🧑💼🧑💼 🧑💼 🧑💼 🧑💼 🧑💼 Procurement Law
Preamble
Liberland is a night watchman State and will operate with precious little resources by design. To allow even those resources to go to waste is to endanger the very foundations of the State, to turn it into a lawless wasteland by the resulting absence of a competent government. The malpractice in extant states shows us abundantly that there is no place in a free society for exceptions regarding procurement, as those are corruption and waste risks untenable in Liberland.
This Law shall represent the complete process rules on the level of the Law on how the State shall procure goods and services.
Section 1: Procurement
Art. 1: Procurement
Procurement shall be when Liberland, the Administration and any other body, organ or an Agent acting in the state's service in form or fact enters a contract to obtain goods and services, henceforth "Procurement Object", in exchange for a counter-performance such as money money-like instruments or goods and services.
Procurement begins with the intention to obtain those objects and ends with the obtainment, although legal effects as stipulated in this Law shall survive this moment.
Art. 2: Levels of Procurement
§ 1
There shall be several procurement levels depending on how expensive the Procurement Object is. These levels influence how formal the Procurement process must be and how strict the criteria for transparency shall be.
§ 2
There shall be the following Levels of Procurement:
a) The Routine Level, where no process is necessary besides the accounting due diligence as common in the business world; this shall be procurement up to 1/10th of a BTC.
b) The Standard Level, where the Standard Procurement Process applies in addition to the accounting due diligence and which pertains to expenses up to 5 BTC; and
c) The Expensive Level above 5 BTC, where the Enhanced Procurement Process applies, in addition to all the above.
To determine the correct Level for any given Procurement, the total expenses shall be counted for the entire project. Where the total expenses calculated before or during the procurement and the total expenses in hindsight differ, the calculation having more information shall prevail.
This may allow for situations where a Procurement may be declared illegal by the Courts ex-post because the wrong Level was used for the first purchase.
Art. 3: Routine Level
The Routine Level shall not be governed by any special process in this Law, though all its principles apply to it as well; such procurement shall require all the Agents and Elected Official concerned to perform their duties with due diligence, on the level equal or better to that of the Fiduciary Duty of a Principal of a Company as per the Company Law.
Art. 4: Responsibility
An Agent and any other person or entity facilitating the Procurement, henceforth "Emptor", shall bear the responsibility for the results of the Procurement and the only way to eschew this responsibility shall be on the cause of an objective act of higher power the Emptor couldn't have predicted even while acting with due diligence.
Where superior Agents or Elected Officials should overturn the decision of the Emptor, this shall likewise exculpate the Emptor; the overturning superiors shall henceforth assume the responsibility for the entire Procurement.
Art. 5: Due Diligence and Transparency
All persons engaged in Procurement shall act with the utmost diligence. All their actions shall be transparent. Transparency requires that they not only be compliant with the Constitution, the Law, International Law and morality and customs of good trading, but their conduct shall be such so as not to seem suspicious.
Art. 6: No Exceptions
Any legislation in Liberland existing on any level, be it a Law, a Decision, a Decree, an Edict or something else entirely, that concerns itself formally or materially with Procurement for the use of the State, the Public Sector, Public Domain, Public Interest, the Fiscus and any other such purpose, henceforth, "Procurement Legislation", shall never contain Exceptions in any way, nor shall be amended later to include these. An Exception shall be any derogation that intends to set up differing rules for a particular sector, situation, crisis, person, institution, State or any other thinkable subject or object of the Procurement.
Art. 7: Singularity
There shall only be one set of rules having legal force at any given time as to how the Public Administration or any other body of the State or its Agents in the service of the State ever procures goods and services.
This shall not prevent the Administration from securing further ammendments to the Procurement Legislature, but these shall directly replace and derrogate the old provisions or, where required, the old law, so that the Procurement Legislature remains codified in one single Law and with one single set of logically structured sub-legal Regulations where required.
Section 2: Standard Procurement Process
Art. 8: Intention
§ 1
The State, acting using the Public Administration, its Agents or other persons or entities, henceforth the "Stakeholders", shall inform the Emptor that they wish to procure a product or a service.
The Stakeholders and the Emptor shall formulate the intentions behind the Procurement, the procurement conditions, the price limits, and the total budget, henceforth the "Intention".
§ 2
The Stakeholders shall be able to monitor and, where needed, overturn the decisions of the Emptor during the Standard Procurement Process.
Art. 9: Market Research
§ 1
The Emptor shall begin the Procurement by conducting a thorough Market Research and Analysis. Where necessary, they shall contact the possible Suppliers and find out details, including sample offers.
