On 20 October 2016 I had a pleasure to attend the ECCO's 13th Symposium dedicated to current trends in defence and offset in Europe. The event was organised in Paris as part of Euronaval exhibition in Paris-Le Bourget. I was invited to talk about offset in Poland.
My presentation included a description of the defence procurement path in Poland – from identification of the procurement needs to the conclusion of the contract.
I described the main choices for defence procurement:
- defence public procurement – regulated by Public Procurement Law (art. 131a-131w)
- procurement under the Ministry of Defence (MoD) procedures – regulated mainly by MoD decision No 367/MON (in Polish only)
- government to government (G2G) contracts – no dedicated regulation for such contracts.
The defence public procurement is a default procedure, however, there are many exemptions allowing to avoid it, including the main exemption related to the procurement of an arm, munitions or war materials provided for in art. 346 of the EU Treaty if required by primary national security interest. Offset cannot be requested in the defence procurement under the public procurement rules.
The Polish law provides detailed regulation on the terms of evaluating the existence of the primary national security interest and justifying the application of the said exemption. If such justification is prepared, it opens the way for procurement under the MoD procedure. Offset is not an obligatory element of such procurement – it is an option that requires a separate justification. However, when there is no offset, the contract may include a specific obligation related to the transfer of technology.
The use of an offset must be justified independently in accordance with the Council of Ministers regulation from 1 December 2014 (in Polish only) which determines the procedure and rules of conduct with respect to preparing the justification and assessing the necessity of using an offset for the protection of essential national security interests, taking into account the obligation to ensure proper application of Article 346(1)(b) of the TFEU.
Offset itself is regulated by the Act of 26 June 2014 on Certain Agreements Concluded in Connection with Contracts Essential for National Security (if you need English translation of this Act send me an e-mail). Offset law 2014 applies to all offset procedures started after 30 July 2014.
Offset requirements must be directly related to the procured goods or services and to the need of establishing production or service capabilities in Poland.
In my presentation I described subsequent stages of the offset contracting – from preparing the offset specification, through submitting an offset offer and negotiations to the conclusion of the offset agreement, establishing the contractual performance security and renegotiations.
If you are interested in offset in Poland, please let me know – I can arrange such presentation for your company, tailored to your needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.