Public Procurement & Government Contracts 2023 Comparisons

Last Updated April 14, 2023

Contributed By Eversheds Sutherland

Law and Practice

Authors



Eversheds Sutherland has a public law department in Spain that was launched by the arrival of Alberto Dorrego and Andrés Jimenéz and their team in 2012. Bringing with them over 20 years of experience working in the Spanish Parliament advising legislative committees, drafting legislation, representing the parliament in court and serving in relevant governmental posts, Alberto and Andrés have also taught administrative law at Spanish universities. At Eversheds, their team specialises in Spanish public law (administrative and constitutional law, public policy and regulated sectors). Its main practice areas are infrastructure, public services, concessions, PPP and public procurement. It has additional expertise in the areas of pharmaceutical, healthcare, transport and water. As well as its work throughout Spain, the team has advised clients on international expansion in infrastructure and public services operations, concessions and public tenders in Latin America, mainly in Peru and Chile.

The procurement of government contracts in the Spain is regulated by the following legislation:

  • Law 9/2017, of 8 November, on Public Procurement Law, which transposes into the national law the Directives of the European Parliament and of the Council No 2014/23/EU and No 2014/24/EU, dated 26 February 2014 (the “Spanish Act on Public Procurement”);
  • Royal Decree 1098/2001, of 12 October, on General Regulations on Public Procurement Law;
  • Royal Decree 814/2015 dated 11 September, on approval of the Regulation of the special proceedings for review of administrative decisions on public procurement;
  • Royal Decree 817/2009 dated 8 May, on partial regulatory implementation of the General Act on Public Procurement (RD 817/2009); and
  • Royal Decree 3/2020 dated 4 February 2020, on urgent measures to transpose into Spanish law several European Union directives in the areas of public procurement in certain sectors; private insurance; pension plans and funds; taxation and tax litigation.

Also, some Spanish regions have enacted their own legislation:

  • Navarra: Act 2/2018, dated 13 April, on public contracts in Navarra.
  • Region of Madrid: Decree 49/2003, dated 3 April, on approval of the general regulation of public procurement in Madrid; and
  • Basque Country: Decree 116/2016, dated 27 July on legal regime of the public procurement in the Basque Country.

Spanish public sector entities subject to public procurement regulation include, in particular:

  • central state administration, the administrations of the autonomous communities and the autonomous cities of Ceuta and Melilla, as well as local administration;
  • the management entities and the common services of the social security;
  • the autonomous bodies, the public universities and the independent administrative authorities;
  • the consortia with their own legal personality referred to in Law 40/2015, of 1 October, on the Legal Regime of the Public Sector, and local legislation, as well as the consortia regulated by customs legislation;
  • public foundations, when following certain requirements;
  • mutual insurance companies collaborating with the social security;
  • public business entities and public companies, under certain conditions;
  • funds without legal personality;
  • any entities with their own legal personality, which have been created specifically to satisfy needs of the general interest;
  • associations constituted by the entities mentioned above; and
  • provincial councils and general meetings of the historical territories of the Basque Country.

Certain articles of the public procurement regulations may apply to other entities that are considered to be contracting authorities (for example, entities with their own legal personality other than those expressed above that have been created specifically to satisfy needs of the general interest, and political parties).

The contracts that are subject to public procurement regulation are any onerous contracts (in which the contractor obtains any kind of economic benefit, either directly or indirectly), whatever their legal nature, concluded by the entities referred to in 1.2 Entities Subject to Procurement Regulation. In this regard, the Common Vocabulary of Public Procurement: according to Regulation (EC) No 2195/2002 of the European Parliament and of the Council of 5 November 2002 on the Common Procurement Vocabulary (CPV) provides for the classification of contracts subject to the public procurement regulation.

The procedure for awarding contracts is open to any Spanish company and to non-Spanish companies from member states of the European Union or signatory states of the Agreement on the European Economic Area, provided that they meet the requirements of full capacity to act, are not subject to any prohibition to contract, and can prove their economic and financial and technical or professional solvency or, in those cases required by law, are duly classified.

