(last update - 22 march 2022)
A very large number of people from Ukraine are now coming to Poland to find shelter from the war. It is obvious that, apart from individual aid measures, the size of the tragedy and its effects require the involvement of state institutions. In particular, the process of organising direct support may sometimes require applying the provisions of the Act of 11 September 2019 – Public Procurement Law (“PPL”).
With this in mind, in a sense of responsibility and solidarity, we present key practical information which may be useful to entities having the status of a contracting authority under the PPL. To ensure the document's communicativeness, we present the prepared explanations in the form of 10 practical questions and concise answers.
The PPL issues of key practical importance for the efficient provision, in the public procurement system, of aid due to a humanitarian crisis include:
- the general scope of the obligation to apply the provisions of the PPL (Q 1-6),
- specific exclusions (Q7),
- the conclusion of contracts according to the single-source procurement procedure (Q8),
- andinstruments for “accelerating” purchasing processes (Q9-10).
1. Are there specific regulations for awarding contracts in the case of a humanitarian crisis?
No, as at the date of the publication of the statement, no regulations have been enacted that would regulate the award of public contracts to counter the negative effects of the humanitarian crisis caused by the war in Ukraine.
However, we would like to remind you that, in 2015, the European Commission published Communication COM (2015) 454 “on Public Procurement rules in connection with the current asylum crisis”. This document is a useful source of practical information on which the information contained in this statement is also based.
2. When is it necessary to apply the PPL’s provisions?
The application of the PPL’s provisions is obligatory only if the following conditions are (jointly) met:
- a contract for pecuniary interest is concluded by an entity having the status of a contracting authority,
- the contract value exceeds the “de minimis threshold” (see item 5 below),
- andthe contract is not covered by any subjective or objective exemptions.
3. Who is obliged to apply the PPL’s provisions?
The status of a contracting authority, i.e. the entity obliged to apply the PPL, is held by the entities referred to in Articles 4-6 of the PPL. A detailed analysis of this status may be problematic. In view of the challenges faced, it is important to emphasize that such a status is held, in particular, by:
- government administration authorities,
- local government units and their associations,
- metropolitan unions,budget units,
- local government budgetary establishments,
- executive agencies,
- public sector enterprises,state earmarked funds,
- independent public health care establishments,
- public universities, and
- State Treasury companies and municipal companies operating in so-called infrastructure sectors (Article 5(4) of the PPA).
4. Are foundations obliged to apply the PPL’s provisions?
This doubt is relatively common for foundations which receive public funding for their activities. The mere fact of obtaining a grant or other form of support to implement a specific project does not create an obligation to apply the PPL’s provisions. What is crucial is the nature of the financial aid. According to the valid opinion of the President of the Public Procurement Office, such an obligation arises where the support consists of financing the foundation’s general functioning. However, such an obligation does not arise where the support from public funds covers a specific project’s implementation.
5. What value of contracts require the PPL’s provisions to be applied?
If contracting authorities are public institutions (in particular, local government units and government administration authorities), the threshold for the mandatory application of the PPL’s provisions is PLN 130,000.
For “sectoral contracting” authorities, this threshold is:
- PLN 1,919,502 for supplies and services contracts,
- PLN 4,453,600 for social services contracts, and
- PLN 23,969,275 for construction works contracts.
The conclusion of contracts with a value lower than the amounts specified above does not require the PPL’s provisions to be applied. All the amounts given above are exclusive of VAT.
6. How to estimate the contract value?
The contract value is determined based on the economic operator's total estimated remuneration excluding value added tax (VAT), determined with due diligence. If the contracting authority has recently awarded contracts similar to those it intends to award in connection with the organisation of aid to Ukrainians and Ukraine, doubts may arise as to whether, to estimate the value of the contract, both “purchases” should not be aggregated.
If the contracting authority demonstrates that it could not foresee the need to award another, similar contract, then the condition of the time concurrency test would not be met. In such a situation, there will also be no obligation to jointly estimate the value of the contracts.
7. Is it necessary to apply the PPL’s provisions whenever the estimated value of the contract exceeds the de minimis threshold?
