TRANSPARENCY OF PUBLIC PROCUREMENT AND FUNDING OF PROJECTS OF PUBLIC INTEREST

1. TRANSPARENCY OF PUBLIC PROCUREMENT AND FUNDING OF PROJECTS OF PUBLIC INTEREST IN THE REPUBLIC OF CROATIA Zagreb, 2 December 2015

2. PUBLIC PROCUREMENT

3. Primary Legislative Framework of Public Procurement Systems in EU • An integral part of the Treaty Establishing the European Community (EC Treaty) • Directly governs the award of public contracts in the EU • Fundamental freedoms of the common internal market: • Free movement of goods (Article 28 of the EC Treaty); • Freedom of establishment (Article 43 of the EC Treaty); • Freedom to provide services (Article 49 of the EC Treaty). • Fundamental provisions and prohibitions: • Competition (Article 81 of the EC Treaty); • Prohibition of any nationality-based discrimination (Article 81 of the EC Treaty).

4. Legislative Framework of the Public Procurement System in the Republic of Croatia • Legislative framework of the public procurement system in the Republic of Croatia is based on the Constitution of the Republic of Croatia and is governed by four fundamental acts: • Public Procurement Act, OG 90/11, 83/13 and 143/13 • Concessions Act, OG 143/12 • Public Private Partnership Act, OG 78/12 and 152/14 • Act on the State Commission for Supervision of Public Procurement Procedures, OG 18/13, 127/13 and 74/14

5. Institutional Framework of the Public Procurement System in the Republic of Croatia

6. Public Procurement Act - Public Procurement Principles • Article 3 of the Public Procurement Act • In the implementation of public procurement procedures under this Act, in relation to alleconomic operators, contracting authorities/entities shall respect: • the principle of freedom of movement of goods • the principle of freedom of establishment • the principle of freedom to provide services • and the principles deriving therefrom: • the principle of competition • the principle of equal treatment • the principle of non-discrimination • the principle of mutual recognition • the principle of proportionality • the principle of transparency

7. The Principle of Transparency • All potential tenderers have an equal opportunity • Procurement opportunities are open to all interested parties • Local tenderers are not preferred • The procurement procedure is complete, objective • Procurement procedures are predictable • More information = bigger competition ………………………………………………………… • Objective: The public procurement system is reliable • Example: European Court of Justice, cases: C - 24/91, C -107/92, C-328/92, C - 318/92, C - 20/01 and C-84/03

8. PUBLIC PROCUREMENT NOTICES CONTRACTING AUTHORITIES • a contract notice, • a design contest notice, • a prior notice of the intention to award a contract, • a prior (information) notice, • a notice of the publication of the prior (information) notice on the contracting authority(buyer) profile, • a contract award notice, • a notice of the results of a design contest, • a notice of the intention to award a public works concession, • a notice of the intention to award a works contract by concessionaires which are not contracting authorities, • a notice for additional information, cancellation of the procedure or correction. CONTRACTING ENTITIES • a contractnotice, • a designcontestnotice, • a prior noticeoftheintention to award a contract, • a periodic (indicative) notice, • a noticeofthepublicationofthe prior (indicative) notice on thecontractingentity (buyer) profile, • a notice on theexistenceof a qualificationsystem, • a contractawardnotice, • a noticeoftheresultsof a designcontest, • a notice for additionalinformation, cancellationofthe procedure or correction.

9. ELECTRONIC PUBLIC PROCUREMENT CLASSIFIEDS OF THE REPUBLIC OF CROATIA • A service that: • enables contracting authorities/entities to electronically draw up and send for publication public procurement notices on standard forms and offer access to tender documents and potential supplementary documents; • publishes public procurement notices on standard forms and offers access to accompanying documents; • enables free examination and downloading of published public procurement notices and accompanying documents; • contains a database of all data from public procurement notices and enables their statistical processing. • Electronic Public Procurement Classifieds of the Republic of Croatia is established, managed and maintained by Narodne novine d.d.

10. https://eojn.nn.hr/Oglasnik/

11. OBJECTIVES OF THE E-PUBLIC PROCUREMENT STRATEGY FOR 2013-2016 Electronic public procurement (e-public procurement) is the comprehensive public procurement process based on the application of electronic communication means in public procurement procedures. • E-notice – drawing up, sending and publishing public procurement notices on standard forms in electronic format. • E-documents – electronic access to tender documents. • E-submission – electronic submission of tenders, requests to participate, applications for qualification and plans and projects. • E-auction – a repetitive process involving an electronic device for the presentation of new prices, revised downwards, and/or new values concerning certain elements of tenders, which occurs after an initial full evaluation of the tenders, enabling them to be ranked usingautomatic evaluation methods. • E-catalogue – an electronic document drafted by economic operators following the guidelines or schedule prescribed by the contracting authority/entity in a certain procedure which, in a structured manner, describes products and specifies prices. • E-evaluation – examination and evaluation of tenders, requests to participate, applications for qualification and plans and projects. • E-order – electronic system of ordering/delivery under concluded public contracts or frame agreements. • E-invoice and e-payment – issuing electronic invoices and electronic payment for public contracts or frame agreements.

