New law approved on procurement in excluded sectors and modification of some aspects of the Law on Public Sector Contracts

Written on 24 Feb 2020

The Government has just approved by Royal Decree-Law 3/2020, of 4 February, the partial transposition of the European Directives relating to procurement in the traditionally known as "excluded sectors" (water, energy, transport and postal services) and to the awarding of concession contracts. Some aspects of the Public Sector Contracts Law were also modified.

With this new Royal Decree-Law, the transposition of the aforementioned Directives is completed with regard to contracting and tendering of concessions in the excluded sectors by public sector entities that are not public administrations, public companies, as well as private companies with special or exclusive rights.

Compared to the law so far in force on procurement in the excluded sectors, this royal decree establishes a more ambitious and extensive regime, with many new features. For example, the following should be noted:

  • It regulates for the first time the award procedures to be applied by contracting entities for contracts for works concessions or service concessions in the excluded sectors.
  • In addition to the traditional principles governing procurement in these sectors (non-discrimination, transparency, equality, etc.), the principle of free competition and the principles of guaranteeing market unity are new.
  • Competitive dialogue and partnership for innovation are introduced as procedures for tendering. And "market consultations" are also regulated for the first time for excluded sectors.
  • With regard to the award criteria, the traditional principle of the most advantageous tender is replaced by the principle of the best offer (linked to value for money).
  • The application of so-called "procurement exclusions" are extended to all contracting entities, and not only to public law bodies and public undertakings (as has been the case until now).
  • Likewise, the compulsory electronic procurement is introduced, except in the case of certain exceptions, and electronic means must be used at all stages of the procedure. Consistently, contracting entities are required to have a profile of the contractor.
  • Fraudulent splitting of contracts for the purpose of circumventing advertising requirements or requirements relating to the relevant award procedure is expressly prohibited. In conjunction with this, there is a general obligation to divide the object of the contract into sections (where this is possible according to their nature).
  • For the first time, the minimum content of the contracts is established, as well as their duration, which in the case of contracting entities belonging to the Public Sector is subject to the same limitations as provided for in the Public Sector Contracts Law.
  • Limitations are introduced for the first time in relation to amendments to contracts, e.g. permission must be obtained from the competent ministry for unforeseen amendments of more than 20% of the initial contract price. On the other hand, the limit on subcontracting, which was previously set at 60% of the amount awarded, has been removed.
  • A regulation is introduced that is very much in line with that provided for in the Public Sector Contracts Act with regard to nullity and claims. Thus, claims against certain acts may be brought before the contractual remedies bodies, and the provisions governing special remedies for contracts with certain specialities apply. It also allows for out-of-court settlement of disputes regarding the effects, performance and termination of contracts.
  • The regulation of orders for so-called "own personified resources" by contracting entities that are contracting authorities, as well as agreements between contracting entities belonging to the public sector, are also highlighted.

Another of the main objectives of this new regulation is to use public procurement as an instrument to implement European and national policies in social, environmental, innovation and development and promotion of SMEs affairs. In this sense:

  • An unequivocal legal mandate is established for the contracting entity to incorporate considerations of a social, environmental and SME support nature across the board (both in the design and in the implementation of the procurement procedure).
  • In the same context, contracting entities are obliged to take measures to ensure that, in the performance of their contracts, companies comply with environmental, social and labour law obligations, with the possibility of imposing penalties for non-compliance.
  • An obligation is imposed on contracting entities to reject abnormally low tenders where they are found not to comply with applicable environmental, social or employment obligations.

In short, the new regulation incorporates into procurement in the excluded sectors some aspects already included in the Public Sector Contracts Law, but which represent important novelties in these sectors. In any case, a unique regulatory regime remains in place, which in some aspects is still less strict and rigid than the general regime for public sector procurement.

On another level, but also in the area of public procurement, Royal Decree-Law 3/2020 incorporates a series of amendments to the Public Sector Contracts Law. The modification to the regime of the so-called "minor contracts" is notable, eliminating the requirement that, in order to sign a minor contract, the contractor should not have signed more minor contracts that individually or jointly exceed the amounts established by law for these contracts.

Should you wish to know more about the changes that the new regulations will bring and their possible repercussions, please do not hesitate to contact one of our experts mentioned below or your usual contact at Osborne Clarke.