Understanding Public Contracts: Elements, Procedures, and Termination
Understanding Public Contracts
A contract is any agreement that creates obligations. In the context of public contracts:
- Subject: An end for a public legal entity.
- Object: The contract should be conducted for the organization or operation of a public service.
- Special Legal Regime: Governed by specific rules.
- Form: Usually formalized through an administrative document.
- Jurisdiction: Disputes are resolved in contentious-administrative courts.
Classes of Contracts
- Administrative contracts
- Direct object contracts
- Mixed contracts
- Special private contracts
Elements of a Contract
Subjective Element
The parties involved are the administration and the contractor. The administration has the ability to recruit and the competence to conclude contracts. The contractor is responsible for carrying out the work or service required by the administration.
Requirements for the contractor:
- Ability to work
- Economic, financial, and technical capacity
- Not disabled (e.g., no prior convictions, not bankrupt, no prior contract terminations with the administration)
Objective Element
The object of the contract must be determined and priced.
Causal Element
The cause of public contracts is the need for public service purposes or social interest. This need must be real and verifiable.
Formal Element
Public contracts are formalized in an administrative document.
Requirements for Administrative Contracts
- Jurisdiction of the recruiting body
- Ability of the successful contractor
- Determining the object of the contract
- Pricing
- Existence of appropriate and sufficient credit
- Processing of the file
- Prior inspection of administrative acts of economic content relating to contracts as provided in the budget law
- Approval of expenditure by the authority responsible for execution of the contract
Procedures and Forms for Awarding Public Contracts
Public contracts are awarded through the following procedures:
- Open Procedure: All interested parties may submit a proposal.
- Restricted Procedure: Only entrepreneurs selected by the administration may submit prepositions.
- Negotiated Procedure: The contract is awarded to the employer legitimately elected by the Board after consultation and negotiation of terms with one or more entrepreneurs.
Procedures for Awarding Public Contracts
- Auction: The lowest price bid wins, provided it does not exceed a predetermined amount.
- Competition: The award goes to the bidder who made the most advantageous proposition, considering the criteria established in the specifications, without regard exclusively to price. The administration reserves the right to declare the process void.
Documentation to be submitted in tenders must be placed in a sealed envelope, identified on the outside showing the tender and signed by the tenderer or representative, including their name and company. A separate envelope must contain the following documents:
- Evidence of the legal status of the entrepreneur.
- Receipt proving warranty.
- Provisional guarantee.
- For foreign companies, a statement referring to the Spanish courts.
- Evidence of the company’s classification.
Contract Termination
Contracts are terminated by execution or by resolution. The contract is met by the contractor when they have fulfilled its entire purpose in accordance with the terms and to the satisfaction of the administration.
Causes for Resolution of Contracts
- Death or supervening incapacity of the individual contractor, or extinction of the legal status of the contractor company.
- Declaration of bankruptcy or insolvency.
- Mutual agreement between management and the contractor.
- Lack of provision by the contractor of the final guarantee.
- Delay in the timeliness of the contractor.
- Lack of payment by the administration within 8 months.
- Failure of other essential obligations contained in the contract.
- Those that specifically provide for each type of contract.