Public procurement is one of the most common ways in which the state, municipalities or other public institutions purchase services, works or supplies. Although they may seem complex and opaque at first sight, they aim to ensure transparent and fair use of public money. This is why public procurement is regulated in detail by law and is accompanied by a number of obligations, the breach of which can have serious legal consequences.
A public contract is the award of a contract for consideration, the subject of which is supplies, services or works, and which the contracting authority concludes with a supplier in accordance with the rules of the law. Typical contracting authorities are the state, ministries, regions, municipalities, contributory organisations, but also some public institutions. The purpose of public procurement is not only the purchase itself, but above all to ensure that public funds are managed economically, transparently and without favouring specific suppliers.
Unlike normal commercial relations between private parties, there is not complete contractual freedom. The contracting authority is not free to choose with whom it enters into a contract, but must follow predetermined rules. This is why public procurement is often perceived as administratively demanding and legally sensitive. At the same time, however, they represent a significant opportunity for large companies as well as for smaller firms or sole traders who can navigate the rules.
Public procurement is also sometimes referred to as government procurement, although this term is not legally precise. The state is only one of many possible contracting authorities. The common denominator is that they are awarded by a public contracting authority and are transactions for consideration, for which the law requires a transparent and non-discriminatory procedure – typically because they involve the use of public funds or funds under public control. Transparency and equal treatment are not just formal concepts in this area, but fundamental principles, the breach of which may lead to the annulment of the procurement procedure or to corrective measures and sanctions.
The basic legislation governing public procurement in the Czech Republic is the Public Procurement Act. This Act sets out not only the definition of a public contract itself, but also detailed rules for the award of public contracts, the conduct of tendering procedures, qualification requirements and the methods of evaluating tenders. In practice, the term “Public Procurement Act” can still be found, but it refers to older legislation.
The current law emphasises three basic principles: transparency, equal treatment and non-discrimination. The contracting authority must act in such a way that it is clear why the contract has been launched, what conditions the suppliers must meet and on the basis of which criteria the winner is selected. Any action that undermines these principles may give rise to objections or intervention by the Competition Authority.
The Public Procurement Act also provides a framework to protect not only public finances but also the suppliers themselves. They can defend themselves against illegal practices of the contracting authority and seek redress. It is knowledge of the law that is crucial for both contracting authorities and suppliers, as ignorance of the law in this area is no excuse and mistakes can be very costly.
Public procurement is one of the most strictly regulated areas of law and even a seemingly minor mistake can lead to the cancellation of a contract, objections from suppliers or sanctions from the Office for the Protection of Competition. We can assist you with the preparation and review of tender documents, assessment of the legality of the procedure, filing objections and representation in proceedings related to public procurement.
One of the most important criteria by which public contracts are distinguished is their estimated value. This determines the legal regime applicable to the contract, the strict rules the contracting authority has to follow and the obligations it incurs. It is therefore not just a formal categorisation, but a key decision that affects the whole procurement process – from the way it is published to the degree of scrutiny by the supervisory authorities.
The Public Procurement Act distinguishes three basic categories: small-scale public procurement, sub-limit public procurement and above-limit public procurement. Each of these categories has different rules, levels of formalisation and legal risks. The mere incorrect determination of the estimated value can lead to a breach of the law and, in extreme cases, to the cancellation of the entire contract.
Small public contracts are the least formal category in terms of the law. The contracting authority is not obliged to follow all the detailed procedural rules of the law, which gives it a certain degree of flexibility. However, this does not mean that it can proceed in a completely arbitrary manner.
Even for a small-scale contract, the basic principles of public procurement, namely transparency, equal treatment and non-discrimination, must be maintained.
If, for example, a contracting authority were to approach only a pre-selected supplier without an objective reason, such a contract could be challenged as being targeted. Thus, a small-scale contract is not a “lawless space” but only a simplified regime that is still subject to scrutiny.
A sub-limited public contract already falls under a much stricter regime. The contracting authority is generally obliged to launch a formal procurement procedure, to comply with the statutory deadlines and procedures and to publish the contract accordingly.
In the case of sub-limited public contracts , the contracting authority can no longer proceed “on its own”. Unlike for small-scale contracts, it must choose a specific type of procurement procedure, comply with the statutory deadlines, clearly define the qualification requirements and determine in advance the criteria against which it will evaluate the tenders. Once the contract has been launched, the conditions cannot be changed “as necessary” or to the advantage of a particular tenderer; if a modification is necessary, it must be done in a legal manner (typically through clarification or amendment of the tender documentation and, where appropriate, extension of time limits).
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It is at this stage that the most common mistakes occur in practice. For example, contracting authorities set unreasonably strict qualification requirements that do not correspond to the actual scope of the contract or choose evaluation criteria that are unclear or easily manipulated. Inadequately prepared tender documentation, which does not make it clear what exactly the supplier is to offer, is also a typical problem. These errors often lead to objections from suppliers, prolongation of the procedure or even its cancellation.
