George Washington University Law School Webinar – A Tumultuous Year for Trade

Please join a free webinar on emerging barriers in procurement due to cybersecurity, the “Section 889” Huawei ban, Trump and Biden on “Buy American,” and growing European protectionism with Professor Christopher Yukins (GW Law School) and Professor Laurence Folliot Lalliot (Université Paris Nanterre) as moderators.

More info at www.publicprocurementinternational.com

White Paper dealing with the distortive effects caused by foreign subsidies in the Single Market

On June 17 the European Commission has adopted a White Paper dealing with the distortive effects caused by foreign subsidies in the Single Market. The Commission now seeks views and input from all stakeholders on the options set out in the White Paper. The public consultation, which will be open until 23 September 2020, will help the Commission to prepare for appropriate legislative proposals in this area.

Foreign subsidies in EU public procurement procedures has been presented in the Module 3 of the White Paper. Foreign subsidies may enable bidders to gain an unfair advantage, for example by submitting bids below market price or even below cost, allowing them to obtain public procurement contracts that they would otherwise not have obtained. Under this Module, the White Paper proposes a mechanism where bidders would have to notify the contracting authority of financial contributions received from non-EU countries. The competent contracting and supervisory authorities would then assess whether there is a foreign subsidy and whether it made the procurement procedure unfair. In this case, the bidder would be excluded from the procurement procedure.

A package of solutions introduced by the Act on Interest Rate Subsidies on Bank Loans Granted to Provide Financial Liquidity to Businesses Affected by Covid -19 (known as Anti-Crisis Shield 4.0.) of 19 June 2020 related to the Polish Public Procurement

The Act on Interest Rate Subsidies on Bank Loans Granted to Provide Financial Liquidity to Businesses Affected by Covid -19 (known as Anti-Crisis Shield 4.0.) of 19 June 2020, is quite significant for the public procurement market. The solutions contained in this normative act are to support businesses suffering economic consequences resulting from the pandemic. The range of solutions it introduces includes also those applicable in the public procurement sector.

The most important of these include the issue of amending the content of a public procurement contract when it is found that the proper performance of the contract is affected by circumstances surrounding the occurrence of Covid-19. Until the solutions provided for in Anti-Crisis Shield 4.0. entered into force, a claim on the part of a contractor to amend the content of the contract in situations referred to in Article 15r section 1 of the act did not exist. Pursuant to Article 15r section 4, after stating that circumstances related to the occurrence of Covid-19 may affect or influence the proper performance of the contract, the contracting authority was entitled to amend the content of the contract. Such a solution gave the contracting authority a discretionary right to amend the content of the contract, even if the circumstances related to the Covid-19 pandemic were clearly found to have affected the proper performance of the contract. Therefore, the regulation did not guarantee any protection to contractors.

Anti-Crisis Shield 1.0. introduced a provision of Article 15r section 4 that had to be treated only in terms of clarifying the content of Article 144 section 1 point 3 of the Public Procurement Law, which could rightly be assessed as insufficient from the point of view of the contractors. The solution introduced in Anti-Crisis Shield 4.0 brings a significant change in this respect. After stating that the circumstances related to Covid-19 affect the proper performance of a contract, the obligation to modify the contract as referred to in Article 15r section 4 of the act is imposed on the contracting parties de lege lata. At the same time, pursuant to Article 15r section 4a, if it is found that the circumstances related to Covid-19, as referred to in section 1, may affect the proper performance of the contract, also referred to in section 1, then the contracting authority, as before, may agree with the contractor to amend the content of the contract between them, but does not have to.

Significant changes have also been introduced in relation to advance payments, the payment of remuneration in parts and the return of security submitted by contractors. Ratio legis of solutions provided for in Article 15vb of Anti-Crisis Shield 4.0. is to support the financial liquidity of businesses operating on the public procurement market, and it should be considered quite advantageous. The introduced solutions will, in fact, contribute to increasing the attractiveness of the public procurement market for businesses. Article 15vb section 2 imposes an obligation on contracting authorities to pay remuneration in parts, after the performance of a part of a public procurement contract, or to make an advance payment for the performance of the contract, in the case of contracts entered into for a period longer than 12 months. At the same time, the contracting authority specifies in the contract the percentage of the remuneration paid for the execution of its individual parts, with the percentage value of the last part of the remuneration not exceeding 50% of the remuneration due to the contractor. Advance payments may not be less than 5% of the amount of remuneration due to the contractor (Article 15vb section 3). In the case referred to in Article 143a section 1 point 1 of the Public Procurement Law, namely for construction works contracts whose term of performance exceeds 12 months, the contracting authority may indicate in the terms of reference to the contract the percentage of the last part of the remuneration, which may not be more than 50% of the amount of remuneration due to the contractor.

The solutions introduced by Anti-Crisis Shield 4.0. also provide for reducing the value of the performance bond to 5% of the total price quoted in the tender, or the maximum nominal value of the contracting authority’s obligation under the contract (Article 15vb. section 5). The security may be set at a higher amount – up to 10% of the total price stated in the tender or the maximum nominal value of the contracting authority's obligation under the contract – if justified by the subject matter of the contract or the existing risk related to its performance, as described by the contracting authority in the terms of reference (Article 15vb section 6). In addition, pursuant to Article 15vb section 7, the contracting authority may return the performance bond in part, after the execution of a part of the contract, if it has provided for such a possibility in the terms of reference to the contract. An important solution was also added under Article 15r (1) section 1.

