Financial accounts (or parts of financial accounts) are among the documents most frequently requested in public procurement proceedings. Primarily, prospective contractors use them as evidence to corroborate their eligibility to compete for contracts by confirming their economic and financial standing.

Notably, public procurement proceedings require documents to be in electronic format. Where only hard copies of documents are available, current as well as previous laws stipulate that digital copies need to be made and confirmed as true to the original by means of a qualified electronic signature.

Likewise, the Accounting Act stipulates that financial accounts must be prepared in electronic form and signed by a qualified electronic signature, a trusted signature or a personal signature. Notably, the underlying assumption for all regulations governing the preparing and filing of annual accounts is that the entire document must have an electronic structure.

Furthermore, in accordance with the Accounting Act, financial accounts consist of:

1. A balance sheet;
2. An income statement;
3. Additional notes, including introduction to the financial statements, additional information and explanations.

The above-mentioned provisions of the Accounting Act need to be be juxtaposed with the regulations directly applicable to public procurement proceedings, both in terms of document formats required under these regulations and in terms of whether only specific parts of financial accounts may be requested and submitted.

Interestingly, the juxtaposition of the above-mentioned regulations has even sparked major controversies in public procurement practice with regard to the form and manner of truncating and submitting parts of accounts. These controversies surfaced especially in the course of audits and inspections conducted by the Chairman of the Public Procurement Office as well as in the judicature of the National Appeal Chamber.

Namely, in the course of ex ante audit no. KU/127/21, the Chairperson of the Competition and Consumer Protection Office found that the required parts of financial accounts (balance sheet and profit and loss account) submitted by the successful contractor in the course of the audited proceedings and accepted by the contracting authority had been in the form of .xtml file printouts signed by the chief accountant and the unit manager (with handwritten signatures), and then scanned, certified as true copies by means of a qualified electronic signature by the contractor, and submitted to the contracting authority in this form.

Accordingly, in the ex ante audit report of 1 October 2021, the Chairperson of the Public Procurement Office brought allegations to the effect that the financial accounts (namely the requested part of the statements, i.e., balance sheet and profit and loss account) were not submitted in the electronic original version. In the Public Procurement Office’s estimation, electronic copies of a part of “evidence confirming a prospective contractor’s eligibility to compete for the contract in the form of natural electronic documents” must not be prepared and/or accepted in procurement proceedings.

One of the findings made in the audit report was that only an original electronic document can duly confirm the contractor’s eligibility. The report also indicated that “a hard copy of an electronically prepared financial statement is merely a copy, not the original of the financial statement.” On the other hand, contractors must not make electronic copies of a “natural electronic document” such as financial accounts, and to confirm them as true to the original in order to prove their eligibility to participate in the proceedings because an adequate document must “have the attributes of evidence, meaning that the document ought to warrant that the information it carries remains invariable for as long as it exists, so that the document may be used to investigate and establish the facts to which it relates, as well as to establish certain data, such as the date and time of its creation, and to unequivocally identify any person connected with this document, in particular its signatories. With respect to evidence confirming the prospective contractor’s eligibility to compete for the contract in the form of natural electronic documents, this means that such documents must be provided in their original form and preserving their integrity."

Consequently, as the accounting regulations thoroughly regulate the principles and requirements for preparing financial accounts (they must be drawn up as an integral electronic document signed by the entity’s manager and its accountant), it was concluded in the audit report that: “Thus, it is not technically possible to prepare an electronic extract/to extract a fragment of a signed electronic document (e.g., a profit and loss statement) without compromising the integrity of the signatures affixed to it.”

As a result of objections filed against the audit findings referred to above, the case was referred for resolution by the National Appeals Chamber. In a resolution of 3 November 2021, case no. KIO/KU 21/21, the National Appeals Chamber agreed with the aforesaid objections, unequivocally ruling that “the Contracting Authority did not require the contractors to submit the entire financial statement but only certain specific parts. Accordingly, the contractor was within its rights to submit extracts of the relevant financial accounts to the extent necessary to prove its eligibility to participate in the proceedings.” By the same token, the National Appeals Chamber challenged the Public Procurement Office’s misguided assumption that only the entire financial accounts could be used to confirm contractors’ eligibility, ruling that this was inconsistent with the applicable regulations, which actually allowed for a situation where only part of this document could be required and submitted.

In the statement of grounds for the resolution, the Chamber also cited its own judgment handed down in case KIO 3003/21 on 28 October 2021, with regard to similar facts of the case, whereby the Chamber ruled that all applicable statutory laws and and secondary legislation promulgated thereunder shall take priority as regards the requirements applicable to the contract awarding procedure and the form of documents requested by the contracting authority and submitted by contractors in the procurement proceedings.

