An amendment to the Criminal Code adopted last July entered into force on 1 October. Among the changes introduced is Article 305 of the Criminal Code, which deals with criminal liability for disrupting a public procurement procedure. In line with the general direction of change in this amendment, the new wording of the provision in question implies a broader range of criminalised behaviour, facilitation of law enforcement in the detection and prosecution of crimes, as well as harsher penalties for interfering in tenders and other protected procurement methods.

Simplified conditions for liability

The amendment provides for simplified rules of liability for the offence defined in Article 305 of the Criminal Code by removing the requirement to prove that the perpetrator acted for financial gain. According to the new wording defining the basic nature of the offence (Article 305 § 1 of the Criminal Code), the penalty will be imposed on anyone who obstructs or frustrates a tender or a procedure for the award of a public contract to the detriment of the owner of the property, the person or entity for whose benefit the tender is made or who carries out the procedure, or to the detriment of the public interest.

In particular, this means that in addition to perpetrators who act - as before - with the direct intention of committing a crime, those who act with a conceivable intention, i.e. those who foresee and accept that their action may be unlawful, will also be liable for disrupting a public procurement procedure.

It is worth noting that the previous mandatory requirement of financial motivation has not been permanently removed from the provision, and under the amendment it will serve as grounds for a higher penalty against the perpetrator (also discussed in more detail below).

Clarification and broadening of the scope of protected procedures

Another amendment that significantly expands the scope of punishable acts is the clarification of which bidding or related procedures are protected under this provision.

The previous scope of Article 305 of the Criminal Code raised practical doubts due to the concept of "public tender" used in the provision as the object of unlawful interference. In the absence of a legal definition of a public tender, the term raised doubts as to whether it should be interpreted as referring only to tenders conducted in accordance with the Public Procurement Law (PPL) or also to tenders conducted in accordance with the Civil Code (CC).

The amendment unequivocally resolves the above-mentioned dispute by extending protection to all types of public procurement procedures specified in the PPL, as well as to tenders and auctions conducted in a manner not subject to the PPL. The explanatory memorandum submitted by the authors of the amendment (Parliamentary Paper No. 2024) clarifies that the intention of the new regulation is to ensure equal protection of public procurement procedures initiated under the Public Procurement Law and those conducted under the provisions of the Civil Code.

Increased penalties for certain types of crime

Paragraph 2 of the provision in question, which has been criticised for many years as being poorly drafted, has been substantially amended. The legislator has replaced its wording with a new provision, according to which anyone who, with the aim of unlawfully influencing the outcome of an ongoing or prepared tender or public procurement procedure:

• enters into an agreement with another person (so-called bid-rigging), or
• communicates or disseminates information (this includes both true and false information) or remains silent about circumstances relevant to the procedure (this applies to both contractors and contracting authorities),

and thereby acts to the detriment of the owner of the property, the person or entity on whose behalf the tender is made or which conducts the procedure, or to the detriment of the public interest, is subject to a penalty.

It should be noted that, in addition to purely editorial changes, the new provision provides for criminal liability not only for actions aimed at influencing the outcome of an ongoing tender (public procurement procedure), but also for actions aimed at influencing a tender that is being prepared. The inclusion of the preparatory stage of the tender (public procurement procedure) in this provision is a positive change, as in many cases tenders are corrupted at this stage. Therefore, contracting authorities should pay special attention to communication with potential contractors at the stage of preparing a tender (public procurement procedure) and ensure that they all have equal access to all information, while complying with the provisions of the PPL in this regard.

Furthermore, it is not necessary to prove that the perpetrator achieved the intended purpose in order to hold him liable. Under the new provisions, the above-mentioned forms of interference in a public procurement procedure are punishable by an increased penalty of 3 months to 5 years' imprisonment (i.e. 2 years more than for the basic form stipulated in §1).

