Vol. XIV No.4
April 2009



Romanian Public Procurement Law Amended ...

After protracted discussions with the representatives of the European Commission, the Romanian Government has finally adopted Emergency Ordinance 19/2009 (hereinafter referred to as “GEO 19”), to improve the public procurement procedures (“PPP”), put in place by Government Emergency Ordinance no.34/2006 (the “Public Procurement Law”), and make them more flexible and efficient. This is not too soon for an economy that could benefit enormously from the stimulus provided by an infusion of funding to public infrastructure and environmental projects throughout Romania.

Prior to March 2009, when GEO 19 became effective, the process of awarding a public procurement contract (“PPA”) was exceedingly complex and readily subject to allegations of a lack of transparency, unfair conduct, and official corruption. This article addresses the new aspects to public procurement created by GEO 19. For a more detailed look into the provisions of the system of public procurement in Romania, please visit The Romanian Digest™ Archive at www.hr.ro , i.e., our July 2006 article – “Romania’s New Public Procurement Law”.

[ Up to Contents ]

Main amendments to GEO 19

The contracting authority – broader definition
Until GEO 19 became effective, the public contracting authority was represented by, among others, any organism of the state, either a public authority or a public institution, acting at the central/regional/local level, and also by any other entity of public law created in order to satisfy the needs of general interest without a commercial or industrial character. This last category of contracting authorities has been broadened by GEO 19, in the sense that there is no need now for these entities to arise from the public law. Therefore, contracting authorities may now be represented also by entities created by private law, which satisfy general interest needs and that do not have a commercial or industrial character, such as associations or foundations. However, these entities still have to comply with the specific conditions set forth in the Public Procurement Law, i.e., to be financed mostly by a contracting authority or by another entity of public law; to be under the authority or control of a contracting authority or other entity of public law; or more than a half of the members of its management board or leading or supervising organ to be appointed by a contracting authority or by another entity arising out of public law.

By broadening the definition of the contracting authority, more entities will have to abide by the Public Procurement Law, creating greater access to public funds for interested companies – but through more formalities.

Another important amendment introduced by GEO 19 concerns the applicability of the Public Procurement Law to the awarding of PPAs by “structures” of the contracting authorities functioning in other states when the value of the agreement that should be subject to a PPP is equal or greater than €100,000 for products and services agreements, and €750,000 for public works projects. Although such an amendment should be significant in practice, it may raise difficulties with regard to the interpretation of the term “structures” of contracting authorities, as such term has not been defined by Romanian law, and, consequently, it is unclear whether it should cover only entities without legal personality, or also entities with legal personality.

Increased access to public funds
As a consequence of GEO 19, more interested entities should now have access to public funds, because the monetary threshold under which the contracting authority does no longer have the obligation to organize a public tender has been increased from €10,000 to €15,000. Therefore, products, services and works can now be acquired or performed directly using public funds if the value for each of them does not exceed €15,000 without the cumbersome bidding process. This will also relieve the burden from the contracting authorities of handling lots of paper work and a large number of administrative tasks for small projects. By increasing the threshold under which the organization of a PPP is no longer mandatory, contracting authorities will free up approximately 10,000 files, representing 10-15% of the entire number of PPPs at the national level (according to the president of the National Regulatory and Monitoring Authority for Public Procurement - ANRMAP, in her speech published on the website of ANRMAP).

Furthermore, the maximum threshold up to which the offer request procedure (the simplest PPP) can be applied has been amended, as follows: €100,000 for products and services (instead of €75,000), and €750,000 for works projects (instead of €500,000). Additionally, the estimated value of public works projects that are financed/subsidized directly by more than 50% through a contracting authority, and over which a PPP should be applied, has been increased from €2.5 million to €5 million. In the case of services agreements, the estimated value has increased from €125,000 to €200,000.

Another provision of GEO 19 refers to advertising agreements, for which a PPP can be concluded without the special publication requirements in the specially created system available on the internet, if the value of the agreement does not exceed €20,000 (instead of the prior €2,000), once more leading to less formalities and paperwork.

These increases in different threshold amounts allows for more flexibility in the execution of different agreements, especially in the case of public-private partnerships, for which Romania still does not have any relevant legislation.

Benefiting from direct access to public funds allows for a reduction in the red tape that usually characterizes PPPs and creates substantial time savings. Public funds may even help some companies remain viable and keep the economy afloat during the current economic crisis ensuring some continued employment. On the other hand, if these provisions are not to be properly implemented, abuses by contracting authorities and even less transparency in the use of public money may occur.

More efficient procedure
In order to make a PPP more flexible and, in the end, more efficient, shorter terms have been set by GEO 19. For instance, the term for organizing the tender has been reduced to 30 days, while the term for analyzing offers by contracting authorities has been reduced to 20 days. Such term may be prolonged by a maximum 20 days, but only in well-justified situations. The fact that the contracting authorities are now obliged to provide an answer to an applicant within 20 days is essential, because until now this has been a great impediment in the efficient administration of PPPs. The lack of such a term up to now permitted abusive behavior by the contracting authorities which often unjustifiably delayed the evaluation of offers and the announcement of a winning bidder.

Until now, the excessive documentation required for a PPP, and the non-operative manner of rendering solutions in a PPP discouraged potential investors. The high cost of obtaining requisite documentation from contracting authorities was also an impediment to potential applicants that sought an opportunity to bid upon a PPP. Because such costs were barriers for many applicants, GEO 19 imposes the obligation for any contracting authority to put such documentation at the disposal of any interested applicant for free, obviously making the process of awarding a PPA much more flexible and efficient.

