The integration of solvency through third parties in public tenders

Before bidding for a public tender in Spain, entities must thoroughly study the technical and administrative specifications of the tender. They must also ensure that they meet all legal requirements.

In Spain, the regulatory law detailing the requirements for bidders in public tenders is Law 9/2017 of 8th of November, on Public Sector Contracts, transposing into Spanish law the Directives of the European Parliament and of the Council 2014/23/EU and 2014/24/EU of 26 February 2014 (hereafter the Public Sector Contracts Act).

Among other conditions, the Public Sector Contracts Act compels tenderers to prove their economic and financial solvency.

Specifically, under Article 74.1 of the Public Sector Contracts Act, To enter into contracts with the public sector, entrepreneurs must prove that they possess the minimum conditions of economic and financial, and professional or technical solvency determined by the contracting body. (…).

Regarding the minimum conditions of economic and financial solvency, under Article 74.2 of the Public Sector Contracts Act, they (…) shall be specified in the contract documents and be linked to and proportionate to the subject matter of the contract.

It is not, however, the accreditation of being solvent or not being insolvent, according to the concept of solvency set out in Royal Legislative Decree 1/2020 of 5 May, approving the revised text of the Bankruptcy Law. It is the accreditation proving it has the economic resources generally required to undertake the execution of the entire public contract. For example, a declaration of the highest yearly turnover in the last three years for a total amount equal to or greater than 50% of the budget of the Public Tender. Or the annual accounts of the tenderer approved and deposited in the Commercial Register.

Thus, one of the aspiring bidders, being solvent and able to operate in legal and commercial transactions, may not meet the specific state of economic and financial solvency requested in the tender documents and, therefore, may not be able to apply for the tender.

To solve cases such as this, the Public Sector Contracts Act in Article 75 allows bidders to rely on the solvency and resources of other entities. Specifically, according to number 1 of the provision, To prove the solvency necessary to conclude a given contract, the contractor may rely on the solvency and means of other entities, regardless of the legal nature of the links which he has with them, provided that he proves that throughout the performance of the contract, he will possess the required financial stability and resources, ensuring that the entity he relies on is not restricted from entering into contracts (…).

The above is a possibility expressly enabled by the Public Sector Contracts Act, and the public tender specifications don’t need explicit mention for bidders to utilize it.

The above means, sensu contrario, that the silence of the relevant specifications cannot be seen as a prohibition for using this legally established formula. On the contrary, proving solvency with external resources, as expressly stated in Article 75 of the Public Sector Contracts Act, must always be allowed.

Conditions for integrating financial solvency with borrowed funds

Article 75 requires some provisions to accept the tenderer’s approach of integrating financial solvency with borrowed funds. As far as is relevant here, they are as follows:

• The tenderer must prove that he will have such solvency and resources at his disposal for the entire duration of the performance of the public contract
• The tenderer must also certify that the entity providing the financial solvency requirement is not subject to a prohibition on contracting
• The contracting authority may require forms of co-responsibility between the tenderer and the entity providing the financial solvency requirement for the performance of the contract, including joint liability.

On the other hand, the tenderer relying on the economic capacities of third parties may choose the type of legal relationship established with them and the means of proof to establish it.

In this sense, the Public Administration cannot impose an obligation to conclude a collaboration agreement.

However, in all cases, tenderers wishing to use the economic capacities of other entities must prove to the contracting authority that they will have the necessary means at their disposal. For this purpose, both entities must submit a written commitment upon request of the Public Administration (articles 140, 145 and 150 of the Public Sector Contracts Act).

According to the above, the availability of external resources for public contract execution is decisive. Furthermore, this availability implies the potential to use resources from another entity to fulfil the financial solvency requirement.

In short, a simple declaration does not prove the availability of the third party’s economic resources (Resolution of the Central Administrative Court of Contract Appeals no. 393/2016).

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