Portugal's upcoming procurement law(s) review

A flipside of having commented on the recent Portuguese general election party manifestos is that I now have a record of proposals. None paid much attention to procurement and certainly no one suggested a profound revision of the Public Contracts Code. Fast forward a mere 4 months and that is exactly the plan of the new Portuguese government for the summer. Rush is never good counsel as we say down there.

In a recent interview to national media the Minister for Cohesion railed against the Public Contracts Code and how it was a barrier to the speedy deployment of the Recovery and Resilience Facility funds. If it sounds familiar is because the previous government had already loosened the rules significantly back in 2021 to an extent that I found in some instances beyond what is allowed by the Directives and an example of 'strategic deviation from EU law.'

The Minister for Cohesion is particularly concerned with the number of reviews being brought before the courts which, in his view, delay the whole process. In that I am fully in agreement with him: a key feature of our review system is that it is extremely easy to start a dispute in connection with a public procurement procedure. But its rules are governed not on the Public Contracts Code but the Administrative Courts Process Code instead.

What I am not in agreement with the Minister on is on his confusion between symptoms and causes. The delay from a judicial review is a symptom since the cause for this delay resides elsewhere, namely in the Portuguese court system. The system is woefully under resourced and since it is very cheap to bring a case the consequences are easy to figure out. As procurement cases are treated as urgent, that means they have clogged up the Administrative courts also for other disputes involving the State. A culture of litigation, as identified by Despina Pachnou about Greece (and the UK) over 20 years ago, also plays a part here. 

The Minister, however, is concerned only with the day-to-day impacts of the symptoms and not the underlying cause so his suggestion is simply to restrict judicial review in the first place. If cases are not brought before the courts, well, then the issue of delays is magically solved in a cheap and effective way. Job done. Well, no. For contracts covered by EU secondary law, curtailing access to the only review mechanism offered in Portugal is blatantly illegal. Even if the government pushed this through it is a question of time until the Commissions ruffles its feathers and the CJEU gets involved as well.

Since the problem of excessive delays in obtaining a judicial review decision in connection with public procurement contracts in Portugal is a real issue, what should the government consider instead? These are just a few ideas that I already had floating in my mind in one way or another but are not fully formed.

Investment in courts

The obvious place to start is by solving the underlying problem, but doing so would be incredibly expensive and would not yield immediate results helping out on the deployment of the RRF. This is not going to happen and it is a shame that the government passes on the opportunity to significantly improve how the overall judicial system works.

Raising court fees

If the government wants to introduce some 'demand management' measures then another obvious lever to pull is that of the court fees. Today, if you want to challenge an award decision the initial cost to do so is only €204. Of course the final bill may be higher once process costs are calculated but the low initial cost does not function as a deterrent (in the sense of forcing the claimant to consider the pros and cons of the challenge).

Introducing appeal boards

Independent appeal boards for public procurement decisions are nothing new within the EU. Out of the top of my head they have a long tradition in countries like Denmark or Germany (I think) and about a decade ago Spain introduced a similar structure after being dragged over the coals for not complying with the Remedies Directive. What is important is to have a fast review with suspensive effect to weed out the most egregious examples of mal-practice. From then on build a judicial review system to deal with the cases that require it but this could be done in conjunction with higher court fees and removing the suspensive effect of the appeals.

Introducing a Procurement Ombud

I am a huge fan of the Canadian approach to having a Procurement Ombud overseeing public procurement practice. The Ombud does not adjudicate directly but can review suppliers complaints and in the process obtain valuable information of the overall health of the system that informs future legislative revisions.