Regarding the participation in public tenders of companies coming from states not belonging to the European Union, nor signatory states of the Agreement on Government Procurement of the World Trade Organization (GPA), Article 68 of the Spanish Act on Public Procurement requires that said bidders must justify that their state of origin admits in turn the participation of Spanish companies. This justification must be carried out by means of a report issued by the Spanish Economic and Commercial Office of the country of origin of the potential bidder, the reciprocity in the treatment of Spanish companies in said country’s public tenders thus accredited.

On the other hand, Article 70 of Royal Decree-Law 3/2020 establishes yet another limit to participation in public tenders. Said Article applies to supply contracts that include products originating in third countries with which the European Union has not concluded, in a multilateral or bilateral framework, an agreement ensuring comparable and effective access for Union undertakings to the markets of such third countries. In these cases, the contracting authority may reject any tender submitted for the award of a supply contract, when the share of products originating in third countries exceeds 50% of the total value of the products making up this tender.

The legislation applies to natural or legal persons that have full capacity to act, are not subject to any prohibition to contract and can prove their economic, financial and technical or professional solvency or are properly classified in the cases in which the law so requires. Natural or legal persons located in the EU or in states that are signatories to the Agreement on the European Economic Area have the capacity to contract with the public sector, as long as they are able to perform fulfilment of the contract according to the legislation of the state in which they are established. When the legislation of the state in which these companies are established requires a special authorisation or membership of a certain organisation, they must prove that they meet this requirement.

As established above, non-European natural or legal persons must additionally demonstrate that their country of origin also admits the participation of Spanish companies in contracting with their public sector entities in an analogous manner.

Prior advertisement of regulated contract award procedures is regulated by the Spanish Act on Public Procurement. (See the Official State Gazette Agency website.) The type of information to be disclosed in the advertisement varies depending on the type of public contract, but must generally include:

  • the name, identification number, address, NUTS code, telephone and fax number, and website of the contracting authority;
  • the type of contracting authority and main activity exercised; the CPV codes (Common Procurement Vocabulary);
  • the internet address of the “contractor profile” (URL); and
  • the date of dispatch of the announcement regarding the publication of a prior information announcement in the contractor profile.

According to Article 115(1) of the Spanish Act on Public Procurement, the contracting authorities may carry out market studies and inquire directly with economic operators in order to prepare the tender correctly. The contracting authority may seek the advice of third parties, such as independent experts or authorities, professional associations or, exceptionally, economic operators active in the market.

The Spanish Act on Public Procurement provides for five main types of procedures:

  • open procedures, in which any interested natural or legal person may submit a proposal, excluding any negotiation of the terms of the contract with the bidders;
  • restricted procedures, in which any interested company may apply for participation in response to a call for bids;
  • negotiated procedures, which can only be used under certain conditions;
  • competitive dialogues, whereby a special competitive dialogue table directs a dialogue with selected candidates, upon their request, in order to develop one or more solutions, which will serve as a basis for the elected candidates to present an offer; and
  • partnerships for innovation, the purpose of which is the development of innovative products, services or works and their subsequent purchase.

Negotiations are permitted, and the specific administrative clauses of the particular contract will determine the economic and technical aspects that are subject to negotiation. According to Article 167 of the Spanish Act on Public Procurement, negotiations can only be conducted for works, supplies, services, works concession and service concession contracts when one of the following situations occurs:

  • when it is essential that the provision is subject to previous design or adaptation work from the bidders;
  • when the service object of the contract includes an innovative project or solution;
  • when the contract cannot be awarded without prior negotiations due to the nature, complexity or legal or financial configuration of the contract;
  • when the contracting authority cannot establish with enough precision the technical specifications of the contract;
  • when, in open or restricted procedures, only irregular or unacceptable offers have been presented; and/or
  • in the case of certain social service contracts that have characteristics such as the establishment of the person in the social care environment.

The awarding authority will choose the tender procedure depending on various aspects, such as the purpose of the contract, its price and the potential bidders.

