Wednesday 13 December 2017
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Country Profile Cyprus By: Christina Ioannou

I. Public Procurement Legislation Review Summary

a. Legislative Framework

Public Procurement in Cyprus is regulated by the Procedures for the Conclusion of Public Procurement and for Relevant Issues Law of 2016 - 73 (I) / 2016 (Public Procurement Law – PPL). The present law has substituted the previous relevant law on Public Procurement. Complementary laws on the main one are

a)    the Law for the Purchase of Clean and Energy Efficient Vehicles in Public Utilities of 2011 – 39(I)/2011;

b)    the Law on the Regulation of Procurement Procedures for Bodies Operating in the Water, Energy, Transport and Postal Services and Related Issues of 2016 - Law 140 (I) / 2016;

c)    the Law on the Regulation of the Procedures for the Assignment of Concession Contracts and Related Issues of 2017 – Law 11(I) / 2017.

 

EU Directives have been transposed into Cypriot Law of Public Procurement. Directive 2014/24/EC of the European Parliament has been transposed by Law 73(I) / 2016 governing public procurement main law and abolishes the previous relevant European Directive 2004/18/EC. Additionally, EU Directive 2014/23/EC has been transposed by Law 11(I) / 2017 governing the regulation of the procedures for the assignment of concession contracts. Finally, EU Directive 2014/25/EC of the European Parliament has been transposed by Law 140(I) /2016 governing public utilities.

 

b. Institutional framework

The PPL sets as the single centralised body for public procurement matters in Cyprus the Public Procurement Directorate (PPD) belonging to the Treasury of the Republic of Cyprus. The responsibilities of the PPD are to prepare drafts of public procurement legislation and supervise and safeguard the correct implementation of procurement principles and rules through guidance and training. The PPD is entitled to carry out checks of compliance of the contracting authorities with the procurement regulations and have the authority to issue compliance certificates in some cases were contracting authorities carry out projects whose value is below the EU thresholds.

Additionally, two other bodies supervise public procurement in the Republic of Cyprus. These are the Audit Office of the Republic of Cyprus and the second is the Internal Audit Service of the Republic of Cyprus. The Audit Office is an independent body and has the authority to perform external controls of the execution of the national budget. It reviews (audit) all the public-funded activities, amongst others are public procurement documents, procedures and award decisions. Its findings are published in an annual report. However, it is not competent to issue sanctions or to initiate judicial proceedings in case of non-compliance. Instead, it has the power to notify the Attorney General in case of violations in the procurement sector. The Attorney General can therefore, as the competent authority, commence judicial proceedings if he concludes that there is a legal issue. The Internal Audit Service has the power to conduct internal audits of Cypriot public organization and other programs funded by the EU, including public procurement procedures. 

Finally, the official Procurement Review Body of the Republic of Cyprus is the Tenders Review Authority which safeguards the rule of law, legislations, regulations and procedures regarding public procurement in Cyprus.[1]

 

Public Procurement Directorate

According to Article 92 of the PPL the Public Procurement Directorate, as the Competent Authority for Public Procurement in Cyprus, has the following powers:

  • to carry out checks to the contracting authorities to ensure compliance with the PPL law and the relevant regulations – monitoring function
  • to make any proposals or suggestions to the contracting authorities as regards to the proper application of the provisions of the PPL – advisory function
  • to request and receive any information it deems appropriate in relation to the application of the PPL, at regular intervals, in particular the supplementary information that are required in the PPL – information function
  • to issue circulars for the better implementation of the PPL and the relevant regulations – regulatory function
  • to notify the contracting authorities for decision(s) of the European Commission – information function

 

Tenders Review Authority

According to the Law 104(I) /2010 (The Procedure for the Recourse to the Sector of Public Procurement Law of 2010) which was enacted in order to harmonize the Cypriot legislation with the European Laws on improving the efficiency of procedures in public procurement, the Tenders Review Authority has the authority to examine the recourses against acts or decisions of the Contracting Authorities that violate any provision of the law before or after signing a contract of supplies, services or projects.

It is constituted by a Chairman and four other Members appointed by the Board of Ministers and their serve lasts for five years. The Tenders Review Authority has the powers:

(1) to decide on Recourses lodged against acts or decisions of the Contracting Authority prior to the award of the contract and based on information submitted.

