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The COVID-19 epidemic also has an impact on public procurement. Currently, the situation has forced the need to make changes in legislation in this area. Please find below some of the statutory changes which, in our view, are the most essential from the point of view of the public procurement contractor.
Possibility to amend public procurement contracts
The essence of the change (Articles 15r and 15s of the of the Anti-Crisis Act [i])
- the contracting authority has the right to make amendments to a contract due to the impact on its performance of the circumstances associated with COVID-19, including, i.e. in the event of appropriate decisions made by the competent public authorities (in particular, the Chief Sanitary Inspector of Poland), absence of employees due to illness or suspension of supplies necessary to perform the contract,
- a contract may be amended, among other things, in terms of completion date of the contract, method of its execution or remuneration, provided that the increase in remuneration caused by each subsequent change does not exceed 50% of the original contract value,
- a contractor shall be obliged to prove the impact of such circumstances by providing relevant documents or declarations, and a contracting authority shall have the right to request the submission of additional documents or declarations if the documents or declarations that have already been provided are considered insufficient,
- the amendment of the contract referred to above shall not constitute a violation of public finance discipline.In our view
- Article 15r section 4 of the Anti-Crisis Act by explicitly referring to Article 144 section 1 item 3) of the PPL[ii] in fact clarifies the statutory “circumstances which the contracting authority, acting with due diligence, could not have predicted” and which may justify an amendment to the contract,
- it should be noted, that changing the contract shall continue to be solely the right of the contracting authority, and not the claim of the contractor, even if the impact of the circumstances related to COVID-19 on its performance seems obvious,
- the question also arises as to how the contracting authorities will prove the impact of the circumstances related to COVID-19 on the performance of the contract by the contractor. In practice, this may not be an easy task to convince the contracting authority that the circumstances associated with COVID-19 reported to it affect the performance of the contract. The right of the contracting authority to request additional documents or statements leads to a risk that the contracting authority may abuse this right in order to avoid a change of the contract. Therefore, it is recommended for contractors to carefully gather evidence in this case. It should be clearly indicated that an amendment to a public procurement contract made pursuant to Article 15r section 4 shall not constitute a violation of public finance discipline but should encourage contracting authorities to agree on such amendments more often.Amendments to subcontracts (Article 15r of the Anti-Crisis Act)
The essence of the change
- a contractor and a sub-contractor are obliged to agree on a relevant amendment to a subcontract, if they find that the circumstances associated with COVID-19 have an impact on its performance,
- The contractor and the sub-contractor are also required to adjust the subcontract to the amended main contract so that the terms of the performance of the subcontract by the sub-contractor are no less favorable than the terms of the performance of the amended main contract by the contractor.In our view
- The amendments made raise considerable doubts. Unlike the amendment of the main contract, which is optional and depends on the consent of the contracting authority, the amendments to the subcontracts in question appear to be mandatory in relations between the contractor and its subcontractors. Consequently, there may be a possibility for the sub-contractor to request the contractor to amend the subcontract even though the main contract has not been amended yet.Contractual penalties (Article 15s of the Anti-Crisis Act)
The essence of the change
- failure to establish or enforce contractual penalties by a contracting authority does not constitute a violation of public finance discipline.In our view
- in practice, contracting authorities very often refuse to agree on reduction or resignation from enforcement of contractual penalties, even though they have not suffered any damage, claiming the risk that they would be attributed to a violation of public finance discipline. This amendment exempts contracting authorities from such risks, giving the opportunity to facilitate negotiations with contracting authorities on contractual penalties.Proceedings before the National Appeals Chamber (Article 15zzs of the Anti-Crisis Act and Article 46 item 20 of the Protective Act[iii])
The essence of the change
- pursuant to Article 15z, the National Appeals Chamber suspended all hearings as well as open trials involving parties and participants in appeal proceedings, while keeping the time limits for using only
- legal remedies. No prior checks have been withheld or suspended because of COVID-19.
- on 16 May 2020, as a result of entry into force of the so-called Protective Act, suspension of hearings and open trials was lifted and consequently, the National Appeals Chamber will resume carrying out appeal proceedings at hearings and trials with participation of parties and participantsIn our view
- suspension of hearings and open trials regarding appeals by the National Appeals Chamber caused significant difficulties on the public procurement market and the factual suspension of many tender proceedings. The “defrosting” of hearings and open trials before the Chamber will contribute to improve the system of public procurement, and consequently provide such necessary pro-development stimuli for the national economy in these challenging times of economic crisis.
- there are still no detailed solutions ensuring that the National Appeals Chamber can effectively comply with the recommendations of the sanitary services in the current conditions of premises.
[i] Act of 2 March 2020 on Special Solutions for Preventing, Countering and Combating COVID-19, Other Infectious Diseases, and Crises Caused by Them
[ii] Act of 29 January 2004, Public Procurement Law
[iii] Act dated 14 May 2020 on Amending Certain Acts with Respect to Protective Activities in Connection with the Spread of the SARS-CoV-2 Virus