Decree-Law no. 177/2026 was published on 4 September and enters into force on 1 October. It amends 154 articles of the Public Contracts Code, adds another 34 and also reworks the defence and security procurement regime. Those who have to comply with it are given twenty-seven days to read it, understand it and put it into practice.
The preamble speaks of simplification, speed and the sound execution of public spending. Open the enacted text and, among many other things, you find this: from October a city council will be able to award a works contract worth nine hundred and ninety-nine thousand euros by inviting three companies of its own choosing, with no public notice, with nobody on the outside learning that the procedure existed until it had already been decided.
Until now, the threshold for doing so was one hundred and fifty thousand euros.
The thresholds that change everything
The new figures fit into a few lines. For public works, direct awardA procedure in which the contracting authority directly invites a single company of its own choosing, with no tender and no public notice. rises from thirty thousand to one hundred and fifty thousand euros, and prior consultationA procedure in which the contracting authority invites several companies of its own choosing to submit a proposal, with no public notice open to any interested party. from one hundred and fifty thousand to one million. For goods and services, direct award goes from twenty to seventy-five thousand, and prior consultation from seventy-five to one hundred and thirty thousand. For the remaining contracts the figures converge on those same seventy-five thousand and one hundred and thirty thousand euros.
The first pair deserves a pause. The ceiling for direct award, the procedure where a single company is invited, now coincides exactly with the old ceiling for prior consultation. And the ceiling for prior consultation has been multiplied by almost seven.
Between 2017 and 2026 prices in Portugal came nowhere near rising sevenfold, so monetary updating explains very little of what happened here. What was decided was how much public money may circulate outside open tendering, and the decision reached the country wrapped in the language of administrative efficiency.
These figures comfortably cover the refurbishment of a school, the resurfacing of a parish road network, the building of a sports hall. A good share of Portuguese municipal works can now be awarded by invitation.
The preamble assures us that all of this happens without compromising competition or transparency, and that is where the reading becomes uncomfortable. In a procedure where only the invited take part, competition has been filtered by an administrative decision before the procedure even begins. One can argue that speed is worth that cost, and some argue it well. It is harder to accept a statute stating that the cost does not exist.
What the legislator was saying in 2008
There is a full turn of the wheel here worth telling, not least because the Portuguese State itself wrote it down in black and white.
When the Public Contracts Code was born, in 2008, prior consultation was simply struck from the list of procedures. That statute's preamble explained why in a sentence that reads rather differently today: the procedures least compatible with competition were being removed, and prior consultation was named among them.
In 2017 it was given its autonomy back, within tight boundaries and with an explicit justification: to curb recourse to direct award with a single entity consulted. It returned for goods and services between twenty and seventy-five thousand euros, and for works between thirty and one hundred and fifty thousand. It was reborn, avowedly, as a brake.
Nine years later, the procedure judged in 2008 to sit poorly with competition, and brought back in 2017 as an instrument of restraint, covers public works up to one million euros.
Nobody needs to be accused of bad faith for the essential point to stand: the same legal order has held, at three different moments, three incompatible positions on the same procedure, and none of them was set aside by argument. They were set aside for the convenience of the calendar.
The brake that rose along with the thresholds
With the thresholds raised, the obvious question follows: what stops the same construction firm from receiving the same invitations, year after year?
The answer still sits in Article 113. A contracting authority may not invite a company to which it has already awarded, in the current year and the two preceding ones, contracts whose accumulated price reaches the limits of these procedures. The count is broken down by department, in the State and the autonomous regions, and by municipal service, in local authorities. And there is a rule that rarely appears in compliance manuals and ought to appear in all of them: a company is equally barred where, over those same three years, it has carried out works, supplied goods or provided services free of charge to the contracting authority, save under the Patronage Statute.
The critical point is written into the decree-law itself and needs no interpreting: the calculation is now made using the updated figures. The brake rose along with the thresholds.
In practice, the same contractor can accumulate one million euros through prior consultation with the same authority over a three-year period, where the ceiling used to be one hundred and fifty thousand. For goods and services, one hundred and thirty thousand against seventy-five thousand. The anti-concentration mechanism keeps its wording intact and loses its effectiveness through the sheer scale at which it now operates.
Two explanations remain available, deliberate choice or drift, and neither of them reassures me.
