Contractors’ clarifications and retention of bid bonds | In Principle

The regulation on retention of a contractor’s bid bond has not uniformly interpreted. Two different views have developed in the case law and the legal literature on the situations when the contracting authority can apply this sanction.

Under Art. 46(4a) of Poland’s Public Procurement Law, the contracting authority shall retain a contractor’s bid bond, together with interest, if when summoned by the contracting authority the contractor fails to submit statements or documents confirming fulfilment of the conditions for participation in the procedure, selection criteria, requirements laid down by the contracting authority, and the absence of grounds for exclusion (e.g. the Single European Procurement Document), or powers of attorney, or fails to consent to correction of immaterial discrepancies between the contractor’s offer and the terms of reference for the procurement.

The dominant view, which is more liberal and friendly for contractors, is that the contracting authority will refuse to return the bid bond only when the contractor has displayed negligence, for example by failing to respond to a summons by the contracting authority or not even attempting to supplement the offer or submit the relevant documents.

An opinion issued by the Public Procurement Office also indicates that the bid bond cannot be retained in a situation where, objectively, the contractor and the services, supplies or construction works it offers do not meet the conditions or requirements laid down by the contracting authority. In other words, the obligation to retain the bid bond pursuant to Art. 46(4a) of the act does not apply to contactors who have submitted offers but in fact are not eligible to participate in the procedure (for example because they lack the required experience), or could not offer the goods or services sought in the procurement.

In short, two different situations may be distinguished with reference to Art. 46(4a):

• The contracting authority summons the contractor, and the contractor responds, but the documents submitted in response to the summons do not show that the contractor meets the conditions for participation in the procedure.
• The contracting authority summons the contractor, but the contractor does not respond, attempt to supplement its offer, or submit the requested documents.

Under the view discussed above, only in the latter case can the contracting authority refuse to return the contractor’s bond. If the contractor at least attempts to supplement the documents, the bond should not be retained.

This interpretation has been extensively applied in cases before the National Appeal Chamber (KIO). For example, in the ruling of 11 March 2014 (KIO 401/14) the chamber took the view that “the sanction of retaining the bond is imposed only when, despite a summons, the contractor intentionally fails to submit any documents, statements, powers of attorney etc.” The Białystok Court of Appeal also took this view in the judgment of 18 June 2014 (Case I ACa 275/14), holding that the contracting authority should return the bid bond if the contractor provided documents in good faith which nonetheless did not meet the requirements for participation in the tender. The Supreme Court of Poland addressed this issue in the judgment of 7 July 2011 (Case II CSK 675/2010), where it held that “the contracting authority may effectively retain the bid bond together with interest if the contractor does not submit the required documents or statements at all, not when it provides the information in the wrong form.”

However, a different view has also arisen in the case law, under which the bond should always be retained when the contractor is unable to supplement its documentation to show that it meets all the conditions for participation in the procedure. This was the holding for example in the Gliwice Regional Court judgment of 16 July 2009 (Case XIX Ga 268/09), under which the contractor’s submission of a document different from the one demanded by the contracting authority means that the correct document is physically missing.

The Constitutional Tribunal adverted to the divergence between these views in its order of 9 May 2012 (Case P 47/11), stating that in practice, it is up to the court resolving the dispute between the contractor and the contracting authority to choose the correct interpretation of this provision. But at the same time the tribunal appeared to favour the view favourable to contractors, stating that if a contractor summoned under Art. 26(3) of the Public Procurement Law provides documents not meeting the contracting authority’s expectations that is not grounds for retaining the contractor’s bond.

In summary, despite the discrepancy in views concerning this regulation, the dominant view appears to be that objective failure to meet the conditions for participation in a tender does not in itself require the contracting authority to retain the bond.

Nonetheless, the contractor faces the risk that the contracting authority will take the more restrictive view and decide to retain the bond in such circumstances. In that case, relying on the case law discussed above holding that there is no right to retain the bond when the contractor attempts to supplement the documents but ultimately does not satisfy the contracting authority, the contractor can challenge the contracting authority’s decision before the National Appeal Chamber.

It should also be stressed that even when the more liberal view on this issue is adopted, it will be vital to determine whether the contractor made due efforts when responding to the summons from the contracting authority. It is undisputed in the case law that “return of the bid bond is possible only when it is found that the contractor cannot be accused of any neglect under Art. 46(4a) of the Public Procurement Law” (Kraków Court of Appeal judgment of 12 July 2016, Case I ACa 340/16). If the contracting authority has reservations as to efforts taken by the contractor or the contractor has obviously been negligent in responding to the summons, it may decide to retain the bond.

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

Update:

On 22 June 2017, after this article was published, the Civil Chamber of the Supreme Court of Poland issued a resolution (Case III CZP 27/17) holding that a contractor’s bid bond is subject to retention if in response to a summons by the contracting authority, the contractor submits the relevant documents or statements but they do not confirm the circumstances referred to in Art. 25(1) of the Public Procurement Law. An article discussing this resolution is found here.