Table of Contents:
1. How to Spend Funds from KPO?
2. Can an Entrepreneur Be Considered a Subsidized Contracting Authority?
3. Do KPO Funds Constitute Public Financing of a Contract?
Funds from the National Recovery Plan (KPO) are currently being utilized in various programs and instruments for different entities, including private entrepreneurs. The proper expenditure of KPO funds is crucial for the settlement of individual projects. Most KPO funds are implemented in the form of preferential loans, typically with interest rates more favorable than market rates and often with an option to waive a portion of the loan.
How to Spend Funds from KPO?
Institutions implementing a given instrument define the rules for spending KPO funds in program documents. Entities obliged to apply the Public Procurement Law of September 11, 2019, must adhere to this law when spending KPO funds, meaning they must organize tenders through which they will disburse the acquired funds. If a given entity is not a public contracting authority, it spends the funds in accordance with the principle of competitiveness but without the need for tenders.
Can an Entrepreneur Be Considered a Subsidized Contracting Authority?
Institutions implementing a given instrument cannot impose an obligation on entrepreneurs to apply public procurement procedures. Private entrepreneurs follow the principle of competitiveness. However, the Public Procurement Law provides for a special category of contracting authorities known as subsidized contracting authorities.
According to Article 6 of the Public Procurement Law, the provisions of the law apply to subsidized contracting authorities, which are entities other than public or sectoral contracting authorities, if all of the following conditions are met:
- More than 50% of the value of the contract awarded by the entity is financed from public funds or by contracting authorities referred to in Articles 4 and 5(1)(1).
- The value of the contract is equal to or exceeds the EU thresholds.
- The contract involves civil or hydraulic engineering works listed in Annex II of Directive 2014/24/EU, the construction of hospitals, sports, recreational, or leisure facilities, school buildings, university buildings, or buildings used by public administration, or services related to such construction works.
Therefore, when spending public funds, even a private entrepreneur must exercise caution and verify whether the contracts they execute fall within the category of construction works specified in Article 6(3) of the Public Procurement Law.
Do KPO Funds Constitute Public Financing of a Contract?
The definition of public funds is contained in Article 5 of the Public Finance Act. These include, among others, funds from the European Union budget and non-repayable aid funds provided by member states of the European Free Trade Association (EFTA). KPO funds come from the EU budget.
However, it should be noted that KPO funds are mainly utilized in programs for entrepreneurs in the form of loans. According to the opinion of the Public Procurement Office, issued under the previous Public Procurement Law but still relevant, “the scope of application of Article 8 of Directive 2004/18/EC excludes cases where financial resources provided by contracting authorities do not take the form of grants or are not directly intended to cover the costs of a given contract. Thus, the scope of this provision does not cover cases where contracting authorities provide financing in repayable forms, including loans. The same position should be taken under Article 3(1)(5) of the Public Procurement Law.” (Financing of Contracts within the Meaning of Article 3(1)(5) of the Public Procurement Law – Opinion Issued by the Public Procurement Office).
Therefore, if an entrepreneur receives KPO funds in the form of a repayable loan, they cannot be considered a subsidized contracting authority.
However, Article 6 of the Public Procurement Law may be relevant when spending funds obtained in the form of grants. Hence, private entrepreneurs who are not public contracting authorities must always conduct a thorough analysis of the subject matter of the contract and its financing method.
