Acciona’s garbage collection and street cleansing service in Torrevieja, which had commenced a year prior, was scrutinised by the specialised inspection company for the first time in July 2023. The consequence was catastrophic: €90,000 in accumulated penalties for minor breaches of the contract terms and €45,000 for severe deficiencies, which were primarily tied to the failure to hire the personnel specified in the contract. The company has refrained from providing a response to this court decision.
Penalty proceedings have been initiated on a monthly basis since that time. The amounts are reduced as a result of the resolution of certain minor and significant deficiencies. Each of these proceedings has been appealed by the multinational in court. The initial ruling in Elche resulted in the first case being forfeited. The City Council’s actions have been upheld by the High Court of Justice of the Valencian Community, which serves as a prelude to the outcome of the proceedings that Acciona has appealed since that time. Its universal appeal drives this.
Consequently, the Valencian court ratified the imposition of penalties totalling 135,003 euros on the company Acciona Servicios Urbanos for the defective fulfilment of the waste collection, street cleaning, and maintenance contract of the Torrevieja coast during the month of July 2023 in a sentence signed on April 14th.
The appeal submitted by the multinational company is dismissed by the Fifth Section of the Administrative Court, which also confirms the judgement of the Administrative Court Number 1 of Elche, which had previously endorsed the administrative acts of the City Council.
Acciona Servicios Urbanos appealed the decision on three primary grounds: the alleged violation of the general contracting principle, which renders tender documents binding on the parties, the infringement of Articles 203 et seq. of the Public Sector Contracts Law, and the breach of the principle of proportionality enshrined in Article 192 of the same law. The company essentially contested the validity of the inspections conducted and the procedure used to impose the sanctions, contending that they violated its contract.
In response to these arguments, the Torrevieja City Council maintained that the inspections were conducted on a weekly basis and with continuous monitoring during the period under analysis, as stipulated in the terms and conditions of the contract. The company “never demonstrated interest” in participating in these actions in conjunction with the quality control representative, a position that the municipality only implemented a year after the service began, at a cost of 180,000 euros annually.
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The monthly reports issued by the company Ingeniería Quipons (now known as Natur Forest Murcia), the contractor for the quality control service, as well as the technical opinions of the Municipal Auditor and the Civil Engineer, which confirmed non-compliance in the provision of the service, were provided by the local administration as evidence.
The comprehensive provision of waste removal and transport services, maintenance of collection points, street cleaning, conservation of the beaches, and management of the municipal ecopark is the subject of the contract, which was awarded in January 2022 for an annual amount of 24,368,664 euros including VAT. Despite the fact that the contract has already been modified upwards to account for the CPI increases and to assume collection areas of the La Hoya urbanisation, the total value of the contract exceeds 25 million.
The court evaluated the proportionality of the penalties imposed by taking into account the magnitude of the agreement and the significance of the summer period, which sees a substantial population increase in Torrevieja: €90,000 for minor breaches and €45,003 for serious and very serious infractions. In the latter instances, the penalties included the obstruction of the auditor’s work and, most importantly, the discovery that the contractor failed to provide the necessary number of street cleaning personnel as specified in the contract specifications during the peak of the season..
The penalty is equivalent to a mere 9% of the monthly fee that the organization receives. The company’s operation in Torrevieja is significantly impacted by this small amount, as it reduces its profit margin.
The ruling underscores that the City Council’s procedure was in accordance with the conditions of the contract and relevant legislation, including the initiation of the proceedings, a hearing process with an extension requested by the company, and a reasoned decision by the competent body. Additionally, the court observes that the administrative penalties are not exclusively punitive in nature, but rather serve as a contractual penalty clause that is intended to safeguard the public interest that underpins the contract. This is due to the fact that the City Council has implemented monthly reductions for services that the company does not provide in conjunction with these penalty proceedings—the fines. The monthly invoices issued by the City Council have accurately reflected all penalties that have been imposed. Acciona’s appeals are intended to recoup these sums with late payment interest.
Acciona Servicios Urbanos will be required to assume the penalties that were already deducted at the time, as well as the costs of the appeal, which have been set at 1,800 euros, with this resolution, which is final in administrative proceedings.
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The judgement permits an appeal to the Third Chamber of the Supreme Court or, if applicable, to the Administrative Chamber of the TSJCV. The interested party is granted a thirty-day period from the date of notification to file an appeal.
The organisation has been able to rectify numerous deficiencies as a result of municipal oversight. Nevertheless, the refuse collection and street cleaning services, which were expected to have significantly improved following the implementation of the new contract, have been met with a very uneven level of satisfaction among residents. Additionally, their garbage collection fees have increased by 80%.
The accumulation of garbage in residential areas and housing developments is still insufficient. In the city centre, the fifth container for organic refuse—a requirement under waste legislation that would ultimately reduce costs and is a “priority” of the contract—has not yet been implemented, despite the fact that containers and machinery have been renewed and cleaning is more thorough.
Acciona maintains a 50% stake in the company, while the Hozono Global Group retains a 50% stake through one of the group’s companies, Actúa. The Torrevieja City Council permitted the establishment of a Temporary Business Association a few weeks ago.
