Harris Kyriakides
Harris Kyriakides

Major reforms announced in Cyprus public procurement regulations to enhance efficiency

Posted on 31 December 2024 | 3 mins read

The House of Representatives of the Republic of Cyprus is reviewing amendments aimed at streamlining the management of public contracts. These changes include enhancing procedures for evaluating contract variations and economic operator exclusions. The reforms are projected to reduce the workload of the Central Committee for Changes and Claims (the KEAA) by up to 33%.

Current Legal Framework

Currently, KEAA oversees approximately 900 cases annually related to supply and service contracts. Of these, about 500 involve contract changes, and 400 concern claims, such as requests for time extensions or financial adjustments. The existing framework centralises decision-making, often leading to administrative delays and unnecessary bureaucracy. Since their implementation in 2016, the Regulations on the Management of the Execution of Public Contracts and the Procedures for Excluding Economic Bodies from Public Procurement Procedures (the Regulations) have positively impacted the oversight of changes and claims in public sector contracts, enhancing the financial management of public resources in procurement.

However, nearly a decade of practical experience has highlighted the need for improvements to the procedural framework for managing contract changes and claims, as well as the exclusion of economic operators by the Exclusion Committee.

Proposed Changes to the Regulations

The proposed amendments, titled ‘Management of the Execution of Public Contracts and the Procedures for Excluding Economic Bodies from Public Procurement Procedures (Amendment) Regulations of 2024’, aim to delegate more authority to contracting entities, in an effort to avoid disproportionate bureaucracy.

Key updates include:

  1. Clarification of the definition of a public official to include individuals employed under private law contracts in contracting authorities, to formalise processes for approving time extensions and timeline modifications;
  2. Introduction of inflation-adjusted decision-making carried out by the head of the contracting authority for contracts not exceeding €100,000, instead of requiring referral to TEAA and/or KEAA; and
  3. Delegation of authority to KEAA to inspect contract execution sites for direct assessments.

In relation to claims, the only adjustment is an amendment of the overall limit for the Sectional Committees on Changes and Claims, which will receive a €10,000 increase (i.e., from €40,000 to €50,000) for contracts valued between €100,000 and €500,000. This change aims to rationalise the process while considering other existing limits for the Sectional Committees. Importantly, all other authority thresholds for responsible bodies will remain unchanged.

Additionally, the amendment proposes a streamlined process for the exclusion of economic operators. More precisely, it requires that final decisions on exclusions are to be made by the Exclusion Committee for Economic Bodies (the Exclusion Committee)only following an examination and confirmation by the Tender Review Authority. The Exclusion Committee will no longer address exclusion cases directly based on informal notifications.

Finally, the amendments include provisions for maintaining a registry of terminated public contracts and contractors, managed by the competent authority for public procurement.

Significance and Implications

These amendments are expected to significantly reduce KEAA’s administrative burden, easing its focus on high-value and complex matters. For public contracts below €100,000, contracting entities will assume greater responsibility, reducing delays and aligning decision-making with contract value.

This change is crucial for Cyprus, as it ensures faster project implementation and better allocation of public resources. By addressing inflation and excessive procedural requirements, the reforms promote more efficient public spending, ultimately benefiting taxpayers and the economy as a whole.

For more information or any inquiries, please feel free to write to the members of the Public Procurement, Competition & State Aid team or contact us at [email protected]