The Saeima1has adopted
and the President has proclaimed the following Law:
Law On Procurement for the Needs of Public Service Providers
Chapter I
General Provisions
Section 1. Terms Used in this Law
The following terms are used in this Law:
1) open, restricted and negotiated procedures – procurement procedures that are applied by public service providers and in which:
a) in the case of open procedures – any interested suppliers may submit tenders,
b) in the case of restricted procedures – any supplier may request the right to participate, but only such candidates who have been invited by a public service provider may submit tenders, and
c) in the case of negotiated procedures – a public service provider consults with the suppliers of its choice and negotiates the provisions of a contract with one or more of such providers;
2) central purchasing body – a provider of public services or any other person who is a contracting authority within the meaning of the Law On Procurement for State or Local Government Needs and who enters into supply, works or service contracts or framework agreements or performs procurement procedures for the needs of public service providers;
3) dynamic purchasing system – a completely electronic process used for the purchasing of commonly used products that are generally available on the market and that meet the requirements of the contracting authority, which is limited in duration and open to all suppliers with a condition that the suppliers conform to the qualification requirements and have submitted information regarding the products that they may offer (an indicative tender);
4) electronic auction – a repeated presentation of descending prices or new values of certain elements of tenders by electronic means after a full evaluation of the tenders, thereby enabling the ranking of the tenders by electronic means in a specific order on the basis of the prices or values of certain elements of the tenders. Certain service contracts or works contracts the subject-matter of which is intellectual performances (design, etc.) shall not be the object of electronic auctions. Electronic means shall mean electronic devices that are suited for the processing (also digital compression) and storage of data received or transmitted by wire, by radio, by optical means or other electromagnetic means;
5) procurement procedure – a procedure in accordance with which a public service provider selects suppliers and confers the right to enter into a supply, works or service contract;
6) Common Procurement Vocabulary (CPV) – a nomenclature approved by the European Parliament and the Council of the European Union in accordance with the prescribed procedures and which is utilised in the procurement procedures for the identification of a procurement object;
7) indicative tender – a tender that characterises the range of goods offered by a tenderer in the dynamic purchasing system, but is not binding on the tenderer and a public service provider;
8) candidate – a supplier who participates in a restricted or negotiated procedure until the submission of a tender;
9) design contests – such procedures that enable a public service provider to acquire a plan or a design that a jury has recognised as the best in a competition with or without the award of prizes, mainly in the fields of the solution of urban and any other territory planning tasks, architecture, construction or data processing;
10) supplier – a natural or a legal person, or an association of such persons in any combination thereof that offers on the market, respectively, the execution of works, the supply of products or the provision of services;
11) supply, works and service contracts – contracts for pecuniary interest that have been entered into in writing between one or more public service providers and one or more product suppliers, performers of works, or service providers, and the subject-matter of which is:
a) for works contracts – the execution of the works referred to in Annex 1 of this Law or the execution and design of such works, or a structure, as well as any other transaction as a result of which a public service provider acquires the rights to a structure that has been designed in accordance with the requirements specified for such structure. Within the meaning of this Law, a structure is the outcome of the works referred to in Annex 1, which is sufficient to serve the specified purpose,
b) for supply contracts – purchase of a product, lease, rental or hire-purchase. Such contract the subject-matter of which is the supply of products and the incidental part of which is the siting or installation of the product shall also be regarded as a supply contract, and
c) for service contracts – the services referred to in Annex 2 of this Law;
12) tenderer – a supplier who has submitted a tender;
13) public authorities – State administrative institutions, other State institutions, local governments or other derived legal persons governed by public law, as well as a private-law entity that concurrently conforms to the following criteria:
a) such entity is established or operates in order to ensure the general needs of society, which are not of a commercial or industrial nature, and
b) such entity is subordinate to or subject to the decisive influence of a State administrative institution, another State institution, derived legal person governed by public law, or subject to the decisive influence of a private-law entity conforming to these criteria (such subordination or subjection is manifested as a majority of voting rights in the election of members of a supervisory or executive body or in the appointment of an administration), or more than 50 per cent of the activities of such private-law entity are financed by the State, a derived legal person governed by public law or another private-law entity conforming to these criteria;
14) public authority undertaking – any merchant that is subject to a direct or indirect decisive influence of a public authority on the basis of participation or a contract. A public authority shall have a decisive influence if such authority directly or indirectly holds the majority (more than 50 per cent) of the subscribed fixed capital of a capital company or if such authority controls the majority of votes that is related to the issued capital shares (stocks), or such authority may appoint more than half of the members of a supervisory body or executive body;
15) public service provider:
a) a public authority or a public authority undertaking that performs the activities referred to in Chapter II of this Law in the fields referred to in Chapter II of this Law, or
b) any private-law entity that performs the activities referred to in Chapter II of this Law in the fields referred to in Chapter II of this Law or in any combination thereof on the basis of special or exclusive rights that have been conferred by a competent authority on the basis of such regulatory or administrative enactments the norms of which restrict the performance of activities in the aforementioned fields, granting the right to perform activities in any of these fields only to one entity or some entities, and which significantly affects the opportunities of other entities to act in these fields; and
16) framework agreement – such agreement between one or more public service providers and one or more suppliers, the purpose of which is to determine and characterise the contracts to be entered into during a given time period and to provide for the provisions with which such contracts shall be entered into (especially in relation to prices and, if necessary, the intended quantity).
