Who’s Who Legal brings together Peter Curran of Eversheds and Pedro García of Morales & Besa to discuss public sector investment, government initatives and the nature of the legal market in this field.
Peter Curran: Ireland is emerging from a very difficult economic period and the country remains heavily indebted. After seven austerity budgets in six years, politics and economics are beginning to normalise again and Ireland now has one of the fastest-growing economies in Europe. Business sentiment is generally very strong; there is confidence that the tide has eventually turned.
The government has focused its investment in areas like health, education, transport (road schemes), energy efficiency and social housing, projects which have a high employment impact and which benefit local economies throughout the state. Much of the investment has been predicated on the use of non-traditional funding methods, for exammple, private financing through the PPP structure and additional exchequer investment through reinvestment of proceeds from the sale of state assets and a new licencing arrangement for the National Lottery.
Pedro García M: The key areas have been infrastructure and social expenditures. Infrastructure is being used as counter-cyclical tool for the Chilean economy, which has decreased its pace of growth, due to a combination of external and internal factors, chiefly the end of the commodities price boom (with copper representing approximately 50 per cent of Chile’s external trade) and a recent tax reform, which made a significant increase in the corporate tax rate.
Peter Curran: The Irish government is determined to make it easier for small businesses to bid for work across the public sector. Government guidelines aim to make public procurement more accessible to small and medium-sized enterprises (SMEs) by promoting the setting of relevant and proportionate financial capacity, turnover and insurance levels for tendering firms and the subdividing of larger contracts into lots, where possible. The guidelines also encourage SMEs to form consortia where they are not of sufficient scale to tender in their own right and to register on the government procurement portal to ensure maximum exposure to tendering opportunities. Social clauses are being deployed to open up employment or training opportunities for the long-term unemployed. There is also a drive towards more centralised procurement by the public sector. The Office of Government Procurement has been charged with making significant savings in public expenditure and to this end, a large number of framework agreements are being established for public sector bodies to use.
Pedro García M: Public procurement through Chilecompras, a centralised online public procurement system amounted to US$10.2 billion in 2014, representing a 7 per cent increase from 2013. This amount is expected to grow even further, as public expenditures increased approximately 9 per cent in the 2015 Chilean public budget.
Peter Curran: There is scope for legal advice to government to be provided by both the larger international firms, as well as smaller boutiques. Complex project work can be more suited to the larger firms as it involves a wide range of disciplines and expertise in various niche areas. Experience of the practices in other jurisdictions can be relevant and this is more accessible to the international firms. Procurement is an example of an area where there is plenty of scope for know-how and precedents to be shared across jurisdictions, particularly within the EU. However, there is no reason why boutique firms cannot also deliver a high level of service to government. Much government work is not particularly specialised. Smaller firms which are focussed on providing a high-quality, responsive service, can do this work just as well.
Pedro García M: It depends on the size of the public procurement process. For example, an international bidding process for the awarding of an airport, transmission lines or toll roads on a PPP basis, fits well with larger firms, given the level of complexity that theses process represent; whereas a small procurement contract of pencils to a municipality (local county) may not require legal work at all. Boutiques seem to be oriented mostly to regulatory issues or specialised litigation.
Peter Curran:There is no doubt that the market for government work has become increasingly competitive in recent years and with this, there has been a marked increase in the amount of procurement litigation. It can vary from sector to sector, but disputes are now very common in certain areas and for certain types of contracts. It depends a lot on how a particular market is structured, how significant the tendered contract is, and how many other opportunities are available at any given time.
Bidders are also increasingly aware of their rights and of the rules that awarding authorities have to adhere to. On the larger, complex procurements which bidders invest a lot of time and money in, procurement challenges are always a very real possibility that awarding authorities have to be mindful of. Many authorities spend a significant amount of time taking steps to reduce, mitigate and eliminate the risks of challenge.
Pedro García M: Chile has a public procurement court, though parties that feel affected may also file actions before ordinary courts of justice. There has been some litigation that has attracted public attention, but a greater number of procurement processes seem not to be controversial. Local public procurement through municipalities is the area where more reclamations are filed. As the government is intervening more in the economy though increased public spending, it seems plausible that litigations will increase.