The amended Public Procurement Law (“Pzp”) takes effect on Oct. 19. The amendment concerns a range of important matters, e.g. it restricts the use of price as the only criterion for evaluation, clarifies issues related to grossly understated prices and makes third parties liable for possible failure to provide resources.

Proving legitimacy of reservation of business secrets

The amendment introduces an important procedural change to contractors stipulating of certain information as business secrets. A contractor who makes such a stipulation shall be obligated to prove that the reserved information actually constitutes its business secret. In practice this means that the substantiation should be included in the submitted bid or application.

New prerequisite of exclusion

Doubts concerning compliance with EU law of two of the previously binding prerequisites for exclusion from public tenders for 3 years led the legislator to delete them from the Pzp and replace them with a new prerequisite. In accordance with the modification, a contractor that in the period of 3 years preceding the opening of the proceedings willfully and grossly breached its professional duties, in particular failed to perform or improperly performed a contract as a result of its intended actions or gross negligence, which the awarding party can prove with evidentiary measures, shall be excluded from the proceedings. Application of the new prerequisite is not obligatory – it may be applied if the awarding party foresaw such a possibility.

Moreover, even in such a case, the exclusion is not automatic. A contractor that proves it has undertaken particular technical, organizational and personnel related measures to prevent willful and gross breach of its professional duties in the future, and redressed damage inflicted as a result of a breach of its professional duties or undertook to redress it, shall not be subject to exclusion.

Joint and several liability of an entity providing resources

The legislator attempted to prevent bogus disposal of a third party’s resources. An entity providing resources to a contractor applying for a public contract shall be liable jointly and severally with the contractor for the damage suffered by an awarding party, caused by a failure to provide resources.

It has also been determined that resources in the form of economic capacity may also be provided by a third party.

Labor law requirements

A new regulation introduced to the Pzp provides for an awarding party’s right to specify in the description of the subject matter of the contract its requirements concerning engagement by a contractor or subcontractor of persons through whom they shall act during performance of a contract for construction works or services under an employment contract. However, requirements in this respect must be substantiated by the object or nature of actions to be performed. When imposing a requirement of engagement under an employment contract an awarding party shall be also obligated to specify in the Terms of Reference (SIWZ) the types of actions to which the requirement applies.

Liberalization of prerequisites for withholding a bid deposit

The new regulations limit the possibility of an awarding party keeping a bid deposit only to situations where tender collusion may be suspected. A bid deposit may be kept if a contractor’s failure to submit certain documents, or a lack of its consent to the correction by an awarding party of another mistake which does not significantly affect the content of the bid prevent selection of the bid submitted by that contractor as the most advantageous one.

Limitation of the possibility to apply the price criterion

The legislator’s intention was to limit the phenomenon of abuse by awarding parties of the price criterion as the only criterion for the evaluation of bids. Awarding parties will be allowed to apply that criterion only if the object of the contract is commonly available and characterized by definite quality standards. Additionally, an awarding party which is a state budgetary unit or other state organizational unit will be obligated to demonstrate how it took into consideration in the description of the contract the costs to be incurred during the whole period of use of the object of the contract. At the same time the range of criteria of bid evaluation other than price is extended by environmental, social and innovative aspects, though the list of these criteria is not yet exhaustive.

Grossly low price – guidelines for awarding parties and the burden of proof

The amendment specifies the prerequisites substantiating an awarding party’s request for clarification by a contractor of a grossly low price. This is necessary if a price seems grossly low in light of the object of the contract and raises doubts as to the possibility to perform the contract in accordance with the requirements specified by the awarding party or arising from separate regulations, in particular if it is lower by 30% than the value of the contract or the arithmetical mean of other prices proposed in all submitted bids.

A contractor shall bear the burden of proving that a price is not grossly low. When presenting clarifications with evidence a contractor shall refer to particular price-creating elements, including labor costs (the value of which may not be below the statutory minimum remuneration).

During appeal or complaint proceedings, the burden of proving that a price is not grossly low shall be borne by the contractor that submitted a particular bid, provided it is a party or participant (including as an intervener) of the proceedings. If a given contractor does not participate in the proceeding, the burden of proving that the price was not understated shall be borne by the awarding party.

Obligatory indexation clauses

The amendment responds to the demands, raised by practitioners, for including in public contracts indexation clauses determining the rules of changing a contractor’s remuneration. The legislator obligated the awarding parties to include in contracts concluded for a period exceeding 12 months clauses concerning changes to: (i) VAT rate, (ii) minimum remuneration for work, (iii) rules (including rates) governing social security or health insurance. A condition of including the above clauses in a contract is the influence of possible changes on the costs of performance of the contract by a contractor.