The Public Procurement Law (PPL) provides that contracting authorities have an option to stipulate in the procurement documentation that the contractor must personally perform key tasks in connection with construction works/services and/or siting and installation operations under a supply contract. The aforesaid option is expressly provided in Article 121 PPL. How to structure such a stipulation without running the risk of it being deemed inconsistent with the PPL? This issue was addressed by the National Appeal Chamber in its award of 13 October 2021, case no. KIO 2733/21.

The facts of this case were as follows: the contracting authority, in launching a procurement procedure regarding the construction of selected sections of the S6 expressway, chose to use the option available under the PPL and requested contractors to personally perform certain key tasks, such as laying the surface of main traffic lanes as well as producing and laying at least 80% (in terms of quantity) of the other layers of the road pavement structure above the native soil (excavations) or infill material / embankments, excluding supplies of materials and services. The scope and limits of key tasks were expressly determined by the contracting authority.

One of the prospective contractors (the appellant) challenged the above description of the contract subject-matter, arguing that the contracting authority had no reasonable grounds to make a reservation to the effect that the contractor must perform key parts of the contract personally, that this stipulation hindered fair competition and unreasonably narrowed the group of potential contractors able to file a bid in the contract award procedure or otherwise participate in the proceedings.

The appellant explained that by defining some tasks as “key tasks” and stipulating that the contractor must perform them personally the contracting authority groundlessly restricted competition in the proceedings, thereby effectively excluding some contractors, including some small and medium-sized entities possessing the capacity to perform key tasks but not having the full potential to perform the contract as the main contractor. The appellant also argued that the reservations made by the contracting authority in the procurement proceedings at issue were not justified by the authority’s objective and reasonable needs.

Although the appellant admitted that no provision of the PPL defines the term “key tasks”, the existing case-law and legal commentaries leave no doubt in this regard. Namely, in the appellant’s estimation, only tasks jointly fulfilling the following conditions may be regarded as “key”:

  • tasks that are the most important elements under a given contract;
  • tasks that the contracting authority finds the most relevant in the circumstances of the case;
  • tasks in which the personal involvement of the selected contractor is essential because the contractor possesses certain unique qualities or skills that enable him/her to properly perform the given task (e.g., specific professional qualifications, professional team, high-tech equipment, etc.).

According to the appellant, it is equally important that any such reservation is in keeping with the specific circumstances and requirements of a particular project. Moreover, in the appellant’s view, no such reservation may be used as a default option without the contracting authority being first required to thoroughly consider the context and specific circumstances of the contract in question. The appellant also pointed out that in the public procurement procedure at issue the terms of reference (ToR) provided no rational and convincing explanation why the contracting authority deemed it necessary to make the reservation, and that before preparing the ToR the contracting authority did not analyze whether it was indeed indispensable that the key tasks must performed by the contractor, which—in the appellant's view—is a mandatory requirement under Article 121 PPL, considering that the said article is quite specific in nature and for this reason needs to be interpreted as strictly as possible.

In the appeal proceedings, the contracting authority modified the reservation contested by the appellant by removing the specified limit of key tasks (i.e. deleting the phrase “at least 80%”), but the type of work considered as key tasks was not changed in either case. The contracting authority brought the following arguments to support its choice of certain key tasks to be performed personally by the selected contractor:

  • the surface layer of the main lanes is the key part of the contract in terms of quantity, complexity and —above all—quality;
  • the structure of the main lanes (including all filler layers as well as the top surface) is the central, pivotal part of the contract and, as such, may be subject to the special reservation as in the case at hand;
  • these tasks are complicated and require considerable experience. Consequently, optimal technological and organizational solutions must be provided to ensure overall success;
  • this type of road construction works [i.e. the ‘key tasks’] poses a great deal of risk and requires the use of high-end technological standards, materials and equipment, making it therefore necessary for the contractor to oversee on an ongoing basis the quality of works and materials embedded in each road surface layer;
  • identification of key tasks to be performed personally ensures participation of suitable contractors possessing adequate human resources, equipment, technology and know-how to perform the contract efficiently and in compliance with its terms.

The contracting authority also argued that no provision of the PPL prohibits a bidder unable to individually perform the required scope of contract to enlist the help of another entity/entities (a consortium), which will enable the consortium members to fulfill the conditions set by the contracting authority.

Taking into account the evidence gathered in the case and the parties’ pleadings, the National Appeal Chamber (KIO) agreed with the appellant, ruling that the works specified by the contracting authority did not constitute ‘key tasks’ within the meaning of the PPL. The adjudicating panel noted that the PPL, in line with European procurement directives, does not define the term “key tasks” and that it actually appears that this term must have been made intentionally vague, so as to allow the contracting authority some leeway and to enable it to take into account such factors as the nature, scope, significance, or intended use of the works, services or supplies. However, in KIO’s opinion, to properly answer the question as to which tasks can be deemed essential, it is absolutely necessary to examine the specific situation and the facts of the case.

In KIO’s opinion, it should be assumed in this context that ‘key tasks’ certainly mean such tasks as will be important, critical and sensitive to ensure proper contract performance, and therefore must be performed by an entity whose qualifications were verified in the course of the procurement procedure. This applies first and foremost to services that were outsourced to the contractor due to its specific qualifications, skills or quality management measures.

In the statement of reasons for its award, the KIO also cited the view it took in the award of 12 January 2021, case no. KIO 3321/20, whereby the introduction of a personal performance requirement must not be used as a straightforward, default response addressing the problem of ensuring utmost diligence in the performance of a strategic contract, and that a reservation of that sort should be based on individualized, objective circumstances corroborating the assumption that entrusting a given task to a subcontractor is actually likely to increase the risk of defective contract performance.

The provisions of the Public Procurement Law give contracting parties the right to reserve in the procurement documents the obligation for the contractor to personally perform the key tasks of the contract. However, contracting authorities are not supposed to treat this as a default, mechanical solution unwarranted by any objective and reasonable needs of the contracting authority in the specific context of the awarded contract. Likewise, the strategic importance of a given project does not automatically condone such a reservation. Contractors should always check whether or not the requirements introduced by the contracting authority in this regard restrict competition, thereby effectively leading to the exclusion of certain contractors, including small and medium-sized entities. If a contractor concludes that the contracting authority infringed regulations governing the admissibility of the contracting authority insisting on the contractor personally performing certain key tasks, it is free to challenge this requirement by filing an appeal against the wording of the terms of reference. Such court action seems quite a useful tool, as evidenced by the award of 13 October 2021, handed down in case no. KIO 2733/21.