Legal Alert | Public Procurement and the pre-emption right for real estate in the Act on the National Data Processing Center

Public Procurement: A Separate Procedure Under the KCPD Act

The KCPD Act introduces its own procurement procedure, which largely supersedes the regime of the Public Procurement Law (PZP). Pursuant to Article 10 of the KCPD Act, for contracts related to the preparation, implementation, and operation of KCPD investments with a value equal to or exceeding the threshold specified in Article 2(1)(1) of the PZP (i.e., PLN 170,000), the provisions of the PZP do not apply, except for the corresponding application of selected provisions—including Articles 16, 17, 56, 99, 134, and 168 of the Public Procurement Law (with respect to the investor) and Articles 108 and 109 of the Public Procurement Law, i.e., the grounds for exclusion (with respect to the contractor).

The most important rules of this procedure are:

• Invitation instead of a public notice — the contracting authority selects contractors on its own and invites them to negotiations; as a rule, at least three contractors must be invited, unless the specialized nature of the contract or objective reasons justify a smaller number (even a single contractor);
• Limited pool of contractors — only contractors based in the EU, the EEA, or in countries with which relevant agreements have been concluded in the fields of defense and security may be invited; they must have experience with similar contracts, not be subject to exclusion, and, in justified cases, demonstrate the ability to protect classified information;
• Broader grounds for exclusion — the contracting authority may exclude a contractor at any stage of the procedure, including for breach of obligations regarding information security or supply (including by members of the company’s governing bodies), lack of the credibility necessary for national security, or refusal to submit a confidentiality statement;
• Cancellation without justification — the investor may cancel the procedure at any stage without providing reasons. If the cancellation occurred for reasons attributable to the investor, a contractor who has not been excluded is entitled only to reimbursement of reasonable costs incurred in participating in the procedure;
• Limited transparency and CBA oversight — information regarding security measures, building plans, or fiber-optic routes is not subject to disclosure as public information, and the Central Anti-Corruption Bureau (CBA) conducts protective measures and receives invitations along with a list of contractors no later than 7 days before they are forwarded.

The same rules apply accordingly to ancillary investments.

What does this mean for the market?

• Market access depends on the investor — there is no obligation to publish a notice, and invitations depend, among other things, on experience with similar contracts. Contractors should therefore build their reputation in advance and document their references;
• Security as a condition for entry — the requirement to be headquartered in the EU, the EEA, or a country covered by a relevant agreement, as well as the ability to protect classified information, limits the number of competitors. Security clearances must therefore be obtained in advance;
• Supply chain and subcontractors — the contracting authority may also require commitments and information from subcontractors. It may also reserve the right to verify or remove a contractor’s employee;
• Higher risk of exclusion — in addition to the standard grounds under Articles 108 and 109 of the Public Procurement Law, the contracting authority may exclude a contractor at any stage, including due to breaches of information security or supply chain security by members of its governing bodies or authorized representatives. This requires internal compliance verification and preparation for submitting declarations under penalty of criminal liability;
• Limited legal protection and cost risk — since Article 10 of the KCPD Act does not refer to the provisions of the Public Procurement Law regarding legal remedies, contractors should not assume that a standard appeal process before the National Appeal Chamber (KIO) is available. The contracting authority may annul the proceedings without justification, and reimbursement of costs is only due if the reasons lie with the contracting authority;
• Less transparency and increased oversight — some information about the investment will not be available, and the CBA’s involvement in protective measures means that the course of negotiations and the selection of contractors are subject to heightened anti-corruption scrutiny.

Pre-emption rights – Articles 18 and 19 of the KCPD

The pre-emption right is regulated by Articles 18 and 19 of the KCPD Act and is of particular importance to property owners, investors, and corporations, including from the perspective of M&A transactions.

This is because the pre-emption right applies to the sale of real estate, perpetual usufruct rights, shares in co-ownership, or shares in the perpetual usufruct of real estate covered by a decision on the location of an investment within the scope of the National Data Processing Center. However, that is not all, because, as is the case with several other statutory preemptive rights under Polish law, in this instance as well, the competent Minister has the right to acquire shares in a capital company that is the owner or perpetual usufructuary of real estate covered by a decision determining the location of an investment related to the National Data Processing Center. The condition is that it must be demonstrated that the exercise of this right is necessary for the implementation, construction, reconstruction, renovation, maintenance, use, operation, demolition, or ensuring the security of the National Data Processing Center (KCPD).

