NAC once again draws a line for in-house procurement

Katarzyna Kuźma and Wojciech Hartung from the Infrastructure & Energy Practice’s public procurement team has successfully represented ATF Polska sp. z o.o. sp.k. in the National Appeal Chamber (NAC) in a dispute over a procedure for municipal waste collection and management in Chojna and Widuchowa municipalities. Widuchowa Municipality intended to contract the task in in-house procurement to Przedsiębiorstwo Usług Komunalnych (PUK) in Chojna, a municipal company in which it had previously acquired a 0.25% stake from Chojna Municipality. Two companies dealing with waste collection in the municipality filed an appeal against the decision.

Until recently, Chojna Municipality held 100% of the 8,800 shares in the municipal company Przedsiębiorstwo Usług Komunalnych (PUK) in Chojna. In 2020, the Chojna Municipality councillors passed a resolution approving the sale of 50 shares in PUK in Chojna to the neighbouring Widuchowa Municipality, which ultimately decided to acquire 22 shares (0.25%) and thus decided to use an in-house procurement procedure.

Two companies dealing with waste collection in the municipality filed an appeal against the decision, arguing that the conditions for in-house procurement included:

• exercising control of and having a dominant influence over a municipal company;
• performance by the municipal company of the tasks contracted to it (i.e. collection and management of municipal waste) in their entirety and not delegation of some of the tasks to other entities;
• more than 90% of the activities of the municipal company being carried out for the municipality (less than 10% of the services can be provided commercially).

“The NAC upheld ATF's argumentation, stating that merely formally holding a minimum number of shares in a municipal company is insufficient to be able to speak of exercising control over it as required by the provisions of the PPL and the EU directive. It is also necessary to ensure such shareholder(s) have actual influence over the company's activity through appropriate mechanisms provided for in the company's articles of association.” said Wojciech Hartung, Counsel in the Infrastructure & Energy Practice.

“Another key issue is limiting the possibility of commissioning implementation of the tasks to those for which such company is prepared, i.e. has appropriate experience and facilities. It should not be the case that an in-house entity (here: a company) acts only as an intermediary, and contracts implementation of the contract (and this without observing the provisions of the PPL) to its subcontractor.” added Katarzyna Kuźma, Partner in the Infrastructure & Energy Practice.

“The NAC also confirmed that, in order to demonstrate compliance with the condition that the municipal company generate a certain level of revenue, the contracting authority should first look at historical data. The PPL provides a derogation from this rule in favour of commercial forecasts, but the contracting authority should show why the historical data have become inadequate. This is important because historical data are based on facts, while forecasts are based only on certain plans and expectations, which makes them easier to "adjust" to the requirements provided for in the law.” commented Wojciech Hartung.