Contributed By Riquito Advogados
Macau law does not have general statutes governing the procurement of government contracts. Despite some general provisions in the Administrative Procedure Code, the matter is governed by different statutes that regulate the different government contracts and contract procedures, as detailed below.
The Macau government, public departments with administrative autonomy, autonomous services and funds are subject to procurement regulation.
The procurement of goods and services, the concession of public construction works and public services are subject to special statutes on procurement regulation.
In general, the minimum value thresholds serve as indicators to determine the type of procedures to be used in the public procurement procedures.
Based on the current law, when the public works contract is estimated to exceed MOP2.5 million, or the estimated cost for the acquisition of goods and services exceeds MOP750,000, the awarding authority shall organise the procurement by public tender. The revision of these minimum value thresholds has recently been proposed, as outlined in 5.4 Legislative Amendments under Consideration.
For public works contracts, only entities registered in the Official List of Public Works Contractors of the Land, Public Works and Transport Bureau are admitted as tenderers; entities not established in Macau and that are not registered in the Official List of Public Works Contractors are only admitted in limited situations prescribed in the law and must evidence their registration as public works contractors in their own territory, for equivalence purposes.
With regard to procurement of goods and services by the government, there are no legal prerequisites for eligibility to bid on public sector opportunities, without prejudice to the requisites set out in the tender programme.
Please refer to 2.7 Eligibility for Participation in a Procurement Process on the general requisites of eligibility for concessionaires of public construction works or public services.
Public procurement is guided by the following general principles: legality, impartiality, competition, equal opportunities, responsibility, stability, and transparency and publicity.
In particular, under Law No 14/96/M, gazetted on 12 August 1996, the concessionaires of public construction works and public services are obliged to make public on an annual basis their respective balance sheet, the management report and the opinion of the supervisor or the supervisory board.
In general terms, as a consequence of the general principle of publicity applicable to administrative procedures, the decision to start a public procurement procedure that is to be carried out in the form of a public tender is subject to announcement in the Macau Official Gazette, as well as in two of the most-read newspapers in Macau, one in Portuguese and the other in Chinese.
Pursuant to Decree-Law No 63/85/M, the opening of a public tender for the procurement of goods and services shall be announced in the Official Gazette, with details as to the awarding entity, the public service responsible for the tender, the nature of the goods and services being procured, the base value of the tender (if declared), the place and time for the examination of the tender specifications and tender programme, the deadline for the submission of tender proposals, the provisional bond to be provided by the bidders to participate in the tender and the entity where such bond shall be deposited, and the place, day and time of the public act of the tender.
Further to the decision to open a public tender, Law No 3/90/M prescribes the mandatory announcement in the Macau Official Gazette for the following actions in respect of the concession of public works and public services:
Macau law does not prevent the awarding authority from collecting market information prior to the decision to start contract award procedures, it being prudent to collect as much information as it deems necessary to organise the tender and protect the public interest in the best possible manner.
The collection of market information may be relevant to assess the type of contract procedure to be followed by the awarding authority.
The MAPC provides four general procedures for soliciting proposals from potential contractors, which are applicable with minor adaptations to the different types of contracts executed by the government. According to the MAPC, except where a special regime establishes differently, the government can only solicit proposals (i) by public tender, (ii) by limited public tender by prior qualification, (iii) by limited public tender without prior qualification, or (iv) by direct negotiation (ajuste directo):
The procedure to contract by public tender comprises the following steps:
Limited public tender by prior qualification
The procedure to contract by limited public tender by prior qualification is regulated by the same rules as the public tender, with the particularity that only bidders who were pre-selected by the government based on the verification of certain requirements and conditions (technical, professional, economical and financial) can submit a proposal. After such initial verification, the government must select a minimum of three bidders and invite them to submit their proposals. The contract is awarded to the bidder who submits the proposal with the lowest price.
Limited public tender without prior qualification
A limited public tender without prior qualification procedure is regulated by the same rules as the public tender, with the particularity that only the bidders invited by the government can participate in the tender and submit proposals. The government must invite a minimum of three bidders to participate in the tender. The tender announcement is substituted by an invitation sent to the selected bidders with all the information required by law, including the deadline for the submission of proposals and the criteria for the awarding of the contract (ie, the lowest price).
The procedure to contract by direct negotiation can be used by the government when the procedure of public tender is not mandatory or has been (legally) waived. The procedure starts with the prior inquiry of at least three specialised entities with domicile/registered office or representation in Macau, being the prior inquiry waived in the situations expressly mentioned in the law, as per example cases involving internal or external public security. A prior inquiry must be in written form when the amount of expense to be incurred by the government is above MOP15,000 for the acquisition of goods and services or above MOP150,000 for construction works.
