Public Procurement & Government Contracts 2020

Last Updated April 06, 2020

Portugal

Law and Practice

Authors



VdA is a leading international law firm with more than 40 years of history, and is recognised for its impressive track record and innovative approach in corporate legal services. The firm offers specialised legal services covering several sectors and practice areas, enabling it to handle the increasingly complex challenges faced by clients. VdA offers robust solutions grounded in consistent standards of excellence, ethics and professionalism. Through the VdA Legal Partners network, clients have access to 13 jurisdictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste. The firm is recognised as a leader in the provision of legal services and has successively received the industry’s most prestigious international accolades and awards.

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

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

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

Also relevant is Law 96/2015, of 17 August, which establishes the legal framework for the access and use of electronic platforms for public procurement purposes, as well as Decree-Law 111/2012, of 23 May, amended by Decree-Law 84/2019, of 28 June and Decree-Law 170/2019, of 4 December, which provides for a special legal framework for public-private partnerships (PPPs). For details on Decree-Law 170/2019, please refer to 5.4. Legislative Amendments Under Consideration.

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

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

In Azores, the regional government approved Regional Legislative Decree 27/2015/A, of 29 December, which consolidated the main provisions referring to the award of public contracts in the region and has implemented some provisions of the European Union (EU) directives on public procurement not yet transposed into the national framework.

Finally, reference must be made to the Administrative Procedure Code (“APC”), approved by Decree-Law 4/2015, of 7 January, and to the Administrative Courts Procedure Code (“ACPC”) and the Statute of Administrative and Tax Courts, both amended and republished by Decree-Law 214-G/2015, of 2 October and by Law No 118/2019, of September 2017; all three apply to public procurement procedures in general.

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

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

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

  • the Portuguese state;
  • the autonomous regions;
  • local authorities;
  • municipalities;
  • public institutes;
  • independent administrative authorities;
  • the Central Bank of Portugal;
  • public foundations;
  • public associations; and
  • associations financed, for the most part, by the previous entities, or subject to management supervision of those aforementioned authorities or bodies, or where the major part of the members of its administrative, managerial or supervisory board is, directly or indirectly, appointed by the aforementioned entities.

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

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

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

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

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

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

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

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

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

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

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

  • for provision of services contracts, goods supply or leasing contracts: EUR428,000;
  • for public works contracts: EUR5,350,000; and
  • for service contracts for social and other specific services: EUR1,000,000.

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

The PCC does not establish any restrictions on the opening of contract award procedures. However, the regulated competitive public procurement procedures must be advertised in the national gazette (Diário da República), and also in the Official Journal of the European Union (OJEU) if their value is over the European thresholds. 

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

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

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

Prior Information Notices

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

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

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

Contract Notices

As mentioned in 1.3 Type of Contracts Subject to Procurement Regulation, depending on the value and the scope of the contract, public contract authorities are, as a rule, bound to advertise the awarding procedures: with the exception of the direct award and the prior consultation procedures, all public procurement procedures are required to be advertised in advance in the Diário da República, only, or also in the OJEU.

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

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

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

The PCC provides for the following procurement procedures:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Criteria Based on Contract Value

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See also 2.1 Prior Advertisement of Regulated Contract Award Procedures.

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

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

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

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

  • Negotiated procedure:

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

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

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

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

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

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

Eligibility criteria include:

  • a) insolvency or similar;
  • b) conviction for crimes affecting professional reputation;
  • c) administrative sanctions for a serious professional breach;
  • d) non-payment of tax obligations;
  • e) non-payment of social security obligations;
  • f) sanction of prohibition to participate in public tenders set forth in special legislation;
  • g) sanction for a breach of legal obligations in respect of employees subject to payment of taxes and social security obligations;
  • h) conviction for crimes concerning criminal organisations, corruption, fraud or money laundering, as set out in the PCC;
  • i) direct or indirect participation in the preparation of tender documents, thus obtaining a special advantage;
  • j) unlawful influence on the competent body for the decision to contract, or obtainment of confidential information granting undue advantages, or provision of misleading information;
  • k) conflict of interest; and
  • l) significant faults on the performance of a previous public contract in the past three years.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

However, the referred ten-day period shall not apply where:

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

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

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

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

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

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

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

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

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

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

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

There is not any statistic data regarding this matter for 2018. However, according to statistical data for the past three years (taken from the IT platform where judicial proceedings are conducted), one may conclude that the number of pre-contractual litigation proceedings has increased (274 in 2015; 299 in 2016; and 345 in 2017).

