Increase in limits for small-scale public contracts and other significant changes in procurement
On 3 April 2025, an amendment to the Public Procurement Act entered into force increasing the limits for small-scale public procurement and bringing other significant changes that will affect "public tenders".
The limits had not been adjusted since the Public Procurement Act entered into force in 2016, so their increase is a welcome change. The new limit for supplies and services is CZK 3 million, whereas previously it was CZK 2 million. For construction work, the limit has been increased to CZK 9 million compared to the previous CZK 6 million.
A seemingly insignificant change is that the Public Procurement Act now explicitly refers to directly applicable EU legislation. In practice, this will mean that the contracting authority shall also be obliged to select suppliers under EU rules, such as the Foreign Subsidies Regulation. This entails the supplier’s notification obligation regarding foreign financial aid (subsidies) if the estimated value of the contract or framework agreement, excluding VAT, exceeds the threshold of EUR 250 million or if the tenderer (including its holding companies, subsidiaries or main subcontractors) has received a foreign subsidy from a third country exceeding EUR 4 million in total. Such notifications shall be made to the contracting authority, who then must forward them to the European Commission.
Equally important, if a supplier fails to report foreign subsidies or fails to comply with other obligations set out in the Foreign Subsidies Regulation, the contracting authority may exclude the supplier from the tender.
Following the wording of the Foreign Subsidies Regulation, some changes also concern preliminary reviews and in-depth investigations of foreign subsidies reported to the European Commission. Contracting authorities are obliged to inform tenderers of the initiation and completion of in-depth investigations by the European Commission, as the EC has up to 110 working days to close an in-depth investigation, which may significantly prolong the entire process. In this context, the tendering period has also been extended and now includes the period required for the preliminary review or in-depth investigation of reported foreign subsidies. Additionally, tendering suppliers now may withdraw from the procedure during the EC’s in-depth investigation. Other changes include, for example, an increase in the limit for the obligation to publish contracts on the contracting authority's profile from CZK 500,000 (excluding VAT) to CZK 1 million (excluding VAT).
While the amendment introduces new obligations, it mainly simplifies the administration for small-scale contracts below the new limit. For these contracts, contracting authorities may now follow their internal rules.
The amendment has been effective from 3 April 2025, and the increased limits apply to proceedings commencing after that date. The changes to the limits will also apply to modifications of existing contracts, allowing that contracts that fall under the new limits be treated according to the contracting authority's internal rules.