Moreover, GEO 19 introduced several other measures which should discourage abuses by contracting authorities, such as, an obligation to register the contracting authority with the electronic system of public procurements and to draft annual activity reports and submit them to the ANRMAP.

The exercise of the right to challenge aspects of the PPP
With regard to contesting a PPP, GEO 19 states that any person that deems itself as aggrieved by an “alleged infringement of the public procurement law” may bring an action in court in order to obtain the annulment of the specific act which has allegedly generated the injury and/or to obtain the recognition of an alleged right or legitimate interest.

Furthermore, maximum terms were set for each part of the court proceedings in order to make the judicial procedure of contesting decisions regarding the award of PPAs rapid and efficient. Considering the usual terms set by ordinary civil procedure in court, these specific terms set by GEO 19 are very short – for instance, after the first hearing, further matters will be made within a maximum of 10 days – leading to an expedited procedure and to increased efficiency. However, such limited terms may make it impossible to obtain certain evidence in discovery procedures, which may impair parties’ ability to present their case properly and harm the court’s ability to render a thorough and detailed analysis of the file. Although this is a risk to be taken into consideration, such short terms in the judicial procedures for a contestation of a PPP is undoubtedly positive.

GEO 19 introduced a stamp tax of 2% of the estimated value of the contract for any contestation taken to court to deter abusive contestations and aimed against those entities that have become “specialized” in contesting tender results and, by this, ultimately blocking investments. Mention should be made that the courts have had the means to sanction an abusive exercise of certain rights by parties in an action. Note that Directive 2007/66/CE regarding the improvement of appeals in the field of public procurement establishes that the Member States have the obligation to ensure “efficient” appeals within PPPs. Hopefully, the new stamp tax, which was meant to avoid abuses by those who submit unjustified contestations, will not turn into an impediment to the exercise of legitimate challenges to abusive conduct by contracting authorities.

In addition to the right to contest in court certain aspects of a PPP, persons that are involved in a tender procedure can submit contestations against decisions of a contracting authority to the National Council for Claim Resolutions (“CNSC”). This is a Romanian legal entity that can rule over contestations against a PPP, decide in regard to the procedures and operations undertaken by a contracting authority in a PPP, and also issue official points of view on certain litigations when a court makes a specific request in this respect.

Until the entry into force of GEO 19, the CNSC was under the authority of ANRMAP, but now it has come under the authority of the General Secretariat of the Romanian Government. It remains to be seen if such an amendment in the supervisory body will improve the activity of CNSC. Additionally, although, from the information posted on the internet with regard to the activity of the CNSC between 2006-2008, the CNSC seems to have had a very good record in resolving contestations, until the enactment of GEO 19, there has been no coherent system for monitoring and evaluating its activity. Consequently, GEO 19 provides for the creation of an evaluation commission within the CNSC with the power to monitor and evaluate the activity of the CNSC in general, and of the persons charged with the resolution of contestations in particular, which should lead to a higher degree of transparency, objectiveness and, presumably, to the improved performance of the CNSC. In order to achieve such a purpose, the evaluation commission must be an independent and impartial entity; in order to make such an entity functional, a regulation regarding its organization and operation is still required.

[ Up to Contents ]

GEO 19 should bring the process of awarding a PPA to a new level of efficiency and transparency with regard to the use of public money. The shorter terms put in place should make the procedure more expeditious, while the increase in the thresholds under which the organization of a PPP is no longer mandatory should increase the access of a higher number of companies to public funds stimulating the economy while maintaining a high level of competitiveness. But if not implemented properly, such provisions may cause an even greater lack of transparency in the awarding of PPAs, more corruption and, ultimately, to court proceedings against Romania due to the newly introduced stamp tax for contestations, that may prove to be prohibitive.

[ Up to Contents ]

Editors Note: It is our policy not to mention our clients by name in The Romanian Digest™ or discuss their business unless it is a matter of public record and our clients approve. The information herein is correct to the best of our knowledge and belief at press time. Specific advice should be sought from us, however, before investment or other decisions are made.

Copyright 2009 Rubin Meyer Doru & Trandafir, societate civila de avocati. All rights reserved. No part of The Romanian Digest™ may be reproduced, reused or redistributed in any form without prior written permission from the publisher.

societate civila de avocati
Str. Putul cu Plopi, Nr.7, Sector 1
Bucharest, Romania
Tel: (40) (21) 311 14 60
Fax: (40) (21) 311 14 65
E-Mail: office@hr.ro

The Romanian Digest Archive



Herzfeld & Rubin, P.C.
125 Broad Street
New York, NY, 10004
Tel: (212) 471-8500
Fax: (212) 344-3333

Long Island Office
Herzfeld & Rubin, P.C.
1225 Franklin Avenue, Suite 315
Garden City, New York 11530
Tel: (212) 471-3231

Herzfeld & Rubin LLP
1925 Century Park East
Los Angeles, California 90067
Tel: (310) 553-0451
Fax: (310) 553-0648

Chase Kurshan Herzfeld & Rubin
354 Eisenhower Parkway, Suite1100
Livingston, New Jersey 07039-1022
Tel: (973) 535-8840
Fax: (973) 535-8841

Israeli Affiliated Law Firm
Balter Guth Aloni & Co.
96 Yigal Alon Street,
Tel Aviv, 67891, Israel
Tel: +972-3-511-1111
Fax: +972-3-624-6000


New York — California — New Jersey — Romania
If you no longer wish to receive emails from us, please send an e-mail with UNSUBSCRIBE in the subject line to Romanian.Digest@hr.ro.