Regulatory and compliance

Public Procurement: Spain failed during 2017, according to the European Commission

Published on 23rd Nov 2018

In the annual report on the health of the internal market in terms of public procurement, Spain appears at the tail end of 28, followed closely by Greece and Romania in 2017, for not passing 10 of the 12 parameters used by the European Commission (EC).

Every year the EC produces reports relating to the state and functioning of the internal market. Amongst these, the EC produces a report relating to the state of public procurement in the member states of the European Union (EU).

In light of the principles of equal treatment, non-discrimination and transparency and the use of the twelve indicators, the EC analyses how the member states are in terms of public procurement. Next, we will analyse said indicators and Spain´s results in 2017.

Mechanics of the report and indicators

The EC generates the overall score by adding together the scores in the twelve individual indicators, the better the score in each indicator, the higher the overall score will be. Notwithstanding this, there are three indicators that score higher than the rest (triple), it is the first three: i) single bidder; ii) no calls for bids; and iii) publication rate.

As a result, the rest of the indicators combined only make up a third of the total score. Said indicators evaluate the following: iv) cooperative procurement; v) award criteria; vi) decision speed; vii) SME contractors; viii) SME bids; ix) procedures divided into lots; x) missing calls for bids; xi) missing successful bidder information; and xii) missing information from the contracting body.

In what areas has Spain passed

To start with the positive, Spain has obtained a "pass" in the indicator ii) no calls for bids. This means that the proportion of unpublished and negotiated bids with a single company was relatively acceptable, that is, that the bids in Spain during 2017 have been acceptably publicized, transparent and competitive, although there is room for improvement.

Likewise, Spain has received a remarkable in relation to the indicator v) award criteria. This reflects that in Spain in 2017, no public contracts were awarded taking into account only the lowest price, but other factors were considered such as the quality of the good or service.

In what areas Spain failed

Despite having passed two of the twelve indicators, given that it failed two of the most important indicators, Spain has failed the 2017 course.

Next we can see in which areas Spain failed and what each indicator reflects:

  1. Single bidder: evidence that in Spain there are too many bids in which only one bidder is present and reflects a possible lack of competitiveness and / or too much bureaucracy;
  2. Publication rate: measures the number of bids published on the TED portal in relation to Spain's GDP and reflects a possible lack of openness and accessibility to the Spanish public procurement market;
  3. Cooperative procurement: measures the number of bids in which the Spanish public administrations collaborate jointly, which reflects that in Spain there are lost opportunities to buy at better prices and exchange knowledge between administrations;
  4. Decision speed: evidence that Spain takes too long between receiving offers and awarding contracts, which results in more expensive procedures and more uncertainty for administrations and bidders;
  5. SME contractors: measures the number of contracts in Spain in which SME´s are awarded the contract, reflects that in Spain there are barriers that favour large companies over SMEs (which make up the majority of companies in the EU);
  6. SME bids: measures the proportion of offers made by SMEs in bids in Spain and reflects the possibility that bidding documents are biased against SMEs;
  7. Procedures divided into lots: measures the number of bids that are divided into lots, in order to favour the participation of SMEs, reflects possible discrimination in favour of large bidders in Spain;
  8. Missing calls for bids: measures the number of contracts in which, despite the existence of a tender, the conditions or the tender itself are not clear, reflecting that in Spain there is insufficient information on public procurement activities;
  9. Missing successful bidder information: measures the number of times that information of the vendors was not included in the bidding process, this would reflect that in Spain not enough information is collected about the bidders;
  10. Missing information from the contracting body: similarly to the previous indicator, measures the number of times that information from the contracting body has not been collected during a bid, reflecting that they probably do not take due note of this information in Spain.

The solution, the new Law of Public Sector Contracts?

Given the failure of Spain, the question is whether the new Law of Public Sector Contracts will be able to improve the qualification of Spain for 2018.

We can anticipate a prediction if we take into account the objectives pursued with the new law, and that we analyzed here. Some of these objectives coincide with many of the indicators taken into account by the EC when evaluating the "health" of the Spanish public bidding market.

In this sense, we can say that if the Spanish administrations comply with the objective of creating more purchasing centers; correctly apply simplified open procedures; apply more flexibility in the solvency requirements required of SMEs; and respect, when possible, the bidding by lots, we would be facing an approved potential of Spain.

It is worth mentioning that the work of the companies themselves in this regard is very important, given that they have to denounce any irregularity that does not comply with the objective of both the EC, and the new law of public sector contracts. Thus allowing greater competitiveness, transparency and evolution of the Spanish public procurement market, and bringing Spain closer to levels of EU competitiveness.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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