To public departments I leave one concrete piece of advice: treat this count as a formalised internal control, with a written record and a named person responsible. Of economic operators I ask the same care from the other side, because an invitation accepted beyond the limit also compromises the party who accepted it.
The duty to use artificial intelligence
The Code now has an article devoted to digital public procurement, and its first paragraph provides that contracting authorities shall use digital systems, including artificial intelligence, in planning, preparing and conducting procedures, as well as in performing contracts, with the aim of securing maximum efficiency. Shall, says the text, in the imperative our legislative tradition reserves for obligations. I know of no parallel in Portuguese administrative law.
The following paragraph sets out four principles: transparency and explainability, with a right to know how the systems work; safety, with the minimisation of error risks and discriminatory effects; protection of personal data and of commercial and industrial secrets; and human oversight, without dispensing with the involvement of the competent officeholders in verifying the results.
It is worth measuring the real reach of that list. It arrives with no regulations, no compliance benchmark, no deadline and no attached sanction. Nobody can determine whether an authority has complied or failed to, nor which systems satisfy the principles. The word explainability written into a statute leaves untouched the system that refuses to be explained, and the phrase human oversight coexists happily with oversight degraded into signing off on a result nobody understood.
There is also a constitutional problem the statute leaves unresolved. The Constitution and the Administrative Procedure Code require an act to be reasoned in such a way that its addressee understands the concrete path of the decision and a court can review it. Knowing in the abstract how a system works falls well short of that. The exclusion of a bid has to be explained in relation to that bid. A system that does not allow the decision to be reconstructed case by case delivers a result without delivering reasons, and administrative litigation will notice sooner rather than later.
The statute's internal tension is plain to see. The same text that raises an architecture of principles, invoking legality, impartiality, proportionality, reasonableness and good faith, goes on shortly afterwards to require the use of tools that make it harder to prove any of them was observed. Good faith belongs to the realm of will, reasonableness to the realm of judgment, and a statistical system has access to neither.
Imposing by law the use of a technology without saying which one, without regulating how and without settling who answers for the errors hands the problem to the Court of Auditors and the administrative courts, which will receive it with no legal criteria for deciding it. Until regulations arrive, the prudent course follows from the law itself: the system's output counts as evidence gathered in the file, the decision remains human, and the human reasoning is documented in writing and separately. Responsibility does not migrate inside a machine.
The emergency moved into the Code
In 2021, under the pandemic and the pressure of the recovery plan, simplified procurement regimes were created and presented as temporary and exceptional. This decree-law repeals them in that law and moves their subject matter inside the Code.
A special prior consultation appears, with at least five entities invited and available up to two million euros, provided it stays below the European thresholds, in areas such as projects funded by European money, public or cost-controlled housing, buildings transferred to municipalities through decentralisation, and digital transformation. A regime for making open tendering more flexible appears too, with phased evaluation of bids. And a dedicated regime becomes available for states of siege, emergency or calamity, usable for up to a year after the declaration ends.
The legislator took care to close the door on restarting the counter, requiring contracts already concluded under the 2021 simplified regime to be added to the total accumulated under this new special prior consultation. I note the care, because this is the sort of detail that usually goes missing.
The underlying movement deserves to be named without euphemism. Emergency regimes rarely end. They migrate into ordinary law and, once inside, no longer have to justify themselves to anyone. The special prior consultation is reasonably bounded and may well prove useful. What I take issue with is the method: promoting exceptional regimes to permanent law inside a statute presented as technical housekeeping, without the decision ever being debated publicly for what it actually is.
The point that catches contracts already under way
This is the part that matters to anyone with work under way, and it is also the part that travelled least.
The general rule made the news: the new law applies to procedures started after 1 October and to the performance of the contracts arising from them. The rest went unreported. The same article requires immediate application, to ongoing procedures and to contracts already being performed, of the changes made in two areas: objective modification of the contract, and alternative resolution of pre-contractual and contractual disputes.
Anyone with a works contract under way, with additional works under discussion or a request to restore the financial balance on the table, sees the applicable regime change on 1 October without having started any procedure at all. Anyone with a pending dispute immediately gains access to the new framework, with its conciliation committees and the interruption of limitation and lapse periods.
The statute now draws a clear line between objective modification of the contract and the abnormal and unforeseeable change of circumstances, the latter given its own article granting the injured party a right to financial compensation set on equitable criteria. The distinction was needed, because for years the two doctrines were invoked as if interchangeable. It is worth holding on to what immediate application means here: substantive rules were changed with effect on contractual relationships already in place, in a statute with twenty-seven days of vacatio legisThe period between the publication of a law and the moment it enters into force and becomes applicable..
