Lisbon City Council and direct awards of public works in Portugal

One of Portugal's top newspapers investigated the direct award of a €5.179.873,44 public works project by the Lisbon City Council to Teixeira Duarte, one of the largest construction companies in the country. The piece is an example of how direct award (negotiated procedure without competition or notice) is wrongly used and abused in the country. The contract covered works to repair/sustain the Miradouro de Sao Pedro de Alcantara, one of the many scenic viewpoints in the city which is alleged to be in risk of collapse.

The Council claims the urgency of the works required the contract to be awarded quickly, therefore justifying the need to award the contract directly and without competition. Needless to say, this is an exceptional use of direct award and the material justification is supposed to reflect such exceptionality. Herein lies part of the problem: that specific reason to use the direct award procedure does not appear to comply with the requirements for its use.

The Miradouro de Sao Pedro de Alcantara has been monitored since 2006, with a detailed study carried out in 2016 so there is no factor external to the Council justifying the use of the direct award procedure. In other words, if it became urgent to repair the Miradouro its because the Council did not act as quickly as it should and created itself the situation of urgency (i.e., an internal reason for the urgency). By itself, this amounts to poor management at the very least, since the detailed report was handed to the Council in December 2016 and the decision to award the contract directly taken in May, on the same date another company was commissioned to prepare the works project. And surely by coincidence it is the same exact consultancy which produced the 2016 report. The works contract itself was signed only on July 4th, again raising the question of what 'urgent' really means in the context of this contract.

But it gets worse. It appears the National Civil Engineering Lab produced an opinion sustaining that the intervention was not urgent, contradicting the consultants' view from 2016.

Without seeing the actual decision and the arguments produced by the Council, I frankly cannot accept at face value that it was a clear cut case of urgency which would justify the use of this 'exceptional' approach to procurement.

There is, unfortunately even more to this case. According to the newspaper piece, it seems the works contract covers not only the repairs on the wall (i.e., the 'urgent' bit) but also the works at the surface. Using the contract available on BASE.gov.pt it is impossible to confirm this information. However, if true those works (~€1,000,000) were not strictly needed and therefore not urgent at all. They could (and should) have been subject to the regular public procurement rules in the country.

One final note for the value of contract: €5.179.873,44. The current EU financial thresholds for public works are €5.225.000 and until January 2016 they were €5.186.000. There* is a growing body of evidence that contracts valued close to the thresholds are more likely to have been manipulated and are associated with corruption risks.

PS: I will be publishing soon a paper about the excessive use of direct award in Portugal. Will link it here when it happens.

*Thanks for pointing out the typo Domingos :)