Furthermore, the three procedures are differentiated by the eligible bidders: while public tenders are open to all entities that verify the requisites provided for in the law, limited public tenders are restricted either to the entities that verify the special requisites determined by, or to the entities invited by, the administration. As a general principle, the procedure of direct negotiation requires prior consultation of at least three potential contractors.
Each of the aforementioned procedures has minor adjustments in Decree-Law No 74/99/M (applicable to public works contracts), and Decree-Law No 122/84/M and Decree-Law No 63/85/M (applicable to goods and services procurement).
Revision of these minimum value thresholds was recently proposed, as outlined in 5.4 Legislative Amendments under Consideration.
Restrictions on conduct of negotiations
As a general rule, the contract is awarded to the bidder who submits the proposal with the lower price, subject only to the verification by the winning bidder, and by its respective proposal, of all the requirements prescribed in the tender specifications. Furthermore, the draft contract is not subject to negotiation between the parties: the bidder may challenge it only on grounds of discrepancy in respect of the tender programme and tender specifications.
There is, however, no general provision in Macau law preventing the awarding authority from – in consideration of the particulars of the deliverable and/or the existence of various awarding criteria – prescribing in the tender specifications that (some) bidders be called for a negotiation before the award is made.
A final bidding procedure may also take place if the best price is offered by more than one bidder. Any such bidding will take place verbally and in the presence of all such bidders. If none of the bidders improves its price, the awarding authority is entitled to choose one of them at its discretion.
In a public tender for construction works, the awarding authority and the winning bidder may negotiate further certain amendments to the proposal provided that the new agreed solutions are not part of the proposals submitted by another bidder.
Furthermore, the negotiation in the case of a direct negotiation is subject to prior inquiry procedures, as mentioned above.
The situations where the awarding authority may choose between two types of tender are expressly prescribed in the law. The option for a limited tender usually exists when the value of the award exceeds a certain amount (eg, MOP7.5 million for the provision of goods or services), when the services or goods to be provided require special technologies, or when the construction works are complex and shall be performed in special circumstances. In such situations, the option between the public tender or the limited tender is not completely discretionary, as the administration must at all times act in the best manner possible to pursue and protect the public interest.
The waiver of tender (either public or limited) may only be determined by the awarding authority for reasons of public interest and if certain conditions require so, including the protection of public safety, the urgency of the procedure caused by sudden natural catastrophes or the protection of certain intellectual property rights.
In the particular case of the procurement of real estate, it is the Financial Services Bureau that must assess the most adequate procedure (direct negotiation, prior consultation or tender) and submit its proposal to the awarding authority.
As outlined in 5.4 Legislative Amendments under Consideration, the revision of the aforementioned minimum value thresholds has recently been proposed.
The legislation does not impose mandatory deadlines for the publication of procurement procedure-related documents.
The deadlines for the bidders or interested entities to exercise certain rights in the context of tenders are expressly set forth either in the law or in the tender programme.
Pursuant to Decree-Law No 63/85/M, the deadline for the submission of proposals in the context of a tender for the procurement of goods and services shall be between 15 and 180 days, as determined in the tender programme considering the nature and the relevance of the goods or services being procured, counted from the tender announcement.
In respect of a tender for public construction works, Decree-Law No 74/99/M provides the following:
The specific criteria that parties must meet in order to be eligible to participate in the procurement procedures depend on the nature of the contract to be awarded. The specific statutes of certain public contracts prescribe (in more or less detail) some criteria and where the law does not provide or does not detail them, they must be prescribed in the tender documents.
Law No 3/90/M prescribes the general criteria for an entity to be eligible as a concessionaire of public construction works or public services: suitability (ie, appropriateness), technical and financial capacity. It also prescribes that when the concessionaire is a commercial company, it must have its registered office and main management in Macau and its main business must be the activity for which the concession is to be granted.
As a general rule, pursuant to Decree-Law No 74/99/M, only entities registered in the official registration as public works constructors of the works referred to in the tender programme are eligible to participate in procedures for the award of public construction works contracts. Entities not registered may participate if such is permitted by international agreements applicable to Macau on the adjudication of construction works contracts, or when the particulars of the construction works demand so. It also prescribes that the interested party does not owe the Macau Financial Services Bureau any taxes liquidated in the previous five years and that it has no debts vis-à-vis the Social Security Fund.
Please refer to 2.4 Choice/Conditions of a Tender Procedure as to the situations where the awarding authority may organise the procurement procedure in the manner of a limited tender (with or without prior qualification). The existence of a shortlist can be determined on the basis of special qualifications, capacity or experience being required to provide certain goods or services, or to execute certain works, and/or considering the contract to be awarded.
The minimum number of qualified suppliers that must be invited to participate in a contract award procedure (organised in the manner of a limited tender with or without prior qualification) is three.
The procedure to contract by direct negotiation also starts with the prior inquiry of at least three specialised entities.