§ 2
The Emptor shall select the most suitable suppliers and list them in the file regarding that particular Procurement, henceforth, "Procurement Documentation". They will also note what the reason for their selection was.
Art. 10: Determining Possible Suppliers
§ 1
The Emptor shall, where possible, make sure to obtain the propositions of at least five suitable suppliers or determine with certainty that fewer suppliers are willing to accept the conditions as Intended by the Stakeholders.
Where this should prove impossible, the Emptor shall document why this was impossible. There shall be at the very least two suppliers; where less than that exist, the Emptor shall cancell the Procurement as it can't be performed transparently with but a single possible suplier.
§ 2
Upon being informed by the Emptor that there are less than two suppliers, the Stakeholders shall either reformulate their Intention in order to include more suppliers, or they shall accept that there shall be no Procurement at this time.
Art. 11: The Offer
§ 1
Based on the Market Research, the Emptor shall learn what is available and the prices. They will inform the Stakeholders of their findings and, together with them, shall formulate the Offer.
The Stakeholders shall then Finalize the Offer. An Offer that is Finalized shall be changed neither by the Stakeholders nor by the Emptor.
§ 2
The Finalized Offer shall contain
a) the thorough and clear description of the project;
b) the listed products or services that are required for the project and the reasons are given why;
c) the price range acceptable to the Stakeholders;
d) all the important special conditions of the future contract might influence the Offer's acceptance, performance and other factors of importance.
Art. 12: Publication
§ 1
The Offer shall be made public for at least 15 workdays, using electronic communication methods to make it visible to as many Suppliers as possible.
The Offer shall also be communicated directly to the Suppliers determined as the most suitable during the Market Research.
§ 2
The published Offer shall contain the instructions on how to respond to the Offer and the Final Date on which the Emptor wishes to close the Contract. That date shall be at least 20 days after the Publication date.
Art. 13: Preliminary Selection
After the Publication, the Emptor shall gather the responses to the Offer. They shall make a comparative analysis and determine the most suitable candidates to close the contract with.
There shall be at least three such candidates wherever possible, and the situation where there are non must be transparently explainable. Where this is not possible, the Emptor shall terminate the Procurement and inform the Stakeholders that the Intention must be reformulated to enable more possible suppliers.
Art. 14: Background Checks of Suppliers
§ 1
The Emptor shall perform a thorough background check and a KYC procedure on the entity of the candidate Supplier and the persons negotiating for them.
Where this procedure shows that a Supplier might represent a High Risk to Liberland, the Emptor will replace such a candidate with the next candidate on the list.
§ 2
The Emptor shall inform all the other Suppliers that they have not been selected. They will disclose the truthful reasons for this non-selection.
Art. 15: Negotiation
§ 1
The Emptor shall then enter the Negotiation with the chosen Suppliers. During the Negotiation, they shall be able to change the terms of the Offer only where this is to the clear and direct benefit of Liberland; the maximal price requirements might not be exceeded under any circumstances.
§ 2
The Emptor shall thoroughly document the Negotiation, and they shall make truthful minutes of all the meetings.
§ 3
Where the conduct or other circumstances of a candidate Supplier point to the fact that this Supplier might not be acting in good faith or that proceeding further might not be in the best interest of Liberland, the Emptor shall abandon this Supplier and restart the Negotiation with the next candidate on the list.
They shall document this decision and inform the rejected Suppliers of the reasons for the rejection.
Art. 16: Final Terms
§ 1
The outcome of the Negotiation shall be the Final Terms. These will be the final offers of each candidate Supplier, and they shall be complex and thorough, resembling the intended future Contract in every way.
The Emptor shall inform the candidate Suppliers that these offers must be like the future Contract and where the Contract would differ from those in a significant way, the Supplier will be rejected.
§ 2
The Emptor shall compare the Final Offers and the documentation from the negotiations and the KYC processes. They shall propose the best candidate in their opinion and give a reasoned proposal to the Stakeholder, comparing all the candidates.
Art. 17: Selection
§ 1
The Stakeholders shall select the Supplier to offer the Contract to. The result of the Selection doesn't need to follow the recommendation of the Emptor, but where it doesn't, the Stakeholders shall document why they selected another candidate.
§ 2
The Stakeholders shall select the candidate who offers the best price unless there is strong evidence of the exceptional, short to mid-term benefits to Liberland of choosing the given Supplier over other, cheaper options. Even in that case, the price shall not be significantly higher than the best price.
