Here is how the American Chamber of Commerce would address the shortcomings of public procurement in Croatia

The American Chamber of Commerce (AmCham) supports the application of the economically most advantageous offer as the primary criterion for selecting bidders in public procurement procedures, and in the process of drafting a new law proposal, it suggests some solutions to eliminate the existing structural deficiencies of the system.

As stated in a press release from the chamber published on Tuesday, Croatia is currently in the process of drafting a proposal for a new Public Procurement Act, which will implement EU directives aimed at reforming and modernizing the public procurement system in the European Union. The American Chamber of Commerce in Croatia believes that this process should be utilized to improve the public procurement system in Croatia.

EU directives, among other things, emphasize the importance of using the economically most advantageous offer (EMO) as a criterion for selecting bidders. The topic of using EMO has already been present in the public domain, and AmCham has been addressing this issue for three years, particularly emphasizing its importance in the healthcare sector.

AmCham points out that the existing Public Procurement Act already allows for the application of the economically most advantageous offer as a criterion for selecting bidders, but in practice, this criterion is very rarely used. It is, in fact, simpler for contracting authorities to select a bidder based on price.

– By taking into account the total costs and the efficiency of the product or service over a longer term, which includes dimensions of quality and innovation, the actual price of the product or service is revealed. This encourages competition and the development of quality products and services for end users, while also achieving savings of public funds in the long term due to reduced need for additional maintenance, replacements, etc., said Andrea Doko Jelušić, Executive Director of the American Chamber of Commerce.

AmCham President Berislav Horvat emphasized that based on the experiences of members, companies in domestic and foreign ownership, he believes that the biggest problem for participants in Croatian public procurement procedures is legal uncertainty, which largely arises from inconsistent application of regulations.

– A higher quality and more efficient public procurement system in Croatia can and must be achieved through better alignment of practices of the State Commission for Control of Public Procurement Procedures, the Public Procurement System Administration, and administrative courts as the three key holders of the system. Currently, there is no legal basis on which their positions must be mutually aligned, nor are there any consequences prescribed for possible mutual contradictions, which leads to continuous differences in interpretation in practice. Such a situation is not sustainable in the long term, as it slows down and increases the costs of public procurement procedures, while simultaneously failing to ensure the necessary minimum of legal certainty in the operations of participants, emphasized Horvat.

AmCham proposes the introduction of an e-platform that would allow for the search of decisions by competent authorities and lead to the unification of positions and greater predictability for participants in public procurement procedures. The inefficiency of the public procurement system, as stated in the press release, is especially visible in the large number of appeal procedures, and since it is possible to exclude an offer from the tender based on a relevant appeal due to minor procedural and administrative errors. AmCham suggests that contracting authorities should be allowed to request additional clarifications and supplements from bidders, with equal and transparent treatment towards all, so that minor deficiencies can be corrected.

AmCham also proposes the legal definition of particularly significant violations, so that participants can be assured in advance that certain procedures will regularly result in the annulment of the procedure. This, they assume, would achieve a higher level of legal certainty and better efficiency in appeal procedures.

By narrowly interpreting legal interest in the appeal procedure, the possibility of appeal is only allowed for parties that directly participate in public procurement procedures. AmCham believes that the possibility of appeal should also be available to companies that have been prevented from competing due to illegal actions by contracting authorities. The proposed amendment would encourage a larger number of market participants to monitor public procurement procedures and thus control illegal actions by contracting authorities. Consequently, the percentage of illegal actions would decrease, thereby opening market competition for a larger number of economic entities, as stated in the press release.

AmCham also proposes extending the deadlines for initiating appeal procedures, which are currently too short to allow for effective legal protection, and supports reducing the fees for initiating an appeal procedure since high fees have not led to the planned reduction in the number of appeals filed.