AUTHOR (name and surname)

Ana Neves

COUNTRY

Portugal

YEAR

2021

Name of the act/s*

Exceptional scheme of budget execution and procedural simplification for projects approved under the Recovery and Resilience Plan

Subject area

Administrative law and Budgetary law

Brief description of the contents of the act

On 23^rd June 2021, the Portuguese Government enacted an exceptional scheme of budget execution and of procedural simplification concerning the implementation of projects under the Recovery and Resilience Plan (RRP). The Act entered into force on the day following its publication, on 24^th June 2021.

Its main goal is to assure “that the State and social security agencies and bodies have all the conditions and autonomy for a quick implementation of the RRP” (according to the Government).

It is one among others special or exceptional schemes designed to facilitate the implementation of the Recovery and Resilience Plan (that was endorsed by the European Commission on 16^th June 2021; and had a positive implementing decision of EU economic and finance ministers on 13 July) for the period 2021-2026, according to Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility.

The exceptional scheme has three types of rules: budget rules, procedural rules, and competence rules.

Regarding the first ones, it establishes rules about budget heading, budgetary reprogramming and about financial flows, and advance payments to beneficiaries. Furthermore, the budget funds allocated to the implementation of projects exclusively funded by the RRP are not under general budgetary restrictions (Article 7). The assumption and reprogramming of multi-annual expenses do not depend on a previous authorisation by the Minister of Finance and can be exempted from the formality of publication in the Official Gazette (Article 8). It also provides that the direct, intermediate or final beneficiaries of the Recovery and Resilience Plan (RRP) may receive, on behalf of the RRP funds, the amount equivalent to the Value Added Tax (VAT) due or to be due and which would be directly borne by them in execution costs of projects exclusively funded under the RRP (Article 16).

In terms of procedural and competence rules, it should be mentioned the following:

i)               The expenses with service contracts and studies, opinions, projects and consultancy are exempted from the due authorization (Articles 9 and 10);

ii)             Investments in health and the acquisition of electric vehicles, fire prevention and combat vehicles or for mobile health units are exempted from the authorization normally required (Articles 13 and 14);

iii)           Any legal opinions or consultations regarding projects in “electronic certification, administrative modernisation and simplification, and electronic administration” are due in three working days following their request, and are deemed to be favourable if not issued within this period;

iv)            The deadline for the issuing of a binding opinion by the Agency for Administrative Modernisation on the procurement of goods and services in IT is reduced from 30 to 5 days (Article 12.º).

The Act in comment provides also for an exceptional hiring regulation of fixed-term workers to Public Administration regarding PPR (Article 15)

Comment

1. Exceptional legislation as a pattern and the test of suitability

The Act being commented, enacted by the Government, was promulgated on the 21^st July by the President of Republic. In a note published on the President’s website, it is explained that he does not want “to delay the execution of the programs to be financed by the European Union, namely within the scope of the RRP, which are urgent and a priority”. Notwithstanding, he stressed that the subject matter of the decree “will normally be included in the Budget Execution Decree-law, which has not yet been approved and, therefore, has not been submitted for promulgation” (https://www.presidencia.pt/atualidade/toda-a-atualidade/2021/06/presidente-da-republica-promulga-diploma-para-execucao-do-prr/).

According to Recital 4 of the Act, it aims to speed up the implementation of the policy measures or investments under the Recovery and Resilience Plan. For this purpose, it shortens procedural deadlines, abolishes procedural requirements (e.g., weakens technical preparation, reasoning and publicity of decision-making), modifies competence rules and relaxes budgetary rules. These legal options mean less transparency, less competition, fewer administrative guarantees, and less accountability.

The exceptional scheme corresponds to a regulation pattern that is being adopted: the enact of special or exceptional regulations with the aim of achieving certain objectives more quickly and in an easier way. Another example is the special public procurement scheme (Act no. 30/2021, of 21 May, which introduces amends to the Public Contracts Code, to the Process Code in the Administrative Courts, and to the rules applicable to the creation, organization, and operation of central purchasing bodies).

These legislative options (with the intended simplification and celerity aims) are contradicted by:

a)     The various regulatory burdens that continue to exist in different acts. For instance, public powers are unaware of the only once principle (e.g., EU eGovernment Action Plan 2016-2020, Accelerating the digital transformation of government, COM(2016) 179 final); people's communications with Public Administration are very difficult and are hampered by specific formal requirement to submit claims or requests; and the notification regulation raises difficulties from the point of view of legal certainty.

b)    The objectives of “modernisation of the public administration to improve accessibility and simplify public interactions with businesses and citizens”; (e.g., the Commission staff working document analysis of the recovery and resilience plan of Portugal accompanying the document Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Portugal, SWD/2021/146 final, 1, § 7; 4.7).

In particular, it should be highlighted that it is being adopted an exceptional budget implementation scheme to have an easier and successful use of recovery and resilience funds. However, the Portuguese plan is supposed to be used to have a full and effective implementation of the 2015 Budgetary Framework Law. In fact, the Commission staff working document analysis of the recovery and resilience plan of Portugal points out that “[t]he full and effective implementation of the 2015 Budgetary Framework Law – which has experienced systematic delays – is expected to support overall budgetary planning and monitoring through a stronger medium-term focus and enhanced transparency to ensure transparency and accountability in the implementation of the Facility. It should also help strengthen expenditure control, cost efficiency and appropriate budgeting, which would facilitate rechannelling public resources to new strategic priorities and assessing the effectiveness of public policies” (4.7, § 5; and the Post-Programme Surveillance Report Portugal, Spring 2021, European Economy Institutional Paper n. º 152, June, 2021, p. 16 - https://ec.europa.eu/info/publications/post-programme-surveillance-report-portugal-spring-2021_pt).

