Eng. Adriana Spassova
MSc Construction Law & Dispute Resolution King’s College London
Member of BACEA Control Board, Member of FIDIC and EFCA
DRBF Country Representative
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
• The PPA establishes the principles, terms and procedures for
public procurement, ensuring efficiency in the spending of
public resources. (PPA Art.1)
• The Ministry of Economy is responsible for the public
procurement.
• The Public Procurement Agency (PP Agency) is a special
body, responsible for the draft legislation, the implementing
of EU directives, the methodology for their implementation
and keeping a national public contracts register.
• The Public Financial Inspection Agency and the National
Audit Office are monitoring the proper implementation of
the public procurement legislation.
http://europa.eu/youreurope/business/public-tenders/tools-database/index_en.htm#bulgaria_en_benefiting-from-public-contracts
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
The Public Procurement Portal is a centralized information
system, providing access to all aspects of public procurement.
The e-Register kept by the PP Agency contains:
• decisions on opening and closing public contract selection
procedures, as well as decisions to extend submission
periods for bids or expressions of interest;
• notices intended for entry in the register;
• information about awarded public contracts;
• information about completed public contract agreements;
• other information.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Statistics for construction contracts awarded in 2014
Source: Public Procurement Portal
1 EUR = 1.95583 BGN
Threshold (excl. VAT)
> 2 150 000 BGN
No.
Contract Amount
319 2,052,152,505.28 BGN
1132
798,938,990.17 BGN
1657
83,862,010.39 BGN
2
213,356.61 EUR
• Contracts with FIDIC conditions (Red or Yellow Book): about
1% of the value of the awarded works contracts in 2014;
• FIDIC used for transport, waste and water projects.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA
• Usually a new Clause 21 is added in the Particular
Conditions, stating that all agreements and future actions
of the parties shall be interpreted pursuant to the PPA.
• The starting point is the mandatory PPA Art.43(1): The
parties may not modify a PP Contract! For pity, in many
cases this is the mantra repeated by employers within the
PPA ambit… Working with the lowest EU salaries in a
constantly changing environment (5 government for the
last two years, more than 60 amendments of the Spatial
Development Act (SDA) and more than 30 amendments of
the PPA for the last 10 years), the responsible officers
prefer the narrow interpretation of the PPA.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA:
Including “Options” in the contract conditions pursuant to
PPA Art. 15(2) 3., within the marginal Contract Price:
• Option clauses permitting time extension.
• A provision for additional % (usually 5÷15) of the
Accepted Contract Amount per FIDIC SC 1.1.4.1 to
be stated in the tender documents as an amount
for “unforeseen costs” and to be available for
adjustments in accordance with the Contract,
limiting the margin of the Contract Price per FIDIC
SC 1.1.4.2;
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA: EOT Options
• FIDIC mechanism to be used. “Time for Completion” per FIDIC SC
1.1.3.3 means the proposed time for completion, used as a selection
criterion, with any extension under SC 8.4, calculated from the
Commencement Date. (Attachment 3 to Art.47a (4) of the Regulations
for the PPA Implementation (31): “The time for completion may be
fixed or definable”);
Commencement
Time for Completion
EOT
State
Commissioning
• The Commencement Date per FIDIC SC 1.1.3.2. to be the Date for the
Commencement of Construction, pursuant to the SDA (the SDA Site
Opening to be harmonised with FIDIC SC 2.1);
• Harmonising the Taking-Over procedure with the SDA – different
trends, sometimes disbalancing the contract, due to the state
commissioning procedures with uncertain deadlines;
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA: EOT
• Suspension of the works, signing the relevant Act 10 per
Regulation 3 for acts and protocols during construction in
case of unfavourable climatic conditions (FIDIC SC 8.4),
unforeseeable physical conditions (FIDIC SC 4.12) or other
unforeseen circumstances (e.g. Force Majeure FIDIC Clause
19). Instead of determining the Contractor’s entitlement to
EOT, the interpretation is that the Time for Completion is not
running until the Act 11 for the restarting of construction is
signed by the parties.
