What is the relevant legislation regulating the award of public contracts?
The main pieces of national legislation are the following:
- Act 9/2017, dated 8 November, on public procurement and transposition to the Spanish legislation of EU directives on public procurement 2014/23/EU and 2014/24/EU (Act 9/2017);
- Act 31/2007, dated 30 October, on public procurement of special sectors (Act 31/2007);
- Royal Decree 814/2015, dated 11 September, on approval of the Regulation of the special proceedings for review of administrative decisions on public procurement (RD 814/2015);
- Royal Decree 817/2009, dated 8 May, on partial regulatory implementation of the General Act on Public Procurement (RD 817/2009); and
- Royal Decree 1098/2001, dated 12 October, on approval of the general regulation of the Act on contracts of the Public Bodies (RD 1098/2001).
Also, some Spanish regions have enacted their own legislation:
- Navarra: Act 2/2018, dated 13 April, on public contracts in Navarra;
- Region of Madrid: Decree 49/2003, dated 3 April, on approval of the general regulation of public procurement in Madrid; and
- Basque Country: Decree 116/2016, dated 27 July, on legal regime of the public procurement in the Basque Country.
Is there any sector-specific procurement legislation supplementing the general regime?
Yes, there is special legislation, set out in Act 24/2011, dated 1 August, on public procurement in the fields of defence and national security.
In which respect does the relevant legislation supplement the EU procurement directives or the GPA?
The legislation in force incorporated the European Union (EU) procurement directives 2014/23/EU and 2014/24/EU and the former 2004/18/CE. Some of the regulations in such legislation are also based on the rules in the World Trade Organization’s Agreement on Government Procurement (GPA), of which the EU is a member state.
Are there proposals to change the legislation?
There is currently a bill in the Spanish parliament, the purpose of which is to incorporate the new EU directive on public procurement of special sectors, 2014/25/EU.
Applicability of procurement law
Which, or what kinds of, entities have been ruled not to constitute contracting authorities?
Any private undertaking that an entity of the public sector has less than 50 per cent participation in or control of is not subject to the legislation on public procurement.
Likewise, public bodies that are engaged in any profit-making activity of goods manufacture or services provision, or that are mostly financed by income received as consideration for the provision of goods of services, shall not be subject to the legislation on public procurement.
In any event, in practice, there are very few of these institutions.
Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?
No. There are exclusions according to the purpose of the contract, but not according to its value.
Despite this, minor contracts (work contracts with a value of less than €40,000, or any other contracts of less than €15,000) have very light requirements: public expense approval, registry of the relevant invoice and, if possible, the submission of at least three offers.
Amendment of concluded contracts
Does the legislation permit the amendment of a concluded contract without a new procurement procedure?
Yes, but only provided that such possibility is expressly set out in the tender documents, or in case of unexpected circumstances. In the latter scenario, the contracting authority shall not alter the essential conditions of the tender and award, and the scope of the amendments shall not exceed what is strictly necessary to include new provisions owing to unexpected circumstances.
Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?
Most of the judgments in this matter have been issued by the European Court of Justice (CJEU). See, for example, the judgment dated 29 April 2004, CAS Succhi di Frutta SpA, C-496/99 P, EU:C:2000:595.
In which circumstances do privatisations require a procurement procedure?
Privatisation is ruled by the public properties legislation, not public procurement regulations.
Despite this, if a public authority decides to change the management of a public service or utility from a purely public management scheme to a public-private partnership (PPP) scheme, it shall be obliged to choose the private undertaking by means of a public tender, which is controlled by the public procurement legislation.
In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?
In cases of the management of public services or utilities by means of the granting of concessions in favour of private undertakings and the incorporation of companies allocated to the management of such services and owned by public and private shareholders, the private undertaking (ie, concessionaire or private shareholder) shall be chosen according to a public tender.
Advertisement and selection
In which publications must regulated procurement contracts be advertised?
In official gazettes and in the contracting profile of the contracting authority.
Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?
Such requirements shall be bound to the purpose of the contract and be proportional to such purpose.
Is it possible to limit the number of bidders that can participate in a tender procedure?
Yes. The restricted proceeding allows the contracting authority to limit the number of bidders according to impartial criteria related to financial solvency or technical ability. In any event, the number of bidders shall not be less than five.
In the cases set out in the Act 9/2017 that allow the contracting authorities the use of the competitive procedure with negotiation, the authorities shall request offers from at least three undertakings when possible.
Moreover, the contracting authority is entitled to award a contract to a single bidder (therefore without any prior selection based on competitive concurrence) by means of the competitive procedure with negotiation without publicity, on the basis of exclusivity, in cases where only the single bidder is capable of executing the contract for technical or artistic reasons, or any reasons related to the protection of industrial property rights.
