Public procurement

What it means

Public procurement is the statutory process by which the state, municipalities and other contracting authorities buy goods, works and services. Procedure and deadlines follow the estimated value.

Unlike a private tender, a supplier cannot be chosen at will. Criteria are published in advance and the decision must be reasoned and open to review.

The circle of contracting entities is wider than it seems. The rules can apply to a private company too, if a substantial part of the money for a contract comes from public sources, typically in projects financed from EU funds; it then has to choose its suppliers by the statutory procedure, not at its own discretion.

How it works in practice

A bidder evidences its standing: no arrears to the tax office or insurers, an entry in the public sector partners register and professional capability.

Accounting matters for financial standing too: turnover, equity and financial statements filed with the register. Unfiled statements can knock out a bid whatever its price.

On larger contracts the authority often asks for a tender security, which the company pays into an account or replaces with a bank guarantee. Arranging a guarantee takes time and the bank wants current figures, so we prepare interim statements for the client well before the bid deadline.

What to watch out for

An abnormally low bid must be explained or it can be excluded. Winning below cost is a route to losses anyway: prices change during performance only in narrowly defined cases.

Registration in the register of public sector partners does not end when the contract is signed: the data on ultimate beneficial owners must be verified on the occasions the law sets and kept up to date. An incorrect entry can lead to a fine and to the authority withdrawing from the contract.