Public Contracting

Wolfenson Lawyers provides its clients with legal advice on public procurement, during all the stages that make up its procedures.

 

We also represent our clients in the filing of those means of defense and challenge of the bidding process, sanctions and fines before public bodies, the Public Procurement Court and the Comptroller General of the Republic.

 

We highlight in our advice the analysis of the bases of the tender procedure, the elaboration, interpretation and application of administrative contracts and framework agreements, procedures for modification or early termination of the contract, challenges before the Comptroller's Office, before the Public Contracting Court, contentious trials that occur during the execution of the contract, among others.

Here is a legal guide to provide you with guidance on public procurement law:

What is Public Procurement?

The Administrative Contracting or Public Contracting is a manifestation of the patrimonial act of the State , as an economic agent requesting goods and services for the achievement of its purposes. Hence, the enormous transcendence that can be seen of the role of the State and its organizations as a consumer actor in the market, especially in times of economic slowdown, when it is precisely when public initiative must be deployed with singular relevance for the fulfillment of subsidiarity as a duty of the State Administration.

Traditionally, the Chilean contracting and purchasing system was based on a public body in charge of "negotiating" with private parties the acquisition of the goods and services demanded by the various public bodies and services , through deformed mechanisms that conspired against the speed, efficiency, effectiveness and transparency that all procurement procedures by the public sector must conduct. From the normative point of view, in Chile the regulation of administrative contracting was given to the general regulation applicable to private contracting , without prejudice to the application of certain elements of public law , as in the case of the species, the requirement of a public bidding process as a co-contractor choice mechanism. On the other hand, our law recognized the coexistence of supply contracts , the provision of services subject to a general framework and other particular contracting figures affected by singular frameworks, as is still the case with the public works concession contract .
Now, during the 21st century, we have witnessed the emergence of a set of modernizing rules for the operation of public bodies that seek precisely to guarantee an adequate relationship between the State and individuals. In this context, Law 19,886 on administrative contracts for the supply and provision of services, better known as the Law on Administrative Contracting or Public Procurement , is situated, among others and in what concerns here, insofar as it regulates a certain type of administrative contracts.

What are the Fundamental Principles of Administrative Contracting?
Law 19,886 on administrative contracts for the supply and provision of services ( “Purchasing Law” ), as well as its Regulations, contained in Supreme Decree No. 250 of 2004, which approves Regulation of Law 19,886 on the bases for administrative contracts for supplies and provision of services ("The regulation"), constitute the main legal framework regulating contracts for the acquisition of goods and services by the State. Likewise, there are a series of other intervening provisions of the Regulation of public purchases in Chile. Such is the case of the Law N ° 18,575 Constitutional Organic of General Bases of the State Administration , Law 19,880 on Administrative Procedure , Law 20,285 on Access to Information, etc., delivering its supervision and judgment to the Court of the Public Procurement and the courts , without prejudice to the powers of the Office of the Comptroller General of the Republic.


The main principles of Public Procurement are the following:

1. Public Bidding as a general rule.

Said principle, it matters that in the matter of administrative contracting , the general rule will be the need to select the co-contractor through a public bidding process , except in qualified and exceptional cases that allow to go to private bidding , or even to the treatment or direct negotiation . In this sense, it is unnecessary to consider that Article 9 of Law 18,575 indicates that " Administrative contracts will be concluded after a public proposal , in accordance with the law": Adding that " Private bidding will proceed, where appropriate, after a well-founded resolution that so provide, unless due to the nature of the negotiation it is appropriate to resort to direct treatment ”. From the aforementioned principle, those of legality , strict subjection to the bases and equality between the bidders are derived. The strict subjection to the bases is erected as the cornerstone of any bidding procedure and guarantee of equal treatment that must be protected among the bidders . As a result of the obligation assumed by the approved bases, it is that they become immovable and invariable. That is, they cannot be modified or replaced in the course of the process, neither by unanimous agreement of the bidders, nor under the pretext of eventual subsequent clarifications, as these are only intended to clarify their doubtful points or supplement the gaps with additional information. of such bases. And, it is precisely from the strict subjection to the bases , that the equality of treatment that the bidding entity owes to the different participants in a bidding procedure is deduced, guaranteeing their equality before the selection procedure of the most convenient offer for the Administration, any arbitrary discrimination with respect to some of the participants in the tender or a potential bidder being strictly prohibited. Thus, article 9 of Law 18,575 on the general bases of the Administration , is clear when stating that "The bankruptcy procedure will be governed by the principles of free competition of bidders to the administrative call and equality before the bases that govern the contract" .

