Four companies won one in ten euros from 2020 Spanish emergency contracts
Reporting and data: Eva Belmonte, Data: David Cabo, Visualisations: Carmen Torrecillas, Data: Miguel Ángel Gavilanes, Visualisations: Antonio Hernández, Data: María Álvarez del Vayo, Data: Ángela Bernardo, English editing: Lucas Laursen, Lucas Laursen, March 23, 2021
Story originally published in Civio
On March 31, 2020, in the first crazy days of the state of alarm, the Government of Murcia (Spain) awarded the management of its public television to CBM, the company that already held the contract. The difference is that, this time, it did so using emergency processing, an exceptional system that allows ultra-fast procurement, without opening a file and with very little prior controls and transparency. This system, the fastest and most direct available under the national Public Procurement Law (LCSP in Spanish), even allows officials to initiate contracts orally, and write the conditions later. Emergency procurement is limited to three very clear situations: catastrophic events, situations that pose serious danger and national defense needs.
The just-declared pandemic was and is a catastrophe that posed serious dangers, which is why officials used this system to purchase, for example, masks. It takes a little more imagination to understand how a routine public television service contract renewal helps fight the pandemic. But Murcian officials proved up to the task.
In the Murcian justification, the first argument is that the state of alarm stopped administrative procedures so the regional government could not continue the tender they had already opened. Beyond the fact that delays are not a sufficient cause to use the emergency procurement system, they did have time: the existing contract dated to 2015 and had already been extended three times. The latest extension expired on April 30, but officials only published the tender for replacing it on February 25, after several delays. Given that starting date, it was almost impossible, regardless of pandemics or a state of alarm, that bids would arrive on time.
The second argument is more ethereal: television is essential in disasters, Murcian officials wrote. Not approving the contract via emergency rules posed a “significant danger to people’s health and lives.” So they approved 744,000 euros per month under emergency procurement rules until the government could select a winning bid in an ordinary open tender. The plan was for it to be just a patch for two months, May and June, but the Murcian government has extended it twice, the last extension laid the groundwork for another extension in 2021.
All published emergency contracts of all public entities
We have analysed all the emergency contracts awarded and published in 2020 on the Spanish Public Sector Contract Portal and the linked platforms of the autonomous communities, excluding minor contracts. Some contracts may not be in our database because either they remain unpublished, are not linked to the national portal or are misclassified.
We have had to extract, clean and structure and fill in data by hand for months. We have found missing information, errors, inconsistent codes, delays and publishing differences between agencies. It was the only way to obtain as complete an overview as possible. The Transparency Portal, for example, includes only national contracts, does not include them all, and does not distinguish emergency contracts from urgent contracts. This is our methodology.
The Murcia public television contract is one of many officials snuck in among the masks, plastic screens and diagnostic tests. In total, Spanish public entities awarded and published at least 16,589 emergency contracts during 2020, totalling more than 6.445 billion euros. Emergency contracts made up almost 15% of all public contracts signed that year, an unprecedented percentage. For comparison: the General State Administration signed 658 emergency contracts worth 3.2 billion euros in 2020, up from 50 emergency contracts worth 27 million euros in 2019 and 12 contracts worth 3 million euros in 2018.
That is not surprising. It was a truly extraordinary situation. But what did it buy? From whom? And, most importantly, did our public officials follow the few emergency procurement rules? Are there more suspicious contracts? Spoiler: The answers to those last two questions are no and yes.
Four companies captured one in every ten euros
The health crisis forced many companies to reinvent themselves. Others saw opportunities in the midst of crisis. This is the case of FCS Select Products, an energy drinks company based in Barcelona with a branch in China that had never worked in the health sector. Thanks to four contracts signed with the Ministry of Health, all of them signed on March 23 and totalling more than 217 million euros, it became the main importer, or intermediary, of the Government.