It may decide:

(a) to approve the act or decision of Contracting Authority,

(b) to annul the act or decision of Contracting Authority if it violates any provision of the law, or

(c) to cancel or order the amendment of any term contained in the tender documents or any other document relating to public procurement procedure in respect to technical, economic or financial requirements before submitting applications or tenders for breach of any provision of applicable law,

(2) to decide on whether to grant interim measures to remedy the alleged violation of the law or to prevent further damage to the interests concerned, including measures to suspend the award procedure or the signature of the contract or to prevent the Contracting Authority executing any decision;

(3) to declare a signed public contract ineffective,

(4) to impose sanctions on Contracting Authorities if a contract was signed illegally,

(5) to enforce payment of the costs of the proceedings.[2]

 

c. Scope of regulation

The PPL covers national procurement and provides specific procurement rules for both the utilities sectors and the institutions in line with EU Directives. Concessions are not regulated by the PPL; however, the PPL provides the review and remedies mechanisms that apply to both concessions and public private partnerships. The PPL clearly defines that a Central Purchasing Body is the contracting authority which provides centralized market activities and possibly ancillary purchasing activities.

The PPL covers different aspects of all three major procurement phases.

 

Pre-tendering

Pre-tendering procedures are regulated in a comprehensive manner by the PPL. According to Article 47 of the PPL, the contracting authorities may disclose their intentions for planned procurement procedures with the publishing of a pre-notice. This pre-notice shall include all the relevant information required by the law (Annex V, Part B, Section I) and follows a certain procedure of publishing (Annex VII). When the pre-notice is published, the contracting authorities are required to send the European Commission a notice of publication of their pre-tendering on the relevant electronic platform, as illustrated in Annex VII of the PPL.

Tendering

The tendering process is comprehensively regulated by the PPL, as it sets out eligibility criteria for the contracting entities and reasons of exclusion. Additionally, the PPL establishes specific criteria for the appointment and composition of the evaluation committee in the procurement processes. The evaluation committee is independent in the decision-making process and ensures anonymity of the tenderers when practicing its duties. Contract notices and contract award notices are published in the Republic of Cyprus. Especially, the contracting authorities provide freely and without any barriers, directly, complete and free of charge electronic access to the tender documents starting from the date of the publication of the pre-tendering notice. In case that the tendering documents cannot be disclosed, the contracting authorities shall mention this in the pre-tendering notice that these are measures taken due to confidentiality matters.

Post-tendering

The PPL lacks any specific provisions necessary for the effective regulation of the post-tendering phase. It does not require the contracting authorities to provide contract management of public contract, neither to ensure that procurement staff have adequate contract management capabilities. However, the PPL provides that the qualification, experience and organization of the procurement staff is taken into account when the quality of the staff can significantly affect the level of the contract execution.

Additionally, the process of competitive dialogue enables the contracting authorities to enter into a dialogue with the participants selected in accordance with the relevant provisions of Articles 56 to 66. The dialogue shall seek to identify and determine the means which best meet the needs of the contracting authorities. During the dialogue, contracting authorities may discuss all aspects of the contract with the selected participants.

A strength of the PPL in this area is that it requires that procurement monitoring and administration to be computerized when the process is conducted through electronic systems. The records are uploaded online free, directly, full and free of charge to the public. However, when the records cannot be obtainable free, directly, fully and free of charge online, there must be mentioned that they are under confidentiality measures in order to protect certain information.

 

d. Eligibility rules

The PPL establishes primary eligibility rules. Contracting entities must exclude a supplier, according to Article 57 of the Law, if it:

  • has been convicted for participation in criminal organization, corruption, fraud, terrorism or crimes connected to criminal activities, money laundering or terrorist financing, child labor or other forms of human trafficking in the previous five year
  • has breached its obligations regarding the payment of taxes or social security contributions
  • is under bankruptcy or liquidation procedure or special liquidation procedure or is under the administration of a liquidator or of the court, or has been the subject of a bankruptcy arrangement procedure or has suspended its business activities
  • has committed a serious professional misconduct, which calls into question its integrity in the previous three years
  • has entered into agreement with other suppliers in order to distort competition in the previous three years
  • creates a conflict of interest which cannot be remedied by other less intrusive means
  • has demonstrated a serious or repeated irregularity in the execution of an essential obligation under an earlier public contract, which had as a result the prior termination of the previous contract, indemnities or other similar sanctions
  • presents false information or does not submit the information required by the contracting authority
  • attempted to unfairly influence the decision-making process of the contracting authority, by obtaining confidential information which may give it an unfair advantage in the contract award procedure or providing with negligence misleading information likely to have a material effect on decisions concerning exclusion, selection or award