So, the question that arises is whether the exceptional scheme of budget execution and procedural simplification for projects approved under the Recovery and Resilience Plan is suitable to address effectively the challenges it wants to face. That is to say, the exceptional scheme seems, inconsistently, to be a deviation from some of the objectives of the RRP.

The other question that may be asked is if it has the disguised goal of diminishing procedural and budgetary specific requirements in order to have a formal increase in compliance.

2. Institutional arrangements and the exceptional scheme of budget execution and procedural simplification for projects approved under the Recovery and Resilience Plan

The Commission Staff Working Document above mentioned considers that the Portuguese RRP “sets out a clear administrative organization for its implementation” and an adequate one (3.2., § 12). However, it may be questioned whether the institutional design does not also affect the confidence in the exceptional scheme adopted.

The governance model adopted has four-levels (Decree-Law 29-b/2021 of 4^th May): i) an Inter-ministerial Commission (chaired by the Prime Minister, that is in charge of the strategic and policy coordination); ii) a National Monitoring Commission (that generally oversees the implementation of the RRP, with representatives of the various social and economic partners and civil society figures and chaired by an independent person); iii) a technical coordination and monitoring level, entrusted to the “Recovering Portugal” structure (that shall articulate with Agency for Development and Cohesion, I. P., and with the Minister of Finance); iv) and an Audit and Control Committee (chaired by the Inspectorate-General for Finance, with a member from the Agency for Development and Cohesion, I. P., and one person with a career of recognised merit in the area of auditing and control, co-opted by the remaining members).

The “Recovering Portugal” structure has a central role. This “task force is expected to monitor the implementation of the reforms and investments of the recovery and resilience plan, ensuring that its strategic objectives are achieved and that milestones and targets serve for monitoring and achieving the operational objectives of the recovery and resilience plan. It is set to sign contracts with direct and intermediate beneficiaries with the respective conditions for the use of funding and is expected to prepare and submit to the European Commission the requests for payment, gathering the necessary information from the competent authorities” (European Commission Staff Working Document, 4.8).

This “task force” is led by a president, a vice-president and four project team coordinators. Three of them to the resilience, climate transition and digital transition dimensions; and a coordinator is appointed to the segregated internal control team (https://dre.pt/pesquisa/-/search/162756796/details/maximized). All these four coordinators are proposed by the president and politically appointed by a member of the Government. The Agency for Development and Cohesion, I. P., as mentioned, supports the technical coordination and monitoring of the “Recovering Portugal” structure and is part of the Audit and Control Committee (has a representant in this).

In view of the above, the following should be borne in mind that:

a)     It is not clear whether the “principles of segregation of management functions and prevention of conflicts of interest” (Article 2) are strictly respected, due the organic overlaps highlighted.

b)     The conflicts of interest’s concept is quite unknow by the main administrative legislation and in case-law;

c)     Public Administration has general deficiencies regarding impartiality, access to information and transparency of law and decision making.

Another problematic issue regards the recruitment of staff. Preference goes to fixed terms contracts, which are signed up following urgent and simplified procedure. However, this is in contradiction with the fact that the Portuguese plan wants to address the problem of employees with short term contracts, atypical labour and lack of skilled staff, in line with the European Pillar of Social Rights.

To sum up, there are some organizational issues that may difficult, not only the efficient and reliable implementation of RRP, but most importantly a lasting impact on administrative capacity for good governance. Everything seems done to have an immediate, apparent and formal fulfilment of the European demands.

Secondary sources/ doctrinal works (if any)

Regulation 2021/241 of European Parliament of the Council 12 February 2021, establishing the Recovery and Resilience Facility.

Ministerial Order no. 48/2021, of 4 March: establishes the procedures for anticipating European funds with budget inscription and for the assumption of pluriannual charges.

Regulation for the Recovery and Resilience Facility, Brussels, 17.9.2020 COM(2020) 575 final, Annual Sustainable Growth Strategy 2021 (https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2020)575&lang=en).

*

Lopriore, Marco and Vlachodimitropoulou, Marina, Recovery and Resilience Plans for the Next Generation EU: a unique opportunity that must be taken quickly, and carefully, EIPA Paper, February 2021 (available at: https://www.eipa.eu/recovery-and-resilience-plans-for-the-next-generation-eu-a-unique-opportunity-that-must-be-taken-quickly-and-carefully/).

Gomes, Carla Amado, Neves, Ana F. e Raimundo, Miguel Assis (eds.), Direito Público, Política de Coesão e Fundos Europeus Pós-2020, ICJP/CIDP, 2019, ISBN: 978-989-8722-37-9, 2019 (available at: https://www.icjp.pt/publicacoes/pub/1/18803/view).

*Act citation /year and number

Decree-Law 53-B/2021, of 23^rd July.

Enacted by

Government

Official link to the text of the act

https://dre.pt/web/guest/pesquisa/-/search/165721068/details/maximized?p_p_auth=nidg2Pq5