Companies & corporate law

Bid bond in Polish law

§ 1 of Article 704 of the Civil Code defines the bid bond as the sum or the appropriate security for its payment, which is to be paid by the participant entered into the auction or tender to the organizer under pain of not allowing to enter them.

Core of the bid bond

Therefore, the main purpose of introducing this objection into the terms of the auction or tender is securing the interests of the contracting authority in the procurement procedure. If the auction or tender participant, the tender offer of which has been selected as the most advantageous, refrains from entering into the contract, the auctioneer or tenderer may retain the sum paid or seek recovery from the subject of collateral. On the other hand, if the contracting authority refrains the contract, the winner of the tender may demand payment of a double bid bond or compensation for damages. In this way, the compensatory objective of the bid bond is also shown, which is subsidiary in this case.

Bid bond as securing sum

In case of invalidating the procedure or choosing the most advantageous tender and then concluding the contract with the winner of the tender, the main objective of the bid bond as the sum securing the participation in the tender is fulfilled. There is therefore no reason for keeping the sums paid by participants.

Return of bid bond

Paragraph 1 of Article 46 of the Public Procurement Law states that the bid bond shall be returned to all contractors immediately after the most advantageous tender was chosen or the procedure was cancelled, except for the contractor whose bid was chosen as the most advantageous.

This provision has the current wording as a result of the amendment effective from 22.12.2009. From this time it has a general nature and is also applicable if the offer is withdrawn before the deadline for the submission of bids, the exclusion of the participant or the rejection of the offer. Whereby the refund of the bid bond is an obligation of the contracting authority even in the absence of a request for return from the contractor, but not for the contractor who withdrew the offer before the deadline for submission of tenders.

The last of the contractors will receive the winner of the tender – only after the signing of the contract with the contracting authority and the performance of the contract if the request was necessary.

Detaining the bid bond

The Public Procurement Law provides four conditions for detaining the bid bond together with interest, all of which, related to the guilty conduct of the contractor, resulting the choice of the tender submitted by the contractor or the conclusion of the contract becoming impossible:

  1. Failure to submit in response to the tenderer’s request for statements or documents necessary for the conduct of the proceedings, which resulted in the inability to select the tender submitted by the contractor as the most advantageous for reasons attributable to the contractor,
  2. Refuse to sign a public procurement contract under the terms of the offer,
  3. Failure to provide the good performance bond,
  4. Concluding a public procurement contract is not possible for reasons attributable to the contractor.

Before the contracting authority applies his right to retain a bid bond, he must first summon for fulfilling formal deficiencies. In addition, the purpose and intention of the contractor, refusing to sign the contract or filing documents, should be taken into account as the bid bond is a sanction only for the intentional action of the contractor. Thus, for example, the erroneous preparation of documents in itself can not constitute a basis for detaining a bid bond.

Author team leader DKP Legal Michał Dudkowiak
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