Public Procurement and Government Contracts 2019 Comparisons

Last Updated May 10, 2019

Contributed By VdA

Law and Practice

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VdA is a leading international law firm with more than 40 years of history, and is recognised for its innovative approach and impressive track record in corporate legal services. The firm offers specialised legal services covering several sectors and practice areas, enabling it to handle the increasingly complex challenges faced by clients. Through the VdA Legal Partners network, clients have access to 13 jurisdictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste.

The Public Contracts Code, approved by Decree-Law 18/2008 of January 29th, as amended (hereinafter “PCC”), is the key legislation regulating public procurement and government contracts in the Portuguese legal system.

The last significant amendment to the PCC was approved by Decree-Law 111-B/2017 of August 31st, which implemented Directive 2014/23/EU (Concession Contracts Directive), Directive 2014/24/EU (the Public Procurement Directive) and Directive 2014/25/EU (Utilities Directive), all dated 26 February 2014, into the Portuguese legal system. This amendment significantly modified the legal regime applicable to public procurement procedures and public contracts, revoking 35, adding 54 and changing 155 articles.

This amendment was complemented by both Decree (“Portaria”) 371/2017, of December 14, which established the model contract notices applicable to pre-contractual procedures under the PCC, and Decree 372/2017, of the same date, which established the rules and terms concerning submission of the contractor’s qualification documents.

Also relevant is Law 96/2015, of August 17, which establishes the legal framework for the access and use of electronic platforms for public procurement purposes, and Decree-Law 111/2012, of May 23, which provides for a special legal framework for public-private partnerships (PPPs).

Portugal has two autonomous administrative regions – Madeira and Azores – each of which has adapted regional public procurement rules to the particularities of their territories.

In Madeira, the most relevant piece of legislation is the Regional Legislative Decree 34/2008/M, of August 14th, as amended, which introduced minor adjustments to the national legal framework.

In Azores, the Regional Government recently approved Regional Legislative Decree 27/2015/A, of December 29th, which consolidated the main provisions referring to the award of public contracts in the region and has implemented some provisions of the EU Directives on public procurement not yet transposed into the national framework.

Finally, reference must be made to the Administrative Procedure Code (“APC”), approved by Decree-Law 4/2015, of January 7th, and to the Administrative Courts Procedure Code (“ACPC”) and the Statute of Administrative and Tax Courts, which were both amended and republished by Decree-Law 214-G/2015, of October 2nd; all three apply to public procurement procedures in general.

The PCC establishes a wide concept of contracting authorities. However, until the revision of the PCC introduced by Decree-Law 149/2012 of July 12th, certain public entities – eg, public foundations for university education or corporate public hospitals – were excluded from its subjective scope of application.

The Portuguese legislation currently recognises three main categories of contracting authority.

Article 2 (1) of the PCC enshrined the first group of entities, which is generally composed of the traditional public sector and includes:

  • the Portuguese State;
  • the Autonomous Regions;
  • local authorities;
  • Municipalities;
  • Public Institutes;
  • Independent Administrative Authorities;
  • the Central Bank of Portugal;
  • public foundations;
  • public associations; and
  • associations financed, for the most part, by the previous entities or subject to management supervision of those aforementioned authorities or bodies, or where the major part of the members of the administrative, managerial or supervisory boards is, directly or indirectly, appointed by the aforementioned entities.

In accordance with Article 2 (2) of the PCC, the second group of entities is made up of bodies governed by public law, including:

  • bodies governed by public law that, regardless of their public or private nature, were established for the specific purpose of meeting needs in the general interest; do not have an industrial or commercial character (ie, are not subject to competition); and are financed, for the most part, by any entity of the traditional public sector or by other bodies governed by public law, or are subject to their management supervision, or where more than half of the members of the administrative, managerial or supervisory boards is, directly or indirectly, appointed by the aforementioned entities;
  • any entities that are under the same situation set forth in the previous paragraph in relation to an entity that is a public contracting authority under the same paragraph; and
  • associations financed, for the most part, by the previous entities or subject to management supervision of those aforementioned authorities or bodies, or where the major part of the members of the administrative, managerial or supervisory boards is, directly or indirectly, appointed by the aforementioned entities.

