Sanctions and Public Procurement — What Every Contractor and Contracting Authority Must Know

Legal status as of: 2026-05-26.

If you are bidding in a public tender above EUR 221,000 — or you are the contracting authority yourself — EU sanctions rules impose an obligation on you that cannot be circumvented. This is not a “best practice”. It is directly applicable EU law — Art. 5k of Council Regulation (EU) 833/2014¹ — together with Art. 7 of the act of 13 April 2022², which jointly exclude from Polish tenders contractors from Russia and Belarus, as well as persons and entities on the EU sanctions lists and the Polish MSWiA (Ministry of Interior and Administration) list.

In this article you will get a concrete map: who has to do what, what the thresholds are, what a sanctions clause in the tender documents looks like, and what you risk if you ignore the rules.

TL;DR

• Art. 5k of Reg. 833/2014 prohibits the award of public contracts above the EU thresholds to Russian entities, entities controlled by Russians, and contracts in which Russian subcontractors or suppliers account for more than 10% of the contract value¹.
• Art. 7 of the act of 13 April 2022 extends the obligation to ALL public procurement (PZP) procedures — regardless of value — with respect to contractors on the EU sanctions lists (Reg. 269/2014, 765/2006) and the Polish MSWiA list².
• The contracting authority verifies the contractor (mandatory exclusion) — and is liable for any failure to do so.
• The contractor submits a declaration and is liable for its truthfulness — under penalty of the contract being declared invalid.
• A breach: invalidation of the procedure, an administrative fine of up to PLN 20 million, and in extreme cases criminal liability (Art. 15 of the sanctions act + Directive 2024/1226)²³.

Where does the obligation come from? Two regimes operating in parallel

A Polish company bidding in a tender (or announcing one) is subject to two independent legal regimes. They are easy to confuse, so let me set them out separately.

Regime 1: EU law — Art. 5k of Regulation 833/2014

Council Regulation (EU) 2022/576 of 8 April 2022, introduced as part of the fifth package of sanctions against Russia, added a new Art. 5k to Regulation 833/2014¹⁴. This provision:

• Prohibits the award of public contracts and concessions covered by Directives 2014/24/EU, 2014/25/EU, 2014/23/EU, and 2009/81/EC — that is, contracts above the so-called EU thresholds¹.
• Addressee of the prohibition: all public-sector and utilities entities in the EU (contracting authorities within the meaning of the procurement directives).
• Who is excluded: (a) Russian nationals and entities established in Russia; (b) legal persons more than 50% of whose shares are held by Russian entities; (c) legal persons controlled by entities under (a) or (b); (d) contractors acting on behalf of or at the direction of entities under (a)–(c); (e) contracts in which subcontractors, suppliers, or entities providing resources of Russian origin account for more than 10% of the contract value¹.
• Entry into force: 9 April 2022⁴.
• Application to ongoing contracts: contracts concluded before 9 April 2022 had to be terminated by 10 October 2022 (a transition period for existing contracts)¹.

An EU regulation is directly applicable — it does not require transposition into Polish law. A contracting authority that concludes a contract with an excluded entity breaches EU law regardless of what the Polish Public Procurement Law (PZP) says.

EU thresholds — when Art. 5k applies

Art. 5k refers to the EU procurement directives. The thresholds are updated every two years by Commission delegated regulations. For the 2024–2025 period (the most recent update — Commission Delegated Regulation (EU) 2023/2495)⁵ the net thresholds are:

These are net values, excluding VAT, for the total estimated value of the contract. Below the threshold, Art. 5k does not apply — but the Polish regime does (Art. 7 of the sanctions act, see below).

Regime 2: Polish law — Art. 7 of the act of 13 April 2022

The Polish legislature went further than the EU. Art. 7(1) of the act of 13 April 2022 on special measures to counter support for aggression against Ukraine and to protect national security (Journal of Laws 2022, item 835)² provides:

“The following shall be excluded from a procedure for the award of a public contract or from a contest conducted under the act of 11 September 2019 — Public Procurement Law: 1) a contractor or contest participant listed in the lists specified in Regulation 765/2006 and Regulation 269/2014, or entered on the list pursuant to a decision concerning entry on the list deciding on the application of the measure referred to in Art. 1(3)”²

So — unlike EU Art. 5k — Art. 7 applies to EVERY PZP procedure, regardless of value. It also applies to below-threshold contracts, low-value (de minimis) contracts, and the in-house procurement rules of local-government units (the scope of the PZP act).

A few more things worth knowing:

• The MSWiA list is maintained under the act of 13 April 2022 — entry is made by a decision of the Minister of Interior and Administration⁶.
• The exclusion also covers the contractor’s beneficial owners (UBOs) and parent entities controlling the contractor (Art. 7(1)(2) and (3))².
• The exclusion is mandatory — the contracting authority has no discretion. A finding that the entity is on the list is sufficient.

Who is affected: contracting authorities vs contractors

Both regimes impose obligations on two different parties. They are easy to confuse.

