Czech Parliament approves higher thresholds for small-scale contracts without tendering process

The Czech Parliament has approved an amendment to increase the financial thresholds for small-scale public contracts that can be awarded without a formal procurement procedure. Under the new rules, the threshold for supplies and services will rise from CZK 2 million to CZK 3 million, while for construction works, the limit will increase from CZK 6 million to CZK 9 million. The amendment, aimed at ensuring fair competition between European Union firms and companies from outside the EU, was recommended by the House Economic Committee as a response to rising costs.

Minister for Regional Development Petr Kulhánek (STAN) supported the increase, which is expected to exempt approximately one-third of public contracts from the procurement process. Additionally, lawmakers approved raising the threshold for mandatory contract publication from CZK 500,000 to CZK 1 million, a move intended to simplify procedures for smaller contracting authorities, including municipalities.

“The existing limits have not been adjusted for years, and given inflation, this increase is fully justified and anticipated by contracting authorities,” Minister Kulhánek stated. The decision was reached after three voting attempts, with the final approval passing by a margin of just two votes. Previous votes failed due to opposition from MPs Rudolf Salvetr (ODS) and Pavel Bělobrádek (KDU-ČSL), who questioned the proposal.

Efforts to enhance transparency in small-scale public procurement were not as successful. A proposal by Pirate Party leader Jakub Michálek, which sought to introduce a requirement for contracting authorities to disclose the selection process for contracts exceeding CZK 1 million, was rejected. The initiative, co-signed by coalition members from STAN, KDU-ČSL, and TOP 09, aimed to increase public scrutiny over spending. Minister Kulhánek expressed disappointment over the rejection, emphasizing the need for public oversight in the use of taxpayer funds.

The approved amendment, which tightens regulations on large acquisitions and public contracts involving non-EU companies, introduces closer cooperation between the Ministry of Industry and the Office for the Protection of Competition. The measure aims to enhance oversight and information sharing regarding foreign companies participating in Czech public tenders.

The legislative changes align with the European Union’s efforts to address concerns over unfair competition from Chinese firms, which have been accused of benefitting from state subsidies that distort market dynamics. The EU’s regulatory framework, introduced in 2021, aims to level the playing field by scrutinizing financial contributions provided by non-EU governments to companies operating within the bloc. The regulation defines foreign subsidies as financial contributions from third countries that confer a competitive advantage on specific companies or sectors.

The Czech government emphasized that while EU member states are bound by strict public aid regulations, foreign subsidies previously remained largely unregulated, potentially giving non-EU firms an unfair advantage. The new amendment ensures that such subsidies are monitored and their impact on the Czech market is assessed to prevent market distortions.

With the approval of these changes, Czech authorities aim to balance regulatory efficiency with market fairness, supporting both domestic businesses and the broader European economic framework.

Source: CTK