Finally, the third group of contracting authorities is provided for in Article 7 of the PCC and is composed of entities operating in the utilities sectors (water, energy, transport and postal services) that fall within the following three subcategories:

  • legal entities that are not included in the categories of Article 2 above, that operate in one of the utilities sectors and concerning which any of the entities referred to above may exercise a dominant influence, directly or indirectly;
  • legal entities that are not included in the categories of Article 2 above and which hold special or exclusive rights that have not been granted by means of an internationally advertised competitive procedure, with the effects of reserving to itself or jointly with other entities the exercise of activities in the utilities sector and substantially affecting the ability of other entities to carry out such activities; and
  • entities that were exclusively incorporated by the entities referred to in the two paragraphs above, that are financed by the same, for the most part, or are subject to the management supervision of said entities, or that have an administrative, managerial or supervisory board where more than half of the members are directly or indirectly appointed by said entities, provided that they are destined to jointly operate in the utilities sectors.

Further to the three main categories of contracting authorities referred to above, the PCC also extends its scope of application to entities that enter into public works contracts or associated public service contracts, provided those contracts are directly financed, for more than 50% of the contractual price, by contracting authorities, and the values of the contracts to be executed are equal to or greater than the relevant thresholds (Article 275 of the PCC).

The PCC also extends the application of certain specific public procurement rules to contracts to be carried out by public works concessionaires or by entities holding special or exclusive rights, under certain circumstances expressly defined in Articles 276 and 277 of the PCC.

The contracts that are subject to procurement regulation are those whose scope is, or may be, subject to competition. In this sense, in accordance with the PCC, the following contracts are considered to be subject to competition, without limitation: public works contracts; public works concessions; public services concessions; the acquisition or lease of goods; the acquisition of services; and company contracts.

Relevant thresholds (referring to the thresholds’ value net of VAT) differ depending on the contracting authority at stake and on whether the contracting authority pertains to the traditional public sector or to the utilities sector.

All public contracts executed by entities pertaining to the traditional public sector or that are considered bodies governed by public law fall within the scope of procurement law, regardless of the contract value. Nevertheless, contracts whose value is under certain amounts can be awarded through a non-competitive procedure (direct award), and their terms are also regulated by the PCC.

The scope of application of the direct award has been reduced by the latest amendment to the PCC, with the inclusion of a new procurement procedure (prior consultation) that imposes the consultation of three entities for the award of a contract.

For contracting authorities in the utilities sector, regardless of the general application of the public procurement principles to all contracts carried out by those entities, the European thresholds apply and are currently as follows:

  • for the provision of services contracts, goods supply or leasing contracts: EUR443,000;
  • for public works contracts: EUR5,548,000; and
  • for service contracts for social and other specific services: EUR1,000,000.

All public works concession contracts and all public service concession contracts, as well as company incorporation contracts, fall within the scope of the PCC, regardless of their value.

The PCC does not establish any restriction regarding the opening of regulated contract award procedures to any interested party from any jurisdiction, although the regulated competitive public procurement procedures must be advertised in the National Gazette (Diário da República) only, or also in the OJEU, depending on their value.

According to the Portuguese legislation, the award of contracts is subject to compliance with the principles of the Treaty on the Functioning of the European Union, in particular the free movement of goods, freedom of establishment and freedom to provide services; it must also comply with the principles deriving therefrom, such as the principles of equal treatment, non-discrimination, mutual recognition, proportionality, competition and transparency.

Additionally, the law sets forth key obligations regarding the opening and selection of procurement procedure, notices, tender documents, procedure phases and the course of the procedure, bidder requirements and impediments, qualification and bid submission and evaluation, award, contract execution and performance. 

Regarding the advertising of contract award procedures, contracting authorities are obliged to adopt two types of prior notices.

Prior information notices

According to Article 34 (1) of the PCC, prior to the formal opening of the pre-contractual procedures, and in accordance with the transparency principle, the contracting authorities should disclose their annual procurement plan in a prior information notice that complies with the model provided in Article 48 (1) of Directive 2014/24/EU for publication in the OJEU - https://eur-lex.europa.eu/content/help/oj/intro.html?locale=en, provided that the aggregate contractual value of the contracts to be executed during the following 12 months equals or exceeds the European thresholds (mentioned in 1.3 Type of Contracts Subject to Procurement Regulation).

In accordance with Article 34 (2) of the PCC, contracting authorities may also send a prior information notice for publication in the OJEU, which complies with the model provided in Article 31 (2) and (3) of Directive 2014/23/EU, in the case of service contracts for social and other specific services listed in Appendix IV of the Directive.

