Concessions & Public Procurement

This section covers in details the regulation of concessions and public procurements in Bulgaria.

Concessions

The applicable legislation which currently governs the the terms and procedure for the granting, performance and termination of concessions is the Concession Act which has been in force since June 2006. Thus, Bulgarian legislation in this field is harmonized with the EU legislation. National Concession Register keeps track of all the concluded agreements for concession in Bulgaria.

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Concession is the right to exploit a facility and/or a service of general interest, conceded by a concession granting authority to a person engaged in commercial activity - concessionaire, under the concessionaire's obligation to construct and to manage, and maintain the subject of the concession or to manage the service at the concessionaire's own risk. A concession can only be granted on the basis of a long-term agreement in a written form involving a particular material interest, concluded between the concession granting authority and the concessionaire. Depending on its object, a concession may be: (a) public works concession; (b) public service concession; (c) extraction concession. The maximum term of a concession is 35 years.

First, the public works concession has as its object the partial or total building of the subject of the concession and the management and maintenance of the said subject after its commissioning, with the consideration consisting in the concessionaire's right to exploit the subject of the concession or in that right and compensation on the part of the concession granting authority under the respective provisions of the Concession Act. The concessionaire's right to exploit the subject of the concession includes the provision of a service of general interest and/or the performance of other economic activities in consideration of obtaining revenue.

Second, a service concession has as its object the management of a service of general interest at the concessionaire's own risk, with the consideration consisting in the concessionaire's right to exploit the service or in that right and compensation on the part of the concession granting authority under the respective provisions of the Concession Act. The concessionaire's right to exploit the service of general interest includes the provision of services and/or the performance of other economic activities against obtaining revenue.

Third, an extraction concession has as its object the exploitation of natural resources by means of extraction effected on resources ensured by the concessionaire and at the concessionaire's own risk. Subsurface resources extraction concession is granted under the terms and according to the procedure established by the Subsurface Resources Act. As a matter of principle, the Concession Act applies to the performance and termination of a subsurface resources extraction concession, save insofar as otherwise provided for in the Subsurface Resources Act.

Grantor of any concession under the Concessions Act may be the Council of Ministers, for assets constituting state property; or the Municipal Council, for assets constituting municipal property; or a public law organization, represented by a body in accordance with its act of establishment – in regard to facilities in its ownership; or water supply and sewage associations established under the Water Act.

The granting of a concession includes taking preparatory steps, then, conducting a concession granting procedure, and lastly, conclusion of a concession agreement. The concession granting procedure includes adoption of a decision to initiate a concession granting procedure; conducting an open procedure for granting a concession, and finally a selection of a concessionaire. Below attention will be paid to the concession granting procedure, choosing of a concessionaire and concluding an agreement with a concessionaire.

Concession Granting Procedure;

Some basic principles must be observed in the process of granting a concession, and namely, public openness and transparency, free and fair competition, and equal treatment of all participants in the concession granting procedure and non-discrimination. The law explicitly provides that the concessionaire must be elected through an open procedure. The commission responsible for conducting the concession granting procedure conducts a selection of all the candidates permitted to participate in the procedure on the basis of criteria set in the Concession Act. When conducting a concession granting procedure, the criterion applied in the evaluation of participants’ proposals is the most economically advantageous proposal. The most economically advantageous proposal is determined on the basis of an integral evaluation of the tender under the criteria specified in the decision and in the notice of initiation of a concession granting procedure. The procedure and time limits for organizing and conducting a concession granting procedure is established by the Regulations for Application of this Act.

Choosing a Concessionaire;

The authority which organizes the conduct of the concession granting procedure submits to the concession granting authority a report and a draft decision on selection of a concessionaire within a time limit determined by the order on appointment of the commission responsible for the concession. The memorandum of the commission, containing all reasoned decisions of this commission, is attached to the report. On the basis of the report and the memorandum of the commission, after an individual review of the facts and circumstances set forth therein, the concession granting authority adopts a decision on selection of the highest ranked tenderer as a concessionaire.

Concluding Concession Agreement;

The concession agreement is concluded without conduct of negotiations in accordance with the draft included in the documents for the bid and with the tender proposal of the highest ranked tenderer. In the cases where the best-ranked participant in the concession procedure declines to conclude the concession agreement, the agreement may be concluded after holding negotiations with a view to improving the proposals as per the comprehensive tender evaluation criteria. The said negotiations are conducted with the second ranked participant. The concession agreement is concluded in writing in at least three originals: one for each of the parties and one for the National Concessions Register. The concession agreement is terminated upon expiry of the period of the concession.

Public Procurement

Public Private Partnership in Bulgaria is basically regulated by the Public Procurement Act. The Minister of Economy, Energy and Tourism carries out the state policy in this area. Public Procurement Agency assist the Minister of Economy, Energy and Tourism in the implementation of the state policy in the sphere of public procurement. All public procurements are recorded in the Public Procurement Register which is public.

The Public Procurement Act establishes the principles, terms and procedure for the award of public procurements for the purpose of ensuring efficiency in the spending of on-budget and off-budget resources, as well as of the resources associated with the carrying out of relevant public activities specified in the Act. As with concessions, the basic principles which must be observed in granting public procurements are public openness and transparency, free and fair competition, equality and non-discrimination.

