Municipal waste treatment in Poland is predominantly carried out by the public sector. It is municipal companies that are most often responsible for waste management and the performance of local government tasks. At the same time, the waste industry today faces a huge challenge – achieving ever-higher levels of recovery and recycling.
Waste sorting facilities, where waste is processed and prepared for recycling, play a key role in this process. Growing environmental requirements and the pressure resulting from EU targets make it necessary to implement increasingly advanced technologies – both in new investments and in the modernisation of existing plants.
The problem is that the staff of the contracting authorities often lack specialist technical knowledge. It is therefore difficult to expect them to independently develop optimal technological solutions and prepare the project. In practice, every facility requires an individual approach, tailored to local conditions, needs and limitations. There is no standard, ‘off-the-shelf’ product, and every sorting plant must be individually designed.
The entire process cannot take place without consultation between contracting authorities and contractors. It is precisely the contractors’ experience that makes it possible to clarify the objectives of the project and identify the most appropriate solutions.
The complexity of technology requires dialogue
Dialogue between the client and the contractor is therefore crucial and forms the foundation of project preparation. It makes it possible to clarify needs, to prepare various solution options, and to select the most suitable one. A lack of communication leads to the risk of incorrectly defining requirements, designing inappropriate technologies, financial and time losses, and consequently – to the ineffective implementation of public waste management tasks.
However, this is where a systemic barrier arises. Representatives of the public sector are wary of engaging with the market, as any discussion with a potential contractor could be misinterpreted as an attempt to reach informal agreements.
The result is a paradox: public contracting authorities operate under more restrictive conditions than the private sector. Private companies are free to engage in dialogue with suppliers, test solutions, optimise procurement processes, and negotiate – consequently achieving better project outcomes. Meanwhile, the public sector, constrained by rigid regulations, faces a greater risk of poor decision-making and waste of resources.
What might the solution be? A safe space for dialogue must be established between the public contracting authority and the market. Clearly defined legal guidelines and standards of conduct can and should enable local authorities and municipal companies to prepare projects in a professional, transparent and more effective manner. Only in this way can the requirements of public procurement law be reconciled with the realities of constructing modern, technologically complex waste treatment facilities and other complex projects.
How can the public sector prepare a technologically complex project?
One of the key tools for preparing complex projects is preliminary market consultation (PMC). This institution is regulated by Article 40 of Directive 2014/24/EU on public procurement and has been implemented into the Polish legal order under Article 84 of the Public Procurement Law (PPL), in force since 1 January 2021.
Preliminary market consultations are conducted prior to the commencement of a public procurement procedure. Their purpose is to prepare the procedure, including, in particular, identifying solutions available on the market, verifying project assumptions and informing contractors of the contracting authority’s plans and requirements regarding the future contract (Article 84 of the Public Procurement Law). Preliminary market consultations are therefore a fully permissible mechanism for dialogue with the market, enabling the contracting authority to better define the subject matter of the contract whilst upholding the principles of fair competition and equal treatment of contractors.
A detailed article has been devoted to the PMC procedure, entitled “Modernisation of municipal waste sorting plants – how to prepare for it? The role of preliminary market consultations”, together with a legal commentary by Daniel Reck, Solicitor.
Competitive Procedure with Negotiation – the underestimated potential of the Public Procurement Law
This article focuses on another instrument provided for under the Public Procurement Law which – unlike the PMC – enables dialogue with contractors during the course of the procedure. This tool is particularly useful in the case of complex technological investments, such as the construction or modernisation of municipal waste sorting plants, where it is often objectively impossible to fully and precisely define the optimal solution at the stage of initiating the procedure.
The competitive procedure with negotiation offers this possibility. It is commonly used, for example, in the Czech Republic for contracts concerning technologically advanced facilities, such as waste sorting facilities. Its structure is tailored to the specific nature of projects that cannot be clearly defined without prior dialogue with the market. Although this procedure is also regulated in the Polish Public Procurement Law (Articles 152–168), it is not used in practice for projects in the construction or modernisation of waste sorting plants.
The Czech model – Competitive Procedure with Negotiation as the investment standard
To avoid purely theoretical considerations, the following analysis will be based on the practice of public procurement relating to the design and supply of waste sorting technology in the Czech Republic. In the Czech Republic, the procedure known as jednací řízení s uveřejněním — corresponding to the EU competitive procedure with negotiation — is regulated by the Act of 19 April 2016, ZZVZ – Zákon o zadávání veřejných zakázek (Public Procurement Act) and is applied to technologically complex projects.
