The rules in Portugal for public procurement, particularly for large works or equipment, open a fast track to a high level of litigation in the courts in relation to tenders, which ends up delaying (even further) the execution of many projects. From the railway to the metro.

The largest order in CP history – the purchase of 117 trains for urban and regional services – has been stuck in court for more than six months due to objections. CP requested the invocation of public interest, but the challenge of the eliminated competitors has not yet been resolved and the contract cannot advance for the Court of Auditors to issue a visa. Only after this step can the current rules begin to take effect.

This Wednesday in Parliament, the president of the CP, Pedro Moreira, attributed the excess of litigation in public tenders to public procurement rules and stated that it is the manufacturers themselves who make this association. “Litigations are greater in Portugal because we are the most transparent country in this type of competitions,” he stated.

The portal where the competitions are held allows all competitors to have access to the details of each other’s proposals and, given the complexity of the procedures, there is not a single manufacturer whose proposal does not have some errors. These lapses are taken advantage of by other competitors to file complaints or ask for clarifications and, ultimately, question the results and delay awards. That is to say, with current legislation it is very easy to find reasons to litigate and opposition actions always seek to have a suspensive effect on the production of contract effects that must be overcome before the courts.

CP’s largest order amounts to 746 million and plans to assemble 100 trains in Portugal

The 746 million euro contract was awarded by CP to the Alstom/DST group almost a year ago, in December 2023, and after a tender that was approved in 2021 when Pedro Nuno Santos was in the Infrastructure portfolio. The contest was launched at the end of that year and took two years to be decided. The minister who followed him in the portfolio, João Galamba, justified the delay in the award process with the company’s care and concern to avoid or mitigate the risk of litigation, but it was not possible to escape the inevitable challenges of those who lost.

Weeks after the announcement of the award, the excluded competitors (CAF and Stadler) challenged the procedure before the Administrative Court, alleging illegalities in the proposals made by the different competitors.

One of these competitors, the Austrian company Stadler, won the tender at the end of 2019 to supply 22 wagons for CP’s regional service, in what was the first order for new rolling stock after cuts in the financial aid period to Portugal. . The challenge from another competitor, the Spanish CAF, paralyzed the process for months and CP was only able to lift the suspensive effect in October 2020, when it signed the contract. The first delivery of these wagons was delayed by at least a year.

Signed contract. The new regional trains will begin to arrive in 2024, a year late

Extraordinary regimes to minimize the effect of litigation

This chain of challenges involves other large transport and public infrastructure companies and is more noticeable at times when there is more money to spend, as has happened in recent years with the PRR (Recovery and Resilience Plan) funds. And it is to stop new delays in the already delayed execution of these funds that the Government approved an extraordinary regime for contracts and public works financed with European money.

A day earlier, on Tuesday, in the parliamentary committee on public works, the Secretary of State for Mobility also pointed out litigation as one of the reasons for the temporary delays in the Lisbon Metro expansion projects. Cristina Pinto Dias gave as an example the red line, whose process was stopped for five months due to judicial challenges. But he assured that, with the new regulations, which have already been promulgated, that delay would be reduced to a month and a half.

Expansion of the Lisbon Metro with delays of up to 30 months. What is at stake is not the work (which is progressing) but rather the sources of financing.

What is at stake are the extraordinary regimes proposed by the Government and approved by Parliament to rationalize and accelerate public contracts financed by the PRR. In the contentious and pre-litigation field, it is provided, in cases of contestation of adjudication acts, that the lifting of the automatic suspensive effect may be carried out with a summary decision of the judge. The possibility of resorting to arbitration between the parties is also established. There is also a diploma that allows projects to advance without having to wait for prior approval from the Court of Auditors, with inspections being carried out at the same time as the project is being executed.

Last week, the president and vice president of Infrastructures of Portugal, the company that has the most works in Portugal and which is responsible for the high-speed network, also referred to the objections as sources of delay, although in this case case is just one more factor in a longer list of culprits.

Railway delays. From the Pope’s visit to the theft of material and an “inadequate” plan impossible to execute in four years