Conduct of Contracting Authorities in Case of Non-Compliance with Subcontracting Conditions

On 14 February 2020, the National Review Commission for Reviewing Public Procurement Award Procedures (DKOM) issued Decision no. 018-152 / 2019-87. In the decision, DKOM held that the contracting authority, the company 2TDK, d.o.o., having found that the subcontractor failed to meet the requirement of past successful construction of a support structure higher than 8 meters and a length of at least 50 m, should have asked the tenderer to submit an appropriate reference instead of an inappropriate reference. This means that the tenderer should be able to obtain a new reference from the same subcontractor or even find a new subcontractor that can provide the required reference.

The DKOM issued its decision under the second paragraph of Article 81 of the Public Procurement Act (hereinafter referred to as: ZJN-3), which states that a contracting authority must check whether the entities whose facilities it intends to use meet the appropriate conditions for participation and whether there are grounds for their exclusion. In the event that the conditions for participation are not met or if there are grounds for exclusion, the contracting authority must request a replacement from the tenderer.

The decision and its statement of reasons came as a surprise to many, because a change of reference generally already implies modification of the contract, whereas a change of subcontractor and all other factors that such a change logically entails (participating individuals, final price, method of payment of the subcontractor etc.) definitely requires modification of the contract. In accordance with the provisions of the fifth, sixth and seventh paragraphs of Article 89 of ZJN-3, the amendment of the contract is possible only when the changes are in full compliance with the principle of equal treatment and the principle of transparency.

It is understandable that the DKOM gave priority to the provision of the second paragraph of Article 81 of ZJN-3 given that it governs issues related to the use of the capacities of other entities. However, the question remains whether such a requirement complies with the general principles of public procurement law, which require transparency and equality in the treatment of all tenderers.

In practice, this contracting authority duty may lead to even greater delays in public procurement procedures, because as with the case of an unsuitable subcontractor the contracting authority will have to inform the tenderer and invite it to submit an appropriate reference. The tenderer will be able to (ab)use this after the deadline for submission of tenders, when it will already be in possession of relevant information key to the final decision.