In addition, in paragraph 3, the legislator provided for a highest penalty - from 6 months to up to 8 years imprisonment - for the perpetrator of any of the above offences who additionally acts with the purpose of obtaining financial or personal gain. Given that the purpose of bid-rigging and similar offences is generally to obtain benefits, for example in the form of a public contract, this amendment can be seen as an overall increase in the severity of penalties for all tender-related offences.

This is all the more important as the increase in the maximum penalty is followed by an extension of the statute of limitations for acts punishable under Article 305(2) and (3) of the Criminal Code. Law enforcement authorities will be able to initiate investigations into these acts within 15 years of their commission, i.e. five years longer than previously.

The amendment introduced a number of solutions aimed at increasing the detectability and prosecutability of the offences referred to in Article 305 of the Criminal Code. Previously, an investigation could only be initiated at the request of an injured party - the contracting authority or other owner of the property subject to a tender. Exceptions to this rule were acts committed directly against the State Treasury, where the prosecuting authorities could also initiate investigations on their own initiative (ex officio). However, this provision, if interpreted narrowly, did not allow, for example, the ex officio opening of an investigation into a tender organised by a state-owned company.

Under the amended regulations, ex officio prosecution is available not only for offences in which the State Treasury is the victim, but also for offences in which the object of the tender, auction or public contract was at least partly financed with public funds. In addition, the provision criminalises acts committed "to the detriment of the public interest" where no specific person or entity is harmed. By choosing this solution, the legislator wanted to be able to combat situations in which the ordering authority itself, although formally an injured party, has no real interest in prosecuting the offence in which it has been involved. However, given the general nature of the concept of public interest, the amendment opens the door to much broader prosecutions in the area of public procurement and private tenders and auctions.

It is worth recalling that since 20 May 2023, the detection of tender-related offences has also been facilitated by paragraph 6 of the same provision, according to which a person who is an accomplice to an offence avoids the penalty if he himself reports the offence to the competent law enforcement or antitrust authorities, disclosing all relevant circumstances of the case.

Exclusion from the procedure

Article 56 of the Public Procurement Law, the chapter on contracting authorities, provides for the exclusion of persons performing activities in the procedure. Namely, a manager of a contracting authority, a member of the tender committee and other persons involved in the award procedure on the side of the contracting authority or persons who may influence the outcome of the procedure or persons who award the contract are excluded from exercising these activities if they have been validly convicted of an offence committed in connection with the award procedure, referred to, inter alia, in Article 305 of the Criminal Code, unless the conviction has been expunged.

In addition to Article 305 of the Criminal Code, which currently appears to be the provision most broadly applicable to offences related to public procurement, the Public Procurement Law indicates a number of other provisions under which such offences may be prosecuted:

• Articles 228 - 230a of the Criminal Code, relating to bribery and influence peddling;
• Article 270 of the Criminal Code, relating to falsification (e.g. forgery, alteration of documents);
• Article 276 of the Criminal Code, concerning offences against documents (e.g. destroying or concealing documents of which one does not have the exclusive right to dispose);
• Article 296a of the Criminal Code, concerning bribery in an executive position.

Summary

It is worth noting that to the extent that the amendment introduces new types of offences or increased penalties, it should only apply to acts committed after 1 October 2023. However, it can already be said that the changes are a sign of increased activity by law enforcement agencies in investigating the fairness of tenders and public procurement procedures at their earliest stages. The new rules may also pose a challenge to companies that are not subject to the Public Procurement Law but make purchases by tender or auction.

In order to effectively manage liability risks, contracting authorities should review their internal processes and procedures to ensure that tenders or procedures are prepared and conducted under conditions of fair competition, in a manner that ensures equal access to information and in compliance with other provisions of the Public Procurement Law.

Contractors, in turn, should be particularly vigilant in their communications with the contracting authority and its staff and should be on the lookout for any signs of bid-rigging (i.e. conspiring with others to pervert the true and fair outcome of a public procurement).