In these circumstances, there may be more frequent situations where, even despite the value of the contract exceeding the de minimis threshold, it will not be necessary to apply the PPL’s provisions to award the contract. Exceptions with a particular potential for use include:
- Article 11(1)(6) of the PPL, under which, the PPL’s provisions do not apply to contracts for the purchase of property rights or other rights to buildings or real estates. Therefore, if the contracting authority intends to extend the premises base to make it available to persons in need, it does not have to apply the provisions of the PPL; and
- Article 11(1)(9) of the PPA, under which, the provisions of the PPL do not apply to contracts where the subject-matter of the contracts includes civil defence, civil protection, or prevention services provided by non-commercial organisations and covered by the CPV codes 75250000-3, 75251000-0, 75251100-1, 75251110-4, 75251120-7, 75252000-7, 75222000-8, 98113100-9, and 85143000-3, defined in the Common Procurement Vocabulary, except for patient medical transport services.
7a. Have any special solutions been implemented in the area of public procurement law in connection with the war in Ukraine?
Yes, the Act of 12 March 2022 implemented solutions on assisting Ukrainian nationals regarding the armed conflict in the territory of Ukraine (“Special Act”) which, as regards the award of contracts, entered into force on the date of its publication, i.e. with effect from 24 February 2022.
The Special Act’s provisions provide for exemptions from the obligation to apply the PPL’s provisions when concluding agreements necessary to perform the following tasks:
- tasks carried out by municipal authorities consisting of enabling a Ukrainian citizen to take a photograph required to apply for the PESEL (Personal ID) number free of charge (Section 8 paragraph 1 of the Special Act);
- the purchase of computer hardware and services for municipalities necessary for the performance of their tasks by the minister competent for computerisation (Section 8 paragraph 1 of the Special Act);
- ensuring the right to social benefits (Section 26 paragraph 5 of the Special Act);
- the provision of medical care and assistance for accommodation and meals or assistance in the form of a cash benefit by the Head of the Office for Foreigners (Section 112 paragraph 5) of the Act of 13 June 2003 on granting protection to foreigners in the territory of the Republic of Poland); and
- the execution of emergency instructions issued by the Prime Minister based on the provisions of the Act on Crisis Management (Section 7c Paragraph 1 of that act).
However, one may estimate that the exemption laid down in Section 12 paragraph 6 of the Special Act will be of crucial practical importance. Under that provision, the PPL will not apply to public contracts necessary to provide assistance consisting of:
- the provision of all-day collective meals;
- the transport to and between places of accommodation or between those places and facilities operated by the Head of the Office for Foreigners or places where medical care is provided to Ukrainian nationals;
- the financing of public transport and specialised transport for persons with disabilities, in particular, to or between the places referred to in items 1–3 above;
- making arrangements for a place of residence, consisting of ensuring lodging conditions that enable or support artistic, scientific, didactic, or research activities in the field of art, professional, or artistic development;
- establishing an artistic scholarship, consisting of the provision of support in kind or financial support that enables or supports artistic, scientific, didactic, or research activities in the field of art, professional, or artistic development; and
- organising an artistic stay, consisting of the provision of lodging conditions, support in kind or financial support that enables or supports artistic, scientific, didactic, or research activities in the field of art, professional, or artistic development.
However, it is important that the subjective scope of this exemption has been precisely indicated and many ordering parties will not be eligible for its application.
It may be used by:
- the voivode;
- another public administration body;
- units subordinate to or supervised by public administration bodies;
- public finance sector entities; and
- other public administration authorities, local self-government units, associations of local self-government units, or metropolitan associations.
It should also be emphasised that only the agreements necessary to provide the assistance referred to above as well as those necessary to communicate the assistance addressed to Ukrainian citizens are covered by the exemption. When concluding an agreement based on an exemption, it is obligatory to publish, in the Public Procurement Bulletin, information on the factual circumstances justifying its application as well as to provide:
- the name and address of the registered seat of the ordering party;
- the date and place of the agreement being concluded or information about the agreement being concluded by electronic means;
- a description of the subject matter of the agreement specifying, respectively, the quantity of items or other goods and the scope of services;
- the price (or the maximum price if the price is not known at the time when the announcement is published); and
- the name (business name) of the entity or full name of the person with whom the agreement was concluded.
8. If there are no grounds to exclude the application of the PPL’s provisions, is it necessary to organise an open, formalised procedure, e.g. an open tender?
