Supplementation of documents in procurement proceeding and retention of bid bond

There has been a great divergence in interpretation of the grounds for retention of bid bonds. A recent resolution by the Supreme Court should unify the practice of contracting authorities on this issue. But the justification for the resolution itself admits certain exceptions from the obligation to retain the bid bond, even when the documents submitted by the contractor fail to confirm fulfilment of the requirements of the tender.

Supreme Court of Poland resolution of 22 June 2017 (Case III CZP 27/17)

In the case ruled on by the Supreme Court, a contractor had submitted a bid in a procedure for award of a contract for creating the permanent exhibition for a museum. After opening the offers, the contracting authority summoned the contractor to supplement its documents confirming fulfilment of one of the conditions for participation in the proceeding—to show that in the three years prior to the deadline for filing offers, the contractor had provided services on at least two occasions involving execution of a multimedia museum exhibition and the relevant design documentation. In response, the contractor supplemented its documents by submitting a new list of services it had performed, with references. The contracting authority approached one of these entities seeking confirmation of the reference. The contracting authority learned that the contractor had not performed the multimedia exhibition services but only minor related technical activities. Consequently the contracting authority excluded the contractor from the tender.

After the National Appeal Chamber denied the contractor’s appeal, it filed a complaint with the regional court. The court held that the right to retain the bid bond existed only when the contractor displayed complete inactivity in response to the summons, failing to physically submit any documents or statements.

On appeal, the court of appeal decided to seek a ruling on a legal question from the Supreme Court, which held that failure to submit documents (or statements) should be understood to cover a situation where the contractor does submit documents or statements which nonetheless fail to confirm that the contractor meets the conditions for participation in the tender or that the good and services offered by the contractor meet the requirements specified by the contracting authority.

The Supreme Court also averted to the existing discrepancy in interpretation and application of the relevant provision (Art. 25(1) of the Public Procurement Law) in the decisions of the National Appeal Chamber and the courts. According to the Supreme Court, the justification for the amendment to the Public Procurement Law dated 4 September 2008 indicated that the legislative intent was to equalise the position of a contractor that fails to present documents and statements confirming fulfilment of the conditions for participation in the proceeding with that of a contractor that refuses to conclude the contract or fails to provide the required security for proper performance of the contract.

The justification for the resolution also stresses that limiting application of this provision to instances of complete passivity by contractors would not combat cases of collusion by contractors, which was the main aim of this provision. The court pointed out that this approach would enable avoidance of the regulation by simply submitting any sort of document at all failing to confirm fulfilment of the conditions. This line of interpretation would also weaken the protection of contracting authorities against bad-faith behaviour by contractors.

But the Supreme Court also stated that “there is no reason to find that the sanction of forfeiture of the bid bond can be applied in relation to a contractor who, in good faith, submitted documents to the contractor which nonetheless, in the contracting authority’s view, failed to confirm fulfilment of the requirements for participation in the tender” (citing the justification for the Constitutional Tribunal order of 9 May 2010, Case P 47/11). Thus a contractor acting in good faith can still argue that its failure to submit documents and statements referred to in Art. 25(1) of the Public Procurement Law, or the relevant powers of attorney, occurred for reasons not attributable to the contractor, e.g. because it was not given sufficient time to obtain the documents, the summons, contract announcement or terms of reference were imprecise, or the documents were evaluated according to vague or ambiguous criteria.

Thus the position holding that a contractor will not necessarily sacrifice its bid bond even if it submits documents and statements failing to confirm fulfilment of the conditions for participation in the tender remains alive.

In the case before the Supreme Court, the contractor’s offer was rejected because of the contractor’s intentional or accidental misclassification of its own services, seeking to inflate the work it had done to suit the requirements for the tender. But in procurement proceedings, it is vital for contractors to display due care in responding to a summons from the contracting authority and ensure that their efforts are above reproach.

Hanna Drynkorn, Przemysław Gruchała, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners