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The Warsaw Voice » Law » April 23, 2008
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Tender Together
April 23, 2008   
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Poland's dynamic economic growth has led to a massive increase in the number and size of public contracts. The European Union has a major role to play in this, providing funding to both public and private entities.

With big stakes like these, minor contractors may face an uphill struggle to satisfy the pre-conditions to qualify for tenders and could be squeezed out by their bigger rivals. They might like to consider joining forces with other businesses to create a level playing field.

Although the law guarantees all companies equal access to public procurement, in practice, especially with big or complicated investments, contractors cannot always meet the requirements of the awarding body on their own. Often the best way ahead is to find a business partner and set up a consortium.

A consortium works by having at least two entities formally undertaking to cooperate with the aim of winning a tender and completing the work. This form of cooperation has numerous advantages. First, it opens up tenders that would otherwise be out of reach on grounds of experience, financial strength, and staff and technical support. Consortia can overcome these issues by pooling their resources. L'union fait la force. A combination of "my money, your know-how" can go far. Obviously, the $64,000 question is finding a suitable and trusty partner. If one member of the consortium possesses sufficient qualifications to carry out the contract, the other partners do not generally need to have them. The detailed principles by which contractors may combine their commercial potential will be set out by the awarding body in the terms of reference.

A fully-functioning consortium can be formed simply and easily, assuming agreement can be reached among the members as to apportioning rights and tasks. A consortium is not a company, its assets need not be amalgamated, and it needs neither equity nor registration. It does not need to have a specific type of organizational structure. It is set up on the strength of an agreement that can take whatever shape its members wish. But it should be remembered that, under Polish law, the members of a consortium are jointly liable for the performance of a public contract. This liability cannot be excluded, which means that even if one member of the consortium discharges its obligations faultlessly, the awarding body can still hold that selfsame consortium member liable for any contractual failures caused by their consortium partners. The members of a consortium can set up different internal regulations concerning contractual liabilities, but these regulations will only have effect within the consortium itself.

Polish public procurements are attracting increasing interest from companies elsewhere in the EU. They can put in bids on the same terms as Polish firms, although it sometimes happens that companies from other EU countries set up single-purpose subsidiaries to win and perform a particular tender. A newly-formed company, however, does not have much of a chance of winning a big procurement contract since it lacks the required experience. The references of an EU parent company do not devolve onto a Polish subsidiary. It would be better to set up a consortium.

Firms that form consortiums and make joint bids for public procurements should nominate a proxy. For this purpose they may choose a leader from among themselves. The proxy can also be an entity that does not belong to the consortium. There is nothing that prevents several proxies being appointed. As a minimum, a proxy should be able to represent the consortium in the tender proceedings. It may also be given the power to conclude a contract with the awarding body. The proxy will handle tender correspondence with the awarding body and receive declarations on behalf of the consortium. Contractors should exercise exceptional care in drafting the terms of their proxies since these terms are one of the few documents that cannot be supplemented afterwards. Presenting an invalid authorization to the awarding body will trigger a definitive rejection of the consortium's bid.

Going down the consortium road facilitates access to the market for many companies. It certainly deserves a second look by subcontractors. However, do choose your partners wisely, because if your partner is excluded from the proceedings, you get disqualified too.

Aldona Kowalczyk
Anna Rudowald
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