In the cases set out in Act 9/2017 that allow the contracting authorities the use of the competitive dialogue, such authorities shall request offers from at least three undertakings.
Regaining status following exclusion
How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?
The prohibition to contract is not indefinite, but subject to the term ordered by the relevant public authority or judicial court.
Self-cleaning is currently recognised as a way of avoidance of the statement of prohibition to contract (see article 72, paragraph 5 of Act 9/2017).
The procurement procedures
Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?
Yes. They are all set out in article 1 of Act 9/2017.
Independence and impartiality
Does the relevant legislation or the case law require the contracting authority to be independent and impartial?
Yes. Any officer of the contracting authority shall refrain from participating in any tender and could be subject to recusal if he or she shares any interests with any of the bidders.
Conflicts of interest
How are conflicts of interest dealt with?
The officer of the contracting authority shall refrain from participating in any tender. If the officer does not refrain, any bidder may request the officer to be recused by the contracting authority, the officer could be recused if it is deemed that there is a conflict of interests that must be avoided.
Bidder involvement in preparation
How is the involvement of a bidder in the preparation of a tender procedure dealt with?
Bidders are not entitled to participate in the tender if such participation could restrict free competition or result in an advantage in favour of the bidder in front of the remaining participants.
What is the prevailing type of procurement procedure used by contracting authorities?
The prevailing types of procurement procedure are the open and restricted proceedings.
Separate bids in one procedure
Can related bidders submit separate bids in one procurement procedure?
No, they cannot.
Negotiations with bidders
Is the use of procedures involving negotiations with bidders subject to any special conditions?
It is compulsory to request at least three offers whenever possible and the negotiation points must be expressly indicated in the tender documents.
If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?
The competitive procedure with negotiation is used most frequently, since it is easier to justify its use. There are new forms enacted upon the Act 9/2017, but these have not been used much yet, as the Act entered into force recently.
Competitive dialogue can only be used when the contracting authority is not sure of the scope of the purpose of the public contract to be awarded and requires the feedback of the market itself. These circumstances do not usually occur, as the contracting authorities are perfectly aware of the needs to be fulfilled and the scope of the purpose of the public contract to be awarded.
What are the requirements for the conclusion of a framework agreement?
In general terms, the framework agreements cannot be used in a fraudulent manner or result in distortion of free competition. The framework’s term shall not be more than four years, save for exceptional cases, which shall be duly justified.
May a framework agreement with several suppliers be concluded?
Yes. The award of contracts resulting from such framework agreement requires an additional competitive procedure, but such a procedure is only based in the award criteria of the contract and not the framework agreement itself.
Act 9/2017 sets out the award of contracts under framework agreements without the need to issue an additional competitive procedure, provided that certain requirements are met.
Changing members of a bidding consortium
Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?
Only before the term granted for the filing of documents related to the financial solvency and technical ability of each member of a bidding consortium.
Participation of small and medium-sized enterprises
Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?
Yes, by means of the division of the purpose of the public contract into different lots.
There are no limitations, but such division shall not be carried out to avoid the application of stricter rules for the award of the public contract due to its value.
What are the requirements for the admissibility of variant bids?
This possibility shall be indicated in the tender documents, including in which elements and under which conditions a variant bid may be admitted.
Must a contracting authority take variant bids into account?
Only if the tender documents entitle bidders to propose variant bids or improvements.
Changes to tender specifications
What are the consequences if bidders change the tender specifications or submit their own standard terms of business?
The participant shall be excluded from the tender.
What are the award criteria provided for in the relevant legislation?
The award criteria shall be directly related to the purpose of the public contract, such as:
- term for execution;
- delivery of the goods;
- provision of the service;
- costs bound to the use of the goods supplied;
- technical value;
- aesthetic or functional characteristics;
- technical assistance;
- after-sales or customer services;
- environmental or social advantages;
- quality-price ratio or value for money; or
- any other similar features.
The award criteria are set out by the contracting authority and are expressly indicated in the tender documents. Such criteria cannot refer to the bidders’ technical ability or financial solvency, which are tender admission criteria, not tender award criteria.
In cases where the contracting authority decides to set out only a single criterion for an award, the criterion will be the price offered.
Award criteria can be appraised automatically, by means of formulae, or by a value judgment. In order to ensure impartiality, the appraisal of award criteria based on value judgments is carried out before the appraisal of the award criteria based on formulae.
In general terms, award criteria based on formulae count for more than award criteria based on value judgments. When award criteria based on value judgments receive a higher score than those based on formulae, the contracting authority forms an expert committee of at least three members that appraise the award criteria based on value judgements, or commission such an appraisal from a specialised technical body.
Abnormally low bids
What constitutes an ‘abnormally low’ bid?