12. E-PROCUREMENT DEVELOPMENT Public Procurement Act (2002, 2008, 2012, amendments 2013, 2014) Regulation on the Methodology for Drawing up and Handling Tender Documents and Tenders (2012) Strategy for the Development of the Public Procurement System in the Republic of Croatia (2008) and Action Plan for the Implementation of the Strategy (2008) Strategy for the Development of the Electronic Public Procurement in the Republic of Croatia 2013 – 2016 (2013) (www.javnanabava.hr)

13. 13 WHY? Strategy for e-procurement, EuropeanCommission, 2012 “E-PROCUREMENT maysignificantly simplifythewayprocurement is conducted, reducerisksanddeliverbetter procurementoutcomes (lowerprice, better quality) bystimulatinggreatercompetition acrossthesinglemarket. Itcanalsocontribute to solving twomainchallenges theEuropeaneconomyfacestoday: theneed to increasetheefficiency ofthepublicspendinginthecontextoffiscal constraintsandtheneed to find newsourcesofeconomicgrowth.” • The World Bank estimates that e-procurement may result in 6 – 13.5% savings of the total public procurement. • Contracting authorities/entities and bodies already transitioned to the e-procurement most often report on savings between 5 and 20% of their procurement costs. • Strategy for e-procurement: “to achieve a full transition to e-procurement in the EU by mid-2016”

14. DEFINITION AND OBJECTIVES • E-procurement is a system for electronic submission, receipt and opening of tenders, i.e. electronic handling of documents and forms in public procurement procedures, harmonised with the Public Procurement Act and integrated into the Electronic Public Procurement Classifieds. • The European Commission encourages implementation of e-procurement in the EU Member States in order to enable fully electronic business activities, with the goal of creating interoperability between the market and the public administration and strengthening the EU single market. • E-procurement stimulates speeding up of the public procurement process and a complete transition from paper to the electronic way of doing business.

15. ILLUSTRATION OF THE FULL IMPLEMENTATION OF E-PROCUREMENT

16. NECESSARY / SUPPLEMENTARY ELEMENTS • e-Certis (web confirmation storage) • advanced electronic signature e-catalogue (pre-award and post-award) E-archive / process completion

17. eCertis,http://ec.europa.eu/markt/ecertis/searchDocument.do?clean=trueeCertis,http://ec.europa.eu/markt/ecertis/searchDocument.do?clean=true • Information system which helps to find various confirmations and certificates often necessary in public procurement procedures in the 28 Member States, Candidate Country (Turkey) and three Member States of EEA (Island, Liechtenstein and Norway) • It is intended for contracting authorities/entities and economic operators in cross-border procedures • Reference tool, and not legal assistance service • Currently voluntary / soon to be obligatory

18. E-PROCUREMENT/ ADVANTAGES

19. E-PROCUREMENT / CHALLENGES • Questionable benefits for SMEs (small and medium-sized enterprises) • Insufficient IT knowledge, stakeholders' experience = invalid tender / unsuccessful procedures • Resisting change, fear of making mistakes • Dependence on Internet connection • System vulnerability or non-availability • Lack of standardised processes and documents (issuing of electronic documents by state and other institutions / guarantee) • Fees • Technical requirements for a digital signature • Longer period of adaptation to new forms and the system • Necessary additional education of contracting authorities/entities and tenderers

20. PLAN FOR INTRODUCING E-SUBMISSION Deadlines for introducing e-submission modules into public procurement procedures DUSJN – State Office for Central Public Procurement VV – procurement of high value (procurement whose estimated value is equal to or greater than the value of European thresholds) MV – procurement of lesser value (procurement whose estimated value is smaller than the value of European thresholds)

21. CHARACTERISTICS OF TRANSITION TO E-SUBMISSION • extension and upgrade of eOJN platform (reduced need of users adapting to new solutions); • gradual introduction of obligatory application of e-submission (enables adequate time for preparation of contracting authorities/entities); • necessary education of contracting authorities/entities and economic operators • e-submission without fees for economic operators • collection of a minimum fee for contracting authorities/entities (covering solely costs of system management and at the level of individual public procurement procedures) • obligatory use of the advanced electronic signature in e-tenders (reduction in security risks related to data integrity, pursuant to the Digital Signature Act) • application of adequate security standards in the development and management of eOJN platform (opinion of Zavod za informatičku djelatnost Hrvatske d.o.o.)

