The Amending and Supplementing Act of the Bulgarian Concessions Act ('The Act'/ 'The Amending and Supplementing Act'), promulgated on 26 February 2021 introduced a number of legislative amendments, related to Bulgaria’s obligation to transpose Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (the 'Directive') into its national law. The amendments follow a letter of formal notice sent to Bulgaria by the European Commission, implying that the Bulgarian transposition of the Directive is not in full compliance with its text. Thus, a significant part of the changes focuses on clarifying certain terms. Nevertheless, the following key changes have also been introduced with the Act:
► Only ministers and mayors (of municipalities) can be concession grantors;
► The concession for use is repealed;
► The possibility to grant concessions in the field of defence and security is repealed;
► The criteria for granting concessions are changed and a new section X 'a' of Chapter Three is created;
► The liability of third parties, whose capabilities are used to prove compliance with the requirements for financial and economic standing is changed.
With the adoption of the Amending and Supplementing Act, the term public authority is replaced by the terms contracting authority and contracting entity. To clarify the new terms, a number of definitions are introduced, which fully correspond to Art. 6 and Art. 7 of the Directive. The most important of these are: 'dominant influence'; 'exclusive right'; 'local authorities'; 'regional authorities'; 'affiliated undertaking'; 'special right'; and others.
The authorities exercising the powers of a concession grantor are also explicitly indicated - these can only be a minister or mayor. In case the contracting authority or the contracting entity is neither a minister nor a mayor, the award of the concession is carried out under the procedure of the Public Procurement Act (Art. 3, para 2 of the CA).
Moreover, a new type of concessions has been introduced – sectoral concessions. They are awarded when the works or services subject of the concession is intended for the execution of one of the “sectoral activities” listed in Annex No 2 of the CA.
The amendments also provide an answer to the key question of whether concessions can be granted in the fields of defence and national security. The previous version of the Concessions Act contains an exhaustive list of all contracts in the fields of defence and national security, which are excluded from its scope. With the adoption of the latest amendments, however, the legislator embraces another approach, introducing a new paragraph 2 of Art. 24 of the CA, pursuant to which no concessions are granted in the fields of defence and security. In this way, any possibility of granting a concession in these areas is excluded.
Amendments in the existing rules for determining the criteria for granting concessions are also envisaged by the Act. It contains a new paragraph 3 of Art. 69, which prohibits the determination of "highest amount of investment" as award criteria.
The Act’s amendments related to the possibility of changing the award criteria set by the concession grantor are even more significant. They are introduced with the creation of the new section X "a" of Chapter Three of the CA with Art. 115a and Art. 115b. The need to clarify the already existing provisions in this area is caused by Bulgaria’s obligation to correctly transpose the Directive and the rules for determining the criteria for awarding concessions regulated in Art. 41, para 3 thereof. The first item of paragraph 3 imposes an obligation on the contracting authority or contracting entity to list the objective criteria on the basis of which the concession is awarded in descending order of importance. Item 2, on the other hand, regulates the possibility to change the order of the criteria relevant to the award, upon receipt of a tender that offers an innovative solution with an extremely high level of functional performance. Prior to the latest amendments, the CA only provided for the obligation of the concession grantor to determine the award criteria according to their importance (Article 70, paragraph 1 of the CA), and did not provide for the possibility of changing them with the existence of an innovative solution. All this has contributed to the need for the introduction of the new section X 'a' of Chapter Three of the CA. Pursuant to Art. 115a, para. 2 of the CA, changes in the order of the criteria according to their importance can be carried out via:
► a decision to terminate the procedure, which includes a decision for conducting a new procedure for determining a concessionaire – in the case of an open procedure;
► a decision to issue an invitation to submit new tenders – in the case of competitive procedures with negotiation and competitive dialogues.
Moreover, Art. 115a, para. 2 of the CA introduces the requirement that no change in the criteria should lead to discrimination.
In the cases where the change is made via a decision for issuing an invitation for a new tender, the legislator envisages that along with the new tender are also determined:
► the changes in the order of the award criteria according to their importance;
► the changes in the importance of the award criteria;
► the deadline for submission of new tenders, which may not be shorter than 22 days.
The invitation and the decision are sent to all participants who have submitted a tender for the procedure (Article 115b, paragraph 3 of the CA).
The previous version of the CA defines the award of a concession for use as the possibility to grant an economic operator the right to carry out a particular economic activity using a facility constituting public state property or public municipal property, without entrusting the execution of works or the provision and the management of services. The concessionaire pays the grantor a concession fee and undertakes to implement an investment program, which ensures the maintenance of the facility in operational suitability (Art. 9 of the CA, repealed – SG, issue 17 of 2021 from 26.02.2021). With the adoption of the Amending and Supplementing Act the possibility of awarding concessions for use is revoked. One of the reasons for this is that such a possibility makes it difficult for a concession grantor to determine exactly what type of concession should be awarded. This is motivated by the application in practice of the previous version of the Concessions Act. It shows that when determining the minimum requirements for the content of the investment program of each concession qualifying as a concession for use, the implementation of construction and installation works (included in Appendix No 1 of the CA) is always included.
Besides, when granting this type of concessions, it is necessary to maintain the provided facility in operational suitability, and this inevitably implies performance of an asset management service at the very least. Therefore, in practice, each concession for use that has been awarded so far includes the execution of construction and the provision of at least one service - circumstances which strongly contradict the definition of contracts for use introduced by the legislator in Art. 9 of the previous version of the CA.
The previous text of Art. 63, para. 3 of the CA envisions that third parties, whose capabilities are used to prove compliance with the requirements for financial and economic standing bear several liability with the concessionaire for the performance of the concession contract, taking into account the nature and amount of the commitment undertaken by the third party for provision of resources. With the latest amendments, however, this several liability is presented as an opportunity, not as an absolute rule. The new text of para. 3 provides for a concession grantor to decide for themselves whether the third party will bear several liability or not, by placing such a requirement when announcing the initiation of the procedure or in the documentation itself.
With the adoption of the Act, the Bulgarian legislator responds to the critiques made by the European Commission regarding the implementation of the provisions of European legislation in the field of public-private partnership in the national legal framework. At the same time, answers are given to a number of questions related to the application of the CA in Bulgaria up to this point.