Transposition into national law of the new EU public procurement directives and the impact on subsurface construction contracts – the Portuguese case

Abstract

Last year the Portuguese Public Procurement Code was reviewed and republished by Decree-Law 111-B/2017, which transposed the European Directives 2014/23/EU, 2014/24/EU, 2014/25/EU and 2014/55/EU into Portuguese legislation. The reviewed code came into force in Portugal on January 1st, 2018. This article focuses on the most relevant changes related to Subsurface Contracts for Complex Geotechnical Works. A brief summary of the changes that impact directly the design, tender, execution and risk management of subsurface works (especially for tunnels) is presented. The article also promotes the best international contractual practices recommended by the International Tunnelling and Underground Space Association (ITA). In a second step, the potential appliction of these practices in Portugal will be highlighted and limitations and opportunities will be discussed. 2 BRIEF BACKGROUND ON THE NEW EU PUBLIC PROCUREMENT DIRECTIVES AND SUBSURFACE PROJECTS 2.1 The new EU Public Procurement Directives On 26 February 2014 three new public procurement Directives were adopted by the European Parliament and the Council of the European Union: Directive 2014/24/EU on public procurement (known as the ‘classic directive’), Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors (the ‘sector specific directive’), and Directive 2014/23/EU on the award of concession contracts. Those directives had to be transposed by EU countries into national law by 18 April 2016. EU member states have stepped up their efforts to implement those new procurement directives, and despite some delay, by the end of 2017 almost all countries (with just four exceptions) have made that transposition, Portugal included. The 2014 EU public procurement reform pursued several objectives, in order to achieve EU strategic policy goals while ensuring the most efficient use of public funds: i) make public spending more efficient; ii) clarify basic notions and concepts to ensure legal certainty; iii) make it easier for SMEs to participate in public contracts; iv) promote integrity and equal treatment; v) enable contracting authorities to make better use of procurement in support of innovation and common societal and environment goals; and vi) incorporate relevant case-law of the Court of Justice of the European Union. The new Directives have introduced a number of changes and new rules in order to simplify public procurement procedures and make them more flexible. For instance, a key aspect of the new directives concerns the article 72 of the 2014/24/EU directive (modification of contracts during their term) that clarifies in which cases contracts and framework agreements can be modified without going through a new procurement procedure, and in which cases a substantial change leads to a retendering of the contract. One example: for additional works (services or supplies which were not included in the original contract) the directive provides considerably more flexibility for contracting authorities in comparison to the previous situation of Directive 2004/18/EC, allowing for a negotiated procedure without prior publication of a contract notice under some conditions. Here, we highlight the first item: a) “where the modifications, irrespective of their monetary value, have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses, which may include price revision clauses, or options. Such clauses shall state the scope and nature of possible modifications or options as well as the conditions under which they may be used. They shall not provide for modifications or options that would alter the overall nature of the contract or the framework agreement;”. 2.2 Particularities of subsurface projects and underground works Underground works depends on the behavior of the ground materials, and geological, hydrogeological and geotechnical ground characteristics that cannot be precisely known in the design phase. The ground characteristics have a strong influence on the means and methods required for successful implementation of subsurface projects, especially in difficult and complex geotechnical conditions. In addition, the difficulty in predicting ground behavior and foreseeable conditions, due to several reasons like the nature of the subsurface soil conditions, heterogeneity, previous conditions of over consolidation, depth and extent of the work, etc, leads to inherent uncertainty of underground works which results in unique risks regarding construction practicability, time and cost. Even a comprehensive subsoil investigation before the design and construction phases does not eliminate all surprises during performance of the underground construction although, in many cases, it will minimize. For instance, tunnel design is more than a determination of the structural adequacy of component parts. It must meet practical construction requirements to secure economy and safety in a range of heterogeneous ground conditions. When an underground structure is built a redistribution of the natural initial stresses takes place. Due to this redistribution, the underground structure will be subjected to a certain level of stresses and hence loads that influences adjacent structures. Figure 1. Design of a tunnel in Lisbon – Red Line extension of Lisbon Metro, 2008. Recognizing these unique characteristics of subsurface projects, especially for those with longer distance and more complex soil-structure interaction like tunnels, that demand special contractual provisions and management for their successful completion, some countries with great tradition in this type of complex geotechnical works (for example, Switzerland with the Suisse Tunnel Code, and others) promote the best contractual practices with the adequacy of the construction methods initially planned to the real ground conditions and behavior found at tunnel face. For instance, by using the observational method (as set out in Chapter 2.7 of the Eurocode 7: Geotechnical Design) in which the design is reviewed during construction. Therefore, it’s recommended the use of flexible legislative solutions adapted to this reality, which follow the best construction practices, and allow a better management of the geotechnical risk allocation. 3 THE PORTUGUESE CASE: TRANSPOSITION AND REFORM OF THE PORTUGUESE PUBLIC PROCUREMENT CODE (PPC) In Portugal, this need for transposition has been used to proceed with a more thorough reform of the Portuguese Public Procurement Code, and took three years to complete: 2017 was the year that the Portuguese Public Procurement Code was reviewed and republished by Decreto-Lei n.o 111-B/2017. Besides the three new EU procurement directives, the Portuguese legislator also transposed into the same code the 2014/55/EU Directive on electronic invoicing in public procurement. This law came into force in Portugal on January 1 2018. Figure 2. Timescale for transposition of the new EU Public Procurement Directives in Portugal. During the transposition period some public and private entities and associations in Portugal had the opportunity to contribute and express their opinion on the reform and improvement of public procurement legislation in Portugal. Within the Portuguese Commission on Tunnelling and Underground Space (CPT) a specific working group was created; GT2 Engineering and Legislation: Contractual Practices -, which has been working in this topic for the last 3 years and has elaborated some contributions that have been submitted to the legislator. These contributions aimed to facilitate the national legislature to access to the best contractual practices in underground construction, taking into account the rules of the new European Directives and the international experience in other countries and organizations like ITA. The most important aspects are resumed below: i) The new directives reinforce the possibility of creating more flexible contractual arrangements, based on the rules on contract’s modification during their term. They are more open to adaptation to real ground conditions encountered during excavations in the case of complex geotechnical works, if those modifications are clearly provided for in the initial procurement documents [article 72(1)(a)]. This opens the possibility of considering different design scenarios for ground conditions and characteristics with different probability of occurrence. ii) GT2 of CPT proposed a new type of modifications to the contract during their term, called Special Modified Works (SMW) that can occur due to modifications of the construction method on site as a consequence of the information obtained during excavations, for a scenario different than the baseline, and that can result in additional or less works (considering the baseline construction plan which was based on the most probable scenario for the expected ground conditions). But more flexibility during construction requires accurate preparation and some conditions must be fulfilled: iii) The modifications are performed within a Special Technical Assistance (STA) provided to the owner of the works, according to the current Portuguese Legislation (Regulation 701-H) “(...) to make the analysis of the real geological conditions ... and the assessment of the results provided by monitoring of the work ... to adapt the project to the real underground conditions.”; iv) In the tender phase, the design should be revised by a qualified and experienced entity, distinct from its author. The revision should follow the provisions of article 43, paragraph 2 of the Portuguese Public Procurement Code and cover all of the design phases, from initial design phase until final design phase; v) The tender documents must contain all available geological and geotechnical information, including soil investigation and classification, which is the owner’s responsibility, compiled in a geological and geotechnical informat