Changes in the mode of the Basic State Security Interest. “Everything in the hands of the Ministry of National Defense” [KOMENTARZ]

After many years of applying the Act of January 29, 2004, Public Procurement Law in Poland and gathering extensive experience from its practical operation, a new law was adopted of September 11, 2019. It replaced the previous one and entered into force at the beginning of 2021. Purchases for the military were made under the old law, and now they are under the new law. However, for some of the most important purchases, especially those relating to military equipment, the mode of basic state security interest is applied. This procedure is based on the provisions of the Treaty on the Functioning of the European Union (TFEU), which significantly facilitates such purchases.

“Article 346 TFEU

  1. The provisions of the Treaties shall not prevent the application of the following rules:
  2. (a) no Member State shall be obliged to supply information the disclosure of which it considers contrary to the essential interests of its security;
  3. (b) each Member State may take such measures as it deems necessary for the protection of the essential interests of its security relating to the production of or trade in arms, munitions or war material; such measures must not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes.
  4. The Council, acting unanimously on a proposal from the Commission, may amend the list of products which it drew up on April 15, 1958 to which the provisions of paragraph 1 (b) apply. “
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The new Polish Act – Public Procurement Law of September 11, 2019 obligated the Council of Ministers to define the procedure for assessing the existence of the basic national security interest, the method of determining measures to protect this interest, assessing the proportionality of measures used to ensure the protection of this interest, the entity competent for qualification of tasks as tasks of fundamental importance for the interest of state security and the method of determining the scope of application of the provisions of this Act in the contract award procedure.

The Council of Ministers was supposed to do this by regulation, at the request of the Minister of National Defense and the Minister of the Interior and Administration in consultation with the ministers competent for foreign affairs and economy. The date of entry into force of this regulation was set by law on January 1, 2022.

The applicants for amendments to the public procurement law believe this regulation, as an unnecessary additional legal act, which in practice only makes it difficult to proceed quickly. They also refer to the fact that it is practically impossible to rigidly establish the premises for such an assessment, especially in the changing global security situation. In addition, the introduction of such a regulation of the Council of Ministers is not dictated by any requirements of European law, but is only a Polish (national) additional solution. The applicants motivate the elimination of the need for an “additional” regulation of the Council of Ministers with the current international situation.

From the justification of the draft changes:

The basic interest of state security, including the way it is defined, is not an unchanging category in today’s geopolitical conditions. It is particularly well visible on the example of the recent events on the eastern border, and the experience of the Ukrainian conflict (dynamically changing rules of conducting an armed conflict, especially in terms of equipment) clearly shows that the top-down definition of the rules for making orders of fundamental importance for state security is a far imperfect solution which in practice may completely block their implementation in relation to the operational need.

In practice, the procedures will be simple. The ordering party, i.e. AThe Armaments Army or another authority conducting the contract is to immediately inform the Minister of National Defense of its intention to initiate a contract award procedure for the production or trade in weapons, ammunition or war materials, referred to in Article 346 TFEU. The information is to include at least the specification of the subject of the contract award procedure and a document containing an assessment of the existence of basic national security interests. In accordance with the draft amendments, this regulation is to enter into force on January 1, 2022, that is exactly on the day on which the regulation of the Council of Ministers removed from the legal system should enter into force.

If the deputy’s bill of changes is adopted by the Sejm and the Senate and signed by the President, it is undoubtedly This will greatly simplify the practice of applying the instrument of conducting proceedings, taking into account the basic interest of state security. The body that will determine the existence of such an interest will do so directly on the basis of European law (quoted article 346 TFEU) and will not be constrained by any additional Polish regulations. This will significantly simplify the procedures conducted with the use of this procedure by the Ministry of National Defense, but at the same time it will deprive the Council of Ministers of the framework for its application.

Today it is very difficult to assess what impact this will have on the practical conduct of proceedings. On the one hand, it is possible to imagine that the application of the mode of presenting the basic state security interest will involve too large a scope of proceedings. This will allow, for example, to bypass standard tenders and indicate entities with whom negotiations are conducted immediately.

While this is not intended to be beneficial for market development and competitiveness, it is a lot depends on how it will be implemented. The mere presence of the basic interest of the state’s security does not mean that only state-owned companies are automatically invited to negotiations, as is the case in many PIBP proceedings and which in fact often causes a reduction in competition, and sometimes also extending the implementation of tasks (examples are the purchases of the Wizjer or Orlik unmanned aerial vehicles). The PIBP mode is determined by the bodies of the Ministry of National Defense, which have a lot of freedom (and it will be even more). For example, nothing stands in the way of admitting orders under PIBP all domestic entities covered by the Economy Mobilization Plan, and thus also private domestic companies. They often have great potential, for example in the areas of reconnaissance, communication and masking systems, and their use could meet the goals set by the applicants, i.e. accelerating the modernization of the Polish Armed Forces. After all, he says about the support for the domestic industry “regardless of the form of ownership” National Security Strategy, adopted in May this year.

Yet another option are consortia consisting of state and private companies, supported by foreign entities. An example of the latter option is the acquisition of the Miecznik frigates. Based on the occurrence of such a case, the PGZ-Miecznik consortium was invited to negotiate, which includes the state-owned PGZ SA, PGZ Stocznia Wojenna SA and the private Remontowa Shipbuilding SA In addition, the consortium will employ a foreign company as the main and leading subcontractor, the project of which will be indicated by the Ministry of National Defense.

In situations of real crisis or even the danger of starting military operations, the introduction of these regulations may accelerate the process of acquiring military equipment, spare parts, or carrying out repairs and repairs, but PIBP should be used in a flexible manner, taking into account, for example, the provisions of the SBN and the potential of Polish private companies. As almost always, a complete evaluation of any changes introduced can only be made after a certain period of application.

About Alex Marcell

He likes dogs, pizza and popcorn. Already a fanboy of Nintendo and Sony, but today throws anything. He has collaborated on sites and magazines such as GameBlast, Nintendo World, Hero and Portal Pop, but today is dedicated exclusively to Spark Chronicles.

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