public procurement | In Principle

The issue of trade secrets in Polish public procurement continues to generate doubts and objections. Recent actions by contracting authorities and rulings by the National Appeal Chamber show that less and less information can be classified as trade secrets. The chamber closely examines whether contractors have met all the prerequisites for treatment of classified information as a protected trade secret.

A proposal to cut red tape for businesses in Poland could backfire against contractors in procurement appeals.

The last two years in the public procurement market have been stormy. The Covid-19 pandemic and the war in Ukraine have caused a steady and dynamic increase in the prices of materials and services, and disrupted supply chains, translating into record inflation rates and unprecedented fee increases. With this tough economic situation directly affecting the market, contractors have faced the difficult task of indexing their fees in public contracts. The National Appeal Chamber, which hears challenges in public procurement matters in Poland, gave essential guidance on this issue in its ruling of 28 November 2023 (case no. KIO 3389/23).

Sometimes, before opening the bids, the contracting authority already knows the amount it will allocate for both the basic contract and the optional contract. How should it indicate these amounts for finalising the procedure? When can the procedure be cancelled under Art. 255(3) of the Public Procurement Law if the contract provides for the right of an option? In a recent ruling, the National Appeal Chamber answered these and other questions.

Can the parties to a public contract be obliged to modify the contract when the contractual prerequisite for amendment has been met? And can a party agree only to the beneficial consequences of a change in economic realities?

The EU’s Foreign Subsidies Regulation entered into force in July 2023. The first case in which the European Commission will decide what impact non-EU financial support has on the EU procurement market involves a Chinese bidder for a public contract in Bulgaria.

Contrary to popular belief, contracting authorities do not have unlimited possibilities to invalidate procedures for award of public contracts. Once a procedure is launched, they can invalidate it only in selected situations. And if a contractor challenges the grounds for invalidation of the procedure by the contracting authority, the contracting authority will have to demonstrate the existence of such grounds and defend its position before the National Appeal Chamber.

As of 1 January 2024, the EU thresholds for public procurement and the average euro exchange rate for converting threshold amounts from euros into Polish zlotys have changed.

A key issue in protecting trade secrets in public procurement is to demonstrate the economic value of the confidential information. Despite many rulings by the National Appeal Chamber and interpretations by commentators, it remains a controversial issue.

Public procurement is subject to the general principle of openness. Sometimes, this conflicts with the interests of contractors, who can protect their companies’ valuable information and knowhow by designating it as a trade secret. But this is not an automatic process, as it requires contractors to make a credible showing of the rationale for protecting the information. In a recent ruling, the National Appeal Chamber clarified the conditions for correctly reserving trade secrets.

As of 12 October 2023, once they exceed certain financial thresholds, undertakings participating in public procurement procedures are required to notify the contracting authority of all foreign financial contributions.

The Polish Public Procurement Law does not specify an upper limit for contractual penalties. However, if the penalties are out of line with the realities of the contract, the contractor can seek review by the National Appeal Chamber. In a recent ruling, the chamber cut the penalties to 30% of the contractor’s gross fee.