Obligations of the contracting authority

If you run a PZP procedure (a public office, a local-government unit, a municipal company, a body governed by public law — the full catalogue is in Art. 4 of the PZP⁷), you must:

1. Check every contractor against the lists:
   • Annex I to Reg. 269/2014 (EU persons and entities)⁸
   • Annex I to Reg. 765/2006 (Belarus)⁹
   • The MSWiA list on gov.pl⁶
   • Annex IV to Reg. 833/2014 (sectoral — Russia) — for Art. 5k verification
2. Check the contractor’s beneficial owners (via the Central Register of Beneficial Owners — CRBR) and the ownership structure against the 50% rule¹⁰.
3. Check subcontractors — if the contract is subject to EU Art. 5k (above the thresholds), also the value of the Russian subcontractors’ input (the 10% limit).
4. Document the verification — an entry in the procedure record (Art. 73 of the PZP⁷).
5. Include a sanctions clause in the contract — especially important for contracts that will be performed over a longer period (a change in the status of the contractor or its counterparty during performance).

No verification = a breach of the sanctions act + a breach of the PZP. It may result in the procedure being invalidated by the National Appeal Chamber (KIO) or an ad hoc inspection by the President of the Public Procurement Office (UZP)¹¹.

Obligations of the contractor

If you submit a bid in a public tender:

1. Submit a preliminary declaration that there are no grounds for exclusion (the ESPD or a declaration under Art. 125 of the PZP⁷).
2. Provide verification documents at the contracting authority’s request — including information on the ownership structure, beneficial owners, and country of registration.
3. If you use subcontractors accounting for more than 10% of the contract value (for EU contracts) — document their ownership structure.
4. Update the information during performance — if your subcontractor or supplier ends up on a sanctions list after the contract is concluded, you are obliged to report this to the contracting authority and change the structure.

Submitting a false declaration is not only grounds for exclusion, but also entails criminal liability under Art. 297 of the Penal Code (fraud in a public procurement procedure, up to 5 years’ imprisonment)¹².

In practice — if you run counterparty verification against sanctions lists as a routine part of your sales process, you automatically satisfy most of the documentation requirements.

The exclusion procedure — what exactly the contracting authority checks

In practice, the contracting authority has to carry out three levels of contractor verification.

Level 1: name and tax ID against the lists

The simplest stage. We take the data from the bid:

• Full name of the contractor (company name)
• Tax ID (NIP) / KRS / business register number in the country of registration
• Registered address

And we check them against:

• Annex I to Reg. 269/2014 (natural and legal persons subject to asset freezes)⁸
• Annex I to Reg. 765/2006 (Belarus)⁹
• The MSWiA list⁶

Result: a hit or no hit. A hit = mandatory exclusion.

Level 2: ownership structure — the 50% rule

The contractor’s name alone may be “clean”, but its parent company may not be. We check:

• The beneficial owner (UBO) in the CRBR — whether it appears on any list¹⁰
• The parent entity — whether the contractor’s parent entity is on a list
• The capital structure — if a person/entity on a list holds more than 50% of the contractor’s shares, the contractor is also subject to exclusion (the so-called 50% ownership rule¹³)

The ownership and control rule is often an underrated element — described in detail in our article on the 50% ownership rule in sanctions.

Level 3: subcontractors and origin of goods (EU Art. 5k)

Only for contracts covered by EU Art. 5k (above the thresholds). We check:

• The list of subcontractors named in the bid
• The value of their input (if of Russian origin — the 10% of contract value limit)
• The origin of the goods / services / software in the contract

This level requires cooperation from the contractor — the contractor submits a declaration and provides documents.

The sanctions clause in the contract — template and pitfalls

Every contract concluded as a result of a PZP procedure should contain a sanctions clause. This is not a direct statutory requirement, but a practice recommended by the UZP and the National Appeal Chamber — without it, the contracting authority loses the ability to terminate the contract if the contractor (or its counterparty) ends up on a list during performance.

Minimum scope of a sanctions clause in a PZP contract:

1. A declaration by the contractor that there are no grounds for exclusion as at the date of conclusion of the contract — under EU Art. 5k and Art. 7 of the Polish sanctions act.
2. An obligation to inform the contracting authority of changes in the ownership structure, subcontractors, and suppliers — within 7 days of the change.
3. A right of withdrawal / termination of the contract in the event the contractor or its UBO is entered on a list — with an obligation to pay only for the part of the performance already completed.
4. A subcontracting clause — a prohibition on subcontracting above a defined threshold (e.g., 10% of the contract value) without the prior consent of the contracting authority and verification against the sanctions lists.
5. An information clause — the contractor agrees to periodic verification of its data by the contracting authority.

Pitfall 1: a clause that is too general (“the contractor declares that it is not subject to sanctions”) — a court will not treat it as grounds for terminating the contract if the situation changed during performance and the clause did not cover updates.

Pitfall 2: the absence of a periodic verification procedure — if the contract runs for 24 months and the contractor is added to the MSWiA list in month 18, the contracting authority still keeps paying for the service. The clause must oblige the contractor to provide ongoing information.

Pitfall 3: a provision on a contractual penalty for a false declaration — it does not replace the obligation to exclude. These are two different regimes.

