Civio's footprint in a more transparent public procurement
Congress has passed the new Procurement Law and we are now able to verify the impact we have had: the majority of Civio's anti-opacity recommendations have been included - either directly or indirectly - in the regulation. Let's look more closely at the mark we’ve made.
Today, following parliament’s approval of the the new Public Procurement Law (LCSP in Spanish), we can verify and announce an important achievement, perhaps one of Civio’s most significant of the last 5 years: the majority of our recommendations to make Spanish public procurement more transparent and halt corruption, have been included - either directly or indirectly - in the new regulation, to be implemented as of the end of February.
Reform of this law has been a long process. For over 5 years we have been thoroughy examining its development: from the preliminary draft, through the delay in implementation of the European directives, the start of its processing in parliament to, in recent months, collaboration with the main political parties to introduce improvements in transparency in the law. Very specific improvements. Those parties that included such improvements in their reforms have been open and generous with regards to the participation of civil society and, more specifically, Civio’s contribution. Today, we witness the fruits of our labor.
Our priorities focus on 2 main areas: transparency throughout the entire process of public contracting and the introduction of an independent and reliable monitoring system to detect irregularities. In terms of the former, we have achieved many important victories. As for the latter, not as many as we consider necessary. Unfortunately, some of our recommendations have been left out upon consideration by the congressional committee, which, it has to be pointed out, discussed the reforms behind closed doors.
We will explain everything here in detail. First, a summary of the most significant victories we have won:
Our most important achievements, in brief
As we had insisted upon, the entire process - from preliminary studies to modifications and contract execution - will be made public. This includes the rationale behind all decisions taken: reports on contractual amendments, justification of the chosen procurement process, reviews of dangerously low bids, detailed assessment of each bid… Citizens will be able to access all of the above data.
Key information such as the identity of all tenderers, the participants in each TJVs(Temporary Joint Ventures) and their percentage of participation, the external advisors on the Board of Procurement or the detailed subject matter of a contract will also finally be open to the public.
All of this information will be published and, if there are exceptions these will be limited and justified on the public record. These will not apply by default: the Transparency Council will prepare reports to weigh up which law should take precedence: either the right of all citizens to access information or other higher laws.
Contractor profiles will be open to public access (and a password will not be required for access), the information will be published in open and reusable formats, and will be available to the public for at least 5 years. If older data becomes unavailable, these can be obtained by exercising the right to access granted in the Transparency Law.
A new anti-corruption monitoring body is to be created, which was nonexistent before and which Civio have been calling for. Its reports on violations and illegalities will be made public, and it will be granted the means (still to be established) to carry out its work. However, although it will be called the Independent Office for the Regulation and Monitoring of Procurement, independence is only in name and on paper: its members, civil servants, will be appointed by the government and not by Congress, subject to large majorities.
This is the most relevant area in which have achieved impact. However, the PSCL is a very broad and complex regulation, and the devil is in the details. Below we explain more thoroughly what we have achieved - either fully or partially - as well as what we have not. It is possible to lobby in a transparent way. We do.
Thanks to parliamentary groups which, on a political level and - more importantly - on a technical level (to differing degrees) have listened to and taken on board many of our recommendations, helping us to refine and improve certain proposals. We continue to work towards further transparency in Spanish public procurement, and we are open to continued collaboration in order to achieve this.
Our victories, in detail
The most important point is that we have gone from a system of transparency in public procurement which focussed on competition among companies, and where only the basic information needed for a company to access tenders is published, to one which concentrates on making the entire public procurement process more transparent, from preliminary reports to the justification of amendments.
Transparency from start to finish
Our proposal listed, one by one, all of the specific information that should accompany any public record. Many of these points have been included word for word, or in a similar vein, in the law (art. 63.3). Thus, we have succeeded, for example, in getting not only amendments to contracts published, as required by the European directive which forced through this reform, but also the justification of said amendments, which covers reports provided by the contracting body as well as the contractor. This is just one breakthrough in a topic we consider fundamental: being held accountable. Civio has been pushing for public acknowledgement of all decisions taken throughout the procurement process. And we’ve succeeded: preliminary reasoned submissions, rationales for the chosen process when bidding is not open, or reports on dangerously low bids should all be made public, once the law comes into force.
