October 2015
Law 40/2015, of October 1, on the Legal Regime of the Public Sector.
On October 2, it was published in the Official State Gazette (hereinafter, “BOE“) Law 40/2015, of October 1, on the Legal Regime of the Public Sector (hereinafter, “LRJSP“).
The LRJSP introduces modifications to numerous regulatory texts, being able to highlight, due to their importance and specificity, those that affect the Consolidated Text of the Public Sector Contracts Law, approved by Royal Legislative Decree 3/2011, of November 14 (hereinafter, “TRLCSP“). Specifically, by virtue of the Ninth Final Provision of the LRJSP, the following modifications are introduced to the TRLCSP:
1.- Prohibition of hiring.
Firstly, it is established that the prohibitions on contracting will be with respect to the entire public sector, disappearing the distinction between the causes that affected contracting with the public sector and those that affected contracting with Public Administrations.
On the other hand, in relation to the effects of the declaration of the prohibition on contracting, this will in principle affect only future contracts with the contracting body competent for its declaration, without prejudice to the fact that in some cases it may be extended to the public sector in which the contracting body is integrated by decision of the Ministry of Finance and, only exceptionally, to the entire public sector.
Additionally, the list of causes for hiring prohibitions is modified. Specifically, a new cause of prohibition of contracting is introduced (article 60.2.b) of the TRLCSP), referring to the case in which, within the deadlines provided for in article 156.3 of the TRLCSP, the successful bidder does not formalize, for reasons attributable to him, the contract awarded in his favor. Likewise, the scope of some of the prohibitions already provided for previously is modified. Thus, for example, in relation to the prohibition of contracting contained in article 60.1.a) of the TRLCSP, relating to the conviction by final judgment of certain crimes, new criminal figures are added, now including the following: crimes of terrorism, constitution or integration of a criminal organization or group, illicit association, illegal financing of political parties, trafficking in human beings, corruption in business, influence peddling, bribery, prevarication, fraud, negotiations and prohibited activities to officials, crimes against the Public Treasury and Social Security, crimes against workers’ rights, embezzlement, money laundering, crimes related to territorial planning and urban planning, the protection of historical heritage and the environment, or the penalty of special disqualification for the exercise of a profession, trade, industry or commerce. On the other hand, in addition to the already traditional cause of prohibition of hiring because the bidder or candidate is not up to date with compliance with tax or Social Security obligations, non-compliance by companies with 50 or more employees with the requirement to reserve at least 2 percent of jobs for workers with disabilities is now added as a cause of prohibition (article 60.1.d) of the TRLCSP, although this prohibition will not be effective until it is developed in accordance with regulations. Finally, the cause previously provided for in article 60.2.b) of the TRLCSP is eliminated, which included as a prohibition to contract having violated a prohibition to contract with any of the Public Administrations.
Regarding the procedure for the declaration of the concurrence of prohibitions on contracting, the distinction is maintained between (i) prohibitions on contracting directly appreciable by the contracting bodies, and (ii) causes of prohibition that require a prior declaration. Among the prohibitions directly appreciable by the contracting body, those already existing in the previous regulation are added those in which the prohibition results from a final sanctioning resolution provided that the administrative resolution itself had expressly ruled on the scope and duration of the prohibition. In the rest of the causes of prohibitions on contracting (including cases in which the ruling or administrative resolution does not contain a statement on the scope or duration of the prohibition), the prohibition and its scope will be determined through a procedure instructed for this purpose.
Regarding the duration of the prohibition, in cases in which the final criminal sentence does not expressly rule on the duration of the prohibition, this may not exceed five years (there were eight in the previous regulation); For the rest of the cases, the duration period may not exceed three years.
It is also provided that, with the exception of the prohibitions relating to the declaration of bankruptcy, since the company is not up to date with compliance with tax or Social Security obligations, and the regime of incompatibilities or conflicts of interest, all other prohibitions on contracting must be registered in the Official Registry of Bidders and Classified Companies of the Public Sector.
2.- Awarding of public works concession contracts.
