PKP PLK withdraws from important investments

The public procurement industry has recently been buzzing about turmoil caused by PKP PLK (the Polish railway lines). 

In one of the tenders for the modernization of railroad infrastructure that had been issued, the Contracting Authority canceled the proceedings. As a result of appeals filed by contractors, PKP PLK decided to cancel the cancellation, i.e. decided to continue the tender. Contrary to bidders’ expectations, however, this does not mean that the Contracting Authority will complete the investment. In light of PKP PLK’s past practice and information provided by representatives of the Ministry of Infrastructure, it should be understood that PKP PLK intends to cancel the tender again. 

The Procuring Authority gives limitations on investment funding by the Center for EU Transport Projects (CUPT) as justification for the cancellation of tenders. These restrictions are said to be due to a review of the spending of funds from the Krajowy Plan Odbudowy (National Recovery Plan). The cited explanation – contrary to PKP PLK’s intention to ensure “transparency of implemented activities” – only deepens the uncertainty of the contractors’ position in the tender.

The complicated story described above exemplifies the whole trend of PKP PLK withdrawing from “cost inefficient” investments. In August of this year, the Ministry of Infrastructure reported that more than a dozen tenders had already been canceled. 

This complex situation raises the question of (in)stability in relations with the public procurer and (in)certainty of contracts executed with public funds. Undoubtedly, changes in the position of PKP PLK strain stability in the infrastructure investment market and may undermine credibility in contractual/tender relations with the State Treasury and state-owned companies.

The reaction of the construction industry should not be limited to calls for more thoughtful calculation of expenditures from public funds. After all, contractors may have legal remedies provided for in the Public Procurement Law and the Civil Code, including a claim for reimbursement of the costs of participation in the proceedings (Article 261 of the Public Procurement Law), an appeal to the KIO – National Appeals Chamber (Article 513 of the Public Procurement Law) and a claim for damages on the general grounds provided for in the Civil Code.