The Ministry for Regional Development and the Office for the Protection of Competition have issued a joint opinion on concluding banking contracts in connection with the fall of Sberbank. The document summarises situations in which entities awarding public contracts may avoid standard procurement procedures and make use of some exceptions foreseen in the law, as otherwise they would be under the general obligation to award public contracts in a procurement procedure.

Exception for credits and loans
The first exception concerns credits and loans. If the contracting entity wishes to apply for a credit or a loan with a bank, they shall not be obliged to award the respective contract in a procurement procedure: they may conclude the contract with the bank directly. If, however, the banking services also include supplies other than the provision of a credit or loan, and such other supply would otherwise have to be awarded in a procurement procedure (a ‘mixed contract’), the contracting entity must award the contract for such supply via a procurement procedure, either separately or together as one public contract.

Small-scale public contracts
Another exception to the obligation to award a banking contract in a standard procurement procedure concerns small-scale public contracts (i.e., contracts with an estimated value of up to CZK 2 million). If the contracting entity wishes, for instance, to conclude a new contract on a current account, it shall not be necessary to do so via a procurement procedure if the total amount of the consideration for the opening and maintenance of such an account (e.g., fees, commissions, interest and other related payments to the bank) does not exceed CZK 2 million in four years. In practice, this exception will mainly apply to current and savings accounts.

Use of negotiated procedure without prior publication
A third way to avoid the standard procurement procedure is to use a negotiated procedure without publication. This is the least transparent type of procurement procedure, and strict conditions are stipulated for its use. One of them is its use has become necessary due to 'extremely urgent circumstances' which the contracting entity could not have foreseen and did not cause, and that due to a lack of time it is impossible to observe the time limits for standard (more transparent) types of procurement procedures. The ministry and the Office for the Protection of Competition admit that using this procedure may indeed be necessary due to the termination of the provision of services by some banks with ties to Russia, which is also the case of Sberbank. However, to be able to use the negotiated procedure without prior publication, contracting entities must initiate the procurement procedure as soon as possible, without undue delay. A contract can then be concluded only for the period until a standard procurement procedure can be carried out.
 

Tomáš Kočař tkocar@kpmg.cz +420 222 123 658

Karolína Kubíčková kkubickova@kpmg.cz +420 222 123 306