DZZD in Bulgarian Public Procurement — Rules & Practice (2026)

What you will learn in this article

• The legal framework for consortium participation in public procurement
• Practical steps for forming a consortium (DZZD) for a tender
• Mandatory content of the consortium agreement
• ESPD rules and selection criteria pooling
• Guarantees — participation and performance
• Consortium vs. subcontractor — when to choose which
• Tax treatment and common mistakes

Legal framework — PPA and OCA

Participation of consortia in public procurement is regulated by the Public Procurement Act (PPA):

• Art. 10(2) PPA — permits participation by consortia of individuals and/or legal entities. No specific legal form is required for participation.
• The contracting authority cannot require the consortium to be registered as a legal entity before submitting a tender.
• If selected as contractor, the contracting authority may require a specific legal form — but only after selection.

Most commonly, consortia are formed as DZZD under Art. 357–364 OCA, as this form is fast, inexpensive, and does not require registration in the Commercial Register.

Formation of a consortium for public procurement

The practical steps for creating a consortium are:

1. Identify partners — companies whose experience and resources complement each other to meet the selection criteria.
2. Conclude a consortium agreement (DZZD) between the partners.
3. Designate a lead partner (representative of the consortium).
4. Allocate activities, responsibilities, and shares.
5. Register the DZZD in BULSTAT — not mandatory before submission, but recommended. The fee is BGN 10 (EUR 5.11).
6. Prepare the ESPD for each member of the consortium separately.
7. Prepare and submit the tender.

Consortium agreement — mandatory content

The consortium agreement is the key document and is submitted with the tender. It must include:

• Allocation of activities — which member performs which activities.
• Representative — the lead partner authorised to represent the consortium before the contracting authority.
• Joint liability — an explicit clause that all members are jointly liable to the contracting authority for contract performance.
• Shares — financial allocation between members.
• Term of the consortium — usually until completion of the procurement plus warranty periods.

Tender submission — ESPD and documentation

When a consortium participates, the following rules apply:

• The ESPD (European Single Procurement Document) is submitted separately for each member of the consortium.
• The consortium agreement is submitted with the tender.
• The tender is submitted by the representative of the consortium.
• Selection criteria are met by the consortium as a whole — each member may use the capacity of the others.

Selection criteria and capacity

One of the main advantages of a consortium is the pooling of resources:

• Each member can use the capacity of the others to meet the selection criteria.
• Turnover, experience, and staff of all members are aggregated.
• If a specific criterion (e.g. ISO certificate) is required for a particular activity, it must be held by the member performing that activity.

This is different from the subcontractor model, where the subcontractor must meet the criteria only for their activities (Art. 66(2) PPA).

Guarantees — participation and performance

Participation guarantee

The participation guarantee amount is determined by the contracting authority and is up to 1 % of the procurement value.

Performance guarantee

The performance guarantee is up to 5 % of the contract value (Art. 111 PPA). For reserved contracts for specialised enterprises for people with disabilities — up to 2 %.

The guarantee may be provided as:

• Bank guarantee
• Cash deposit
• Insurance

In a consortium, the guarantee is usually provided by the lead partner on behalf of the entire consortium.

Joint liability

Consortium members are jointly liable to the contracting authority for contract performance. This means:

• The contracting authority may seek performance or compensation from any one of the members.
• If one member fails to perform, the others must take over.
• Joint liability is explicitly stated in the consortium agreement.

This unlimited and joint liability is characteristic of DZZD under the OCA — unlike an LLC, where liability is limited.

After award — registration and performance

After being selected as contractor, additional steps follow:

1. Register the DZZD in BULSTAT (if not done before submission).
2. Register for VAT (if applicable and if the contract requires invoicing from the consortium).
3. Conclude the public procurement contract — usually by the consortium representative.
4. Organise accounting — DZZD is a taxable person under Art. 2(2) CITA and maintains separate accounts.
5. Perform the contract and issue invoices.

