Selling to the Government
Legal requirements are in place for selling to the host government, including whether the country or economy is a party to the WTO Agreement on Government Procurement or a party to a free trade agreement (FTA) with the United States that contains commitments on government procurement.
Information regarding public procurement regulations and public tenders in Poland is available via the Office of Public Procurement web page. However, it should be noted that only a handful of relevant resources are available in English.
The Armaments Agency (formerly Armaments Inspectorate) handles Ministry of National Defense procurements. Comprehensive information about military procurement laws and regulations is provided on the Armaments Agency website. Note that online resources are only available in Polish.
Unlimited tendering is the preferred method in Poland, and participation is open to all who are legally, technically, and financially able to perform the contract (including foreign companies).
The U.S. Commercial Service strongly urges U.S. firms bidding on Polish government tenders to utilize the Department of Commerce’s advocacy and counseling services to avoid common pitfalls in this complex process. U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Government procurement in Europe is governed by both international obligations under the WTO Government Procurement Agreement (GPA) and by EU-wide legislation under the EU Public Procurement Directives. U.S.-based companies can bid on public tenders covered by the GPA, while European subsidiaries of U.S. companies may bid on all public procurement contracts covered by the EU Directives in the European Union.
EU directives on public procurement have been revised and concession legislation has been adopted. Member States were required to adopt the new directives by April 16, 2016. The four relevant directives are:
- Directive 2014/24/EU (replacing Directive 2004/18/EC) on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts applies to the general sector.
- Directive 2014/25/EU (replacing Directive 2004/17/EC) coordinates the procurement procedures of entities operating in the water, energy, transport, and postal services sectors.
- Directive 2009/81/EC on defense and sensitive security procurement. This Directive sets Community rules for the procurement of arms, munitions, and war material (plus related works and services) for defense purposes, but also for the procurement of sensitive supplies, works and services for non-military security purposes.
- Directive 2014/23/EU on the award of concession contracts. A concession contract (either for the delivery of works or services) is conducted between a public authority and a private enterprise that gives the right to the company to build infrastructure and operate businesses that would normally fall within the jurisdiction of the public authority (e.g., highways).
The EU has “remedies” directives imposing common standards for all member states to abide by in case bidders identify discriminatory public procurement practices. Electronic versions of procurement documentation must be available through an internet URL immediately upon publication of the Official Journal of the European Union (OJEU) contract notice. Full electronic communications (with some exceptions) are mandatory for all public contracts and Central purchasing bodies are required to publish their contracts and requests for tenders.
Electronic invoicing (e-invoicing) was introduced beginning of the 3rd quarter of 2018, based on the requirement set forth in Directive 2014/55/EU. The Directive makes the receipt and processing of electronic invoices in public procurement obligatory. Standards for e-invoicing are being developed by the European Committee for Standardization (CEN).
There are restrictions for U.S. suppliers in the EU utilities sector, and details of these restrictions can be found in the EU Utilities Directive and in EU coverage of the GPA. Article 85 of Directive 2014/25 allows EU contracting authorities to either reject non-EU bids where the proportion of goods originating in non-EU countries exceeds 50 percent or give preference to the EU bid if prices are equivalent (meaning within a three percent margin). Moreover, the Directive allows EU contracting authorities to retain the right to suspend or restrict the award of service contract to undertakings in third countries where no reciprocal access is granted.
There are also restrictions in the EU coverage of the GPA that apply specifically to U.S.-based companies. U.S. companies are not allowed to bid on works and services contracts procured by sub-central public contracting authorities in the following sectors:
- Water sector
- Airport services
- Urban transport sector as described above, and railways in general
- Dredging services and procurement related to shipbuilding
Resources: EU Tenders Database (for European Public Procurement)
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks. The U.S. Department of Commerce’s International Trade Administration has a Foreign Commercial Service Officer stationed at each of the five major MDBs: the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
The European Bank for Reconstruction and Development (EBRD)
The EBRD operates in Poland and aims to provide support in those areas where challenges remain significant and where reforms can be deepened to improve energy efficiency and strengthen Poland’s competitiveness. In Poland, the EBRD is focused on promoting a low-carbon economy, enhancing the private sector’s role in the economy, and assisting in development of a sustainable financial sector and capital markets. Since the beginning of its operations in 1991, the EBRD has invested almost €13.28 billion (approx. $14 billion) in Poland in over 505projects. The private sector holds a 96% share of the portfolio. As well as being a country where the EBRD operates, Poland is also an EBRD donor with €5.5 million (almost $ 6 million) of contributions.
The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Offices to the European Bank for Reconstruction and Development and the World Bank.
The EU supports projects within its Member States, as well as EU-wide economic integration projects that cross both internal and external EU borders. The European Union provides project financing through grants from the European Commission and loans from the European Investment Bank. EU Structural Funds are distributed through the Member States’ national and regional authorities and are only available for projects in the 27 EU Member States.