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

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

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

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

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

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

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

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

Several decisions have been taken in relation to public procurement matters, of which the following should be highlighted.

Decision of the Supreme Administrative Court of 11 September (case 0829/18.3BEAVR)

The Supreme Administrative Court considered that the lack of presentation of the European single procurement document (ESPD - Documento Europeu Único de Contratação Pública), which was mandatory but not requested by the tender specifications, does not constitute a cause for the immediate exclusion of the candidate. The court considered that the above-mentioned situation should lead to the candidate being granted the opportunity to subsequently submit the missing document. In this case, the Supreme Administrative Court decided that only an illegality which may determine the invalidity of the procedure may lead to the annulment of the procedure and the subsequent repetition of the said procedure.

Decision of the Central South Administrative Court of 7 November (case 1339/18.4BELSB)

The Administrative Court considered that the use of paper featuring the letterhead of one of the candidates in the procedure documents violates the principles of impartiality, reliability, objectivity, competition, good faith, protection of legitimate expectations, transparency, equal treatment and non-discrimination. It was considered that the use of such paper provides proof by judicial presumption that the candidate has participated directly or indirectly in the draft of the procedure document, which constitutes an impediment.

COVID-19: Exceptional Measures

Given the exceptional period that Portugal is facing due to the COVID-19 pandemic, several measures have been taken by the government in regard to judicial terms, relationship with the administration and public procurement.

The following legislative acts have been approved, among others:

  • Resolution of the Council of Ministers No 10-A/2020, of 13 March; and
  • Decree-Law 10-A/2020, of 13 March;
  • Law No 1-A/2020, of 19 March; and
  • Parliament Resolution No 16/2020, of March 19.

Resolution of the Council of Ministers No 10-A/2020

This Resolution sets forth an increased duty of cooperation by the public contractor, in particular with regard to payment of contractual debts.

Decree-Law 10-A/2020

Decree-Law 10-A/2020 establishes an exceptional public procurement regime for the execution of public works, lease or purchase of goods and services supply contracts by entities in the public administrative sector, public companies and local authorities, provided that they are related to Covid-19.

This exceptional regime allows for the adoption of direct award procedures on the grounds of extreme urgency.

It also allows for the adoption of simplified direct award for the lease or purchase of goods and services supply contracts whose contract value is not above EUR20,000.

It foresees the removal of the obligation to invite more than one entity, even where possible, as set forth in Article 27-A of the CCP, due to the urgency of the procurement, as well as the removal of the limitation of subsequent direct awards to the same entity as was established in Article 113 of the CCP.

It provides for the possibility of advance payments of the contract price, regardless of the legal requirements, whenever the availability of a product or service is at stake.

Prior authorisation is no longer required for the centralised acquisition of goods and services covered by a framework agreement for entities that come within the Public Acquisitions National System.

The above-mentioned contracts may enter into effect even before the prior approval of the Court of Auditors is obtained.

The Decree-Law also provides an exceptional regime for the approval of expenses, including the following measures: tacit approval of the expense authorisation requests within 24 hours, sent by electronic means; tacit approval of pluriannual expenses set forth in the Decree-Law within three days; and tacit approval of de-captivation of funds whenever they are necessary for the accomplishment of the objectives of the Decree-Law within three days.

An exceptional regime is also in place for the administrative authorisation of decisions to contract services for consultancy, expert opinions, studies or projects.

