My new paper about direct awards in Portugal is out

This happened last week but completely forgot to mention it here. My most recent paper about the use of direct awards (negotiated procedure without notice) in Portugal is out in the newest number of the e-Publica journal. Here's the abstract:

The Portuguese Revised Public Contracts Code misses an opportunity to change the paradigm of how public contracts valued at below EU thresholds are awarded. This paper argues that the changes for low value contracts, where the direct award was replaced for some contracts by the prior consultation procedure (request for quotes) amount to little more than window dressing. This is problematic since 90.2% of all public contracts in Portugal are awarded via direct award, meaning 47.9% all public procurement expenditure is not subject to transparency. As the lack of transparency in low value public contracts is associated with procurement risks such as corruption, strategic behaviour by contracting authorities and bidders or lack of accountability, it is apparent the recent public procurement reform did not really address the behaviours behind these risks.
Portugal could have instead improved transparency in low value contracts by adapting already existing provisions within its legal framework, or following the footsteps of the Public Contracts Regulations 2015 (England and Wales) and the Draft Public Sector Contracts Law (Spain) which introduced significant transparency reforms for low value contracts. Although, there is room for improvement on these, either solution would have provided a marked improvement in the regulation of low value public contracts in Portugal.

The full PDF is available on the usual place (SSRN) but also on the e-Publica website as well.

Lisbon City Council and direct awards of public works in Portugal

One of Portugal's top newspapers investigated the direct award of a €5.179.873,44 public works project by the Lisbon City Council to Teixeira Duarte, one of the largest construction companies in the country. The piece is an example of how direct award (negotiated procedure without competition or notice) is wrongly used and abused in the country. The contract covered works to repair/sustain the Miradouro de Sao Pedro de Alcantara, one of the many scenic viewpoints in the city which is alleged to be in risk of collapse.

The Council claims the urgency of the works required the contract to be awarded quickly, therefore justifying the need to award the contract directly and without competition. Needless to say, this is an exceptional use of direct award and the material justification is supposed to reflect such exceptionality. Herein lies part of the problem: that specific reason to use the direct award procedure does not appear to comply with the requirements for its use.

The Miradouro de Sao Pedro de Alcantara has been monitored since 2006, with a detailed study carried out in 2016 so there is no factor external to the Council justifying the use of the direct award procedure. In other words, if it became urgent to repair the Miradouro its because the Council did not act as quickly as it should and created itself the situation of urgency (i.e., an internal reason for the urgency). By itself, this amounts to poor management at the very least, since the detailed report was handed to the Council in December 2016 and the decision to award the contract directly taken in May, on the same date another company was commissioned to prepare the works project. And surely by coincidence it is the same exact consultancy which produced the 2016 report. The works contract itself was signed only on July 4th, again raising the question of what 'urgent' really means in the context of this contract.

But it gets worse. It appears the National Civil Engineering Lab produced an opinion sustaining that the intervention was not urgent, contradicting the consultants' view from 2016.

Without seeing the actual decision and the arguments produced by the Council, I frankly cannot accept at face value that it was a clear cut case of urgency which would justify the use of this 'exceptional' approach to procurement. 

There is, unfortunately even more to this case. According to the newspaper piece, it seems the works contract covers not only the repairs on the wall (i.e., the 'urgent' bit) but also the works at the surface. Using the contract available on BASE.gov.pt it is impossible to confirm this information. However, if true those works (~€1,000,000) were not strictly needed and therefore not urgent at all. They could (and should) have been subject to the regular public procurement rules in the country.

One final note for the value of contract: €5.179.873,44. The current EU financial thresholds for public works are €5.225.000 and until January 2016 they were €5.186.000. There* is a growing body of evidence that contracts valued close to the thresholds are more likely to have been manipulated and are associated with corruption risks.

PS: I will be publishing soon a paper about the excessive use of direct award in Portugal. Will link it here when it happens.

 

*Thanks for pointing out the typo Domingos :)

 

Portugal (finally) publishes its transposition of the Procurement Directives

Portugal has just transposed the Procurement Directives (well, new law is not in force yet). The full blown 476 article law (Decree-Law 111-B/2017) revising the Public Contracts Code is available here in Portuguese only.

Needless to say it goes well beyond the requirements for transposition, maintaining instead the model of a single codex unifying all substantive legislation related to public procurement.

A short summary in English is available here

I'm putting the finishing touches on a paper about part of the Code which will be uploaded to the usual place as soon as possible. 

 

Leading Portuguese e-procurement platform suspended by regulator

Gatewit, the e-procurement platform with the highest market share in Portugal has had its operational license revoked by the Regulator IMPIC. A significant number of little birdies in the country had told me over the last few months that this was the most likely outcome for the hardball business practices Gatewit had adopted.

In essence, Gatewit was milking the suppliers by charging for services which should have been free as required by Law 96/2015 (which establishes the legal framework for e-procurement platforms), "double dipping" by charging both to the contracting and economic operators. We are talking about charging the latter for simple stuff such as technical support, multiple users and the requirement of certificates produced by Gatewit where none were required.

In consequence, all contracting authorities which had contract their electronic platform solutions with Gatewit are under instructions of IMPIC to resolver their contracts immediately and hire another provider, if needed be by negotiated procedure without prior notice (what we call in Portugal a direct award). This is more than a simply suspension and implies effectively a cancellation of the license to operate.

We'll see if Gatewit complies with the obligations of releasing all data of ongoing procedures (as required by law and requested by IMPIC) or if that is going down the drain as well. If it does not, I do not see any alternative for affected contracting authorities other than cancelling the procedure due to reasons outside their control and re-starting them from scratch.

Some may see on this outcome a vindication that the multi-platform system does not work and a single centrally managed platform would have been preferable but I disagree. The fact the operational license for the largest platform was cancelled by IMPIC (with clear instructions on how to weather the storm) indicates the system is working as it should. On balance I think we're better off with multiple providers offering competing solutions and continually improving their service. My view would be different had the regulator not acted which would imply a degree of regulatory capture.

 

PS: As in Portugal all contracts have to be tendered via e-procurement platforms, this is a significant disruption for the country's public procurement practice. 

New Portuguese multi-author blog on public procurement

My dear colleagues from the Instituto de Ciencias Juridicas e Politicas from the University of Lisbon decided to set up a multiauthor blog in public procurement: contratospublicos.net. It is in Portuguese only but the content already there is excellent and with a good deal of discussion in the comments.

I could not resist Miguel Raimundo's kind invitation and have joined up as an author. It's the first time in more than 10 years that I am writing work related pieces in Portuguese. Although rusty, it is nice for a change from my usual English writing.

My first entry on direct awards and request for proposals is already up and a second on lots is coming later today.

Some comments to Arrowsmith's Brexit whitepaper

Prof. Sue Arrowsmith put out a whitepaper on the implications of Brexit for the UK's procurement rules. Albert has already provided a general comment on some important issues raised by the paper, such as the feasibility of a completely new procurement legal regime and what could be the transitional arrangements. 

There is not much to add to the first part of the paper - the EEA option is pretty much 'business as usual.' I suspect that EEA or no EEA option, not much will change at regulatory level for the next few years - there are too many sunken costs on the current system to warrant a wholesale change just for the sake of change. As such I will focus my commentary in other topics instead.

 

1. The GPA option 

While I agree with the view that the UK would find itself out of the GPA the possibility of speedy re-entry into the agreement is certainly possible as argued by Arrowsmith, it is by no means a given. In a scenario where the UK is negotiating multiple trade deals at the same time any other State will use whatever leverage it can over the UK to achieve concessions elsewhere. Access to the procurement markets within the GPA may well be thrown into the mix of the negotiations, if only because it devalues the commitments made by a UK-less EU. At this stage we should not take for granted that re-joining the GPA will be a 'walk in the park' and to that end I would recommend the sage commentary by Jean Heilman Grier on this topic. As she mentions, the UK would have to negotiate first with the EU the terms of its arrangement and only then the GPA's accession. This could leave the UK with a potentially long GPA-less transitional period.

 

2. Transition period

Arrowsmith suggests that for a transition period '[a] sensible and likely interim solution would, therefore, be to retain the award procedures of the regulations in place, but without provision for enforcement by non-domestic suppliers, pending eventual confirmation, modification/replacement or total repeal of the regulations [...].' I agree with the overall view that the UK must have a tat-for-tat approach to the negotiations (as do the other Member States) to protect its own interests. In this I disagree with Albert's view as restricting access to procurement markets if temporarily is a way to gain some negotiation leverage which I accept is a price to pay in that period.

Having said that I am not entirely sure about the actual suggestion made: i) is it EU/EEA economic operators are entitled to take part in procurement procedures but cannot enforce the rules - as it currently happens with foreign economic operators; or ii) is it that they simply are barred from taking part in procurement procedures? I can understand the second (although retribution would be certain) but cannot understand the first. What would be the point of having economic operators taking part in the procedure only for them not to be able to enforce the rules? Plus, if awarded the contract would they also be barred from enforcing the contract terms under English contract law?

 

3. The Freedom option

In addition, Arrowsmith suggests that '[...]Brexit would see the UK throw off the shackles of EU procurement law, leaving it free to design its own system.' In other words, the UK could finally design its own procurement legal system as it sees fit. While Arrowmsith's preference for a more simpler, single system based off the Utilities Directive are not new, as is a preference for higher thresholds, but describing current EU rules as shackles that need to be thrown off appears to be. Especially if we agree with Arrowsmith's view that Member States have a wide range of discretion in transposing Directives into their national legal systems. As other Member States have used such discretion (sometimes to the point beyond discretion in my view) why has the UK not done so?

After all it is the UK's Government approach to transpose Directives (in general) with a copy out approach and with as few options as possible, thus leaving scope for national/regional rules to be created. The responsibility such national/regional rules are not created in the first place can only be attributed to the respective Government(s). If Portugal, Spain, Italy, Denmark have detailed rules crafted for their own realities, why doesn't the UK do the same? I am not positing those are great legal systems, but at least in those countries lawmakers have made use of their powers in transposition to adapt Directives to the national setting. In short: it can be done.

So, even with a (possible) wide discretion, the UK Government has not opted to implement its own national rules, with the exception of the baby steps taken with contracts below thresholds - where it could regulate them at will as it would not be transposing any Directive. On the other hand, as recognised by Arrowsmith the Scottish Government has taken the opportunity to create its own 'regional' procurement regime in addition to the narrow transposition of the appropriate Directives. However, as correctly pointed out by Arrowsmith, the downside of this freedom to legislate at regional level is an increase in 'regional differences'. These, in my view and based on my own experience, will amount to protectionist measures designed to keep out 'foreign' economic operators, ie those based in another UK region. Therefore, I fear it is much more likely we would end up with a patchwork of regional systems than with the simpler, more efficient system Arrowsmith would like to have.

Finally, as for the simpler, more efficient system that could be designed outside of the EU shackles (setting aside the fact it can be designed inside/below them) it would seem our starting positions are on polar opposites. Arrowsmith appears to prefer a system with more discretion given to the contracting authority and fewer rules, so they can design whatever procedure they might want in compliance with a set of limited principles. I am the first to recognise the current rules limit truly great procurement, but they do so as a trade off - not to shackle the top 1% of contracting authorities (or procurement officers) but as a way to provide enough detail so that all contracting authorities can use them. That does not mean they cannot be improved, but it is important to recognise this trade off. And I will take a set of detailed rules that avoid really bad procurement (or try to) for most people, most of the time over ones which only suit the top 1%. 

There are other downsides to a simpler, less prescriptive system. For example, compliance costs would go up for the economic operators - instead of learning one set of rules/procedures, they would have to analyse the specific rules of every single procurement procedure as even within each contracting authority different departments/officers may prefer to do those things differently. Again, I prefer standardisation as a means to reduce transaction costs overall than the discretion to tweak each procedure to suit the contracting authority.    

In addition, if we look at the contracts below-thresholds, where such simpler approach would make more sense and where currently there are no legal restrictions, why are we currently not seeing great practice being developed? Other than the pilots I ran in Wales a few years ago and the excellent work being done by the Government Digital Service and the Digital Marketplace, are there any other examples we should be looking at? Is it not surprising that the most common practice below thresholds for a long time was a preference by contracting authorities to either just use the restricted procedure with all the transaction costs it entailed or going for non-transparent request for quotes - as those were the reality overworked procurement officers knew. Sticking to the tried and tested approach is always the default even if a careful consideration would say otherwise when there is no time or incentive to carry out such consideration. In essence, these default approaches explain why Central Government contracting authorities are under the obligation of advertising contracts above £10,000 and the baby steps to regulate contracts below-thresholds in the Public Contracts Regulations 2015.

In conclusion, even if possible, I fear a simplified, looser regulatory system would leave most stakeholders (contracting authorities, economic operators) worse off most of the time. While it could (theoretically) facilitate great practice in some instances, my experience in practice leads me to a bearish view on the overall merits of such a regime.  

 

4. Remedies

A final short word on remedies.  Arrowsmith is of the opinion that the current remedies system is 'burdensome.' As such, a freedom option should also consider a review of the current remedies system '[...] that offers a better balance between the costs and benefits of legal enforcement [...].' This point is particularly interesting as on p.13 Arrowsmith correctly highlights one of the problems of the current remedies system to be the UK's preference for the High Court. This is very true but, once more, it is not really the EU legal system fault's for the UK's design of its remedies system. Even within the EU legal framework it is possible to think different.

If we look at Sweden we see a competition authority with strong powers in this are. Denmark also has its own competition authority and the Procurement Boards which deal specifically with procurement matters. After a couple of run ins with the Court of Justice Spain has today a fast, efficient and cheap (for the time being) system of procurement tribunals. In Portugal, as the administrative courts are clogged up with procurement disputes the draft Public Contracts Code explictly accepts the parties may recur to arbitration instead. 

Outside the EU we can find another system which I find very appealing and would probably fit within the current rules: Canada and its Procurement Ombudsman.  Here's an interview with the then Ombudsman Frank Brunetta about his office's work. It is not hard to conceive a scenario where the current Mystery Shopper Service would be transformed into a true Ombudsman-type service with stronger powers than today. Again, this would be perfectly possible within the current rules.

 

5. Conclusion

In conclusion, I agree with Albert's view that most of the debate we can have at the moment is theoretical. Nonetheless, there is a value in having these discussions as they can influence decisions taken down the line. Having said that, I would like to see the same interest and energy in debating how we can improve practice (and national/regional rules) within the current legal framework. It is likely it will stay mostly unchanged for a good while and there is the odd chance they will actually not change at all. 

 

 

 

 

 

 

First draft of the Revised Portuguese Public Contracts Code is now available

The Portuguese Government has just published a first public draft of the Revised Public Contracts Code (PCC) which aims to transpose Directives 2014/23/EU, 2014/24/EU and 2014/25/EU. The draft is available here (Portuguese only) and a public consultation open until September 23rd.

The PCC revision suffered delays and a difficult birth to say the least. I was told by sources in the know that the previous Government (2011-15) prepared two very different drafts: one with significant changes to the structure of the code and the other only with the nips and tucks needed to make it compliant with the new set of Directives.

The current Government appointed a taskforce earlier in the year to work on a third draft and this appears to be their output.

Procurement Week presentation on electronic procurement in Portugal

A couple of weeks ago I delivered a presentation on electronic procurement in Portugal at this year's Procurement Week conference in Bangor. As some of you have asked for the presentation, here it is embedded in all its glory. A downloadable PDF is available on the Presentations tab.

What's the going rate for part of a nice, shiny cutlery service? €74,778.45

That's the price the Portuguese Foreign Ministry paid for part of a D. Joao V cutlery service to be used in State functions. The €74,778.45 contract was awarded via what we call in Portugal a "direct award procedure" to a cutlery firm based in Lisbon. I suspect this was done without any competition as there is no legal obligation for obtaining multiple quotes.

There are no prizes for you to guess why the contract is valued at a sliver below €75,000.00. According to the current Public Contracts Code (Art 20(1)), the direct award procedure can be freely used to award contracts up to...€75,000.00. It could be argued that only specific cutlery makers (?) have the artistic chops to do that and the "artistic" exception could probably have been used in this instance, but there is no indication it was.

By itself there is nothing illegal or irregular in this transaction...so far. But there may well be in the future. According to its clause 1, the contract was awarded for part of a cutlery service (knifes and scissors) and not the whole lot, I would not be surprised if we see another similar contract surfacing in the future for the remaining pieces, irrespective of awardee. If that happens, then this is a textbook example of contract subdivision, a practice banned by Article 8(3) of Directive 2004/18/EC.

A national TV station is claiming that the purchase was for the whole service and not simply for parts of it, so it may well be that two clerical mistakes were made. The first, when the contract was drafted, the second when the information was uploaded to the BASE database.

As for the timing of the purchase, it is quite common for entities to spend their remaining budgets right before the end of financial year and there is nothing illegal in that practice. Use it or lose it, as they say.

Preliminary thoughts on a very detailed implementation of the innovation partnership

Although Portugal is yet to transpose Directive 2014/24/EU into national law, the Azores, one of its autonomous regions decided to go ahead and transpose it nonetheless into regional law via the Regional Decree 27/2015/A from December 31st.

Its structure is very different from that of the Directive, something that can be explained by the cross-referencing it does to the Portuguese Public Contracts Code 2008 (Portuguese only) in itself very different as well from both Directives 2004/18/EC and 2014/24/EU/. There is much to say (and critique) about the new Regional Decree, but I am focusing this post on the detailed structure adopted for the innovation partnership. And by detailed, I mean really detailed - the whole innovation partnership legal framework spans 25 articles out of a total of 104. As for the drafting, it is uninspiring and at stages confusing as epigraphs do not match content and the same epigraph ("Serving the conclusion of the partnership") appears in two different articles meaning completely different things. As another example, Article 47(2) bans negotiations in the innovation partnership procedure, but Article 70 establishes a stage for tenders to be negotiated.

As an introductory point this approach reminds me of what happened with competitive dialogue in the Public Contracts Code 2008. Whereas the Directive left gaps in the regulation of competitive dialogue, the national legislator decided to try and plug them. The end result was that the procedure was barely used in the country.

As for the innovation partnership, the regulation is to be found in two sections of the Regional Decree: Article 22 (choice of procedure) and Articles 47 - 71. As for Article 22, the epigraph is misleading as there is more in such Article than simply the choice of procedure. For example, the purpose of the procedure and tender documents contents are all described there. The meat of the substance, however, is on Articles 47-71. These articles are divided into various subsections which I will be following for readability purposes:

General clauses (Arts 47-51)

Article 47 establishes that the subsidiary rules applicable to the innovation partnership are the those contained in the Public Contracts Code 2008 for the restricted procedure, subject to the specific rules contained in the Regional Decree. For an idea of the characteristics in terms ofselection and qualification of candidates in Portugal, feel free to check this paper.

Articles 48 and 49 define a structure for the innovation partnership which is both similar to that of Article 31 of Directive 2014/24/EU (successive stages, preliminary objectives etc) and different. As for the differences, Article 49 sets three distinct phases for the procedure: (1) selection/qualification; (2) partnership(s); (3) final tenders and award. Looking in detail into the actual subsequent articles it is easy to understand that in reality there are four different phases as the partnership is divided into "establishing the partnership" (Subsection III - Articles 54-59) and "presenting solutions" (Subsection IV - Arts 60-65).

Articles 50 and 51 on tender documents follow a similar approach to that of the Public Contracts Code 2008 for the restricted procedure and impose a duty to provide significant detail to potential participants right at the start of the procedure. Some of those requirements are quite reasonable. For example, the value of the payments needs to be set in advance and this is something I tend to agree with as it can be necessary for a go/no go decision by economic operators. However, others such as the objectives to be achieved on each successive stage are frankly too much detail to require at the start of a procedure where the end product is unknown. This is probably a good example of the law maker(s) not knowing what the innovation partnership will be used for and establishing rules based on traditional mental models ("this is how we've done procurement before, so all procedures need to look like this") and perhaps a consequence of using the restricted procedure as subsidiary rules.

This is a marked difference from the Directive but one that can be explained by cultural factors. In a country where procurement equates to "painting by numbers", following religiously what the law says and steering away from areas that are not regulated in detail, it is expectable law makers would provide as much detail as possible via legal regulation. If that is conducive to lead to a good procurement procedure where flexibility is needed, that's a different story.

Selection and Qualification (Arts 52-53)

Nothing really relevant in here other than the procedure needs to be announced on the Regional Government Official Journal and certainly on the OJEU/National Journals if the partnership's value is above the EU thresholds. Article 53 establishes a minimum timelimit of 30 days for receiving requests for participation.

Partnership stage(s) (Arts 54-59)

This is where things start to get really interesting. According to Article 54 and 55, the candidates invited to the following stage are effectively being invited to sign a partnership contract with the clauses established by Article 51 (the ones which were included in the original tender documents). The partnership stages will be monitored by the procedure's jury (Article 56, another Portuguese staple) which has the power to mandate the partner to produce the innovation it is suppose to. Reading this, frankly, I have the impression that the legislators do not really understand how innovation works and as we are effectively talking about a contract here we might as well just leave its performance to contract law.

The logical conclusion of the antagonistic approach taken in Article 56 is to be found in Article 59, whereby the innovation partnership may be "terminated". Whomever drafted Article 59 did not mince his/her words: a serious and consistent (repeated?) breach of the obligations to develop the innovative product or service will lead to the termination of the partnership. Article 59 provides two extra grounds for termination, in case the objectives have not been achieved or deadlines have not been met. As above, I think we would be better off if only regular contract law applied here. Article 59 is drafted in a way where apparently only the grounds mentioned can be used to terminate the partnership.

As for the technical solutions that are supposed to be developed, well, those just come into play in the following sub-section.

Solution stage(s) (Arts 60-65)

This stage starts and ends with two articles including the "Serving the conclusion of the partnership" epigraph. I am very puzzled by why the same words would be used to mean different things. The first means the partnership is established and second that it ended.

Furthermore, one would have expected that the quality of the solutions would be relevant for the termination mentioned above. But as we are talking about different subsections it appears not.

As for the rest, each candidate can only work on a single solution (Art 61), yet another limitation imposed by the law maker which was unnecessary and could be left for the contracting authority to decide at the start of the procedure. All documents pertaining to the solutions need to be presented in Portuguese (Art 62, with some exceptions).

Art 63 is focused on the successive stages but does so on very unclear terms. This is an area where the drafting could be much improved and I certainly hope the national law heeds a different direction. Paragraph 63(1) states that the procedure is automatically concluded if there are no participants in a subsequent stage. Not only that is obvious, but starting the Article with that specific paragraph referring to the conclusion is not really logical. Paragraph 2 is not entirely clear either. It appears that once the procedure is down to a single economic operator his solution will constitute the technical specifications for the award stage. In other words, it appears that the development is to stop when there is only one economic operator standing. I am not sure that this was the intention...

Paragraph 3 foresees that multiple technical solutions may be presented (obviously, by multiple partners due to the one solution per partner mentioned earlier) and if that is the case, there will be no technical specifications for the award stage but only the minimum requirements and elements not subject to competition are to be set.

Articles 64 and 65 deal with the conclusion of the partnership (well, the conclusion of the this stage). Articles 57 and 59 are to be applied here as well, thus once more apparently only the reasons set forth in Article 59 are to be used to conclude the solution stage.

Tender and award stage (Arts 66-71)

The final stage of the procedure is focused with awarding the contract. I say contract and not contracts as the whole procedure (including this stage) appear to be designed with the aim of ending with a single contract at the end. This is consistent with the restrictive approaches taken earlier for example when restricting partners to a single solution. It is not consistent, however, with the overall objective of the innovation partnership as it is contained in Article 31 of Directive 2014/24/EU. It may well be that in specific circumstances the contracting authority may start an innovation partnership assuming there will be only one solution for its needs and reach the end wanting to deploy two different solutions (perhaps because the requirements could be split during the successive stages) by awarding two contracts. Again, I find this approach overly restrictive.

As for this final stage, there are two points worth mentioning. First, 40 days is the time limit for final tenders to be submitted. I think this is overly long as a good development cycle should have flushed out all the issues and the final tender should be easy to assemble.

Second, although Article 47 prohibits a negotiation stage in the innovation partnership procedure, Article 70 mandates one. This contradiction was completely avoidable and should have been avoided by the legislator. It can, however, be set aside if we read Article 47 as a general rule (prohibition) and Article 70 as a specific one (authorisation in specific cases). As for the purposes of having a negotiation stage so late in the procedure, it may make sense if there are multiple economic operators in play. However, in the situations where there is only one, I will make the same comments I have been doing for the last 6 years regarding the competitive dialogue: it's a very bad idea. It leads to longer procedures, to the previous stages not be taken seriously enough (less of a problem in this case) and more importantly to a complete change on the power relationships between the economic operator and the contracting authority.

What was left out (intellectual property)

The legislator was very proactive when it came down to imposing rigid administrative processes of what needs to be done. One would have expected a similar level of attention to intellectual property, for me the critical issue with the innovation partnership. Not so. Intellectual property demands care and attention and it got none from the legislator, absent in this instance. The only mention of intellectual property comes in Article 49(5) where it is said that said rights need to be dealt with "in accordance with applicable law."

In other areas of the law, the legislator had no problem in identifying the applicable law. In fact, there are plenty of cross-references to the Public Contracts Code for example. So why not pointing out what is the "applicable law" relevant to deal with intellectual property? A cop out if there ever was one.

General comment

In "traditional" Portuguese style, the way the innovation partnership was transposed into this regional law is too prescriptive, based on pre-conceptions of what procurement should be and look like (running on rails and with limited flexibility) and making assumptions of what the usage should look like.

The national Government is yet to transpose Directive 2014/24/EU. I have the bad feeling that this regional law is probably based on the working drafts of the transposition which already exist (but are not public and I have not seen them). I sincerely hope to be wrong and that the national law follows a less prescriptive and detailed blueprint.

 

 

 

 

 

New paper on the qualitative selection and exclusion of tenderers in Portugal

Abstract

This paper provides an overview of the qualification, selection, and exclusion of economic operators rules under Portuguese public procurement law (approved by Decree-Law no 18/2008, hereinafter “Public Contracts Code 2008”). As Directive 2014/24/EU is yet to be transposed into national law, the chapter will focus on the law which transposed Directive 2004/18/EC. This chapter shows that the Portuguese law departs significantly from the EU template on rules regarding qualification, selection and exclusion of economic operators in public procurement. The Public Contracts Code is at times more similar to the new Directive 2014/24/EU than the Directive 2004/18/EC it transposed.

Ungated copy available at SSRN (for now).

Forthcoming later this year on Vol 8 of the European Procurement Law Series.

Links I Liked [Public Procurement]

1. Evaluation of tenders after the expiry of their validity does not annul tender for EU public contracts (T-553/13). Albert comments on case T-553/13.

2. UK Government spent 27.1% of procurement spend with SMEs. Full dataset here. It is all on the way how you count it: only 10.9% was spent directly with SMEs, the rest came via supply chain arrangements. It makes as much sense as the claims by multinationals that their employees pay a lot of tax on the countries where they operate.

3. UnitingCare, NHS Provider Consortium, Folds and Walks Away from Cambridge Contract. Ohm dear.

4. Court of Appeal overturns conviction of former Portuguese Education Minister in procurement case (Portuguese only). Long story short, Maria de Lurdes Rodrigues awarded €220k worth of services (including legal) to the brother of another Minister. The Audit Court considered the contract illegal and she was found guilty in first instance. However, the Court of Appeal repealed the decision, interpreting the then existing law (Decree-Law 197/99) with a law yet to come into force at the time (Public Contracts Code). This is a great example of why legal services should be subject to the same procurement rules as all other services.

As for the fact the Court of Appeal decided to base its decision on a non-existent law at the time, well maybe they did not even notice the existence of Directive 2004/18 and that Directives generate indirect effect.

5. Corruption And 'Tenderpreneurs' Bring Kenya's Economy To Its Knees. Great writeup by Forbes on corruption in Kenya. Speaking of corruption and transparency.

What can citizens do when public contracts data gets released into the wild?

Well, in Slovakia we have seen (via Transparency International) that around 10% of the population goes into the procurement portal to check what is being purchased by whom and from what suppliers.

In Portugal numbers are probably not as high, although every now and again the local press decides to publish something. Well, some people are taking matters into their own hands and blogging about potentially shady contracts at Ma Despesa Publica. It roughly translates into "Bad Procurement".

I like the style and most of the content is good (if not from a gossipy type of way). It is great to see pressure being gently applied upon public servants to explain why and how they spend taxpayers money. For example, monthly security services contracts being awarded without competition smells of fractioning/unbundling, something completely illegal under EU law. Well spotted ladies and gents.

However, as one professor of economics once told me, the downside of putting this information out there is that a lot of people which do not understand how public procurement works will be blowing whistles where there are none to blow.

Case in point, a stated owned company (although in the process of being wound up) hired some lawyers via the negotiated procedure (direct award in Portuguese). My views about legal services not being subject to the rules of Directive 2014/24/EU and Directive 2004/18/EC are probably well known by now, and no one more than me would like to see them changed. However, "we are where we are" and unfortunately legal services can legally be awarded directly. Furthermore, this particular contract was well below EU thresholds and the national law also allows for this type of action. Instead of railing against a decision that is (unfortunately) entirely legal, this energy would be better spent lobbying to change the legislation.

I hope the next Government shows some spine and starts chipping away at the discretion of contracting authorities to use these type of procedures be it for legal services or any others. It would be great if started in the legal services though.

Links I Liked [Public Procurement]

1. Barcelona is a wired city. Excellent Forbes article. Not strictly procurement but relevant for the field nonetheless as an indication of what extra technology and sensors can do to influence the running of a city. One of the examples provided in the article is about procurement though: the savings achieved by putting down fibreoptic when the innovation district @22 was being replumbed. Back in 2012 we had Ramon Sagarra talking about this on Procurement Week

2. Speaking of Barcelona...TMB fails to put up performance bond for Porto's metro concession (Portuguese only). In Portugal if you win a contract, particularly public works or concessions you have to provide up front a performance bond to guarantee you will perform the contract. TMB did not cough up the €20M required for the Porto metro concession which it had won and the award has been annulled.

3. TTIP is being negotiated in the dark (as it should)There are plenty of people complaining that the TTIP is being negotiated in the dark and that peoples concerns (ie, lobbying) is not being taken into account. Said people probably do not negotiate their contracts in the open either but would prefer the EU to divulge its negotiation position to the world to see, including the americans. This podcast from Planet Money explains why trade deals not be done in secret. Yes, it's because of the lobbying.

As for the TTIP itself, as highlighted by Piotr Bogdanowciz on our PPP interview, it is more relevant than we think for procurement and we should be discussing it more.

4. Portuguese Government greenlights €400M worth of contracts for 2016-2019 (Portuguese only). Portugal will have general elections in less than two months and some media reported (complaining) that the outgoing Government has authorised expenditure up to the tune of €400M for the 2016-2019. Note, no contract has been awarded or signed, only the first step of authorising procedures to be carried out was done. It will take ages until they reach their conclusion, even if they are launched sooner rather than later. As for the people who cannot understand why an outgoing Government is doing this, just imagine the uproar if the services were disrupted otherwise.  

5. Basque country wants to help local SMEs to win contracts...internationally (Spanish only). As I said many times before, contracting authorities can do a lot to help their supplier base as long as they comply with state aid principles (Article 107 TFEU) and do not use their procurement spend as a piggy bank to feed those suppliers. The Basque country will help supplier which are successful winning contracts abroad, which ensure that they are not mixing their support with procurement activities. However, the support is only available for economic operators who win tenders. If that is the case, why do they need public sector support? It makes more sense to help struggling SMEs to become successful (within reason and only sometimes), not to throw money to the ones which do not need the support. Weird. 

Portuguese Competition Authority fines cartel operating in public procurement

The Portuguese Competition Authority has just nailed a cartel operating in public procurement.

The 5 Portuguese companies convicted were fined a total just over €800,000. They were found guilty of price-fixing tenders in a number of procurement procedures launched by the Parque Escolar Secondary School Modernisation Programme in 2009-2010 for the supply and assembly of pre-fab modular constructions used as temporary classrooms. The companies have waved their appeal rights in exchange for a 10% reduction on the fine.

As usual the cartel was discovered by a complaint/insider blowing the whistle to the authorities. Personally I find it surprising that the companies collaborated with the investigation, so perhaps they considered that after the proverbial horses had bolted there was not much else to do rather than damage control.

Although I cannot claim to be an expert in the pre-fab modular construction business, could it be that this cartel was operating in tenders launched by other contracting authorities? The decision appears to be restricted to the procedures launched by Parque Escolar and I have no idea what is their representativeness in terms of market share for pre-fab modular construction.

There are other things I would love to know but cannot find in the press release and the decision's text is yet to be published:

- Was the cartel's operation facilitated by the obligation for contract information to be published on the national database base.gov.pt?

- If the cartel was operating in 2009 and 2010, why did the investigation process only start in January 2014?

- Who came forward? One of the cartel members or an aggrieved (ex-)employee?

I am not aware of the PCA finding anti-competitive practices in procurement before, (correction: there is at least another decision from 2011 related with procurement) but it is good to know they are paying attention to our patch.

Oh, and the PCA is putting up an international conference in October.