Public Sector Works Contracts: Award, Execution, and Liability

Public Sector Contracts: Definition and Scope

A Public Sector Contract is an agreement where a party, known as the employer or contractor, using its own organization and resources, undertakes to perform a specific work, provide a service, or make a provision intended to satisfy a public interest. This is done in exchange for a determined monetary price paid by the Public Power Authority.

Public Power Authority Entities

The Public Power Authority is understood to include:

• Government, autonomous agencies, universities, and public agencies.
• Public entities, Social Security, labor mutual funds, and business-managing entities.
• Public institutions of any kind.
• Any bodies financed or controlled by public-sector subjects.
• Concessionaires (e.g., property developers).

Works Contracts

Works Contracts are those whose object is the completion or execution of construction work intended to satisfy a public interest, including the drafting of the appropriate project. Works include:

• Preparation of works.
• General construction and civil engineering works.
• Specialized buildings, facilities, and building completion.
• Rental of construction or demolition equipment with an operator.

Key Features of Public Sector Contracts

These contracts are generally binding, but specific award procedures allow for flexibility. The process is governed by strict principles:

• Governing Principles: Openness, transparency, equality, and freedom of competition.
• Object: Must be a work of construction or service provision.
• Purpose: Satisfaction of required public interest.
• Jurisdiction: Contracted by a public authority exercising its jurisdictional functions.
• Conflict Resolution: Handled through administrative resolution processes.

Exceptions to Binding Nature

Exceptions apply to the award process, such as:

• Award by negotiated procedure (focused primarily on price).
• Award by competitive dialogue procedure (focused on price, specifications, and production conditions).

Contract Award Procedure Stages

1. Drafting and Elaboration of the Project.
2. Approval and Layout (Replanteo).
3. Preparation of the Statement of General and Special Administrative Clauses (Pliego).

Contract Execution Modalities

Execution modalities may include:

• Flat rate adjustment (Lump Sum).
• Unit price adjustments.
• Redesign or modification records of the works, managed by the Administration.

Forms of Contract Award

• Open Procedure: Public competition.
• Restricted Procedure: (Via auction or tender).
• Negotiated Procedure.

Contract Execution: Duties and Responsibilities

The contractor must adhere to strict guidelines during the execution phase:

• Work Program: Provide a detailed work program within one month of commencement.
• Adherence: Execute the works based on the Technical Specification, design, and written instructions from the Technical Directorate.
• Risk: Execute the contract at their own risk, but retain the right to pricing review and compensation in case of force majeure.
• Defective Work: Demolish poorly executed works without the right to indemnification.
• Third-Party Liability: Duty to indemnify third parties for damages caused during the implementation of the works.
• Materials: Be responsible for materials provided by the Administration, if applicable.
• Deadlines: Meet all contractual deadlines for the implementation of the works.
• Defect Liability: Answer for hidden defects for 15 years following the final receipt of the works.