Minor Contracts in the Public Sector

INSTRUCTION 1/2019 OF THE INDEPENDENT OFFICE OF REGULATION AND SUPERVISION OF THE CONTRACT.

On March 6th, 2019 the Instruction 1/2019 was published in the Official State Gazette, from February 28th, on minor contracts by the Independent Office of Regulation and Supervision of Contracting, given the confusion and uncertainty (sic) that the new Law on Public Sector Contracts [1] (hereinafter, the “LCSP“) had been able to cause certain contracting bodies to process files on minor contracts.

The Independent Office of Regulation and Supervision of Contracting is an administrative body created by the LCSP, which came into force on March 9, 2018, which has the purpose, in accordance with article 332.1 LCSP, to ensure the correct application of legislation and, in particular, promote competition and combat illegalities, in relation to public procurement. The Office will act in the development of its activity and the fulfillment of its purposes with full organic and functional independence.

It should be noted that Instruction 1/2019 on minor contracts approved by the Independent Office, in line with 332.7.d) LCSP, is mandatory for all contracting bodies of the Public Sector and must be taken into account for the processing of the corresponding contract files. However, some dissenting opinions have already appeared, questioning whether it is applicable to the contracting bodies of the Autonomous Communities and Local Authorities for the autonomy that the Constitution itself recognizes.

Minor contracts, as is well known, despite the long shadow of irregularities that they carry, constitute an instrument that the Ordinance provides to the contracting bodies so that, under certain circumstances and under certain conditions, they can contract with greater agility and cover immediately needs that, due to their amount or nature, require a fast processing avoiding the delays and rigidity imposed by a file of ordinary contracting. Instruction 1/2019 itself emphasizes the extraordinary nature of minor contracts, noting the alternative that contracting bodies have to process contracts through the simplified open procedure, provided for in Article 159 LCSP, which does comply to a greater extent with the principles of transparency, publicity and concurrence that govern all public sector contracting.

 

The LCSP has imposed a series of ex ante and ex post requirements in the processing of contracting files for minor contracts, especially aimed at preventing or avoiding, as far as possible, the fractionation and which meet the requirements and limitations already existing in the previous regulations of:

 

  • Economic limitation (118.1 LCSP): setting amounts of 15,000 euros for contracts for supplies and services and 40,000 euros for works, compared to € 18,000 and € 50,000 that governed the previous regulations [2] of public contracts.
  • Term of duration (29.8 LCSP): which may not exceed one year.
  • Impossibility of extension of the minor contract (29.8 LCSP)

 

Thus, with regard to the processing of minor contracts, Instruction 1/2019 reminds us of the need for a contracting file, determining the minimum content that it must meet:

 

(1)       Report of the contracting body motivating the need for the contract.

(2)       Justification that the object of the contract is not being altered to avoid the principles of public procurement, as well as the circumstance that the contractor is not in the case provided for in article 118.3 of the LCSP in relation to its first section.

 

Of special interest is the analysis carried out by Instruction 1/2019 on the problem of splitting the contract and the so-called criterion of the “functional unit” to distinguish if there is splitting and if it is possible to separate or distinguish the different features that make up the contract. In addition, Instruction 1/2019 resolves the uncertainty generated in the cases of contractors with several minor contracts awarded, since the time interval to be measured was not determined in order to determine if the established limits of 18,000 and 50,000 euros were being exceeded. (One year, two years, etc.).

The Instruction indicates that the criterion must refer to the budget year, since it facilitates its verification by the bodies responsible for auditing the public accounts.

 

(3)       Accreditation of the existence of credit and document of approval of the expense prior to its execution, later incorporating the invoice or invoices issued corresponding.

(4)       Documentation accrediting the three offers / budgets requested by the contracting body to different contractors or, in the case of non-response or that they decline to attend, justified reasons for this.

As a measure to promote competition, and as an anti-fraud and anti-corruption measure, the contracting bodies must request at least three budgets, which must be sufficiently accredited in the contracting file. Both the offers received and the justification for the selection will be included in the file. Likewise, if any of the recipients of the request does not answer or declines to present an offer, it is not necessary to make new requests.

However, in accordance with the Explanatory Note on Instruction 1/2019, issued this week by the Office itself, this formal obligation to request the three budgets has been qualified to the extent that it is justified by the contracting authority. The non-provenance of such request when said procedure does not contribute to the promotion of competition or, hinders, prevents or supposes an obstacle to cover immediately the needs that in each case motivate the minor contract.

Finally, Instruction 1/2019 recalls the legal obligation of publicity of the minor contracts foreseen in Article 63.4 LCSP, according to which, the contracting bodies must publish quarterly all the minor contracts that they have awarded in that period indicating, at least, the purpose of the contract, duration, amount of the contract (VAT included) and the identity of the successful bidder, contracts must be ordered for the identity of the successful bidder.

CONCLUSION

In conclusion, we successfully note the publication of Instruction 1/2019 because it comes to shed some light on aspects of the regulation of the LCSP on minor contracts that, even though it entered into force a year ago, had raised certain problems of interpretation to many contracting bodies, especially in those cases in which the same bidder was awarded several contracts with respect to the same body.

We believe that it may also be of special interest to traffic operators who regularly bid with the Public Sector and who may receive requests for offers or budgets, since the need for a formal file as well as the obligations of quarterly advertising only reinforce the capacity of the rest of the bidders of the market and of the administrative intervention agencies to supervise the activity of the contracting bodies that, in the end, will always result in greater transparency, in an efficient use of public funds and in the existence of a greater equality among bidders.

 

Authors: Luis Manuel García and Borja de Cárdenas


[1] Law 9/2017, of November 8, on Public Sector Contracts, by which the Directives of the European Parliament and the Council 2014/23 / EU and 2014/24 / EU, of 26 are transposed into Spanish law. February 2014 [

2] Royal Legislative Decree 3/2011, of November 14, approving the revised text of the Public Sector Contracts Law.