The procurement of government contracts in 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 “Government Contracts Code”);
• Royal Decree 1098/2001 of 12 October, on General Regulations on Public Procurement Law;
• Royal Decree 814/2015 of 11 September, on approval of the Regulation of the special proceedings for review of administrative decisions on public procurement;
• Royal Decree 817/2009 of 8 May, on partial regulatory implementation of the Government Contracts Code (RD 817/2009); and
• Royal Decree 3/2020 of 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 of 13 April, on public contracts in Navarra.
• Region of Madrid: Decree 49/2003 of 3 April, on approval of the general regulation of public procurement in Madrid; and
• Basque Country: Decree 116/2016 of 27 July, on the legal regime of public procurement in the Basque Country.

Spanish public sector entities subject to public procurement regulation include:

• the central state administration, administrations of autonomous communities and the autonomous cities of Ceuta and Melilla, as well as local administrations;
• entities managing and providing social security services;
• autonomous bodies, public universities and 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, subject to meeting certain requirements;
• mutual insurance companies that collaborate with the social security system;
• public business entities and public companies, under certain conditions;
• funds without legal personality;
• any entities with their own legal personality that have been created specifically to meet general interest needs;
• 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 meet general interest needs, as well as 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 Procurement Vocabulary established by 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 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 originating from states outside the European Union and not party to the Agreement on Government Procurement of the World Trade Organization (GPA), Article 68 of the Government Contracts Code requires that said bidders must provide evidence that their country of origin allows Spanish companies to participate in public tenders. This proof typically comes in the form of a report issued by the Spanish Economic and Commercial Office in the bidder’s home country, ensuring reciprocity in public tender participation for Spanish companies in that country.

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.

To ensure responsible stewardship of public funds, awarding authorities must conduct procurements with open access, transparent procedures, and non-discriminatory treatment for all qualified bidders.  This commitment extends to efficient resource management. Awarding authorities operate within a framework emphasising objectivity and transparency in administrative activities. The programming and execution of public sector economic and financial activities are strategically designed to achieve specific objectives, effectively manage outcomes, and contribute to the continuous improvement of procedures, services, and public benefits – all in accordance with government spending policies and available resources.

Prior advertisement of regulated contract award procedures is regulated by the Government Contracts Code (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 Government Contracts Code, 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 Government Contracts Code 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 Government Contracts Code, 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 with specific characteristics (eg, establishing social care placements).

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.

The Government Contracts Code allows for direct contract awards, also known as “minor contracts”, for contracts not subject to harmonised regulation and that are under the following thresholds:

• EUR40,000 for works contracts, work concessions, and service concessions; or
• EUR15,000 for service and supply contracts.

These awards can be made directly to any contractor with the necessary technical and professional capabilities.

According to Article 138 of the Government Contracts Code, six days before the end of the period set for the submission of bids, the contracting authorities are required to provide 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 Government Contracts Code, 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 the date of publication of the tender notice by the Publications Office of the EU.

In general terms, Article 65(1) of the Government Contracts Code 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 by the contractor.

Under the restricted procedure, it is possible to limit participation in public tenders to a small number of qualified suppliers. In accordance with Article 162(1) and (3) of the Government Contracts Code, 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 Government Contracts Code, 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 Government Contracts Code. 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 Government Contracts Code, 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.

Bidders may be excluded from award procedures by the awarding authority in the event of non-compliance with technical specifications.

Bidders may also be excluded from tenders if they have been prohibited from contracting with the public sector (in the terms set forth in Article 72 of the Government Contracts Code), if:

• the contracting authority finds strong indications of collusive behaviour (Article 150 of the Government Contracts Code);
• during the course of the award procedure, the composition of a bidding joint venture changes (Article 69 (8) of the Government Contracts Code); or
• a bid is submitted after the deadline.

Bids that are considered abnormally low may be excluded, but only after the procedure set forth in Article 149 of the Government Contracts Code is followed. This procedure aims to verify if the bid presumed abnormally low may render the contract unenforceable.

Article 150 of the Government Contracts Code establishes that the contracting 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 Government Contracts Code, 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 Government Contracts Code, the disclosure shall take place within 15 days of the contract being awarded.

According to Article 151(2)(a) of the Government Contracts Code, the award publicity and notice must include a summary statement of the reasons why certain 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 Government Contracts Code, 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.

There is no obligation to ensure that bidders are heard before the decision is taken in the context of the contract award procedure.