Additionally, pursuant to Article 35 of the PCC, contracting entities in the special utilities sector may send an indicative periodical notice for publication in the OJEU, with the mentions provided for in Article 67 of Directive 2014/25/EU, and covering a period of 12 months as a rule.

Contract notices

As mentioned in 1.3 Type of Contracts Subject to Procurement Regulation, depending on the value and scope of the contract, public contract authorities are, as a rule, bound to advertise the awarding procedures. With the exception of the direct award and the prior consultation procedures, all public procurement procedures are required to be advertised in advance in the National Gazette (Diário da República) only, or also in the OJEU (https://dre.pt/web/guest/home/-/dre/120837269/details/maximized?serie=II&at=c&parte_filter=41).

The type of information that must be disclosed in the advertisement is as follows.

Prior information notices

Regarding the acquisition or lease of goods or the acquisition of services, the estimated contract price of all contracts to be concluded during the following 12 months whose price is equal to or higher than the thresholds mentioned under 1.3 Type of Contracts Subject to Procurement Regulation must be disclosed.

Concerning public works contracts or public works concession or public service concession contracts, their main characteristics and the contract price must be disclosed when the estimated contract price of all contracts to be concluded during the following 12 months equals or exceeds the thresholds mentioned under 1.3 Type of Contracts Subject to Procurement Regulation.

Contract notices

The information to be included in the contract notices is provided for in Annex V of the Directive 2014/24/EU (for announcements to be published in the OJEU) or in the Ordinance n.br 371/2017 (for notices to be published in the Diário da República), and varies according to the type of procedure. However, regardless of the type of procedure, the following information is expected to be disclosed in all advertisements:

  • identification of the contracting authority;
  • the internet address at which the procurement documents will be available;
  • the type of contracting authority and its main activity;
  • a description of the procurement (nature and extent of works, nature and quantity or value of supplies, nature and extent of services);
  • an estimated total order of the magnitude of the contract;
  • the admission or prohibition of variant bids;
  • the timeframe for the delivery or provision of supplies, works or services and, as far as possible, the duration of the contract;
  • conditions for participation;
  • the type of award procedure and, where appropriate, reasons for the use of an accelerated procedure;
  • criteria to be used for the award of the contract or contracts; and
  • the time limit for the receipt of tenders (open procedures) or requests to participate (restricted procedures, competitive procedures with negotiation, dynamic purchasing systems, competitive dialogues, innovation partnerships).

The large amendment to the PCC in 2017 introduced Article 35-A, regarding the “preliminary market consultations”. In this respect, the awarding authorities may conduct informal market consultations before the launch of the contract award procedure, namely requesting the opinion of experts, independent authorities or economic operators.

The PCC provides for the following procurement procedures:

    1. direct award: one bidder will be invited to submit bids;
    2. prior consultation: at least three entities will be invited to submit bids;
    3. open procedure: any interested entity is free to submit bids after the publication of a tender notice;
    4. restricted procedure with pre-qualification – similar to c) but comprising two stages: submitting technical and financial qualification documents, and selecting candidates; and submitting bids, evaluating bids and award;
    5. negotiated procedure: including the same two phases as the procedure in d) and a third phase for the negotiation of bids;
    6. competitive dialogue: whenever a contracting authority is not able to specify a definitive and concrete solution for the contract and launches a tender to which bidders submit solutions; and
    7. partnership for innovation: whenever a contracting authority intends the performance of R&D of goods, services or innovative works, with the intention of further purchasing it.

Both the prior consultation procedure and the partnership for innovation were introduced in the PCC with its 11th amendment, in 2017.

The use of procedures involving negotiation with bidders in Portugal is limited to certain specific circumstances.

The PCC establishes two procedures that involve negotiation with bidders: the competitive dialogue and the negotiation procedure.

Currently, the PCC states that the adoption of a competitive dialogue or a negotiation procedure may occur if:

  • the contracting authority’s needs cannot be fulfilled without adapting easily available solutions;
  • the goods or services include the adoption of innovative solutions;
  • it is not objectively possible for the contract award to occur without any previous negotiation due to the contract’s specific nature, complexity, legal or financial assemble or risk; and
  • it is not objectively possible precisely to define, in a detailed manner, the technical solution to be implemented by referring to a certain rule or standard.

