VACUUM TUBES, HOLDERS AND NEEDLES - GENERAL HOSPITAL SABAC (2017)
Contracting authority’s attempts to unjustifiably apply the negotiated procedure without publishing a call for tenders for reasons of urgency (hereinafter: “urgent negotiated procedure”) are certainly not uncommon in public procurement practice in Serbia. What makes this case special, however, is the fact that the contracting authority tried to mislead the competent authorities regarding the existence of grounds for conducting this procedure, and that in two parallel procedures (open and negotiated), practically simultaneously, the contracting authority concluded two public procurement contracts with the same bidder for the same procurement subject.
Namely, in accordance with the Law on Public Procurement, the contracting authority may conduct a negotiated procedure without publishing a call for tenders if due to extreme urgency caused by extraordinary circumstances or unforeseen events, the occurrence of which in no case depends on the will of the contracting authority, he couldn’t have acted within the deadlines set for open or restrictive proceedings.
In this specific case, two months before the expiration of the previously concluded contract for vacuum tubes, holders and needles, the contracting authority initiated an open public procurement procedure in which the subject of one of the lots were precisely these medical supplies. The decision was made to award the contract to the bidder “Eco trade BG” Nis, but after that one of the dissatisfied bidders submitted a request for protection of rights by which he challenged the decision in the part related to the lot in question.
Without waiting for the Republic Commission to decide on the request for protection of rights, the procuring entity initiated a urgent negotiated procedure for the same subject – vacuum tubes, holders and needles, only for a shorter period compared to the open procedure, and thus for a smaller amount of the said supplies. In this way, the ordering party wanted to “bridge” the period until the decision on the request for protection of rights is made, by receiving the necessary quantities of the needed medical supplies while waiting for the Republic commission’s decision.
The same bidder who submitted a request for protection of rights in the open procedure, also submitted a request in the second, urgent negotiated procedure, disputing the existence of grounds for conducting this procedure.
Before initiating the urgent negotiated procedure, every contracting authority is obliged to request an opinion from the Public Procurement Office on the merits of the subject negotiation procedure. This contracting authority did so stating that due to the work overload and a large number of service users, especially with the flu epidemic, all vacuum tubes, holders and needles (procured in the previous procurement procedures) were consumed earlier than expected. The hospital also stated that in order to procure new quantities of the said medical supplies, it initiated an open public procurement procedure nearly two months before the expiration of the previous contract, but then the protection of rights request was made which resulted in the procedure not being completed within the planned deadline: contracting authority couldn’t have known how long the procedure for protection of rights will take, especially having in mind that the Republic Commission did not make a decision on the submitted request for protection of rights within the legally prescribed deadline. As a key argument for the validity of the urgent negotiated procedure in this particular case, the procuring entity pointed out that the end of December 2016 was the last deadline in which the Republic Commission should have made a decision on the submitted request for protection of rights related to the open public procurement procedure, but this decision was never made.
However, as the opinion of the Public Procurement Office on the merits of the urgent negotiated procedure has no suspensive effect, and as the contracting authority in this procedure can make a decision to award and conclude a public procurement contract even when a request for protection of rights has been submitted, the hospital used this opportunity. Without waiting for the opinion of the Public Procurement Office and the decision of the Republic Commission, on February 14, 2017 the contracting authority awarded and concluded the contract, and published a notice on the same day on the Public Procurement Portal. The contract was awarded to the same bidder to whom it was awarded in an open public procurement procedure, the company “Eco trade BG” Nis.
It is important to note here that at the time when the decision was made and the contract concluded in the urgent negotiated procedure (February 14, 2017), the Republic Commission had already decided on the request for protection of rights in open proceedings (on February 6, 2017), which made the conclusion of contract in the negotiated procedure completely pointless. That becomes even more clear knowing that the Republic Commission rejected the request for protection of rights, so from that moment in the open procedure there were no obstacles for concluding a contract for the medical supplies in question. The irrationality of the accelerated conclusion of the contract in the negotiated procedure is especially evidenced by the fact that the Republic Commission with its decision of January 31, 2017 extended the deadline for deciding on the request for protection of rights by 15 days, i.e. until February 15, 2017. The Commission submitted this decision to the procuring entity, so the procuring entity was aware in advance of the deadline by which the Republic Commission would make a decision.
On the other hand, the contract for the medical supplies in the open procedure was concluded on February 21, 2017.
Having in mind all the above, it is completely clear that in this particular case there were a number of complex formal problems and shortcomings.
The first and perhaps the most important problem is the attempt to mislead the competent body regarding the key data related to the validity of the negotiated procedure, and that is the expiration of the deadline for the Republic Commission to decide on the request for protection of rights.
