Public tenders rebound with the election year

If last year the bidding for public contracts closed with the highest volume since the Great Recession, so far in 2023 the rate has not decreased and, if it stays that way, it will reach another record.

Oliver Thansan
Oliver Thansan
24 May 2023 Wednesday 22:39
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Public tenders rebound with the election year

If last year the bidding for public contracts closed with the highest volume since the Great Recession, so far in 2023 the rate has not decreased and, if it stays that way, it will reach another record. The reports from the Seopan construction business association and the DoubleTrade consultation point to a new and strong increase, and the sector cites the electoral calendar as one of the reasons.

"The influence of the electoral cycle on the bidding and public contracting of works confirms the habitual pattern consisting of the acceleration of both practices prior to the elections and a stoppage after its celebration, regardless of the electoral result", affirms the president of the Seopan Construction Association, Julián Núñez.

Between January and March, 37,570 public tenders for services and construction were put out to tender in Spain, 14% more than in the same period last year, with a particularly striking cost of 36,734 million euros, almost double that at the start of 2022. , motivated in this case by the upward revision of costs, according to DoubleTrade.

In the field of construction, according to Seopan, the tender was equivalent to 5,337 million in the first quarter, 16% more, and was especially intense in the State and among local administrations, with increases of 49% and 30%, respectively. . The General Directorate of Highways is making full use of asphalting roads, to the point of quintupling the volume of contracts and competing with Adif for the first position as a bidding body.

For Xavier Piccinini, general director of DoubleTrade Spain, the problem with this bidding frenzy in an election year is that it is accompanied by "soaring" budgets. "Runaway inflation and the increase in the cost of materials have caused us to head towards a higher cost of living that is also transferred to public tenders that do not stop growing due to the requirement to cover the needs of citizens and the proximity of new appointments elections," he concludes.

The president of the National Construction Confederation (CNC), Pedro Fernández Alén, hopes that the effort will be as useful as possible. "We trust that the increase in investment will not be used as an electoral weapon, but rather as a boost to a decisive sector to execute European funds and encourage the economy and employment in Spain", he affirms.

Of all the tenders launched in the first quarter, those for construction works represent a smaller portion and are below those for supplies and services, which are equivalent to close to half. However, in an election year, works tend to grow more.

The largest tender of those published in the quarter was the one for Aragón highways, for an amount of 2,192 million euros, ahead of one for communications equipment from the Ministry of Finance for 1,302 million euros and another for the supply of laboratory material from the Consorci de Serveis Universitaris de Catalunya (CSUC) for 1,000 million euros.

The two autonomous communities in which the most tenders were tendered in the first quarter were Catalonia and Andalusia, with more than 6,000 each. In Madrid and Valencia the figure was between 3,000 and 6,000, while in the rest of the regions it was below.

Fernández Alén warns of the need for a stable mechanism for reviewing the prices of public contracts, given the risk that many works may be stopped. "Today, many construction companies are being forced to work at a loss or, directly, to shut down. These are problems that suffocate our companies and threaten the Recovery Plan," he warns.

"Either urgent solutions are adopted or companies will continue to die and jobs will be destroyed in a crucial sector for the execution of European funds, since it will channel seven out of every 10 euros from Europe," he says.

From Seopan, Núñez also laments the "absence of price stabilization formulas and mechanisms in works tendered by autonomous communities and local corporations. According to him, the uncertainty affects public works worth close to 6,000 million euros.

It also detects other difficulties such as the "increasingly unsustainable reduction in treasury of contractor companies as they are anticipating with their own resources the unprecedented increase in the cost of construction materials". A third stumbling block has to do with the "absence of review mechanisms in public service contracts" of up to five years in duration, in which current regulations prevent them from reviewing both their salary costs and materials and energy.