Consequently, this regulation is also relevant to M&A transactions involving companies that own real estate in areas potentially covered by location decisions.

In this context, it is worth noting that the competent Minister, or persons authorized by him, has the right to inspect the books and documents of such a company and to request from the company information regarding encumbrances and obligations not reflected in the books and documents. The inspection of a company’s books and documents may take place at the company’s registered office or at the location where the books are kept.

In both cases, the provisions of the Civil Code apply accordingly to the exercise of the Minister’s right. The deadline for submitting a declaration of the exercise of the pre-emption right is 2 months, counting from the date of receipt by the minister responsible for digitization of a notice (regarding the conclusion of a conditional agreement) submitted by the owner or perpetual usufructuary of the real property or such a notice submitted by the company whose shares are the subject of the transaction.

Impact of the Act on the Property Owner and Owners of Adjacent Properties

When analyzing the provisions of the KCPD Act, attention should be paid to the rather “authoritarian” right to designate the location of an investment for the construction of facilities belonging to the National Data Processing Center. Such a decision is issued by the relevant voivode at the request of the investor (who is the competent Minister for Digitalization or a unit subordinate to him). It is worth noting that before issuing the decision, the voivode notifies the relevant parties of the receipt of such an application, including the owner(s) of the real estate covered by the application; as a result, the real estate may not be the subject of a transaction within the meaning of the Real Estate Management Act.

The voivode notifies the applicant and the owners or perpetual usufructuaries of the real estate covered by the decision of the issuance of the location decision, sending them a notice to the address indicated in the land and building registry. Other parties are notified through public notices in the Public Information Bulletin, at the provincial office and the municipal offices with jurisdiction over the investment’s location, on the websites of those municipalities and the provincial office, as well as in the local press.

A location decision may have effects extending far beyond the boundaries of the project site. The Act provides for two categories of restrictions concerning neighboring properties:

1. Restrictions on the Use of Real Property (Article 32)

A location decision may restrict (subject to compensation) the manner in which the properties specified in the decision are used, including by:

• a prohibition on erecting and maintaining structures intended for human habitation;
• requiring that the location of structures be approved by the minister;
• a prohibition on planting vegetation exceeding a specified height.

2. Distance Restriction Zones (Article 42)

The Act establishes mandatory zones prohibiting the construction of certain structures within a specified distance from the computing center, measured in a straight line between the nearest points on the property boundaries. Examples of minimum distances:

• 8 km—airports;
• 5 km—military training grounds, mines, and facilities with a high risk of industrial accidents;
• 3 km – high-risk facilities;
• 1–1.6 km – pipelines, gas stations, shopping centers >0.5 ha, nuclear facilities;
• 0.2–0.8 km—highways, roads, rail lines, district heating mains.

It should be emphasized that the boundaries of the restricted areas under Article 32 and the prohibited zones under Article 42 may extend beyond the boundaries of the project site and include properties belonging to third parties who are not directly involved in the implementation of the KCPD.

Recommendations

The KCPD Act establishes a new, broad regime of restrictions on property rights, which should be taken into account at every stage of planning real estate transactions and M&A transactions. We recommend in particular:

• Verification of the Status of Zoning Decisions — Before any sale of real estate or shares in a company that owns real estate, it is necessary to verify that the land in question is not subject to a KCPD zoning decision.
• Consideration of the Extended Deadline — The 2-month deadline for the minister to exercise the pre-emption right should be taken into account when planning transactions and establishing conditions precedent in conditional or preliminary agreements.
• Analysis of impact zones — even if a property is not directly subject to a location decision, it may be located within a zone subject to the restrictions under Article 32 or the prohibitions under Article 42, which significantly affects its value and development potential.
• M&A Transactions — the pre-emption right for shares (Article 19) requires expanding the standard scope of a company’s legal due diligence to include an analysis of the location of its real estate holdings in relation to planned KCPD investments.

Contact

If you are interested in our support regarding the implementation of the new regulations, we warmly encourage you to contact us.