22. PROGRAMMES AND PROJECTS OF PUBLIC INTEREST

23. PROJECTS OF PUBLIC INTEREST - LEGISLATIVE FRAMEWORK • Budget Act, OG 87/08, 136/12 and 15/15 • Law on Financial Operations and Accounting for Non-Profit Organisations, OG 121/14 • Law on the Right of Access to Information, OG 25/13 and 85/15 • Associations Act, OG 74/14 • Regulation on the Criteria, Standards and Procedures for Financing and Contracting Programmes and Projects of Public Benefit Interest Implemented by Associations, OG 26/15

24. PROGRAMMES OF PUBLIC INTEREST • Programmes and projects of public interest implemented by associations in the Republic of Croatia can be funded from the state budget or other public sources • Programmes and projects of public benefit interest are • complete sets/set of activities with a clearly defined theme which are consistent with the values prescribed by the Constitution of the Republic of Croatia, and • whose implementation in a long-term or a time limited period provides for a visible added social value improving the quality of life of individuals and enhances development of a wider social community

25. REGULATION ADOPTION • Each year, more than HRK 1.5 billion is allocated from public sources for programmes and projects of associations, one billion of which is allocated by Local and Regional Self-Government Units • Adoption of the Regulation on the Criteria, Standards and Procedures for Financing and Contracting Programmes and Projects of Public Benefit Interest Implemented by Associations shall increase the transparency and responsibility in spending public funds • The Regulation entered into force on 17 March 2015. • The Office for Cooperation with NGOs has published a Manual on the Application of the Regulation

26. APPLICATION OF THE REGULATION • When financial resources from public sources are allocated to associations for: • implementing programmes and projects that achieve objectives and priorities defined in strategic and planning documents, • implementing national, regional and local programmes of public needs referred to in a separate act, • carrying out a certain public authority entrusted by a separate act, • providing a social service under a separate regulation, • co-funding a mandatory contribution of a funding beneficiary for implementation of programmes and projects contracted from European Union funds and foreign public sources, • supporting the institutional and organisational development of an association, • employment programmes or projects, • donations and sponsorships and • other forms and purposes of allocation of financial resources from public sources

27. APPLICATION OF THE REGULATION • Application also when non-financial support in rights, movable and immovable property is approved to associations • Provisions of the Regulation referring to associations also apply, in a corresponding manner, to foundations, private institutions, religious communities and other non-profit organisations, when they are, in accordance with the tender requirements, acceptable applicants, i.e partners

28. PUBLIC TENDER • Funding is conducted via a public tender or public call for funding programmes and projects of associations • Providers of financial resources publish their annual plan of issuing public tenders on their web-site which is then recorded in the comprehensive annual public tenders plan available on the web-site of the Office for Cooperation with NGOs • Public tender prescribes the following: • application criteria, • benchmarks for application evaluation, • procedure for awarding financial resources and • procedure for filing complaints

29. PUBLIC TENDER • Public tender is open for applying programmes or projects for at least 30 days from the day of publication • Public tender criteria is used for planning: • estimated number of programmes, i.e. projects to be financed and • the lowest and the highest amount which can be awarded for financing individual programmes, i.e. projects • The public tender defines procedures for preventing conflict of interest of persons involved in the financial resources awarding procedure

30. AWARDING FINANCIAL RESOURCES WITHOUT PUBLIC TENDERS • The financial resources may be awarded without publishing a public tender only in extraordinary situations when unforeseen events require urgency (for example: natural disasters) • In such cases, financial resources are awarded to the association which has the exclusive jurisdiction in the area of operation (Red Cross Act, Firefighting Act, Croatian Mountain Rescue Service Act)

31. AWARDING FINANCIAL RESOURCES WITHOUT PUBLIC TENDERS • Without a public tender, one-off financial resources (up to HRK 5,000) may be awarded according to the opinion of the competent committee for activities which could not have been planned in the association's annual plan for justified reasons • The total amount of financial resources awarded in such a manner cannot exceed 5% of all resources planned in the budget for funding all programmes and projects of associations • In such cases, the obligation of concluding a contract on direct award of financial resources with an association and complying with the basic standards of funding related to planning financial resources, contracting, following up financing, publishing and reporting

32. ANNUAL PLAN OF ISSUING PUBLIC TENDERS • Within 30 days of the day of adopting the budget for the following calendar year, the local and regional self-government unit drafts the annual plan of issuing public tenders and publishes it on its web-site or in another adequate manner. The plan specifies the following data: • provider of financial resources, • region, name and planned time of publication of a public tender, • total amount of available financial resources, • scope of financial resources intended for financing a single program, i.e. project, • estimated number of programmes and projects which will be contracted for funding and • other data, depending on the type of public tender