Where the Final Selection favours the candidate who didn't offer their services for the lowest price, the Stakeholders must give thorough reasoning to back up their decision.
Art. 18: Informing Candidates
The Emptor shall inform the selected Supplier of their decision and inform other candidates of the outcome, including the thorough reasoning for the rejections.
Art. 19: The Contract
§ 1
The Supplier and the Emptor shall agree on the final Contract and present it to the Stakeholders.
§ 2
The Stakeholders shall wait for five workdays to allow the other candidates to bring in their complaints about the decision. The Stakeholders shall consider any complaints that come, and should they find merit in them, they shall restart the Final Selection process.
§ 3
After the complaints have been answered, or should none come, the Stakeholders shall sign the Contract.
Section 3: Enhanced Procurement Process
Art. 20: Public Tender
§ 1
The Enhanced Procurement Process requires that the Procurement take a transparent Public Tender. The Supplier will be chosen based on the best price only. The Enhanced Procurement Process begins with an Intention formulation and Market Research. These shall follow the Standard Procurement Process.
§ 2
There shall be no list of preferred Suppliers; instead, the Emptor shall inform the Suppliers that the Research represents no intention to make a selection. The only way to be selected is to win the Public Tender.
Art. 21: Criteria and the Contract
§ 1
The Emptor and the Stakeholders shall prepare the Criteria for acceptance, including the maximal price, just as they would for the Standard Procurement Process. Those criteria shall be final.
They shall also draft the Contract, which shall be the object of the Public Tender. This Contract shall likewise be final and non-negotiable, even where later obvious mistakes should be stated. The only way to change the Contract shall be to end the Procurement and start again.
§ 2
The Stakeholders and the Emptor shall formulate the Criteria and the Contract in a way that allows the widest variety of possible suppliers to apply. Under no circumstances shall the Criteria be set up in such a way that would suggest they are set up to favour one Supplier or a small group of Suppliers.
Art. 22: Central Emptor
§ 1
All Enhanced Procurement shall be handled by the Central Emptor of Liberland, an Agency under the Ministry of Justice. This Agency shall be staffed by experts in procurement of impeccable skill and good repute. Any Enhanced Procurement that should be assigned to another organ or Emptor shall be deemed as illegal from the start.
§ 2
The Stakeholders shall not influence the Procurement beyond setting up the initial Intention, the Criteria and the Contract.
Art. 23: The Offer
Like with the Standard Procurement Process, the Stakeholders and the Central Emptor shall form the Offer based on the Market Analysis. In the case of the Enhanced Procurement Procedure, however, the Offer shall be truly final, and there shall be no possibility to change any part of it after it is published and the Shareholders shall not be able to retract the Offer.
Art. 24: Publishing the Offer
The Central Emptor shall publish the Offer as part of the open Invitation to the Public Tender. This Invitation shall be open for at least 30 days to allow the candidate Suppliers to post their offers.
Art. 25: The Invitation
§ 1
The Invitation shall contain at least the following information:
§ 2
a) The requirements on the form, background and professional credentials of the Supplier;
b) The thorough description of the products or services being procured;
c) The duration of the Public Tender;
d) The sample contract which the Emptor intends to close with the Supplier; and
d) The description of the process as stipulated by this Law.
Art. 26: Selection
§ 1
After the Publication, the Emptor shall gather the responses of the candidate Suppliers. They shall make a threefold selection process:
§ 2
1) They shall determine whether a supplier fulfils the objective criteria for a candidate; and
They shall perform a thorough and strict KYC on the supplier and their UBOs and the persons or entities negotiating for the supplier.
§ 3
Should less than three Candidates pass the Selection, the Central Emptor shall cancel the Procurement where there are less than three because it would be impossible to keep it transparent with fewer candidates.
§ 4
The Central Emptor shall inform all the Suppliers that they have not been selected. They will disclose the truthful reasons for this non-selection.
Art.27: Auction
§ 1
The final selection shall take the form of an open auction, which shall take at most ten workdays. The Emptor shall declare the winning Suppliers from the Preliminary Selection and publish their price offerings. They will then be allowed to bid against each other, offering their services at the lowest price.
§ 2
The Supplier who offers the lowest price upon the moment the Auction ends shall win the Public Tender and there shall be no other decisionmaking made. The Stakeholders shall then sign the Contract with them.
Section 3: Final Provisions
Art. 28: Legal Force
This Law shall gain Legal Force on ... and remain in force in perpetuity or until its legal effects should be terminated or another Law should replace it.
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