In these circumstances, in many cases, it will be possible to use the single-source procurement procedure whereby the contracting authority awards the contract after negotiations with only one economic operator under Article 214(1)(5) of the PPA. Under that provision, the procedure in question may be applied where, due to an exceptional situation not resulting from reasons attributable to the contracting authority which it could not have foreseen, urgent execution of the contract is required and the time limits specified for the other procurement procedures cannot be complied with.
Before applying that prerequisite, it is always necessary to consider in detail whether all the conditions listed under Article 214(1)(5) have been met. The reasonable solution is to provide as detailed factual and legal justification as possible.
However, it may be assumed that, in the current circumstances, the demonstration of those grounds should not cause particular difficulties. In this regard, the guidelines contained in the above-mentioned Communication of the European Commission (COM (2015) 454), the extracts of which are cited below, are helpful and should certainly be worth using in formulating a justification to apply the aforesaid provision:
- “It can be expected that, in general, a concrete contracting authority did not and could not know sufficiently in advance how many asylum seekers it would have to provide for. The specific need for an individual municipality to provide housing, supplies or services to asylum seekers could, therefore, not be planned in advance, and would thus constitute an unforeseeable event for the municipality in question.”
- “It cannot be doubted that the most immediate needs of the asylum seekers coming to the various Member States (housing, supplies and services) should be ensured with all possible speed.”
- “For the provision of the most immediate needs to asylum seekers within a very short timeframe, the causal link between the increase in asylum seekers and the need to provide for their needs cannot reasonably be doubted.”
The formal obligations of the contracting authority that awards a contract is limited to inviting the successful tenderer to negotiations, keeping a record of the procedure, concluding a contract, and publishing a notice. From 1 January 2021, the application of the single-source procurement procedure does not require, in any respect, notifying the President of the Public Procurement Office of such a procedure being initiated.
9. In the case of a decision to organise a competitive procedure (e.g. an open tender), is it possible to speed up the procurement process in relation to the default schedule resulting from the PPL’s provisions?
In some situations, the contracting authority may consider that the optimal solution is not to award a contract on a single-source basis, but to organise a competitive procedure. However, in such circumstances, the contracting authority does not have to worry about the necessity to organise a long-lasting procedure.
In particular, due to the urgent need to award a public contract, there is a possibility to shorten the time limit for the submission of applications for admission to the tender procedure or the time limit for the submission of tenders.
Furthermore, the identification of the urgent need justifies the application of a negotiated procedure without publication (Article 209(1)(4) of the PPA). This is a procedure whereby a contracting authority negotiates the terms of a public procurement contract with economic operators of its choice and then invites them to submit their tenders. Therefore, this is a reasonable solution because although the contracting authority intends to obtain the most advantageous tender during the competitive rivalry between economic entities, it wants to limit their circle to only a few selected economic operators.
In the case of sectoral contracting authorities, the power under Article 393(1)(1) of the PPA may also be a specific instrument to make procedures more flexible and less formalised. That provision allows an abstention from applying obligatory grounds for exclusion and therefore, demanding subjective requests for subjective evidence relating to those grounds.
10. Will the initiation of appeal proceedings by lodging an appeal with the National Board of Appeals always entail an extension of the procedure?
The contracting authority’s activities may be challenged by economic operators as being non-compliant with the PPL’s provisions by lodging an appeal with the National Board of Appeal (“KIO”). If an appeal is lodged, the conclusion of a public procurement contract before the resolution of the appeal proceedings will, in principle, be impossible.
However, where an appeal is lodged at the stage following the selection of the most advantageous tender, the contracting authority may have, at its disposal, an instrument enabling the conclusion of the contract despite the appeal being lodged. Namely, under Article 578(2) of the PPA, it is possible to submit a request to the KIO to repeal the ban on the conclusion of the contract which the KIO will take into account if:
- the failure to conclude a contract could have adverse effects on public interest which exceed the advantages of the need to protect all interests in respect of which there is a likelihood of injury as a result of the actions taken by the contracting authority in the procurement procedure; andt
- he contracting authority proved with a reasonable degree of likelihood that the appeal is lodged exclusively to prevent the conclusion of the contract.
It is worth noting that, based on the KIO’s jurisprudence to date, convincing arguments can be formulated that the ongoing humanitarian crisis caused by the war in Ukraine would be the basis for lifting the ban on concluding the contract, which obviously, in specific circumstances, requires detailed justification.