A limited access to tenders, colluding bidders, contractors favoured by ordering parties – to name the most common restrictions to competition in public procurement, presented in the latest report of UOKiK. How to improve the bidding system operating in Poland? The debate held at the premises of UOKiK will address this question

In 2012, the value of public procurement in Poland was approx. PLN 132.7 billion, i.e. about 8.32% of gross domestic product. The Office of Competition and Consumer Protection is one of institutions responsible for the proper spending of money collected from tax payers. Most importantly, however, the Office is in charge of detecting bid rigging in the following relations: between bidders, and between an ordering party and a bidder. Over the last few years, the Office has issued 15 decisions concerning bid rigging; 13 antimonopoly proceedings are still pending.

However, the Office goes further beyond – e.g. UOKiK made the analysis of public procurement system, which resulted in drawing up the report titled System zamówień publicznych, a rozwój konkurencji w gospodarce (Public procurement system and the growth of competition in the market). The report presents regulations relating both to tenders in Poland and EU member states,  indicating  some drawbacks in the functioning of the Polish public procurement system, and possible solutions. Bidders and tender callers may find the information on what practices are regarded as competition-resticting very essential.

Bid rigging

Within the scope of competence of UOKiK, bid rigging is the most significant problem faced by the system of public procurement in Poland. They may take various shapes – most frequently, decisions issued by the Office include a mechanism of placing and withdrawing bids by colluding entities. It consists in withdrawal of a bid by a contractor offering a lower price when the first two places are taken by colluding bidders, which means in practice that the next offer in a row – offering the higher price – is selected.

Price       

Moreover, the Office addressed the problem of selecting a bidder only based on the price offered by such tenderer. – When a price is the only criterion, it negatively affects the competiveness of a tender – stressed Małgorzata Krasnodębska-Tomkiel, the President of UOKiK. – It eliminates the effective rivalry between undertakings who are not capable of winning the price rivalry, despite the fact their product or service are much more favourable for other reasons. It may lead to selecting an offer which after its evaluation is not the most favourable for tax payers. Furthermore, it results in tender collusions. In the case only one criterion determines the selection of an offer, entering prohibited agreements is much more likely – added the President of UOKiK. It is worth noting that taking a price as the only criterion  is not a common practice abroad. This way of dealing tenders refers to only 30% of bids in Europe, whereas in Poland – as much as 90%.

Proposed amendments

Detection of bid rigging will become more effective thanks to changes in law started by UOKiK. In July, the Council of Ministers adopted the draft amendment to the Act on competition and consumer protection, which assumes expanding the limitation period in cases concerning collusions (including bid rigging) from 1 to 5 years.

Moreover, the Office proposed amendments to the Public Procurement Law to limit the risk of entering into prohibited agreements. One of them consists in restricting the access to submitted bids. This will eliminate the most common cases of collusions, i.e. placing or withdrawing bids. For this reason the Office implies that contractors should be allowed to access only the detailed content of the most favourable offer.

Another raised issue relates to changes which will lead to excluding from tenders these undertakings whose participation in bid rigging has been proved.

Debate

The report of the Office will be discussed in detail during the debate held at the premises of UOKiK on 10^th September. Representatives of institutions responsible for the proper functioning of the public procurement system, as well as heads of businesses and public procurement granting entities will join the debate.

Additional information for media:
Małgorzata Cieloch, Spokesperson of UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Tel.: +48 22 827 28 92, 55 60 314, 55 60 430
Fax: +48 22 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]

• Refers to public procurement published in the Public Procurement Bulletin and the Official Journal of the EU