Without prejudice to the provision of other criteria in the tender programme, the contract for the provision of goods and services must be awarded to the best proposal in terms of price and/or the deadline for the provision of such goods or services.
The contract for the execution of public construction works shall be awarded to the proposal that best guarantees the good technical execution of the project, factoring in the price, the deadline for the execution of the works, the using cost, the profitability or the technical value, etc.
Following the announcement of the opening of the tender, the tender programme and specifications must be disclosed and made public on the website of the awarding authority; the hard copy is made available for public consultation at the awarding authority's premises. The criteria, evaluation methodology and other relevant elements are disclosed altogether in the tender programme and specifications (caderno de encargos).
As referred to in 2.1 Prior Advertisement of Regulated Contract Award Procedures, the tender programme and specifications are disclosed following the publication of the announcement of the tender in the Official Gazette and in local newspapers.
Pursuant to Decree-Law No 63/85/M and Decree-Law No 74/99/M, in the procedures by public tender, following the time limits for submission of proposals, a public act takes place for the opening and acceptance of the proposals, which is processed by the commission designated by the awarding authority and comprises the following:
The interested parties who have not been included in any of the lists can file a claim against the decision of the commission; the commission then has to decide immediately on the merits of the claim.
In a limited public tender by prior qualification, the awarding authority will notify the parties who have met the prior (technical, professional, economical or financial) requisites and invite them to submit their proposals.
In a limited public tender without prior qualification, only the parties invited by the contractor can participate and submit their proposals.
Within 90 days from the opening of the proposals, if the bidders do not receive any contract award communication, they do not need to keep their proposal and have the right to take back the provisory guarantee. If none of the bidders requests the restitution of their provisory guarantee in this period, the period is extended until one of them requests this, up to 180 days. At the end of this period, the awarding authority shall return the provisory guarantee to the non-selected bidders.
The awarding authority will notify the selected bidder to provide the final guarantee. Only after such definitive guarantee is provided by the selected bidder will the authority notify the non-selected bidders of the decision to award the contract.
The selected bidder is legally obliged to enter into the award contract after the awarding decision has been made. However, if the selected bidder does not provide a definitive guarantee in a timely manner, without reasonable cause, the awarding decision will expire and the awarding authority will keep the provisory guarantee.
Pending an administrative appeal against a decision of the tender commission in the context of procurement procedures of either the provision of goods and services or public construction works, the awarding authority cannot issue the awarding decision.
Without prejudice to the possibility of the appellant/interested party requesting the suspension of the awarding decision, as a general rule the submission of a judicial appeal (recurso contencioso) or of an action on administrative contracts (acção sobre contratos administrativos) does not suspend the effects of the awarding decision.
In general terms, the awarding authority’s decisions (eg, not to admit a bidder or to award the contract) may be reviewed, either by the awarding authority in the context of an administrative claim (reclamação), by the immediate superior of the awarding authority in the context of a hierarchical appeal (recurso hierárquico), or by the court in the context of a judicial appeal and, subject to particulars, an action on administrative contracts (acção sobre contratos administrativos) set forth in Article 113 and following the Administrative Litigation Procedure Code (Código de Processo Administrativo Contencioso, or the CPAC).
Paragraph 3 of Article 113 of the CPAC allows the affected entity to start an action on administrative contracts to request both the annulment of a decision taken by the awarding authority during the award procedure (a pre-awarding decision) and the revocation of the contract or compensation for damages, provided that the judgment of those requests is strictly connected or relies substantially on the judgment of the same facts and/or the application of the same legal provisions.
In procurement procedures for the provision of goods or services by tender, the decisions of the tender commission, in the context of the public act for opening and acceptance of proposals, must first be challenged by means of a claim to the commission and, if this is rejected, to the awarding authority.
In a procurement procedure for public construction works, the bidders must challenge the decisions or omissions (eg, the decision not to admit a bidder/proposal) first by means of an administrative claim submitted directly to the awarding authority.
If there is a relevant breach of the procurement legislation, the awarding authority’s decision may be revoked on grounds of its invalidity, including the decision not to admit a certain bidder/proposal or the decision to award the contract.
The entities affected by the awarding authority’s decision (eg, the bidders whose proposal was wrongfully not admitted) may also claim compensation for damages.
An administrative act performed in the context of a contract award procedure (eg, the awarding decision) may be suspended provided that (i) the performance of such act is likely to cause damages of difficult repair to the applicant or its interests, (ii) the suspension does not cause serious damage to the public interest that is pursued with the performance of such act (this does not apply when the damages caused by the immediate performance of the act are disproportionately higher), and (iii) there is strong indication of the illegality of the appeal submitted against the act (Article 120 and following of the CPAC).
Upon being notified of the request for the suspension of the act, the authority shall immediately cease or discontinue its performance, except if, within three days, it acknowledges in writing that the non-immediate performance of the act will cause a significant damage to the public interest, detailing the grounds for such averment.