Otherwise, all suppliers, foreign and domestic, have an equal right to participate in procurement procedures. This general criteria is distinguished from the qualification and technical requirements to be met be tenderers as defined by the contracting entity. Technical specifications, requirements for tenderers and award criteria must be consistently and accurately described in the tendering documents.

 

e. Procurement methods and procedures as prescribed by law

The PPL provides for various types of procedures. These are:

  • open procedure
  • closed procedure
  • competitive negotiated procedure
  • competitive dialogue
  • partnership of an innovation
  • use of the negotiated procedure without prior publication of a notice

All of the above procedures are default procurement methods. The only method that is considered as a special situation is the last one regarding the use of the negotiated procedure without prior publication. This specific method can only be used for public procurement of works, supplies and services.

Following EU law, the PPL includes the use of negotiated procedures which allows the selection of tender method to be based on the specifics of the purchase and contract profile. Although it is not explicitly prescribed in the PPL, technically it is not possible to change the type of procedure after the contract notice has been published.

Contracting authorities shall send to the European Commission notices of the concluded contracts, based on a dynamic purchasing system, no later than thirty (30) days after the award of each contract.

Certain information about the conclusion of the contract or the framework agreement may not be published when disclosure may obstruct the application of laws, be contrary to the public interest or harm, in any other way, the legitimate commercial interests of the public or private economic operators (suppliers) or the conditions of fair competition between them.

 

f. Public procurement process regulation

The PPL includes clear minimum deadlines for the submissions of tenders. According to Article 88 of the PPL, the deadline for the submission of tenders specified by the contracting authorities may not be less than fourteen (14) days from the date of dispatch of the contract notice for publication in the Official Gazette of the Republic.

Where an urgent situation duly justified by the contracting authorities makes it impossible to meet the minimum time limits of fourteen days (14), contracting authorities may set a minimum period for the submission of requests to participate not less than ten (10) days from the date of dispatch of the contract notice and the time limit for receipt of tenders not less than ten (10) days from the date of the invitation to tender.

Τhe PPL contains guidelines on how to draft the tendering documents prescribing standards forms of contract notices which are based on the EU standard models. However, the PPL does not encompass clear requirement on the use of languages, therefore requiring from the tendering documents to specify the language to be used.

Additionally, the currency or currencies in which the price of the tender can be expressed and which is to be used during the evaluation of tenders is not clearly prescribed by the PPL, hence the tendering documents should determine the currency or currencies used.

The PPL provides that relevant information is published at every stage of the procurement procedure. Specifically, the contracting authorities shall document the progress of all procurement procedures, whether carried out by electronic means or not. To this end, they shall ensure that they maintain sufficient documentation to justify decisions taken at all stages of the procurement process, such as documenting communications with the suppliers and internal discussions, preparing contract documents, dialogues or negotiations (if conducted) etc.

Conditions for cancellation of procedures are not explicitly prescribed in the PPL. However, what is explicitly prescribed is the termination of public procurement in Article 73 PPL. These are:

  • The contract has been substantially amended without a new contract award procedure
  • the contractor, at the time of the award of the contract, was in one of the situations referred to in Article 57 (1) PPL (reasons for exclusion) and should therefore have been excluded from the contract award procedure;
  •  the contract should not have been awarded to the contractor as a result of a serious breach of obligations under the Treaties and this Law, pursuant to a judgment of the Court of Justice of the European Union in a procedure under Article 258 TFEU.

