Public procurement. State wants to contract faster, but the real test will be in practice.

New rules, published this Friday in the Official Gazette and entering into force on 1 October, raise the thresholds for the use of less competitive procurement procedures.

Simplify, reduce bureaucracy and accelerate. This is the central objective of the reform of the Public Contracts Code (PCC), which introduces significant changes in the way the State procures, supervises and executes public works and acquires goods and services. The new rules, published this Friday in the Official Gazette and entering into force on 1 October, increase the thresholds for the use of less competitive procurement procedures, reduce documentary requirements, facilitate the correction of formal errors and modify prior control mechanisms.

According to the lawyers interviewed by Advocatus/ECO, the reform may make the system more agile, but it is not without risks. 

More direct awards and prior consultation procedures

One of the most impactful changes is the increase in the thresholds up to which contracting authorities may resort to direct awards and prior consultation procedures. According to the Government, the aim is to adapt procurement values to the current economic reality and reduce the bureaucratic burden associated with lower-value contracts.

For the procurement of goods and services, under the direct award procedure, the threshold rises from the current €20,000 to €75,000, while under the prior consultation procedure the threshold is set at €130,000, compared with the current €75,000.

For public works contracts, the threshold for direct awards increases fivefold to €150,000 from the current €30,000, while the threshold for prior consultation procedures rises from €150,000 to €1 million.

Ana Filipa Urbano considers this update to be “necessary and fundamental”. The limits applicable to direct awards had remained virtually unchanged for around a decade and, in her view, their revision allows pre-contractual procedures to be aligned with present-day economic conditions.

The lawyer acknowledges that raising the thresholds grants contracting authorities greater discretion, but argues that this does not “necessarily mean moving away from the principles of public procurement. When used within the legal framework, direct awards remain an essential instrument for responding quickly to public needs.”

Less bureaucracy for companies

The reform also seeks to reduce the administrative burden of pre-contractual procedures. Among the changes are the elimination of proposal documents considered to have no practical utility and the waiver of information already held by the Public Administration.

Errors that previously might have led to the exclusion of tenders may now be corrected under certain circumstances. One example concerns qualification documents, where an error will no longer automatically result in the lapse of the contract award.

Contracting authorities will also assume greater responsibility for collecting qualification documents and must obtain them ex officio whenever they are available through State platforms.

Court of Auditors: Less Prior Control, More Subsequent Oversight

The public procurement reform is linked to a significant change in the supervisory model of the Court of Auditors. By raising the thresholds above which contracts are subject to prior review, the new regime reduces the number of contracts that will require approval before execution.

For Ana Filipa Urbano, this should not be confused with a reduction in the Court of Auditors’ role. “Increasing the threshold for prior review of contracts does not diminish the Court of Auditors’ functions; it merely reconfigures the form of control,” she argues.

The model therefore shifts towards stronger ex post supervision. In the lawyer’s view, greater administrative efficiency is not incompatible with effective control and oversight mechanisms. On the contrary, excessive procedural requirements may also harm the public interest.

Public Works: could speed come at a higher cost?

Some of the main concerns regarding the reform arise in the area of public works contracts. One of the most significant changes is the elimination of the mandatory review of detailed design projects.

At first glance, the measure will remove a procedural step and accelerate the launch of public works projects.

The concern is a possible unintended consequence of simplification: what is saved during the preliminary phase may ultimately have to be paid for during contract execution.

No base price: more flexibility and more uncertainty

Another structural change is the abolition of the mandatory base price. Until now, the contracting authority established a maximum amount it was prepared to pay for the execution of a contract. Under the reform, this reference value is no longer mandatory.

The partner at Dower Law Firm expresses reservations about the new solution, particularly regarding the method for determining the estimated value of contracts. “The use of less rigorous criteria, namely the reference to the foreseeable price to be paid by the contracting authority, may create uncertainty and difficulties in reconciling procurement rules with public accounting and expenditure procedures,” she notes.

The debate therefore extends beyond legal considerations. What is at stake is the State’s ability to predict how much it will spend and to control expenditure throughout contract execution.

Greater flexibility, but what about competition?

The reform also seeks to increase interaction between the private sector and the Public Administration. One of the new mechanisms is the unsolicited proposal initiative, intended to allow economic operators to present innovative projects and solutions. In practice, private entities will be able, on their own initiative, to submit proposals to public entities even where no procurement procedure has been launched.

Greater flexibility in procurement inevitably raises questions concerning competition and transparency. Ana Filipa Urbano argues that economic operators “now play a relevant role in supervising the system, as they are better equipped to scrutinise the actions of contracting authorities and make use of administrative and judicial remedies whenever they believe their rights have been affected.” Without the formal publication of procurement procedures beforehand, information about executed contracts will become available later, making it more difficult for companies to monitor what has been procured and under what conditions.

Arbitration can no longer be imposed

In dispute resolution, one of the relevant changes is the revision of the arbitration regime for contract-related disputes and pre-contractual litigation.

The new Code establishes a fully voluntary arbitration regime, following concerns regarding constitutionality and compatibility with the principles of European Union law under the previous framework. At the same time, conciliation committees are reintroduced as an alternative dispute resolution mechanism.

The Government maintains that simplification does not compromise the fundamental principles of public procurement. The legislation reaffirms the need to respect legality, equality, competition, impartiality, proportionality, transparency, publicity and good administration.