Sector News
Poland – Risk Averse Procurement, Yet Many Supplier Challenges Too!

Doing our regular trawl of public procurement news, views and information, we came across an interesting article here on the Lexology website, from leading global legal firm Eversheds. The theme is the differences between public procurement in different countries, particularly looking at the UK and Poland.

Much of the EU’s budget is designated for the former Eastern Bloc countries, with a focus on major infrastructure and energy projects to help them catch up with the more developed Western European countries. The Eversheds article looks at specific differences between Poland and the UK (the same would apply to other Western European countries, we suspect).

The main difference is that in Poland, contracting authorities appear to be more risk averse and cautious than in Western European countries. For example, the competitive dialogue procedure is used less often, with Restricted or Open procedures used even in the case of complex tenders that might suit competitive dialogue. Other points highlighted include this:

“Clauses in Polish public contracts are more often drafted heavily in favour of contracting authorities such as high contractual penalties and no liability cap. There is a greater general reluctance to move from this position even where commercially this may offer a better option”.

Another example of this inherent caution and attitude to risk given in the article relates to the evaluation or assessment of criminal convictions within bidding firms. In our experience, in the UK and other Western countries, this is very much a formality – literally a simple “tick-box” for the bidders. But in Poland this is taken more seriously, and focuses more on individuals within the bidding firms rather than just corporate wrong-doing.

“For many EU public procurement projects, tenderers are required to provide evidence they have not been the subject of a court conviction for corruption or fraud. In Poland this requirement applies not only to legal entities but also individuals, including company directors and any person having powers of representation or decision-making”.

This risk aversion in Poland appears to be related to the greater likelihood of suppliers challenging the outcome of processes and procurement decisions.

“This may be partly because of the greater propensity in Poland for other tenderers to mount a procurement challenge if they suspect foul play. In the UK, whilst procurement challenges are certainly on the increase they are still seen as the exception rather than the rule… In Poland, it is almost expected that there will be a procurement challenge. Fast track challenge procedures and relatively low fees in Poland contributed to 3,044 procurement cases in 2013 and the figures are rising”.

So if you are in a country that is not so subject to challenge, you should be grateful that you’re not in Poland! What we don’t get from the article is a sense of how many of these challenges are actually successful. Is it the case that procurement competence is low in Poland or there is a shortage of skilled resource? Or is it just suppliers challenging to delay the process or hurt competitors?

Whatever the cause, it does seem that Poland is probably too risk averse (based on doing the right things to get best value for money). And if this risk aversion is combined with a high number of successful supplier challenges, then it is the worst of all worlds really.

Could the countries that are more experienced in public procurement help at all, we wonder? Would a handful of experienced experts from the UK, Germany or France be able to help matters if they were shipped into Warsaw? It’s a thought anyway. But do take a look at the Eversheds article, which is well worth a read. And as they say, it is worth getting local legal advice if you are operating in a country for the first time as a buyer or seller!