A contractor requested under Article 224(1) of the Public Procurement Law (PPL) submits a letter consisting of a few general assurances: favourable terms with the manufacturer, no subcontractors, a calculation compliant with the rules on labour costs. Not a single piece of evidence, not a single figure. The matter seems settled. The point is, however, that the same bid is the most expensive bid submitted in the given lot of the contract, and the 30% threshold was triggered solely in relation to the contracting authority’s own estimate. Below is a reconstruction of the two lines of case law that intersect here, and practical conclusions for both parties to the procedure.

The two benchmarks in Article 224(2)(1) PPL are not of equal evidentiary value

The obligation to request explanations arises where the total price of the bid is at least 30% lower than the contract value plus the applicable VAT, determined before the procedure was launched, or than the arithmetic mean of the prices of all bids submitted that are not subject to rejection on the grounds specified in the provision. The alternative is inclusive – one benchmark is enough.

The two benchmarks, however, have different cognitive value. The first refers to the internal findings of the contracting authority itself, made before the market was opened. The second is an external valuation of the subject matter of the contract made by the industry. When they diverge, the question is not which contractor understated the price, but which benchmark departs from reality.

Let us consider a model situation in a single lot of the contract: contract value plus VAT – PLN 1,200,000; bids – PLN 520,000, PLN 690,000 and PLN 815,000. The request is sent to the contractor with the price of PLN 815,000, because the 30% threshold calculated from the estimate falls at PLN 840,000.

Except that the same bid is the most expensive in the lot and exceeds the arithmetic mean of the bids submitted by approx. 21%. The other two depart from the estimate even more – the lowest one amounts to approx. 43% of the estimated value.

Such a distribution of figures is not a signal that the market has understated prices. It is a signal that the contract value for this lot was overestimated.

Explanations without evidence – the line of case law is strict and there is no reason to soften it

The starting point is unequivocal. The burden of proving that the bid does not contain an abnormally low price or cost lies with the contractor (Article 224(5) PPL), and the bid of a contractor who has not provided explanations within the set time limit, or whose explanations together with evidence do not justify the price or cost stated in the bid, is subject to rejection (Article 224(6) PPL).

KIO 722/16 (judgment of 19 May 2016) – the legal position of a contractor who has submitted general explanations, inadequate to the request and not allowing the correctness of the price calculation to be established, is the same as that of a contractor who has not submitted explanations at all; in both cases the bid is subject to rejection.

KIO 421/22 (judgment of 7 March 2022) – explanations cannot be limited to the contractor’s assurances; they must indicate specific data and established costs so that the contracting authority can verify the level of the individual price components.

KIO 144/22 (judgment of 1 February 2022) – explanations alone are not enough, as the legislator has determined that they must be supported by evidence, leaving the contractor freedom only as to the choice of that evidence.

KIO 600/21 (judgment of 16 March 2021) – it is not enough to invoke the existence of favourable circumstances; it is necessary to demonstrate in a measurable way how they contribute to reducing costs and how they translate into the components of the price. This is particularly important where the contractor invokes particularly favourable conditions on its side.

This last point goes to the heart of a typical explanatory letter. Invoking individual price terms with the manufacturer, a guarantee of fixed rates during the term of the contract, or the manufacturer taking over the costs of servicing and complaints are circumstances which the contractor cannot merely declare. They are by their nature provable – a commercial offer, a supplier’s confirmation or correspondence is sufficient. Failure to attach them is the contractor’s choice, not an objective obstacle.

Rejection, however, is based on Article 226(1)(8) PPL – and that is a substantive assessment

Article 224(6) PPL is not an independent ground for rejection. The contracting authority rejects the bid on the basis of Article 226(1)(8) in conjunction with Article 224(6) PPL, and the provision referred to speaks of a price that is abnormally low in relation to the subject matter of the contract – not in relation to the contracting authority’s cost estimate.

KIO 451/21 (judgment of 5 March 2021) – an abnormally low price is a price that is unrealistic and implausible compared to the market prices of similar contracts and possibly other bids submitted in the procedure, indicating performance below production costs.

KIO 769/18 (judgment of 8 May 2018) – the contracting authority’s findings may be based in particular on a comparison of the price of the examined bid with the estimated value plus VAT, with the average prices of bids submitted in the procedure or with the price of the next bid.

