Guidelines for Public Procurement in Croatia during the COVID-19 Crisis

Like other EU Member States, Croatia has been affected by the Covid-19 pandemic and its repercussion on the state budget and economy will be significant. In the last month, the Croatian Government has adopted various measures to help the economy, as well to provide guidance to all market participants on how to continue their business during the crisis.

In relation to public procurement, the Croatian Government has adopted one decision and the Ministry of Economy, Entrepreneurship and Crafts two recommendations:

1. Decision to limit use of the state budget in 2020;
2. Recommendation to contracting authorities on the requirements and delivery of the bid guarantee;
3. Recommendation to contracting authorities on the public opening of bids.

Also, the State Commission for Supervision of Public Procurement Procedures (DKOM) adopted a decision on communication with clients during the crisis.

1. Government’s decision to limit use of the state budget in 2020

The government's decision to limit use of the state budget in 2020 prescribes that as of 4 April 2020 budgetary and extra-budgetary entities in Croatia must suspend all public tenders and are not allowed to initiate new tenders, unless doing so is necessary to carry out their essential functions and work.

The decision applies to: (i) budgetary entities listed in the Registry of Budgetary Entities (please click here for the list of budgetary entities); and (ii) extra-budgetary entities listed in the Registry of Extra-Budgetary Entities (for the list of extra-budgetary entities, please click here).

As of 4 April 2020, the budgetary and extra-budgetary entities must suspend and may not initiate new: (i) public tenders; (ii) public procurement procedures and (iii) simple procurement procedures, which are not necessary for carrying out their essential functions and work.

Budgetary and extra-budgetary entities may carry out and initiate new procedures if:

• the procurement is necessary to carry out measures to help the economy during the coronavirus pandemic;
• the procurement is carried out to remedy damage caused by earthquake;1
• the procurement of materials and equipment that is necessary to combat the coronavirus pandemic;
• there is a justified and elaborated reason for the procurement, in which case the Minister of Finance’s approval must be obtained prior to adopting the selection decision for an ongoing procedures/ initiating a procurement procedure.

The Public Procurement Act does not provide for the suspension of a public procurement procedure, so the contracting authorities can comply with the government’s decision by using the instrument of ‘annulment of a public procurement procedure’.

One of the reasons the Public Procurement Act provides for the annulment of a public procurement procedure is for when the contracting authority becomes aware of circumstances which would have resulted in non-initiation of the procedure had they been known prior to initiation of the procedure. This could be an adequate legal basis for the contracting authorities to “suspend” ongoing procurement procedures in line with the government’s decision and the Public Procurement Act.

Failure to comply with the government’s decision constitutes a violation punishable under the State Budget Act and the Fiscal Liability Act.

2. Ministry’s recommendation to contracting authorities on bid guarantees

The recommendation concerns the fact that the original copy of the bid guarantee must be delivered and timely delivery of the bid guarantees is difficult due to the restrictions on movement within Croatia (prohibition to leave residence) and restrictions on international travel.

The first recommendation to contracting authorities is that they ask for a bid guarantee only if they assess that the risks prescribed by the Public Procurement Act, for which the bid is usually required, are likely to occur, taking into consideration the value, urgency and importance of the procurement.

If, following such assessment, the contracting authority decides that it will require a bid guarantee in procurement documents, the recommendation is to decrease the amount of the bid guarantee in proportion to the maximum amount allowed by law (which is 3% of the estimated procurement value). By prescribing the amount of a bid guarantee in the amount of e.g. 1% of the estimated procurement value, a bid guarantee would not represent a huge financial burden for tenderers. As a result, they could use the possibility provided by law to pay a cash deposit as a bid guarantee, instead of delivering a bank guarantee or a debenture. As evidence of payment of the cash deposit, tenderers can deliver a scan of an internet banking payment confirmation. This would significantly mitigate the problems of delivering an original bid guarantees in the form of a bank guarantee or debenture.

3. Recommendation to contracting authorities on the public opening of bids

The recommendation was adopted in the light of a previous Civil Protection Directorate decision on limiting social gatherings and the obligation of employers to cancel meetings and organize teleconferences for future meetings, which is also reflected in public procurement procedures.

The recommendation is that the opening of bids is carried out without authorised representatives of tenderers or other interested parties present, and that this will not be considered a violation of the Public Procurement Act. In the event that authorised representatives of tenderers wish to participate in the opening of bids, the contracting authority must ensure their participation in line with the government decision on public gatherings just mentioned if this is feasible, or enable participation via video conference if the technical requirements exist.

4. State Commission for the Supervision of Public Procurement Procedures decision on communication with clients

The State Commission for the Supervision of Public Procurement Procedures (DKOM) adopted a decision by which:

• DKOM will not receive clients, unless this is necessary in exceptional circumstances which will be assessed separately;
• Appeals are delivered by courier or via electronic communication system for e-appeals; the appeal may not be filed to DKOM in person;
• All documents in writing (motions in the appeal procedure) must be delivered by courier or via electronic communication system for e-appeals or to the e-mail address: [email protected]; documents may not be filed to DKOM in person;
• A request for insight into a file must contain the client’s e-mail address;
• All information to clients will only be provided via telephone +38514559930 or e-mail: [email protected].

Please see here for the full text of the government’s decision on limiting use of the state budget in 2020 (In Croatian: Odluka o ograničavanju korištenja sredstava predviđenih Državnim proračunom Republike Hrvatske i financijskim planovima izvanproračunskih korisnika Državnog proračuna za 2020. godinu).

Please see here for the full text of the Ministry of Economy, Entrepreneurship and Crafts recommendation to contracting authorities on the requirements and delivery of the bid guarantee (in Croatian: Preporuke Ministarstva gospodarstva, poduzetništva i obrta u vezi s pitanjima propisivanja i dostave jamstva za ozbiljnost ponude u novonastaloj situaciji izazvanoj epidemijom Corona virusom).

Please see here for the Ministry of Economy, Entrepreneurship and Crafts recommendation to contracting authorities on public opening of bids (in Croatian: Preporuka Ministarstva gospodarstva, poduzetništva i obrta u vezi s provedbom postupka javnog otvaranja ponuda u novonastaloj situaciji izazvanoj epidemijom Corona virusom).

Please see here for DKOM’s decision on communication with clients during the Covid-19 crisis.

All documents are only available in the Croatian language.

1 Zagreb, the capital of Croatia was heavily hit by an earthquake on 22 March 2020, which caused a lot of damage in the city.