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IP/11/430

Brussels, 6 April 2011

Public procurement: Spain amends its legislation on public sector contracts following infringement procedure

The European Commission has closed infringement proceedings against Spain over a series of provisions in Spanish public procurement law on modification of public contracts after award as the law in question (Spanish Law 30/2007 on public sector contracts known as the LCSP) has been substantially amended by a new Law 2/2011 on Sustainable Economy (LES). The new regime established by the LES is a welcome step in that it limits the power of the contracting authorities to modify public contracts after award in a way that alleviates the concerns that had triggered the infringement procedure. However, this new regime will be closely examined and monitored by the Commission to ensure its compatibility with EU public procurement directives and with the case law on modification of public contracts and additional works.

What is the aim of the EU rule in question?

Public procurement is about how public authorities spend public money on construction, goods and services. It covers purchases of everything from computer systems to waste water plants, ship building, and consulting services. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

Why did the Commission open an investigation in the first place?

The Commission launched infringement proceedings as it had come across a widespread problem concerning modification of contracts after award in Spain, largely thanks to the auditing of projects co-financed with Structural and Cohesion Funds. Indeed, irregular modification of contracts after award, mainly concerning additional works, is one of the most frequent reasons for financial corrections in Spain.

The Commission considered that the LCSP gave contracting authorities a wide, almost unlimited, power to modify essential terms of public contracts after award, in a manner which was not in line with the principles of equal treatment between bidders, non-discrimination and transparency set out in EU public procurement rules.

The Commission also considered that the LCSP allowed for the possibility of the contracting authority to resort to the use of negotiated procedures without publication in violation of Article 31 of Directive 2008/14/EC.

How will the citizens now benefit?

An appropriate regime on modification of contracts after award, including additional works, is fundamental to guaranteeing full respect of the principle of transparency and of equal treatment between bidders. It is essential that bidders are placed in the same position when formulating their offers, which will also allow the contracting authority to compare and evaluate the different tenders. An appropriate regime on modification of contracts is also likely to have a positive impact in avoiding abnormally low tenders, as the winning tender and the contracting authority will not be able to freely renegotiate the terms of the contract as tendered and awarded.

The Law on Sustainable Economy is a welcome step in that it limits the power of the contracting authorities to modify public contracts after award in a way that alleviates the Commission’s concerns that had triggered the infringement proceedings. However, close examination and monitoring of the new regime will take place in order to ensure full compliance of this new Law with EU procurement rules on modification of contracts and additional works.

More information on the Commission's legal cases against Member States is available at:

http://ec.europa.eu/community_law/index_en.htm

MEMO/11/220


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