Section 2. Principle of Equality and Transparency
A public service provider shall set forth equal requirements for all suppliers and observe transparency in the procurement procedures.
Chapter II
Areas of Activities of Public Service Providers
Section 3. Activities of Public Service Providers in the Field of Heat Supply, Gas Supply and Electricity Supply
(1) In the field of heat supply and gas supply, this Law shall be applied to the provision or management of the public networks of gas or heat energy production, transport or distribution, as well to the supply of gas or heat energy to such networks, except the cases where the production of gas or heat energy is the unavoidable consequence of the types of activities of public authority undertakings or private-law entities not referred to in this Section and other types of activities not referred to in Section 4, 5, 6 or 7 of this Law and the public authority undertaking or the private-law entity performs the supply to the public networks only in order to economically exploit the gas or heat energy obtained through such activity. Moreover, the amount of such supply in terms of money shall not exceed 20 per cent of the turnover of the relevant public authority undertaking or private-law entity, taking into account the average turnover of the preceding three accounting years, including the current year.
(2) In the field of electricity supply, this Law shall be applied to the provision and management of the public networks of electricity transmission and distribution, as well as to the supply of electricity to such networks, except the cases where the public authority undertakings or private-law entities need the production of electricity in order to ensure the electricity consumption in other types of activities not referred to in this Section and in Section 4, 5, 6 or 7 of this Law, and the supply to a public network depends only on the home consumption of electricity and does not exceed 30 per cent of the average amount of electricity produced in a year, taking into account the amount of electricity produced in the preceding three accounting years, including the current year.
Section 4. Activities of Public Service Providers in the Field of Water Supply
(1) In the field of drinking water supply, this Law shall be applied to the provision or management of the public networks of drinking water supply, transportation or distribution, or to the supply of drinking water to such networks, except the cases where the acquisition and consumption of drinking water for public authority undertakings or private-law entities is the unavoidable consequence of other types of activities not referred to in this Section and in Section 3, 5, 6 or 7 of this Law, and the supply of drinking water to a public network depends on the home consumption of a public authority undertaking or a private-law entity and does not exceed 30 per cent of the average amount of water obtained in a year, taking into account the amount of water obtained in the preceding three accounting years, including the current year.
(2) This Law shall also be applied to procurement procedures or design contests that are related to hydraulic engineering projects, irrigation or drainage of farming land, taking into account the condition that the amount of supplied drinking water exceeds 20 per cent of the total volume of water obtained as a result of the installation of a hydraulic engineering structure, irrigation or drainage of farming lands, as well as to such procurement procedures and design contests that are related to the disposal or treatment of sewage and which are organised by public authority undertakings, private-law entities and public authorities that perform the activities referred to in Paragraph one of this Section.
Section 5. Activities of Public Service Providers in the Field of Transport Services
(1) In the field of transport services, this Law shall be applied to the provision of public railway, tramway, trolley bus, bus and ropeway transport networks or the services thereof.
(2) Within the meaning of this Section, a transport network shall exist if transport services are provided in accordance with the regulations issued by an institution regulating such services, including regulations regarding the routes to be served, the quantities to be carried or the frequency of the carriages.
Section 6. Activities of Public Service Providers in the Field of Postal Services
In the field of postal services, this Law shall be applied to the general postal services to which the provider thereof has monopoly rights in accordance with the Postal Law and to additional postal services that such provider of general services provides.
Section 7. Activities of Public Service Providers in the Field of the Exploitation of a Geographical Area
In the field of the exploitation of a geographical area, this Law shall be applied with regard to the exploitation of a specific geographical area for the exploration or extraction of oil or gas, or for the extraction of solid fuel, as well as to the management of airports or sea ports.
Section 8. Contracts that Cover Several Activities in Several Fields or Various Types of Subject-matter of a Contract
(1) If a contract applies to activities in several fields, procurement procedures shall be regulated by the norms of such field to which the most essential part of the contract applies.
