Public Procurement · Sub-area
Contract Execution & EU Funds
Once the contract is awarded, the real problems begin: amendments the contracting authority tries to impose outside the legal channels, invoices not paid on time, and — in Next Generation-funded contracts — DNSH compliance requirements that can jeopardise the eligibility of the expenditure. Dobarro y Asociados supports the contractor throughout the life of the contract.
Arts. 198-215 LCSP
Advice throughout the life of the contract
The most frequent disputes in public procurement do not arise during the tender, but during execution. The regulation is dense and the deadlines for action are short.
Contract amendments
Feasibility analysis of amendments (arts. 204-205 LCSP), drafting the proposal, processing the file, and defence against challenges.
Claiming payments and interest
Claiming timely payment of the price, calculating late-payment interest (Law 3/2004), the fixed €40 compensation per invoice, and pursuing administrative and judicial remedies.
Defence against penalties
Challenging improper penalties, negotiating the amount, and responding to termination proceedings initiated by the contracting authority.
PRTR / Next Generation Funds compliance
Verifying the DNSH principle, traceability of eligible expenditure, evidencing milestones and targets, and preparing for audits by the IGAE and the European Commission.
Contract termination
Handling termination for causes attributable to the contracting authority or the contractor, claiming damages, and settling the contract.
Suspension and rebalancing
Claiming compensation for temporary suspension of execution, economic rebalancing of the contract due to unforeseeable causes, and unforeseeable risk.
Arts. 204-205 LCSP
Contract amendments: the only lawful channels
One of the most frequent conflicts during execution is an amendment the contracting authority tries to impose outside art. 205. Accepting it without reservations can compromise the contractor's rights and even create liability.
Amendment envisaged in the tender specifications (art. 204)
As set in the tender specifications, respecting the LCSP's principlesThe original tender specifications expressly envisaged the possibility of amendment, indicating its conditions, scope and limits. This is the safest channel: the amendment is direct if the envisaged terms are respected.
Unforeseen amendment due to unforeseeable circumstances (art. 205.2.a)
≤ 20% of the award price per amendmentCauses unrelated to the parties' will that could not have been foreseen at the time of tender. Requires rigorously evidencing unforeseeability. TACRC and regional High Court case law is restrictive.
Amendment due to the need for additional works/services (art. 205.2.b)
≤ 20% of the award price per amendmentWorks or services not technically or economically separable from the main subject matter without serious inconvenience for the contracting authority. Must be essential to the correct execution of the contract's subject matter.
Amendment exceeding the limits of art. 205
Prohibited. Requires a new procurement procedureIf the amendment exceeds 20% individually or 50% cumulatively, it cannot be processed as an amendment. The contracting authority must terminate the contract and tender the new scope, or process a new complementary contract.
The amendment procedure: stages and deadlines
| Stage | Deadline | Detail |
|---|---|---|
| Amendment proposal | Before executing the additional works/services | The contracting authority prepares the proposal. The amendment cannot be executed without processing the file. |
| Hearing for the contractor | 5 working days | A mandatory hearing stage before the decision. Failure to hold the hearing invalidates the procedure. |
| Legal Department report | Concurrent with the proceedings | Mandatory for amendments exceeding 10% of the award price. |
| Decision and notification | Before execution | The amendment cannot be executed until it is notified to the contractor and the contractor gives its consent or raises appropriate reservations. |
| Publication in the OJEU (where applicable) | Within 30 days of the amendment | Mandatory for contracts exceeding the European thresholds (arts. 205.4 and 63 LCSP). |
Important notice: Executing additional works or services without processing the amendment file, even at the contracting authority's instruction, creates an unwritten (verbal) contract not covered by the LCSP. The contractor may be left with no right to payment and exposed to penalties. In response to any instruction to expand the contract's scope, submit written reservations before executing.
Law 3/2004 · Art. 198 LCSP
30-day payment and automatic late-payment interest
Late payment by the contracting authority is a frequent reality. Law 3/2004 establishes an automatic interest regime designed to discourage it, but applying it requires knowing the deadlines, rates and claim channels.
| Item | Value / Deadline | Legal basis |
|---|---|---|
| Maximum payment deadline | 30 calendar days | Art. 198.4 LCSP and Law 3/2004 |
| Start of the count | From acceptance/verification of the good or service | Art. 4.1 Law 3/2004 |
| Late-payment interest rate | ECB rate + 8 percentage points | Art. 7 Law 3/2004 (Directive 2011/7/EU) |
| Accrual of interest | Automatic from the day after the deadline expires | No prior demand required |
| Fixed compensation for recovery costs | €40 per unpaid invoice | Art. 8 Law 3/2004 |
| Right to terminate the contract | If the delay exceeds 4 months | Art. 198.6 LCSP |
| Invoice register | Mandatory for all public sector entities | Law 25/2013, since January 2015 |
| Electronic invoicing | Mandatory in contracts with the central government | Law 25/2013, since January 2015 |
How to claim payment and interest
Administrative claim
A formal submission to the contracting authority requesting payment of the principal, interest accrued from the due date, and the €40 compensation per invoice. The authority has 1 month to decide. Denial or silence opens the way to judicial review.
Judicial review
If the administrative claim is expressly or presumptively dismissed, a judicial review action can be filed with the competent court. The deadline is 2 months from notification or 6 months from silence.
Termination of the contract for delay
If the payment delay exceeds 4 months, art. 198.6 LCSP recognises the right to terminate the contract for cause attributable to the contracting authority. Termination carries the right to claim damages in addition to interest.