According to Article 138 of the Spanish Act on Public Procurement, six days before the end of the period set for the submission of bids the contracting authorities shall provide the additional information on the bidding documents, as well as other complementary documentation requested of them provided that such information has been requested at least twelve days before the end of the deadline for the submission of proposals or requests to participate, unless a different deadline was established in the tender documents governing the tender.

According to Article 156 of the Spanish Act on Public Procurement, the deadlines for the submission of bids are as follows:

  • in open procedures, for the award of contracts subject to harmonised regulation, at least 35 days for works, supplies and services contracts, and at least 30 days for works and services concessions; and
  • for contracts not subject to harmonised regulation, at least 15 days, or at least 26 days in works contracts, as well as in works and services concessions.

All the above deadlines are counted from the day following that of publication of the tender notice by the Publications Office of the EU.

In general terms, Article 65(1) of the Spanish Act on Public Procurement establishes that the only entities that can contract with the public sector are natural or legal persons, Spanish or foreign, that have full capacity to act, are not subject to any public procurement prohibition, and can prove their economic/financial and technical/professional solvency or, where required by law, are duly classified. When the applicable regulations require the contractor to meet certain requirements relating to its organisation, destination of its profits, financing system or others in order to be able to participate in the corresponding award procedure, these must be duly accredited to the contractor.

Under the restricted procedure, it is possible to limit the participation in public tenders to only a small number of qualified suppliers. In accordance with Article 162(1) and (3) of the Spanish Act on Public Procurement, the contracting authority must have previously established the objective criteria of solvency according to which the candidates that will be invited to submit offers will be chosen.

The tender notice will include the objective and non-dis­criminatory criteria or standards by which candidates will be selected, as well as the minimum and maximum number of those invited to bid. According to Article 162(2) of the Spanish Act on Public Procurement, a minimum of five bidders must be invited to participate in the tender. If the number of candidates meeting the established criteria is lower than this minimum number, the contracting authority may continue the procedure with those that meet the conditions.

The criteria for evaluation and award of contracts are established under Article 145 of the Spanish Act on Public Procurement. Nevertheless, the awarding of the contract will generally depend on a plurality of criteria based, in general, on the best price-quality ratio. This quality-price evaluation of the offer will be carried out according to economic and qualitative criteria. Among the qualitative criteria, the contracting authority may include environmental and social aspects detailed in Article 145(2) of the Spanish Act on Public Procurement, provided that they are linked to the purpose of the contract.

In addition, the award criteria shall be set out in the tender specifications or in the descriptive document and must be included in the notice serving as a call for tender. It is possible that the contracting authority may introduce improvements as an award criterion, which means additional services provided by the contractor in addition to those included in the bidding documents.

Article 150 of the Spanish Act on Public Procurement establishes that the contacting authority shall classify, in descending order, the offers submitted by the bidders. In order to carry out the said classification, the award criteria indicated in the tender specifications will be taken into account, and as many technical reports as deemed pertinent may be requested for this purpose. When the only criterion to be considered is price, it shall be understood that the best offer is the one that incorporates the lowest price. Generally, these “technical” reports are published in the contracting authority web profile. If they are not published, bidders can request access to them.

Additionally, and according to Article 151 of the Spanish Act on Public Procurement, notice and publicity of the award must contain the information that would be necessary in order for those interested in the award procedure to file a sufficiently well-founded appeal against the awarding decision. In accordance with Article 151(1) of the Spanish Act on Public Procurement, the disclosure shall take place within 15 days of the contract being awarded.

According to Article 151(2)(a) of the Spanish Act on Public Procurement, the award publicity and notice must include a summary statement of the reasons why discarded candidates have been rejected in order to allow interested parties in the award procedure to lodge a sufficiently well-founded appeal against the award decision. The notification shall be made by electronic means within 15 days following the award of the contract.

According to Article 151(1) of the Spanish Act on Public Procurement, the awarding decision must be reasoned, and the candidates and tenderers must be duly notified. The decision must be published in the contractor profile within 15 days.

