Legal and tax toolbox

Award procedure

The award procedures depend on the value of procurement. When the value of procurement is below BAM 50,000.00 in case of supplies and services, or BAM 80,000.00 in case of works, the contracting authority may apply one of the procedures defined in the Law on Public Procurement, except for direct agreement, and shall have to meet the requirements regulated for each specific procedure. The application of open or restricted procedure, or negotiated procedure with or without publication of notice, or design contest or competitive dialogue is obligatory when the value of procurement for supplies and services amounts to or exceeds:

1. 250,000.00 BAM for institution at State, entity, or local level and associations;
2. 400,000.00 BAM for legal persons;
3. 800,000.00 BAM for sectoral contracting authorities.

In general, the Law foresees either an open and restricted public procurement procedure. In an open procedure any interested bidder may submit a bid, whereby the restricted procedure features a pre-qualification stage and a bid submission stage. In addition, the Law on Public Procurement foresees a negotiated procedure with or without publication of notice and the competitive dialogue.

Public contract for procurement of supplies, services or works may be awarded in a negotiated procedure with publication of notice:

• if all the bids submitted in open or restricted public procurement procedure or competitive dialogue failed to meet qualification requirements, and the basic conditions for contract award have not altered significantly, the contracting authority shall not be under obligation to publish the procurement notice again, conditioned that it invites all the bidders, i.e. candidates, to remove the deficiencies in their bids, and to render their bids acceptable;
• in exceptional cases when due to the nature of supplies, services or works, or risk related to contract subject matter execution, it is not possible to perform prior determination of the total price;
• in case of public procurement of intellectual services when the subject of procurement cannot be determined with sufficient clarity; and
• procurement for research, testing or development purposes.

In exceptional cases procurement contracts may be awarded by applying the negotiated procedure without publication of the procurement notice:

• when no bid or no acceptable bid has been submitted in the open or restricted procedure and when the contract terms have not been altered significantly compared to the terms from the preceding procedure;
• when no request for participation has been submitted in the restricted procedure and no qualified candidate requested participation in the restricted procedure, and when the contract terms have not altered significantly compared to the terms from the previous procedure;
• when the contract may be awarded only to a specific supplier due to essential, provable technical or artistic reasons, or due to reasons that relate to the protection of exclusive rights;
• when, exceptionally, the minimum time limits defined in the Law on Public procurement for open, restricted, or negotiated procedure with publication of notice cannot be complied with due to provable reasons of ultimate emergency caused by events unforeseeable to the given contracting authority. The circumstances that justify the exceptional emergency of the procedure may not be in any way linked with the contracting authority.

The competitive dialogue can be used if the subject of procurement is particularly complex thereby considering the technical specifications and legal / economic structure. The contracting authority invites all interested parties to submit an application for participation in the competitive dialogue and recognizes the applicants’ qualification based on the conditions determined in advance. The contracting authority performs the “competitive dialogue” with all qualified applicants, until an adequate solution is found. Once the solution is found, the contracting authority calls for submission of bids.

The deadline for submission of bids cannot be less than 45 days in open procedure and 35 days in restricted procedure. If the contracting authority has published an advance notice of planned procurements, with estimated values, the deadlines in open and restricted procedure can be reduced to 25 days.

Privatizations

Privatization in Bosnia and Herzegovina is an ongoing process. It is managed by the Federation of BiH Privatization Agency and cantonal privatization agencies in the Federation of Bosnia and Herzegovina, and the Republic of Srpska Investment-Development Bank. The Agency for Privatization in Federation of Bosnia and Herzegovina is a specialized organization performing professional, advisory, promotional, educational and other business activities relating to the privatization process. The Republic of Srpska Investment-Development Bank is authorized to sell state capital in and restructure enterprises with majority state capital which is subject to privatization. Privatization of the state-owned capital is carried through several methods: the sale of shares through the stock exchange, tender, acceptance of a public takeover bid, sale to employees of the company (so-called ESOP method), or a combination of previous methods.

The privatization process in the Federation entity started in 1999 but continued to suffer from delays despite the adoption of privatization strategies in 2014 and 2015. Attempts to sell 14 earmarked companies were largely unsuccessful, so far. The 14 companies are: Bosnalijek, Energopetrol, Energoinvest, Aluminij Mostar, Hidrogradnja, Remontni Zavod Travnik, Šipad export-import, Zenica Steel plant, KTK Visoko, Agrokomerc, Borac Confection Travnik, Tobacco Factory Mostar, Vitezit, and Holding Company Putevi BiH. The sale attempts failed because of the poor state of the companies as well as because of the high prices set by the Federation government. In the Republic of Srpska entity the privatization of state-owned companies is more advanced. However, progress in selling or liquidating remaining assets has been limited. Overall, strategic sectors such as transport, energy (and telecom in the Federation entity) are still dominated by state-owned companies.

Public-private-partnerships (PPPs)

The country’s legal framework for PPPs is characterized by fragmentation with several laws regulating PPPs at the entity and cantonal level. There is no PPP-specific law at the national level but the entity level. The Republic of Srpska has its own Law on Public Private Partnership. The Federation of BiH has had a draft version of the Law on PPPs since 2009 (proposed by the Federal Ministry of Transport and Communications), which was adopted in April 2014 by the House of Peoples of the Parliament of Federation of BiH, and is still awaiting public hearing. The Federation of BiH-level Law on PPPs has been initiated mainly with Corridor Vc projects in mind. The cantons, on the other hand, were quicker to jump on the PPP board, and almost all cantons have already adopted PPP laws, mainly through ministries of finance or economy. Although difficult to implement Bosnia and Herzegovina has realized some projects in the PPP field, e.g. the Thermal Plant Stanari.