How Portugal's New Audit Reform Could Speed Up Infrastructure and Housing Projects

Portugal's Ministry of State Reform has pledged to overhaul the nation's Court of Audit (Tribunal de Contas) legislation by this summer, a regulatory shift that could fundamentally alter how public procurement, hiring, and spending decisions are made across all levels of government. The move, spearheaded by Minister Gonçalo Matias, aims to dismantle what officials describe as a paralyzing system of pre-approval oversight that has no equivalent elsewhere in Europe.

Why This Matters:

• Public contracts could move faster: Municipalities, hospitals, and state agencies currently wait for Court of Audit clearance before finalizing deals—delays the government says stall infrastructure, housing projects, and even basic service purchases.

• Accountability shifts to after-the-fact audits: Instead of pre-clearance, officials would face post-execution financial audits and heavy personal fines for illegal spending.

• Legal test of EU procurement rules: The Cabinet also intends to digitize and simplify the Public Procurement Code, a process that may "test the limits" of Brussels' regulatory framework.

How the Current System Works—and Why It's Under Fire

Portugal's Court of Audit functions as both auditor and quasi-judicial body, issuing binding "prior visas" (visto prévio) for public contracts above €750,000 to €950,000. Unlike counterparts in the UK (National Audit Office), Germany (Bundesrechnungshof), or the European Court of Auditors—all of which advise parliaments but lack enforcement powers—Portugal's tribunal can block contracts outright if it finds legal or budgetary irregularities.

Speaking at an event organized by the Portuguese Development Bank (Banco Português de Fomento) in Lisbon, Matias argued the Court has overstepped its remit. "It is a tribunal that substitutes itself for administration and political decision-making," he said, describing a culture in which civil servants fear personal liability for routine procurement choices. "This creates distrust among public administration workers and paralyzes their decision-making."

The minister framed the prior visa as a "sword" hanging over elected officials and appointed administrators. Under the proposed reform, those figures would be held accountable only if they break the law, rather than facing preemptive judicial review of the merits of their administrative and political choices.

What the Reform Actually Proposes

The Cabinet's plan, drafted with input from constitutional law scholar Professor Rui Medeiros, centers on three pillars:

Elimination or drastic reduction of prior visas for most contracts, with possible exceptions for long-term public-private partnerships and mega-projects.

Expanded post-audit powers, including the ability to impose steep fines and demand reimbursement for illegal expenditures.

Alignment with European norms, where supreme audit institutions typically report findings to parliament rather than act as gatekeepers.

In October, Matias noted that Portugal's model has no parallel in Europe. France, Spain, and Italy—though also using "jurisdictional" audit systems rooted in Roman-Germanic legal traditions—do not routinely block contracts before execution. The UK's system, by contrast, empowers the Public Accounts Committee of Parliament to scrutinize spending after the fact, with the Comptroller and Auditor General serving as an investigative arm rather than a judicial authority.

The Timing and the Politics

Matias confirmed the legislation will reach Parliament before summer 2026, with a draft expected to be approved by the Council of Ministers imminently. The reform has already attracted scrutiny from Court of Audit President Filipa Calvão, who met with Matias in January and acknowledged a "convergence of concerns" while cautioning that public management must not be left "unchecked."

Opposition parties and some legal scholars warn that scrapping prior review could open the door to irreversible financial damage and corruption. Calvão has suggested that high-value, long-duration contracts—such as concessions and public-private partnerships—should retain some form of pre-clearance to prevent the kind of costly errors that are difficult to unwind after execution.

A recent precedent underscores the stakes: a special prior-audit regime for EU-funded projects, including those under the Recovery and Resilience Plan (Plano de Recuperação e Resiliência), already allows contracts to take effect before the Court rules. Critics say this has reduced transparency and made it harder to prevent wasteful spending, though the government argues it was essential to accelerate pandemic recovery investments.

What Changes for Residents and Businesses

For municipalities, the reform could mean faster procurement of everything from school renovations to waste collection contracts. Local councils have long complained that months-long waits for Court approval delay projects critical to residents' daily lives.

For businesses that bid on public tenders, the shift to post-audit enforcement introduces a new risk calculus. Companies that win contracts under the revised system would no longer face the uncertainty of a Court veto midstream, but they—and the officials who hired them—could be subject to retroactive penalties and forced repayment if auditors later find irregularities.

For taxpayers, the trade-off is speed versus safeguard. Proponents argue that heavy ex-post fines will deter malfeasance just as effectively as prior review. Skeptics counter that by the time an audit uncovers waste or corruption, the money is often gone—and recovery is far from guaranteed.

The Broader Simplification Push

The Court of Audit overhaul is part of a wider campaign to streamline Portugal's administrative and procurement laws. Matias announced simultaneous reviews of the Administrative Procedure Code (Código de Procedimento Administrativo) and the Public Procurement Code (Código dos Contratos Públicos).

On procurement specifically, the minister lamented that "in Portugal, a public entity cannot buy anything, cannot commission a service, cannot make the economy function," placing much of the blame on Brussels-imposed complexity. The government plans to digitize the entire Public Procurement Code and, in Matias' words, "test the limits of European law" to carve out greater national flexibility.

Recent amendments have already loosened requirements:

• Design-build contracts (conceção-construção), once restricted to exceptional cases, can now be used at the discretion of contracting authorities, a change finalized in October 2025.

• Simplified procedures for social housing contracts allow direct awards up to €15,000 and streamlined tenders up to €1M, valid through December 2026.

• Information technology contracts are exempt from prior advisory opinions unless they exceed standard direct-award thresholds, under a decree issued February 11.

New EU procurement thresholds took effect January 1, and the National Public Suppliers Portal (Portal Nacional dos Fornecedores do Estado) rolled out an updated interface on January 9, introducing preliminary consultation features and green procurement tools.

European Context and Compliance Questions

Portugal's Court of Audit was established under a jurisdictional model common to southern Europe, where audit institutions double as courts with the power to sanction. This contrasts sharply with:

• The UK's National Audit Office, which reports to Parliament and has no enforcement authority.

• Germany's Bundesrechnungshof, whose members enjoy judicial independence but issue recommendations, not binding orders.

• The European Court of Auditors, which can refer suspected fraud to the European Anti-Fraud Office (OLAF) but cannot impose penalties itself.

Matias argues Portugal's hybrid system—tribunal plus auditor—has drifted toward quasi-administrative review, effectively second-guessing policy choices rather than policing legality. The proposed reform seeks to restore a clearer division: politicians and administrators decide; auditors check afterward; courts punish lawbreakers.

Whether that vision will survive parliamentary debate—and whether it can coexist with EU procurement directives—remains an open question. Brussels has shown limited tolerance for member states that weaken financial oversight, particularly when EU funds are at stake.

What Happens Next

The Council of Ministers is expected to approve the Court of Audit bill in the coming weeks, triggering a legislative process in the Assembly of the Republic. Given the government's stated summer deadline, passage by late June or early July appears likely, barring significant political opposition.

In parallel, the Public Procurement Code overhaul and Administrative Procedure Code revisions will follow their own timelines, though Matias has signaled all three reforms are interconnected and share the goal of "unlocking Portugal" from what he describes as self-imposed bureaucratic paralysis.

For residents, the practical test will come in execution: whether municipalities can indeed hire contractors faster, whether state agencies can procure IT systems without months of delay, and whether the shift to post-audit enforcement proves as effective a deterrent as the prior-visa regime it replaces.

The minister's promise—"This will stop happening in Portugal, you have my guarantee, by summer"—is now on the clock.