FCS Select Products is the company that won the most money via emergency procurement in Spain in 2020. One of its directors had been convicted in 2015 for fraud, as revealed by El Confidencial. After those four contracts (here, here, here and here), it did not sign any more with Spanish public entities. It was a one-hit wonder. But a very, very lucrative one.
Emergency awards by company in 2020
The Chinese company Hong Kong Travis Asia is next on the list, having won 187 million euros, mainly due to a purchase of 150 million euros’ worth of masks. In fact, this company won one out of every three emergency euros that went to non-EU companies. Non-EU companies won a total of 574 million euros in emergency procurement, or 9% of the total.
Third on the list is Barna Import Médica. Unlike FCS, it was already involved in the importation and sale of health products before the pandemic. It contracted for 121 million euros spead over 225 emergency contracts. It sold masks, gloves and gowns, among other protective elements, to public entities at all levels of government.
The fourth is Abbott, which contracted for 111 million euros over 103 emergency contracts, the vast majority of which was for the purchase of antigen diagnostic tests, since they market one of the most effective of these tests.
In total, these four companies won some 637 million euros, almost 10% of the total amount in emergency contracts awarded and published in 2020.
What is an emergency and what is not?
The three rules that make an emergency
Emergency procurement can’t be used just because administrators want to hurry along a delayed tender. It can only be used fulfilling three conditions: the need is caused by catastrophic events, situations that pose serious danger or national defense; it is impossible to issue the contract through more secure methods such as urgent procurement, which shortens deadlines; or negotiated procurement, which allows direct selection of the company; and only what is strictly necessary is included in the emergency contract. Sorry, you can’t issue a five-year contract this way. National procurement agencies have reiterated these conditions (here and here, for example). See also our Basic Guide to the Procurement Law (in Spanish) in our Contratopedia.
When can emergency procurement be used? According to the Procurement Law, “when the Entity has to act immediately because of catastrophic events, situations that pose serious danger or needs that affect national defence”. In these cases, the public entity can hire whomever they want, without opening a file, even orally, to be able to start the process quickly.
In the past, public entities have used these contracts for unforeseen repairs (such as a broken pipe or the cracks in the road) or other urgent measures against storms and other catastrophes. But, even before the pandemic, administrations did not always follow these rules. On 2 January 2020 the Canary Islands municipality of Icod used this system to rent three camels for Three Kings Day. It was not enough, in the municipality’s justification, to issue a minor contract. They needed even more flexibility, and they also awarded it on an emergency basis. They had little time left, it’s true, but it is also true that the Kings come every year on the same day and the parade was therefore predictable. And, of course, it would not be a catastrophe or serious danger to host a parade without camels. Something similar happened in Cádiz, but in this case their emergency need for the holidays were Transformers and illuminated stars.
If we go back to previous years we find the purchase of food for the Boi Taüll ski resort or a Big Data and Machine Learning course that the public engineering company Ineco bought from Telefónica, q rather surprising emergency.
On 13 March 2020, one day before the declaration of the state of alarm, the first Decree Law of many with pandemic measures appeared in the Spanish Official Gazette. Among other things, it declared that the General State Administration could use emergency contracting “to meet the needs derived from the protection of people and other measures adopted by the Council of Ministers to deal with COVID-19”. Two weeks later, this power was extended to all public entities and advance payments were given the green light, even before signing any contracts or receiving anything.
With these rules on the table, in the midst of pandemic chaos, between thousands and thousands of emergency contracts, some crept in that, at first glance, do not seem to support the fight against the virus or to follow from the Council of Ministers’ decision. One of the most common examples is institutional advertising campaigns. It is clear that ads for masks + distance + hand washing do meet these requirements, but is less clear that ads for (annual) forest fire prevention campaigns, economic reactivation plans or -the most commone ones- tourism promotion campaigns should qualify.