2. Publicity and Transparency in Public Procurement:

As will be seen, publicity and transparency today constitute a fundamental pillar of the regulation and procedures of administrative contracting. Indeed, already at the constitutional level, the aforementioned principle is generally enshrined, starting from of the constitutional reform of 2005 when pointing out in the new article 8 of the Constitution that “The exercise of public functions obliges its sole holders to strictly comply with the principle of probity in all their actions. The acts and resolutions of the State organs are public, as well as their foundations and the procedures they use. However, only a qualified quorum law may establish the reservation or secrecy of those or of these, when the publicity affects the due fulfillment of the functions of said bodies, the rights of persons , the security of the Nation or the national interest. "

Thus said principle, of publicity and transparency , receives its counterpart in the legislative - general order , both in law 18.5758 and in law 19.880 . On the other hand, it is useful from the particular legislative perspective to make it clear that as of the enactment of Law 20,285 , the public services must inform - in compliance with their duty of transparency, the administrative contracts they celebrate with third parties, on their corresponding electronic sites. , at the risk of being exposed to a request for access to information by an individual, whose refusal by the service and after the required deadlines, could lead to an action before the recently created Council for Transparency , which trigger the application of sanctions against the officials involved.

 

3. Convergence of Interests: Administrative Contracting, being a means of satisfying public interests, assumes the co-contractor as a collaborator in administrative action . Hence, there is no opposition of interests but an alignment of them. This translates into the recognition of a series of clauses such as dynamic legality (adjusting the terms of the contract against unforeseen circumstances ), progress (adjusting the terms of the contract against technological imperatives that arose during the execution of the contract) , etc.


4. Inequality in legal positions:  

As can be seen, given the characteristics of the bidding entity and especially, the public function that the bidder must fulfill, spaces are opened for the possibility of modifying the terms of a certain contract, without prejudice to the consequential compensation for the co -contracting or supplier of the State . In this sense, it is worth mentioning the ius variandi, the power to impose certain fines (state ius puniendi), all to the extent that it has been, we understand, provided for in the bidding conditions or at least in the corresponding contract and limited to due process.


5. Priority of the regulatory framework:  

The existence of an administrative contract does not per se exclude the application of rules of private law, much less of general provisions and principles of law , since as such, its application is transversal to both public and private law. On the other hand, from the point of view of the regulatory priority , article 1 of Law 19.886 is clear in order to recognize a priority order in the regulations applicable to administrative contracts subject to said rule, providing the preeminence of the Law and of its Regulations without prejudice that "the rules of public law and, in default of those, the rules of Private Law will apply to them." In other words, the public procurement regulations itself enshrine the full application of other provisions of public law and private law, and the application of general principles of law , such as good faith , reparation of the damage caused, exception of unfulfilled contract , etc.

How do public procurement and contracting work in Chile?
The Public Procurement and Contracting System in Chile is structured on the basis of suppliers and public bodies demanding goods and services, who converge in an electronic system called the Purchasing Portal , administered and managed by the Directorate of Public Procurement and Contracting (Chilecompras ) , a decentralized public service of the State Administration and linked to the President of the Republic through the Ministry of Finance. The aforementioned Purchasing Directorate advises public bodies in the planning and management of purchasing processes, both individually and through the signing of Marcos Agreements , not being responsible for their regularity, since it assumes a coordinating role and system administrator , with responsibility for both the bidding process and the execution of the contract falling on the bidder-applicant entity for the good or service.


On the other hand, Chilecompras permanently issues instructions called guidelines on good practices in public procurement , especially instructing bidding services . Likewise, the Procurement System has established the existence of an Official Electronic Registry of State Suppliers (Chileprovederos) , which includes all those suppliers that after a certification process are enabled to contract with the State , this not being a requirement indispensable, even though it is increasingly recurrent that it is required to hold said condition, at the time of the subscription of the respective administrative contract. Thus, Chilecompras , stands as the public entity in charge of administering and coordinating an electronic site that allows requesting bodies for goods and services to enter their requests or requirements for the acquisition of goods or services to the electronic portal ( www.mercadopublico.cl ), These requirements are manifested in the bidding rules ( administrative and technical ) that determine a transparent bidding process , which as such begins through the call, contained in the respective administrative act, by which the bidding entity communicates through the portal of purchases the opening of the tender , in front of which, the bidders of said goods or services can make queries , which are duly answered, all with the aim that within a pre-established period, both technical and economic , accompanying the respective guarantee ballot of seriousness of the offer.