In addition to the two cases referred to above, provided that some requirements are fulfilled (in particular if it is provided for in the procedure programme), a negotiation phase can be carried out in the procedures of direct award and prior consultation, or in public tenders, including, for example, in public tenders for the award of public works or public services concession contracts, or for the award of public works, supply or lease of goods or services provision contracts whose value is below certain amounts.

In general, awarding authorities may freely choose to adopt an open procedure or a restricted procedure with pre-qualification.

For contracts designed for the utilities sector, awarding authorities may freely choose between the open procedure, the restricted procedure with pre-qualification, the negotiation procedure, the competitive dialogue or, if the respective requirements are fulfilled, the partnership for innovation.

For public works or public services concessions, as well as company incorporation contracts, awarding authorities may freely choose between the open procedure, the restricted procedure with pre-qualification, the negotiation procedure or the competitive dialogue.

In both cases, other procedures may be adopted if certain criteria legally set forth – based on the value of the contract or material criteria – are met.

Regarding the defence and security sector, Decree-Law 104/2011 provides three procedures: competitive dialogue; a restricted procedure with pre-qualification (both governed by the rules of the PCC); and the negotiation procedure, which may or may not be preceded by a contract notice.

Special procedural instruments are also set forth: the design procedure; the dynamic acquisition systems; and the qualification systems, which is applicable to the utilities sector.

As the European directives state the importance of simplifying and dematerialising procurement procedures with a view to ensuring greater efficiency and transparency, the PCC opts unequivocally for electronic procurement, and the awarding authorities are bound to adopt electronic procurement procedures.

Furthermore, there are certain criteria that are relevant and have to be fulfilled for the adoption of certain types of procedures – based on the contract value, material criteria, or the type of contract.

Criteria based on contract value

For entities pertaining to the traditional public sector or that are considered bodies governed by public law, the thresholds are as follows:

  • For the provision of services contracts, goods supply or leasing contracts:
    1. direct award may be adopted for contracts whose value is below EUR20,000;
    2. prior consultation may be adopted for contracts whose value is below EUR75,000 (EUR75,000 was the previous threshold for direct award); and
    3. public tender or limited tender with prior qualification (or negotiation procedure or competitive dialogue when respective conditions are met) without notice in the OJEU may be adopted for contracts whose value is below the European thresholds (EUR144,000 or EUR221,000, depending on whether the contracting authority is the State or other entities, respectively).
  • For public works contracts:
    1. direct award may be adopted for contracts whose value is below EUR30,000;
    2. prior consultation may be adopted for contracts whose value is below EUR150,000 for prior consultations (EUR150,000 was the previous threshold for direct award); and
    3. public tender or limited tender with prior qualification (or negotiation procedure or competitive dialogue when respective conditions are met) without notice in the OJEU may be adopted for contracts whose value is below the European thresholds (EUR5,548,000).
  • For other types of contracts:
    1. direct award may be adopted for contracts whose value is below EUR50,000; and
    2. prior consultation may be adopted for contracts whose value is below EUR100,000 (EUR100,000 was also the previous threshold for direct award).

As referred to above, the European thresholds apply for contracting authorities in the utilities sector, regardless of the general application of the public procurement principles to all contracts carried out by those entities, and are currently as follows:

  • for provision of services contracts, goods supply or leasing contracts: EUR443,000;
  • for public works contracts: EUR5,548,000; and
  • for service contracts for social and other specific services: EUR1,000,000.

However, in some situations, a direct award or a prior consultation may be adopted irrespective of the contract value, particularly when the following material criteria are met:

  • no participant has presented any bid, or all bids have been excluded in a previous open procedure or restricted procedure with pre-qualification, if the specifications and the minimum technical and financial requirements are not substantially altered;
  • insofar as is strictly necessary and for reasons of extreme urgency resulting from events that were unforeseeable by the awarding authority, the deadlines concerning other procedures cannot be fulfilled, provided that the circumstances invoked are not in any way attributable to the awarding authority;
  • the services covered by the contract are mainly to enable the awarding authority to provide one or more telecommunications services to the public; or
  • the contract can only be allocated to a determined entity, when the scope of the procedure is the creation or the acquisition of a work of art or an artistic event, when there is no competition for technical reasons, or when it is necessary to protect exclusive rights (namely, intellectual property rights).