Yet public officials signed numerous emergency contracts to promote tourism. Catalonia used a decree law. The Consell Insular de Eivissa did not bother to justify its emergency procurement of tourism advertising even though justifications are mandatory. Even the Secretariat of the Ministry of Tourism issued two million euros in emergency advertising contracts.
The municipality of Marbella spent 36,000 EUR on 15 Tasers. Its justification of the emergency use was: “Not all citizens willingly accept instructions” to follow confinement rules. They also called it a matter of workplace health and safety: “The agent is at risk of suffering another type of aggression that can degenerate into physical injury that weakens his immune defenses that can degenerate into the spread of COVID19 or any other infectious disease.”
When the municipality of Meco in the Autonomous Community of Madrid used the emergency fast-track to procure management services for its municipal swimming pool it gave the usual excuse of being in a rush (it’s that with all this fuss I just haven’t had the time), although it issues the same contract every summer. It also added a more imaginative excuse: the neighbours are having a bad time and need their pool.
Masks, tests, renovations and computer services
The bulk of the 6.445 billion euros in emergency contracts was used for pandemic protection. The vast majority, 5.398 billion euros, went to supply contracts, especially masks and other protective equipment (3 billion euros), followed by tests.
Of the 326 million euros in emergency construction contracts in 2020, more than 94 million euros, or some 30%, went to build, repair and maintain health facilities. Beyond the coronavirus response, there are the usual emergency works: road and train repairs and repair to storm damage, in this case caused by storm Gloria, which killed thirteen people in January 2020.
Regarding emergency contracts for services, the majority was spent on transportation, logistics, and vehicle rental, sometimes to deliver purchased supplies to their destination; on covid testing, contact tracing, healthcare and patient accommodation; and cleaning and disinfection, especially in the first months, when people thought the virus waited crouching on the walls for hours, ready to jump on passers-by. Spending on social services and computing also stands out, in the latter case to meet the increased needs of remote working.
The General State Administration spent more than half of those 6.445 billion euros. Almost all of the emergency spending was by the Ministry of Health. Some 98% of the Ministry of Health’s procurement in 2020 was awarded via emergency rules. Among the autonomous communities, Catalonia (807 million euros in emergency spending) and Madrid (689 million euros) spent the most.
Due to their more limited competencies and budgets, local governments made up a smaller share of emergency procurement. But the city of Madrid, which spent 45 million euros on emergency procurement, stands out. Among the masks and tests, Madrid issued a contract for a censer to hold a flame in honour of the victims of COVID-19.
This article is part of Tenders Guru, a project funded by the European Union.
The data used in this article comes from the Public Sector Contracting Platform (PLCSP), where the majority of Spanish public entities publish procurement data. We have downloaded all contracts published from January 1 to December 31 from 2020. They total 119,976. In addition, we have also added the contracts that some regional administrations (such as Madrid and Catalonia) publish on their own websites and only summarise on the PLCSP. We found 53,838 such contracts. The goal was to create a comprehensive database for understanding emergency procurement in 2020 and detect potential abuses of the rules.
All amounts exclude value added taxes and we excluded so-called minor contracts, subject to less demanding transparency and publication rules.
At the beginning of 2021, seven autonomous communities did not publish their procurement data directly on the national portal, but rather on their own portals: Andalusia, Catalonia, Euskadi, Galicia, Madrid, Navarra and La Rioja. The Region of Murcia published incomplete data on the national portal in 2020. Although in theory these regional portals are connected to the national one and the information should match, in practice there are problems. Not all contracts are available, and fundamental information is lacking, such as the award date and the urgency of the contract. Therefore, we have completed the contracts of these external platforms with additional details extracted from their web pages.