An under-limit public contract thus represents the threshold at which the procurement process becomes a full-fledged legal process, where any error affects the legality of the entire procedure. Even seemingly ‘minor’ formal errors can result in the contracting authority being unable to complete the contract or facing sanctions from the supervisory authorities.
The most strictly regulated category is the over-limit public contracts. These contracts are subject to the most detailed regulation, mandatory publication in established systems and a high level of control.
It is in the case of above-limit public contracts that contractor objections, review proceedings and interventions by the Office for the Protection of Competition (OPC) are most frequent. Any procedural error here can have serious consequences, including the annulment of the procurement procedure or the imposition of a fine on the contracting authority.
The distinction between the different categories of public contracts according to value is thus not a mere technicality, but a cornerstone of a correct and lawful procedure. It is often at this stage that the decision is made as to whether the procurement will run smoothly or become a source of litigation and legal complications.
Procurement is a process that starts long before the actual publication of the contract. The contracting authority must first correctly identify its needs and prepare tender documents that clearly and understandably describe the subject matter of the contract and the conditions of participation. It is at this stage that the greatest risk of errors arises, which are difficult to correct later.
The preparation of the documentation is followed by the publication of the contract. The method of publication varies according to the type of contract, but must always be chosen in such a way as to give access to the widest possible range of potential suppliers. Tenders must then be evaluated according to predetermined criteria which cannot be changed during the procedure. Any interference with the process without a legitimate reason may constitute a breach of the law. The system of awarding, publishing and obtaining contracts is discussed in more detail in a separate article.
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Public procurement is an area where legal prevention pays more than anywhere else. A lawyer can help as early as preparing tender documents, setting evaluation criteria or choosing the right procurement procedure. Similarly, legal assistance is crucial when dealing with contractor objections or when representing them before the Office of Public Procurement.
On the contracting authority’s side, a legal error can mean cancellation of the contract and unnecessary prolongation of the project. On the contractor’s side, it can lead to exclusion from the procedure or loss of the contract. If you want to avoid these risks, professional legal assistance in public procurement is the wisest investment.
Public procurement is the legally regulated way in which the state, municipalities and other public institutions procure supplies, services and works from public budgets, with the main objective of ensuring transparent, economic and non-discriminatory use of public funds. It is not a normal commercial relationship, as the contracting authority is not free to choose any supplier, but must follow the Public Procurement Act, which lays down binding rules, the principles of transparency, equal treatment and non-discrimination, and protects the suppliers themselves. A key element of the whole system is the distinction of public contracts according to their expected value into small-scale, under-limit and over-limit public contracts, and it is this classification that determines the degree of formalisation of the procedure, the obligations of the contracting authority and the intensity of control. While small-scale contracts allow for some flexibility, but still have to respect the basic principles, sub-limit contracts are already a full-fledged legal process with clearly defined rules, and above-limit contracts are subject to the strictest regulation and frequent supervision by the Office of Public Procurement. Public procurement is a process starting with the careful preparation of tender documents, continuing with appropriate publication and ending with the evaluation of tenders according to predetermined criteria that cannot be changed afterwards. Any misconduct in this process may lead to objections, cancellation of the contract or sanctions.
The contracting authority may not divide a public contract on purpose in order to reduce its estimated value and avoid the under- or over-limit procurement regime. The Public Procurement Act expressly prohibits such a procedure if the individual parts are related in terms of subject matter, time or function. In practice, this means that if the supply could reasonably be implemented as a whole, it must be treated as a single public contract. Violations of this rule are among the frequent grounds for intervention by the Office and may lead to the cancellation of the contract or the imposition of a fine.
Incorrect determination of the estimated value is one of the most serious errors in public procurement. If the contracting authority underestimates the value and chooses a more lenient regime than required by law, the entire procurement procedure may be declared illegal. The consequence is often not only the cancellation of the contract but also sanctions by the Office of Public Procurement. The law therefore emphasises that the estimated value should be determined objectively, on the basis of real market prices and available data.
In general, the terms and conditions of a public contract cannot be changed at will after it has been announced. Any substantial change to the terms of the contract may undermine equal treatment between suppliers, in particular if it would give some of them an unfair advantage. While the law allows for certain modifications, for example in the form of clarifications to the tender documentation, these must not alter the substance of the contract itself. If the change would be substantial, it is often necessary to cancel the procedure and reopen it.
Objections are an essential defence tool for suppliers who believe that the contracting authority has violated the law. They may be directed, for example, against discriminatory conditions, unclear evaluation criteria or unlawful exclusion from the procedure. The contracting authority is obliged to deal with the objections properly and if it fails to do so, the dispute may end up before the Office for Competition and Consumer Protection. The objection procedure thus serves not only to protect suppliers but also as a control mechanism that contributes to the legality of the whole process.
Public procurement is an area where mistakes are generally unforgivable and their consequences only become apparent with the passage of time, when it is difficult or impossible to correct them. Early legal advice can help to get the tender documentation right, choose the appropriate procedure and avoid disputes with suppliers. For suppliers, legal assistance can often mean the difference between successful participation and exclusion from the procedure due to a formal error. Legal prevention is therefore not only safer but also more cost-effective in public procurement.
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