If you have live contracts, check this within the week.
The silence that costs bidders dearly
Submitting a bid now counts as a declaration that the bidder is in none of the disqualifying situations set out in the Code. Submitting it while in one of them counts as making false declarations, and it is worth knowing what lies on the other side of that cross-reference: a very serious administrative offence, with a fine of two thousand to three thousand seven hundred euros for individuals and seven thousand five hundred to forty-four thousand eight hundred euros for companies. Its reach is broader than the usual reading suggests, since it also covers the accumulation and conflict situations regulated elsewhere in the Code.
The law provides a way out, in express terms: a bidder who has disclosed the situation to the contracting authority is spared, whether for the impediment to be assessed or with a view to its being waived.
The list of impediments has grown too, and one of the new entries deserves particular attention. A bidder is now barred where there are strong indications of conduct, participation in agreements or exchanges of information capable of distorting competition in earlier procedures. The indication alone suffices, with no conviction required.
The practical consequence is twofold and worth keeping. Faced with a doubtful impediment, silence produces both the exclusion of the bid and the very serious administrative offence at once. Declaring the situation in the bid, and asking for a waiver where appropriate, keeps the discussion on the terrain of qualification, which is where it can be argued.
What the statute gets right
There is decent technical work in three places, and it deserves saying with the same clarity as everything else.
The estimated contract value replaces the old contract value, which served at once to measure the successful bidder's maximum economic benefit and the awarding authority's financial effort. Two realities lived under a single word. A new article settles the matter with dedicated calculation rules for works, framework agreements, dynamic purchasing systems, innovation partnerships and concessions, correcting a flaw that dated back to 2008.
The refusal to award on grounds of unsatisfactory bids, announced in the preamble with worrying breadth, turns out to be narrow once the rule is read: it is available only where no bid reaches the minimum overall score previously set in the procedure documents or in the invitation. And those documents need only state it where applicable. An authority that never set it is left without the ground, in a classic case of self-binding. Worth noting, in passing, that the preamble describes the rule worse than the rule describes itself.
Arbitration becomes fully voluntary. The regime is aligned with the Code of Procedure in the Administrative Courts and brings back conciliation committees, with the interruption of limitation and lapse periods, correcting a solution that had been badly built from the start.
Adding it all up: three technical corrections on one side, and on the other the near-sevenfold multiplication of the threshold for awarding public works by invitation. The scales settle where they settle.
Twenty-seven days
I have left for last the criticism that weighs most on those who have to apply all this.
Approved in the Council of Ministers on 25 June. Signed into law on 28 August. Countersigned on 31 August. Published on 4 September. In force on 1 October.
More than two months passed between the Council of Ministers and publication. Twenty-seven days pass between publication and entry into force, in September, with public offices coming back from holiday. The available time was shared out, and almost all of it went to the side that legislates.
Twenty-seven days for thousands of contracting authorities to revise procedure documents and specifications, recalibrate internal controls, rebuild three-year counts, decide minimum-score policies and train lawyers, procurement officers and local politicians. Twenty-seven days for a reform that also reaches contracts already being performed.
The effect is predictable to anyone in the sector: launch in September under the old regime, or wait until October for the new thresholds, whichever suits the case at hand. That is the rational behaviour a badly calibrated vacatio legis induces, and the legislator had a duty to anticipate it.
A Code has to be read, understood and taught before it can be complied with. Granting a reform of this size the same lead time given to a schedule of fees says a great deal about the regard shown for those who will have to apply it.
Before 1 October
If you have contracts under way, check today whether there are objective modifications under discussion or pending disputes. That is the ground where the new law catches you without warning.
If you are a contracting authority, review your templates, redo the three-year count with the new figures and the breakdown by department, decide and put in writing your minimum overall scoring policy, and set an internal protocol for the use of digital systems that keeps the human decision documented.
If you are an economic operator, reassess your route into the public market, because with these thresholds much of the demand stops going through public notices and starts depending on being known to the contracting authority. Keep watch on your three-year total, review the grounds for exclusion, and where any impediment might exist, declare it.
And read the enacted text. The preamble was written for a different purpose.
© 2026 Horacio Baptista Ladera. All rights reserved. Reproduction prohibited without prior authorization.