Other material criteria are set forth in the law, specifically for each type of contract (Articles 24 to 27 of the PCC).

Even when one of the material criteria for the adoption of a direct award or a prior consultation is met, the law specifies that prior consultation should be adopted whenever the resource to more than one entity is possible and compatible with the criteria used for the adoption of such a procedure.

As for the criteria concerning the type of procedure, the awarding authorities can adopt the negotiated procedure or the competitive dialogue when:

  • their needs cannot be met without adapting easily available solutions;
  • the goods or services include the design of innovative solutions;
  • it is not objectively possible to award the contract without prior negotiation due to specific circumstances related to its nature, complexity, legal and financial arrangement, or due to the risks associated with it; or
  • it is not objectively possible to define precisely the technical specifications by reference to a standard, European Technical Approval, common technical specifications or technical reference.

On the other hand, the awarding authorities may adopt the partnership for innovation when they intend to carry out research activities and the development of innovative goods, services or works, irrespective of their nature and areas of activity, according to their subsequent acquisition, provided that they correspond to the levels of performance and agreed prices previously agreed between it and the participants in the partnership.

Finally, there are also specific rules and conditions for the adoption of a specific procedure for the award of mixed contracts as to its scope.

As a rule, apart from procedures where the submission of a proposal depends on an invitation (ie, direct award and prior consultation), the awarding authorities shall provide free, unrestricted and full direct electronic access to the procurement documents, from the date of publication of the notice. In other cases (ie, when the direct award or prior consultation is adopted), the documents of the procedure shall accompany the invitation.

The PCC also establishes the obligation to disclose, in the public procurement portal (called BASE), the information related to the pre-contractual procedure and performance of public contracts, through a form conforming to the model in Annex III of the PCC.

In this respect, the Decree (“Portaria”) 57/2018, of February 26, regulates the operation and management of the public procurement portal. This portal was designed to centralise the most important information relating to all pre-contractual procedures, which must be carried out electronically as required by the PCC. It is a virtual space where the elements relating to the pre-contractual procedure and performance of public contracts are publicised, thus enabling their follow-up and monitoring.

See also 2.1 Prior Advertisement of Regulated Contract Award Procedures.

The PCC establishes the minimum timescales in which to present applications (technical and financial qualification documents) or tenders. Pursuant to Article 63 (1) of the PCC, the awarding entity may broaden the timescales in the procedure documents, with respect for the following time limits stipulated by the PCC:

  • direct award: no minimum time limit (nevertheless, the courts consider that the time limit should not be less than the time period considered reasonable for the submission of the proposal);
  • prior consultation: no minimum time limit (nevertheless, the courts consider that the time limit should not be less than the time period considered reasonable for the submission of the proposal);
  • open procedure: if the notice is not subject to publication in the OJEU, the PCC establishes a minimum time limit to submit bids of six days after notice is sent to publication, unless the proceeding concerns the formation of public works contracts, in which case the time limit is 14 days. If the works are clearly simple, the time limit of 14 days can be reduced to six days. If the notice is publicised in the OJEU, the minimum time limit is 30 days, which can be reduced to 15 days in cases of urgency duly reasoned by the awarding entity or if a prior information notice has been published and complies with certain conditions set forth in the law. In urgent open procedures, the time limit is 24 hours on working days for the acquisition or lease of goods or acquisition of services, and 72 hours on working days for public works contracts;
  • Restricted procedure with pre-qualification:

Submission of applications for technical and financial pre-qualification: if the notice is not subject to publication in the OJEU, the minimum time limit for the presentation of the application is six days (14 days for public works contracts) after notice is sent to publication. If the notice is subject to publication in the OJEU, the minimum time limit for presenting the application is 30 days (reduced to 15 days in cases of urgency duly reasoned by the awarding entity, or for contracts in the utility sector).

Submission of bids: six days after the invitation is sent, if the notice is not subject to publication in the OJEU, unless the proceeding concerns the formation of public works contracts, in which case the time limit is 14 days. If the works are clearly simple, the time limit of 14 days can be reduced to six days. If the notice is publicised in the OJEU, the minimum time limit is 25 days, which can be reduced to ten days in cases of urgency duly reasoned by the awarding entity or if a prior information notice has been published and complies with certain conditions set forth in the law, or for contracts in the utilities sector.