(2) If a contract applies to activities in several fields, such contract may not be divided into several contracts individually for each field (and to enter into an individual contract for each field) with the purpose of avoiding the application of this Law or the Law On Procurement for State or Local Government Needs.
(3) If a contract applies to the activities in the field of application of both this Law and the Law On Procurement for State or Local Government Needs and it is impossible to objectively determine to which field the essential part of the contract applies, procurement procedure shall be performed in accordance with the Law On Procurement for State or Local Government Needs.
(4) If a contract applies to activities in the field of the application this Law and to other activities that are neither included in this Law nor in the Law On Procurement for State or Local Government Needs, and it is impossible to objectively determine to which field the essential part of the contract applies, procurement procedure shall be performed in accordance with the requirements of this Law.
(5) Contracts that contain both the provision of services and the delivery of supplies shall be regarded as supply contracts, if the total value of the supplies exceeds the value of services included in the contract.
(6) Contracts the subject-matter of which is the provision of services, but which, in addition to the provision of services, also include the construction works as an unimportant part shall be considered service contracts.
Chapter III
Exclusions to the Application of this Law
Section 9. Works and Service Concessions
This Law shall not be applied in cases where a public service provider awards a works or a service concession in order for the concessionaire to perform the activities referred to in Section 3, 4, 5, 6 or 7 of this Law.
Section 10. Contracts with Third Parties
(1) This Law shall not be applied in cases where a public service provider enters into a supply or works contract if the subject-matter of the contract is intended to be sold or leased to third parties for profit, observing the condition that the public service provider has no special or exclusive rights to sell or lease such subject-matter of the contract and that other private-law entities may sell or lease such subject-matter of the contract in accordance with the same conditions that apply to the public service provider.
(2) A public service provider shall inform the European Commission at the request thereof regarding all categories of products or activities to which exclusions are applied in accordance with Paragraph one of this Section.
Section 11. Contracts Entered into for Other Purposes
(1) This Law shall not be applied in cases where a public service provider enters into contracts for purposes other than the performance of the activities referred to in Section 3, 4, 5, 6 or 7 of this Law, or with the purpose of performing such activities in a state that is not a European Union Member State (hereinafter – third country), taking into account the condition that the public network or a territory included in the European Union shall not be used for such purpose.
(2) A public service provider shall inform the European Commission at the request thereof regarding all activities to which exclusions are applied in accordance with Paragraph one of this Section.
Section 12. Contracts that Contain State Secrets
This Law shall not be applied in cases where the Cabinet determines a secrecy regime for information regarding a contract in accordance with the regulatory enactments in force or the implementation of a contract involves special security measures of a State secret.
Section 13. Contracts that are Entered into in Accordance with International Regulations
This Law shall not be applied in cases where contracts are entered into in accordance with different procedural rules that are determined, taking into account:
1) an agreement that has been entered into between Latvia and a third country regarding supplies, works or services that are necessary for the joint implementation or exploitation of a project by the Member States of such international agreement. The European Commission shall be notified regarding all such agreements;
2) an international agreement regarding the stationing of troops. The procedural rules shall be applied to organisations in Latvia or the third country; and
3) provisions of procurement procedure regulated by an international organisation in relation to projects that are financed by such organisation.
Section 14. Contracts that are Entered into with an Affiliated Undertaking, Joint Venture or a Public Service Provider that is part of a Joint Venture
(1) This Law shall not be applied to services, supply and works contracts, respectively, that a public service provider enters into with an affiliated undertaking or which a joint venture that has been established by various public service providers in order for such venture to perform some of the activities referred to in Section 3, 4, 5, 6 or 7 of this Law enters into with one of the affiliated undertakings of such public service providers, taking into account the condition that an average 80 per cent of the turnover of the services provided, supplies or works performed by such affiliated undertaking during the last three years is related to services, supplies or works to such public service provider whose affiliated undertaking is a service provider, supplier or performer of works.
(2) Within the meaning of this Section, an affiliated undertaking shall be a capital company over which a service provider exercises a decisive influence or which exercises a decisive influence over a public service provider, or a capital company over which another capital company exercises a decisive influence and which concurrently exercises a decisive influence over a public service provider. Within the meaning of this Section, a capital company shall exercise a decisive influence over another capital company if such capital company, directly or indirectly, holds the majority (more than 50 per cent) of the subscribed fixed capital of another capital company or if such capital company controls the majority vote that is related to the capital shares (stocks) issued by another capital company, or if such capital company has the majority of voting rights in the election of members of a supervisory or executive body of such other capital company.