It sets out that, during the period of declared state of epidemiological threat or state of epidemic in connection with Covid-19, and for 90 days from the date of cancellation of the state that was last in force, the contracting authority may not enforce a contractual penalty reserved for the non-performance or improper performance of the contract referred to in Article 15r section 1 from the contractor's remuneration, or other receivables of the contractor, and may not seek satisfaction from the performance bond for this contract, if the occurrence in connection with which this penalty was reserved took place during the period of declared state of epidemiological threat or state of epidemic. At the same time, during the period of a state of epidemiological threat or state of epidemic declared in connection with Covid 19, and for 90 days from the date of cancellation of state that was last in force, the statute of limitations for the contracting authority's claim referred to above does not commence, and is suspended if it has already commenced. This period may expire no earlier than 120 days after the last state is cancelled (Article 15r (1) section 2). It should be noted that, if the term of the performance bond expires during the declared state of epidemiological threat or state of epidemic, the contracting authority cannot claim satisfaction from the bond if, at least 14 days before the bond expires, the contractor extends its validity or provides a new performance bond, and the contracting authority accepts the bond terms (Article 15r (1) section 3). If the term of the performance bond expires between 91 and 119 days after the declared state of epidemiological threat or state of epidemic in relation to Covid-19, the term of the bond is automatically extended by law to 120 days after the cancellation of this state (Article 15r (1) section 4).

Another solution provided for in Anti-Crisis Shield 4.0. concerns the legislator’s removal of the obligation imposed on contracting authorities to demand that contractors pay a bid bond in the case of contracts with a value exceeding the EU thresholds. Lege iuris, pursuant to Article 45 section 1 of the Public Procurement Law, the contracting authority should demand that contractors pay a bid bond if the value of the contract is equal to or exceeds the amounts specified in the regulations issued pursuant to Article 11 section 8. In light of the new Article 15va of Anti-Crisis Shield 4.0., contracting authorities may require contractors to pay a bid bond in such situations, but do not have to.

Shield 4.0. also introduces changes in terms of announcing contracts in relation to open tender procedures. Under the amended Article 40 section 1 of the Public Procurement Law, it will be sufficient to initiate proceedings under an open tender procedure by publishing a contract announcement on the website.

Another important change is that it is no longer necessary to apply the provisions of the new Public Procurement Law to Employee Capital Plans (ECP) management contracts and contracts for maintaining ECPs with a contract value below the EU thresholds. The relevant regulation was included in Article 7 section 2a of the Act on Employee Capital Plans of 4 October 2018, according to which "the provisions of the Public Procurement Law of 11 September 2019 (Journal of Laws, item 2019 and of 2020, item 288) do not apply to ECP (Employee Capital Plans) management contracts and contracts for maintaining ECP, if the value of the contract is lower than the EU thresholds referred to in Article 3 section 1 of that act.

Crew Dragon spacecraft docked with the ISS

Crew Dragon spacecraft docked with the International Space Station on May, 31. The spacecraft with two American astronauts: Bob Behnken and Doug Hurley docked with the ISS at 10.16 a.m. Eastern. The successful mission has been completed through the PPP agreement between NASA and SpaceX. It was the first pairing in space featuring a crewed spacecraft constructed by a private entity and the first step to the next moon landing within NASA Artemis program. 

With the Artemis program, NASA plans to land the first woman and next man on the Moon by 2024, using innovative technologies to explore more of the lunar surface than ever before.

Webinar: Public procurement in times of Covid-19. Global experiences, challenges and further steps. Conversation with professor Christopher Yukins.

Please join the conversation with Professor Christopher Yukins (George Washington University), the author of publicprocurementinternational blog. Meeting will concern global challenges related to public procurement and COVID-19, next steps and opportunities to benefit from lessons learned around the world.

Registration on: rejestracja@prosilesia.pl

Professor Christopher Yukins serves as co-director of the government procurement law program at George Washington University Law School, and has taught there on contract formations and performance issues in public procurement, bid protests and claims litigation, state and local procurement, anti-corruption issues, foreign contracting, procurement reform, and comparative and international law. He has testified on issues of procurement reform and trade before committees of the U.S. Congress and the European Parliament. He is a visiting professor at the Université Paris Nanterre, where he lectures annually, and has taught a week-long course on procurement issues and corruption at the International Anti-Corruption Academy (Austria).

He has spoken as a guest lecturer at institutions around the world, and he was a contributing editor to the UN Office on Drugs and Crime manual, Guidebook on Anti-Corruption in Public Procurement. He is an active member of the Public Contract Law Section of the American Bar Association, and is a member of the Procurement Roundtable, an organization of senior members of the U.S. procurement community. He is a faculty advisor to the Public Contract Law Journal, is a member of the editorial board of the European Procurement & Public-Private Partnership Law Review, and is on the advisory board of The Government Contractor. He has worked on a wide array of international projects on capacity-building in procurement, and he was an advisor to the U.S. delegation to the working group on reform of the United Nations Commission on International Trade Law (UNCITRAL) Model Procurement Law. Together with his colleagues, he runs a colloquium series on procurement reform at The George Washington University Law School.

In private practice, Professor Yukins has been an associate, partner and counsel at leading law firms; he is currently counsel to the firm of Arnold & Porter.