Pursuant to Section 60 of the Czech ZZVZ Act, the contracting authority may apply the competitive procedure with negotiation if:
a) the contracting authority’s needs cannot be met without adapting solutions available on the market,
b) the performance of the public contract involves the design of a solution or an innovative solution,
c) the contract cannot be awarded without prior negotiations due to specific circumstances arising from the nature, degree of complexity or legal and financial conditions related to the subject matter of the contract, or
d) the technical conditions cannot be defined by reference to standards, technical documents or other unambiguous technical specifications.
In practice, when investing in municipal waste sorting facilities, these conditions occur cumulatively, making the competitive procedure with negotiation the natural and rational method for awarding contracts in this area.
How does the Competitive Procedure with Negotiation work in three stages?
The competitive procedure with negotiation involves three main stages.
1. Contractor qualification stage
The contracting authority sets out the minimum technological requirements, functional needs and objectives, and the conditions for participation in the procedure. It then publishes a notice and invites an unlimited number of contractors to submit applications for admission to the procedure. On the basis of the applications submitted, the contracting authority qualifies contractors for the next stage and invites selected participants to submit preliminary tenders.
2. Conceptual stage – dialogue and negotiations
At this stage, the shortlisted contractors prepare preliminary bids based on the tender requirements, which are of a framework and functional nature. The contracting authority then holds meetings and negotiations with the bidders, which are standard practice in the procedure. These provide an opportunity, amongst other things, to present and discuss concepts, including in the form of drawings, which allows for a better illustration of the proposed solutions, as well as any emerging problems or doubts.
The aim of this stage is to refine and improve the solutions from the contracting authority’s perspective. It is at this stage that one can, and indeed should, challenge unreasonable requirements, propose alternative solutions, explain the cost and operational implications of the adopted assumptions, and discuss additional options, such as enhancing the functionality of the facility. The contracting authority expects the contractor to contribute specialist know-how, verify the assumptions, identify risks, or propose more effective solutions. The absence of such comments from the contractor effectively means a lack of added value for the contracting authority.
During negotiations, the contracting authority may amend or supplement the terms of the contract, in particular to clarify technical requirements and adjust them if they prove to be unreasonable or ineffective, with the exception of minimum requirements and the agreed tender evaluation criteria. This stage is crucial for clarifying doubts and developing optimal technological and organisational requirements for the project. It is not merely a formal procedural phase, but a genuine opportunity for co-creation, in which the contracting authority actively participates in the design of the facility, drawing on the contractors’ knowledge and experience.
3. The tendering and contractor selection stage
Once negotiations are concluded, the contracting authority invites participants in the procedure to submit final tenders. Contractors therefore submit technical and financial tenders, along with guaranteed parameters for solutions that have been previously verified and finalised. From among the tenders submitted, the contracting authority selects the most advantageous tender in accordance with the established evaluation criteria.
Limitations of open procedure in technology investments
The construction or modernisation of a municipal waste sorting plant is not a contract for the supply of a standard product. It is a design process in which the subject of the contract is developed as a result of an analysis of local conditions, waste stream parameters, existing infrastructure, the contracting authority’s expectations, and environmental and market requirements.
When comparing the Competitive Procedure with Negotiation – used in the Czech Republic for technological investments – with a classic open procedure, a fundamental structural difference can be observed. In practice, an open procedure boils down to a single step, combining the contractor qualification stage with the stage of submitting final bids. It lacks a genuine, formalised conceptual phase involving dialogue and negotiations, which are essential not only for the facility to be built, but also for it to operate effectively.
In an open procedure, this phase is limited to the contractor’s analysis of the requirements contained in the procurement documentation, in particular in the Description of the Subject Matter of the Contract (Polish: OPZ) or the Functional and Utility Programme (PFU), and to developing technological solutions that comply with those requirements. The contractor, operating under time pressure, due to the deadline for submitting bids, focuses primarily on preparing a proposal that complies with the provisions of the tender documentation.
From the contractor’s perspective, the tender preparation stage is conceptual in nature – it is at this point, during the preliminary design phase, that problems, risks and inaccuracies in the documentation are identified, but also opportunities and potential ways to enhance the functionality or technological efficiency of the waste sorting plant. This is also the stage for verifying the feasibility of the requirements, estimating the costs of their achievement, and identifying solutions that generate costs disproportionate to the expected outcomes.
At the same time, contact with the client is limited solely to formally asking questions regarding the content of the specifications. This procedure does not allow for the illustration or presentation of a full justification for the proposed changes, nor for a substantive discussion of the technological concept. Consequently, the contracting authority does not participate meaningfully in the process of shaping the specification, and the contractor is unable to present emerging problems or proposed solutions in a comprehensive and systematic manner.
