Compensation for unjustified exclusion from a public contract

Scope of the public procurement procedure

A public procurement is a procedure in which state bodies conduct proceedings to select the most advantageous offer to carry out a specific task, from the purchase of equipment to large infrastructure projects.

Businesses meeting certain requirements can participate in this process.

In addition, some companies, especially those implementing projects co-financed from the EU budget, are obliged to apply the principles of the Public Procurement Law (PPL) when organising tenders. In such a situation, it is incumbent on entrepreneurs to prepare an enquiry and then conduct the entire process in accordance with the applicable provisions of the law.

What does the process of selecting a contractor look like?

Each contracting authority prepares the tender request (together with the contract terms and conditions) in such a way that the contracting authority can select the most advantageous tender for itself.

Frequent factors shaping the tender selection process are price, contract completion time, but also the experience of the tenderer.

In addition, the contracting authority is obliged to prepare the conditions for the selection of the tender in a non-discriminatory manner that does not restrict fair competition.

On this basis, the contracting authority analyses the tenders and selects those which meet the specified criteria.

The consequence of this is the rejection of bidders who do not meet the conditions specified in the request for proposals.

Importantly, the contracting authority may reject a given tender if its content does not comply with the contracting authority’s requirements.

The reason for rejection is fundamental and irremovable.

Consequences of the unjustified exclusion of a bidder Admittedly

, during the procedure for a given public contract, bidders may appeal against the contracting authority’s decision as to the terms in the contract documents or the reason for the rejection of a given bid.

However, this will not always result in the selection of an excluded tender.

In such situations, it is worth noting that there is a recent CJEU judgment[1] in which the Court held that a bidder unlawfully excluded from a procurement procedure may claim damages for the loss of opportunity itself (and not just the lost profit).

The CJEU states that: Article 2(1)(c) of Directive 89/665 must be interpreted as precluding national legislation or practice which excludes, in principle, the possibility for a tenderer excluded from a public procurement procedure because of an unlawful decision of the contracting authority to obtain compensation for loss suffered as a result of the loss of the chance to participate in that procedure in order to obtain the contract in question[2].

Thus, the CJEU significantly extends the possibility for a bidder to obtain damages from a contracting authority for wrongful exclusion from the process of competing for a particular public contract.

Basis for a claim for damages

In the Polish legal system, a bidder who has been wrongfully excluded may claim damages on the basis of Article 415 of the Civil Code, i.e. under so-called tort liability.

In such a case, the bidder must demonstrate to the court that a tort has occurred, damage has been caused and there is a causal link between the two.

In such a situation, the damage takes the form of lost profits (lucrum cessans), which include the value of the assets that did not enter the bidder’s property due to the event causing the damage and the value of the liabilities that did not diminish as a result of that event.

It is recognised that only those benefits that would in all probability have found their way into the property of the injured party should be taken into account.

Thanks to the CJEU’s ruling, bidders have an easier task – they no longer have to solely prove the loss of profit, it is sufficient to prove the loss of an opportunity to participate in a public procurement procedure.

Consequences for entrepreneurs

The CJEU judgment has far-reaching consequences for entrepreneurs participating in public procurement.

On the one hand, economic operators-tenderers have an easier way to claim damages for the loss of the chance to participate in the procedure.

On the other hand, economic operators-tenderers face the risk of paying damages as a result of the unjustified exclusion of a tenderer.

____________________________________________________________________[1] Judgment of the CJEU of 6 June 2024, C-547/22 INGSTEEL, ECLI:EU:C:2024:478.[2] Paragraph 48 of the judgment of the CJEU of 6 June 2024, C-547/22 INGSTEEL, ECLI:EU:C:2024:478.