Shield 4.0 a changes in public procurement

On June 19, 2020, the Polish legislator adopted the so-called he Anti-Crisis Shield 4.0, i.e. the Act on Subsidies to Interest Rates on Bank Loans granted to Entrepreneurs Affected by COVID-19 and on Simplified Procedure for Approval of the Agreement in connection with COVID-19 application.

With a few exceptions, this law enters into force on June 24, 2020.

Shield 4.0 introduces substantial changes relating to public contracts, in particular with regard to the guarantee, the method of payment of remuneration and the performance bond.

First of all, the contracting authority may currently require contractors to lodge a security deposit as referred to in Article 45 act of January 29, 2004 – Public Procurement Law (hereinafter: p.p.l). This excludes the application of Article 45 § 1 p.p.l. Until now, it was obligatory to demand a deposit.

Then, the contracting authority shall pay the remuneration in parts, after the execution of part of the public procurement contract, or shall grant an advance payment for the execution of the contract, in the case of public procurement contracts concluded for a period longer than 12 months.

In this case:

1. the contracting authority shall specify in the contract a percentage of the remuneration paid for the execution of its individual parts; the percentage of the last part of the remuneration may not be more than 50% of the remuneration due to the contractor;
2. the advance payment may not be less than 5% of the remuneration due to the contractor.

Moreover, in the case referred to in Article 143a (1) point 1 p.p.l. (works contracts whose term of performance is longer than 12 months, if the contract provides for payment), the contracting authority may indicate in the contract documents the percentage of the last part of the remuneration, which may not be more than 50% of the remuneration due to the contractor.

The performance bond shall be set at an amount not exceeding 5% of the total price quoted in the tender or the maximum nominal value of the contracting authority’s obligation under the contract.

The performance bond may be set at a higher amount than specified above, but not higher than 10% of the total price quoted in the tender or the maximum nominal value of the contracting authority’s obligation under the contract, if it is justified by the subject matter of the contract or the occurrence of risk related to the performance of the contract, as described by the contracting authority in the Terms of Reference.

The Contracting Authority may partially return the performance bond after part of the contract has been completed, if it is provided for in the Terms of Reference.