When a lack of dialogue is replaced by parameters
In the face of technological uncertainty, it is sometimes a natural reaction for contracting authorities to set very high technical specifications. The intention is to safeguard the public interest and the quality of the project. In practice, however, this approach creates significant risks, in particular:
- the exclusion of experienced contractors who cannot meet unrealistic specifications,
- an increase in investment and operating costs resulting from the need for ‘safety-net’ oversizing of solutions that are disproportionate to the intended outcomes,
- the risk of declaring parameters that prove impossible to achieve under actual operating conditions.
The lack of a formal mechanism for verifying and correcting requirements during the tender process means that potential problems only come to light after the contract has been signed – during the design phase, technological commissioning or operation. At this stage, the cost of resolving them is already significantly higher, and the scope for modification is limited.
Efficiency as a key principle in public procurement
Pursuant to Article 17(1)(4) of the Public Procurement Law, the contracting authority shall award a contract in a manner that ensures efficiency. Efficiency is therefore a statutory principle of public procurement. Article 44(3)(1) of the Public Finance Act, in turn, indicates that efficiency is an economic category. According to this provision, public expenditure should be incurred in a targeted and economical manner, in accordance with two principles. These are the principles of:
a) achieving the best results from the given expenditure,
b) the optimal selection of methods and means to achieve the set objectives.
The essence of efficiency is therefore not the lowest price (lowest expenditure), but obtaining the best results from a given expenditure and the optimal selection of methods and means, to which technology belongs . In the case of technological investments, the ‘methods and means’ are technological solutions that shape the cost-benefit ratio and directly determine efficiency as understood here.
Efficiency in technological investments therefore depends first and foremost on the selection of the technology best suited to actual needs, public objectives and the local operating conditions of the facility. For this reason, choosing a procurement procedure that allows for a realistic verification of technological requirements, an analysis of the benefit-cost ratio, and the identification and mitigation of risks, may better fulfil the principle of efficiency than a procedure lacking a dialogue stage.
In technologically complex projects, choosing a procedure without a dialogue stage does not reduce risk – it merely shifts it to the point at which its cost becomes highest.
COMMENTS
Competitive Procedure with Negotiation as a Fully Rational Tool
Monika Gnacy-Witt, Legal Adviser at Duraj Reck i Partnerzy
The opportunity to use the competitive procedure with negotiation is available whenever a procedure conducted under one of the standard procedures fails to produce the expected results. In practice, this primarily concerns situations where the contracting authority is unable to precisely define how to meet its needs or reliably assess what the market can realistically offer – particularly in terms of technological solutions.
Our experience in working with various contracting authorities clearly shows that the most difficult part of the procedure is drawing up the procurement documentation. In other words – determining what one actually wants to buy. Staff of contracting authorities are often very well prepared from a procedural perspective, but are left to deal with technological challenges on their own. It is difficult to expect them to possess specialist knowledge in every sector – one day they are procuring construction works, another time services or supplies. With typical contracts, standard templates can still suffice. However, for non-standard, technologically advanced or ‘tailor-made’ solutions, this is no longer sufficient. In such situations, the competitive procedure with negotiation is a perfectly rational tool.
Yet in practice, only around 1% of contracts are awarded under this procedure. Why? The answer is simple: fear. The procedure seems complicated, multi-stage, and therefore – potentially riskier. Contracting authorities fear making mistakes and having the validity of their choice of procedure questioned. With procedures such as the open procedure, contracting authorities feel more secure – they are ‘safe’ and require no justification.
Competitive Procedure with Negotiation – a Tool for Smarter Procurement
Daniel Reck, Managing Partner at Duraj Reck and Partners
It is worth remembering that the Act explicitly provides for the possibility of using the Competitive Procedure with Negotiation in situations where solutions available on the market do not meet the contracting authority’s needs without adaptation, where the contract involves design or innovative solutions, or where its nature, degree of complexity, legal or financial conditions, or associated risks require prior negotiations. This is not an exceptional procedure – it is a procedure specifically designed for ‘difficult’ contracts.
The waste sector is a striking example here. The waste sorting plants that local authorities must purchase today are not off-the-shelf products. They are complex, technologically advanced facilities that should be tailored to local needs, conditions or investment plans. Attempts to describe them within the rigid framework of standard procedures often result in a ‘random’ purchase.
Paradoxically, therefore, the public sector, which in the field of waste management should set standards and inspire the private sector, is often constrained by procedures and, as a result, opts for less flexible or less modern solutions. Meanwhile, the openness to dialogue with the market offered by the competitive procedure with negotiation allows not only for a better match between technology and actual needs, but also for a more rational use of public funds.
In our practice, we have supported contracting authorities in the effective use of the competitive procedure with negotiation, minimising procedural risks and helping to translate technical requirements into legally robust procurement documentation. So perhaps, rather than fearing this procedure, it is worth starting to treat it for what it actually is – a tool for buying smarter, not harder.