In accordance with Article 153(3) of the Government Contracts Code, 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, but it cannot exceed 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, 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 has the standing to challenge the awarding authority’s decisions. In particular, trade 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 1,689 public procurement claims in 2023. In the case of the Andalucía Public Procurement Court, there was a total of 641; and, in Madrid, there was a total of 450.

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.

Government contracts terminate either upon their fulfilment or upon their early termination (Article 209 of the Government Contracts Code). Article 211 of the Government Contracts Code sets forth the general grounds for early termination of government contracts, which include:

• death or extinction of the legal personality of the contractor;
• insolvency;
• mutual agreement between the awarding authority and the contractor;
• delay in the payment of the awarding authority;
• non-compliance with essential obligations under the contract;
• the impossibility of performing the contract under the terms initially agreed; and
• failure by the contractor to pay wages to workers during the performance of the contract, or non-compliance with the conditions established in the Collective Bargaining Agreements in force for these workers.

Additionally, the Government Contracts Code sets forth specific grounds for early termination of contracts applicable to each type of contract.

Per Article 190 of the Government Contracts Code, the awarding authority has the prerogative to interpret government contracts, resolve any doubts regarding their performance, modify them for reasons of public interest, declare the liability attributable to the contractor as a result of the performance of them, suspend their performance, agree to their early termination and determine the effects of said termination.

Likewise, the awarding authority has the power to inspect the activities carried out by the contractors during the performance of the contract, under the terms and within the limits established in the Government Contracts Code for each type of contract.

When implementing these prerogatives, the contractor shall be granted the chance to be heard.

The opinion of the Council of State or equivalent advisory body of the respective Region shall be mandatory in the following cases:

• the interpretation, nullity and termination of contracts, when opposition is formulated by the contractor;
• amendments to contracts when they are not provided for in the specific administrative clauses and their amount, individually or jointly, is greater than 20% of the initial contract price, excluding VAT, and their price is equal to or greater than EUR6,000,000; or
• liability claims to the awarding authority, in specific cases.

In addition, specifically regarding government concession works contracts, per Article 261 of the Government Contracts Code, the awarding authority may also decide on the restoration of the economic balance of the concessions, on the imposition of penalties on the concessionaires in cases of non-compliance and on the assumption of the operation of the works in the event of seizure or intervention of the concessions. The awarding authority may also exercise the functions of policing the use and operation of the works under the terms established in the specific sectoral legislation and temporarily impose the conditions of use of the works that are necessary to resolve exceptional situations of general interest, paying the appropriate compensation.

In 2023 there have been two important rulings by the Spanish Supreme Court concerning public procurements, specifically on the right of contractors to the restoration of the economic balance of concession contracts.

The Supreme Court’s Ruling 1452/2023 of 16 November 2023 addresses the right to the restoration of the economic balance of a government service concession contract. The Supreme Court rules that any contractor, when submitting its bid, includes, in addition to the costs of the service, an expected profit margin, which can vary significantly based on various circumstances encountered during the contract period. This variability in profit, whether it is a gain, a break-even situation, or even a loss, is recognised as an inherent risk borne by the contractor.

However, the Supreme Court clarified that this risk does not extend to unilateral changes made by the awarding authority that significantly alter the relevant aspects of the contract that directly impact the economic results of the service provision. The ruling emphasises that the awarding authority cannot arbitrarily modify the contract, even if the contractor has not demonstrably incurred losses yet.

The Supreme Court’s Ruling 912/2023 of 4 July 2023 also addresses the restoration of the economic balance of a concession, in this case as a consequence of a legal change in land tax on highways in the Region of Navarra during the execution of the contract. The Supreme Court ruled that the imposition of property tax on the concessionaire, a change occurring after the contract’s commencement, did not automatically constitute a breach of the contract’s economic balance. On the contrary, this situation was deemed part of the contractor’s risk, and the Supreme Court did not recognise any resulting right to compensation for the contractor.

The Official Journal of the European Union of 16 November 2023 published European Commission Delegated Regulations 2023/2497, 2023/2495 and 2023/2496, which amend Directives 2014/23, 2014/24 and 2014/25, respectively, adjusting the thresholds for several type of contracts (EUR5,538,000 for works contracts and works and services concession contracts, EUR221,000 for service and supply contracts, and EUR143,000 for contracts to be awarded by the General State Administration), which would be applicable as from 1 January 2024.

In Spain, these thresholds have been incorporated through Order 1352/2023 of 15 December 2023, which modified the Government Contracts Code, in particular Articles 20(1), 21(1), 22(1), 23(1) and 318, in order to update the aforementioned thresholds for contracts subject to harmonised regulation.