In accordance with Article 153(3) of the Spanish Act on Public Procurement, the formalisation of the contract is generally carried out within 15 days of the notification of the award of the contract for its signature. However, if the contract is subject to a special appeal for procurement, the formalisation may not take place until 15 business days after the notification of the award has been sent to the bidders and candidates. Autonomous communities may increase this period, without exceeding one month.

There are two bodies responsible for the review of the awarding authority’s decisions: the Spanish procurement courts or regional procurement courts (of a non-jurisdictional nature); or the Spanish courts (of a jurisdictional nature).

The regional procurement courts of the different Spanish Regions are the responsible bodies for review of the awarding authority’s decisions within their territory. In the case of contracts concluded by the Central State Administration, and in cases where there is no specific regional procurement court, the competent body will be the Central Spanish Public Procurement Court. This is the case for La Rioja Region, Castilla-La Mancha Region, the Region of Murcia, the Region of Cantabria, Balearic Islands Region, Comunitat Valenciana Region, Principado de Asturias Region, Galicia Region, and Ceuta and Melilla.

Decisions issued by the Spanish procurement courts or regional procurement courts may be appealed to the court with contentious-administrative jurisdiction.

Special procurement appeals may be submitted before the Spanish procurement courts or regional procurement courts. The main actions that may be the subject of such appeals are tender notices, contract specifications and other contractual documents, other procedural acts, award agreements and modifications of contracts (where the modification in question should have been the subject of a new award), among others. The above-mentioned actions are not subject to ordinary administrative appeal.

Some particular cases (actions carried out by contracting authorities that do not have the status of Public Administrations) will be challenged administratively in accordance with the provisions of Law 39/2015, of 1 October, on the Common Administrative Procedure of the Public Administrations.

Interim measures may be sought prior to the submission of special appeals, and their adoption may be requested by persons entitled to do so before the competent body to resolve the appeal. Such measures shall be aimed at correcting procedural infractions or preventing further damage to the affected interests. They also include measures intended to suspend the procedure for awarding the contract or its execution. Additionally, in cases where the adoption of interim measures may result in damages of any kind, the resolution may impose the creation of a sufficient bond or guarantee to respond to them.

Any natural or legal person whose legitimate interests have been or are likely to be affected directly or indirectly by the decisions in an appeal have the standing to challenge the awarding authority’s decisions. In particular, trades unions are entitled to challenge the awarding decisions when labour rights of workers may be threatened.

Awarding authority’s decisions may be challenged within 15 business days. The date on which this period shall begin depends on the subject matter, as follows:

  • in the case of the tender notice, from the day following its publication in the contractor’s profile;
  • in the case of the tender specifications and other contractual documents, from the day following the publication of the tender notice in the contractor’s profile;
  • in the case of other procedural acts, from the day following knowledge about them; and
  • in the case of the award decision, from the day following its notification to the bidders.

According to regulations and case study analysis, the typi­cal length of proceedings relating to a procurement claim is around 25 days. The notice of appeal must be given within 15 days, following which the corresponding public procurement court grants a three-day period to remedy procedural defects. After this, other interested parties are entitled to submit allegations within five days. The Spanish Public Procurement Court may then make its decision within five days.

The number of procurement claims considered by the procurement courts depends on each public procurement court. Hence, in the case of the Central Spanish Public Procurement Court, there was a total of 1,667 public procurement claims in 2022. In the case of the Andalucía Public Procurement Court, there was a total number of 639; and, in Madrid, there was a total number of 482.

There are no costs involved in challenging an awarding authority’s decision. The proceedings relating to a procurement claim before a public procurement court are free of charge. However, if the public procurement court considers that the complainant has acted in bad faith, a penalty of between EUR1,000 and EUR30,000 may be imposed.

