Closer and closer to a new Act on Concessions for Construction Works and Services | In Principle

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Closer and closer to a new Act on Concessions for Construction Works and Services

Work on Poland’s new Act on Concessions for Constructions Works and Services is near the end. The act is supposed to enter into force before the end of this year.

In September 2016 the Sejm forwarded the bill for the new Act on Concessions for Construction Works and Services to the Senate for further work. It is intended to replace the current act of 9 January 2009, implementing the Concessions Directive (2014/23/EU) into the Polish legal system. The directive contains simplifications characteristic for concession contracts as compared to the public procurement directives, but many of its provisions are identical to those concerning public procurement also included in the 2014 package of procurement directives.

Given the extensive nature of the changes, including modification of fundamental principles governing the award of concession contracts, it was decided to draft an entirely new act, much expanded from the current act. At the present time, the main assumptions of the bill are as follows:

  1. The term koncesjodawca (grantor of a concession) is replaced by the term zamawiający (in the language of the directive, a contracting authority or contracting entity) (Art. 2(11) of the bill).
  2. The concept of a concession contract for construction works or services is modified. Current law indicates that the concessionaire bears the main part of the economic risk of performance of the concession (Art. 1(3) of the current act). The bill provides instead that the concessionaire shall bear the economic risk connected with operation of the structure or provision of the services, including the risk connected with supply and demand (Art. 3(3) of the bill). The bill also defines the assumption of “economic risk” (or “operating risk,” in the terms of the directive) as a situation where under normal operating conditions, the concessionaire is not guaranteed to recoup the investments made or the costs incurred in operating the works or the services which are the subject matter of the concession, and any potential estimated loss incurred by the concessionaire shall not be merely nominal or negligible. In evaluating economic risk, the current net value of all investments, costs and income of the concessionaire should be reflected in a consistent and uniform manner.
  3. Under the threshold provided, the new act would apply to contracts with an estimated value at or above the zloty equivalent of EUR 30,000 (consistent with the threshold provided in the Public Procurement Law). But if the EU threshold provided in the Concessions Directive is exceeded, the concession would also have to be announced in the Official Journal of the European Union (Art. 4 of the bill).
  4. The exceptions where the act would not apply to concession contracts are expanded in line with the scope of the Public Procurement Law as amended effective 28 July 2016 (Art. 5 of the bill).
  5. The concept of the estimated value of a concession contract is introduced, together with the method for calculation of the value by the contracting authority. The value of a concession contract is the total turnover of the concessionaire generated over the duration of the contract, net of VAT, estimated by the contracting authority with due diligence, in consideration of the works and services that are the subject of the concession, as well as incidental supplies and services (Art. 6 of the bill).
  6. Rules are introduced for mixed concessions covering various types of concession contracts (construction works and services, social services and other specific services) as well as contracts awarded under different legal regimes, e.g. concession contracts, classic public procurements or sector procurements (Art. 9 of the bill).
  7. New provisions are included for social services and other specific services, taking social aspects into account in awarding and carrying out concession contracts for construction works or services (Art. 26 of the bill). The contracting authority could set requirements in the contract description related to performance of the concession contract, including economic, environmental and social aspects, innovation and employment.
  8. More detailed rules are provided for announcement of commencement of procedures for award of a concession contract, particularly concerning the place of publication of notices provided for in the act, use of standard forms laid down by European Commission regulation, exceptions from the duty to publish concession notices, and the permissibility of publishing a notice of intention of concluding a concession contract.
  9. New eligibility criteria are introduced, indicating mandatory and optional grounds for exclusion of contractors from procedures for award of a concession contract and criteria for evaluation of offers (Chapter 6 of the bill).
  10. The period for which a concession contract may be awarded is to be limited in order to reduce unfavourable restriction of competition in access to the market (Art. 44 of the bill). Besides indicating that a concession must be awarded for a definite period, the bill provides that for concessions lasting more than 5 years, the maximum duration of the concession shall not exceed the time that the concessionaire could reasonably be expected to take to recoup its investments in operating the works or services together with a return on invested capital, taking into account both initial investments and investments during the life of the concession.
  11. The possibilities for modifying concession contracts are expanded, in line with the current possibilities for modification of public procurement contracts (Art. 45 of the bill).
  12. Avenues of legal recourse in proceedings for award of concessions are recast in line with the provisions for public procurement contracts. Contractors seeking a concession would thus be permitted to file appeals with the National Appeal Chamber and to file complaints with the regional court (Art. 52 and following). The bill also designates the president of the Public Procurement Office as the competent authority in matters of concession contracts (Art. 50).

It is apparent that the new solutions will significantly impact the process of conclusion and performance of concession contracts. Given the importance of the proposed changes, we will report on the fate of the bill on an ongoing basis.

Natalia Rutkowska, Infrastructure, Transport, Public Procurement and PPP Practice, Wardyński & Partners