Employee capital plans and public procurement contracts

Along with the entry into force of the Act on employee capital plans, amendments to the Public Procurement Law stipulated in that Act became effective. 

Under the first of the new regulations, the Public Procurement Law may not be applied to award contracts on the management of employee capital plans, irrespective of the value of such agreements. 

The second regulation stipulates that a public procurement contract entered into for a period longer than 12 months should specify the principles of introducing relevant changes to the remuneration due to the contractor, should there be a change to the principles of collecting payments and the amount of the payments to the employee capital plans.

The indicated amendments entered into force on 1 January 2019.

The possibility of changing remuneration in existing agreements 

The transitional provision stipulated in the Act on employee capital plans regulates a special case where the conclusion of an agreement for maintaining an employee capital plan by an employing entity which, on the date the Act enters into force, participates in the performance of a public procurement contract granted in proceedings concluded before that date, affects the costs of performing the contract. Under that provision the contractor may submit a written request to the contracting authority to hold negotiations concerning the conclusion of an understanding on the relevant change of the remuneration.

The requested change should take into consideration the aggregate increase of the costs of performing the public procurement contract arising from the payments to the employee capital plan made by the employing entities participating in the performance of the public procurement contract.

Importantly, the failure to conclude the understanding within a month from the date of submitting the request authorises both the contractor and the contracting authority to terminate the contract upon two months’ notice. In such case the termination of the contract will not be deemed as its improper performance or non-performance.