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17.02.2020

Sanctions compliance in public procurement

In February 2020, Dienas Bizness DB Hub featured an article drawn up by PRIMUS DERLING lawyer and CAMS Kristīna Markeviča and PRIMUS DERLING attorney-at-law Konstantīns Teļakovs, which describes sanctions compliance steps to be considered by all undertakings participating in public procurement.

All undertakings and bodies governed by public law must comply with international and national sanctions and sanctions of a member country of the European Union or the North Atlantic Treaty Organisation affecting significant financial and capital market interests, which impact the execution of contracts. It is important to know that the duty to comply with sanctions applies also to tenderers and subcontractors.

If a tenderer and its related parties are not covered by sanctions, the contracting authority, public service provider, public partner or its representative may enter into a contract. If a tenderer and its related parties are subject to sanctions, without impacting the execution of a contract, the contracting authority, public service provider or public partner also may sign a contract. Meanwhile, if a tenderer or its related parties are subject to sanctions, which impact the execution of a contract, the contracting authority, public service provider or public partner must exclude the tenderer concerned.

Where the contracting authority has provided for a possibility to make direct payments to a subcontractor who is, or whose related parties are, subject to sanctions, without impacting the execution of a contract, the contracting authority, public service provider or public partner may sign a contract. Meanwhile, if sanctions impact the execution of a contract, the relevant subcontractor must be excluded from the contract award procedure if the subcontractor is not replaced within 10 working days after a relevant request has been issued or sent according to the procedure laid down in public procurement law.

It is essential that the duty to comply with sanctions is treated seriously and comprehensively, and not merely formally, in order to facilitate peace and security all over the world

Read the full text of the article in Latvian here.