The contracting authority is entitled to indicate objective parameters by which a bid can be deemed as abnormally low in the tender documents.
An abnormally low bid is, therefore, any bid that is considered such compared to the objective parameters set out in the tender documents.
What is the required process for dealing with abnormally low bids?
If the contracting authority finds any bid abnormally low, according to the objective parameters set out in the tender documents, it shall ask the bidder to justify the terms of its proposal and explain the reasons why it is able to offer an abnormally low bid.
Such terms can be related to the:
- reduction of the costs in the execution of the public contract;
- technical solutions proposed;
- any exceptionally favourable conditions in favour of the bidder for the execution of the public contract that enables the offering of lower prices;
- innovation of the proposed provisions; and
- compliance with the provisions related to employment protection and labour, social, environmental or outsourcing conditions in force in the place where the public contract is to be executed; or
- the potential granting of state aid.
The contracting authority shall request the relevant public body’s technical advice to analyse the bidder’s justification.
Upon such hearing and analysis, the contracting authority shall either accept the justification and admit the bid or exclude the bidder from the award procedure if it deems that the public contract cannot be executed due to the abnormal or disproportionate values.
Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?
Procurement complaints can be filed before an administrative tribunal of contractual complaints, which is a special administrative body created specifically to solve some public procurement disputes, and the decisions of which may be subsequently appealed before judicial courts. Procurement complaints can also be submitted directly to the judicial courts.
If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?
Yes, as any decision of these administrative contractual complaints can be subsequently challenged before the relevant courts.
Timeframe and admissibility requirements
How long do administrative or judicial proceedings for the review of procurement decisions generally take?
Administrative proceedings are normally concluded within one or two months.
Judicial proceedings may take two years initially, and another one or two years if a ruling is appealed before the High Court.
What are the admissibility requirements?
Besides formal requirements, there are two substantive issues that should be considered:
- if a participant challenges an award based on any potential nullity of any term set out in the tender document, but did not challenge the tender document itself, the award challenge shall be dismissed, as it is considered that the lack of challenge of the tender documents is deemed as a full acceptance of their contents; and
- if a participant challenges an award, the claim shall only be admitted if such participant would be the awardee of the public contract, if the administrative tribunal agrees with the participant’s legal grounds.
What are the time limits in which applications for review of a procurement decision must be made?
The deadline for appealing before the administrative tribunals of contractual complaints is 15 working days, and two months before the judicial courts. These periods start from the day following the date of publication or notification of the challenged administrative action or resolution. Both deadlines are strictly observed; thus, appeals filed later will be rejected.
Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?
If a challenge is filed against an award, the administrative tribunal of contractual complaints automatically suspends the conclusion of the contract.
Upon 30 working days as from the filing, the administrative tribunal of contractual complaints reviews the decision and can resume the conclusion of the contract if new circumstances require such continuation.
Furthermore, in the case of any other decision being challenged, such as the approval of the tender documents, the administrative tribunal of contractual complaints can adopt injunctive measures (including suspension of the procurement procedure) by its own decision or upon a request from the challenging bidder. Likewise, the administrative tribunal of contractual complaints is entitled to revoke such injunctive measures should it be advisable due to justifiable circumstances.
Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?
Ninety per cent of the automatic suspensions are in force until the conclusion of the claim before the administrative tribunal of contractual complaints.
Notification of unsuccessful bidders
Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?
Yes. The notice shall be sent to all unsuccessful bidders and uploaded to the contracting profile within 10 days as from the date of award of the bid.
Access to procurement file
Is access to the procurement file granted to an applicant?
Is it customary for disadvantaged bidders to file review applications?
Approximately 2,000 appeals on public procurement matters are submitted every year (the central tribunal of contractual complaints issued more than 1,200 resolutions in 2018).
Considering that the special appeal on contracting in Act 9/2017 can be filed against a greater type of administrative decisions beyond the approval of tender documents, exclusions from public tenders or awards (for instance admission to public tenders, in-house providing or contractual amendments), this number is expected to increase.
Violations of procurement law
If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?
Yes, but only upon request of the bidder, and such damages shall be duly justified.
May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?
Yes, but cancellation or termination is usually delayed until urgent measures are adopted to avoid damages to the public interests.
Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?
Yes. In such case, parties interested in the public contract are entitled to challenge the award before the administrative tribunals of contractual complaints, and courts on the legal grounds that such a contract is null and void, due to the absolute breach of administrative proceeding rules which are applicable to public procurement.
What are the typical costs of making an application for the review of a procurement decision?
Such costs depend on the estimated value of the contract. However, the minimum cost of the legal services related to the filing a challenge to a decision with the administrative tribunals of contractual complaints is €3,000 to €6,000.