EQUIPMENT FOR CLINICAL CENTER NIS (2016)
Public procurement of equipment for the needs of the Clinical Center Nis is one of the largest procurements in the field of health in Serbia, both in its value and importance. The procurement of the said equipment was carried out within the project “Reconstruction of four Clinical Centers in Serbia“, and the estimated value was close to 2 billion dinars without VAT. The contracting authority, the Ministry of Health, designated 117 different items as the sole subject of procurement.
The public procurement procedure in question was annulled in its entirety by the Republic Commission, but only after the contracting authority concluded the contract with the selected bidder.
This study will present the reasons of the Republic Commission for annulment of the procedure, but also the consequences of such a decision, as well as some serious violations of the provisions of the Law on Public Procurement (hereinafter: LPP), which the Republic Commission did not point out in its decision, and which we consider very important.
The first reason why this public procurement procedure was annulled is that the Republic Commission determined that the public procurement procedure in question was initiated before the specific public procurement appeared in the annual public procurement plan. Namely, by checking on the Public Procurement Portal, the Republic Commission determined that the procuring entity amended the public procurement plan on December 21, 2016, and for the first time inserted the implementation of the open public procurement procedure for the needs of KC Nis. However, as the contracting authority made the decision to initiate the procedure on December 19, 2016, before this procurement appeared in the annual procurement plan, it was determined that the contracting authority violated the provision of Art. 52, para. 1 of the LPP, which stipulates that the procuring entity may initiate a public procurement procedure if the procurement is planned by the annual public procurement plan. The Republic Commission also concluded that in the specific case there were no conditions for the application of the provision of Art. 52, para. 2 of the LPP, which stipulates that the contracting authority may initiate a public procurement procedure even if the procurement is not planned by the public procurement plan, if that procurement couldn’t have been planned in advance or due to urgency.
Although it is indisputable that the contracting authority violated the provisions of the LPP by acting in the described manner, there is one crucial and contradictory fact: on the one hand, the Republic Commission concluded that there were no reasons that would justify initiating public procurement procedure not included in the plan and therefore annulled the whole procedure; but on the other hand, before making that decision the Commission allowed the contracting authority to continue further activities (even to conclude a contract), despite the fact that at that time no decision was made on the request for protection of rights, thus confirming the urgency referred to by the contracting authority in its proposal for continuation of activities. Therefore, on the basis of the approval of the Republic Commission, even before the decision on the request for protection of rights, the procuring entity continued the public procurement procedure and concluded the contract, and then the same Republic Commission annulled the procedure in question because it shouldn’t have been initiated at the first place.
Another reason why the Republic Commission annulled this public procurement procedure is that it determined that the contracting authority, while answering the questions of potential bidders, revealed the name of one of them in the answer it published on the Public Procurement Portal. Namely, in this answer it was stated: “Snežo, at the end of the answer to the request no. 5 Paroco, add this conclusion !!!!!!”. Obviously, it was a reckless move of one of the employees of the contracting authority, but this move violated the provision of Art. 14, para. 1, point 3) of the LPP which, among other things, prescribes that the contracting authority is obliged to keep as a business secret the names of potential bidders until the opening of bids. Also, the provision of Art. 20, para. 4 of the LPP was also violated, which, among other things, stipulates that communication in the public procurement procedure must take place in a way that ensures the confidentiality of data of all potential bidders.
The issue that the Republic Commission did not deal with, which we consider extremely important and which was pointed out in the request for protection of rights, is the duty of the contracting authority to divide the subject of public procurement into several lots in a situation when procurement refers to various types of goods.
Namely, in this specific case, the contracting authority combined the procurement of as many as 117 different types of devices and equipment, including a scanner, an MRI scanner, X-rays, microscopes, but also chairs and cabinets. We believe that in accordance with the principle of economy and efficiency from Art. 9 of the PPL, the procuring entity had to divide this public procurement into lots, in order to enable different bidders to participate for public procurement items they already offer on the market and for which they have all the necessary permits. It is almost impossible for one bidder to have a permit for placing on the market all medical devices that the procuring entity requested in this specific case. Anyway, the contracting authority received 5 bids for one procurement item consisting of 117 different articles, and only one offer was acceptable. So, only one bid could meet all the requirements of the procuring entity, in the sense that all items were offered together, and that everything that the procuring entity requested in terms of technical specifications and required permits was met. We believe this represents a serious restriction of competition in terms of the provision of Art. 10 of the PPL.
Based on all the above, it is obvious that the public procurement contract concluded in this public procurement procedure is null and void, since the procedure that preceded it (and which was the basis for its conclusion) was annulled in its entirety by the decision of the Republic Commission. Namely, the Law on Public Procurement stipulates that a contract concluded contrary to the decision of the Republic Commission is null and void. In order for the contract to be annulled, however, it is necessary for the interested person or the competent state body to file a lawsuit for establishing nullity. To our knowledge, no such lawsuit has been filed in this case so far.
Therefore, this contract of enormous value (although executed) can be challenged at any time by filing a lawsuit to establish its nullity, given the fact that in accordance with the provisions of the Law on Obligations, the right to determine nullity does not expire. If a lawsuit was filed and if the competent court accepted the lawsuit, the consequences of nullity would occur. The most significant consequence is that each contracting party is obliged to return to the other all that it has received under such a contract, and if this is not possible, each contracting party would have to pay appropriate monetary compensation according to prices at the time of the court decision. All this could lead to a million-dollar dispute over damages, but also to criminal liability of the actors involved in this public procurement procedure.
And all of the above is a consequence of frivolous and irresponsible behavior of the contracting authority, which initiated the public procurement which was not foreseen by the annual procurement plan at the time of launch, and which published the name of the potential bidder who asked the question in the bid preparation phase. We could call these omissions beginner’s mistakes had they not happened in such a valuable and important public procurement procedure. Thus, these errors must be characterized as catastrophic, given the very serious consequences.