Introduction

This analysis focuses on some of the most relevant issues in public procurement that have recently been addressed by the Spanish courts with significant practical implications.

The following key topics will be addressed:

• the increasing shift by public authorities towards direct management of public services and how the courts have addressed compliance with the so-called equivalent control requirement when assessing the lawfulness of such changes in management models;
• the application of exclusion grounds, with a special focus on those arising from infringements of antitrust and competition law;
• the economic consequences on contractors when public administrations suspend contract execution;
• the interpretation of how successive contractual amendments should be taken into account and their impact on assessing whether such modifications are substantial, for the purpose of deciding whether or not to launch a new procurement procedure;
• the latest updates to EU procurement thresholds for the 2026-2027 period;
• recent judicial findings regarding legal standing in procedures for granting public domain concessions; and
• a closing reflection on digitalisation and the use of artificial intelligence in procurement procedures.

In-House Entities and Control Over Their Activities

In contrast to earlier periods characterised by the outsourcing of most public services, there is currently a growing inclination towards direct or “in-house” management. Spanish public administrations are increasingly opting for management models favouring in-house resources – ie, entities over which the administration exercises effective control, among other requirements. As a result, the traditional model of indirect management, whereby a private company is selected through a competitive public tender process, is gradually being replaced. This shift creates tension between the administration’s organisational autonomy and the core principles governing public procurement, particularly competition, transparency and equal treatment.

These changes require compliance with a number of conditions established under European Union regulations and further developed by the case law of the Court of Justice of the European Union. Among these, the “equivalent control” requirement is of paramount importance. It means that the contracting authority must exercise control over the in-house resources similar to that exercised over its own departments. Such control may also be exercised jointly with other public entities that are shareholders in the in-house entity, which in practice often complicates the assessment of whether this legal requirement is truly met.

Compliance with this “equivalent control” standard has recently generated significant litigation before Spanish courts, largely driven by private companies that previously provided these services before the shift to direct management. Spanish courts have not always adopted a uniform approach, which has led to the matter being brought before the Supreme Court, which has issued several recent rulings clarifying its position on the configuration of the in-house resources. However, given the highly case-specific nature of these matters, no general doctrine has yet been fully established. Nevertheless, certain key criteria have been identified that public authorities must take into account when opting for direct management.

In light of the above, it is foreseeable that litigation concerning in-house resources will continue to increase, particularly regarding whether the specific requirements (and especially the “equivalent control” test) are met.

Exclusion Grounds and Their Practical Impact

The public procurement system must strictly adhere to the fundamental principle of good administration. Consequently, the framework and enforcement of exclusion grounds play a crucial role in safeguarding the integrity of the system.

From its very preamble, the Spanish Public Sector Contracts Law explicitly links exclusion grounds to anti-corruption measures, as reflected in the list of legally established circumstances under which individuals or entities may be prohibited from contracting with public authorities.

By way of example, exclusion grounds include final convictions for specific offences, sanctions for serious professional misconduct, or failure to comply with tax or social security obligations. This catalogue has been progressively expanded through legislative amendments.

In addition to these traditional grounds, competition law has recently emerged as a critical area giving rise to exclusion from public procurement. There has been a notable increase in decisions by national competition authorities imposing contracting prohibitions as a consequence of anti-competitive conduct.

This administrative power has required clarification by the Supreme Court as to whether the Spanish system – which allows competition authorities to determine both the scope and duration of an exclusion – is compatible with EU regulations and case law.

In this regard, in a recent landmark ruling of 26 January 2026, the Spanish Supreme Court upheld the validity of the current system. The Court confirmed that it is compatible with EU law for a competition authority to determine the scope and duration of an exclusion when sanctioning antitrust violations. Furthermore, where the competition authority does not specify these aspects, the contracting authority itself remains empowered to determine them.

Economic Consequences of the Suspension of Public Contracts

Contractors participating in public tenders must assume that unforeseen circumstances, such as economic crises or market fluctuations, may arise during a contract’s term and affect its economic balance. In addition, other factors may affect the economic rights of contractors, most notably the suspension of contract performance by the contracting authority.

When a suspension originates from a decision by the public authority, the legal framework provides for the contractor’s right to compensation for damages actually incurred during the suspension period. Following the entry into force of Law 9/2017 on Public Sector Contracts, the previous regime was amended and now includes a specific list of compensable items. By limiting the categories of recoverable costs – provided they are duly evidenced and subject to the provisions of the contract documents – the current law has resolved many of the interpretative difficulties that existed under the previous framework.

Despite these clarifications, the suspension of public contracts remains a frequent source of disputes between contractors and contracting authorities, particularly regarding the quantification and evidence of damages incurred as a result of the suspension.

The Supreme Court has recently had the opportunity to further develop its case law on compensation in such cases, mainly in relation to the previous legal regime. In contrast to the current closed system, the Court distinguishes between direct, indirect and general costs. Regarding the latter – costs incurred by the contractor regardless of specific projects – the Court has clarified that contractors must use all available means of proof to demonstrate both the existence and extent of such damages. Where evidence is not conclusive, courts may employ indirect methods, such as applying specific percentages to the material execution budget in works contracts.

