Public procurement without brakes? New thresholds raise concerns and require oversight

The reform of public procurement - approved by the Council of Ministers this Thursday - represents an ambitious revision of the Public Contracts Code (CCP), given its potential impact on the functioning of Public Administration and its relationship with economic operators. At the heart of this reform is a significant increase in the value thresholds for direct awards and prior consultations - a decision the Government frames as “essential to unblock procedures, speed up decisions, and adapt the system to the current economic reality.”

Thus, for contracts entered into by the State for the acquisition of goods and services, the threshold for direct awards rises from the current €20,000 to €75,000, while prior consultation increases from €75,000 to €130,000. In public works contracts, the direct award threshold increases fivefold, from €30,000 to €150,000, and prior consultation rises from €150,000 to €1 million. According to the Executive, this is “a correction of a gap that has accumulated over the years, worsened by inflation and rising costs of executing public contracts,” said Gonçalo de Saraiva Matias, Minister Adjunct and for State Reform.

The minister also justified this measure by the need to remove “unnecessary bottlenecks” and give greater decision-making capacity to public managers, arguing that the previous thresholds were “too low” and hindered administrative efficiency. He further stressed that, even with this update, Portugal will remain below the thresholds applied in other European countries - that is, with less restrictive limits than before, but still more restrictive than those in other European countries.

Alongside this change, the reform introduces a set of structural measures: the “once-only” principle in the submission of documents, the elimination of repetitive formalities, the possibility of using artificial intelligence in procedural processing, the creation of a specific framework for design-build contracts, mandatory price revision in long-term contracts, and a focus on alternative dispute resolution mechanisms. It also includes the introduction of the so-called “spontaneous initiative,” allowing private entities to propose projects to the Administration (without having to wait for a tender to be launched), as well as a new public expenditure authorization framework, replacing a legal regime still based on values denominated in escudos.

The Government estimates that these measures could eliminate the need to submit more than three million documents per year, as part of a clear effort toward simplification and reducing bureaucracy. However, it is precisely in this area that some of the main concerns have been raised by the lawyers consulted by ECO/Advocatus.

For Pedro Neves de Sousa, a public law lawyer and partner at Dower Law Firm, the reform is part of a broader evolution within Public Administration itself. “For several years now, there has been a paradigm shift in how the Administration relates to private parties,” he notes, pointing to a transition from a model of prior control to one based more on accountability of decision-makers and economic operators. This trend, he explains, “results both from structural factors—such as increasing societal complexity—and from specific contexts, such as the pandemic or the management of European funds.”

Within this framework, the lawyer views the intention to simplify procedures positively. “The Administration suffers from a serious bureaucratic problem, and public procurement is no exception,” he stresses, arguing that changes reducing obstacles can help stimulate the economy. He also highlights as particularly positive the introduction of the “spontaneous initiative,” which could involve companies and research centers in developing innovative solutions to public needs.

Even so, he issues a clear warning: “Simplification and debureaucratization do not mean removing accountability.” In his view, increasing the decision-making freedom of public entities must be accompanied by maintaining—and even strengthening—control and oversight mechanisms.

A complementary perspective is offered by Luís Graça Nunes, a lawyer at Santiago Mediano Advogados, who rejects the idea of an inevitable conflict between efficiency and control. “It does not seem to me that one should assume an absolute conflict between efficiency/simplicity and control/oversight,” he argues, suggesting that this opposition is often more apparent than real.

He highlights the existence of concurrent and ex post oversight mechanisms that do not hinder the progress of procedures, as well as preventive tools capable of ensuring greater rigor without compromising speed. “Mechanisms such as planning, standardization of procedures, and the use of central purchasing bodies can be adopted, among others,” he explains, arguing that balance should result from a combination of mutually reinforcing solutions, rather than a trade-off between risk and efficiency.

Ricardo Maia Magalhães, partner at Cerejeira Namora, Marinho Falcão, takes a more cautious stance regarding the reform’s practical effectiveness. While acknowledging that some measures may reduce unnecessary bureaucracy, he warns about the historical difficulties in implementing legislative changes. “It remains to be seen whether these mechanisms will actually be applied in practice,” he says, recalling that many previously introduced solutions never moved beyond the formal stage.

He also raises concerns about the capacity of contracting authorities to manage the greater margin of discretion now being granted. “It is important to understand whether internal audit systems will be able to accommodate this increased decision-making margin,” he adds, pointing to the need to strengthen internal control structures.

The increase in thresholds for direct awards is, moreover, one of the most sensitive aspects of the reform. Pedro Neves de Sousa frames this change as a correction of a historical anomaly. “Portugal has always been ‘timid’ in setting thresholds,” he observes, comparing them with European directive values and arguing that previous levels contributed to inefficiency and lost opportunities. In his view, the change does not necessarily increase risks: “Raising thresholds does not, in itself, lead to greater risks of corruption or undue favoritism.”

Luís Graça Nunes also downplays this association, emphasizing that direct award is a legally established and regulated procedure. “One should not assume there is something inherently pathological or corrupt in this procedure,” he states, adding that public tenders are not, in themselves, a guarantee of integrity. In his view, the causes of corruption are deeper and more structural, linked to economic and political factors.

Even so, he acknowledges that the new framework should be accompanied by additional transparency measures. “The increase in thresholds could be paired with mechanisms that strengthen requirements for justification of decisions, publication of procedures, and reporting to oversight bodies,” he argues, highlighting the role of the Court of Auditors and other independent entities.

A more cautious note is again struck by Ricardo Maia Magalhães, who considers it inevitable to associate increased discretion with heightened risks. “It is impossible to separate the expansion of discretionary power from potential risks in terms of combating corruption,” he says, while clarifying that this is not a matter of distrust toward public decision-makers. For him, the key lies in balance: “These reforms can only be viewed positively if properly offset by a significant strengthening of both internal and external oversight.”

From a critical standpoint, all three lawyers converge on the idea that the reform’s ultimate assessment will depend on its concrete implementation. Pedro Neves de Sousa anticipates that the main challenges will arise precisely at that stage, when the new rules are tested in practice. Luís Graça Nunes points to the lack of detail in the measures known so far, warning of uncertainties surrounding concepts such as “spontaneous initiative” or voluntary arbitration, whose operationalization remains unclear.

Ricardo Maia Magalhães, in turn, raises a more structural and political criticism, questioning the timing of the reform. He considers it “incomprehensible” to move forward with far-reaching changes at a time when a European review of public procurement rules is underway, which may require further adjustments in the near future. “Within a few months, new European rules may lead to another need to revise this pillar of Portuguese legislation,” he warns.