Regulation (EU) 2021/241 · Recovery Plan
PRTR contracts and Next Generation EU funds
Next Generation EU funds (€140 billion for Spain between 2021 and 2026) finance public contracts with compliance requirements far stricter than ordinary procurement. Non-compliance can force repayment of the funds received, plus late-payment interest.
The DNSH principle (Do No Significant Harm)
Enshrined in Regulation (EU) 2020/852 on the Green Taxonomy, the DNSH principle requires that no investment financed with PRTR funds cause significant harm to any of the EU's six environmental objectives. It is not a voluntary declaration: non-compliance renders the expenditure ineligible.
Climate change mitigation
The activity must not significantly contribute to greenhouse gas emissions. This includes verifying that projects with a high CO₂ impact are not financed.
Climate change adaptation
The activity must not increase the negative impact of climate change on the current and future environment. Requires an analysis of vulnerability to physical climate risks.
Sustainable use of water
The activity must not adversely affect the good status of water bodies or compromise their sustainable long-term use.
Circular economy
The activity must not generate significant inefficiencies in the use of materials or increase waste generation or the incineration of non-recyclable waste.
Pollution prevention
The activity must not cause a significant increase in pollutant emissions into air, water or soil.
Protection of biodiversity
The activity must not cause significant harm to the good condition and resilience of ecosystems or threaten the conservation of habitats and species.
Compliance obligations in PRTR contracts
DNSH declaration in the supporting report
Each eligible expense must document compliance with the six environmental objectives of the DNSH principle. The declaration must be signed by the project's technical lead.
Traceability of eligible expenditure
Expenditure financed with PRTR funds must be individually recorded in the accounts, with invoice number, supplier, amount, and a link to the Recovery Plan milestone or target it contributes to.
Milestones and targets
Each PRTR component has milestones (regulatory or institutional reforms) and targets (quantifiable results). Funds are released once compliance is verified by the European Commission.
Ban on double financing
The same expense cannot be financed simultaneously with PRTR funds and other European funds (ERDF, ESF, EAFRD). Requires a cross-verification system between managing bodies.
Anti-fraud measures plan
Art. 22 of Regulation (EU) 2021/241 requires responsible bodies to have an effective, up-to-date anti-fraud measures plan. OLAF audits apply to recipients of public funds.
Document retention
Supporting documentation for the expenditure must be kept for at least 5 years after the programme closes (31 December 2029), or until any ongoing audits or judicial proceedings are resolved.
PRTR fund audits: Spain's General State Comptroller (IGAE), the Court of Audit, the European Anti-Fraud Office (OLAF) and the European Commission itself can audit contracts financed with Next Generation funds at any time during execution and up to 5 years after the programme closes. Early documentary preparation is the only safeguard against repayment demands.
Related area
Excluded from a tender or the award seems unlawful?
The special TACRC appeal has a 15-working-day deadline and automatically suspends the procedure.
Related area
Want to enter the public market? Bid preparation
Analysis of the tender specifications, technical and financial bid, solvency and abnormally-low bid analysis before submitting.
During execution
Have a dispute with the contracting authority during contract execution?
Unlawful amendments, unpaid invoices, improper penalties, or DNSH compliance issues in PRTR contracts. We'll tell you what rights you have and how to exercise them.
Free ConsultationFrequently asked questions about contract execution and EU funds
When can the contracting authority amend a public contract?
An amendment is only possible in two scenarios. If the original tender specifications expressly envisaged the possibility with its conditions and limits (art. 204 LCSP), the amendment follows that channel. If it was not envisaged, it is only possible on the limited grounds of art. 205.2 LCSP: unforeseeable circumstances or the need for additional works not separable from the main subject matter. In both cases, the limit per amendment is 20% of the award price, and the sum of all amendments cannot exceed 50% of the original price.
How is late-payment interest calculated in public procurement?
Interest is calculated by applying the ECB reference rate plus 8 percentage points, under Law 3/2004. Accrual is automatic from the day after the 30-calendar-day deadline expires: no prior demand is required. Additionally, the creditor is entitled to a fixed €40 compensation per unpaid invoice for recovery costs (art. 8 Law 3/2004).
What is the DNSH principle and how does it affect Next Generation-funded contracts?
The DNSH principle (Do No Significant Harm) is enshrined in Regulation (EU) 2020/852 on the Green Taxonomy and is mandatory for all contracts financed with PRTR funds. It requires that the investment cause no significant harm to any of the six environmental objectives: climate change, adaptation, water, circular economy, pollution and biodiversity. In practice this means DNSH declarations in the supporting report, an impact review, and documentation that must be kept for 5 years after the programme closes.
What happens if the contracting authority does not pay within 30 days?
Late-payment interest (ECB rate + 8 points) and a fixed €40 compensation per invoice accrue automatically, with no prior demand required. The contractor can claim through the administrative route (a claim before the contracting authority) or through judicial review. If the delay exceeds 4 months, art. 198.6 LCSP recognises the right to terminate the contract for cause attributable to the contracting authority and claim damages.
When can a public contract be terminated during execution?
Contracts are terminated on the grounds set out in arts. 211-213 LCSP. Grounds attributable to the contractor include breach of essential obligations, unjustified delay, or repeated penalties. Grounds attributable to the contracting authority include suspension exceeding 8 months and payment delay exceeding 4 months. Termination for cause attributable to the contracting authority entitles the contractor to claim damages. The procedure requires a hearing for the interested party and a reasoned decision.