There is also an exceptional regime for the authorisation of the execution of contracts for the acquisition of services by entities, bodies, services, of the Ministry of Health or other institutions, such as the Directorate General for Rehabilitation and Prison Services, the National Institute of Forensic Medicine and Sciences, the Hospital of the Armed Forces, the Military Laboratory of Chemical and Pharmaceutical Products and the Institute of Social Action of the Armed Forces.

The legislator suspended the deadlines for procedures subject to tacit approval pursuant to the law, including environmental impact assessment procedures, and admitted the claim of a "justifiable reason" as a ground for excusable non-compliance with deadlines before the Public Administration (or, at least, as a ground for requesting an extension of the deadline); this has already been accepted by the legislator, albeit subject to documentary proof of such justified reason.

Law No 1-A/2020, of March 19

This Law determines the suspension of the deadlines for procedural acts and applies the court holidays regime. Also, contracts as per Decree-Law 10-A/2020 are exempt from prior auditing of the court of accounts.

Parliament Resolution No 16/2020, of March 19

This Resolution determines the cessation of the validity of Decree-Law 170/2019, of 4 December, which established the tenth amendment to the Public Procurement Code, and the reinstatement of the legal regime applicable before such amendment.

Considering the challenges of the difficult times that are now upon us, it may be that new exceptional measures are enacted regarding public procurement, public expense and public contracts. 

VdA

Rua Dom Luis I, 28
1200-151 Lisboa
Portugal

+351 21 311 3400

+351 21 311 3406

lisboa@vda.pt www.vda.pt
Author Business Card

Trends and Developments


Authors



Miranda & Associados is a renowned Portuguese firm. Its Public Law and Regulatory team has more than 15 lawyers with broad expertise in administrative and constitutional law, regulatory law, public and utilities procurement, government contracts (eg, concession, construction, service and supply contracts) and litigation. The team is able to assist clients during all stages of administrative procedures: preparing and filing applications, negotiating with public entities, assuring compliance with regulatory issues, and administrative and judicial litigation, including amicable conflict resolution. The team is also experienced in analysing constitutional law issues and drafting statutes and regulations for public entities.

The year 2019 was another positive year for Portugal, registering an increase of 2% in economic growth, continuing the trend observed since 2013.

The highest level of public investment since 2010 is expected to be seen in 2020. The Portuguese government has announced that public investment will increase by 22% and that one of these investments’ primary action plans is focused on national infrastructure.

In this regard, it should be noted that Portugal is experiencing a period of political stability, as the current government is on its second mandate and formal agreements with other political forces have been deemed unnecessary, which represents a solid indicator for the promotion of the investments. According to an evaluation by the European Commission, Portugal will have the highest level of public investment in the eurozone.

Among other projected investments are those involving Portuguese railways, hospitals, a new airport and improvements in the port sector.

In this specific context, we should mention that the new airport to be built in Montijo (near Lisbon) has already been given the green light by the Portuguese Environmental Agency. This will allow the respective construction works to begin this year. However, such decision may still be challenged in courts by some municipalities which do not agree with this infrastructure project.

In the port sector, in order to implement the “Strategy to Increase the Competition of the Continent’s Commercial Ports Network – Horizon 2026”, approved by the Resolution of the Council of Ministers No 175/2017, significant investments are planned. Sines terminal needs to be specifically addressed, as various investments shall be carried out here, namely the expansion of the current container terminal and the construction of a new container terminal. The respective public tender was announced in the last quarter of 2019 and it is expected to be awarded in the last quarter of 2020. Upon completion of these two port projects the Port of Sines is expected to become one of the main ports within the Western Mediterranean and around the world in terms of container handling capacity, thereby strengthening the position of Sines within the international maritime context.

In the energy sector, a second public auction is expected to take place in 2020, aimed at allocating capacity to inject electricity generated by photovoltaic solar power plants into the public service grid. Following the success of the first public auction in July 2019, when demand was nine times higher than supply and the auction was closed with an average price of EUR20 per megawatt/hour (MW/h) – the lowest price in Europe, and significantly lower than in the wholesale market –, the government has already announced that a new public auction is being devised for a capacity between 700 and 800MW at the beginning of 2020.