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Subject matters of public procurement can be:

  • supply of goods, performed by means of purchase, lease, rental with or without option to buy, or hire purchase, as well as all preliminary operations as will be necessary for the actual use of the products, such as installation, testing of machinery and plant, etc.;

  • provision of services;

  • works, including:

(a) building or civil engineering (design and construction) of building works;

(b) realization or design and execution, by whatever means, of one or several construction and installing works covered under the Procurement Act annexes, related to the construction, redevelopment, remodelling, maintenance, restoration or rehabilitation of buildings or construction facilities;

(c) integrated engineering services and realization, by whatever means, of one or more activities related to construction of building works in compliance with the requirements of the contracting authority, such as feasibility study, design, organization of building, supply and installation of machinery, plant and technical equipment, preparation and commissioning of works.

Contracting authorities are obligated to conduct a public procurement award procedure where the grounds provided for in the law exist. Contracting authorities or officials authorized thereby organize and conduct the public procurement award procedures and conclude public procurement contracts. Authorization may not be used to split public procurements for the purpose of circumventing the application of the law.

The terms and procedure for public procurement awards, established in the Public Procurement Act, are applied compulsory upon award of public procurements which have the following values, free of value added tax:

  • in respect of works: not less than BGN 2,150,000 and, where the place of performance of the procurement is outside Bulgaria, not less than BGN 6,000,000;

  • in respect of supplies: not less than BGN 180,000 and, and, where the place of performance of the procurement is outside Bulgaria, not less than BGN 250,000;

  • in respect of services: not less than BGN 110,000 and, where the place of performance of the procurement is outside Bulgaria, not less than BGN 250,000;

  • design contest: not less than BGN 110,000.

The value of a public procurement is fixed as of the date of the decision to initiate a public procurement award procedure.

Public procurements can be awarded by means of:

  • an open procedure, in which all interested parties may submit tender proposals;

  • a restricted procedure, in which only qualified candidates invited by the contracting authority may submit a tender proposal;

  • a competitive dialogue, in which any interested party may request to participate and whereby the contracting authority conducts a dialogue with the qualified candidates admitted to that procedure, with the aim of developing one or more suitable alternatives capable of meeting the requirements of the contracting authority, and on the basis of which the contracting authority invites the candidates with suitable alternatives to tender.

  • negotiated procedures can be:

(a) a negotiated procedure with publication of a contract notice, whereby the contracting authority conducts negotiation for determination of the terms of the contract with one or more qualified participants selected by the contracting authority;

(b) a negotiated procedure without publication of a contract notice, whereby the contracting authority conducts negotiations for determination of the terms of the contract with one or more specific persons.

Common Rules for Public Procurement Award;

Contracting authorities dispatch a prior information notice of all public procurement award procedures which they envisage to initiate during the following twelve months to the State Gazette for publication on its Internet site and to the Public Procurement Agency for entry into the Public Procurement Register or publish such prior information notice on the buyer profile:

  • for supply of goods and for services under specified under the Public Procurement Act, differentiated by category, where the total value, net of value added tax, for the relevant category of goods or services, is greater than BGN 450,000;

  • for works, where the total value of the procurement, net of value added tax, is greater than BGN 2,150,000 and, where the place of performance of the procurement is outside Bulgaria, greater than BGN 6,000,000.

The contracting authority adopts a decision to initiate a public procurement award procedure, whereby the contracting authority approves the contract notice and the contract documents. Any such decision and notice is dispatched to the Public Procurement Agency for registering into the Public Procurement Register on an electronic data medium as well.

The contracting authority appoints a commission for the conduct of a public procurement procedure, designating its composition and choosing members.

The contracting authority selects the supplier, contractor or service provider of the public procurement on the basis of evaluation of the tender participants under one of the following criteria as indicated in the notice: the lowest price tendered, or the most economically advantageous tender.

Public Procurement Contracts;

The contracting authority concludes a written public procurement contract with the tenderer who or which has been selected as supplier, contractor or service provider as a result of the procedure conducted. The public procurement contract includes compulsorily all proposals contained in the tender of the tenderer on the basis of which the said tenderer has been selected as supplier, contractor or service provider. Public Procurement contracts of indefinite period are not allowed. The parties to a public procurement contract may not amend the contract, subject to very restricted exceptions specified in the Public Procurement Act.

Common Rules for Participation in Public Procurement Award Procedure;

Every candidate or participant that complies with the previously announced criteria of the public procurement procedure can participate in its award. In preparing the tender proposal, each tenderer must strictly observe the terms and conditions announced by the contracting authority. Each participant or candidate can submit only one tender proposal. The tender proposal must be submitted in an sealed opaque envelope by the tenderer or by an authorized representative thereof, in person or by registered mail with advice of delivery. Each candidate or tenderer provides a guarantee for participation in the public procurement award procedure, and the candidate or tenderer that has been selected as supplier, contractor or service provider, provides also a performance guarantee upon signature of the contract.

Project Contest;

The Public Procurement Act applies to project contests organized as part of a procedure for the award of a public procurement of service or with prizes and/or payments to participants in the contest. Such contest must be organized for acquisition of:

  • a spatial-development concept for preparation of a spatial-development scheme, a spatial-development plan, a land-distribution plan, or a forest-management project;

  • a conceptual project for the preparation of projects, including landscape, architectural, structural, technological, utility-system designs, as well as designs for works of art and for restoration and renovation of cultural property;

  • designs in the sphere of data processing;

  • other designs.

Control over the compliance of public procurements with the provisions of the Public Procurement Act is exercised by the National Audit Office and by the authorities of the Public Financial Inspection Agency.

Under the rules and procedures, envisaged by the Public Procurement Act and the Concessions Act, the Commission on Protection of Competition examines the appeals on lawfulness of a decision, actions or lack of actions/omissions of the contracting authorities or concessioners in the public procurement or concession awarding procedure

For more information about doing business in Bulgaria, see the complete text of our Guide.