Unfortunately, each autonomous platform has its peculiarities. While Catalonia and Euskadi always indicate the urgency of their contracts in a clearly labelled field, Andalusia often leaves it blank, as does Galicia. La Rioja adds “Emergency” to its file code. Navarra does not always mention the emergency, but classifies the contract as “without procedure”, implying that something unusual is happening. Madrid labels its extraordinary contracts as “Other procedures”, but to find the level of urgency you have to look at the notes: “Emergency”, which it might spell “EMRGENCY” (sic) or “Emergeincy” (sic) or … Galicia classifies everything correctly but has not sent its emergency contracts to the national platform, so we had to add them by hand. (The Galicia web search engine also insists that there are no emergency contracts, although there clearly are.) Madrid does not send all its contracts to the PLCSP either, although we have not discovered the pattern: some arrive, others do not. So, we downloaded all the contracts from its website and added the ones missing from the PLCSP. Furthermore, Madrid is the only platform that does not publish the award date of its contracts, but rather the “award publication date”, which is not the same thing. Murcia published its health systems’ procurement in a spreadsheet separate from the normal contracting information. We combined all the purchases from that file and its non-health procurement to our database. Catalonia published a series of “umbrella” contracts with multiple awards in an attached spreadsheets, plus a separate summary file for the entities of the Generalitat itself. We have reviewed and cross-checked all these files and added the results to our database. Asturias already officially publishes directly in the PLCSP but continues to send some contracts to its own external platform, and some contracts have invalid URLs that do not seem to be accessible even in the Asturian platform.
In general, both for contracts published on external and national platforms, we have found many contracts where the winner of the tender was “See notes” or “See award”, which we have had to add manually. We also found many contracts where the award amount was empty or was clearly incorrect when compared to the budget. We have corrected the errors that we have detected by verifying the original award certificates. A special shout-out to this maintenance contract for six vehicles issued by the city of Oviedo, budgeted at EUR 37,200 and awarded to a local company for -supposedly- 251.52 billion euros, 6.7 million times the original contract budget and 143 times Asturias’ entire health budget. It does not seem to have attracted the attention of any of the officials involved in publishing the clearly mistaken information. (It is also surprising that the other bid did not win, for “only” 50 billion euros.)
The end result is what we believe is the most comprehensive public contracts database available in Spain. This does not mean that it contains all 2020 emergency contracts: although by law all public bodies must send their information to the PLCSP, not all platforms do it consistently, as the Independent Office for Regulating and Supervising Procurement (OIRESCON) has already reported. Some contracts must still be on the long journey (sometimes many months long) from award to publication.
Once we created the database, we reviewed it for possible errors: duplicate files, mis-classified procedures, lots with the wrong prices, mistaken fiscal identification numbers (especially in the case of non-EU companies, which tend to be inconsistently filled in) or names written differently each time, and separate contracts published together that we have had to extract and separate…
The most important revision has been in the award prices, which we always record without taxes. We have looked at what happened with those contracts that did not have any amount or reported an amount of 0. We have filled in as many gaps as possible. In the case of the -few- framework agreements, we have used the bidding price, that is, the budget, since the final expense will depend on the final amount purchased from each supplier, and that has not yet been published.
In all these cases, we have had to dig up the original award documents when needed. And, sometimes, we couldn’t even find basic information in those documents, such as what had been bought from whom and for how much money. The two main barriers have been missing information and inconsistency and typos in the data.
To establish the categories, we had to start with the basics: check which contracts were wrongly classified between supplies / works / services. From there, we have created general categories taking into account which objects were the most common. We have not been able to use the European common procurement vocabulary (CPV) code, because in most cases they were inconsistent or clearly wrong. We had to decipher which category each contract belonged to by its object, using keywords for each of them, also in Spain’s co-official languages, and checking them manually when necessary. An added difficulty: sometimes a single contract covered a variety of products or services.
You can download and reuse the clean files we used in this analysis from the Civio open data website here:
If you find errors, please notify us
We know that the original source, the Public Sector Contracting Portal, contained errors, probably from data entry into the systems by the public entities. We have fixed the errors we found. We have worked on the data with the greatest possible rigor, but if you find any flaws in them or in our analysis, please write to us at email@example.com and we will be happy to correct it.