Don’t turn your backs on Polish public procurement!
British firms have generally not achieved success in winning public tenders in Poland. The combination of a different legal system and cultural differences are usually to blame. Billions of euros worth of major infrastructure and energy projects have been won by contractors from Germany, France, Italy, Sweden, Spain, Portugal and Turkey since Poland joined the EU – but UK firms have generally missed out.
There will be more opportunities in future; what can be done to ensure that Polish public procurement is more transparent to UK firms? The BPCC’s Public Procurement & PPP policy group met on 23 November to discuss the characteristics of the Polish system, and where it can be improved. Bringing together the most experienced lawyers, consultants, representatives of the construction sector, along with senior public-sector experts, the meeting highlighted practices and mind-sets that end up being disadvantageous both to taxpayer and business. Taxpayers end up paying more in the long term because of costly mistakes, whilst businesses are penalised (and sometimes even face bankruptcy) usually because of over-optimism.
Mistakes can be in the form of cancelled tenders – an example being a stretch of motorway, where a low bid wins the contract, only to end up unable to perform the work on time and to budget. The tender is repeated, the new winner’s price is more realistic – but the project ends up being delivered with a delay of a year or two. Over-optimism is driven by bidding firms’ determination to win leading to unrealistic prices being offered
The UK system was praised for its open nature, focus on delivering the best long-term value for the taxpayer, and a practical approach based on the spirit rather than letter of the law.
The Polish system’s drawbacks include a culture of appealing decisions, often overturned on technicalities in the National Chamber of Appeals (KIO) and public procurement court.
There was mention of the Ukrainian public procurement electronic platform, which is being prepared to handle the vast number of projects required in the rebuilding of the nation and its infrastructure. The fully digitised system was shown to be more transparent and modern than Poland’s one or systems present in Western countries. It includes a comprehensive database with very detailed records of past tenders and advance business analytics providing the possibility to identify many information on procurement opportunities and chances.
Public-private partnerships (PPPs) are becoming an increasingly popular solution for many Polish local authorities, with 32 projects currently under way. However, with the exception of three (the Port of Gdynia, the National Archives and the Polonia stadium in Warsaw), the average value is less than 52m złotys – too small to be of interest to the financial sector. The UK’s experience with PPP goes back 30 years; experience that’s both positive and negative, experience that BPCC members will gladly share here in Poland.
Model documents for an entire class of projects, from ports to sports centres, have the potential of saving taxpayers’ money as reinventing the wheel each time becomes unnecessary.
PPP projects should transfer of risk to the party most likely to be able to cope with it, while also including a mechanism whereby public and private sectors should share any unforeseen gains between them equitably.
The Polish government’s IT strategy, centred on delivery of digital services in the cloud, is based on the UK government’s G-Cloud solution. In theory, this should give UK IT firms that are already delivering such services in the UK and have great experience of working with the public sector should be very interested in participating in when tendering for similar contracts in Poland.
Concluding the meeting, there was a consensus of opinion that at the heart of Poland’s suboptimal public procurement system is a low level of social trust, which according to Prof Janusz Czapiński is the lowest of all OECD countries. Poland’s rapid economic development over the past 30 years was not matched by a similar growth of trust within its society.
The BPCC encourages its members and their clients and potential clients to take another look at public-sector projects in Poland. The coming economic downturn will mean for many companies who normally only do business with other firms in the private sector to look to government work to keep order books from drying up. This will require a good understanding of how the public procurement system in Poland works in practice, and how to approach it to have a good chance of winning projects. The BPCC’s Public Procurement & PPP group has access to some of the best and most experienced experts in the field. To ensure you are invited to the next meeting, please let us know with an email
The BPCC wishes to thank Bird & Bird for their hospitality in hosting yesterday’s meeting.