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The Warsaw Voice » Law » October 17, 2007
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Changes in Settling Public Procurement Disputes
October 17, 2007   
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The state is a key client for many companies. In 2006, approximately 35,000 tenders were advertised in the Public Procurement Bulletin. According to figures quoted by the Public Procurement Office (PPO), in the same year procurement accounted for approximately zl.80 billion of public expenditure, or 7.6 percent of Poland's GNP. In light of the sums concerned, an efficient procedure for settling public procurement disputes is essential for both private companies and the state.

On October 12, key statutory amendments entered into force concerning the body charged with hearing appeals against protests lodged by contractors in public procurement proceedings. The new appeals body is called the National Chamber of Appeals at the PPO (Krajowa Izba Odwoławcza - KIO) and three-member panels now hear such appeals.

These changes are being brought in on the premise that the former procedure, whereby arbitrators were drawn from a group of several hundred persons with varying degrees of expertise and experience, was not conducive to ensuring the proper legal protection of parties to public procurement proceedings. Neither did it ensure consistency in decision-making.

Until now, appeals against protests were dealt with by a group of approximately 350 arbitrators, who treated it as a side job. On a more positive note, arbitration panel hearings were always chaired by arbitrators who were legal counsel or advocates. In the new model, being a panel member will be the only professional activity of each arbitrator, which in a sense will put all Chamber members in a position closer to that of a judge.

According to the framers of the new regulations, the new-look KIO will boost the level of professionalism among panel members and enhance the quality and consistency of awards. In their opinion, the setting up of the KIO is also justified by the increasing number of appeals in high value procurement cases and the dwindling number of appeals in cases of lower value.

The Chamber should consist of no more than 100 members, to be appointed and dismissed by the prime minister from among eligible candidates selected in accordance with the Public Procurement Act and who get the highest scores in the qualification process. The eligibility criteria are as follows:
  • Polish citizenship
  • Law degree
  • Full legal capacity
  • Full public rights
  • Impeccable reputation
  • Clean criminal record (regarding intentional crimes, including intentional fiscal crimes)
  • Minimum of five years professional experience in public administration or in a job involving the provision of legal advice or drafting of legislation
  • At least 29 years of age.

Membership of the Chamber may not be combined with being an MP, senator, councilor, mayor, member of a powiat or voivodship executive board (district or regional government), regional accounting chamber or a local government appeals body or membership of any political party.

Additionally, members of the Chamber may not take up additional employment, conduct business activities, be members of corporate bodies of commercial law companies or sit on management boards of foundations conducting business activities, or own more than 10 percent of shares or shareholding interests in commercial law companies.

Appeals will be processed by the Chamber within 15 days of receipt by the PPO chairman on condition the filing fee is paid. Under the new regulations, if the appeal is withdrawn before the first panel hearing, 90 percent of the filing fee will be reimbursed (previously, only 50 percent was reimbursed). The KIO chairman will determine the composition of the arbitration panel for each new case by selecting persons from the alphabetical list of Chamber members.

As previously, a party contesting a decision made by the Chamber can file a complaint with the regional court having jurisdiction over the registered office or residential address of the contracting party. The complaint will be forwarded via the PPO chairman within seven days following the delivery of the ruling issued by the Chamber. The provisions of the Civil Procedure Code pertaining to appeals will apply to proceedings regarding complaints.

Importantly, the powers of the KIO will also include the right to adopt, in the form of resolutions, opinions on reservations submitted by contractors for consideration by the PPO chairman with respect to post-inspection instructions given by the PPO chairman after a so-called "pre-procurement inspection". An inspection of this type may be carried out by the PPO chairman prior to a contract being awarded if the value of the procurement or a framework contract (in the case of construction works) is at least 20 million euros or - with respect to supplies or services - 10 million euros.

The arrival of the new-look KIO should improve the consistency and coherence of public procurement rulings in the long run. The appeals processing procedure will now be similar to the classic court procedure. Unfortunately, the number of persons interested in KIO membership is smaller than originally expected (about 75 applications have been submitted). The selection committee appointed by the Prime Minister is entitled to choose the best candidates by a course of qualification proceedings, which consist of an interview and an exam on public procurement laws and regulations.

Aldona Kowalczyk
Paweł Krzykowski
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