In any event, disputes concerning compensation for contract suspension are likely to persist in the future even under the new legal framework, particularly regarding the determination and quantification of general costs, given the highly case-specific nature of such assessments.

Legal Framework Governing Successive Amendments to Public Contract

One of the key issues in the field of public procurement is the amendment of contracts and its consequences, particularly in light of its substantial financial implications.

In this regard, it is important to note that the Spanish Supreme Court, in a judgment dated 5 February 2026, has ruled on the treatment to be given to successive contractual amendments and, in particular, the manner in which they should be assessed for the purposes of determining their substantial nature in accordance with Article 72 of Directive 2014/24/EU.

It is important to highlight the content of this ruling, insofar as the issue before the Court was limited to determining whether, where several amendments to a contract occur, each one should be assessed individually for the purpose of determining whether or not the specified thresholds are exceeded, or, conversely, whether a joint assessment should be carried out by aggregating their values in order to verify whether the thresholds set out in Article 72 of Directive 2014/24/EU are exceeded.

More specifically, Article 72 of the Directive distinguishes between two types of contractual modifications:

• those justified by one of the specified grounds provided for in the Directive, including those set out in the procurement documents, those arising from unforeseen circumstances that could not have been predicted, or those involving the replacement of the designated contractor, provided that certain requirements are met (Article 72.1 of Directive 2014/24/EU); and
• those of a quantitative nature, which allow the contract to be amended without the need to justify a specific cause, provided that certain percentage thresholds are not exceeded: 15% of the initial value of the works contract (or 10% in the case of services and supplies) (Article 72.2 of Directive 2014/24/EU). 

The issue before the court was limited to determining the legal consequences of a situation in which several modifications, taken individually, do not exceed those thresholds.

The Supreme Court, in application of that provision, holds that the values of such modifications must be calculated on a cumulative basis. Accordingly, if, taken together, they exceed the thresholds set out in Article 72.2 of Directive 2014/24/EU, the provision can no longer be applied for the modification of the contract to take effect.

If these thresholds are exceeded, the modifications may only be considered lawful if they fall within one of the other grounds set out in Article 72 of Directive 2014/14/EU. Otherwise, they must be classified as substantial amendments. As the Supreme Court points out, such an interpretation is consistent with the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency set out in the Directive itself.

This ruling has clear implications for the future regarding how successive amendments to public contracts should be assessed for the purposes of applying Article 72 of Directive 2014/14/EU, particularly in order to determine whether an amendment is substantial and, if so, whether a new procurement procedure must be initiated.

Update of Public Procurement Thresholds

The Spanish public procurement system, in line with EU Directives, is based on the concept of so-called EU thresholds. Exceeding these thresholds determines whether a contract is subject to harmonised regulation, which in turn affects the applicable legal regime, including procurement procedures, contract awards or the mandatory publication in the Official Journal of the European Union.

The actual Spanish Public Sector Contracts Law provides that the thresholds established by the European Commission automatically replace those set out in the law, and that appropriate measures must be taken to ensure their publication.

Accordingly, at the end of 2025, Order HAC/1517/2025 of 18 December was published in the Spanish Official Gazette, setting out the applicable thresholds for public procurement as from 1 January 2026. These updates are of significant practical importance for both contractors and public authorities, as they define the procedural requirements for each specific contract. These thresholds apply for the period from 1 January 2026 to 31 December 2027 and introduce a slight reduction compared to those applicable in the previous 2024-2025 period.

The amendment not only affects Law 9/2017 on Public Sector Contracts but also extends to Royal Decree-Law 3/2020 (applicable to specific sectors such as water, energy, transport and postal services) as well as to Law 24/2011, which contains specific regulations governing contracts in the fields of defence and security.

Legal Standing of Non-bidding Third Parties in Public-Domain Concession Procedures

The Supreme Court has recently established doctrine recognising, as a general rule, the possibility for third parties who did not participate in a procedure for the award of a public domain concession to challenge the call for tenders or specific acts within that procedure.

According to the criteria set by the Supreme Court, it must be assessed on a case-by-case basis whether the claimant has a legitimate right or interest that could be affected by the outcome of the procedure. This ruling clarifies the access to judicial review for entities that, despite not being bidders, may see their legal sphere impacted by the administration’s concessionary activity.

Challenges Regarding the Digitalisation and Automation of Procurement Procedures

In a constantly changing world marked by technological progress, public procurement cannot (and should not) remain unaffected. Mechanisms are therefore being developed to automate certain stages of public procurement procedures through digital tools, including the use of generative artificial intelligence and specifically designed software. Such developments undoubtedly offer significant advantages, including reduced processing times and greater procedural uniformity.

However, the use of these tools must comply with the fundamental principles governing public procurement, particularly transparency and equal treatment.

Beyond the automation of certain procedural aspects, it is essential to ensure that the evaluation of award criteria remains under the control of the Administration. While artificial intelligence may be used to optimise procedures, it must not influence the decision-making process of the contracting authority. Such decisions must ultimately be subject to judicial review by the Courts of Justice.