Direct award and the re-enacting of prior consultation

One of the most talked-about news of the revision of the Public Procurement Code (PPC), carried out by Decree-Law no. 111-B/2017, of August 31, which will come into force on January 1, 2018, is the prior consultation procedure “abolished” since 2008.


The choice for a direct award in relation to the value of the contract becomes eligible under € 30.000 for public works contracts, € 20.000 for contracts for the leasing or acquisition of movable assets and for the purchase of services and € 50.000,00 for other contracts. Up to these amounts, contracting authorities are entitled to invite only one entity to tender.

The old direct adjustment limits are now reserved for prior consultation, with an invitation to at least three entities where the value of the contract is less than € 150.000 for public works contracts, € 75.000 for contracts for leasing or acquisition of movable assets and the purchase of services and € 100.000.00 for other contracts.


Material criteria

Regarding the choice of direct award according to the material criteria listed in Articles 24 to 27 of the PPC, there were no significant changes, only highlighting the densification of the reason foreseen in Article 24 (1) (e) , which clarifies the situations in which the legislature considers that the services which are the purpose of the contract can only be entrusted to a particular entity, namely: (i) The purpose of the procedure is the creation or acquisition of a work of art or an artistic performance; (ii) There is no competition for technical reasons; (iii) It is necessary to protect exclusive rights, including intellectual property rights.“. Reinforcing paragraph 4, paragraphs (ii) and (iii) can only be adopted “where there is no alternative or reasonable substitute and where there is no unreasonable restriction on the lack of competition in relation to the aspects of the contract to be concluded”.

With regard to the material criteria set out in Articles 24 to 27, Article 27-A of the PPC states that in the situations referred to therein should be a prior consultation to the detriment of direct award, whenever more than one economic operator is available and compatible with the reason presented for the adoption of this procedure. Notwithstanding the potential for litigation of this rule, which proves to be difficult to achieve, the legislator’s option is clear: even in the face of a material criterion, where it is possible to invite more than one entity to submit a proposal, then the correct procedure is prior consultation. As an example, the grounds of “extreme urgency” referred to in Article 24 (1) (c) may justify not invoking a public tender which, as is it seldom known, takes up to 6 months to complete, however, it doesn’t mean that it is not possible to opt for prior consultation, which will nonetheless be a faster procedure and which has the advantage of ensuring greater competition.

The legislator itself has made this choice by establishing in Article 259 that for the formation of contracts to be concluded under framework agreements in the type referred to in the no. 1 paragraph b) of Article 252 (framework agreements whose terms do not cover all of its aspects subject to competition), the prior consultation procedure should be adopted. He considered that, since it was possible to call for more than one entity to be submitted, the competition principle should prevail.


Negotiation phase on proposal attributes

The procedural procedure for direct award and prior consultation, set out in Articles 112 to 129, has common points, although prior consultation may, if the contracting authority so foresees in the invitation to tender, contain a different stage – negotiation, which focuses (only) on the attributes of the proposals.


Selection the invited entities

Another rule that is difficult to apply, as a result of this procedure, is Article 113 on the selection of invited entities, which, for the purposes of calculating the cumulative value of the contracts awarded to the same entity, drops the requirement of the identity of the object of contracts and mixes awards following direct awards and prior consultations. It therefore closes the invitation to tender to entities to which the contracting authority has already awarded contracts in the current financial year and in the previous two financial years, following prior consultation or direct awards pursuant to paragraphs c) and d) of article 19 and paragraphs c) and d) of no. 1 of Article 20, as the case may be, proposals for the award of any contract whose contractual price is equal to or greater than the limits referred to in those points.

Doubts are therefore raised as to whether the sum should be made by type of procedure or by combining direct awards and prior consultations and by type of contract or regardless of its purpose.

As long as the case-law is not called upon to give a ruling on this subject, a cautious interpretation is recommended. Thus, when choosing the invited entity or the entities invited to submit a proposal, it is suggested that the contracting authority should gather information on all awards, regardless of the purpose, made to each one, in the current economic year and in the two economic years following a prior consultation or direct award according to the value of the contract, and verify whether or not the thresholds laid down in paragraphs c) and d) of article 19 and paragraphs c) and d) of no. 1 of Article 20 have been exhausted for the type of contract and pre-contractual procedure in question.

For example, if, as of today, a contracting authority is in the process of choosing the economic operator invited to submit a proposal in a direct award for a supply of services, it cannot use an entity which between 2015 and 2017 has been in accordance with the provisions in paragraphs c) and d) of article 19 and paragraphs c) and d) of the no. 1 of Article 20, the sum of the prices of all such contracts is € 45.000, since the limit of € 20.000,00 will already be exceeded. But you can invite the same entity if you choose a prior consultation procedure, because the € 75.000,00 threshold is still to be reached.


The effects of re-enacting

The effects of re-enacting the figure of prior consultation, criticized to great extent by the national doctrine, in promoting competition and opening up the public market to more participants, are expected to be small, since it will always be a closed procedure in which the contracting authority has the power to choose those invited to tender without prior advertising and thus very vulnerable to anti-competitive practices, namely collusion between economic operators. On the contrary, the task of the administrative courts and the Constitutional Court will certainly be Herculean in the selection of the contracting authority in this matter.

Jane Kirkby, partner and lawyer at BAS

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