As a principle, and without other valid reasons, filing a request for protection of rights does not justify the initiation of the urgent negotiated procedure. The request for protection of rights is a regular legal remedy available to the bidders, a tool they usually use, so it does not represent any extraordinary circumstance that the contracting authorities cannot take into account. However, the failure of the competent authorities to comply with the statutory deadlines is very relevant and can be a crucial argument that would justify the initiation of the urgent negotiated procedure, since contracting authorities cannot assume a delay in the decision of the competent authorities and are not obliged to take this delay into account while setting the deadlines and undertaking other actions in the procurement procedures.
However, in the specific case, the problem is the fact that the request for protection of rights in the open procedure was submitted on January 5, 2017, that the procedure before the Republic Commission upon that request began on January 11, 2017, and so at the end of December 2016, all the deadlines for the Republic Commission to make a decision on the submitted request could not have expired, as the contracting authority claimed!
It is also symptomatic that the contracting authority did not state the mentioned reasons and explanations on the merits of the negotiated procedure in its decision to initiate the procedure, but more importantly, it did not state them in the notice of initiation of the negotiation procedure (which it was obliged to do). They weren’t stated in the contract award decision as well. As the notice on the initiation of the negotiated procedure and the decision on the award of the contract are published on the Public Procurement Portal and the contracting authority’s website, the contracting authority evaded its obligation to make these explanations (including incorrect information on the deadline for deciding on the submitted request for protection) accessible and transparent, and therefore easily verifiable.
In its letter dated February 10, 2017 the Public Procurement Office requested certain additional information from the procuring entity, in order to take a position on the merits of the negotiated procedure: when was the previous procurement contract of the subject goods concluded, when did it expire, when was it noticed that the contract is about to expire, what was the estimated value of the public procurement in the negotiated procedure, what was the value in the open procedure, and the exact date on which the request for protection of rights was submitted.
The contracting authority did not respond to the Public Procurement Office request until the end of the urgent negotiated procedure and well after the conclusion of the contract. We believe that he would have remained completely silent and that he would have ignored this request of the Public Procurement Office if it wasn’t for the rights protection procedure that had been initiated in the negotiated procedure as well.
In the rights protection procedure, the Republic Commission asked the contracting authority for the Public Procurement Office opinion on the merits of the initiation of the negotiated procedure, and only after this request, in its letter dated June 06, 2017 the contracting authority submitted the requested statements to the Office. After that, the Public Procurement Office, as expected, issued a negative opinion on the merits of the initiation of the urgent negotiation procedure.
The next problematic thing in this particular case is that in the urgent negotiated procedure the procuring entity concluded the contract immediately, without waiting, on the same day the deadline for submission of bids expired – that is, February 14, 2017. On the same day he also published a notice of the concluded contract on the Public Procurement Portal. It is an extraordinary hurry, which would be said to naturally stem from a state of urgency (which we have already denied). Here, however, there was no reason for such a hurry at all, since the contracting authority knew in advance that the decision on the rights protection procedure in the open procedure would be made no later than February 15. So in case the request for protection of rights is rejected as unfounded, he could conclude the contract as originally planned, and as a result the contract on public procurement in the negotiated procedure would become completely meaningless.
Moreover, the Republic Commission was quite efficient, so on February 6, 2017 it issued a decision rejecting the request for protection of the applicant’s rights in an open procedure as unfounded. This has created formal opportunities for immediate stipulation of the contract in the open procedure, for the lot in question. However, despite that, the contracting authority rapidly concluded the contract in the negotiated procedure and published a notice about that on the Public Procurement Portal on February 14, 2017. The notice of the conclusion of the contract in the open procedure was published on February 21, 2017.
The contracting authority’s actions led to the consequence where 2 contracts for the same subject of procurement were made at the same time. The contract concluded in the urgent negotiated procedure was undoubtedly null and void, since there was no basis for conducting this type of public procurement procedure.
It is important to point out that the Republic Commission, deciding on the request for protection of rights in the negotiated procedure, ex officio determined that in the specific case there were no conditions for initiating urgent negotiated procedure. However, since this decision wasn’t made until July 28, 2017, with a significant delay in relation to the deadlines for submission of requests for protection of rights, and since the public procurement contract in the disputed negotiated procedure was concluded on February 14, 2017, the implementation of the said unlawful contract was enabled in a significant part.
When it comes to cases in which there is a risk of execution of an unlawful public procurement contract, we believe that it is necessary for the Republic Commission to be significantly more efficient (at least as efficient as it was in the case of open procedure JN-27/16), i.e. to make decisions taking into account the deadlines that will prevent the stipulation and execution of unlawful contracts.
Finally, with its acts the contracting authority committed a misdemeanor prescribed by the Law on Public Procurement, given that it conducted a public procurement procedure that is not open or restrictive, when there were no conditions for it.