Trade secrets and confidential information in public procurement proceedings – practical and legal aspects

The institution of trade secrets in public procurement proceedings serves to protect contractors applying for public contracts. In a free market economy, information becomes a strategic asset, and its unauthorised disclosure may lead to significant damage to the competitive position of a business entity. In this article, we present the most important legal regulations, case law and practical issues related to the protection of trade secrets in public procurement.

Legal basis – trade secrets and transparency of proceedings

Pursuant to Article 18(1) and (2) of the Act of 11 September 2019 – Public Procurement Law (hereinafter: PPL), public procurement proceedings are open to the public, and the contracting authority is obliged to ensure that the principle of transparency is upheld. At the same time, the legislator has provided for the possibility of restricting access to information constituting the contractor’s trade secret if it has been appropriately marked and identified as confidential. Article 18 (3) of the PPL stipulates that the contracting authority shall not disclose information constituting a trade secret if the contractor, no later than on the date of submission of tenders or applications for admission to the procedure, has stipulated that such information may not be disclosed and has demonstrated that the restricted information constitutes a trade secret within the meaning of the provisions of the Act on Combating Unfair Competition.

In this regard, Article 11 (2) of the Act of 16 April 1993 on Combating Unfair Competition is of significant importance, as it defines a trade secret as technical, technological or organisational information of an enterprise or other information of economic value, in respect of which the entrepreneur has taken the necessary measures to preserve its confidentiality.

Contractor’s obligations – formal reservation and justification

Simply labelling information as a ‘trade secret’ is not sufficient. The contractor must also:

• reserve the confidentiality of the information at the latest at the time of submitting the offer/application;
• demonstrate that the data meets the criteria for a trade secret;
• justify that its disclosure could expose him to damage or loss of competitive advantage.

In practice, this means that a separate statement and detailed justification must be attached to the tender, indicating, among other things:

• what type of information is reserved,
• what measures have been taken to protect it,
• what its economic value is,
• how its disclosure could harm the contractor.

Limits of admissibility of confidentiality claims – case law of the National Appeal Chamber and courts

The case law of the National Chamber of Appeal has established the view that it is not permissible to claim the entire tender or information used to evaluate the tender as a trade secret, such as:

• unit or total price,
• bid evaluation criteria,
• information on subcontracting, if it affects the evaluation,
• description of how the contract will be performed (if it is an evaluation criterion).

At the same time, the reservation may concern, for example, cost calculations, the method of obtaining materials, technological know-how, detailed agreements with subcontractors or a description of the quality management system – provided that it is duly justified.

Sanctions for abuse of confidentiality

In the event of an unfounded claim of confidentiality, the contracting authority may:

• request the contractor to supplement or clarify the information pursuant to Article 128 of the Public Procurement Law,
• disregard the reservation if it has not been duly justified,
• consider the tender non-compliant with the regulations and reject it (in justified cases).

Furthermore, unjustified classification of data as confidential may lead to a violation of the principles of fair competition and transparency of the procedure, which may be effectively challenged by way of an appeal to the National Chamber of Appeal.

Confidentiality and the right of access to public information

It should also be remembered that public procurement documentation, as material produced in connection with the performance of public tasks, is subject to the provisions of the Public Information Access Act. Trade secrets constitute one of the limitations on the right to information, but they must be demonstrated and justified. Otherwise, even after the proceedings have been completed, the interested party may successfully seek disclosure of the documents.

Practical conclusions for contractors and  ordering parties.

Contractors should carefully prepare their justifications for confidentiality claims – laconic or vague statements are not sufficient.

Ordering parties are required to verify whether the claim is justified and whether it does not lead to a restriction of the transparency of the procedure. Abuse of trade secret protection may result in the rejection of a bid, the acceptance of a competitor’s appeal, or the disclosure of data upon request.

Summary

Trade secrets in public procurement remain a key tool for protecting contractors’ interests, but they require due formal and substantive diligence. Striking the right balance between the principle of transparency and the protection of private interests requires both knowledge of the regulations and current case law.

Our Law Firm’s team offers advice on the preparation and verification of trade secret reservations both at the bidding stage and during any appeal proceedings before the National Chamber of Appeal.