In the first public auction, a total of 1,292 MW of electricity capacity injection rights were allocated, the exploitation of which will not commence until 2022.

A new development of this second public auction is the storage option provided for promoters willing to invest in these projects. This is an important step towards the implementation of the commitment made by Portugal under the Paris Agreement to transition to a carbon neutral economy by 2050.

On a different topic, we should also highlight that the efforts to make public administration less bureaucratic will continue in 2020. Specifically addressing public procurement matters, the effective regulation and implementation of the State Suppliers Portal is expected to be carried out this year. Procedures for qualifying contractors shall be streamlined and electronic billing shall continue to be implemented, as this will be mandatory for big business from 18 April 2020.

Portugal is, thereby, ahead of the modernisation of public administration, taking advantage of technological and digital advances. Of particular significance is the success of a digital key, which allows citizens and professionals to access services through the public administration websites, in a simple and safe way, namely those provided by Social Security, tax  offices, and the National Health Service, among others.

In relation to administrative courts and disputes, two new regulations came into force in 2019 in order to revise administrative and tax procedures (Law No 114/2019, of 12 September 2019 and Law No 118/2019, of 17 September 2019). The laws include important steps towards efficiency and less bureaucratization.

In light of this, courts with specific competence over public procurement and public contract matters in the administrative courts of Lisbon and Porto have been introduced as a means to address the significant increase in public procurement proceedings that are pending resolution. These courts will have extended jurisdiction over their neighboring administrative and tax courts.

This is, indisputably, an important step that we would like to see fulfilled in 2020 and which will largely contribute to a faster resolution of judicial proceedings in the  areas of Lisbon and Porto where public procurement lawsuits have significantly increased.

In terms of administrative arbitration, given its expressive benefits, namely its inherent acceleration of decision-making and the specialisation of the arbitrators, it is desirable that recourse to this form of alternative dispute resolution increases, especially in matters of public procurement.

On this topic, it is important to note that, notwithstanding the fact that the revision of the Public Procurement Code in 2017 fostered the recourse to this form of alternative dispute resolution – expressly establishing a preference for institutionalised arbitration centres – the legislator may have recently compromised this, by allowing the possibility of appeal against arbitral decisions by mere decision of the contracting authority. This recent amendment has caused great controversy among legal professionals as it potentially implies greater delay in the resolution of disputes, jeopardising one of the most relevant benefits of arbitration

Miranda & Associados

Av Engenheiro Duarte Pacheco, 7
1070-100 Lisboa
Portugal

+351 217 814 800

+351 217 814 802

www.mirandalawfirm.com lisboa@mirandalawfirm.com
Author Business Card

Law and Practice

Authors



VdA is a leading international law firm with more than 40 years of history, and is recognised for its impressive track record and innovative approach in corporate legal services. The firm offers specialised legal services covering several sectors and practice areas, enabling it to handle the increasingly complex challenges faced by clients. VdA offers robust solutions grounded in consistent standards of excellence, ethics and professionalism. Through the VdA Legal Partners network, clients have access to 13 jurisdictions, with a broad sectoral coverage in all Portuguese-speaking and several French-speaking African countries, as well as Timor-Leste. The firm is recognised as a leader in the provision of legal services and has successively received the industry’s most prestigious international accolades and awards.

Trends and Development

Authors



Miranda & Associados is a renowned Portuguese firm. Its Public Law and Regulatory team has more than 15 lawyers with broad expertise in administrative and constitutional law, regulatory law, public and utilities procurement, government contracts (eg, concession, construction, service and supply contracts) and litigation. The team is able to assist clients during all stages of administrative procedures: preparing and filing applications, negotiating with public entities, assuring compliance with regulatory issues, and administrative and judicial litigation, including amicable conflict resolution. The team is also experienced in analysing constitutional law issues and drafting statutes and regulations for public entities.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.