Is it worth getting involved in the WKR? The Łódź cross-city tunnel as a case study of risks and opportunities

One of the most high-profile infrastructure projects in Poland is well known to anyone who follows the construction market. A month after terminating the contract with the previous contractor, PKP PLK launched preliminary market consultations (“WKR”) regarding the continued construction of the cross-city tunnel in Łódź.

This is the perfect opportunity to remind people what preliminary market consultations are and what risks are involved in taking part in them.

What are WKRs and what are they used for?

Preliminary market consultations (Article 84 of the Public Procurement Law) are an informal dialogue between the contracting authority and the market, conducted prior to the commencement of the actual tender procedure. As part of this process, the contracting authority may obtain technical, organisational, economic and legal information to help it better prepare the tender – in terms of the description of the subject matter of the contract, conditions for participation, risk allocation and contractual provisions.

In the case of the Łódź tunnel, the scope of the consultations included, amongst other things, a review of the future work schedule, the preferred model for implementing the project, the allocation of risks between the investor and the contractor, and possible methods of protecting neighbouring buildings – including listed buildings.

Whilst participation in preliminary market consultations may present certain opportunities, it requires a careful assessment of the associated legal and strategic risks.

Three risks every contractor needs to be aware of:

1. Lack of legal protection – no means of appeal

Market consultations are not part of the procurement procedure. This means that no decision taken by the Contracting Authority in the course of such consultations – whether regarding an invitation to participate, the subject matter, or the early termination of discussions – may be appealed to the National Appeal Chamber (KIO). All costs incurred in preparing for and participating in the consultation shall be borne by the Contractor, without any right to reimbursement.

2. Risk of exclusion from a subsequent tender (Article 85 of the Public Procurement Law)

This is the most serious risk, and one that is often underestimated. Participation in the WKR does not automatically disqualify a contractor from taking part in a tender – but it does give rise to specific legal consequences. If a Contractor has been involved in the preparation of the tender procedure (including as part of the WKR), and the Contracting Authority considers that the knowledge thus acquired distorts competition and that this distortion cannot be eliminated by other means, the Contractor may be excluded from the procedure pursuant to Article 108(1)(6) of the Public Procurement Law. Importantly, this also applies to entities belonging to the same group of companies as the participant in the consultation.

Exclusion is a last resort – but a realistic one. This is particularly true in procedures of such high technical complexity as the completion of a TBM tunnel, where the knowledge gained during scenario-based dialogue may be difficult to neutralise in relation to other tenderers.

3. The obligation to disclose your knowledge to competitors

Before any exclusion takes place, the Contracting Authority is obliged to take measures to ensure a level playing field – in practice, this means providing the other Contractors with the information it has obtained from a participant in the consultation. Technical knowledge, know-how and proposed solutions may therefore end up in the hands of direct competitors.

What happens after the consultation?

According to PKP PLK’s plans, the results of the consultation will be used to draw up the tender documentation – the very same documentation on the basis of which all market participants will submit their bids, not just those invited to the dialogue.

Participation in preliminary market consultations is therefore a strategic business and legal decision, rather than merely a stage of technical dialogue with the contracting authority. Before a company decides to take part, it is worth asking itself a few questions: is the scope of the information provided general enough that it will not create an information advantage? Is the contracting authority able to effectively neutralise this advantage in relation to the market? And finally – is the potential benefit of influencing the tender’s terms worth the risk of exclusion or disclosure of know-how?

Preliminary market consultations are not only an opportunity to talk to the contracting authority, but also involve specific legal and business risks. With a project such as the cross-city tunnel in Łódź, participation in the preliminary market consultation should be a conscious strategic decision, not a knee-jerk reaction. Sometimes less is more — even before the tender.