Klaudia Przybyłowicz

New rules for exclusion of bidders for public contracts

The Act dated 25 February 2011 amending the Public Procurement Law awaits signing into law by the President of Poland. The act will introduce new grounds for mandatory exclusion of a bidder from a public procurement procedure.

The instances in which a bidder may be excluded from a public procurement procedure are governed by Art. 24 of the Polish Public Procurement Law. The amendment will introduce a new subparagraph 1a in Art. 24(1) calling for mandatory exclusion of a bidder for non-performance or improper performance of a public procurement contract.

The contracting authority will be required to exclude the bidder from the procedure if there was a public procurement contract in force between the contracting authority and the bidder which the contracting authority dissolved, rescinded or terminated, due to circumstances for which the contractor was responsible, within 3 years prior to commencement of the procedure from which the contractor is to be excluded, and the value of the procurement that was not performed due to dissolution, rescission or termination was at least 5% of the value of the contract. All of these conditions would have to be met in order for the contractor to be excluded from the new procurement procedure.

The contracting authority will be entitled to exclude an unreliable contractor that failed to perform or improperly performed a public procurement contract for reasons attributable to the contractor. The contracting authority will be able to exclude the contractor from the procedure for granting all or part of the contract that was the subject of the procurement that the contractor lost, as well as any procurement procedures conducted by that contracting authority that are commenced within 3 years after the dissolution, rescission or termination of the contract.

The new provision will also apply to consortia or contractors jointly seeking a public contract. It will be possible to exclude a consortium if even a single member of the consortium is excludable for the foregoing reasons. It will be irrelevant for this purpose whether the contractor was a party to the previous contract on its own or jointly with other parties.

Under current law, the contracting authority is not entitled to exclude a contractor that failed to perform a prior contract or performed it improperly, unless the loss under the previous contract has been confirmed by a legally final judgment. This means that now a contracting authority may not exclude a contractor with whom it has already had the misfortune of receiving improper, unreliable or untimely performance, until the end of judicial proceedings, often lengthy, in the previous matter.

The new provision creates a freestanding basis for exclusion, which means that the contractor may be excluded first on this basis (before a final judgment is rendered in the prior matter), and then may be excluded as well under Public Procurement Law Art. 24(1)(1) (after the loss under the prior contract has been reduced to a final judgment).

The new provisions will not apply to procurement procedures commenced prior to the effective date of the amendment.

A bidder excluded from a procurement under the new Art. 24(1)(1a) will be entitled to appeal to the National Appeal Chamber under Public Procurement Law Art. 180, followed by a petition to the regional court under Art. 198a. In that case, the contracting authority that excluded the bidder will be required to demonstrate that a prior public contract with the bidder was dissolved, rescinded or terminated for reasons attributable to the contractor.

The new rule, providing an additional basis for exclusion, may significantly expedite public procurement procedures from which an unreliable bidder is excluded. It will also provide ammunition to contracting authorities who may now be powerless against a contractor that has not lived up to previous contracts.

Klaudia Przybyłowicz, Infrastructure, Transport & Public Procurement (PPP) practice, Wardyński & Partners