Portugal establishes exceptional procurement regime due to COVID-19

Late last week Portugal established an exceptional legal framework to deal with the impact arising from the COVID-19 pandemic. The Decree-Law 10-A/2020 was published in March 13th but its effects are backdated to the date of approval (March 12th) or even earlier for some parts of it. There is no sunset clause embedded into the law, so it will remain in force if and when it is revoked.

The law covers more than simply procurement, but procurement is frontloaded from articles 2 to 4.  The former is more interesting than 3 and 4, since these deal with the administrative or bureaucratic approval steps that sit outside the procurement itself, that is financial authorisation which had been centralised as a response to the financial crisis. That particular straightjacket has been loosened a bit.

As for procurement itself, Article 2(1) allows each and every contracting authority in the country to use the negotiated procedure without prior publication of notice (known locally as direct award). This is limited to the requirements set in the Public Contracts Code, namely the need for urgency and compliance with the principle of necessity. I can understand the logic behind this approach, but my gut feeling is that urgency and necessity will simply become empty words to be used to justify less than stellar procurement choices. On the flip side, this being an exceptional legal regime, its provisions must be interpreted narrowly and strictly.

Smaller goods and services contracts (up to €20,000) can be awarded without any formalities whatsoever, again one would assume with respect for the requirements set in Article 2(1). This means - if I am not wrong - that the contract does not have to be formalised in writing, and if I am correct this is a recipe for disaster later down the line.

Paragraph 3 of Article 2 sets aside an important compliance mechanism of the general Public Contracts Code for low value contracts tendered via negotiated procedures without prior notice. Although my criticism of the regime was not light, at least there was an attempt to make sure that these contracts were tracked and that not the same old companies were winning contracts without competition. The rules now introduced effectively take out that compliance mechanism altogether for contracts tendered under this exceptional regime. However, contracts itself are still subject to ex post facto publicity as they will have to be logged with the Government and in the procurement portal, Base.gov.pt.

The remaining paragraphs of Article 2 attempt to simplify and speed up the transition between the procurement phase and the actual contract performance and make do with some formal requirements. As such, the contract may be performed immediately after the award and not after it has been published on the national procurement portal, thus destroying a key incentive for these contracts to be logged in the portal. If under the general legal regime compliance was already less than stellar with this publicity requirement, it is obvious that within the context of the new exceptional rules compliance will not be a priority at all. The same logic can be seen on the last paragraph which obviates for the need of the prior assent by the Court of Auditors in advance of payments being made.

In another attempt to secure the supply of goods/services or the performance of the works contract, contracting authorities are authorised to pay in advance part of the payment without having to comply with the requirements set for by the Public Contracts Code.

Overall I think these measures are excessive and frankly destroy what was already a weak compliance system for low value contracts. If I had to guess, this exceptional regime will be the new normal and a return to the bad old days where procurement below the EU financial thresholds was not particularly transparent or worth looking into. On that, there's the added fear that this new regime is theoretically applicable to *any contract* that fulfils the urgency and necessity requirements.