In the model situation described above, two of the three reference points clearly speak in favour of the examined contractor, and the third – the contracting authority’s estimate – is precisely the element whose reliability is undermined by all the bids submitted. The justification for rejection would have to read: the highest price in the lot is abnormally low in relation to the subject matter of the contract, while prices 15% and 36% lower are not abnormally low. Such a construction is internally contradictory and very difficult to defend in appeal proceedings.

This does not mean that the weakness of the explanations is irrelevant. It means that it does not release the contracting authority from the obligation to formulate a coherent factual justification for the action.

Overestimation of the contract value as an obvious circumstance – and its time limit

Article 224(2)(1) PPL contains an exclusion: the obligation to request explanations does not arise if the discrepancy results from obvious circumstances that do not require explanation. Overestimation of the contract value, confirmed by the level of all bids submitted, is a classic example of such a circumstance.

KIO 747/19 (judgment of 14 May 2019) – there is no automatic obligation to request explanations once one of the benchmarks is met; the assessment of whether a request is justified should be made ad casum.

KIO 983/22 (judgment of 28 April 2022) – obviousness can be spoken of where the contracting authority perceives the cause of the discrepancy without the need for an in-depth analysis.

KIO 2686/21 (judgment of 8 October 2021) – the burden of proving the occurrence of obvious circumstances lies with the party invoking them, i.e. the contracting authority.

KIO 2499/18 (judgment of 14 December 2018) – where most of the values in the procedure, including the estimate, oscillate around one level and only one bid departs from it, it is precisely that one bid that is inflated; the discrepancy results from obvious circumstances and there is no basis for finding an abnormally low price.

KIO 1570/22 (judgment of 6 July 2022) – similarly with two bids, where one inflated price distorted the arithmetic mean; the Chamber confirmed the condition for departing from the obligation to request explanations.

The last two rulings concern distortion of the arithmetic mean benchmark, not the estimated value benchmark – when transferring them to the context of an overestimated cost estimate, this difference must be borne in mind. The common mechanism is, however, the same: the 30% threshold being met results from one of the benchmarks being out of line with market realities, and not from the examined price being unrealistic.

The time limit, on the other hand, is crucial.

KIO 131/18 (judgment of 7 February 2018) – the contracting authority may invoke the overestimation of the contract value only at the stage of bid evaluation; it may not, however, do so only in the proceedings before the National Appeals Chamber (KIO).

A contracting authority that has requested explanations from a contractor does not lose the possibility of recognising the discrepancy as resulting from obvious circumstances – it is still at the stage of examination and evaluation of bids. It must, however, do so now and in the procedure record, not in the response to the appeal. An argument written down only after the appeal is a belated argument.

The scope of the request determines the scope of the explanations

The second line of case law, which is easy to forget when assessing laconic explanations, concerns the quality of the request itself.

KIO 58/22 (judgment of 27 January 2022) – the provisions do not specify the content of the request or its level of detail, which does not release the contracting authority from the obligation to reflect its actual doubts in it.

KIO 657/20 (judgment of 17 June 2020) – the contracting authority must know to what extent the price raises its suspicions, indicate what the doubts concern and specify its expectations as to the scope of the explanations; the request is intended to prevent arbitrary decisions, not to impose unnecessary obligations.

KIO 989/22 (judgment of 4 May 2022) – the contracting authority is obliged to define its doubts precisely and may not shift this burden onto contractors.

KIO 65/23 (judgment of 20 January 2023) – the lack of an explanation of a given element cannot be interpreted to the contractor’s detriment unless the contracting authority expressly asked about that element.

KIO 641/23 (judgment of 21 March 2023) – in the case of a general request, the contractor’s obligation is to explain the calculation of the basic, material elements of the price.

KIO 63/19 (judgment of 25 January 2019, issued under the Public Procurement Law of 2004) – a contractor is not able to explain and prove an undefined “everything”; the scope of the explanations should be directed by the content of the request. The Chamber also indicated that a contracting authority which has no doubts as to the realism of the prices, but requests explanations solely because of its own valuation, which in its view is inflated, should either not request explanations at all or should do so properly – indicating the elements requiring explanation and proof.

A request that amounts to copying Article 224(1) and (3) PPL, without indicating even a single product item or price component, does meet the formal requirement, but weakens the contracting authority’s position when assessing the response. The contractor then answers what it was asked.

It is also worth bearing in mind the scope of Article 224(4) PPL: the obligation to request explanations regarding labour costs and compliance with labour and social security law applies to contracts for works or services. In supply procedures this provision does not apply, and making labour costs the only specified point of the request is sometimes misguided in such procedures.