Commenc
ement
Time for
Completion
Suspension
Time for
Completion
State
Commissioning
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA:
Addendum to the contract
within the ambit of the PPA Art.43(2)exceptions:
“Unforeseen Circumstances”(defined in the PPA Additional
Provisions Para 1, 14b: have arisen after the contract was
signed; not a result of actions or non-performance of the
parties; could have not been foreseen, taking due care; make
impossible the execution of the contract) lead to:
• Extension of Time for Completion – FIDIC SC 8.4;
• Partial substitution of activities benefiting the Employer, not
increasing the Contract Price;
• Reduction of the Contract Price, reducing
or omitting activities or reducing rates;
• Changes in law increasing the Contract Price – FIDIC SC 13.7.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
FIDIC Claims and Variations under the PPA:
New public procurement procedure without announcement
• Additional works may be assigned to the Contractor under Art. 90 (1) 4
(Art.103 for infrastructure) in case of “Exceptional Circumstances”
when urgent actions are needed to mitigate the risks.
• Additional works, necessary for the main contract, may be assigned to
the same Contractor pursuant to Art. 90 (1) 8 (Art.103 for
infrastructure) in case of “Unforeseen Circumstances” not exceeding
50% of the Contract Price.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Problems
Candidates propose impossible Time for Completion
The Time for Completion is a mandatory selection criterion for the most
economically advantageous tender, pursuant to PPA Art. 28a para 2 (usual
weight 10%) and due to the lack of work, the candidates often propose
impossible time periods for design and construction.
Solutions:
• The minimum Time for Completion to be analysed in relation with the
proposed organisation and resource allocation, as well as the technical
specification and best practices, using the options listed under the PPA
Art. 28a para 3 to include such selection criteria.
• The minimum Time for Completion to be stated in the tender
documentation (in this case probably all candidates shall stick to it,
thus this criterion shall not actually participate in the selection of the
best tender).
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Problems
Self-restriction due to incompetent drafting of the contract
• The Time for Completion is fixed with a calendar date;
• The Contract Price is the Accepted Contract Amount and
cannot be changed;
• An Addendum has to be signed for each EOT.
Solutions:
• Competent persons to draft the tender documents;
• No last moment changes to be done by the contracting
authorities;
• FIDIC Particular Conditions for PP procedures to be agreed
and implemented for all major works contracts.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Problems
Legal uncertainty about the contract modifications
Solutions:
• The PP Agency to issue a more detailed guidance about the
application of the options;
• FIDIC contract conditions to be widely implemented, in
order to have a well-known transparent mechanism for
variations and EOT, to be interpreted as option clauses;
• FIDIC Clause 13 may be harmonised in the Particular
Conditions with the European case law for substantial
modifications, implemented in the new EU Directives.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Problems
Discrepancy between the grant and the works contracts
• In many cases the implementing agencies responsible for
the grants impose additional restrictions, which are not part
of the works contracts.
• In similar cases, using FIDIC contracts with the same
Particular Conditions, some employers may require an
addendum, others not, depending on the guidance of the
financing agency.
Solutions:
• Careful drafting and synchronisation;
• Sharing best practices between contracting authorities.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Problems
Subcontractors working “under cover”
The 2014 amendment of the PPA added new provisions to support SMEs:
• Named Subcontractors may be changed only if in default;
• Subcontractors to be present during the approval of the works and
• The Contractor to present evidence before the final payment, that it
has paid the Subcontractors for the approved works.
The big Contractors no longer name any Subcontractors! The Chamber of
Contractors argues that:
• The Contractor has to finance the project and
• Sometimes the Contractor has to finance the acceleration measures
and to be compensated, reducing the payments of the Subcontractors.
Solutions:
• The best practices from France and England to be reviewed.
Current Use of FIDIC under the Bulgarian Public Procurement Act (PPA)
Application of FIDIC conditions under the PPA: Conclusions
• FIDIC Conditions to be used for major works;
• Particular Conditions harmonised with the SDA and PPA to be drafted
after the harmonisation of the PPA with the new European directives;
• The PP Agency to issue a detailed guidance for the modifications;
• The education and training of the implementing agencies and
contracting authorities to focus on the project risk management.
Thank you!
Adriana Spassova
Partner EQE Control OOD, a company of ABS Group
Mobile: +359 888 464 928
Email: [email protected]
www.eqecontrol.com