The criteria for the award of public works concession contracts are developed (article 150.2 of the TRLCSP) and it is established that, when the possibility of public contributions being made is foreseen, as well as any type of guarantees, endorsements or other types of aid to the company, in any case the amount of the reduction offered by the bidders on the contributions provided for in the contracting file will appear as an automatically evaluable award criterion.
3.- Public contributions in public works concession contracts.
Articles 254 and 256 of the TRLCSP are modified, relating to contributions of public resources for the financing of public works subject to concession, and it is established that both public contributions and any type of guarantee, guarantees and other measures to support the financing of the concessionaire must necessarily be provided for in the specifications, and their amount determined in the award procedure, without being able to increase after the award of the contract, although the possibility of use these public contributions as a rebalancing mechanism (article 258 of the TRLCSP).
4.- Pledge of rights derived from the termination of the concession contract.
The possibility of pledging the rights derived from the termination of a public works concession contract or public service management contract is expressly included provided that (i) the pledge is a guarantee of obligations that are related to the concession or the contract; and (ii) that there is prior authorization from the contracting body, published in the BOE or in the official regional or provincial newspapers.
5.- New regulation of the patrimonial responsibility of the Administration in the field of public works concession contracts.
Among the modifications introduced by the LRJSP to the TRLCSP, the new regulation of the way of establishing the patrimonial responsibility of the Administration stands out (hereinafter, “RPA“) in the field of public works concession contracts. Specifically, through the modification of article 271 of the TRLCSP and the introduction of two new articles in the TRLCSP (271 bis and 271 ter), the RPA regime is profoundly transformed in terms of the resolution of public works concession contracts, distinguishing the following situations:
to)Resolution of the public works concession contract due to causes attributable to the Administration: This will pay the concessionaire the amount of the investments made due to the expropriation of land, execution of construction works and acquisition of goods that are necessary for the exploitation of the work that is the subject of the concession, taking into account their degree of straight-line amortization.
In the event that the termination of the contract is a consequence of (i) rescue of the exploitation of the public work by the contracting body, (ii) suppression of the exploitation of the public work for reasons of public interest or (iii) impossibility of the exploitation of the public work as a consequence of agreements adopted by the granting Administration after the contract, in addition to the payment of the unamortized investment, the concessionaire will have the right to be compensated for the damages caused to it.
To determine the amount of compensation, the following will be taken into account: (i) thelost profits: the future benefits that the concessionaire will no longer receive will be quantified based on the arithmetic average of the pre-tax profits obtained during a period of time equivalent to the years remaining until the end of the concession. If the remaining time is longer than the elapsed time, the latter will be taken as a reference. Likewise, a discount rate will be applied based on the weighted average cost of capital corresponding to the concessionaire’s latest annual accounts; and (ii) theemergent damage: The loss in value of the works and facilities that are not to be delivered to the Administration will be considered, taking into account their degree of amortization.
b)Termination of the contract for reasons not attributable to the Administration: This will pay the concessionaire the amount of the investments made due to the expropriation of land, execution of construction works and acquisition of assets that must revert to the Administration, based on the valuation of the concession. The value of the concession will be that resulting from the award of the new tender of the concession declared resolved; In the second tender, the rate will be 50% of the first tender, and if the second tender is void, the value of the concession will be the rate of the latter (article 271 bis of the TRLCSP).
Article 271 ter of the TRLCSP establishes the rules for determining the rate of the first tender: (i) the determination of the rate will be carried out based on the future cash flows expected to be obtained from the exploitation in the period remaining from the resolution until its reversal, updated at the discount rate of the interest on ten-year Treasury obligations increased by 300 basis points; (ii) the debt instrument that serves as the basis for calculating the reasonable profitability and the differential may be modified by the Government, following a report from the National Evaluation Office; (iii) future net cash flows will be quantified in the arithmetic mean of the cash flows obtained by the entity during a period of time equivalent to the years remaining until termination. If the remaining time is greater than the elapsed time, the latter will be taken as a reference; (iv) the value of the cash flows will not include interest payments and receipts, dividend receipts and income tax receipts or payments; and (v) if the termination of the contract occurs before the completion of the construction of the infrastructure, the tender rate will be 70% of the amount equivalent to the investment executed. Executed investment will be understood as the amount appearing in the last approved annual accounts increased by the amount resulting from the certifications issued from the close of the financial year of the last approved accounts until the moment of resolution, deducting the amount of capital subsidies received by the beneficiary, the purpose of which has not been met.