  • Negotiated procedure:

Submission of applications for technical and financial pre-qualification: according to the PCC, the time limit for the presentation of applications is 30 days after notice is sent to publication, or 25 days if a prior information notice has been published that complies with certain conditions set forth in the law. If the notice is sent electronically to publication, this timescale may have a reduction of seven days.

Submission of bids: the rules concerning the restricted procedure apply.

  • Competitive dialogue: the minimum timescale to submit tenders is 40 days after a invitation is sent. There are no minimum deadlines set forth in the law for prior phases for submission of applications for technical and financial pre-qualification and for the submission of solutions, with the awarding entity being bound to indicate as much in the notice and in the invitation, respectively.
  • Partnership for innovation:

Submission of applications for technical and financial pre-qualification: the rules applicable to the negotiation procedure apply also to the partnership for innovation procedure.

Submission of proposals for R&D projects: there are no minimum deadlines set forth in the law, with the awarding entity being bound to indicate as much in the invitation.

Public procurement law sets forth conditions for interested parties to participate in tenders; if a bidder does not comply with these requirements it will be disqualified and excluded from the tender. These requirements certify the professional and personal suitability of bidders and are distinct from the technical and financial capacity requirements whereby candidates’ technical and financial qualification is assessed.

Eligibility criteria include:

    1. insolvency or similar;
    2. conviction for crimes affecting professional reputation;
    3. administrative sanctions for a serious professional breach;
    4. non-payment of tax obligations;
    5. non-payment of social security obligations;
    6. sanction of prohibition to participate in public tenders set forth in special legislation;
    7. sanction for a breach of legal obligations in respect of employees subject to payment of taxes and social security obligations;
    8. conviction for crimes concerning criminal organisations, corruption, fraud or money laundering, as set in the PCC;
    9. direct or indirect participation in the preparation of tender documents, thus obtaining a special advantage;
    10. unlawful influence on the competent body for the decision to contract, or obtainment of confidential information granting undue advantages, or provision of misleading information;
    11. conflict of interest; and
    12. significant faults on the performance of a previous public contract in the past three years.

In the situations mentioned in b), c), g), h) or l), the PCC allows bidders to demonstrate that enough measures have been implemented in order to demonstrate their probity for the performance of the contract.

Besides these eligibility criteria, in procedures allowing for a pre-qualification phase, contracting authorities may establish criteria to evaluate bidders’ technical and financial capacity. These may include factors linked to the bidder and not to the bid to be presented, as is the case in the European directives.

In procedures with a pre-qualification phase (restricted procedure with pre-qualification, negotiated procedure, competitive dialogue), it is possible to restrict participation to a limited number of qualified interested parties.   

Following the assessment of the interested parties and their compliance with the technical and financial qualification criteria, a limitation of the number of bidders may occur. There are two different legal systems for the selection of the qualified interested parties and limitation of the number of entities that will be invited to submit a bid (‘qualification of bidders’), at the free choice of the awarding entity.

Under the first system – the simple system – all interested parties that comply with the minimum technical and financial criteria set forth in the tender documents shall be invited to participate and submit their bids.

In accordance with the second system – the complex or selection system – the technical and financial qualification of the interested parties will be evaluated and ranked, with the criteria of higher technical and financial capacity prevailing, and only the highest qualified parties being qualified for the submission of bids.

It is important to stress that economic operators may resort to the technical qualification of third parties in order to demonstrate full compliance with the qualification criteria. To do so, they must submit with their qualification documents a declaration in which they state that the third party at stake will perform the relevant part of the scope of the contract for which such expertise is required.

Beyond the pre-qualification procedures, in non-competitive procedures such as the direct award, the selection of the invited entity(ies) is at the discretion of the awarding entity.     

Under the simple system of pre-qualification, all interested parties that comply with the minimum technical and financial criteria set forth in the tender documents shall be invited to participate and submit their bids.

If the complex or selection system of pre-qualification is adopted, a minimum of five (or a minimum of three, if a competitive dialogue procedure is at stake) interested parties shall be qualified and invited to submit their bids, unless the number of entities that comply with the minimum technical and financial criteria of pre-qualification is less than  five (or three in the case of competitive dialogue).

In direct award or prior consultation procedures, the selection of the invited entity(ies) for the submission of bids is at the discretion of the awarding entity – one entity only in direct awards and a minimum of three entities for prior consultations.

