Some updates on the Portuguese train tender

Over the weekend it was news in Portugal that the tender for 117 trains had been challenged in court by CAF and Stadler, two of the economic operators which presented themselves. In and of itself, this is unsurprising since by default most tenders in Portugal are challenged in the courts since it is relatively cheap and easy to do so. What happens next though depends on a number of variables.

The first is with the administrative court deciding the case. It is likely the train operator will ask for the case not to have suspensive effect, that is, for the award to go ahead under the guise of public interest that the trains are desperately needed. Indeed they are but it took two years for the award to happen so this urgency is mostly due to the behaviour of the contracting authority. Actually, it took almost three years since information about the then upcoming tender started to surface.

The second variable is the claimants legal strategy. If the administrative court allows the contract to go ahead, then the interest of the bidders to carry on challenging the decision is significantly reduced since what they stand to obtain at the end of the legal proceedings is nowhere as enticing as delivering the contract itself. I cannot recall out of the top of my head but the impression I have is that Portuguese courts have a really high bar for damages to cover more than simply the costs incurred thus far. In consequence, I would consider it unlikely any of the two bidders would be interested in taking the case all the way to the Court of Justice as I think makes sense.

The third variable is the Audit Court. Before the contract can be entered into, the Portuguese Audit Court will be called upon to assess the legality of the procedure. Without its approval, while technically the contract can be entered into it cannot produce any effects and is to be considered null and void. This is where I think more likely the procedure will be stopped in its tracks based on what for me are fairly obvious legal failings.

Now, having said that truth be told that when in Portugal a couple of weeks ago I had the chance to talk with some colleagues. It is fair to say they saw the case very differently from me but their arguments were not really persuasive. However, they did mention that the Audit Court may take a more political view and allow the contract to go ahead. This is not my view and I have not seen any recent decision from it fitting that mould. We shall see.