33. GENERAL ACT ON ISSUING AND IMPLEMENTING PUBLIC TENDERS • A fundamental document for issuing and implementing public tenders is adopted by the competent body of the local and regional self-government unit in the form of a general act which specifies: • program measures, • strategy and plans whose implementation is under the jurisdiction of the local self-government, • importance and need of cooperation with associations in realisation of those measures, • objectives and expected results to be achieved by financing programmes and projects, • types of activities to be financed, • eligible organisations which can apply, • evaluation criteria and other elements of the procedure for granting financial resources, • expected results to be achieved by financing programmes or projects of public benefit interest and which are implemented by associations in a certain area

34. OBLIGATIONS OF ASSOCIATIONS RECIPIENTS OF FINANCIAL RESOURCES • Associations implementing programmes and projects of public benefit interest must report to: • provider of public funding on their work, scope, manner of acquiring and using funding at least once a year, • general public through its web-site or in another corresponding manner • Associations must use the financial resources from public sources exclusively for implementing approved programmes or projects

35. OBLIGATIONS OF PROVIDERS OF FINANCIAL RESOURCES • Provider of financial resources shall follow the implementation of programmes or projects • If the duration of the project implementation is at least a year and its value amounts to HRK 100,000 or more, they shall, at least once during the project duration, carry out a field check of the programme or project implementation

36. OFFICE FOR COOPERATION WITH NGOs • Each year, all providers of financial resources from public sources shall submit to the Office for Cooperation with NGOs of the Republic of Croatia data on procedures and results of awarding financial resources to programmes and/or projects of associations • The Office for Cooperation with NGOs shall, based on that data, publish an annual report on financing projects and programmes of civil society organisations from public sources • All public authority bodies shall, among other things, publish on their web-sites information on awarded aids, grants or donations including the list of beneficiaries and the amount (Article 10(1) of the Right of Access to Information Act)

37. OFFICE FOR COOPERATION WITH NGOs • With the purpose of a coordinated conduct of all providers of financial resources: • coordinates the preparation, implementation and follow up of public tenders for funding programmes and projects of associations from public sources, • gives its opinion on the compliance of the financing area and tender implementation procedure with the Regulation to all providers of financial resources from public sources on the national level, • prepares a consolidated annual plan of tenders and other programmes for financing associations from public sources at the national level with the purpose of harmonising and better joint planning of resources from national public sources and financial resources from European Union funds intended for funding programmes and projects of associations, • at the beginning of each year, it organises Info days when all providers of financial resources to programmes and projects of associations at the national level present tenders to be issued in the current year to potential and interested beneficiaries, • collects and publishes information on issued tenders at national and local levels and publishes them on the Office for Cooperation with NGOs web-site, • ensures timely exchange of information between providers of financial resources on associations which spend the awarded financial resources for unintended purposes or otherwise fail to comply with contractual obligations,

38. OFFICE FOR COOPERATION WITH NGOs • prepares and publishes the Manual on the Application of the Regulation on its web-site with templates of tender documents, as well as the instruction to providers of financial resources, • provides consulting and education on the application of this Regulation to employees of providers of financial resources who work on the award to financial resources to associations, • at least once a year reports to the Government of the Republic of Croatia and the interested general public and prepares comprehensive analyses of programmes and projects of associations and other civil society organisations financed from public sources at the national, regional and local level and from European Union funds, and on the coordination of financing and contracting procedures with this Regulation

39. OFFICE FOR COOPERATION WITH NGOs • Under this Regulation, the Office for Cooperation with NGOs has developed the Manual for Implementation of the Regulation on the Criteria, Standards and Procedures for Financing and Contracting Programmes and Projects of Public Benefit Interest Implemented by Associations • The Manual is developed as an instruction to all public institutions which award financial and non-financial aids from public sources to projects and programmes of public benefit interest which are implemented by associations, but also other civil society organisations. It is intended for state administration bodies, government offices and bodies, other public institutions, but in the local and regional self-government units, companies owned by the Republic of Croatia, i.e. one or more local and regional self-government units and other legal entities established by the Republic of Croatia, i.e. one or more local and regional self-government units, as well as other legal entities when they finance programmes and projects of associations from public sources, and donate to, i.e. sponsor association

40. OFFICE FOR COOPERATION WITH NGOs • Annual reports on financing projects and programmes of civil society organisations indicate how the money the state allocates from public sources for projects and programmes of associations and civil society organisations is spent. Reports are comprehensive and contain detailed analyses on the following: which state bodies award financial resources and in which amounts • financing areas • beneficiaries of financed projects • territorial distribution of projects