Moreover, this signals the end of generic references in contact titles. It is now a requirement for the contract purpose to be “detailed”, as we called for in our proposals. More importantly, the selection of one company or another will be much more transparent. The proceedings of the Bureau of Procurement cannot consist of a single sentence stating that a company has been selected because it presented “the most beneficial offer to the administration’’, a common tagline. From now on, proceedings, resolutions and decisions must be made public, including evaluations of bids and importantly, the identity of the participating bidders. All of these recommendations from Civio form part of the new law, although an explicit reference to applicant companies’ full bids has been left out. In practice however, in the majority of cases the evaluation of bids in the finalised procurement records will give us the same information about said bids.
For us, the message is clear: transparency in the entire process and without exception save for explicit cases, such as issues of national security or serious harm to the public interest. The law embraces this message almost in its entirety. All of this new information will be published insofar as it does not infringe on another interest or higher law, something that cannot just be taken for granted. Here, we have inserted an important concept into the law when it comes to weighing up rights: the damage test (article 154.7) to evaluate whether the right to access information takes precedence or not in each case. The Transparency Council will be responsible for carrying out these tests and publishing reports. And that’s not all: if said exceptions occur, they must be justified in documentation, another point we had called for. Yet again: accountability.
As for minor contracts, the law changes from stating that these ‘‘can be published’’ quarterly to stating that they should be published with said frequency, as we proposed. These are also to be published by order of the successful bidder’s identity, making them easier to monitor. Once the law comes into force, minor contracts - previously those worth less than €50,000 in works and €18,000 in services or supplies - will be limited to €40,000 and €15,000 respectively.
Not covered by these rules are any contracts for less than €5,000 although, as an add-on, they must have used the fixed cash system, a method used by public authorities to pay for minor and recurring expenses.
Open contracting sites
All of this information is to be published on contracting portals which will meet our three requirements, included word for word in the regulation: open access (which means that no passwords or ID will be required, except in the use of alerts, for example); the information will be published in open and reusable formats (this clause is also included in the information published on the Public Sector Contracts Platform, as requested); and it shall be accessible for a minimum period, although all old records will be accessible via requests for information. Thus, we have clarified that all old records will fall under the ‘right to access’ regulations and we’ve put an end to contracting portals that only published open tenders or their most recent records.
So, how long will this information remain open to the public? We proposed a period of 20 years and, although opposition parties included a 20-year period in their amendments, the final drafting reduces this to 5. When all is said and done, the most important point is that finally now, there is a minimum period throughout which this information must be published, mandatorily.
TJVs (Temporary Joint Ventures) are no longer the exception when it comes to transparency. Once the law comes into effect, contracts awarded to TJVs oshould include the names of all participating companies and the % stake each one has in the TJV, data that has previously been denied on multiple occasions.
Preliminary consultations, a mechanism to better understand the market and thus prepare tenders in a more precise way, must be open and transparent. Open, as all calls to tender must be published to allow all applicants to bid; transparent, as the rationale behind the election of external advisors must also be published. We also called for publication of the names, qualifications and professional experience of these external advisors to the Board of Procurement in any applicable cases. This demand was successfully met.
The scope of application has been expanded: all entities with the status of public authorities will also have to publish their call for tenders and awards in the BOE (Official Gazette), and not only the General State Administration. We have achieved this as is.
Posting to the OJEU will occur within a maximum of 10 days, as requested, reducing the time limit here.
There are cases where, due to their value, the Cabinet must authorize the contract. The draft bill stated that Cabinet would only be required to also authorize amendments if these amounted to more than 20% of the initial price. We called for this percentage to be reduced or removed completely, and this has now been amended to 10%.
