Petroleum Club of Romania Wake-up Call on Public Procurement

We are going through complicated times, probably unique in the last 30 years and since the apparition of the current public procurement concept in Romania.

According to Petroleum Club of Romania (PCoR), consultation with potential tenderers, provided by the law (Law No. 208/11.07.2022, updating Law No. 98/2016), is missing. “Before initiating the award procedure, the contracting authority has the right to organize market consultation in order to prepare the procurement, by reference to the object of the public procurement contract, and to inform economic operators on procurement plans and the requirements envisaged in relation to them, making this known through SEAP, as well as by any other means”.

Therefore, within consultation, formulas, indices etc. to adjust prices, the validity of the tenders, technical specifications could be agreed upon. There were big projects, in which this was realized at least partially, eliminating part of the errors/exaggerations. In most cases however, consultation does not take place, and this leads to unattractive documentations, risky for the tenderers. The risk is for the one who does not carefully read the documentation or the one who assumes disproportionate risks to win. But the goal is to realize the project within the budget, under the terms provided in the documentation!

“Unfortunately, the notion of partnership with the tenderers (in the correct sense, not pejoratively) is lacking from the practice of many contracting authorities or entities. The understanding that the parties are in a partnership for the successful implementation of the project would help a lot the procurement process. Several entities or authorities treat the process from positions of strength, which is deeply harmful,” PCoR representatives emphasize.

Another negative aspect reported by PCoR is related to the existence in the market of requests to guarantee prices for very long periods, in conditions in which market volatility is extreme. Therefore, there are cases where producers guarantee a fixed price for a period between one day and one week – maximum one month, and customers request guarantee periods of at least six months or one year. This most often leads to losses at the contractor, decapitalization, or the impossibility to deliver. This leads to blockages, endless discussions, lower quality or even worse bankrupt companies, all these having as consequences blockages in project completion, loss of financing sources etc.

Also, the inflexibility in accepting solutions to renegotiate the contracts, based on market realities – international quotations, exchange prices etc. has a negative impact on producers’ activity.