Joanna Florecka

The treatment of subcontracting issues in terms of reference

The contracting authority may require in the terms of reference that a portion of the procurement be performed personally by the contractor. Absent such restriction, the contractor may assign performance of even the entire contract to a subcontractor.

A public contract in Poland is awarded to a contractor selected in accordance with the requirements of the Public Procurement Law. However, as expressly provided by Art. 36a(1) of the law, the contractor may generally entrust performance of the contract to one or more subcontractors.

Under Art. 36a(2), the contracting authority may require the contractor to personally perform key portions of a contract for construction works or services, or work involving siting and installation under a supply contract. Such reservation must be included in the terms of reference for the procurement.

The contracting authority may require personal performance of the portions of a procurement for construction works or services which are essential for performance of the entirety of the work connected with performance of the contract. It is the contracting authority which decides which portions of the procurement it regards as essential. However, in the case of a supply contract for goods or intangibles, the duty of personal performance is limited to the requirement of personal siting and installation of the goods or intangibles.

A reservation of personal performance will not be effective, however, against a contractor which relies on the capacity of other entities in order to meet the conditions for participation in the contract award procedure. In that case, in areas where the contractor has relied on the capacity of third parties to meet the conditions for participation in the procedure it will be able to entrust performance of the contract to them even for the tasks reserved for personal performance by the contractor.

The contracting authority may require the contractor to indicate which portions of the contract it intends to entrust to a subcontractor. It may also require the contractor to identify the subcontractors whose capacity it is relying on to meet the conditions for participation in the procedure for award of the public contract. If the contractor was required to identify the subcontractors but failed to identify any subcontractors, it may generally be assumed that the contractor has undertaken to perform the contract itself.

Subsequent conclusion of a subcontract could be regarded as a material modification of the procurement contract, and it is prohibited to make a material modification as compared to the offer on the basis of which the contractor was selected, unless the contracting authority admitted this possibility in the contract notice or the terms of reference. It should be pointed out, however, that if the contractor independently met the conditions for participation in the procedure and later entrusted performance of a portion of the contract to a subcontractor in an area which was not reserved to personal performance by the contractor, the situation could be regarded as a non-material modification.

Under the Public Procurement Law, if the contracting authority does not exercise its right under Art. 36a(2) to require personal performance, the contractor may entrust performance of the entire contract to another entity. This is supported by the reading of Art. 36a. Since a contractor may entrust performance of the contract to a subcontractor, and in this case the contracting authority has not exercised the right to require personal performance of essential tasks by the contractor, then it follows that the contractor has the right to entrust performance of even the entirety of the contract to a subcontractor. The Public Procurement Office also took this position in an opinion issued on 20 January 2014.

In the case of a procurement for construction works, the contracting authority may specify in the terms of reference the requirements concerning subcontracts involving construction works. However, in the case of subcontracts for supplies or services, the contracting authority may specify in the terms of reference which subcontracts need not be submitted to the contracting authority in light of their subject matter or value.

Joanna Florecka, Infrastructure & Transport and Public Procurement & Public-Private Partnership practices, Wardyński & Partners