Are there any restrictions or legislative regimes affecting procurement?

Construction (2nd edition)

Australia Small Flag Australia

Procurement rules generally apply to contracts awarded by government bodies using public money, or relating to public property. At the federal level, the Public Governance, Performance and Accountability Act 2013 (Cth) regulates government procurement. Legislation in each state and territory also establishes central bodies to conduct and regulate state procurement and publish codes of conduct. Rules also apply to local government procurement activities.

Belgium Small Flag Belgium

For public procurement, a certain number of legal restrictions apply. These can be found in the Act of 17 June 2016 on public procurement and the Royal decree of 18 April 2017 on the award of public procurement contracts in the classic sectors. This Royal decree contains various obligations to be observed by public authorities during tendering (publication of a contract notice, procedures to be followed, rules governing the validity of tenders received, etc.).

Furthermore, public authorities are also bound by the provisions of the Act of 20 March 1991 organising the accreditation of contractors. In order to qualify for certain projects, the contractors must prove that they are sufficiently qualified on the basis of categories (nature of the works) and classes (price of the works). Public authorities will always specify in the tender documents which category and class are required for the tendered works. There is no similar set of rules for private procurement procedures.

China Small Flag China

If the procurement of equipment, materials or other items relating to the survey, investigation, design, construction, supervision and general engineering works of the project reaches certain standards set out in law (for example, the estimated contract price for a single construction item exceeds RMB 4 million), the following projects, must be put out to tender pursuant to applicable law: (1) projects fully or partially funded or financed by the state, or having accepted loans or financial aid from international organizations or foreign government, (2) projects that relate to social or public interest or public security.

Croatia Small Flag Croatia

Please see No 7.

Germany Small Flag Germany

The procurement process is highly regulated and quite formalised. For laws that apply to procurements see answer to question 7.

Greece Small Flag Greece

Unlike in private contracts, the awarding and execution of public contracts is subject to multiple requirements and restrictions laid down by the Public Procurement Law, which in their majority are mandatory for both the contracting authorities and the tenderers/contractors; as such, breach thereof renders the tendering procedure and, by extension, the respective public contract invalid. Most importantly, the contracting authorities are under the obligation to comply with the principles of equal treatment, transparency, non – discrimination and proportionality. Eligibility of the tenderers is likewise strictly regulated, among others, in Art. 25 of the Public Procurement Law, which provides that any parties established outside the EU, the European Economic Area (EEA) or any third country that is not a signatory to the GPA (WTO) or to any other relevant bilateral or multilateral agreement by which Greece is bound, are not eligible to pursue award of a public contract in Greece. Further to the above, multiple requirements apply in order to ensure that the performance of public contracts is compliant with any applicable environmental, social, labour law and other mandatory provisions established by EU, national or international law and that the contract is not awarded to operators falling under any grounds for mandatory and non-mandatory exclusion.

Switzerland Small Flag Switzerland

Public bodies are subject to special rules, in particular, the strict regime of public procurement laws.

United States Small Flag United States

There are no material restrictions or legislative regimes that affect private construction procurement. However, some states have enacted statutes that impact the rights and obligations of parties to a construction contract. For instance, some states prohibit certain kinds of contractual indemnification obligations, and some states also have statutes governing payment, such as the Prompt Payment Act. Where contracts contain provisions in conflict with state law, such provisions are considered void and unenforceable. Additionally, there are numerous state and federal statutory frameworks affecting public construction procurement.

Austria Small Flag Austria

The only restrictions on procurement are those in respect of public clients. Public contracting is covered by the Federal Procurement Act [German acronym: BVergG].

Cyprus Small Flag Cyprus

Law 12(I)/2006 as amended, is the principal legislation governing public procurement contracts in the Republic of Cyprus. The Law, which transposes EU Procurement Directives 17/2004 and 18/2004 into Cyprus’s legal system, provides for the coordination of procedures for the award of public works contracts, public supply contracts, public service contracts and related matters.

Also relevant are the 2007 Regulations on the coordination of procedures for the award of public works contracts, public supply contracts, public service contracts and related matters issued under article 89 of the Law. Law 11(I)/2006 as amended, which provides for the coordination of procurement procedures in the water, energy, transport and postal services sectors, is also of relevance.

An unsuccessful bidder may file a hierarchical recourse with the Tenders Review Authority (TRA). The TRA has the authority, inter alia, to confirm the decision of the awarding authority, or annul the decision of the awarding authority if it finds that it contravenes the applicable legislation. The competence and structure of the TRA and the procedures it is required to follow are governed by Law 104(1)/2010 as amended, which implements Directive 2007/66/ EC with regard to improving the effectiveness of review procedures concerning the award of public contracts.