The performance of the act in breach of the above may entail civil, disciplinary and criminal action to the authority and the individuals involved.
In general terms, the claim and the administrative appeal can be submitted by the entities vested in the interests or the rights affected by the authority’s decision.
The judicial appeal may be submitted by the entities whose interests were damaged by the decision or that have direct, personal and legitimate interest in the success of the appeal, the holders of the right of popular action (direito de acção popular), the public prosecutor and the legal entities in respect of the acts that may affect the rights and interests they must protect.
With the exception of paragraph 3 of Article 113 of the CPAC (explained above), the action on administrative contracts with the purposes of revoking the contract awarded on grounds of the invalidity of a pre-awarding act of the awarding authority may only be challenged by the entities affected by such act if they have successfully challenged the same by judicial appeal first.
There are different time limits to challenge the awarding authority’s decision, depending on the nature of the procurement procedure and the challenging mechanism to be followed.
In general terms, except where the special statutes provide otherwise:
There are some situations where the special statutes provide different time limits:
The law provides time limits for the awarding authority or its superior to decide the claim or the administrative appeal (20 or 30 days, respectively, in procurement procedures for public construction works), after which it is deemed to be rejected (indeferimento tácito).
There are no mandatory deadlines for the court to make a decision on a judicial appeal. The duration of such proceedings varies with multiple factors, such as the complexity of the matter, the number of parties involved, the incidents raised by them and the workload of the judges. However, the judicial appeal of pre-awarding decisions in procurement procedures of public construction works contracts, continuous supply contracts and services contracts for purposes of immediate public benefit are of an urgent nature; they are not suspended during court holidays, and must be decided in seven days after all the other procedural formalities are completed.
There is insufficient publicly available information to provide an accurate figure for the annual number of procurement claims in Macau. However, it is noted that, according to the information announced by the Commission Against Corruption (Commissariado Contra a Corrupção, or CCAC), in 2017, 15 complaints were filed related to the procurement of goods and services. The CCAC annual report for 2019 does not provide detailed information regarding procurement complaints.
The submission of claims or hierarchical appeal is generally not subject to the payment of administrative costs.
A judicial appeal is subject to the payment of court fees of between MOP880 and MOP26,400, as determined by the court depending on the complexity of the matter and the overall processing of the proceedings.
The court fees of an action on administrative contracts vary with the value of the award and/or the damages petitioned (eg, if they accrue to MOP3 million, the applicable court fees are MOP19,400) and any incident, appeal or other action of the parties therewith may be subject to the payment of further fees.
The MAPC prescribes a general right for the administration to unilaterally modify the contents of a public contract, provided that such modification respects the object of the contract and the equilibrium of the obligations of the parties, as well as the right to unilaterally terminate a public contract for reasons of public interest, without prejudice to the contractor’s right to be compensated.
DL 74/99/M allows, within certain limits, the modification of the construction works plans, by the initiative of the awarding authority or the contractors, as well as the contractor’s right to the revision of the contract when the circumstances under which the parties have decided to contract have been changed by virtue of abnormal and unexpected circumstances, resulting in a significant increase in the execution of the works.
Contractors to public contracts of another nature are also vested in such right (to the modification of the contract on grounds of ulterior change of circumstances) by virtue of the general provision of Article 431 of the Macau Civil Code.
Please refer to 2.3 Tender Procedure for the Award of a Contract, on the procurement procedures by direct negotiation, and by limited tender.
Having already lost the court battle to overturn the lapse of its 25-year land concession term in 2018, Polytex Import and Export Company Limited, the Macau-based affiliate of Hong Kong’s Polytec Asset Holdings Limited, saw its final bid at receiving compensation from the Macau government come undone after Macau’s Administrative Court rejected its USD3.1 billion damages claim in April of last year. This decision was within a string of lawsuits filed against the Macau SAR after it decided to declare the lapse of provisional land concessions, and reclaim several plots of land, on grounds of expiry of the concessions. Although Polytex initially filed to appeal against the above-mentioned decision, it was announced later in the year that Polytex was seeking to withdraw the appeal.
The public procurement rules and procedures in Macau at the moment are spread among the different statutes that regulate the different types of contracts that can be entered into with/by Macau public entities. Thus, the government is preparing a bill with the goal of simplifying, updating and enhancing the public procurement legal regime.
The new bill will:
Further to the simplification of the regime, the new bill will also, inter alia:
The goal of the continuing revisions to the public procurement regime is to increase publicity and transparency, and to promote fair competition.
However, as the works for the new bill progress, an amendment to Decree-Law No 122/84/M has recently been proposed, in order to update the existing minimum value thresholds that determine the type of procedures to be used in the public procurement procedures. According to the proposed wording, the following amendments would come into effect: