Resolution of the Council of Ministers no. 32/2001, of 2 of March

Published in D.R. number 52 (Series II) of 2 March 2001

Presidência do Conselho de Ministros (Council of Ministers' Presidency), Conselho de Ministros (Council of Ministers)

Resolution of the Council of Ministers

New information and communication technologies contribute decisively to improvements in the effectiveness and efficiency of the Public Administration in the various aspects of its activities.

The introduction of e-commerce practises in the Public Administration's acquisition procedures has numerous and obvious advantages, specifically including, reduction of costs, rationalisation of resources, reduced bureaucracy and greater speed and flexibility in acquisition procedures.

Such a measure would also contribute to the development of e-commerce due to the significant critical mass of buyers and suppliers that generate, and have a catalysing effect on, strengthening of the dynamism and competitiveness of the business sector.

For these reasons, the Government has repeatedly assumed the commitment to promote the use of e-commerce by the Public Administration. The Resolution of the Council of Ministers no. 143/2000 (II Series), of September 27, conferred to the Ministers of Social Equipment, of Finances and of Science and Technology the mandate to propose forms and means of activity that will encourage more widespread use of e-commerce practises in the Public Administration.

In order to establish grounds for the relevant choices, a working group was created, responsible for studying this area, identifying possible action lines and the respective advantages and inconveniences, specifically taking into account the experience of other countries in the handling of questions of public e-procurement. The results of the activity of the working group are contained in its report.

Given the importance of this area and the repercussions of implementing public purchasing mechanisms via electronic means it is important to make public the aforementioned report and promote public hearings with the different agents interested in this topic, thus providing the grounds for informed decisions that duly take into account the positions, comments and suggestions of all interested parties.

Thus:
Under the terms of paragraph g) of article 199 of the Constitution, the Council of Ministers hereby decides to:
1 - Determine publication of the experts' report prepared in compliance with the resolution of the Council of Ministers no. 143/2000 (II Series), of September 27, regarding acquisition of goods via electronic means by the Public Administration, provided in annex to the present diploma.

2 - Determine the opening of a 60-day period intended for public discussion of the report specified in the previous point.

3 - Add to the mandate conferred by resolution of the Council of Ministers no. 143/2000 (II Series), of September 27, the organisation of publication and public discussion of the report, specified in the present diploma, as well as presentation to the Government of the respective results.

February 7, 2001. - Prime Minister, António Manuel de Oliveira Guterres.

Report
Acquisition of goods via electronic means by the Public Administration
Foreword

The report herein presented aims to comply with resolution of the Council of Ministers no. 143/2000, of September 27, regarding the design of a system of acquisitions by the State via electronic means.

The structure of the report reflects an underlying concern for clarity, reflected in the use of summary tables, and methodological instruments that are rarely used in such works: flow charts, comparative tables and examples. This same concern for clarity justifies the preparation, alongside this report, of a presentation in a suitable computer format.

The authors of the report experienced considerable difficulties in its preparation, due to both the recent and technical nature of the topic, and the need to collect and analyse a high volume of specialised information for this large-scale work, in a very short space of time. Aware that similar difficulties will be confronted by those that bear the responsibility to take a decision, the reports aims to create conditions that will ensure that such a decision will be as well-founded as possible.

It should also be observed - an indispensable fact in order to make a correct judgement regarding the work herein developed - that it was not possible to gain access to significant quantitative data on the actual acquisition of goods and services by the State. The report therefore lacks a proper empirical basis.
The report is divided into five sections - the main text and four annexes:

A set of three flow charts, representing the management of suppliers and acquisitions;
The general principles and guidelines for the future legal framework of acquisitions by the State via electronic means;
A comparative table of the situation in five countries;
An example of electronic acquisition.

The report's authors are aware that, while they did everything possible within the short space of time granted - actually even more than was requested - they deliberately chose not to fulfil part of the mandate - the preparation of a draft legal diploma on public acquisitions via electronic means. This was effectively a trade-off, that the authors understood to be justified in order to concentrate their energies and forces on the key issue: establishing grounds to take a good decision, as mentioned above.

The authors nonetheless consider that they are bound to prepare two instruments within a reasonably short deadline after the political decision is taken, without any additional charge to the State:

A draft legal diploma on public acquisitions via electronic means;
A document containing the structuring principles of the electronic acquisitions process, that shall be used as the basis for preparation of the necessary regulations, to be prepared by a future regulatory and supervisory authority.

January 16, 2001. - João Caupers António Lorena - Francisco Veloso (did not sign due to being abroad, but expressed his full agreement) - Luís Oliveira - Pedro Amorim.

Executive Summary
Introduction

E-procurement procedures are the most common form of e-commerce between companies, capable of delivering significant improvements in effectiveness and cost reductions in acquisition procedures of goods and services.

The introduction of e-commerce practises in the acquisition procedures of the public administration has been considered to have a strong multiplier effect on the development of e-commerce (due to the great critical mass of buyers and suppliers that it would generate) and a catalysing effect on strengthening the dynamism and competitiveness of the business sector.

The use of more effective procedures, leading to greater economy in the use of public resources, is an imperative of good financial management. The adoption of a public e-procurement system also represents a unique opportunity to rethink the irrationalities and disfunctional aspects of administrative procedures relating to acquisitions of the State.

The transition from a physical acquisitions system (off-line) to a electronic acquisitions system (online) should be made in a gradual manner, starting with goods in certain categories or below a specific value.

Nonetheless such gradualism in the implementation of the electronic acquisitions system cannot imply the co-existence of such a system with the present off-line system. For any one category of goods, or specific goods up to a certain value, it is essential that the electronic acquisitions system be adopted in full.

The Government is advised to set quantified and suitable strategic objectives to be attained, in a scheduled procedure whereby progress and shortfalls may be measured. For this purpose, the Government should also plan actions, targeted at either the suppliers' market or Public Administration itself.

Choice of the platform 

In order to implement a public e-procurement system, the group recommends the State to ensure that the technological platform chosen has the following characteristics:

Open e-commerce standard;
 
Capacity to manage transactions by means of electronic catalogues, for assessment and classification of proposals and for negotiation;
 
Capacity to maintain a register of suppliers to the State;
 
Capacity of management of electronic catalogues, either within the system or external to the system, that adopt international standards for classification of goods;
 
Straightforward operation and compatibility with software that currently exists in most personal computers.

Management models of a public e-procurement electronic service.

A Public Administration e-procurement system may be managed via two main models, that differ in terms of the legal nature of the entity that is charged with managing the service.

In the public model, the system is directly managed by the State, using its own human and financial resources, or indirectly via public organisations that are distinct corporate bodies. Although this model is most easily compatible with the prevailing legal framework of public procurement, it will be necessary to make alterations in this legal framework as a result of the introduction of new acquisition procedures via electronic means and the creation of total separation of functions between acquiring public organisations and the system's managing entity.

Although the public model requires a high initial investment by the State and involves an additional financial risk and higher level of dependence, it presents the greatest potential to widen access to the market of public purchases, specifically to SMEs, and may represent a significant stimulus to re-engineering the entire public acquisitions procedure.

A private model, in which investment and risk are fully assumed by private promoters of the system, imposes certain delicate manoeuvres, namely regarding the choice of the private entity charged with management of the system and the need for the State to assume the costs per transaction or per procedure, as a means to pursue the objective of widening access to the market of public purchases.

This model requires a significant alteration in the prevailing legal framework for public procurement. On the other hand, the intervention of a "foreign body" to the Public Administration may generate hostility that may undermine the success of the public e-procurement system.

In the framework of the private model, the existence of a single system manager is advisable, in order to aggregate purchases and offer economies of scale. The existence of a single manager also constitutes a factor of simplification of the system, that will generate synergies in the allocation of resources and training of users (buyers and suppliers) and make it possible to minimise security problems, which are of particular concern to suppliers.

In either model, it is recommended to establish a single entity charged with the tasks of regulation and supervision of the system.

I - Introduction

1 - In the international arena there is a growing conviction that public acquisitions will be made via electronic means in the future. This appears to be an undeniable trend.

Indeed, to believe that such acquisitions - that correspond to the act of rendering public expenditure more effective - could ignore instruments unanimously considered to be able to deliver significant efficiency and economy gains would be to accept that the use of public funds could maintain less efficient paradigms than those available within the market.

A corollary to such analysis, is that the use of more efficient procedures delivering economies in the use of public resources, rather than being a new option available to governments, constitutes a genuine imperative of good financial management. Such a system also encourages - and this is a highly relevant aspect - the use of the capacities and acquirement needs of the State as a catalysing force in the strengthening of the dynamism and competitiveness of the business sector (see note 1http://www.anacom.pt/render.jsp?contentId=55129).

It is now important to analyse the manner in which a public e-procurement procedure should be organised. Due to its complexity, various aspects must be analysed:

a) Objectives and parameters to be used for the selection of the technological platform required to implement a public e-procurement system, including setting suitable functional and technical specifications;

b) The preferred model for the creation and subsequent management of the public e-procurement system (cost to be fully borne by the State Budget or financed from its own revenues);

c) Impact of the adoption of a public e-procurement procedure in Public Administration, distributed across several areas:

Re-analysis and re-organisation of the current structure of the State's procurement activities, in order to make it compatible with electronic procedures;

Standardisation of procedures, creation of quality plans and dissemination of best practises (centres of excellence);

Determination of the best balance between optimisation of the use of human and organisational resources made possible by a public e-procurement system and minimisation of associated risks;

Determination of re-orientation and professional training within Public Administration;

d) Impact of the adoption of a public e-procurement procedure on the universe of the State's current and future suppliers, including breakdown of the respective impact on large, small and medium scale companies;

e) Effects resulting from a public e-procurement procedure on the relationship between the State and the business sector, namely in terms of the increased capacity of the latter, considered as a whole:

To start to learn, within the context of decision-making, of incidents of non-fulfilment or incomplete fulfilment of previous contracts, and making use of such knowledge;

Control, in a more effective manner, that the tax and social security situation of suppliers and potential supplies is in order;

Monitor fulfilment of the State's payment deadlines to its suppliers (see note 2http://www.anacom.pt/render.jsp?contentId=55130);

f) Combination of the pursuit of the imperative of good financial management with the values, principles and rules that embody the "world of public acquisitions" and determination of the legal framework to be established for this purpose.

The present report attempts to present strategic guidelines on all these aspects, establish benchmark scenarios of the different options, and as far as possible, to present recommendations.

The very short deadline set for conducting the study and the terms of reference resulting from the resolution of the Council of Ministers no. 143/2000 nonetheless conditioned the scope and depth of the treatment of the various aspects summarised above, thus making it advisable to focus on those aspects that have a relevant impact on the immediate options - above all the model to be introduced - and also, assessment of the need to alter the legislative framework.

The object of this report is that which is usually described in English as e-procurement by the Public Administration. In Portuguese we may also describe it as "public provisioning" or "acquisition of goods and services by the Public Administration via electronic means". Irrespective of the term used, it is essential that we know what we are talking about. The question in hand is to identify the procedure involving use of electronic contractual means to satisfy the acquisition needs of public organisations (see note 3http://www.anacom.pt/render.jsp?contentId=55131), thus enabling the concept to be extended to the almost total management of the relationship between public organisations and suppliers.

This process corresponds to the functions made possible by the operation of a system that prepares details (see note 4http://www.anacom.pt/render.jsp?contentId=55132) of acquisition procedures of goods and services by the Public Administration, and may also ensure the set of legal requirements necessary for electronic invoicing and corresponding payment, associated to a database management system (see note 5http://www.anacom.pt/render.jsp?contentId=55133) on suppliers and their product catalogues.

Thus, the e-procurement service does not encompass the public legal decision-making (normative or otherwise) regarding requirements on potential co-contractual parties or the goods or services to be acquired, or the intentions to acquire certain goods or services, or the adjudication of a specific proposal. Public Administration bears sole responsibility for all these aspects. Neither does the e-procurement service express the will of the Public Administration in the signing of a contract to acquire goods and services (see note 6http://www.anacom.pt/render.jsp?contentId=55134). The service in question only concerns the formation of the Administration's intentions (in thousands of contractual procedures involving many interested parties - so-called "bulk procedures").

The utilities made available by an e-procurement service are, as already seen, greater than those currently resulting from the activity of preparing purchase procedures developed within the framework of a selective decision-making procedure of the co-contractual party with the Public Administration.

It would obviously be unreasonable to conceive of a large-scale and instantaneous transition from the present physical acquisitions system (off-line) to an electronic acquisitions system (on-line). Such a transition must be made in a gradual manner, as has occurred in countries that are more advanced in this field - in particular Australia, Malaysia, United Kingdom - starting with goods in certain categories or up to a certain value.

Nonetheless such gradualism in the implementation of the electronic acquisitions system cannot imply the co-existence of such a system with the present off-line system - for a single category of goods, or regarding specific goods up to a certain value, it is essential that the electronic acquisitions system be adopted in full. Any situation of competition between the two systems would encourage perpetuation of the current system, thus creating obstacles to the consolidation of an electronic acquisitions system.

The Government is advised to set quantified and suitable strategic objectives to be attained, in a scheduled procedure, whereby progress and shortfalls may be measured. For this purpose, the Government should also plan actions, targeted at either the suppliers' market or Public Administration itself.

The objectives should take the following into consideration:

a) Economy of resources in terms of acquisitions, both in terms of global amounts and costs per transaction;

b) Percentage of acquisitions to be made via electronic means (see note 7http://www.anacom.pt/render.jsp?contentId=55135);

c) Attraction of the business sector, especially the State's traditional suppliers;

d) Transfer of acquisition procedures by departments or services.

2 - Consideration of the possibility of autonomising this administrative procedural activity results from the vital need to confer greater rationality and transparency in decisions concerning the acquisition of goods and services by the Public Administration, guaranteeing that the conditions of such acquisitions incorporate a growing level of efficiency and effectiveness.

Dispassionate analysis of the current normative framework of public contractual regime for the acquisition of goods and services clearly reveals breakdown of the model. The State as legislator is committed to approving increasingly detailed and restrictive regulations for public sector acquisitions, surrounding such acquisitions with a mesh of restrictions and obstacles, supposedly based on the need to ensure the quality and rigour of administrative decisions that give rise to expenditure (see note 8http://www.anacom.pt/render.jsp?contentId=55137). In reality, the dominant hyper-regulatory trend does not ensure rigour in acquisition decisions: most public organisations are unable to sufficiently explain and justify many of their acquisition decisions. Public decision-makers are subject to increasing pressure - not exactly to spend more effectively, but simply not to spend at all (see note 9http://www.anacom.pt/render.jsp?contentId=55138).

The consequences are very familiar: the State as administrator consumes Herculean energies and efforts to find manners to get round the constraints and restrictions that the State as legislator has imposed (often represented by exactly the same people) thus making the system even less transparent and contributing towards an increased risk that is confronted on a daily basis by all those who accept the responsibility of performing public duties in order to ensure such performance.

The adoption of public e-procurement system represents a unique opportunity to reconsider the irrational and disfunctional aspects of administrative procedures for the State's acquisitions. This perhaps explains why countries such as the United Kingdom after having decided to adopt public e-procurement, have ended up by considering it to be necessary to review the entire legal framework for public procurement.

Of course we should not ignore the fact that some of the referred to irrational and disfuntional aspects do not exist by chance: in certain cases they represent good intentions that have been undermined by actual practises; in other cases they camouflage strange links and suspect associations, that defend personal rather than public interests in acquisition procedures and often explain the extremely poor conditions, especially regarding price, of contracts signed by the State. The revision of the legal framework of the acquisition of goods and services by the State would experience significant obstacles in this regard.

3 - The above mentioned objectives to confer greater rationality and transparency in decisions regarding public e-procurement of goods and services, can be more easily achieved via use of electronic means configured for this purpose; the convenient debate on the conditions of pursuit of such objectives, in turn, involves the need to consider diverse modes of management of the activity described above, specifically in terms of the admissibility of attribution of responsibility for such an activity to one or more private entities.
 
The choice between the public or private nature of the activity is still subject to debate.

Two arguments stand in favour of choosing in favour of the public nature of this activity:

The instrumental character of this activity in terms of decision-making of public adjudication;

The partially discretionary character of this activity, i.e., the fact that it is situated within an area in which the Public Administration has the power to choose, with a considerable degree of latitude.

An argument in favour of the private nature of this activity includes the fact that it can be claimed to be similar to procedures developed within the private sector, in establishing decisions in large-scale contractual procedures. It can also be argued that this concerns an activity that is subject to binding constraints, given that the latitude of supposed discretionary nature of this activity is dramatically reduced by the fact that the decision is bound to application of algorithms supplied by computing programmes, to the extent that this is possible. (see note 10http://www.anacom.pt/render.jsp?contentId=55139).

4 - What should we think?

It should be noted that grouping of an instrumental nature is a valid argument; but also proves, and is valid not only for public buyers but also for any buyers. It is the instrumental character of the contractual decision that ensures the structural identity of sup-procedures of collection and analysis of the necessary information, both in terms of contractual procedures of the Public Administration, and ocontractual procedures. Consideration of the problem of the discretionary or binding nature of the said activity is even more complex.

What is certain is that it may be said that this is a problem of administrative law, and to that extent is exclusively a matter of public choice; which implies that the question requires the establishment of decision parameters based on legal rules, given that Public Administration bodies operate on the principle of powers (see note 11http://www.anacom.pt/render.jsp?contentId=55140) and not, as for private operators, under the principle of freedom of choice (see note 12http://www.anacom.pt/render.jsp?contentId=55141).

Careful analysis of this issue, reveals that the matter is not necessarily so straightforward: nothing prevents a private operator, in the exercise of his activity, empowered by public legal norms, to exercise a power of choice whose parameters are defined in function of the pursuit of a specific interest of public relevance.

This means that, irrespective of confirmation of the more or less binding nature of this activity, it seems to us to be appropriate to defend the idea that it is a neutral activity, in as much as that it may be either of a public or private nature - and therefore is not exclusively reserved to the public sector.

Nonetheless if such an activity may be defined as a neutral activity, the possibility of its management by a private entity, in a regime of private law, involves prior consideration of privatisation of procurement activities, in as much as that it such activities are currently pursued exclusively by public entities, within a regime of administrative law.

5 - E-procurement procedures, are universally recognised to offer efficiency improvements and significant cost reductions in acquisition procedures of goods and services (see note 13http://www.anacom.pt/render.jsp?contentId=55142). This is probably the reason why it is the most common e-commerce practise between companies (see note 14http://www.anacom.pt/render.jsp?contentId=55143); however only very recently has it begun to be adopted by European public administrations.

The introduction of e-commerce practises in the acquisition procedures of public administrations has been considered to have a strong multiplier effect on the development of e-commerce, due to the tremendous critical mass of buyers and buyers that it generates (see note 15http://www.anacom.pt/render.jsp?contentId=55144).

6 - The European Commission calculates that the turnover of public acquisitions of goods and services by European public administrations is around 14% of the European Union's Gross Domestic Product (i.e. around - 1000 billion - the equivalent to around nine times Portugal's GDP).

In the European Council held in Lisbon on March 23 and 24, 2000 the eEurope initiative was approved, in the framework of which intensive use of electronic means by the Union's public administrations is held to be a key factor, and Member States assumed the commitment to ensure widespread use of acquisition procedures via electronic means by the end of 2003.

In the sequence of this initiative, Directive no. 2000/31/CE, of the European Parliament and Council was published on July 17, 2000 (see note 16http://www.anacom.pt/render.jsp?contentId=55145), on certain legal aspects of information society services, in particular e-commerce, in the internal market.

On the other hand, the European Commission has already presented proposals to alter the Directives of public acquisitions (see note 17http://www.anacom.pt/render.jsp?contentId=55146). These alterations aim to encourage the use by public administrations of acquisition procedures via electronic means.

7 - 1997 signalled the beginning of Portuguese concerns within the framework of the Public Administration. The Green Paper on the Information Society in Portugal was approved at that time. Starting from the principle that the information society must be a society for all, we highlight below the main legal implications identified in the Green Paper:

a) The need to create resources aimed at security of information and guarantees of privacy, menaced by the desirable, but potentially hazardous, interconnection of various Public Administration bodies via an electronic network that guarantees sharing of information between the Public Administration, companies and citizens;

b) The resolution of problems that arise from the substitution of paper as the means of transmitting and archiving data, namely regarding formal legal aspects, such as evidential value, representative legitimacy, conservation of documents and legal responsibility (also involving problems of digital signatures and electronic certification);

c) The protection of intellectual property and authors' rights.
In addition to the cited legal implications, the objective of the so-called "Electronic Public Administration" (e-government) began to be outlined, emphasising the need to improve the efficiency levels of Public Administration through measures such as a "single counter" and the constitution of intranets.

8 - The first step towards concretising the Green Paper was taken by the Resolution of the Council of Ministers no. 94/99, of July 29 (see note 18http://www.anacom.pt/render.jsp?contentId=55147), that approved the strategic document of the National Initiative for E-commerce.

This document is structured around principles and measures, grouped into distinct areas. The main areas include:

The creation of a legal regime that is favourable to e-commerce, placing priority on the preparation of legislation regarding the recognition of contracts made via electronic means, the evidential value of electronic documents, the legal recognition of electronic invoices, the guarantee of intellectual property rights in the use of e-commerce and the security and confidentiality of data that circulates in telecommunications networks;

Non-discrimination in fiscal terms between transactions made via electronic means;

Guarantee of free access to the circulation of encrypting technicians;

The creation of a commercial environment that is favourable to e-commerce, determining that in this regard, Public Administration should lead the way.

The measures announced were distributed across different areas, including the creation of a regulatory framework that encourages the development of e-commerce (area 2), definition of a security policy for electronic transactions (area 3) and the use of the Public Administration as a privileged instrument for advancing e-commerce (area 5), given that it represents, by itself, a market of sufficient scale to ensure the critical mass necessary for the success of e-commerce.

9 - The legislative execution of the measures specified in the Green Paper continued with Decree-Law no. 290-B/99, published on August 2, that approved the legal regime of electronic documents and digital signatures. Key aspects of this regime include the following:

The legal definitions of digital signatures and electronic documents (article 2);

The ruling that an electronic document satisfies the requirements of a written legal format, when it includes a digital signature certified by an accredited entity stating that it has the evidential value of a private signed document (article 3);

The ruling that the communication of an electronic document, signed in accordance with the requirements of the present diploma, via a means of telecommunications that guarantees effective reception is equivalent to submission via registered mail; in the event that reception is proved by a confirmation message sent by the receiver to the sender with a digital signature, and received by the receiver, is equivalent to submission via registered mail with recorded delivery (article 6);

The ruling that the addition of a digital signature to an electronic document is equivalent to the value of an autographed signature in a written document in paper format, and also the ruling that the addition of a digital signature substitutes for all legal purposes, the addition of stamps, seals, marks or other identifying signs of the holder (article 7).

10 - Already in 2000, on July 27, the Council of Ministers approved a further Resolution, no. 110/2000 (see note 19http://www.anacom.pt/render.jsp?contentId=55148), via which it launched the Internet Initiative, whose framework was established by the respective strategic document. We highlight two objectives within this document.

The first objective consists in multiplying by a factor of 100 the volume of e-commerce in Portuguese companies over the next three years. To attain this objective two essential and complementary measures were identified: to develop systems of public acquisitions via the Internet and reform the State's Purchasing Centre, in order to encourage the acquisition of goods and services via electronic means.

The second objective concerned acceleration of the development of Portuguese content or Portuguese-language content in the Internet, foreseeing the digitalisation and free and systematic distribution of content stored within libraries, museums and archives and incentives for the production of content of public interest.

11 - In September 25, 2000, the Government published Decree-Law no. 234/2000, establishing the recently created Institute of Information Technologies in the Legal System, as the accreditation authority empowered to accredit and inspect digital signature certification entities. An indispensable step was thus made in the path towards widespread use of e-commerce.

Two days later an additional resolution of the Council of Ministers was published (that had been approved on September 8), no. 143/2000. This resolution designated three members of government - the Ministers of Social Equipment, Finances, Science and Technology and Reform of the State and Public Administration - under the co-ordination of the Minister of Science and Technology to prepare forms and means of activity that will encourage the widespread use of e-commerce practises in the Public Administration.

II - The adoption of a system of acquisition of goods via electronic means and the current legal framework of public procurement.

12 - Before starting to analyse the problems of the technological platform and the different possible models of adoption of e-commerce practises in the acquisition procedures of the Public Administration and the inevitable legislative alterations made necessary by such adoption, it is important to briefly reflect upon a crucial aspect: the possibility of launching public tenders via electronic means, taking into consideration national public procurement legislation and public expenditure related to the leasing and acquisition of goods and services, as defined in the aforementioned Decree-Law no. 197/99, of June 8.

In the light of this legal framework, the State and other public entities are obliged to observe specific principles in the signing of contracts for the acquisition or supply of goods and services. Two of these principles appear to stand in conflict with specific mechanisms of an electronic procurement system (hereinafter called the system).

It is possible, however, to consider that the principle of equality in access conditions (see article 9) would be breached by the need for competitors to possess specific computing and telematic equipment; we assume that it would be difficult to consider adoption of the system as being discriminatory, especially if it was an open system, based on standard equipment and accessible to all.

In regards to the principle of competition, consecrated in article 10, it may even be said that the system facilitates simple access to acquisition procedures by any party interested in establishing contracts with the Public Administration. The preparation of a set of public access Internet pages, which provide detailed instructions on the requirements of each public tender, as well as the set of legal requires of launched tenders, would ensure a store of information available to interested parties that is greater than that made possible via traditional formats.

It is also important to remember that the addition of digital signatures, by either public purchasing organisations, or by suppliers, will increase the level of security of the procedural items of the public tender, given that such an addition guarantees that the signed documents are unequivocally of the responsibility of the entity or person that signed it, and also will not undergo any alteration until received by the entity or person to which it is destined (it is not possible to provide such a guarantee for a signature in a paper format) (see note 20http://www.anacom.pt/render.jsp?contentId=55149). This will thereby strengthen the principle of stability as recognised by article 14

The fact that digital signatures and electronic documents are associated to powerful encrypting systems (see note 21http://www.anacom.pt/render.jsp?contentId=55150) makes it possible, from a technical viewpoint, to guarantee far greater security in their transmission, as compared to a paper format; this is true, even when compared to common e-mail systems (where information is transported in a non-encrypted manner and is consequently easier to detect and may be altered).

13 - Decree-Law no. 197/99 foresees a stage entitled "public act of the tender", that implies interactivity in the participation of interested parties, that does not seem to us to be possible in a totally electronic environment.

It is important not to over dramatise this difficulty; the public act of tender is not, in itself, an indispensable and inviolable guarantee of equality, but rather an instrument created by the legislator in order to uphold this principle of equality. If it is possible to guarantee equality - and reinforce it - via other means, there will be no reason to lament the "death" of the public tender, at least in its present form.

In relation to limited tenders on the basis of prior qualification and negotiation procedures, also suggests the problem of knowing whether the system will enable a simultaneous negotiating session with all bidders. It should also be noted that the possibility to include an off-line pre-qualification stage in acquisition procedures should not be completely precluded - specifically in regards to services - involving a complex qualitative assessment of suppliers.

It should not be ignored that the establishment of these aspects obliges careful pondering of the suitable legislative alterations. It should also be taken into consideration that the new legal instruments to assist e-procurement may play a decisive contribution to providing a response to such questions, at the same time providing a relevant contribution to upholding equality of conditions between all bidders.
It should be remembered, in this regard, that the reception, via electronic means of bids, in which certified digital signatures have been attached (specifically by the adjudicating bodies and by the bidders) and the respective encrypting at the time of the bid's reception, provides a specific guarantee of protection of the content of the bids and their stability (see note 22http://www.anacom.pt/render.jsp?contentId=55151).
14 - During the tender process various notifications have to be made from the adjudicating body to bidders, specifically those transmitting requests for clarification regarding the respective replies, those following the sending of the act of opening the tender, those convening prior hearings and those that inform bidders of the adjudication decision.

The failure to make a notification that should be made implies the ineffectiveness of the act to which the communication refers, in relation to the respective receiver, with the inherent disturbance caused to the tender process.

In the current state of the art, it may be affirmed that a system of electronic messages - above all if based on use of signatures with double encrypting and authentication keys - is more efficient than communication via analogue formats, such as normal mail or fax.

This fact was implicitly recognised in point 1 of article 6 of the legal diploma that regulates digital signatures, where it was established that an electronic document communicated via a telecommunications means is considered to be sent and received by the receiver if it was transmitted to the electronic address defined via the agreement of both parties and was received in this address.

III - Selection of the Platform

15 - In regards to the objectives and parameters to be used to select the technological platform required for the implementation of a public e-procurement system, we should first note that we are likely to see in Portugal a phenomenon that has already been observed in other parts of the world: presentation to the Government of a wide range of commercial and competitive proposals, before which autonomous critical appraisal must be made, in order to select the best option and prior to such a decision, to determine the value of each option as a model (see note 23http://www.anacom.pt/render.jsp?contentId=55152).
It should be added that, at the international level, there is still no uniform model on the manner in which the construction and maintenance of the technological platforms that support public e-procurement systems should be remunerated.

We can succinctly summarise three possible forms of remuneration:

a) Traditional licensing contracts continue to be the most common manner in which public organisations acquire the right to use software. This formula, however, has started to be undermined by the rapid obsolescence of current e-commerce solutions and the excessive dependence that such software creates on the software supplier;

b) Recently, the so-called "Application Service Providers (ASP)" have emerged based on a new contractual model, in which it is foreseen to may a monthly fee to an entity that manages the hardware and software platforms required for operation of an e-procurement system. This model presents the advantage of transferring to such entities the risk of obsolescence and permits a significant reduction in buyers' fixed cost structures;

c) The third possibly, clearly inherited from private e-procurement systems, is based on charging buyers a percentage on each transaction made by the system. This model presents clear advantages in terms of cost structure, but no such case has been adopted to date for public e-procurement (see note 24http://www.anacom.pt/render.jsp?contentId=55153).
Irrespective of the contractual model that is finally chosen, the State should play a decisive role in defining the operating specifications of the system, guaranteeing various different aspects regarding the platform.

As a starting point, it is recommended that this model be open in character (see note 25http://www.anacom.pt/render.jsp?contentId=55154). In truth, the adoption of an open e-commerce standard ["OBI - Open Buying on the Internet (see note 26http://www.anacom.pt/render.jsp?contentId=55155), for example"] will make it possible to significantly reduce interconnection costs between computing systems used by the Public Administration and those used by suppliers.

The use of open systems will permit such interconnection, irrespective of the hardware and software platforms used by buyers and suppliers, thus fulfilling one of the objectives underlying the aforementioned National Initiative for E-commerce and the Resolution of the Council of Ministers no. 143/2000: widening access to the market of public purchases to entities previously excluded from this market, in particular SMEs (see note 27http://www.anacom.pt/render.jsp?contentId=55156).

16 - Secondly we also recommend that the platform maintain a register of suppliers to the State.

In addition to initial verification that a supplier satisfies the pre-qualification requirements, that enables suppliers to be registered within the system, the platform should be able to check that suppliers continue to satisfy such requirements (the regularity of updating the records should be defined by the buyers).
The adjudicated supply contracts should also be registered as well as all incidents that have taken place in supply agreements (e. g. delays in delivery, unavailability of replacement parts, failure to comply with specifications, etc.).

This "system memory" will also enable sanctions to be applied to suppliers that are in breach of their agreements, in far more effective and equitable terms than the current systems of penalties. In reality, this system is based on an individualised and case-by-case reaction, whose effects are restricted to each tender process considered on an individual basis.

17 - Thirdly, we also recommend that the platform encourage the use of electronic product catalogues.

Electronic catalogues are commonly considered to be the tool that makes it possible to attain the ultimate goal of any e-procurement system: the guarantee that the buyer contracts with the supplier that offers the best value for money given his needs. Only a standardised electronic catalogue system makes it possible to compare between various offers, above all where price is not the sole deciding factor.

The mechanisms associated to electronic catalogues should enable resolution of "equations" of determination of value on the basis of multiple variables (price, guarantees, after-sales assistance, delivery deadlines, logistics, etc.).

The constitution and management of electronic catalogues is, however, the most time-consuming and complex task involved in the setting up an e-procurement system, in which it is necessary to choose between inclusion and management of catalogues within the system itself or access to external catalogues.

In the cases where it is decisive to have a high degree of automation and updating (e. g., products with a high degree of rotativity or rapid obsolescence) it has been chosen to include catalogues within the system itself, with content updated by suppliers themselves.

The management of product catalogues by the entity responsible for the system's management has clear advantages in terms of reliability and response times, but generally implies high costs for suppliers (see note 28http://www.anacom.pt/render.jsp?contentId=55157).

In more general systems or those with a very high number of suppliers it has been chosen to access external catalogues, generally defined by suppliers themselves.

Lower efficiency, in terms of precision of responses, of external catalogues may be overcome through the use of standardised databases and the adoption of a standard mechanism of exchange of electronic messages (see note 29http://www.anacom.pt/render.jsp?contentId=55158).

In any case, electronic catalogues should be standardised and include a reasonable level of detail (e. g. information on products, technical assistance, guaranteed conditions, response times, etc.) in order to enable the system to achieve the so-called "optimal specification level".

We have been able to verify with representatives of the Ministry of Finances and of Social Equipment, that at the present time there is no uniform criterion of classification of the goods acquired by the various organisational bodies of the State. It is also recommended that electronic catalogues adopt international standards for the classification of the goods to be acquired.

18 - Lastly, it is necessary to take into consideration language issues, given that the use of other official languages of the European Union, in addition to Portuguese, would enable Portuguese companies to participate in e-procurement systems adopted by other Member States.

We thus recommend that the interface which enables the system's users to conduct online acquisition procedures be extremely simple and use software that already exists in most personal computers (e.g. a standard Internet browser) (see note 30http://www.anacom.pt/render.jsp?contentId=55159).

The success of this system has been clearly associated to its user-friendly nature and the minimisation of administrative and training costs inherent to operation of the platform.

IV - Management models of a public e-procurement service

19 - An e-procurement service for the Public Administration may be managed according to one or two main models: that differ in terms of the legal nature of the entity charged with managing the service. We can thus distinguish between the public management model and the private management model. A third model may also be conceived, of a hybrid nature, that we define as semi-public.

Public model

20 - In this model there will be public management of the system, whereby investment and risk is fully borne by the State (see note 31http://www.anacom.pt/render.jsp?contentId=55160).
 
The management of the e-procurement system will be directly conducted by the State, through its own human and financial resources or indirectly via instrumental public organisations that have distinct legal personality (indirect public management).

Although this is the model that is most easily compatible with the prevailing legal framework of public procurement, it will be necessary to make alterations in the pre-contractual and electronic contractual systems, under the terms identified above.

Given that this represents a service with new characteristics, it is necessary to reconsider both the formulation of some of the applicable principles of administrative law (e. g., the law to hear interested parties), or the scope of intervention of the Court of Auditors.

It is also advisable to consider specific treatment for litigation emerging from the contractual process, based, for example, on a permanent arbitration system. In truth, the current litigious terms of administrative contracts, even after the modifications introduced by Decree-Law no. 134/98, of May 15, does not seem to provide us with a legal framework compatible with the necessary swiftness in resolving litigation arising from public e-procurement.

21 - The public model presents various drawbacks that should be carefully considered:

a) It implies a relatively high initial investment by the State;

b) It increases the possibility of a high level of inertia at the launch of the new system, given that the resistance of the Public Administration to change is well known and due to the lack of preparation of the entities that will adjudicate procurement contracts on behalf of the State via electronic means;

c) It grants the State exclusive powers to choose management of the technological platform to be used, which could, in the event that the platform is of a closed nature, represent an additional factor of dependence and financial risk, especially if we consider the rapid evolution of e-commerce platforms that exist in the market;

d) It represents a failure to take advantage of the opportunities to use the intervention of an external entity as a catalyst of change of the paradigms and acquisition procedures of Public Administration.
It should be noted, in relation to the latter argument, that it is possible to imagine that certain sectors of Public Administration might react in a diametrically opposite fashion, with greater resistance to change, due to the intervention of external bodies.

22 - In terms of revenues, this model will enable a wide freedom of choice, ranging from charging a commission to free utilisation of the system, including possible establishment of a politically imposed price.

This model does not undermine the possibility to apply penalties resulting from non-compliance or failures in terms of reliability, both to buyers and suppliers - as takes place in the private model. We consider this possibility to be essential.

23 - To concretise this model, it is necessary to create a managing entity of the system, that could be located within the framework of direct administration of the State or be a public entity created for this purpose (assuming the legal form of a traditional public institute, a semi-entrepreneurial public institute or a public company).

Given that it is not advisable to concentrate management functions and supervisory and regulatory responsibilities in the same organisation, it will also be necessary to create a specific organisational body to develop the latter functions. This constitutes a new regulatory and supervisory authority, with ideal conditions to constitute an excellent initiative of administrative modernisation, since it exercises a completely new function, rather than an inherited function - as is generally the case for existing regulatory authorities - the defects and "bad habits" of the former monopolies of the State. Such an entity could therefore constitute a genuine factor of modernisation of the Public Administration, and its top management should be genuine managers and not bureaucrats in the worst sense of the term.
 
The capacity of the said authority to constitute added value for the overall business sector should also be fostered, defined by the introduction within the business sector of a dynamism and competitive capacity that is higher than that would exist without the existence of such an authority.

It is also necessary to conduct an alteration in the prevailing legal framework of public procurement, in order to reflect the redefinition of the attributions and acquisition powers of the State, resulting from the introduction of new acquirement procedures via electronic means, consecrating total separation of functions between acquiring public organisations and the system manager.

Table of advantages and disadvantages

Advantages

Wider access to the market of public purchases (especially for SMEs) made possible on the basis of a commission/politically-defined price/free-of-charge.
Maintenance of most current legal principles.
Re-engineering of the entire public acquisition process.
Potential to eliminate certain resistance to change resulting from the intervention of external entities.

Disadvantages

High initial investment.
Increased financial risk resulting from dependence on the choice of platform.
Inertia in the start-up phase of the system.
Failure to take advantage of external intervention as an impulse to change the Public Administration.

Private model

24 - In this model, the investment and risk will be integrally assumed by private promoters of the system.
As can be easily understood, this model implies a significant change in the legal framework of acquisition procedures, thus also implying the creation of a specific regime for handling litigation related to the acts of the private system manager.
If management of the system is based on a purely commercial logic - a possibility that may be admitted in the abstract - access prices and utilisation prices will be defined on the basis of economic criteria. It is possible that this circumstance could represent a serious obstacle to access to the market of the State's purchases for many SMEs.
In this intellectual framework, we tend to consider that it is almost impossible for a private management system not to take the form of a public service or management of an activity of general economic interest. For this reason we have not taken the other possibility into serious consideration.

25 - In the first of these hypotheses, management of the public e-procurement service is considered to be a purely public activity, thus considering the State as the original holder of public service responsibilities (in a subjective sense).

Administrative legal relations between the State and the private entity charged with managing this services may be constituted and shaped through an administrative contract of concession of public service responsibilities, a delegation of public service responsibilities, or an atypical administrative contract.

The concession of public service responsibilities establishes an administrative legal relationship in which the service holder attributes to another entity the right, in his own name and at his own risk, to operate and manage this service, and to be remunerated by charging commissions to users.

The delegation of a public service constitutes an administrative legal relationship via which the service holder creates and conserves the responsibility for its financing as well as, total or partial, responsibility for the risks resulting from pursuit of the activity, conferring to the private entity only the necessary powers for the conservation, organisation and regular and efficient operation of the service (see note 32http://www.anacom.pt/render.jsp?contentId=55161).

For another legal doctrine, however, the concession of public service responsibilities - at least in a broad sense of the term - also covers the delegation of public service responsibilities (see note 33http://www.anacom.pt/render.jsp?contentId=55162).
It is also possible to conceive of an atypical administrative contract, that involves the exercise of public service responsibilities by a private entity, which may be prepared in a manner that is adjusted to the needs of the parties involved.

In the Anglo-American tradition, public franchising is known as the contract via which monopolistic control of the exercise of an economic activity is attributed to a private entity for a specific period of time (see note 34http://www.anacom.pt/render.jsp?contentId=55163). Such a contract is defined as a technique of economic regulation, or as a complement or substitute to such regulation.
Public franchising contracts may be signed in relation to the operation of publicly owned equipment, equipment purchased by the private operator (and thus privately owned) or equipment that is built, used and transferred to the public sector, possibly to be subjected to a new contract (see note 35http://www.anacom.pt/render.jsp?contentId=55164).

26 In the second hypothesis - private management of a private activity of general economic interest - the activity in question will be assumed to be of a private material nature, developed within the scope of free economic initiative and the market. Nonetheless given that the preparation activity of purchase procedures is common to all decision procedures for the acquisition of goods between organisations, it may be considered to be of general economic interest.

Considering such an activity to be of general economic interest leads to the possibility of imposing certain public interest obligations - i.e. despite the predominance of competition in the market. Such obligations include access to the service, the continuous nature of the service's supply and safeguards of quality and of fair and reasonable prices.

The imposition of such public interest obligations to a private activity should be made via the entity responsible for economic regulation.

Control of respective fulfilment should also be guaranteed, within the framework of supervision of the regulated activity, and thus by the same entity (see note 36http://www.anacom.pt/render.jsp?contentId=55165).

The imposition of such public interest obligations may also require, in return, the attribution of special or exclusive rights, or even consideration of a public financing mechanism. Otherwise, the private entity responsible for managing the system would obviously not accept restraints that lowers the operation's profitability.

27 - A relevant question is the determination of the legal nature of the service to be provided by the private entity responsible for managing the system.

It is immediately of concern to know whether the service provided by this entity is a public service or not.

The definition of a public service is controversial (see note 37http://www.anacom.pt/render.jsp?contentId=55166). Although the organic definition has not been abandoned, it is true that the so-called objective definition increasingly prevails. (see note 38http://www.anacom.pt/render.jsp?contentId=55167).

Nonetheless, to limit reflections on the concept of public service to a purely doctrinal framework - of limited extension - does not appear to us to be the best solution.

It is therefore important to examine national and community legislation in which the concept of public service has been defined in a more detailed manner.

Starting with national legislation, it makes sense to refer to Decree-Law no. 182/95, of July 27, that establishes the bases of the organisation of the National Electricity Grid (SEN) and the principles that provide the framework for exercise of the activities of production, transport and distribution of electricity. This diploma provides certain contributions for defining the boundaries of the concept of public service. These elements include the obligation to operate, contract and apply uniform tariffs (consolidated through fulfilment of a tariff regulations that consecrates a tariff system of universal scope to all end customers of the SEP - Public Service Electricity System).

All these elements, objectively, contribute towards configuration of the concept of public service.

A conclusion can be immediately drawn from the obligations referred to above: the natural contradiction between such obligations and a purely commercial logic.

28 - Mention should be made, that is also considered to be paradigmatic, of Regulation (EEC) no. 1191/69, of June 26, that uses a concept of public service applicable within the field of rail, road and river transport that defines with greater precision the three obligations that establish the configuration of the concept of public service (see note 39http://www.anacom.pt/render.jsp?contentId=55168).

29 - Having arrived at this point, we are able to advance towards a definition of public service that, on the basis of the respective typical characteristics, enables a fuller understanding of this concept.
Thus, public service may be defined as a means of administrative action that aims to deliver direct and immediate economic benefit to a citizen or corporate body, provided within the framework of obligations that draw it away from pure commercial management, such as operating, contractual and tariff obligations.

It is now unanimously accepted that the first assumption of concession of public service responsibilities is administrative ownership of a public service activity. In other words, if the activity "to be concessioned" is not a public service, it makes no sense to speak of concession (see note 40http://www.anacom.pt/render.jsp?contentId=55169).

In our understanding, the provision of e-procurement services does not represent either a power or attribution of the State. It seems obvious that nothing prevents each entity, whether public or private, to supply its own needs. On the other hand, when the State chooses in favour of e-procurement, it does not do so with the deliberate intention to provide any service to its suppliers, but because it considers such an option to be advantageous, in the field of public interests which it responsible for upholding. In this context it seems obvious that the State may separate the decision-making process of procurement from setting up the structure suited to such procurement.

Our understanding of this problem may reduce the need for concession to operate the transfer of procedural functions to a private entity responsible for managing the system. It would make more sense to place this issue in terms of development of a private activity of general economic interest, as stated above.
30 - The choice of a private model also obliges delicate interventions:

a) The already referred to need for the existence of a politically-define price obliges consideration of sharing of the two expenditure components to be supported by the State. On the one hand, the State will pay a fixed price as user of the system in function of commercial criteria set by the private entity responsible for the system's management. On the other hand, the State will also pay a compensatory indemnity payment, in return for pursuit of the objective to widen access to the market of public purchases;

b) It will be highly difficult to choose the private entity responsible for the system's management, that will develop a private activity of general economic interest, as referred to above. The use of competition as a means of selecting such an entity is recommended and is probably inevitable;

c) As stated in regards to the previous model - and here with even greater grounds - it will be indispensable to create a regulatory and supervisory authority, to specifically exercise functions in the field of defence of competition, non-discrimination, transparency of acquisition decisions and protection of personal data;

d) As already referred to in regards to the public model, we recommend the creation of a specific model for resolution of litigation arising from acquisition procedures, establishing a permanent arbitration tribunal.

31 - A private model, of course, also has drawbacks:

a) It would be particularly difficult to choose between parties potentially interested in managing the system, given that assessment of the relative merits and disadvantages cannot be made on the basis of empirical analysis, and it is also highly complex to create a framework of technical and operating specifications for this purpose that can be used to distinguish and rank different proposals;

b) Acquiring entities - or rather the human resources employed by these entities - may display some hostility to the system, considering, due to its private nature, that it is a "foreign body" to the Public Administration. Such hostility may of course undermine the success of the public e-procurement system;

c) There is likely to be inertia in the entry of suppliers into the system. It is by no means sure that suppliers will see adhesion to the system as an advantage. They may consider the current situation to be satisfactory;

d) Such inertia will increase in function of the costs for suppliers to adhere to the system. In a private model the system's manager will charge suppliers an entry and maintenance fee plus fees for processing electronic transactions. These fees may act as a disincentive to the adhesion of suppliers - especially in the case of SMEs.

32 - In a private model, the private entity responsible for managing the system may earn various forms of revenue:

a) Adhesion fees from buyers - which may not be restricted to the State or public organisations - and suppliers that adhere to the system;

b) Management and maintenance fees from buyers and suppliers within the system;

c) Processing fees for RFP (requests for procurement), the management of electronic catalogues, bids etc.;

d) The amounts corresponding to monetary sanctions applied due to falls in reliability or performance of buyers or suppliers;

e) The amount paid by the State in the form of a compensatory indemnity payment, and resulting from pursuit of the objective to widen access to the market of public purchases. This amount should in no way serve as a disincentive to seeking the maximum efficiency for the system;

e) Other revenues, in particular those earned from advertising.

33 - In a private model, the State is responsible for developing the following actions:

a) Definition of the operating specifications of the technological platform to be used;

b) Launch of the public tender to choose the private entity to be responsible for managing the system;

c) Redefinition of the State's acquisition attributions and powers;

d) Creation of the regulatory and supervisory entity of public e-procurement, to exercise the functions identified above. This entity may also intervene in a pre-litigation system of re-assessment of acts practised by the private entity responsible for managing the system.

Table of advantages and disadvantages

Advantages
Low initial investment.
The State does not assume the financial risk resulting from dependence on the choice of platform.

Disadvantages

High costs per transaction or per procedure, with potential effects on the adhesion of suppliers or on its partial support by the State.
Opting for market prices runs the risks of failing to attain the objective of widening access to the market of public purchases, specifically in regards to SMEs.
Political risk involved in the choice of the system's manager.
Resistance of the Public Administration to externalising acquisition procedures.
Implies alteration of current legal principles.

34 - We have referred to the private entity responsible for managing the system, as a single entity. But is it only possible to create a single private entity, or could several entities be created?
The existence of more than one system manager would have three main benefits, as follows:

a) It would enhance the advantages of competition - thus tending towards continued improvement of the services provided and development of new services, with effects on the reduction of transaction costs;

b) It would attenuate technological dependence, fostered by the existence of a single system manager;

c) It would reduce the risks resulting from the possible bankruptcy of a system manager or the faulty operation of the latter, enabling such a problem to be resolved through the migration of suppliers working with this system manager to another (see note 41http://www.anacom.pt/render.jsp?contentId=55170).

35 - Inversely there are various advantages associated to assigning the system to a single manager, as follows:

a) Above all, it is clear - especially given the scale of the public procurement market in Portugal - that the potential to reduce costs will increase with the concentration of the service in a single manager;

b) The widening of the universe of clients generates an increase in the volume of purchases and enables such purchases to be aggregated, thus favouring economies of scale for suppliers and thus the possibility to provide quantity discounts;

c) Given that the functioning of the system is largely dependent on the effectiveness of the mechanisms of communication and integration of internal information systems of the various buyers and suppliers, the existence of a single system manager appears to constitute a factor of simplification;

d) A single manager will generate synergies, specifically in terms of the allocation of resources and the training of the system's users (buyers and suppliers);

e) It will avoid duplication of costs, either in the initial connection to the system, or maintenance of such a connection;

f) The higher the number of system managers, the greater will be the problems of security - an aspect of particular importance to suppliers - as we are aware from observing the British experience.

36 - In summary, the position that we defend, in the framework of this model, is clearly favourable to the existence of a single system manager - which does not counter the possibility of the existence of so-called "vertical portals", designed for supplying sectors of the Public Administration that acquire highly specific goods - hospitals, Armed Forces, etc.

Single entity

Table of advantages and disadvantages

Advantages

Greater potential to reduce costs
Aggregation of purchases / economies of scale
Synergy of resources
Efficiency of mechanisms of communication and security.
Integration of information systems of buyers and suppliers.

Disadvantages

Technological dependence.
Concentration of risk.
Additional cost for suppliers
Failure to maximise the advantages of competition (improved provision of services / reduced transaction costs).

Mixed model

37 - The model that we call "mixed" is characterised by a partnership between the State and one or more private entities.

In this model, the service of public e-procurement would have the nature of a service of general economic interest or a concessioned public service. The entity responsible for managing the system would be a company whose share capital is partly owned by the State, in terms that placed a limit on the amount of public investment involved. The buyers, including the State, would pay to use the system, in order to guarantee the remuneration of the private capital invested.

In an option such as that summarily described above, it would be perfectly possible to not organise a public tender before establishing a contractual agreement between the State and the entity responsible for management of the system.

36 - This model would also involve certain difficulties that would have to be overcome:

a) It would be delicate to choose the private partners(s), and would probably be difficult to justify a decision process that did not involve some form of competition;

b) It would be necessary to find a suitable manner to share the system's costs between users and shareholders of the entity responsible for managing the system;

c) The price regime should reflect a convenient sharing of risks and benefits by the private partners, in order to prevent elimination of the incentives to improvements in the system's efficiency.
The problems regarding regulation and supervision do not differ from those arising from the purely private model. The same may be said, mutatis mutandis, of the questions regarding the revenue of the entity responsible for managing the system, as well as the initiatives to be pursued by the State in order to ensure the system's implementation.

Notes:
(note 1) Besides the expense and waste, today's unreformed procurement systems are a drag on the economic well-being of states. With its enormous budget and influence, your government sets the tone for a state's economic vitality and progress. A procurement system that is slow and inefficient sends a strong signal to the business community that your state is unable or unwilling to compete in today's fast paced economy.
Conversely, a state government that has reformed its procurement system and uses the latest techniques, such as an electronic bidding system on the Internet, creates a healthier economic environment. These states send out a positive message to the business community, showing how economically savvy they are, while governments that operate using decades old procurement processes based on manual systems are less likely to have such an impact (National Association of State Procurement Officials, Buying Smart: State Procurement Saves Millions, in www.naspo.org/reform/buyingsmart.html.
(note 2) The institution of a generalised procedure of public procurement encourages a refocusing of the actual relationship between the State and its suppliers, making it possible to move from a procedural logic of selection/adjudication to another, far more fertile in terms of consequences of supply chain management, that corresponds to the actual patterns of inter-relationship of the business world.
(note 3) The term "procurement" has many different interpretations. Throughout this Review "procurement" means the whole process of acquisition from third parties (including logistical aspects) and covers goods, services and construction projects. This process spans the whole life cycle from initial concept and definition of business needs through to the end of the useful life of an asset or end of a services contract. Both conventionally funded and more innovative types (v. g. PFI/PPP) of funded projects are included. This definition is consistent with modern supply chain management practices - Peter Gershon, Review of Civil Procurement in Central Government (report presented to the UK Government in April 1999).
(note 4) Stage of administrative procedure whose function is to retrieve and analyse the information necessary to adopt an administrative decision.
(note 5) Software that enables co-ordination of the utilities provided by one or more databases in a computer, thus enabling access and management of data on a local or remote basis.
(note 6) Without, of course, forgetting that payments via electronic means now has its functional equivalent in administrative procedures of the execution of Public Administration contracts.
(note 7) In its communication on "Public contracts in the European Union", of March 11, 1998, the European Commission proposed to attain the objective of achieving 25% of all acquisition contracts via electronic means by 2003. In the conclusions of the European Council of Lisbon, on March 23 and 24, 2000, this guideline was reiterated and the Commission, Council and Member States were requested "to take the measures necessary to ensure that it is possible to carry out community and public sector acquisitions via electronic means by 2003" (Draft Directive of the European Parliament and Council on co-ordination of adjudication procedures of public supply contracts, provision of public services and public works contracts [(COM 2000) 275 final/2].
(note 8) The current legal regime, as established by Decree-Law no. 197/99, of June 8, is already the same length as the Constitution of the Republic, and if this trend continues will soon be longer than the Civil Code!
(note 9) As seen below, the European Commission has also already understood this situation and has already taken measures to harmonise the four Directives that currently exist in terms of public procurement, merging them into a single Directive, that is more structuring and less regulatory in approach, and thus favours e-commerce.
(note 10) The degree of approximation of 'best value' proposals is measured by weighing up the evaluation criteria. The prior definition of these criteria by the acquiring entity exactly circumscribes its concept of 'best value' - not all of which can be linearly converted into variables of an equation.
(note 11) They are only permitted to do that which the law empowers them to do.
(note 12) They may do everything other than which the law prohibits them from doing.
(note 13) It is estimated that the reduction of procurement costs resulting from the recent e-procurement system created by the world's largest automobile industry manufacturers - GM, Ford e Daimler-Chrysler - is higher than US$ 1000 million in the start-up year (2001).
Using an example closer to the reality which we wish to analyse the Emall projector (that brings together as participating States - Massachusetts, New York, South Dakota, Texas, Utah, Idaho and Washington) represents a public acquisition capacity of around US$ 6000 million, thus hoping to attain savings of 5% to 10%. In addition to this directly measurable effect, the project also aims to enable the formation of purchase agreements on the basis of multi-state co-operation, able to achieve quantity discounts and other supplier benefits such as wider guarantees and aggregated training services (Clinton Wilder, "States turn to Web Procurement - EMall brings supply shopping to the Net for trial period, hoping to trim costs", in Information Week, no. 713, October 5, 1998). In the review document of the pilot project, with much more recent data, there is an assessment table of the economy of resources in the processing of transactions, comparing processing costs following the traditional model with that resulting from electronic processing. The results suggest the following:
a) In 1998, for 78,036 transactions carried out, the estimated savings in transaction costs was around US$ 4,100,000 (US$ 5,670,000 compared to US$1,560,000);
b) In 1999, for 86,323 transactions, the estimated saving was around US$ 4,550,000 (US$ 6,270,000 compared to US$1,720,000);
c) In 2000, for an estimated 95,000 transactions, the forecast savings will be US$ 5,000,000 (US$ 6,900,000 as compared to US$ 1,900,000) (Office of the Comptroller, Commonwealth of Massachusetts, EMall Pilot Project Evaluation, October 12, 1999).
(note 14) E-commerce between companies is commonly referred to as B2B (business to business).
(note 15) In the strategic document of the National Initiative for E-commerce (Resolution of the Council of Ministers no. 94/99, of August 25) express reference is made to the fact, that since business with the State represents an important proportion of companies' business, the adoption of policies that encourage the use of e-commerce by the Public Administration will certainly represent a strong impulse towards the rapid implantation of e-commerce as a whole. The simple use of e-commerce resources by the Public Administration represents by itself a market of sufficiently large scale to ensure the critical mass necessary for the success of e-commerce.
(note 16) Official Journal of the European Communities, no. L 178, of July 17, 2000.
(note 17) See COM(2000) 275 final and COM(2000) 276 final, both of May 10, 2000.
(note 18) Diário da República, 1st series-B, of August 25, 1999.
(note 19) Diário da República, 1st series-B, of August 22, 2000.
(note 20) In this perspective, it should be remembered that the national regime for electronic documents, approved by the above mentioned Decree-Law no. 290-D/99, of August 2, aims to resolve three kinds of problem:
a) Authenticity, i.e., correspondence between the apparent author and the real author of a document, that is normally proven via a signature;
b) Integrity, i.e., preservation of electronic documents against alterations that modify their content;
c) Confidentiality of documents, i.e., their defence against access by non-authorised persons, through use of encrypting techniques.
(note 21) We use encrypting as a synonym for the term already used above of 'cyphering'.
(note 22) We are talking about the so-called function of the inalterability of digital signatures' that is proven by positive verification of a digital signature. In effect, point 1 of article 7 of Decree-Law no. 290-D/99 establishes a legal presumption - obviously refutable by proof to the contrary - that an electronic document to which a digital signature has been attached was not altered after the attachment of this signature, until it was received by the person or entity to which it is destined.
(note 23) [...] agency buyers are faced with a rush of companies offering e-procurement services for government, many based on the model of an online auction. But online purchasing is a fledgling business, at best, and the federal experience with it is barely into the piloting phase. Just what are these companies offering to do for agency buyers? How will the promise of World Wide Web-based buying mesh with the realities of the regulation-driven world of government purchasing? Will it really be as easy as the companies say? And how much will it cost agencies to use these services? - Brian Robinson, Shopping for the right model (FCW.COM, 28-8-2000).
(note 24) In the United States, for acquisition of low cost goods (understood as goods costing less than US$ 2,500), a fourth model has started to be used, based on the use of Commercial Purchase Cards, that enable public entities to acquire goods in any public or private e-procurement system. This practise, already foreseen in the Debt Collection Improvement Act (DCIA), of 1993, has been considered as a decisive factor for de-congesting federal agencies with buying functions.
(note 25) Given that this is not an unequivocal concept we would like to clarify that what we mean by open system (as opposed to 'proprietary' systems) is a system that adheres to standards of public access - e.g. not conditioned by payment of any royalties to the holder of the intellectual property - in order that any user that follows this standard may interact with the system. In the field of computing, the best known open system is the Unix operating system, whose design and developments results from a process of public co-operation, carried out, above all, by universities. Amongst the various organisations that promote the use of open systems, leading examples include Open Software Foundation (OSF) and X/Open Company, that recently joined forces in the Open Group (http://www.xopen.org/).
(note 26) The OBI does not present and characteristic of a commercial product or service, and is instead a series of standards and specifications that are freely available to any organisation that aims to implement B2B e-commerce solutions. A more detailed description of the OBI standard is available via Internet at the following URL: www.openbuy.org.
(note 27) In the European Council of Santa Maria da Feira, held on June 19 and 20, 2000, the eEurope action plan was adopted, that recommends that Member States should use open systems
(note 28) Centralised management of catalogues is presently identified as one of the main advantages of proprietary B2B e-commerce platforms (e. g., CommerceOne, Ariba. SAP and Oracle), nonetheless generally implying the existence of ERP software (Enterprise Resource Planning), whose assembly cost is always very high for suppliers.
(note 29) On the basis of, for example, EDIFACT or ISO 9735, that are standardised mechanisms in terms of content, structure, reception and processing of electronic messages.
(note 30) The system used by NASA is a good example of the possibility of combining extremely complex technical requirements with a comparatively straightforward user interface (see annex IV).
(note 31) This was the system adopted by the US Federal Government and by certain States of the Union, following guidelines on the development of global e-commerce developed by President Clinton on July 1, 1997.
(note 32) See. Marcello Caetano, Manual of Administrative Law, vol. II, Coimbra, 1990, p. 1096. For this author, delegation will be used above all for cultural and assistance services, given that concession would make sense for services of an economic nature, or business nature. Nonetheless, this author also states that "delegation must be used in cases in which, service provision requires qualities of dedication and disinterest, it is difficult to ensure satisfactory operations via the employment of public officials, that are recruited, remunerated and subject to disciplinary controls in the normal manner of the Public Administration. In the event of the existence of a private entity already with experience in the type of activities in question that grooms qualities that are needed for operation of the service, the corporate body where such qualities exists may sign a services provision contract with this entity, in order to perform management tasks under the terms stipulated, delegating to this entity the necessary powers for this purpose. Also in services of an economic nature analogous situations have arisen recently, above all for the effects of remodelling organisational structures or renewal of methods: by agreement with the private specialised entity, to which the necessary powers have been delegated, that latter manages the service in order to introduce the necessary alterations and then restore activities within the agreed deadline."
(note 33) See Pedro Gonçalves, A Concessão de Serviços Públicos, Coimbra, 1999, pp. 142 and 143.
(note 34) See Carol Harlow/Richard Rawlings, Law and Administration, London, 1997, pp. 269 and following.
(note 35) See Antony Dnes, "Public franchising", in New Palgrave Dictionary of Economics and the Law, vol. 3, New York, 1998, pp. 188 and following.
(note 36) Point 1 of article 86 ("Private companies") of the Constitution establishes that the State encourages business activity, especially of small- and medium-scale companies, and inspects the fulfilment of the respective legal obligations, especially by companies that pursue activities of general economic interest.
(note 37) The initial doctrinal understanding of public service had its origins in French doctrine and was designated as organic or subjective definition of public service. This understanding, adopted in Portugal, in a first phase by Marcello Caetano and later by Diogo Freitas do Amaral, is based on the assumption that in each and any activity exercised by human organisations created within each public corporate body in order to carry out the latter's attributions, under directions of the respective governing bodies' constitutes a public service. In addition to being organic, this understanding is of a subjective nature, given that the criteria used concerns the body that performs the specific function. This is the same as saying, in accordance with the concept of public service in question, that all and any activities that involve provision of services, provided by a body of Public Administration will correspond to public service. Due to the fact that this definition was too all-embracing, this doctrinal current was challenged by Marcello Caetano that, in the second edition of his Manual of Administrative Law, adopted a purely objective concept, placing special emphasis on the nature of the activity exercised.
(note 38) In this sense, Pedro Gonçalves states that a public service is not any activity of the Public Administration, but is rather the qualification of a certain kind of administrative tasks whose essential element is based on the concept of provision, to then define public service as an administrative behaviour of a positive nature [...] of a technical and not judicial nature that directly or indirectly satisfies the collective needs of individuals - the provision may be uti singuli, to each citizen or not [...] This means that the person for which the service is intended may be undetermined, or may even be a public entity, as occurs in the case of the provision of water by the State to local councils.
(note 39) Article 2 of the regulations in question establishes that public service obligations are understood to be obligations that the transport company, when considering its own commercial interests, would not assume or would not have assumed in the same manner or under the same conditions.
Public service obligations include the obligation to operate, the obligation to transport and a tariff obligation.
The obligation to operate is considered to be any obligation that falls upon transport companies, regarding lines or installations whose operation has been attributed to them via concession or a transport service that satisfies the established norms of continuity, regularity and capacity. The obligation to operate also covers the obligation to guarantee the operation of complementary services, and the obligation to maintain lines and material in good working order whenever such lines and material exceed the requirements of the network as a whole, and installations, after transport services have been terminated.
The obligation to transport is considered to be the obligation that transport companies must accept and carry out any form of transport of passengers or merchandise at specific transport prices and conditions.
A tariff obligation is considered to be the obligation on any transport company to apply prices that have been fixed or ratified by the public authority, that stand contrary to the company's commercial interest and result from the imposition, or refusal, of alteration of measures, namely for specific passenger categories, product categories or traffic relations.
(note 40) Very recently, the European Commission clarified that regarding the concession of public works, the operation criterion constitutes an essential characteristic in order to determine whether one is in the presence of concession of services. According to this criterion, a concession exists when the operator bears the risks connected to the service in question (establishment and operation of the service), and is remunerated by the user, specifically by levying duties, in any form whatsoever. The mode of remuneration of the operator is, as in the concession of public works, an element whereby it is possible to ascertain the assumption of operating risks.
As with the concession of public works, the concession of services is defined by a transfer of operating responsibilities.
In conclusion, the concession of services normally incides upon activities that, by their nature, object and rules to which they are subject, are susceptible to derive from the powers of the State and for which exclusive or special rights may exist. [Communication of the Commission on its understanding of concessions in community law, of May 4, 2000 (not yet published in the OJC)].
(note 41) It should be noted that these advantages will be lost if the various system managers share the market between each other, for example, by reasons connected to geographical area or the nature of goods.

ANNEX I

(see original document)

ANNEX II
Guidelines for a specific diploma on the acquisition of goods and services via electronic means by the Public Administration.

The new technological means available to the Public Administration in the field of e-commerce offer an excellent opportunity to reflect upon the prevailing legal regime for the acquisition of goods and services by the Public Administration.

Not only is technological development conditioned by concepts (see note 1): technological development also enables, and suggests, new developments and conceptual breaks and the construction of new theories (see note 2). In this sense, current technological development opens up new considerations in the field of decision theory (public), with impact on the legal regime of administrative decisions of the procedures in question.

Nonetheless, before specifically choosing the technological platform, it is unproductive to present a detailed and completed draft Decree-Law on the matter in hand. An important reason that advises against the immediate preparation of such a draft diploma is the fact that it is necessary to take a prior political and legal decision on the most suitable model for a system of acquisition of goods and services via electronic means by the State. Instead of this, it is herein proposed to outline the general foundations of such a legal regime, on the basis of which, and in light of the specific technological platform, it will be relatively straightforward to elaborate a draft diploma.

We encourage the preparation of a diploma that is distinct from Decree-Law no. 197/99, of June 8, because the latter has a general nature and applies to the totality of public acquisitions of goods and services. The diploma to be prepared, as a result, should constitute the specific legal regime for public e-procurement.

It is common knowledge that there is still no European Directive in the field of acquisitions via electronic means by the Public Administration. This means that in this regard, the legislators of the Member States maintain freedom to structure their own legislation, without prejudice to the fact that the targets defined for acquisition procedures are of a Community scale.

Nonetheless, it is likely that such a situation will soon change. We have already received the draft Directive of the European Parliament and Council on co-ordination of public adjudication and supply procedures, the provision of public services and public works contracts presented by the Commission on August 30, 2000 (see note 3). In light of this proposal, namely, that adjudicating entities may make use of means of e-procurement, with the exclusion to others, suggests that we should be prudent in the preparation of national legislation, that is therein foreseen.

The diploma to be prepared should include the following chapters and materials:

CHAPTER I
General Terms

The institutional framework of application of the diploma should be restricted to the State's direct administration and to public organisations that are distinct corporate bodies and thus form part of the State's indirect administration, although it seems that the possibility should be admitted of voluntary adhesion by other public organisations, specifically the Autonomous Regions and local councils (see note 4).

The material scope of the diploma should be restricted, at least during an initial phase, to low-cost goods of easy description (to be identified by an administrative rule of the Minister of Finances) (see note 5).

The principle of exclusivity should be consecrated, in accordance with which the goods and services covered can only be acquired via electronic means (see note 6).
A remitting norm should be foreseen for rules on the making of expenditure, including prevailing competition rules, which do not need to be altered - without prejudice to the fact that it is likely to be opportune to reassess such rules (see note 7).

The candidates that intend to offer goods or services to public buyers should request to be registered in the e-procurement system (see note 8), and will be admitted to this system if they observe the requirements regarding nationality, non-existence of constraints resulting from failure to comply with financial obligations with the State or situations that affect their confidence regarding legal transactions (bankruptcy, liquidation or cessation of trading) and also regarding their technical and financial capacity.
 
The candidates admitted as bidders that comply with the specified requirements may establish an adhesion contract with the system manager, in which the bidder's rights and obligations are stipulated. The observance of the above mentioned requirements concerning the situation of the bidders should be assumed as obligations of the bidders, from the moment on which they are admitted to the system. An indispensable clause of the adhesion contracts will be authorisation by the bidders of permanent collection by the system manager of information on compliance with such requirements, exclusively for the purpose in hand: maintenance of the necessary conditions for remaining within the system and safeguard of the high standards of confidence and security in legal transactions (see note 9).
 
It is vitally important to create a database of suppliers, in order to collect and analyse information regarding the observance of the requirements of admission to, and maintenance within, the system.
The tender specifications and technical specifications must be 'standardised' in order to enable a simple relationship with the bidders' product catalogues and the product classification system adopted by the system manager, under the terms of the existing technological platform (see note 10).
 
The product catalogues made available should be maintained up-to-date, on penalty of applications of monetary sanctions for breach of the system's confidence and reliability upheld in legal terms, applying, with the appropriate adaptations, the rules of the general regime governing bids.
 
Communications between the various parties involved in a procedure should be made via electronic means, except in the existence of fundamental reasons that establish grounds for different behaviour.
 
It is recommended that an obligation be established to attach a digital signature to all communications established between the various parties involved in a procedure, in order to guarantee its effective reception under the terms of article 6 of Decree-Law no. 290-D/99, of August 2 (legal regime of electronic documents and digital signatures).
 
In addition to the aforementioned functions of authenticity, integrity and confidentiality of electronic documents, the use of digital signatures may, in this regard, perform an additional and highly relevant function: the certification of the supplier's attributes (whether or not it satisfies the pre-qualification requires, is able to bid or not etc.).
 
The system manager should be empowered to prepare and approve the regulations required for the proper functioning of the system, specifically in terms of quality, standardisation of catalogues and the acts to be practised by all parties involved, whereby the respective homologation is the responsibility of the Council of Ministers, via a resolution.

CHAPTER II
Electronic tender for public procurement

The opening of a tender is decided by the authority responsible for conducting the corresponding public expenditure. The decision to open a tender should observe rules to be defined in the framework of a quality plan for acquisitions via electronic means (see note 11). Such a decision will identify the goods or services subject to acquisition, the adjudication criteria, the respective weighting factors, as well as all other classification factors involved (see note 12). This decision is electronically communicated to the system (RFP).

After the acquiring entity has displayed its desire to open a tender, the system manager is responsible (see note 13) for assessing whether the need identified in the tender may be satisfied via consultation of product catalogues or whether it will be necessary to formulate a call for proposals (RFR).

A decision to not consider product catalogues in the procedure, due to lack of data therein contained, will be taken by the system manager, controlled by the supervisory entity, to be made in the framework of the regular checks of quality and performance.

Decisions to exclude bids from the procedure, presented in response to the call for proposals, due to failure to comply with the requirements imposed, will be taken by the system manager and automatically communicated to the supervisory entity, that has the power to assess and review such decisions.

The clarifications required for a proper understanding and interpretation of the decision to open the tender that are requested by bidders will generally be provided by the system manager in a very short time period - we suggest 24 hours - except in situations of greater complexity. The public acquirer is responsible for providing the necessary information requested by the system manager, in the deadline set by the latter (see note 14).

The system will automatically assess the proposals, and order them in accordance with the established adjudication criteria (see note 15).

The classification prepared by the system will be notified electronically (with a digital signature) to the adjudicating entity and the bidders, as an adjudication proposal, in order that the latter may exercise their right to a prior hearing before the decision, in writing and in a deadline, that we also suggest be set at 24 hours. The bidders will not have the right to a prior hearing when, on a cumulative basis, no proposal has been to be unacceptable and the adjudication criteria is solely that of the lowest price.

In the event that the deciding adjudication criteria is the lowest price and when the classification list produced by the system presents proposals in which the difference in prices corresponds to an interval equal or less than x% between that proposed by the bidder listed in first place and the other bidders, the system will consider that there has been a technical tie. As a consequence, a sub-procedure will be automatically opened of 'last and best offer' between those bidders, in which they will be asked to present new price bids. These bids will be automatically classified by the system, and this classification will serve as an adjudication proposal to the bidder classified in first place.

The adjudication will be made by the authority responsible for authorising the making of the expense and is communicated to the system within a deadline of 5 days after notification of the classification, and considered to have due grounds when based on this classification. The grounds should be made on an autonomous basis whenever the adjudication decision differs from this classification. Except in this case, there will not be a right to the prior hearing of bidders (see note 16).

A written contract will not be signed - unless this is expressly specified in the notice of opening the tender - on the understanding that the adjudication decision represents a signed contract (see note 17).

In regards to execution of the contract, the date of receipt of the goods and certification that it conforms with the requirements imposed will be introduced within the system, after communication by the receiver, in observance of rules to be defined, in order to enable compliance with relevant legal and contractual duties and the eventual application of sanctions.

For the same reasons, information on events regarding drops in post-sales performance should also be introduced into the system.

CHAPTER III
Sanctions

The sanctions applicable to bidders will be automatically imposed by the system as a result of failure to comply with contractual duties - such as breach of security and confidence in legal transactions, in an electronic environment. These duties should be duly specified in the contracts. The sanctions include suspension and resolution of the adhesion contract.
 
The sanctions applicable to buyers will be of a monetary nature and will incide upon the absence or extemporaneous nature of the decisions that should be taken or communications that should be made by them.
 
The possibility of compulsory measures that apply to the organisational bodies and public officials of Public Administration is admitted.

CHAPTER IV
Resolution of litigation

A permanent arbitration centre should be created, empower to settle possible questions and litigation resulting from contractually bound legal relations between public buyers, bidders and the system manager, as well as satisfy the need to specify, complement, update or even review the system's regulations and adhesion contracts.
 
The centre will operate as a permanent arbitration court, in terms distinct from those specified in Law no. 31/86, of August 29 (voluntary arbitration), that requires the intervention of the Assembly of the Republic, given that it concerns a matter reserved to parliamentary law (see note 18).

The other jurisdictional guarantees must be adapted to this option, in the framework of the reform of administrative litigation presently underway, in order to not permit disfunctional aspects of legal protection, that causes prejudice to such protection and to the very efficiency of the system.

Administrative guarantees that are effectuated by organisational bodies of the Public Administration, taking advantage of the administrative structures themselves and controls of merit and legality used therein (see note 19), as we now know them, may be suppressed, because they are not imposed by any constitutional norm. This option is justified, because such guarantees are not suited to the rapid functioning of the system. Neither are there grounds for modifying such guarantees, given that due to the existence of other guarantees, it should not be permitted that an excess of guarantees causes prejudice to the system's efficiency and economy (see note 20).

Decisions to reject admission requests (inscription) in the system, decisions to exclude bidders or their bids, and adjudication decisions will be assessed by the regulatory and supervisory authority, and possibly, in the event of litigation, will be submitted to a permanent arbitration centre, that it is recommended to be organised within the framework of the regulatory and supervisory authority.

Notes:
(note 1) Thomas Kuhn, The structure of scientific revolutions, 2nd edition, Chicago, 1970.
(note 2) Peter Galison, Image and Logic, Chicago, 1997.
(note 3) See COM (2000) 275 final/2.
(note 4) This is a special solution in relation to the terms of article 2 of Decree-Law no. 197/99, of June 8.
(note 5) This is a special solution in relation to the terms of articles 1 and 3 of Decree-Law no. 197/99.
(note 6) This consecrates the necessary special regime, in relation to Decree-Law no. 197/99.
(note 7) The rules are those specified in articles 16 to 29 of Decree-Law no. 197/99.
(note 8) This is a special solution in relation to the terms of section VII of chapter I of Decree-Law no. 197/99.
(note 9) This is a special solution in relation to the terms of sections V and VII of chapter I of Decree-Law no. 197/99.
(note 10) A special solution is consecrated in relation to the terms of section VI of chapter I of Decree-Law no. 197/99.
(note 11) The quality plan should include aspects such as control of stocks, assessment of the capacity to satisfy needs by the Public Administration itself, existence of contracts that may be widened in a subjective manner, spreading of good practises, standardisation of technical specification and corresponding flexibility, via justifications for specifications that stray from the standardised norms.
(note 12) A special solution is consecrated in relation to the terms of article 94 of Decree-Law no. 197/99.
(note 13) Or, in the event of adopting a centralised model - not for purchase decisions, but for processing acquisitions - an electronic purchasing centre of the State may compete.
(note 14) A special solution is consecrated in relation to the terms of article 93 of Decree-Law no. 197/99.
(note 15) A special solution is consecrated in relation to the terms of article 106 of Decree-Law no. 197/99.
(note 16) A special solution is consecrated in relation to the terms of article 108 of Decree-Law no. 197/99.
(note 17) A special solution is consecrated in relation to the terms of articles 59 to 68 of Decree-Law no. 197/99.
(note 18) See paragraph p) of point 1 of article 165 of the Constitution.
(note 19) See João Caupers, Introdução ao Direito Administrativo, Lisbon, 2000, p. 240.
(note 20) A special solution is consecrated in relation to the terms of articles 180 to 188 of Decree-Law no. 197/99.

ANNEX III

(see original document)