The law excludes from the Public Procurement Law regime public contracts relating to fighting COVID-19. The epidemic may also force amendments to be made to signed contracts.

Aldona Kowalczyk, Anna Szymańska

Provisions of the Public Procurement Law (PPL) do not apply to public contracts for services or supplies required to battle COVID-19 (amended Article 6 (1)).The premise that justifies this exclusion includes the probability of the rapid spread of the disease or the requirement to protect public health. The amendment to the law consists in replacement of the word “goods” with the word “supplies”.The Law also clarifies the understanding of the requirement to counter COVID-19 by specifying the counteracting actions. The amendment clearly indicates the measures intended to tackle socioeconomic effects of the coronavirus disease.The premises justifying exclusion from the PPL must be satisfied jointly and are individually assessed by a contracting authority, in light of applicable circumstances.The exclusion covers supplies and services, but does not include construction works.The supplies and services must be essential to counter COVID-19 and certainly include supply of medical equipment, personal protective equipment and disinfectants. Given the current scale of remote work, exclusion from the PPL regime may also include supply of IT equipment and associated services – for public procurement involving furnishing workplaces (e.g. purchase of laptops, telephones) for remote work or adjustment of IT infrastructure of a contracting authority to start and continue working remotely – as stated on the website of the Public Procurement Authority.The concept of “counteracting COVID-19” includes actions to tackle socioeconomic effects of the epidemic. This may trigger attempts to make a broader application of the exclusion laid down in Article 6 of the COVID law.

Performance of contracts covered by the PPL

The law imposes on parties to public procurement contracts under the PPL regime an obligation to immediately notify each other of the impact of the COVID-19 related circumstances on due performance of the contract, appending relevant statements or documents. Article 15r sec. 1 provides that the circumstances “may” refer in particular to:

• absence of employees or other persons who participate or may participate in performance of the contract,
• decisions issued by a public health inspector, orders issued by provincial governors or decisions of the Prime Minister associated with countering COVID-19,
• cutting off supplies of products, product components or materials, difficulties in accessing equipment or difficulties in performance of transportation services,
• circumstances referred to above, to the extent that they concern subcontractors or further subcontractors.

Moreover, Article 15r sec. 2 grants to each party to a contract a right to request additional statements or documents. Within 14 days of receipt (or supplementation) of the above-mentioned statements or documents, a party to a contract is required to provide to the other party its stance (with justification) on the impact of COVID-19 circumstances on performance of the contract, including impact of a possible amendment to the contract on legitimacy of determination and seeking penalties or compensations or their amounts. New provisions of the special law regarding public procurement contracts become effective on the date of their announcement, i.e. on 31 March 2020. The parties to the contract should thus prepare themselves for the obligations following from the contract: prompt delivery of statements and documents specifying the impact of the epidemic on performance of the contract and agreement of the stance with the other party. The procedure will doubtless trigger many questions, such as for instance whether the right to request additional information is meant to be exercised only once.

If a contracting authority finds that the COVID-19 circumstances impacted or may impact due performance of the contract, the said authority may, in agreement with the contractor, amend the contract under Article 144(1)(3) of the PPL (on the basis of the reference laid down in Article 15r). Increase of remuneration caused by each amendment cannot exceed 50 per cent of the value of the original contract. The amendment may (subject to more favorable provisions of the contract) consist in:

• change of the deadline for performance of all or part of the contract, or temporary suspension of performance of all or part of the contract,
• change of the manner in which supplies, services or construction works are performed,
• change of the scope of the contractor’s services and a corresponding change of remuneration due to the contractor.

Aldona Kowalczyk

As aptly stated by many experts and environments, one of many being the Polish Public Procurement Law Association, Article 15r of the Law neither grants to a contractor, affected by the situation amidst the spreading coronavirus, a right to claim amendment of contract nor introduces any special quick dispute resolution procedures against this backdrop. It is unclear what advantage this regulation bestows on a party to the contract, when the currently binding provisions of the PPL allow for an option to request the other party to execute amendments to a contract if circumstances arise that the contracting authority, applying due care, could not have foreseen. Moreover, numerous real problems currently being experienced by parties to public procurement contracts (in the context of the premises of exclusion, bid bonds, security deposits) remain unresolved and are bound to worsen over time.

Subcontracting in the time of epidemic

COVID-19 related circumstances affecting the subcontractor may impact due performance of the contract by the contractor itself. Thus, they should be taken into account during renegotiation of the main contract and its possible amendments. The contractor may, to this end, present to the contracting authority documents and statements regarding these circumstances as well as those affecting the contractor itself.

COVID-19 related circumstances affecting the subcontractor may especially impact due performance of the subcontracting agreement. Upon identification of the circumstances, the contractor and subcontractor are obliged to agree amendments to the contract that adjust its terms and conditions to the new situation. They may in particular:

• change the deadline for performance of all or part of the contract,
• temporarily suspend performance of all or part of the contract,
• change the manner of performance of the contract,
• change the scope of mutual performance.

This obligation exists irrespective of whether the main contract is amended, but a different principle applies the other way round. The public contract modified due to COVID-19, in the part entrusted to be performed by the subcontractor, must provide for not less favorable conditions of performance than the conditions set out in the main contract. This also applies to contracts executed between subcontractors and further subcontractors.

Anna Szymańska

The rules governing performance of public investment projects must be reviewed due to the epidemic, because protection should be given to contractors and subcontractors who find themselves in this unprecedented situation. After all, they are the ones that create jobs and often represent the SMB sector. On the other hand, where possible, performance of public tasks should continue in order to mitigate knock-on economic effects. Such substantive inclusion of the newly occurring circumstances, where justified, should be an obligation, not a right, of the contracting authority. The Law does not state this directly, but it is hard to imagine a different interpretation, if a contractor is required by law to amend accordingly the agreement with a subcontractor. If, for instance, a contractor has to postpone the date of performance by the subcontractor and this affects its own deadline for performance, then the deadline set in the main contract should also be postponed. The provisions should be interpreted in such a manner that they are consistent with each other. Time will tell as to how this will work out in reality.

The question of deadlines

The Law provides for a stay of procedural timeframes and court deadlines (and suspension - if a timeframe has started to run) in a period of epidemic threat or state of epidemic emergency. Nevertheless, the stay or suspension of timeframes does not apply to:

• control of previous contracts co-financed with EU funds,
• appeal proceedings before the National Appeal Chamber (KIO).

Deviation from the rule of staying the timeframes, as set forth for public procurement, has a significant practical aspect. Until such time as an appeal case is resolved or a previous control completed, the contracting authority cannot conclude a public procurement contract. The ex lege stay of all such cases would result in paralysis of public investments. Consequently, a solution was adopted whereby tender procedures could be conducted and actions or omissions of the contracting authority can be appealed on the currently binding terms. At present, however, the National Appeal Chamber is not conducting any open hearings or sessions. Any submitted appeals are due to be heard at a later date, unless there are grounds for a closed sitting – and this is how many cases are being completed, e.g. if an appeal is rejected or the contracting authority accepts the pleas (and the acceding party raises no objections) or an appeal is withdrawn. The National Appeal Chamber will also consider a request of the contracting authority to revoke a ban on execution of the contract. Ex-ante controls are also being conducted by the President of the Public Procurement Office.