The reports sent by the Advisory Board for Contracting to the European Commission on the state of government contracts in Spain will be made public within a month of their referral to Europe, as we had called for.
A new body to monitor procurement
The draft law presented by the Government granted the responsibilities for monitoring contracting to the Advisory Board, an entity that forms part of the Ministry of Finance and which, to date, makes recommendations and resolves conflicts regarding the application of the law of contracts in effect today. For Civio, along with the need to expand publishing obligations, this was a key point. Since 2015 in all of our recommendations, meetings with parties, and reports, we have called for an independent body to monitor public procurement - focal point for corruption- via modern means and approaches. In the recommendations sent to and discussed with political parties we have focussed on the importance of this point, and included details of how this body would operate in order to be independent, as well as which functions it should carry out. Finally, thanks to this proposal, which was seconded by Podemos, Ciudadanos and PSOE, although to a different extent, in their amendments, this role will not be carried out by the Advisory Board, but by a tailor-made independent body charged with monitoring public procurement. The new law thus creates the Independent Office for the Regulation and Supervision of Contracting. However, its structure, independence and operation are far removed from what we hoped for.
An additional provision was included in the regulation (repeated in practically all regulations passed in recent years) no increases of expenditure will be involved. In this case, with the creation of a new body which would have required funding to carry out its work, we proposed removing or modifying said provision. The final version states there will be no increase ‘‘except for expenses related to” the new duties of both the Advisory Board and the new Independent Office for the Regulation and Supervision of Contracting.
The most important point in this section covering semi-victories is the new monitoring body. Hence, as we had called for, this will be a collegiate body which will monitor the enforcement of the law and will fight against illegalities “with full organic and functional independence” although it will nevertheless be attached to the Ministry of Finance and Civil Service “for purely organizational and budgetary reasons”. Comprising a president and 4 members, they will be nominated by the Cabinet from civil servants who have at least 10 years experience in the public procurement field. We had appealed for the Cabinet to nominate these posts, with large majorities, and for members of civil society to be allowed to serve in order to broaden the spectrum. What we had hoped for was a truly independent body. What we’ve got is an independent body in name only.
Although we have not been successful in including external experts in the organization’s structure, the regulation at least includes our request in a tangential way: an Advisory Board can be created by decree, made up of academics, professionals and independent technical experts in the field of public procurement.
The duties of this new body will focus on monitoring compliance with the ‘principles of transparency, concurrence and legality’ in the enforcement of the law and, among other things, it will produce a report with a list of breaches, the most frequent sources of illegality, and data on the prevention and detection of corruption cases and conflicts of interest, as well as any problems uncovered in these fields. This report, as we had requested, will be made public.
In cases where irregularities are found, these will be forwarded to the Court of Audit, the National Commission on Markets and Competition (CNMC in Spanish), or to the law court, depending on each case. We had called for a modern and advanced system of systematic monitoring, not partial, as the Court of Audit currently provides, however specific mention of such a step towards the prevention of corruption, with a system of alerts, has not been included.
We have not been successful in securing the inclusion of the full names of those who participate in the decision-making process on notices of awards, as we had called for. However a tagline will be included to clarify that the position of the board’s participants will be published, and ‘‘generic and vague references’’ will not be allowed, as is often the case when speaking about a member of a specific directorate’s participation on the board, for example.
We have not managed to secure the creation of an anonymous citizens’ mailbox that would allow anyone, including civil servants, to report irregularities in procurement without fear of reprisal. Our aim was twofold, to protect those reporting violations, and to create a system of alerts and reports that went beyond the participating companies themselves. With cartels, for example, which company will report the others? Therefore, we posited the need for other players to be able to raise the alarm about irregularities. The new law expands the current legitimacy to file a special appeal in terms of public procurement. The new wording states that ‘‘any person’’, whose rights or interests, whether ‘‘individual or collective’’, are infringed ‘‘directly or indirectly’’, can file an appeal (quotes are the sections added to the original draft).
