Are IPSS subject to the Public Contracts Code?

This question has been systematically raised by various Private Institutions of Social Solidarity (IPSS), Misericórdias, etc. And rightly so, as compliance with the Public Contracts Code (PCC) is broad, covering a considerable scope and extent, with the concept of contracting authority being a core concept for defining the scope of application of the PCC.

Given that one of the requirements for this qualification involves, in some cases, the issue of funding, it is essential to point out that the funding granted by public administration bodies in an organic sense (including the State and local authorities) or by so-called public law bodies can be relevant in two ways: for the purpose of qualifying the beneficiary of such funding precisely as a public law body (and thus a contracting authority); and, even when there is no majority funding for the entity, it may still be relevant in terms and within the limits of subsidized contracts (and therefore subject to the Code).

Thus, based on its rules and in general terms regarding the subjective scope, we can state that, among others, in addition to institutional contracting authorities, we also find the so-called public law bodies and entities with subsidized contracts (Article 275).

Setting aside the latter, it is crucial to understand whether IPSS are considered public law bodies and, therefore, subject to public procurement rules. However, it is worth recalling that the IPSS Statute, in its Article 23, explicitly states that construction or major repair works belonging to these institutions must comply with the provisions of the Public Contracts Code, except for works carried out by direct administration up to a maximum amount of 25 thousand euros (note: this provision does not apply to IPSS that do not receive public financial support).

Now, although part of the legal doctrine disagrees — and we ourselves diverge from this understanding, particularly since the 2014 legislative changes (revision of the Statute) — national courts seem inclined to consider IPSS as public law bodies, given they are subject to management control by the State: they are entities specifically created to meet general interest needs, without an industrial or commercial character, that do not follow the competitive logic of the market, notably because they are non-profit, and their management is subject to control by (other) contracting authorities.

Therefore, IPSS are considered contracting authorities and are thus always subject to the Public Contracts Code, which calls for utmost care in purchases and construction works, avoiding liabilities, including personal ones.