It is clarified that, for these purposes, the termination of the contract is not attributable to the Administration in the following cases: (i) death or sudden disability of the individual concessionaire or extinction of the legal personality of the concessionaire company; (ii) declaration of bankruptcy or declaration of insolvency in any other procedure; (iii) mortgage foreclosure declared void or impossibility of initiating the foreclosure procedure due to lack of interested parties authorized to do so in cases where this is appropriate, in accordance with the provisions of the Law; (iv) seizure of the concession for a period longer than the maximum established without the contractor having guaranteed complete assumption of its obligations; and (v) abandonment, unilateral resignation and breach by the concessionaire of its essential contractual obligations.
6.- Modification in the public services management contract.
Article 288.1 of the TRLCSP referring to the public services management contract is modified to adjust it to the same scheme indicated above for the public works concession contract. Specifically, the following situations are distinguished:
to)Resolution of the public service management contract due to causes attributable to the Administration: This will pay the concessionaire the amount of the investments made due to the expropriation of land, execution of construction works and acquisition of goods that are necessary for the exploitation of the work that is the subject of the concession, taking into account their degree of straight-line amortization.
b)Resolution of the public service management contract for reasons not attributable to the Administration: this will pay the concessionaire the amount of the investments made due to the expropriation of land, execution of works and acquisition of assets that must revert to the Administration, based on the valuation of the concession, determined in accordance with the provisions of article 271 bis of the TRLCSP (that is, the same regime provided for the public works concession contract).
It is clarified that, for these purposes, the termination of the contract is not attributable to the Administration in the following cases: (i) death or sudden disability of the individual contractor or extinction of the legal personality of the contracting company; and (ii) declaration of bankruptcy or declaration of insolvency in any other procedure.
7.- National Evaluation Office.
A new thirty-sixth additional provision is introduced into the TRLCSP, relating to the creation of the National Evaluation Office. The purpose of the National Evaluation Office is to analyze the financial sustainability of public works concession contracts and public service concession contracts.
Specifically, prior to the bidding for contracts for the concession of public works and management of public services to be held by the contracting authorities dependent on the General Administration of the State and Local Corporations, the National Evaluation Office will issue a mandatory report in the following cases: (i) when public contributions are made to the construction or operation of the concession, as well as any measure to support the financing of the concessionaire; and (ii) when the fee is assumed totally or partially by the granting contracting authority, if the amount of the works or the first establishment expenses exceed one million euros.
Likewise, the National Evaluation Office will report on the agreements to restore the balance of the contract, in the cases provided for in articles 258.2 and 282.4 of the TRLCSP, with respect to the concessions of public works and services that have been previously informed in accordance with sections (i) and (ii) above or that, without having been informed, involve the incorporation in the contract of any of the elements provided for therein. Each Autonomous Community may join the National Evaluation Office to prepare said reports or, if it has created an equivalent body or organization, it will request these mandatory reports from it when it affects its concession contracts.
If the Administration or the entity receiving the mandatory report from the National Evaluation Office deviates from the recommendations contained therein, it must justify this in a report that will be incorporated into the file of the corresponding contract and which will be published.
8.- Entry into force of the modifications to the TRLCSP.
In accordance with the provisions of the eighteenth final provision of the LRJSP, the provisions relating to the modifications of the TRLCSP will come into force twenty days after their publication in the BOE (that is, on October 22, 2015). However, the provisions on the National Evaluation Office will come into force six months after their publication in the BOE (that is, on April 2, 2016).
The content of this Alert is for informational purposes only. Any decision or action based on its content must be subject to appropriate professional advice.