The financial limit between an agreement and a contract is unclear in the current legislation. Sometimes, this amount has been used to dodge contracting rules. Thus, one of the points we called for was the regulation, clarification and monitoring of this amount. The new regulation establishes rules for agreements, such as the requirement that no participants have ‘‘market interests’’. This means that they must not conduct 20% or more of the activities included in the agreement on the ‘‘open market’’. This is a step in the right direction.
The prohibitions on contracting were less defined in the bill that in its draft, which we also examined at the time, last year. Thus in the majority of cases, we requested a return to the previous wording. Hence, on the plus side, convictions for corruption in business have been included in the list of crimes which bar contracting with the public sector. This prohibition covers not only those companies which have been convicted, but also their current administrators or representatives who have been convicted also. This is the good news. The bad news is that, while the draft bill stated that serious infringements in environmental issues and social or labor sectors would result in prohibition, the bill itself only states very serious. We requested a change back to the previous wording, and in this case, we were unsuccessful.
Another point connected to such prohibitions is that, in the drafting of the bill, a paragraph was included that allowed the veto on contracting to be lifted if fines were paid and a pledge made to put measures into place to avoid a repeat of the events that led to the prohibition in the first place. In our opinion, this paragraph allowed companies that had been severely sanctioned or even convicted to dodge the veto by paying a fine and promising to make amends. We asked for it to be removed. We have at least succeeding in securing the clarification that this loophole in dodging the prohibition will not apply to those companies - or their administrators - convicted by definitive judgment.
Awarding of a contract goes from being notified to the interested parties, “with the possibility of being published” in the contractor’s profile to “having to be published”. We had asked for said publication to happen at the same time as the participants are notified, allowing 15 days to add it to the contractor’s profile.
As we requested, the register of bidders will be made public and include a search function. Unfortunately, ‘‘the person accessing the data will be asked for identification. As for the register of contracts, which is currently just a basic table with global statistical data, from now on this will facilitate access to non-confidential data which has not been previously published. We had called for the publication of all centralized procurement data, but it is not presently clear what this new register will develop into. However, we have managed to ensure that the information must be published following open standards and formats, which allows for its reuse and computer processing.
Recommendations that have been ignored
Sometimes, in spite of promises made by parties in negotiations, which become amendments, some of the proposals that we presented have been left out. Only a few, but we will continue to push for these to be included in subsequent revisions.
An example of how, despite the three main opposition parties (PSOE, Podemos, C’s) including a proposal in their amendments, this was removed from the bill and did not make it into the final law. The European directive requires the inclusion of parties, trade unions, and business associations - provided that the majority of their funding comes from public sources - as regulated entities, although their duties are far fewer than those of public authorities. This is an important step forward, backed by Europe, but one which should have been exploited to improve transparency and the anti-corruption measures related to party funding. The government, however, introduced an important change to the draft law and final bill, one which does not comply with the European regulation’s intent: while the directive clearly states that contracts related to announcements '’in the context of an electoral campaign’‘ are not within the regulation’s scope, the wording of the draft removes this quotation and increases the number of exceptions to account for all campaigns, whenever they are held. We proposed a return to the previous wording and the 3 main opposition parties included this proposal in their amendments. However, the final approved wording fails to include this detail.
Other recommendations that have not been included
Neither have we succeeded in eliminating the article that allows unplanned amendments in the specifications that amount to up to 50% of the initial price. We asked for this percentage to be lowered to 10%. We were ignored. Nor the removal of the clause allowing for a 10% increase for ‘‘surplus measures’’, in other words, miscalculations.
We demanded that a timeframe be established for the linking of contracting portals of the Autonomous Communities of Spain to the national Public Sector Procurement Platform, to allow this data to be grouped. However the new regulation, while stipulating that all Autonomous Communities must do so (whether including their data directly or linking their own websites), fails to include a deadline for this.