Public contracts: Amendments to promote housing

The Portuguese Government has approved Decree-Law 112/2025 of October 23, amending the Portuguese Public Contracts Code (“PPCC”) and introducing special measures governing public procurement. The primary aim of this decree-law is to expedite construction and alleviate the ongoing housing crisis. These amendments apply exclusively to tenders initiated after the law’s entry into force and focus on two main aspects:

1.  Amendments to the PPCC: These changes encourage contracting authorities to adopt design-build contracts and prioritize approaches such as “offsite” manufacturing.
2. Special measures governing public procurement:  A special regime will be established to facilitate the development of public or cost-controlled housing. Effective until the end of 2026 (although it may be extended in the future), this regime introduces reduced deadlines, increased thresholds and streamlined contracting procedures to safeguard the right to housing.

Design-build contracts, a model that amalgamates project design and construction execution, were previously restricted under strict conditions defined in article 43.3 of the PPCC, which read as follows:

“In duly substantiated exceptional cases where the winning bidder must fulfill result obligations concerning the project’s use or where construction complexity demands it, given the technical expertise of the bidders and their connection with its design, the contracting authority may stipulate the drafting of the execution project as part of the contract to be awarded. In such cases, the specifications need only include a preliminary program.”

Consequently, design-build contracts were previously permitted only under exceptional circumstances. It also mandated express justification for the contract type and required fulfillment of one of two alternative technical criteria.

However, in light of Decree-Law 112/2025, these restrictive conditions have been abolished. Contracting authorities now enjoy complete discretion to adopt design-build contracts whenever they consider them appropriate to serve public interests. Specifically, the revised article 43.3 of the PPCC now states the following:

“The contracting authority may stipulate the drafting of the execution project as part of the contract to be awarded, in which case the specifications will only include a preliminary program, and the basic price stipulated in the specifications will set separate maximum amounts that the contracting authority is willing to pay for the services involved in designing and executing the works.”

Conclusion: This amendment signifies a paradigm shift, transforming design-build contracts from a previously exceptional option to a standard contracting approach. Consequently, contracting authorities are no longer required to justify their decision or verify specific conditions.

Key changes to Law 30/2021 of May 21

The amendments implement a set of special measures for public procurement. Specifically, these changes distinguish the “pre-contractual tenders for housing and decentralization,” established in article 3, from the “execution of projects financed or co-financed by European funds,” established in article 2. Consequently, and until the end of 2026, an exceptional regime will govern all tenders “aimed at promoting public or controlled-cost housing.”

Key features of the special regime:

(i)       Simplified public or restricted prequalification tenders: Contracts below European thresholds may adopt simplified processes for public or restricted prequalification tenders in accordance with the amended law.

(ii)      Streamlined prior consultations: For contracts valued at less than €1 million and below European thresholds, simplified prior consultation procedures are permitted. However, at least five entities must be invited in accordance with the amended law.

(iii)     Simplified direct award: Simplified direct awards for contracts valued at up to €15,000 are now expressly permitted under article 128 of the PPCC.

(iv)     Direct awards for specific contract categories:

a.         Public works contracts or concessions: Up to €60,000

b.        Lease contracts and procurement of movable goods or services: Up to €30,000

c.         Other contracts: Up to €65,000

(v)      Decentralized municipal works: These financial limits also extend to work contracts involving properties owned and administered by municipalities due to the decentralization of competences process.

Lastly, on October 23, the European Commission published updated thresholds for public contracts under applicable European directives. For further details, see our Post New EU Public Contract Thresholds 2026–2027.

To address the ongoing housing crisis effectively, contracting authorities should leverage the enhanced flexibility afforded by design-build contracts and thoroughly familiarize themselves with the special public housing regime, which will be in force until the end of 2026. Specifically, they should assess how these new measures will apply within the scope of their forthcoming projects.