The company Exdrog used artificial intelligence to convince a public contracting authority that the price it offered for road maintenance in the Małopolska region was not abnormally low. Unfortunately, the AI hallucinated and cited non-existent laws and their interpretations, “Puls Biznesu” reports. Exdrog ended up losing a contract worth PLN 15.5 million.

The tender in question concerned road maintenance in Małopolska. The company submitted an offer for PLN 15.5 million, and the Kraków Regional Roads Authority (Zarząd Dróg Wojewódzkich, ZDW) wanted to check whether the bid was abnormally low. The explanations ran 280 pages. Based on those explanations, the ZDW initially considered the offer the most advantageous – but a competing company, Mika, showed that the contractor had been using artificial intelligence.

“As the basis for its price calculations, especially regarding VAT rates, it cited non-existent, never-issued tax interpretations that were supposedly about analogous cases. We proved that these were AI hallucinations,” said Jarosław Sroka, a partner at the BSJP law firm representing Mika, as quoted in the article.

As a result, Exdrog was excluded from the tender by the National Appeals Chamber (Krajowa Izba Odwoławcza). The Chamber stated that the contractor had failed to verify the information generated by artificial intelligence and had misled the contracting authority.

As the article stresses, taking shortcuts – relying on AI statements without verifying them – can lead you badly off course, and ultimately get you thrown out of a public tender.