According to the assumption of invariability of public procurement, modification of contracts after their award is only permitted in the public interest and in the following circumstances:

  • when modification is provided for in the general administrative terms and conditions applicable to the contract;
  • when the contract requires additional works and services;
  • in unforeseen circumstances; and
  • in the case of non-substantial modifications, defined as:
    1. change of competitive conditions in the bid submission process;
    2. when the modification could affect the economic equilibrium of the public service contract in question; or
    3. when the modification affects more than 15% of the contract value, or the new works and services fall under another contract’s scope.

In other circumstances, a termination of the contract and a consequent new bidding procedure may take place.

Contracts not subject to harmonised regulation under EUR40,000 (works contracts, work concessions and service concessions) and EUR15,000 (service and supply contracts) may be directly awarded to any contractor with the corresponding technical and professional capabilities. Under the Spanish Act on Public Procurement, these types of “direct” contracts are known as “minor contracts”.

One of the most important decisions of the last year by the Spanish Courts in relation to Spanish public procurement is the National Court’s Ruling 4711/2022, dated 10 October 2022. The social and economic context of the legal controversy which the judgment resolves is preceded by the exorbitant increase in prices due to the economic inflation occurring in the second half of 2021 and which has been aggravated following the invasion of Ukraine in March 2022.

Given this price inflationary context, public contracts subject to the Spanish Act on Public Procurement have been clearly affected, specifically the contractual positioning of the awardee, who clearly could not have foreseen this situation at the time of the formalisation of the contract with the Administration.

Faced with this situation, as an exceptional measure, an exceptional price review regime was established, introduced by Royal Decree-Law 3/2022, which qualified this exceptional situation as an “unforeseeable risk” that overrides the risk assumption principle to which any contractor is subject in the execution of a public contract. This “risk assumption” principle of the contractor can be defined as the principle by which the contractor assumes the risks to which it is exposed in the performance of a contract and which have repercussions on the economic benefit it expects to obtain.

For this reason, price inflation in public contracts is a clear economic detriment to contractors, making it necessary for them to modify the contract in terms of price. Article 205(2)(b) of the Spanish Act on Public Procurement regulates the contractual modifications not foreseen in the tender specifications and establishes that when the need for modification of a contract arises from supervening circumstances impossible to foresee at the time of the formalisation of the contract, the following requirements must be met:

  • that the need for the amendment arises from circumstances that a diligent Administration would not have been able to foresee;
  • that the amendment does not alter the overall nature of the contract; and
  • that the amendment of the contract implies an alteration in its amount that does not exceed, alone or jointly with other modifications, 50% of its initial price, VAT excluded.

The Judgment of the National Court No 4711/2022 of 10 October resolves similarly, determining the possible application of Article 205(2)(b) of the Spanish Act on Public Procurement in a case of alteration of the contract price. In this case one of the contractor companies requested the reduction of the unit price for one of the lots of the contract due to supervening circumstances impossible to foresee at the time of the formalisation of the contract, and the National Court admitted the amendment (downward) of the unit prices of the contract due to circumstances impossible to foresee based on reasons of public interest and efficient use of public funds.

In 2023, the General State Budget Act has amended Article 150(1) of the Spanish Act on Public Procurement, in order to include a proceeding in case of indications of collusive practices. For the first time, the Spanish Act on Public Procurement regulates the procedure to be followed in the event that the contracting authority appreciates well-founded indications of collusive behaviour in the context of a bidding procedure.

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Law and Practice in Spain

Authors



Eversheds Sutherland has a public law department in Spain that was launched by the arrival of Alberto Dorrego and Andrés Jimenéz and their team in 2012. Bringing with them over 20 years of experience working in the Spanish Parliament advising legislative committees, drafting legislation, representing the parliament in court and serving in relevant governmental posts, Alberto and Andrés have also taught administrative law at Spanish universities. At Eversheds, their team specialises in Spanish public law (administrative and constitutional law, public policy and regulated sectors). Its main practice areas are infrastructure, public services, concessions, PPP and public procurement. It has additional expertise in the areas of pharmaceutical, healthcare, transport and water. As well as its work throughout Spain, the team has advised clients on international expansion in infrastructure and public services operations, concessions and public tenders in Latin America, mainly in Peru and Chile.