Main changes related to classification and solvency criteria in Public Procurement Contracts

Written on 7 Oct 2015

On 5 September 2015, Royal Decree 773/2015 of 28 August was published in the Official Gazette. It modifies certain articles of the Spanish General Regulations of the Public Contracts Law, approved by Royal Decree 1098/2001 of 12 October (RD 773/2015).

On the other hand, Royal Decree Law 10/2015 of 11 September, published in the Official Gazette on 12 September, modifies article 75 of Royal Legislative Decree 3/2011 of 14 November on Spanish public procurement law.

A new bidder classification is now required to credit economic, financial, technical and professional solvency. The last regulation was not updated to administration management and neither to market reality.

The Third Final Provision of Law 25/2013, of 27 December, regarding the impetus of the electronic invoice and accounting record of invoices in the Public Sector amended the Spanish Public Procurement Law 3/2011 of 14 November. It modifies some provisions regarding the classification of bidders as well as economic, financial, technical and professional solvency which are required in order to contract with Public Administrations. However, many of these regulatory changes are still waiting for a further development.

This regulatory development becomes reality in the Royal Decree 773/2015 that will enter into force on 5 November 2015. From this date, every solvency criteria and classification requirement introduced by the aforementioned Law 25/2013 will be applicable. As a consequence, articles 65.1; 75 to 78 and 79 bis of Spanish Public Procurement Law 3/2011 of 14 November are amended.

The main innovations introduced by the analysed standard are the following :

  • The mandatory classification of all service contracts is no longer required. However, bidders will be able to use this classification as a means of proving their solvency in contracts such as those for cleaning and maintenance, according to requirements in the invitation to tender and those in the tender documents.
  • In case of opting for classification, a much simpler classification system is promoted in which classification subgroups are reduced from 72 to 29 by eliminating those service contracts which have fallen into disuse and as such are rarely used.
  • Classification in work contracts will only be mandatory where their value is equal to or greater than € 500.000. It also stipulates that where the contract value is below € 500.000, bidders can prove their solvency and creditworthiness through: (i) their inclusion in certain classification groups or subgroups; or (ii) following requirements in tender documents; (iii) solvency criteria in Royal Decree 773/2015. Additionally, certain categories of classification in work contracts are modified with the purpose of adapting the standard to meet industrial sector innovations. In particular, categories are extended in contracts whose value is below € 5.000.000.

Royal Decree 773/2015 establishes a new criteria for selecting contractors and sets standards and criteria to apply where these are not accurately referred in tender documents.

New criteria have been introduced in order to proceed in any bidding where solvency is required and tender documents have not established this. This new criteria is as follows:

  • Economic and financial solvency: the annual business turnover during the largest turnover year, taking into consideration the last three years . This should be at least one and a half times the estimated value of the contract. 
  • Technical and professional solvency: the tenderer shall provide evidence of their specific experience in undertaking work of the same nature as that of the object of the contract. The annual amount accumulated during the year of the greatest exeuction should be equal to or greater than 70% of the estimated contract value. Previous works must have been carried out: (i) in the last five years, in case of services and supplies or; (ii) in the case of public work contracts, in the last ten. 

Finally, Royal Decree-law 10/2015, of 11 September, granting extraordinary funds and credit supplements granted in the State budget and establishing additional policies on public employment and the stimulating of the economy incorporates a new paragraph in article 75.1 of Royal Legislative Decree nº 3/2011 of 14 November, on Spanish Public Procurement Law. This provision states that the contracting authority will be able to require entities contracting with the public sector a certain period for payment to suppliers. Limitations will be introduced by Order of the Ministry of Finance and Public Administration in accordance with the legislation regarding late payment. It will only be applicable when the company cannot submit abridged profit and loss accounts. This is intended to combat late payment between companies and to encourage undertakings to pay their suppliers promptly.