In January 2020, the Ministry of Construction, Transport and Infrastructure of Serbia (Ministry of Construction) signed two agreements with the Chinese company China Machinery Engineering Corporation (CMES) and thus directly, without applying the Law on Public Procurement (LPP), contracted the collection and treatment of the wastewater of the central sewage system of the city of Belgrade.

This is yet another example (as was the case of the construction of the “Moravian Corridor”) that shows the continuation of the practice of concluding contracts of enormous value, which relate to important infrastructure projects, without the application of the LPP.

Unlike the case of the construction of the “Moravian Corridor”, in this particular case there was no lex specialis that suspended the LPP. Instead, the Agreement on Economic and Technical Cooperation in the Field of Infrastructure between the Government of China and the Government of Serbia from 2009 served as the basis for concluding two agreements with the Chinese company. Precisely because of that, the Ministry stated that it was not necessary to announce a public invitation and conduct a public procurement procedure.

It is important to note that in this particular case no one disputes the importance of the signed agreements for the construction of the first large wastewater treatment plant in Belgrade, especially given the fact that Belgrade is one of the few capitals in Europe that does not have a wastewater treatment plant, while one third of Belgrade citizens do not have sewerage.

From the point of view of the legal order of Serbia, however, it’s very problematic that this agreement was not achieved by conducting a public procurement procedure or public-private partnership under the laws in force in Serbia, but only on the basis of the Agreement on Economic and Technical Cooperation in Infrastructure between the Chinese and Serbian Governments, and without any special procedure. Also, it is questionable why the conditions under which the project was agreed remained unknown to the public, as well as whether the contractor will respect Serbian and European regulations and standards during the construction of the mentioned plant.

In this regard, it should be emphasized that the European Commission in many previous reports on Serbia’s progress has indicated that certain international procurement agreements concluded with non-EU countries are not in line with EU regulations, but also with Serbian regulations. Thus, the latest Annual Report of the European Commission on Serbia for 2019 states, among other things, that Serbia should especially ensure that intergovernmental agreements concluded with third countries and their implementation do not restrict competition unjustifiably, respect basic principles of public procurement such as transparency, equal treatment and non-discrimination and to be in line with national legislation and the acquis.

Also, it is important to note that the Law on Public Procurement stipulates that it will not  be applied to procurements that contracting authorities are obliged to conduct in accordance with procurement procedures established by an international agreement concluded with one or more countries and relating to works, goods or services, intended for joint application or joint exploitation by the signatories. It is unclear how the collection and treatment of wastewater from the central sewage system of Belgrade could be intended for joint application or joint use by the signatories – the Government of the Republic of Serbia and the Government of the People’s Republic of China, which is one of the conditions for applying that exception.

These individual cases of “avoiding” the application of the LPP in important infrastructure projects were obviously only an introduction and preparation for the adoption of another special law, which will give the Government the authority to decide in each case whether the LPP will be applied or not.

On February 12, 2020, The Law on Special Procedures for the Implementation of Projects for the Construction and Reconstruction of Line Infrastructure Facilities of Special Importance for the Republic of Serbia entered into force. This law authorized the Government to decide in the cases of large infrastructure projects not to apply the LPP at all to the entire project (or its individual phases and activities), but to apply a special procedure for selecting a strategic partner regulated by the same law. According to the definition from that Law, a strategic partner is nothing but a bidder in public procurement procedures, except when it comes to a financier. General and specific criteria for the selection of a strategic partner are determined depending on the subject and content of each specific project, but it is not known what can be required within these criteria (except for the general call for competition and transparency). It is further foreseen that after the Government makes a decision on the selection of a strategic partner, the working group negotiates elements of the contract with the selected strategic partner, based on the negotiating platform adopted by the Government, but again it remains unknown what will be negotiated.

The explanation of the Proposal of this law states that the Ministry of Construction planned to start the implementation of projects from the new investment cycle, whose value is estimated at about 5 billion euros, and that based on previous experience it was concluded that a lot of time is lost in the project implementation process on resolving property-legal relations before issuing the necessary permits, due to which the works are often late. As further stated in the explanation, the adoption of this Law will enable faster and simpler realization of the projects, from the process of acquiring land to issuing the necessary permits, and quicker public procurement processes necessary for the realization of these projects of importance for the Republic of Serbia. This explanation is particularly interesting: “In order to fully and efficiently implement these projects, it is necessary to speed up all other procedures and, conditionally speaking, ‘gather’ them in one special law, so that all bodies and organizations participating in the implementation process (at any stage) act in a unified manner with clearly defined procedures, deadlines, etc.”.

The regulation, i.e. public policy document to which the proposer of this Law refers is the Strategy for the Development of Railway, Road, Water, Air and Intermodal Transport in the Republic of Serbia (2008-2015), i.e. the Strategy that covered the period up to 4 years ago, while there is no new strategy that would at least to some extent be the basis for the adoption of this law. It was also stated that there is no connection with any EU regulations, i.e. that this Law does not rely on EU regulations.

Having in mind all the above, we can conclude that in the case of construction of wastewater collection and treatment plant in Belgrade, the practice of concluding very valuable contracts without the application of the Law on Public Procurement continued, and that this practice was further encouraged and stimulated by the Law on Special Procedures for the Implementation of Projects for the Construction and Reconstruction of Line Infrastructure Facilities of Special Importance for the Republic of Serbia, which enables the same practice for all major projects in the future.