Bulgaria - Selling to the Public Sector

Selling to the Public Sector

Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.

Last published date: 2022-09-11

Selling to the Government

Government procurement in Europe is governed by both international obligations under theWTO Government Procurement Agreement (GPA) and EU-wide legislation under the EUPublic Procurement Directives. U.S.-based companies can bid on public tenders covered by the GPA, while European subsidiaries of U.S. companies may bid on all public procurement contracts covered by the EU Directives in the European Union.

Under Bulgaria’s procurement law, a government procurement agency, which reports to the Minister of Economy, was established to ensure and monitor the implementation of the state’s public procurement policy.

Bulgarian law uses the following public procurement procedures:

open public tender procedure
restricted tender procedure
competitive dialogue
competitive procedure with negotiation and open publication
negotiated procedure without prior publication, and
design contest.

Procurement opportunities exist in numerous infrastructure sectors such as airports, energy, roads, and railroads. All international and domestic companies are eligible to participate in public procurement tenders. The Commission on Protection of Competition (CPC) is the authority that enforces both the Law on Public Procurement and the Law on Protection of Competition. A law on ‘public – private partnerships’ adopted in 2012, states that a public partner in a public – private partnerships can be:

a minister or the head of department
the mayor of a municipality; or
a state and/or municipal public organization

The AmCham in Bulgaria has an active Procurement Committee which can also be consulted (www.amcham.bg).

Financing of Projects

U.S.-Based Financing

The U.S. Export-Import (EXIM) Bank is a source of export financing and insurance for U.S. transactions in Bulgaria. Exim Bank will guarantee a commercial bank loan up to 85 percent of the value of the contract. Exim Bank will also accept guarantees from larger municipalities.

Previously the Overseas Investment Corporation (OPIC), the U.S. International Development Finance Corporation (DFC) is the U.S. Government’s developing finance institution. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today. More information: https://www.dfc.gov/.

The U.S. Trade and Development Agency (TDA) promote U.S. exports by funding feasibility studies, technical assistance, training programs, and orientation visits. More information: https://ustda.gov/.

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign assistance agency that is helping lead the fight against global poverty. More information: https://www.mcc.gov/about

Financing from International Institutions

The European Bank for Reconstruction and Development (www.EBRD.com), whose largest shareholder is the U.S. Government, has a number of programs available for U.S. companies and has an office in Bulgaria (https://www.ebrd.com/bulgaria-data.html). The Bank provides loans and takes equity stakes in infrastructure and private-sector development projects and mandates open competitive tenders.
The World Bank’s procurement procedures enable U.S. exporters to bid on public procurement contracts. To date, approved projects have been in the energy, telecommunications, residential heating, railways, environmental, health and public administration sectors. See: http://www.worldbank.org/
The Multilateral Investment Guarantee Agency (MIGA) is part of the World Bank Group. Its purpose is to encourage foreign investment in developing countries by providing investment guarantees, including political risk insurance, against the risk of currency transfer, expropriation, war, civil disturbance and breach of contract by the host government. For more information, please see: http://www.worldbank.org/en/country/bulgaria

EU-Based Financing

As an EU member, Bulgaria has access to project financing in the form of EU structural and cohesion funds for grants, loans, loan guarantees and co-financing for feasibility studies and infrastructure projects in several key sectors (environmental, transportation, energy, telecommunications, tourism, and public health).

U.S. exporters (suppliers and subcontractors) are eligible to bid on EU-financed projects. The U.S. Commercial Service at the U.S. Mission to the European Union https://www.trade.gov/european-union offers a tool on its website to help U.S.-based companies identify European public procurement opportunities.

Loans from the European Investment Bank (www.eib.org): http://www.eib.org/projects/pipeline/index.htm

The European Investment Bank (EIB), the financing arm of the EU, is a non-profit banking institution offering cost-competitive, long-term lending in Europe for private and public EU-based borrowers in all sectors of the economy. EIB projects must contribute to the EU’s socioeconomic objective to include:

fostering development of less favored regions
improving European transport and telecommunication infrastructure
protecting the environment
supporting the activities of SMEs
assisting urban renewal and
generally promoting growth, competitiveness and employment in Europe
Seven EU Operational Programs are available to Bulgaria from the European Investment Bank to include:

Structural Funds (SF): Bulgaria, through 10 national programs, benefits from SF funding of USD 11 billion over the period 2014-2020.

Bulgarian officials are the key decision-makers for SF funds. To become familiar with the available financial support programs in Bulgaria, would-be contractors should meet with local officials to discuss local needs.

Tenders issued by Bulgaria’s public contracting authorities for projects supported by EU grants are subject to EU public procurement legislation if they meet the EU minimum contract value requirement for the eligible sector. There are no overt rules prohibiting the participation of U.S. companies as developers or concessionaires of projects partially supported by the SF, or as bidders on subsequent public tenders related to such projects, but it is advisable to team up with a local partner.

All projects supported by the SF are co-financed by national authorities and most may also qualify for a loan from the European Investment Bank. The private sector is also involved in project financing.

See approved programs at: http://ec.europa.eu/regional_policy/index_en.cfm and http://export.gov/europeanunion/marketresearch/index.asp

The Cohesion Fund (CF): For 2014-2020 the CF has USD 70 billion targeted for Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, and numerous other countries, in the following project areas:

Trans-European transport networks, involving EU priority infrastructure projects that support the Connecting Europe Facility.

Projects in energy or transport that benefit the environment in terms of energy efficiency, use of renewable energy, developing rail transport, supporting intermodal ties, strengthening public transport, etc.

See: http://ec.europa.eu/regional_policy/thefunds/cohesion/index_en.cfm

The EIB presents attractive opportunities to U.S. businesses with low interest rates. However, U.S. firms must be certain that projects for which they are applying for funding contribute to the European objectives cited above.