The PPL covers conflict of interests in Article 6. Contracting authorities shall act appropriately to effectively prevent, identify and remedy conflicts of interest arising in the conduct of contract procedures so as to avoid any distortion of competition and to ensure equal treatment for all suppliers. Although, the PPL does not require any specific training for the procurement officers to conduct their job, some training is provided for the contracting authorities and economic operators by the Public Procurement Directorate. Every two years training seminars are provided to all contracting authorities which host expert speakers in both, public procurement and e-procurement from the European Commission. Nevertheless, information on the content of these trainings is not always available to public.[3]

 

g. E-procurement

Cyprus has been placed as one of the more advanced European Union countries in e-procurement.[4] Since 2013 the e-notification was mandatorily used in 100% of the procedures. E-access was also compulsory in use since 2013 which increased to a 60% uptake. To advance e-access in reaching 100%, trainings, seminars and guidelines were launched to promote further implementation of e-access in practice. Finally, e-submission process has been compulsory since 2015 and Cyprus aims to reach full e-submission.[5]

 

h. National review remedies mechanism for complaints related to public procurement

The Competent Public Procurement Authority serves as an independent review and remedies system to monitor the compliance of contracting authorities. Specifically, it has the power to carry out checks on contracting authorities and make any recommendations or suggestions for the correct application of the provisions of the PPL. Additionally, it can request and receive any information it considers relevant in relation to the implementation of the PPL and to issue circulars in that regard. The Authority also notifies the contracting authorities of the European Commission’s decisions and gathers and submits the necessary statistical data to the European Commission within the specified deadlines provided for in the PPL.

According to the PPL, in the event of non-compliance of the contracting authorities with the recommendations or suggestions of the Competent Public Procurement Authority, the latter has the power to refer to the Tenders Review Authority for specific breaches of Article 29 of the Cyprus Constitution (administrative appeal) or to the Attorney General of the Republic for specific breaches of the rules on public procurement procedures.

 

Assessment overview

 

Strengths

  • The PPL adopts a strong stand for the implementation of fair competition and prevention discrimination
  • Particularly, the PPL requires from the contracting authorities to operate in a transparent and proportional way during the procedure of reaching public procurement contracts with financial operators.
  • The amended 2016 PPL successfully complies with the relevant EU regulations and directives, therefore achieving a harmonization between the national Cypriot and EU laws on public procurement.
  • The Cypriot e-Procurement system is developed.

 

Weaknesses

  • The PPL lacks a comprehensive regulation of post-tendering procedures and development of contract management as the staff does not have adequate contract management capabilities.
  •  

Opportunities

  • Further developments can be made in the prevention and prosecution of corruption in public procurement. This can be achieved by ensuring coordination between the different actors involved in this field, starting by follow-ups of the anti-corruption actions and giving further recommendations. Uniformed and effective tools for detection and prevention of corruption at national and local level are also essential in achieving this.
  • Administrative capacity of the Cypriot contracting authorities shall be strengthened in order to avoid persistent irregularities, unnecessary delays and corruption risks. These can be achieved by promoting standardized tender documents for common goods and services, ensuring the availability of training opportunities for the contracting authorities and economic operators and restructuring procurement processes to reduce administrative delays.[6]
  • Finally, the fight against corruption must be further supported by developing and implementing a comprehensive anti-corruption strategy and increase the pool of highly skilled staff of the Coordinating Body Against Corruption (CBB)[7].

 

II. Conclusion and recommendations

Cyprus has managed to overcome important obstacles since 2012, achieving further compliance. This has been principally accomplished because of the efforts of the PPL to comply with the EU Directives and further harmonize the national laws with the European ones.

The main of the amended PPL was to specify and clarify provisions that have been very general, causing ambiguities and gaps of law. The PPL has achieved to strengthen transparency, competition and anti-discrimination  safeguards and develop the institutional and enforcement measures enabling the safeguards to be practically implemented.

AUTHOR: Christina Ioanna



[1] PWC for the European Commission, Stock-taking of administrative capacity, systems and practices across the EU to ensure the compliance and quality of public procurement involving European Structural and Investment (ESI) Funds, Final Report, Country Profiles (Cyprus), January 2016,  http://ec.europa.eu/regional_policy/sources/policy/how/improving-investment/public-procurement/study/country_profile/cy.pdf , as accessed on the 12/05/2017.

[2] Tenders Review Authority website, http://www.tra.gov.cy/aap/aap.nsf/page05_en/page05_en?OpenDocument, as accessed 12/05/2017.

[3] PWC for the European Commission (n.1)

[4] Ibid.

[5] European Commission, Commission Staff Working Document, Annual Public Procurement Implementation Review 2013

[6] PWC for the European Commission (n.1).

[7] Ibid.

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