How to avoid unfavourable public contracts

25 July 2023 | Knowledge, News, The Right Focus

One of the most common mistakes made by economic operators is predatory pricing. This not only makes it impossible to make a profit, but can also result in a loss. Sometimes such a mistake is not the fault of economic operators. In fact, the high inflation and sharp increases in energy, commodity and other prices that we have seen in recent years have had a negative impact on the profitability of public procurement. As a result of such a mistake, economic operators may not only lose the planned profit, but may even risk a surcharge on an ongoing contract.

Validity of tenders: legal implications

Any economic operator who has submitted a tender in a public procurement procedure is bound by it for the period specified in the contract documents. During this period, it cannot release itself from the obligation to conclude the contract on the terms set out in the tender.

Therefore, if a contracting authority selects a particular economic operator’s tender and sets a deadline for signing the contract, the economic operator should sign it. Otherwise, it risks losing a tender bond if, of course, one is requested by the contracting authority.

However, if the validity of the tender expires, the economic operator may refuse to enter into the contract. This is a mechanism to protect economic operators from the risk of entering into unprofitable contracts.

Clarifying a predatory price as a way of avoiding an unfavourable contract

Another way of avoiding an unfavourable contract is to use the procedure for clarifying the price offered.

In the course of a public procurement procedure, a contracting authority may ask an economic operator to provide a relevant explanation or evidence confirming the assumptions made in the tender if it considers that the price offered by the economic operator appears abnormally low or raises doubts as to the economic operator’s ability to perform the subject matter of the contract.

Economic operators who have submitted a quote that is too low and who are seeking a way of avoiding an unfavourable contract do not have to respond to such a request. This will result in the tender being excluded from the procedure without the loss of a tender bond. This is because a contracting authority may withhold a tender bond in cases strictly defined by the Act. And none of these concerns the situation where an economic operator does not respond to a request for an explanation of predatory pricing.

How can we assist?

  • Preparing explanations of predatory pricing
  • Analysing tenders from other economic operators for predatory pricing
  • Preparing appeals to the National Board of Appeal

Any questions? Contact the authors:

Jakub Krysa, PhD

Michał Waraksa

Latest Knowledge

Amendments to the General Tax Code

The Polish tax system could be in for a revolution. The Ministry of Finance has announced draft changes aimed at simplifying, streamlining and, in some areas, tightening the rules for dealing with the tax authorities.

Family foundations – what do you need to know?

At some point, almost every family business is faced with the decision of how to develop the business they have built with their own hands, while at the same time protecting the capital they have accumulated over the years. A family foundation could be the answer.

Landmark ruling in case involving use of data to train AI

The U.S. District Court in Delaware has delivered a significant ruling in a case involving artificial intelligence trained on copyrighted Thomson Reuters’ data. Judge Stephanos Bibas ruled that Ross Intelligence had gone too far. This judgement, while not final, is a milestone in the legal world regarding the protection of content in machine learning.

M&A trends in the AI industry

Over the past two years, we have seen a significant increase in the number of M&A deals involving companies based on artificial intelligence or using AI components.

ICLG – Employment & Labour Laws and Regulations, an overview of Polish employment law

The International Comparative Legal Guides (ICLG) is an acclaimed series of publications co-authored by the editors of the Global Legal Group (GLG) and an international panel of experts. It is a collection of key cross-border legal guides that are essential for law firms, companies, governments and individuals alike when doing business around the world.

Contact us:

Jakub Krysa, PhD

Jakub Krysa, PhD

Attorney at Law, Of Counsel, Public Procurement

+48 784 084 522

j.krysa@kochanski.pl