As a consequence of the 11th amendment to the PCC, the only award criteria is the most economically advantageous bid, which may assume one of two types:

  • best relation between price and quality, where the award criterion is composed of a group of factors and subfactors concerning several aspects of the performance of the contract to be executed; or
  • evaluation of the price or the cost, in which case the tender documents shall set forth all other aspects of the performance of the contract to be executed.

Subject to grounded reasoning, the awarding entity may choose not to submit to competition and not to evaluate the price or cost, in which case it shall establish a fixed or maximum price in the tender documents. 

The factors and sub-factors of the evaluation criterion should have a connection to the subject matter of the public contract in question, comprising all, and only, the aspects of performance of the contract to be executed. They may include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date and delivery period or period of completion, environmental or social sustainability.

With the 11th amendment to the PCC, it became mandatory for the rules of the procedure to establish a tie-breaker criterion in case of tied evaluation of bids. This can be related to the evaluation factors established, or to the bidder being a social enterprise or a small- or medium-sized enterprise. The PCC specifically determines that the tie-breaker criterion cannot be the time when the bids were submitted.

According to the PCC, contracting authorities must be transparent. This general obligation is enshrined in the requirement properly to publicise public tender proceedings, and to make public all procedure documents, which must also be transparent and clear, thereby ensuring a level playing field among bidders.

One of the elements that has to be disclosed is the criteria and evaluation methodology of the bidders (pre-qualification phase, where it exists) and of the bids evaluated.

In accordance with the PCC, there is a general provision that demands the absolute disclosure at the beginning of the procedure of all features of the evaluation methodology that cannot be altered during its course. Thus, the relevant pre-qualification criteria for the selection of bidders must be clearly specified in the tender documents from the beginning of the procedure, alongside the criteria for the selection of the bids and their corresponding weight, the evaluation methodology, and the scoring system for every single criterion, factor and sub-factor.

Any relevant decisions of the contracting authority shall be notified to all interested parties, including unsuccessful bidders. Also, all proposed decisions taken by the jury of the procedure shall be notified to the same entities.

Thus, all entities or bidders that submit a pre-qualification application or a bid are notified and informed of the preliminary evaluation report, including the unsuccessful bidders. At this stage, bidders are granted a brief period, usually of at least five working days, to comment on the analysis made by the jury. They have the opportunity to present a formal request asking for the modification of the preliminary report if they do not agree with its content. A final report and final decision on the pre-qualification or the evaluation of bids and award of contracts is issued and also notified to all participating parties, successful or not. 

The PCC provides that the contract award decision is notified simultaneously to all bidders participating in the procedure together with the final report prepared by the jury, which must also include the reasoning of the decision. As procedures run on electronic platforms, the relevant entities are notified through a notification in the platform.

The PCC stipulates a general standstill period of ten days between the time of notification of the contract award decision in writing to all bidders and the execution of the contract, so that unsuccessful bidders are allowed to challenge the decision before the contract has been signed.

However, this ten-day period shall not apply where:

  • the contract is executed under a direct award or a prior consultation procedure or, in other procedures, where the notice has not been published in the OJEU;
  • the contract refers to a framework agreement whose terms cover all the aspects related to the performance of the contract or to a framework agreement executed with one entity only; or
  • only one bid has been submitted.

As referred to in 3.2 Obligation to Notify Interested Parties Who Have Not Been Selected above, the preliminary evaluation report issued by the jury of the tender should be notified to all bidders, allowing them to submit their views, and said report may be reviewed by the jury in the final report. 

In Portugal, it is possible to challenge all decisions issued in public procurement procedures through administrative review proceedings that address the contracting authorities (the competent body for the contracting decision) or through judicial review proceedings under the jurisdiction of administrative courts.

The PCC sets forth fines that may be applied for breach of procurement rules, and that depend on the seriousness and degree of fault of the defaulting party.

Also, the sanction of prohibition to participate in subsequent public procurement procedures may be applied, for a maximum period of two years. 

Additionally, courts can decide to annul a procedure or a contract due to breach of procurement rules, and to award damages (eg, the bid’s preparation costs).