Loans from the European Investment Bank
Headquartered in Luxembourg, the European Investment Bank (EIB) is the financing arm of the European Union. Since its creation in 1958, the EIB has been a key player in building Europe. As the EIB’s lending practices evolved over the years, it became highly competent in assessing, reviewing, and monitoring projects. As a non-profit banking institution, the EIB offers cost-competitive, long-term lending in Europe. Best known for its project financial and economic analysis, the EIB makes loans to both private and public EU-based borrowers for projects in all sectors of the economy, such as telecommunications, transport, energy infrastructure and environment, with the goal of contributing towards the integration, balanced development, and economic and social cohesion of the member countries. The EIB website is a source of information on upcoming tenders related to EIB-financed projects.
EU Structural Funds, including the European Regional Development Fund, were created in 1975 to assist economically depressed regions of the European Union that required industrial restructuring. For the period of 2021-2027, the EU has earmarked €392 billion for projects under the EU’s cohesion policy. With the national co-financing, about €0.5trillion will be available to finance the programs in the EU. On June 30, 2022, the EC adopted its Partnership Agreement with Poland, laying down the country’s Cohesion Policy investment strategy worth €76.5 billion for the period 2021-2027.
In the 2021-2027 period, the cohesion policy will support, through its investments, the following five priorities:
- Smarter Europe, through innovation, digitization, economic transformation and support SMEs.
- a Greener, carbon-free Europe, implementing the Paris Agreement and investing in energy transition, renewables, and the fight against climate change.
- a more Connected Europe, with strategic transport and digital networks.
- a more Social Europe, delivering on the European Pillar of Social Rights and supporting quality employment, education, skills, social inclusion, and equal access to healthcare.
- a Europe closer to citizens, by supporting locally led development strategies and sustainable urban development across the EU.
The majority of the investment will target the first two priority areas and, following the introduction of the amended regulation in 2020, the cohesion policy will also continue to promote job creation in small and medium enterprises, provide support to the health sector, improve preparedness related to unexpected emergencies, and fully develop the economic potential of tourism and culture sectors.
With the inclusion of an additional €47.5 billion from the Next Generation EU fund, the EU has allocated more than €370 billion to its economic, social, and territorial cohesion policies for the 2021-2027 period. With the enhanced flexibility for use of financial instruments under the new Common Provisions Regulation (Regulation EU 2021/1060), including in combination with grants, it is expected that Member States will increasingly use guarantees, loans and equity investments for the implementation of their Operational Programs.
The package of Cohesion Policy legislation also includes the new regulation on the Just Transition Fund (Regulation EU 2021/1056) which is a key element of the European Green Deal and the first pillar of the Just Transition Mechanism (JTM). It aims to alleviate the social and economic costs resulting from the transition towards a climate-neutral economy through a wide range of activities directed mainly at diversifying the economic activity and helping people adapt to a changing labor market.
To become familiar with available financial support programs in the Member States, it is advisable for would-be contractors to develop a sound understanding of the country’s cohesion policy indicators. For more information on these programs, please see the Market Intelligence section on the website of the U.S. Mission to the EU.
The Cohesion Fund
The Cohesion Fund is another instrument of the EU’s policy. The Cohesion Fund supports investments in the field of environment and trans-European networks in the area of transport infrastructure (TEN-T). Over the 2021-2027 period, the Cohesion Fund will support projects in Bulgaria, Czechia, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovakia, and Slovenia.
Thirty-seven percent of the overall financial allocation of the Cohesion Fund is expected to contribute to climate objectives. These projects are, in principle, co-financed by national authorities, the European Investment Bank, and the private sector. For more information, see the Cohesion Fund and Connecting Europe Facility.
Other EU Grants for Member State
Another set of sector-specific grants offer assistance to EU Member States in the fields of science, technology, communications, energy, security, environmental protection, education, training and research. Tenders related to these grants are posted on the various websites of the directorates-generals of the European Commission. Conditions for participation are strict and participation is usually restricted to EU firms or tied to EU content. Information pertaining to each of these programs can be found at the EU Funding and Tenders website.
Polish Development Fund
The Polish Development Fund (PFR) is an umbrella organization pooling resources of several governmental agencies and departments, including EU funds, to implement programs enhancing long-term investment and support for entrepreneurs. Through a financial support program for micro, small, medium, and large enterprises worth 4.5% of GDP – the so called “Financial Shield” – the PFR supported enterprises which suffered losses due to the COVID-19 pandemic.
The PFR operates as a loose financial group of state-owned banks and insurers, investment bodies and promotion agencies, including the development bank BGK, the Export Credit Insurance Corporation (KUKE), the Industrial Development Agency (ARP), the Polish Agency for Enterprise Development (PARP), and the Polish Investment and Trade Agency (PAIH). Various actors within the organization can invest through acquisition of shares, through direct financing, seed funding, and co-financing venture capital. Depending on the instruments, PFR expects different rates of return. PFR VENTURES, the first professional investor operating on the Polish market within the Fund of Funds formula, is an entity managing the fund of funds, providing financing via venture capital funds and groups of institutional business angels for innovative SMEs at different stages of development.
The government is using PFR funds to launch investments from the National Reconstruction Plan (KPO), providing temporary financing until reimbursement is received from the EU’s Instrument for Reconstruction and Increasing Resilience (RRF). The ongoing disagreements between the government and the European Commission over judicial reform in Poland have caused the withholding of fund disbursements under the RRF.