Brazil Small Flag Brazil

Public procurement procedures in Brazil are heavily regulated by Law 8.666/1993. Such regulation has been under severe criticism, since it is considered too rigid, even though it was not able to prevent all corruption wrongdoing notoriously reported in Brazilian recent history. There are at least two new projects of legislation on this matter under analysis of the Brazilian Congress.

Private procurement procedures in Brazil do not impose particular restrictions to the parties other than legal principles applicable to contracts in general.

Ireland Small Flag Ireland

The restrictions and legislative regimes affecting procurement relate to public bodies, apart from this there are none in place.

Mexico Small Flag Mexico

For Public Contracts that are governed by the Public Works and Related Services Law, if the contract does not comply with the law, it can be fully or partially null.

United Kingdom Small Flag United Kingdom

Public procurement has to date been governed by the EU procurement rules, which were implemented into English law by the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016. These regulations were intended to open up competition throughout the EU and to ensure that contracts were awarded fairly and transparently without national bias.

If the rules apply, the contract must be advertised in the Official Journal of the European Union and tendered using one of five available procedures. The process can take between 6 weeks to 18 months.

In preparation for Britain’s exit from the EU the Public Procurement (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/560) were published on 15 March 2019. These Regulations, which are expected to replace the EU procurement rules on almost identical terms, are likely to come into force on the date of exit, which is currently uncertain. However it has always been the position of the UK government that the procurement regulations will be retained post-exit, at least for the foreseeable future.

Spain Small Flag Spain

No, there are not. The freedom of choice will prevail.

In any case, building agents have a status made up of rights and obligations that are defined in the Law on Building Regulation in force.

Turkey Small Flag Turkey

Procurements initiated by private entities are not specifically regulated. However, there are general principles of Turkish law, such as the duty to act in good faith, as a general restriction in terms of the conduct of the procurement processes. Public entities, however, must comply with the Public Procurement Act numbered 4734 and Public Procurement Contracts Act numbered 4735 as required by law.

South Africa Small Flag South Africa

There are no restrictions or legislative regimes affecting procurement in the private sector.

As mentioned above, in terms of public sector procurement, the PFMA regulates the process to be followed when managing government finances at both a national and provincial level. Regulations promulgated under the PFMA, provide specific guidelines to be followed when dealing with public procurement. The MFMA provides similar guidelines for the management of public finances in respect of municipal authorities.

Some sectors have adopted a sector code in terms of the Broad-Based Black Economic Empowerment Act No 53 of 2003 (“BBBEE Act”). These sector codes aim to increase participation by historically disadvantaged persons in that particular sector.

France Small Flag France

For public contracts, non-compliance with the mandatory tendering procedure may result in the cancellation of the contract. Criminal law sanctions may also apply.

For private contracts, the tender process is not mandatory but, if the project owner uses such process, it will have to comply with the rules set by the bidding documents. In case of non-compliance, the project owner may face potential claims for damages by evicted bidders.

Sweden Small Flag Sweden

There are no specific statutory rules affecting private procurement. However, as has been noted in question 3 above, it should be noted that e.g. bribery is a criminal offence.

As for public procurement, the Public Procurement Act (2016:1145), provides inter alia that a public tender invitation must be submitted and that the cheapest alternative that fulfils all the requirements for the project shall be procured.

Denmark Small Flag Denmark

Except for the public procurement legislation, there is no specific legislation affecting procurement. General contract law and principles apply.

South Korea Small Flag South Korea

- The Framework Act on the Construction Industry contains general standards for the procurement of construction projects.

- Public procurement is governed by a number of statutes, including:

  • The Government Procurement Act;
  • The Act on Contracts to Which the State is a Party;
  • The Act on Contracts to Which a Local Government is a Party; and
  • The Act on the Management of Public Institutions.

Korea is a party to the Agreement on Government Procurement (a plurilateral agreement within the WTO framework) and a number of free trade agreements that contain obligations in relation to public procurement. Among other things, the foregoing laws ensure that public procurement is carried out in line with Korea’s international obligations.
Laws relating to public procurement are applicable to public institutions, which include public companies, government-controlled companies and quasi-governmental entities, among other bodies. Public institutions are designated as such by the Minister of Strategy and Finance and may include the following types of bodies, among others:

  • statutory corporations,
  • institutions for which more than half of the total annual revenue is composed of government grants,
  • companies in which the Government (possibly together with another public institution) holds at least 50 percent of the outstanding shares; and
  • companies in which the Government (possibly together with another public institution) has de facto control over decision-making through the exercise of the power to appoint executive officers, while also holding at least 30% of the outstanding shares.

- For public private partnerships in particular, the Act on Public-Private Partnerships in Infrastructure applies.

- Subcontracting between private parties is regulated by the Fair Transactions in Subcontracting Act.

- The Monopoly Regulation and Fair Trade Act prohibits collusive practices in procurement in the Korean construction industry. The Korea Fair Trade Commission actively monitors and penalizes such practices under the Act.

Updated: June 3, 2019