Consortium vs. subcontractor — when to choose which

When to choose a consortium (DZZD)

• When no single partner meets the selection criteria independently.
• For large and complex procurements requiring diverse competencies.
• When partners want equal participation.

When to choose a subcontractor

• When the lead contractor covers most criteria but needs additional specific expertise.
• For clearly separable activities.
• When a simpler organisational structure is preferred.

Subcontractors must meet the selection criteria for the activities they will perform (Art. 66(2) PPA).

Tax treatment of DZZD in public procurement

Corporate tax

DZZD is a taxable person under Art. 2(2) CITA and pays 10 % corporate tax on its taxable profit. It files an ATR under Art. 92 CITA.

VAT

If the DZZD is VAT-registered, it issues VAT invoices to the contracting authority. The right to tax credit is exercised by the DZZD for goods and services purchased for contract performance.

Mandatory VAT registration is required when turnover exceeds BGN 100,000 (EUR 51,130) over 12 consecutive months (threshold effective from 01.04.2025).

Profit distribution

Upon distribution of profit from contract performance:

• To individual partners — 5 % withholding tax (dividend under Art. 38 PITDA).
• To corporate partners — no additional tax.

Invoicing

Standard practice is for the DZZD to invoice the contracting authority directly. Internal settlements between the DZZD and its members are documented through internal records and protocols.

After completing the procurement

If the DZZD was formed solely for a specific procurement, after performance it is necessary to carry out the termination and liquidation procedure — including VAT deregistration and BULSTAT deregistration.

Common mistakes in consortium participation

CPC and court practice reveals several frequently made errors:

1. Incomplete consortium agreement. Missing allocation of activities or a joint liability clause may lead to exclusion.
2. Incorrect ESPD completion. Each member must complete an ESPD for their own circumstances. A joint ESPD for the consortium is not accepted.
3. Failure to meet criteria. If a specific criterion (e.g. certificate) is required for a particular activity, it must be held by the member performing that activity — it cannot be “shared”.
4. Change of composition after submission. Any change in the consortium composition after tender submission is risky and may lead to exclusion.
5. Incorrect guarantee calculation. The participation guarantee is up to 1 % (not 2 %) of the procurement value. An incorrectly stated amount may be grounds for exclusion.

Appeals before the CPC

The Commission for Protection of Competition (CPC) hears appeals against contracting authority decisions, including those concerning consortia (Art. 196 et seq. PPA). Typical grounds for appeal:

• Unlawful exclusion of a consortium.
• Incorrect assessment of selection criteria.
• Unlawful requirements in the documentation (e.g. requiring legal entity status before submission).
• Violations in tender evaluation.

Practical tips

1. Register the DZZD before submission. Although not mandatory, BULSTAT registration facilitates documentation and demonstrates seriousness.
2. Clearly allocate activities. Vague wording in the consortium agreement leads to disputes during performance and potential appeals.
3. Calculate guarantees correctly. The participation guarantee is up to 1 % of the procurement value — not 2 %. An incorrect calculation may lead to exclusion.
4. Verify your partners have no exclusion grounds. The ESPD is submitted separately — if one member is in breach, the entire consortium may be excluded.
5. Consider termination of the DZZD after completing the procurement, if it was formed solely for that purpose.

Frequently asked questions

Conclusion

Participating in public procurement through a DZZD (consortium) is a well-established mechanism that allows companies to pool their resources and meet selection criteria they could not satisfy individually. Success requires careful preparation of the consortium agreement, correct ESPD completion for each member, proper guarantee calculations, and awareness of joint liability implications.

If you are considering consortium participation in a public procurement, the team at Innovires Legal can assist with the formation of the DZZD, preparation of the consortium agreement, and tender documentation. Contact us for a consultation.

This article is prepared for informational purposes only and does not constitute legal advice. For a specific legal question related to your situation, please consult a qualified lawyer.