New Public Procurement Law: The draft has arrived
On 24 January 2019, the Ministry of Entrepreneurship and Technology presented a draft of the new Public Procurement Law. The extensive new law is intended to simplify and streamline regulations so public procurement becomes more efficient and user-friendly.
The Public Procurement Law currently in force has been amended dozens of times. Several of these amendments were very extensive and of crucial importance, as they were the means to implement EU directives into the Polish legal order. Most of the ad hoc changes to the law adjusted the law to the needs of the changing legal and economic situation, which, unfortunately, resulted in growing incoherence of the entire law.
Finally, the Public Procurement Law had become illegible for an average market participant and contained so many patches that it had to be rewritten. The draft of the new Public Procurement Law responds to this need. It takes into account the Classic Directive (2014/24/EU), the Utilities Directive (2014/25/EU), the Defence Directive (2009/81/EC), as well as the appeal directives.
Statistical data show the importance of this regulation. The proponents of the new law point out that in many sectors, one in four businesses generate more than half of their revenue from public procurement, and for one in ten businesses it represents 75% of their revenue. Therefore, appropriately targeted and managed public procurement can be an important growth factor for companies. In principle, an effective and clear procedure can promote economic and development objectives, as well as social policy and the labour market. It can support the economy of the state and businesses operating in the country.
The draft of the new Public Procurement Law is much broader than the current law. Although many institutions would remain unchanged, the provisions governing them are extended and regrouped. The main aim of the drafters was to achieve readability, which they tried to attain by minimising the number of cross-references, so that the shape of the regulation could be easily understood. Unfortunately, it seems that this way, in some cases to the detriment of the act, the conciseness of provisions which could have been interpreted in accordance with the spirit of the law has been lost.
The proponents attach greater importance to the stage of planning and preparation of tender proceedings. On the other hand, the draft contains simplifications with regards to the subjective qualification of contractors: it will be easier to take part in procedures, and that should be reflected in the number of bids received.
The proposal also introduces some new procedural features. Some are fundamental, such as the basic procedure. All contracts below the EU thresholds are treated in blocks, i.e. as generally subject to a single selection procedure. The new procedure applicable to them is called the “basic procedure,” and provides for three different forms allowing the procedure to be adapted to the nature of the contract. The basic mode is intended to initiate greater dialogue between the contracting authority and contractors.
A new conciliation procedure is also a complete novelty—a new approach for out-of-court settlement of disputes relating to the performance of public procurement contracts. The Public Procurement Court is another new institution: a specialised department of the Warsaw District Court which will handle all complaints against rulings by the National Appeal Chamber (KIO). This will certainly improve the quality of the case law, although it will also cause inconvenience for parties operating far from Warsaw.
Art. 470 lays down an obligation for the contracting authority and the contractor selected in the procedure to cooperate with a view to proper performance of the contract. The existence of such an obligation cannot be denied under the current Public Procurement Law, as it is derived from the Civil Code rules on performance of contractual obligations, which, after all, the new law does not exclude. The justification of the draft states that articulation of the principle of cooperation is designed to achieve the purpose of the procedure, which is the proper performance of the resulting contract. It is certainly to be welcomed that the drafters noticed the phenomenon of excessive one-sidedness of contracts. The aspiration to reduce the disproportion between the parties is also expressed in the ban on framing the provisions of contracts in gross disproportion and in the introduction of regulations enabling escalation of prices in long-term contracts for construction works or services. More flexibility has also been introduced in innovation procedures: a lack of joint and several liability between contractors in such projects can attract innovation to the public sector.
Unfortunately, the draft lacks provisions addressing problems with digital procurement already known to market participants. It is already clear what practical problems require regulation and how ad hoc decisions may negatively impact the market in this respect. Perhaps the position of the president of the Public Procurement Office, strengthened by new regulations, will enable the promotion of good practice furthering the purpose of digitalisation in procurement, which includes the efficiency of proceedings.
The bill now awaits an intense, quite short, consultation stage. It is planned that the new law will come into force at the beginning of 2020 and be adopted in autumn 2019 at the latest. Whether the new regulation meets the hopes placed in it remains to be seen. However, it is already known that some provisions will require fine-tuning at the draft stage. We write about them in other articles in today’s edition.
Anna Prigan, attorney-at-law, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners
