Portuguese government approves 'new' Public Contracts Code

The Portuguese government approved yesterday a new version of the Public Contracts Code, making good in the promise of reviewing it before the upcoming publication of the Public Procurement Act draft by the European Commission.

As there is no official text yet ( we have to wait for the Diario da Republica to get it) all the information currently available about it is coming from the government's own press release and a couple of newspaper articles. There was no public debate or discussion of the proposed amendments to the Public Contracts Code.

Here are the main changes are per the press release:

Introduces a clear distinction is between principles, criteria and objectives, emphasising quality, innovation, sustainability and social responsibility, as well as the principle of the lowest overall cost and the elimination of unnecessary burdens.

Digital public procurement is fully established, allowing the use of digital systems, including artificial intelligence solutions, with guarantees of interoperability, transparency and data protection.

Procedures are streamlined, the required documentation is reduced, and the “once-only” principle is put into practice, easing burdens on contracting authorities and economic operators.

The concept of estimated value is standardised as the foreseeable price to be paid by the contracting authority, clarifying calculation rules and aligning the national regime with European law.

The thresholds for prior consultation and direct award are raised, while always remaining below the thresholds of the European Directive, and greater procedural flexibility is introduced for lower-value contracts.

The duty of prior planning and the weight of quality in the evaluation of proposals are strengthened, allowing greater flexibility in the weighting of price in multi-factor models.

The submission of unsolicited private initiatives is allowed, as well as the prior assessment of technological solutions and the possibility of reserving contracts for startups, promoting innovation in public procurement.

The rules on exclusion, contract modification, design-build, concessions and expenditure authorisation are reorganised and clarified, reducing legislative fragmentation and litigation.

Mechanisms are strengthened for faster procedures in contexts of emergency, disaster or recognised exceptional circumstances.

A fully voluntary arbitration regime is established and alternative means of dispute resolution are promoted.

The only thing I should comment on at the moment is the threshold increase for direct award and the prior consultation procedure. These apply only below the EU financial thresholds and of course the government is free to do as it pleases without significant constraints from EU law.

Having said that, my views on these two 'procedures' are well known and have not really changed since this paper from almost a decade ago. According to Portuguese media today these are the increases on the thresholds for their use:

These are not small increases. Funny how I wrote in that paper linked above that everything old is new again and, here we are, with the new thresholds for direct award being similar to the old pre-2018 limits I was concerned about. I remain convinced that the prior consultation is a pernicious mechanism to award contract since all that it requires is the contracting authority to try and obtain a number of quotes before deciding who to award the contract to. Since it is not an open or transparent procedure as it is up to the contracting authority to choose and contact potential economic operators, it is easy to see how it can be manipulated to work as a de facto direct award. Well, from now on, contracting authorities will be free to use it all the way up to near the services EU financial threshold and a nice, round €1M for works.

I am all for simplifying and making life easier for procurement officers, but this increase is an indictment on Portugal's ability to design a fast, simple and digital by default procurement procedure that is transparent and can be used with low transaction and opportunity costs. Obviously, the easiest way out is to take what you already have and simply scale it up, transparency and accountability be damned.