We show practical sanctions-clause templates — together with a full set of implementation documents — in the article on the sanctions policy and document templates.

What you risk if you do nothing

On the contracting authority’s side

• Invalidation of the procedure or contract by the KIO at the request of another contractor¹¹.
• An ad hoc UZP inspection — the record, correspondence with the President of the UZP, and possible recommendations¹¹.
• Disciplinary liability of the persons who prepared the procedure (the act on liability for breach of public-finance discipline)¹⁴.
• A breach of EU law — a contracting authority using public funds (national + EU) risks having to repay funding if the procedure was co-financed (the National Recovery Plan, operational programmes).

On the contractor’s side

• Exclusion from the procedure + loss of the bid bond paid (up to 3% of the contract value, Art. 98 of the PZP⁷).
• Entry in the public register of unreliable contractors — exclusion from procedures for a period of up to 3 years (Art. 109(1)(8) of the PZP)⁷.
• Criminal liability under Art. 297 of the Penal Code (fraud in public procurement — up to 5 years’ imprisonment)¹².
• An administrative fine — from PLN 10,000 to PLN 20,000,000 for a breach of the sanctions act (Art. 15 of the act of 13 April 2022)².
• Criminal sanctions liability — the implementation of Directive 2024/1226 introduces a new type of offence (breach of EU sanctions), punishable by up to 5 years’ imprisonment¹⁵.

We present a detailed map of penalties in the article on penalties for breaching sanctions.

A practical scenario

A Polish company supplies software to a provincial office (urząd wojewódzki), with a contract value of EUR 280,000. During performance, it emerges that one of the subcontractors (a library component) is a Cypriot company controlled 60% by a natural person on the EU sanctions list. The consequences:

• The provincial office: a breach of Art. 5k — an explanatory procedure by the European Commission, the risk of losing EU funding for part of the project.
• The Polish company: exclusion from the procedure, loss of the bid bond, entry in the register for 3 years, an inspection by the GIIF (Financial Intelligence Unit) + the UZP, the risk of an administrative fine.
• A management board member: possibly criminal proceedings under Art. 297 of the Penal Code.

Most of these consequences can be avoided by routinely verifying subcontractors before the contract is concluded — not after the first invoice.

The industries most exposed

In the context of public procurement, companies in sectors where the supply chain tends to be opaque must be especially careful:

• Transport and freight forwarding (sanctions and transport) — the carriage of goods subject to sectoral restrictions, correspondents of Russian entities.
• Leasing (sanctions and leasing) — financing of fixed assets for contractors who may turn out to be connected.
• Accounting firms (sanctions and accounting) — bookkeeping services for contractors bidding in tenders, where they are themselves an obliged entity.
• E-commerce and IT — providers of software, hosting, and infrastructure — often with subcontractors in third countries.
• Law firms (sanctions and law firms) — legal advice for contractors subject to the declaration obligation.

How Sanqto helps

Sanqto is sanction screening software that you install in your own network — the data of contractors and subcontractors never leaves your infrastructure. The three-state result model (MATCH / POSSIBLE / CLEAR) + sub-30ms response time let you build verification directly into the workflow of either the contracting authority or the contractor:

• Check every contractor and its UBO against the EU, MSWiA, OFAC, and UN lists with a single query.
• When the lists change (daily updates) — automatic re-verification of ongoing contracts.
• Procedure documentation (the record + proof of verification) generated automatically.

If you want to see how it works in practice — book a demo or explore the product.

For more fundamental reading: why companies outside the financial sector even have a sanction screening obligation in the first place.

Legal basis

• Council Regulation (EU) 833/2014 (restrictive measures concerning Russia), Art. 5k — introduced by Reg. 2022/576 of 8 April 2022¹⁴.
• Council Regulation (EU) 269/2014 (persons subject to asset freezes — EU)⁸.
• Council Regulation (EC) 765/2006 (Belarus)⁹.
• Act of 13 April 2022 on special measures to counter support for aggression against Ukraine and to protect national security (Journal of Laws 2022, item 835), Art. 7 and 15².
• Act of 11 September 2019 — Public Procurement Law (Journal of Laws 2024, item 605, consolidated text), Art. 73, 98, 108, 109, 125⁷.
• EU procurement directives: 2014/24/EU (classic), 2014/25/EU (special sectors), 2014/23/EU (concessions), 2009/81/EC (defence)⁵.
• Commission Delegated Regulation (EU) 2023/2495 updating the procurement thresholds for 2024–2025⁵.
• Directive (EU) 2024/1226 on the criminalisation of violations of sanctions — in Poland transposed by the UC92 bill (the “major sanctions act”)¹⁵.
• The list of persons and entities subject to sanctions maintained by the Minister of Interior and Administration⁶.
• The Central Register of Beneficial Owners (CRBR) — Ministry of Finance¹⁰.

Information, not legal advice. This article is for information and educational purposes only and does not constitute legal advice. The specific legal assessment of an individual case should be carried out with a qualified lawyer specialising in sanctions and export-control law. Legal status: 2026-05-26.