Law No. 41/20 of 23 December, which approves the Public Contracts Law (“Lei dos Contratos Públicos” – “LCP”), applies to contracts with a value equal to or exceeding AOA 500 million entered into by Public Companies and Companies under Public Control that receive operating grants or, in relation to the specific transaction concerned, funding from the State Budget. Accordingly, companies within the Public Business Sector that do not receive such grants or funding are excluded from the public procurement rules provided for in the LCP, as are, in all cases, contracts with a value below AOA 500 million. The exceptions are administrative concessions and assignments of contractual positions or rights to operate public assets or services, which are always subject to the LCP, irrespective of their value.
In any event, the inapplicability of the procedural rules laid down in the LCP does not preclude the requirement to comply with the general principles of public procurement and administrative activity. Accordingly, when conducting procurement, these entities remain bound by the principles of legality, transparency, competition, impartiality, economy, efficiency and sound management of public resources, except where the nature or subject matter of the contract proves incompatible with the application of any of these principles. In practice, until now, companies have defined their own procurement processes without a procedural framework that was regulated in advance and known to economic operators. Furthermore, some companies, drawing on the procurement expertise of their internal teams, were already applying best practices in the procurement market, drawing on tried-and-tested international models that had yielded good results in terms of the rationality and efficiency of public procurement.
The Circular has changed this paradigm: exclusion from the LCP no longer implies the absence of a procedure. Those principles must now be translated into rules: each company covered by the Circular must have a set of regulations containing clear, consistent and sufficiently comprehensive rules, subject to oversight by the SNCP.
The Circular is based on Articles 2 and 7 of the LCP, Article 43 of Law No. 11/13 of 3 September (which approves the Framework Law on the Public Business Sector), and the Statutes of IGAPE and the SNCP. Within the scope of its supervisory role and its powers as a shareholder, the State aims to strengthen good governance, internal control and risk management in the Public Business Sector, ensure greater control over expenditure and align public procurement with the policy of promoting domestic production and the resulting import substitution.
This development forms part of the increasing sophistication of the regulatory framework governing the Public Business Sector and, in particular, the status of public-sector managers. In addition to the duties imposed on any director under civil and company law, there are specific considerations arising from public administration: public-sector managers are subject to specific duties, as participants in the management of public assets and interests, within an extremely stringent regulatory framework characterised by often broad provisions, which do not always allow for a reliable assessment of legality. The risk is not merely reputational: it is also legal, with potential financial and even criminal consequences. A well-designed and properly implemented procurement regulation is, therefore, also a means of protecting decision-makers.