In the judgment issued in case no. KIO 3003/21, the Chamber noted that the Accounting Act admittedly stipulates that as of 1 October 2018, financial accounts (of which the profit and loss account is a part), may only be drawn up in electronic form. However, in the Chamber’s estimation, one cannot overlook the fact that the proceedings at issue were also governed by the provisions of the Regulation of the Minister of Development of 26 July 2016 on types of documents that may be requested by the contracting authority from a contractor in a procurement procedure to confirm the economic and financial eligibility of the contractor, and that the aforesaid Regulation has not been amended accordingly and, as a result, it does not rule out the possibility of documents being submitted in the form of certified copies of the original (as regards the financial accounts), nor does it prohibit the contracting authority from demanding and, consequently, the contractor from submitting a fragment of these accounts.

Also, the relevant provisions of the Regulation of the Minister of Development, Labor and Technology of 23 December 2020 on evidence relating to contractors’ eligibility and other documents or statements which a contracting authority may request from contractors (Journal of Laws No. 2145) have not changed compared to the aforementioned Regulation on types of documents and do not contain a stipulation directly transposing the stipulations of the Accounting Act that have been in force for two years.

Consequently, seeing as the regulations applicable to documents contracting authorities request contractors to submit in procurement proceedings to confirm the contractor's eligibility on the basis of criteria established by the contracting authority and the regulations governing the requisite form in which the documents must be submitted are not consistent with the Accounting Act, in a situation where the contracting authority expects balance sheet documents to be submitted in the form required under the Accounting Act, the contracting authority’s requirements in this regard ought to be clearly specified in the contract documents.

The professionalism expected of economic operators competing for public contracts, including, among other things, legal awareness, must simply give precedence to the principles governing the conduct of procurement proceedings, including the principle of transparency, which stipulates that public contract proceedings must be based on clear, unambiguous and comprehensible requirements set out by the contracting authority, as this promotes equal treatment of economic operators and fair competition. In the above context, the Chamber cited the judgment of the European Court of Justice in Case C-216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust, Coopservice Soc. coop arl., which stresses the relationship between the principle of transparency and the principle of equal treatment and non-discrimination.

Moreover, the National Appeals Chamber concluded that the lack of consistency between the requirements laid down in the Accounting Act and those set out in the public procurement regulations should not work to the disadvantage of contractors submitting documents in accordance with the requirements set out in the relevant ToR and acting in reliance on the stipulations of the ToR documents. It is therefore contrary to the principles of public procurement for the contracting authority to draw adverse consequences against contractors, in particular to disqualify them, on the basis of requirements that do not directly follow from statutory laws or tender documentation.

In assessing and permitting the possibility of making a digital copy of a portion of the financial accounts by first printing it out and then scanning it, the Chamber also cited its own case law on scans of offers that had been originally prepared in hard copy and signed by hand and then converted into a pdf file and signed electronically. Namely, the Chamber ruled that a scan so made and signed is a document made in electronic form (see, e.g., rulings in cases nos. KIO 119/19, KIO 221/19, KIO 277/19, KIO 412/19, KIO 599/19). The Chamber pointed out that a similar view was also expressed by the Chairperson of the Public Procurement Office in his opinion re. “Admissibility of a 'scan of an offer' in public procurement proceedings”, in which he took into account the position taken by the Ministry of Digitization and the Polish Chamber of Information Technology and Telecommunications. In the opinion, the Chairperson wrote that “an offer originally drawn up in paper format and then converted to electronic form, e.g. by scanning it, ought to be deemed an electronic document.” Consequently, seeing as an offer, which should always be submitted in the form of an original, may be submitted in the form of a contractor’s statement originally executed in writing and then scanned and electronically signed, there are no grounds whatsoever for us to a limine rule out the possibility of financial statements being submitted in this form. As the Chamber pointed out, there is no justification for conflicting interpretations of the same legal concepts being used in procurement proceedings, as this is not conducive to building legal certainty.

In our assessment, the position advanced by the Chamber with regard to the permitted methods for preparing and submitting parts of financial accounts is definitely less formalistic and thus better suited to the overall goal of making the public procurement system a more rationalized whole, which stands in stark contrast to the position presented by the Chairperson of the Public Procurement Office in the audit report referred to above. Unfortunately, it has become an infamous tradition and a unique feature of the Polish public procurement system to tolerate a situation where contractors who are otherwise evidently eligible to participate in the procurement proceedings on substantive grounds and only made formal errors in demonstrating their eligibility are disqualified. Hence, any attempt to interpret the law or individually apply the law in a manner seeking to put a damper on this “tradition” and its consequences should meet with appreciation. It is also to be hoped that the view presented by the Chamber will be also sustained on the grounds of the currently binding provisions on evidence relating to contractors’ eligibility and the form of such evidence.

The above article was published in the Rzeczpospolita daily on February 23, 2021, page F4.