It would seem that in the light of clear procurement terms or provisions of the Public Procurement Law it is undisputed that the specifications for a procurement may be changed by answers to questions referred by potential contractors. However, the latest case-law of the National Appeals Chamber (KIO) and the District Court in Warsaw denies such theses.
It turns out that answers to questions concerning procurement specifications may be treated as non-binding correspondence between the contracting authority and the prospective contractor. This gives rise to very serious consequences practically for the entire public procurement market.
Significance of answers to questions concerning specifications
Art. 38(4) of the Public Procurement Law provides that in justified cases the contracting authority may, before the deadline for placing offers, amend the Terms of Reference. In the previous body of rulings, the National Appeals Chamber assumed that modification of specifications is introduced not only by a clear reference to the above provision of the Public Procurement Law but also by each statement that may be attributed such an effect – e.g. by an answer to questions referred by potential contractors. Up to now, the Chamber emphasized that answers given as clarification of the contents of the procurement specifications are absolutely binding on contractors (judgment of 16 August 2011, KIO 1648/11; judgment of 7 March 2012, KIO 388/12). It can be thus concluded that an answer to a question relating to specifications becomes a part of the Terms of Reference and may amend their original substance. On such occasions, the contracting authority does not have to perform any further acts and the parties are bound by the contents of the questions and answers. Such an approach offered to the potential contracting parties a sense of security – it was clear that by asking questions to the contracting authority the contractor obtained binding guidelines and not merely exchanged correspondence. At the same time, it made a stimulus for the contracting authority to treat such questions seriously.
However, recently, in the judgment of 25 August 2017 (KIO 1563/17) upheld by the Circuit Court in Warsaw on 15 January 2018 (file reference XXIII Ga 1641/17), the National Appeals Chamber changed its views on the status of an answer to such questions. The case referred to a very large rail infrastructure project realized in the “design and build” framework. In the Functional and Utility Program (FUP), which formed a part of the Terms of Reference, the contracting authority pointed to specific technologies for the implementation of particular elements of the project. However, within the framework of the contract, it was concluded that the agreement incorporated specifications together with the questions and answers relating to the them. Altogether, about 850 questions were asked by potential contractors concerning the specifications – over a dozen of these related to the necessity of application of the technologies specified in the FUP. Contractors indicated, for example, that the use of another technology would allow the possibility to submit a cheaper tender in the procurement procedure. The contracting authority consequently answered such questions by stating that the project was carried out according to the “deign and build” formula, and the final choice of technology belonged to the contractor.
Clarification or amendment?
In the discussed judgment, the Chamber held that answers to questions constitute a mere explanation, clarification, possible specialization of the substance of specifications and, without an actual amendment to the document itself, may not serve as grounds for modification of any technical terms of procurement. In the judgment, the Chamber found that contractors should take into consideration the contracting authority’s clarifications since they form a type of authentic interpretation of the Terms of Reference. Unfortunately, the Chamber overlooked that in the discussed case the specifications and the answers to questions were different. Therefore, assuming that answers provide authentic interpretation of the specifications, priority should be accorded to the former. Strangely enough, exactly the opposite was done.
In the proceedings, the appellant deployed the argument that no item of the specifications defined the applicable technologies categorically, and the contracting authority used expressions as “it is expected,” “it is planned.” The Chamber concluded that Terms of Reference are not a collection of do’s and do not’s but specification of expectations for contractors which should be followed for the proper performance of the contract. In consequence – in the opinion of the Chamber – the lack of clear stipulation in that document of the requirement to apply certain technologies did not mean discretion in this regard. By so concluding, the Chamber disregarded in whole the sense of the answers given by the contracting authority. In particular, it omitted to explain how to understand the statement quoted above that the final choice of technologies belonged to the contractor.
Such an approach gives rise to the conclusion that answers to questions concerning the Terms of Reference do not form a part of expectations for contractors but merely amount to non-binding correspondence between potential contracting parties. In other words, in the view of the Chamber, while preparing the specifications the contracting authority always defines the contractor’s obligations, but this does not refer to answers to the latter’s questions.
It should be stressed that, thus far, it was clearly indicated in the Chamber’s rulings that unclear formulation of specifications may not have negative consequences for contractors, and that obtaining answers to questions relating to such specifications is to facilitate the decision on participation in the procurement procedure. As a result, taking into consideration the identity of Terms of Reference and answers to the questions referred, it should be concluded that ambiguities of such elements may not have any negative impact on the contractor’s interests. However, it turns out that the contrary may be the case. The judgment makes an important signal for all parties interested in performance of public procurement contracts – to approach the answers given by the contracting authority with much caution. Unfortunately, with the said ruling, the Chamber called into question the use of asking any questions.