ELPIS Law Review - Carla Pereira

Written by: Carla Marques Pereira

Second-year student from the University of Lisbon, Faculty of Law

Student Number: 64746, class: 2B, 17

Public Procurement Procedures in Times of Pandemic

Public contracts are awarded by users of public funds and entities operating in specific, non-competitive conditions (for example energy, water, public transport, etc.), for the purchase of services, supplies or civil engineering works. Usually, all medium and higher value contracts must be awarded through competitive procedures (tenders), although there are exclusions and exceptions, such as: purchasing real estate cases of extreme urgency and situations where there is only one supplier.

The standard way of awarding contracts is through competitive tendering. Within competitive tendering, there are distinct types of public procurement procedures. Such as:

1.     The open procedure – in an open procedure anyone may submit a full tender. This is the most frequently used procedure.

2.     The restricted procedure – anyone may ask to participate in a restricted procedure, but only those who are pre-selected may submit tenders.

3.     The competitive negotiated procedure – anyone may ask to participate, but only those who are pre-selected will be invited to submit initial tenders and to negotiate. This type of procedure can only be used in cases where the purchase is specific or complicated due to its nature. Exceptionally, the procuring entities in the defence and security, water, energy, transport sectors may use it as a standard procedure.

4.     The competitive dialogue – this procedure can be used by a contracting authority with the aim of proposing a method of addressing a need defined by the contracting authority.

5.     The innovation partnership – this procedure may be used when there is a need to purchase a good or service that is still unavailable on the market.

6.     The design contest – this procedure is used to obtain an idea for a design.

Depending on the circumstances and needs a contracting authority may sign a framework agreement with one or multiple companies for tenders requiring recurring purchases.

All public procurement procedures in the European Union (EU) are conducted based on national rules. For higher value contracts, these rules are based on general EU public procurement rules.

The value limits (thresholds) that mark when EU rules are used depending on the purchase, and who is making the purchase. These thresholds are revised regularly, and the amounts can be adjusted slightly. The main limits are:

-       EUR 139.000 for most types of services and supplies purchased by central government authorities.

-       EUR 5.350.000 for construction contracts.

For lower value tenders, only national public procurement rules apply but the general EU principles of transparency and equal treatment should be respected.

In Portugal, in terms of legislation, the Law nº 96/2015[1] regulates the access and use of certified public electronic procurement management solutions, establishing the requirements and conditions to enable interoperability with public centralised systems and platforms. The Public Procurement Code (Código dos Contratos Públicos) regulates the use of eInvoices in public procurement.

The dramatic circumstances of the covid-19 pandemic and the need to provide the entities responsible for combating the disease with effective and swift means to an urgent response justified the approval of exceptional and temporary regimes for the award of public contracts. These regimes resulted, in multiple countries, in a radical and dangerous simplification of the award procedures. Public procurement is a fundamental instrument for the prosecution of public interest. Naturally, its legal framework should be adjusted to the demands of the sanitary crisis without hindering the responsible entities’ ability to act nor creating unnecessary setbacks to the award of vital contracts to fighting the pandemic. However, the circumstances mentioned require additional caution to prevent various risks as: risks of rushed public decisions, risks of decisions that lead to inefficiency and lead to waste of public money, risks of corruption. These are usual risks in public procurement. Unfortunately, these risks are aggravated during times of crisis, like the one the world lives in today.

This exceptional regime for the award of public contracts in times of sanitary crisis should be read and interpreted considering the European and the constitutional principles applicable to public procurement. In the Portuguese constitution, article 226º, and in The Public Procurement Code, article 1º, al. a)[2]. Those principles reflect fundamental constitutional values, establish limits, and set guidelines to the choices of contracting authorities. Particularly relevant now are the principle of sustainability and the principle of proportionality, all of which source of tremendously important obligations to contracting authorities even, especially, in a situation of crisis.

The European Commission approved the communication on the 1st of April 2020, containing guidance for public procurement in particularly for above-threshold contracts in the situation caused by the covid-19 crisis.

On the 7th of April 2020, the Portuguese government adopted a series of exceptional and temporary measures in Decree-Law nº 14-A/2020[3] aiming to ease the adoption of eInvoicing. The law established new deadlines for adopting B2G eInvoicing in Portugal. This Decree-Law establish that large companies must start using eInvoicing by 31st of December 2020, instead of 1st of April 2020. Small and medium-sized enterprises have the obligation to start eInvoicing by 1st June 2021, instead of 31st of December 2020. Micro-enterprises will begin eInvoicing on 31st December 2021, one year later than previously planned. Nonetheless, it is important to keep in mind the article 28º of directive 2014/24[4], which foresees the possibility of a substantial reduction in normal deadlines for reasons of urgency, makes it possible to speed up the award of the contract. The contracting authority will have to access the conditions for the use of a negotiated procedure without prior publication of an announcement.

The commission recognizes that until the peak of the pandemic was reached, with the number of patients with covid-19 needing medical treatment increasing daily, such events should be considered as unpredictable for any contracting authority. It is necessary to access on a case-by-case basis whether it is impossible to respect the shortened deadlines of open or limited accelerated tenders (15 and 10 days for submitting tenders). This means that the exception of extreme urgency cannot be invoked for the award of contracts that take longer than what would be necessary if transparent open or restricted tenders had been used including accelerated tempers. These exceptions can only be used until it is possible to find more stable solutions that are it is only a matter of meeting immediate needs, until it is possible to adopt the normal procedures, at least in their accelerated versions.

The exceptional regime approved in March, in Portugal, is applicable to all contracting authorities and includes contracts for works goods and services related to prevention, containment, mitigation and treatment of covid-19, as well as, for all public action needed to refund normality following the epidemiologic outbreak.

Intersecting the objective and subjective scopes of application of the diploma we should conclude that while in theory, it concerns any type of contractual authority of article 2º of The Public Procurement Code, actually only certain entities can resort to this exceptional regime of public procurement, the entities that concretely develop activities for prevention, containment, mitigation and treatment of covid-19 and that wish to award a contract directly related to that activity and not contracts related to other aspects of the activity that they usually develop.

Concerning the temporal scope of the application of this regime, it is true that the legislator addresses contracts necessary to the restitution of normality, but this does not mean making way for celebrating contracts in post-sedentary crisis periods, nor for without penalty or fraud introducing in contracts celebrating during the crisis extended deadlines that would allow them to indefinitely be prolonged into the subsequent phase.

When it comes to above thresh or public procurement this regime should consider the application of simplified regimes contemplated in the directives for cases of urgency and extreme urgency.

In addition, the commission did not give contractive authorities a free pass and takes the position that the existing public procurement law provides for sufficient flexibility.

To sum up, common good requires that the exceptional and temporary legal tools, which the legislator all over Europe envisaged during the pandemic be used prudently and responsibly by all (public decision-makers who award these contracts, lawyers who advise them, academics who speak out on these issues). The profound economic and social crisis that we will have to overcome soon requires that finally there is the expertise to use the public procurement as a tool for building a truly circular economy with sustainability, financial, solidarity and social concerns.

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