Procurement for EXPO 2027 - no minimum deadlines and no legal protection

The Government of Serbia adopted a decree which, in accordance with the lex specialis, prescribes how procurement will be carried out and jobs awarded for EXPO 2027. Nemanja Nenadić from Transparency Serbia for N1 says that the differences between the rules prescribed by the Law on Public Procurement and this Decree are hidden in "trifles" - increased limits of the procurement value for which a public call is published, but also the absence of a prescribed minimum deadline for submitting bids.

"Thus, there is no obstacle for one of the special EXPO 2027 companies to announce a public call for the procurement of works worth 100 million euros and to ask interested companies to send their bids - by tomorrow," warns Nenadić.

The first thing anyone who knows the Law on Public Procurement will notice is that many provisions from that law were transferred in the 62-article-long government decree for procurement within the EXPO 2027 project.

A logical question here is why this was done if a special law for EXPO excluded the application of the Law on Public Procurement?", Nenadić points out.

The answer, he says, is partly hidden in the "little things", i.e. the differences noticeable in this Decree in relation to the Law on Public Procurement.

Two important differences

"The first important difference is that the limits for the implementation of the procedure for which the public call is published are higher than those foreseen by the Law on Public Procurement, so instead of the thresholds of one million dinars for services and goods and three million dinars for works, they are raised here several times – to 12 million dinars (for goods and services) and 24 million dinars (for works).

For the procurement of lesser value, three bids are collected (from companies of the client's choice) without publishing a public call."

"The other 'little thing' omitted in the Decree, which exists in the law, are the submission deadlines for bids. The contracting authority (special enterprise) must set some deadline for the submission of bids, but unlike the Law on Public Procurement and elementary logic for a public call of any kind, the Decree does not prescribe a minimum deadline that can be set. Thus, there is no obstacle for one of the special EXPO 2027 companies to publish a public call to procure works worth 100 million euros and ask interested companies to send bids by tomorrow, Nenadić warns.

For comparison, in the Law on Public Procurement, when it comes to more valuable procurements, the shortest possible deadline is 15 days if there is an exceptional urgency.

"The existence of the possibility of shortening deadlines in the Law on Public Procurement is a key indicator that the application of this law is not excluded due to the alleged urgency of construction on the EXPO 2027 project, but for another reason – the desire to avoid any possibility of challenging decisions on awarding contracts".

Who will protect other bidders?

A far bigger problem than the bad solutions from the Decree is what is not – and not could be – regulated in that act, and that is the protection of the rights of bidders.

"As Transparency Serbia warned immediately as soon as the proposal of the Law on EXPO 2027 appeared on the Parliament website (there was no previous public hearing or announcement), the only reason that the Government could have had to propose to exclude the application of the Law on Public Procurement is precisely the intention to exclude the possibility of legal protection if the conditions of procurement are adjusted or rules are violated when selecting contractors," Nenadić explains.

The fact that the Decree transcribed principles from the Law on Public Procurement, such as the prohibition of discrimination, has no significance in a situation when a company that was interested in getting a job but could not do so  – has no one to complain to, Nenadić reasons.

Namely, when procurement is carried out according to the regular law, a request for the protection of rights is submitted, first to the contracting authority and then to the Commission for the Protection of Rights in Public Procurement Procedures.

"Even if the public stood up or some other state body noticed that the conditions and criteria of procurement were furnished, there would not be a single legal mechanism through which the contracting authority could be obliged to cancel such procurement, i.e. it would only be a matter of his goodwill," Nenadić said.

Unconstitutional article of the EXPO law

Transparency Serbia submitted to the Constitutional Court an initiative to challenge the constitutionality of Article 14 of the Special Law for EXPO, which describes in detail the violations of procedures during the adoption of the law, the unconstitutionality and the harmfulness of its provisions.

"In addition to the fact that the exclusion of the application of the Law on Public Procurement is controversial due to Serbia's international obligations, and above all, the Stabilisation and Association Agreement with the EU, the authority of the Government to adopt this decree is beyond doubt unconstitutional," Nenadić highlights.

Article 14 of the Special Law authorises the Government to "more closely regulate" the procurement procedure for special EXPO companies.

"But legally, it is impossible to 'more closely regulate' something that is not regulated by law at all," Nenadić ads. And the Government passed the Decree regarding this provision precisely.

"In some of its earlier decisions, the Constitutional Court has abolished norms that had the same disadvantage, and therefore, one does not see the possibility of doing otherwise in this case. The only question remains whether the Constitutional Court will consider this initiative in a timely manner and whether it will suspend the application of the disputed provisions until its decision is made or will decide on it only when all procurement for the EXPO have already been contracted and when it is too late to prevent the damage expected to occur due to restrictions of competition for obtaining these jobs".

Lex Specialis

A special law – Lex Specialis "on special procedures for the realisation of the international specialised exhibition EXPO Belgrade 2027" was adopted at the end of October last year.

The law reads: "The realisation of the EXPO Belgrade 2027 project represents a general interest of importance for the overall economic development of the Republic of Serbia. All procedures carried out in accordance with the provisions of this law shall be considered urgent, and all state authorities and bodies of local self-government units, companies, as well as other bodies and institutions exercising public authority, are obliged to issue acts within their competence without delay".

Transparency Serbia initially warned that the works for the construction of the exhibition space for EXPO 2027, facilities for the accommodation of participants and visitors, the National Stadium and the accompanying infrastructure will be contracted without the application of the Law on Public Procurement "which creates a great risk that the costs will be higher than they would otherwise be."

"This 'recipe' has already been tried in several other cases, the most famous of which are 'Belgrade Waterfront', 'Moravian Corridor' and (unrealised) 'South Stream'. Due to the exclusion of the Law on Public Procurement and in the case of application of discriminatory conditions in the selection of contractors, it will not be possible to challenge it before any state body," Transparency Serbia stated at the time.

This Lex Specialis refers to the realisation of the specialised exhibition EXPO BELGRADE 2027, as well as the construction of the National Football Stadium and residential buildings for accommodating participants and visitors.

Recently, Minister of Finance Siniša Mali stated that a "completely new city" is being built in Surčin for the needs of the EXPO 2027 exhibition, which will, in addition to the fair, the National Stadium and apartments, include the new Aquatic Center for water sports with swimming pools, ski jumps...

And the future costs have already increased.

Costs are even higher

Presenting the "Leap into the Future - Serbia 2027" plan, Serbian President Aleksandar Vučić said on January 20 of this year that EUR 17.8 billion will be invested in its implementation.

That is significantly more than the original EUR 12 billion, announced only half a year earlier.

Big announcements also brought new questions: Do these promises have a foothold in reality, or will the state, as the Fiscal Council has already estimated, "bury" in debt?