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The Warsaw Voice » Law » March 18, 2009
A D V I C E F R O M S A L A N S
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All About Concessions
March 18, 2009   
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On Feb. 20 the Act on concession to conduct building works or provide services ("Concession Act") came into effect. The aim of the Act was to create new solutions-along with those proposed by the Law on Public Tenders and the Public Private Partnership Act-making it possible for private expertise and private funds to be invested in the delivery of public works.

The Concession Act defines the course and rules of action that are to lead up to a concession agreement on building works or concession on services being reached between the contractor-company and concession holder-and the public entity.

In the concession agreement the company undertakes to provide building works or services in return for remuneration in the form of either simply an exclusive right to use the construction or service which constitutes the object of a concession or a right to use the construction/service plus an additional payment. This means of payment involves direct charges imposed on end users by the concession holder. Clearly, concessions cannot be used for every kind of building works or services. Only building works or services that may be used by third parties may become objects of concession-parking lots, swimming pools, roads. The concession holder must make every effort to conduct operations in such a way as ensures maximum access and usability for end users.

The Concession Act was framed to minimize formalities and accelerate the procedure proposed by the Act, which is to be open and competitive.

The proceedings comprise several stages. Stage one begins with publication of an information notice-for service concessions the notice must be published in the Public Tender Bulletin, whereas for building works it is placed on the website page of the Office for Official Publications of the European Communities. Additionally, the public entity must post a notice in a place that is generally accessible in its home locality and on its website.

The notice on concession must contain essential data such as: name of the awarding body, definition of the object of concession, proposed date of delivery and bid assessment criteria.

Then, on a day stipulated by the awarding body, the prospective contractors submit applications regarding concluding a concession agreement. All entities submitting correctly made applications must be invited by the awarding body to take part in negotiations.
Negotiations may concern all aspects of the approved concession (financial, legal, way of conduct, period of concession, admissibility of subcontracting).

There is a presumption that applicants will fulfill the conditions of the proceedings, hence when assessing applications regarding concluding a concession agreement the awarding body does not require documents confirming that they fulfill the requirements for participation. The documents may be demanded after the best offer is chosen and only from the contractor who presented the most advantageous offer.

After the negotiations the awarding body invites all candidates with which it negotiated to submit offers by sending a description of the concession conditions. The awarding body concludes an agreement with the party that submitted the most advantageous offer. If the tenderer whose offer was judged the most advantageous evades concluding an agreement, the awarding body may conclude an agreement with the second best tenderer.

The maximum period a concession may run for is 30 years for building works and 15 years for services.

An interested entity whose legal interest has sustained a loss or may sustain a loss may make a complaint to the administrative court. Review by the court is restricted to matters concerning the legality of the awarding body's activities.

Finally, it is worth noting that it is a new departure in Polish law to grant a concession on services, but the possibility of granting a concession on building works is well known. The Law on Public Tenders first opened up the possibility of granting a concession in a public tender. But the Concession Act specifically excluded from public tenders the possibility of concluding a concession agreement on building works. That is why we can only hope that the mechanisms proposed by the concession Act on building works and services will be effective in practice and will be used, thereby leading to real cooperation between the public and private sectors.

Monika Kucharczyk, associate at SALANS Warsaw Public Procurement Team.
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