A repeated request – when it is admissible and when it constitutes an infringement

KIO 293/21 (judgment of 16 March 2021) – a repeated request is justified where the explanations corresponded to the first request but gave rise to further doubts; continuing the procedure is also unobjectionable where the original request was too general and imprecise, as the contractor should not bear the negative consequences of such a request. A further request may not, however, create an unjustified second chance for a contractor who has submitted highly general explanations without any evidence.

KIO 125/22 (judgment of 31 January 2022) – a contractor whose original explanations, due to their vagueness and laconic nature, do not in any way explain the price level may not be requested again.

KIO 3216/21 (judgment of 18 November 2021) – failure to discharge the burden of demonstrating the correctness of the price does not justify a repeated request, as this would infringe the principle of fair competition and equal treatment of contractors.

Regional Court in Warsaw, XXIII Ga 451/16 (judgment of 10 June 2016) – further explanations are admissible only if the first request was imprecise or incomplete.

The assessment is therefore two-stage: first, the contracting authority must honestly classify its own request. If it was general, a repeated request – this time indicating specific items and the evidence required – falls within the limits set by KIO 293/21. If it was precise and the response remained unsubstantiated, repeating the request is inadmissible.

Equal treatment: whom to request in a given lot

The issue arises in every procedure divided into lots in which the 30% threshold was triggered in relation to the estimate. If more than one bid in a given lot fell below the threshold, a request addressed to only one contractor – especially the one with the highest price – is difficult to explain under Article 16(1) PPL. Selective application of the explanatory procedure is sometimes an independent appeal plea, irrespective of the assessment of the content of the explanations.

Equally important is a technical issue which in practice is sometimes a source of error: in a procedure divided into lots, the 30% threshold is calculated from the contract value attributable to the given lot, plus VAT, and not from the value of the entire contract.

Practical conclusions for the contracting authority

1. Before you assess the content of the explanations, check which benchmark triggered the request and how the examined price ranks against the other bids in the same lot. Rejecting the most expensive bid as containing an abnormally low price requires a justification that will withstand comparison with the prices of the cheaper bids.

2. If all bids in a lot are lower than the estimate by more than 30%, the first working hypothesis should be an overestimation of the contract value, not market price collusion.

3. The finding that the circumstances are obvious must be recorded in the procedure record at the stage of examination and evaluation of bids. Later it is too late (KIO 131/18).

4. The request should be formulated specifically – indicating the items, price components and the evidence expected. A general request limits what can later be held against the contractor.

5. In supply procedures there is no obligation to ask about labour costs (Article 224(4) PPL concerns works and services). Asking about the actual price-forming factors of the given market is much more effective.

6. The explanatory procedure in a given lot should be applied to all contractors in respect of whom the condition has been met. Selectivity is a ready-made plea.

7. Rejecting a bid which is not the most advantageous anyway does not change the outcome of the procedure, but generates an appeal risk. It is worth considering what purpose this action is meant to serve.

Practical conclusions for the contractor

1. The obligation to respond to the request exists even where, in the contractor’s view, the request was unjustified. Failure to respond within the time limit leads to rejection irrespective of whether the price is realistic.

2. Every circumstance that can be documented should be documented. Individual price terms with the supplier, a guarantee of fixed rates or the manufacturer taking over the costs of servicing are assertions that a declaration cannot replace.

3. The explanations may be extended beyond the scope of the request – the contractor is not limited by the content of the request and may present evidence of its own choosing.

4. If the bid is the highest bid in the lot, it is worth stating this expressly in the explanations, with reference to the arithmetic mean and to the information from the opening of bids. This is an objective argument that does not require disclosure of the calculation.

5. In the event of rejection in such a factual situation, the appeal plea should be built on Article 226(1)(8) PPL and on the lack of a substantive justification for the assessment, and not solely on a polemic with the assessment of the explanations. The burden of proof before the Chamber lies, however, with the contractor (Article 537(1) PPL).

6. In the case of a general request, it is worth considering an application for clarification – recording what the contracting authority asked about is later of evidentiary significance.

The above material is for information and educational purposes only – it does not constitute legal advice or an opinion on a specific case. Assessment of a specific factual situation requires individual analysis. Legal status: Act of 11 September 2019 – Public Procurement Law (consolidated text: Journal of Laws of 2026, item 793).

Dominik Styczyński – attorney-at-law (radca prawny), public procurement law expert representing contractors and contracting authorities before the National Appeals Chamber (KIO)