Once the offers have been electronically entered, the administrative background is generally validated, and then the technical and economic evaluation in order to choose the contractor who made the best offer, both economically and technically, following the weighting criteria set in the bases. Once the co-contractor has been chosen by the public entity requesting the good or service, the electronic award is made through the electronic portal, which must be accepted by the winning provider. Verified electronic award, it is possible that the procuring entity issued the administrative act formally award which will result in an adjudicatory resolution, which will give way to the signing of the contract corresponding time after which replacement ballots will be verified guarantee (delivering the ballot of faithful compliance), and the material execution of the corresponding contractual instrument will begin .

 

How is the challenge regarding defects in public procurement procedures carried out?
Regarding the possibilities to challenge a bidding procedure against a certain vice, the Procurement Law is generous by providing a special challenge mechanism through the Public Procurement Court , dealt with extensively in title V of Law 19.886 , without prejudice to the powers of the ordinary courts and, of course, to the tuition of the Office of the Comptroller General of the Republic , all organs of jurisdictional and administrative control .


i. The Court of Public Procurement or pre-contracting. It is a special jurisdictional body competent to hear actions to challenge illegal or arbitrary acts or omissions that occurred in the contracting processes governed by the Procurement Law , and whose competence extends between the approval of the bidding conditions and the award. , both inclusive. Indeed, given its competence in the procedural iter, it has been called the Administrative Pre- Contracting Court from the moment it is not called to know of acts or omissions that occurred during the execution of the contract, but occurred prior to it. Its procedure is contained in article 24 and following of the Law and basically the filing of the challenge action is important , within a period of 10 days from the fact that the defect has been taken into account (excluding holidays), then the court proceeds to verify the admissibility of the challenged action and officiate the bidding body to report, and may order the suspension of the bidding procedure . Then if you estimate it, you can open a test term and finally solve. A special appeal is brought against his judgment before the respective Court of Appeals .

ii. The Comptroller General of the Republic. Until before the establishment of the Court of Public Procurement, the superior entity for the control of the legality and / or legality of public actions - was a recurring venue for hearing claims filed against bidding processes and administrative contracting . However, even though at present the jurisdiction lies in the aforementioned Contracting Court , given the limited scope of its jurisdiction from the point of view of the procedural iter, it continues to be a recurring venue, especially in the case of defects related to faults probity in contracting or, occurring in the period between the award and the signing of the respective contract, being challenged by means of trying to compromise the reasoning when the administrative decisions or acts that contain the award are subject to taking of reason , or even being exempt, through complaints from individuals regarding possible defects, exercising their power of subsequent control. In any case, it is worth saying and bearing in mind that the Comptroller by express mandate of its organic law cannot hear matters of a litigious nature, distilling its competence in ordinary justice.


iii. The Ordinary Courts of Justice. As it will be possible to notice, the ordinary courts of justice are actually the competent court to hear claims against the execution, fulfillment and termination of a contract , considering its jurisdictional fullness, since once the corresponding contractual instrument has been signed, The Contracting Court is devoid of its competence, so they will hear the demands for forced execution and resolution with compensation for damages arising in the framework of administrative contracting. The processing procedure will depend on the action deduced, according to the general rules provided in the Code of Civil Procedure , being delivered to the corresponding recursive regime . Consequently, as the choice of the challenge mechanism will be noted, as well as the jurisdictional seat before which the corresponding claim regarding public procurement will be filed, they will ultimately depend on factors such as the moment in which the contested act or omission is verified, the nature of the matter, the claim of the affected party and the type of contract , such evaluation being imperative in order to choose the most suitable and appropriate route for the specific case.

Wolfenson Abogados provides legal advice specialized in administrative contracts, with lawyers specialized in public procurement.

Links of interest on Public and Administrative Procurement :

one.- Administrative Procedures Law (Law No. 19,880)

2.- Organic Constitutional Law of General Bases of the State Administration (Law Nº 18.575)

3.- Chile Purchase

4.- Court of Public Procurement

Wolfenson Lawyers. Chile Law Firm.

If you need more information and legal advice regarding public procurement, we invite you to contact our lawyers in Santiago. We are located at Avenida Apoquindo 2930 in the commune of Las Condes, Santiago de Chile.

Wolfenson
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Av. Apoquindo 2930 Las Condes, Santiago.
Email. contacto@wolfenson.cl  Phone. +56 2 2933 0384  Phone. +56 9 9884 1289