The effectiveness of public procurement largely depends not only on a good knowledge of legislation, the subject of procurement, but also on the constant study of actual court practice. After all, if there are certain controversial points, you can use not only comments to the law, information letters of the Ministry, but also court decisions, in particular the Supreme Court.
And despite the changes to the institution of public procurement, which were reflected in the resolution of the CMU dated October 12, 2022 No. 1178, and the significant simplification of the procedure, the rules regarding provision, termination of the contract, qualification criteria, appeal features remain. Therefore, the issue of constant research and analysis of the positions of the courts remains relevant.
That is exactly why we bring to your attention an analysis of judicial practice in the field of public procurement.
Can AMCU, as an appeals body, during the review of the complaint and the rendering of a decision on it, independently identify other violations than those stated in the complaint? No, because the appeals body is not authorized to go beyond the complaint and the information submitted by the complainant, in particular, it is not authorized to independently identify other violations (SEC resolution of April 7, 2020 in case No. 826/16611/17).
However, the AMCU may render a decision not in accordance with the content of the requirements specified in the complaint (for example, to oblige the customer to cancel the procurement procedure instead of canceling the customer's decision to reject the offer) – the position was confirmed by the SC in the decision of July 14, 2022 in case No. 640/2727 /20.
Under what conditions is a state enterprise a "customer" within the meaning of the Law and subject to the need to make purchases in accordance with the procedure established by the Law?
The very fact of creating a state enterprise and securing state property for it, as a way of realizing the needs of the state, counts such an enterprise into the category of "customers" within the meaning of the Law (the Supreme Court's position in the resolution dated September 23, 2021 in case No. 907/576/19).
When formulating the requirements and conditions of the tender documentation, in particular regarding the qualification criteria, does the plural mean the mandatory presence of two or more elements? Yes, in particular, this was established in the decision of the OASK of Kyiv dated November 30, 2021 No. 640/25903/19. Therefore, if the tender documentation contains wording, for example, that the participant must provide copies of similar contracts to confirm the experience of their implementation, then at least 2 copies of executed contracts should be provided.
Can the very fact of concluding a contract, but for which no confirmation of completion of this similar contract has been provided, be considered as meeting the qualification criteria for confirming the execution of a similar contract? By itself, the fact of concluding a contract does not prove its execution and therefore does not confirm compliance with the qualification criterion regarding the presence of documentary evidence of experience in the execution of a similar contract (Court resolution of August 5, 2021 in case No. 910/1520/20).
In the case of changes to the tender documentation, even minor ones, do participants who have already received guarantees need to make changes to them? Yes, because the tender documentation of the customer in the latest version (after all possible changes) at the time of the deadline for submitting proposals is the document from which the basic relations between the guarantor bank and the principal arise (Decision of the Sixth Administrative Court of Appeal dated 11.08.2021 No. 640 /28053/20).
Is it considered a formal error in the participant's tender offer if an incomplete (not all pages) copy of the employee's employment book is submitted in its composition if there is an order on his employment? Incompleteness of a copy of the work book (not all pages) as part of the tender offer, if there is an employment order in it, is a formal error and, accordingly, is not a reason for rejecting the tender offer (the decision of the Supreme Court dated 19.05.2022 in case No. 200/11480/20- and).
Is it possible to interpret as a formal error the lack of information regarding the status of the taxpayer in the draft contract provided by the participant as part of the tender offer? Yes, because such information is contained both in open registers and in other documents provided by the participant (ruling of the Third Administrative Court of Appeal dated 04/14/2021 in case No. 160/2135/20).
Can the State Audit Service in the conclusion based on the results of the monitoring demand to terminate the contract? According to subsection 20, paragraph 6 of the Regulation on the State Audit Service of Ukraine, the State Audit Service, in order to fulfill the tasks assigned to it, has the right to raise with the relevant state bodies the issue of invalidating contracts concluded in violation of the law.
On the other hand, regulatory and legal acts do not directly establish the authority of financial control bodies to oblige until the termination of the business contract.
Also according to Art. 651 of the Civil Code of Ukraine, the change or termination of the contract is allowed only with the consent of the parties, unless otherwise established by the contract or law. The contract may be amended or terminated by a court decision at the request of one of the parties in case of significant breach of the contract by the other party and in other cases established by the contract or the law. A similar norm of Part 1 of Art. 188 of the Civil Code of Ukraine also states that unilateral changes and termination of business contracts are not allowed, unless otherwise provided by law or contract.
Therefore, a business contract, in particular a purchase contract, can be terminated only by agreement of the parties or by court order. At the same time, the legislation does not establish the authority of financial control bodies to oblige business entities precisely to terminate the business contract.
The court separately also noted that, noting in the conclusion that it is necessary to take measures specifically for the termination of the contract, which is not consistent with the wording of the Regulation on the State Audit Service, the State Audit Service also did not determine the method of eliminating violations detected during monitoring (judicial or extrajudicial), which indicates its vagueness and uncertainty.
The urge of the plaintiff to independently determine, on the basis of undefined norms, what measures should be taken to eliminate the detected violations, can also lead to a new possible violation by the plaintiff of the current legislation (Decision of the Lviv District Administrative Court of October 20, 2020 in case No. 380/1501/20.
Is the Conclusion of the State Audit Service on the need to terminate the contract a sufficient basis for terminating the purchase contract at the request of the Customer in court, in particular after the actual execution of the contract? The court noted that the Customer, as a plaintiff, did not prove the presence of all four conditions defined in Part 2 of Art. 652 of the Civil Code of Ukraine, as well as the presence of a significant change in circumstances as a prerequisite for terminating the contract in accordance with Part 1 of Art. 652 of the Civil Code of Ukraine. At the same time, the presence of the Opinion of the State Audit Service cannot be considered a significant change in such circumstances and be the only reason for terminating the Contract at the request of the Customer (Court Decision No. 911/2183/21 of October 18, 2022).
Conclusions
Therefore, after analyzing the judicial practice, we can come to the conclusion that quite often the state authorities and customers interpret the provisions of the legislation at odds with the positions of the courts. The study of judicial practice and the constant improvement of the actions and decisions of the State Audit Service, the Antimonopoly Committee, as well as customers and bidders, will be able to minimize the number of further appeals and obtaining a negative result for a certain subject.