Whenever a public procurement procedure refers to the conclusion of a public works contract, a public works concession, a public services concession, an acquisition or lease of goods, or an acquisition of services, the judicial challenge of the award decision taken by the contracting authority automatically suspends the effects of the awarding decision or the performance of the contract (if it has already been concluded). The suspensory effect can, however, be ended if so requested by the contracting authority and if the administrative court considers that the damages resulting from the suspension are greater than those resulting from its withdrawal.

When the judicial proceeding refers to a different decision taken in the context of a public procurement procedure (ie, not an award decision), the proceeding shall not have an automatic suspensory effect, but the administrative court may be requested to adopt interim measures aimed to ensure the effectiveness of the final judgment.

Any unsuccessful bidder can submit an application for review of a certain decision, tender document or contract, provided it demonstrates that it has been directly affected by the infringement at stake and that it will obtain an advantage with the review decision sought.

Appeal proceedings concerning procurement decisions are characterised by pressing urgency, aimed at avoiding excessive delays in the procurement procedure. An administrative appeal must be brought within five business days. Judicial proceedings regarding pre-contractual litigation must be filed within one month of the relevant decision being issued and notified to the bidder.

Administrative claims tend to be decided very swiftly. Judicial proceedings usually take no less than six months to obtain the first-instance decision.

There is no statistic data for 2018 regarding this matter. However, according to statistical data for the past three years (taken from the IT platform where judicial proceedings are conducted), one may conclude that the number of pre-contractual litigation proceedings has increased (274 in 2015; 299 in 2016; 345 in 2017).

Administrative appeal of decisions taken by the contracting authorities does not have any cost to the challenging entity.

Judicial challenge has a cost, in the first instance, regardless of the value of the action, of EUR204. However, in the event of appeal of the court ruling, a variable judicial fee will be charged, depending on the value of the claim.

According to the PCC, amendments to concluded contracts are permitted without a new procurement procedure only on public-interest grounds, and if the conditions under which the parties entered into the previous agreement have changed in an abnormal and unpredictable way and the contractor’s new obligations would seriously increase the risks it assumes under the original contract.

Amendments can be introduced by a unilateral decision of the contracting authority based on public interest grounds, by an agreement entered into by both parties, or by a judicial or arbitral decision.

The amendments introduced cannot alter the overall nature of the contract and cannot affect competition within the procurement procedure launched for the performance of said contract (ie, the changes to be introduced cannot alter the order of the bids previously evaluated).

In fact, the amendment cannot substantiate an increase of 25% of the initial contractual price in the mentioned case of change of circumstances, or of 10% in the case of amendments based on public interest. It cannot lead to the introduction of changes that, if included in the contract documents, would objectively change the evaluation of the bids and change the economic balance of the contract in favour of the co-contracting party.

In relation to amendments introduced to concluded contracts, Portuguese courts still follow the Pressetext case law.

The legislation permits direct contract awards, under the circumstances established in 1.3 Type of Contracts Subject to Procurement Regulation, above.

As mentioned in 1.1 Legislation Regulating Procurement of Government Contracts, the PCC was deeply amended with the approval of Decree-Law 111-B/2017 of 31 August 2017, which implemented Directive 2014/23/EU (Concession Contracts Directive), Directive 2014/24/EU (the Public Procurement Directive) and Directive 2014/25/EU (Utilities Directive), all dated 26 February 2014.

In addition, Decree Law No 123/2018 of 28 December establishes an organisational model for the implementation of electronic invoicing in public procurement. Briefly, Decree Law No 123/2018 regulates two subjects:

  • the delay of the dates from which the electronic invoicing is mandatory in public procurement; and
  • the delegation, in a Public Administration Shared Services Entity (Entidade de Serviços Partilhados da Administração Pública – ESPAP), of the co-ordination task regarding the implementation of electronic invoicing.

Additionally, the entering into force of GDPR has several implications for administrative activity and public procurement, which will continue to operate in 2019.

With respect to possible legislative amendments currently being considered, two bills regarding an Administrative and Tax Reform of the Portuguese legal framework were recently submitted and approved by the Portuguese Parliament. Among other measures, these bills aim to develop tools to speed up administrative justice and fight against procedure delays.

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VdA is a leading international law firm with more than 40 years of history, and is recognised for its innovative approach and impressive track record in corporate legal services. The firm offers specialised legal services covering several sectors and practice areas, enabling it to handle the increasingly complex challenges faced by clients. Through the VdA Legal Partners network, clients have access to 13 jurisdictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste.

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