According to the World Bank, around 90% of companies are micro, small, and medium-sized enterprises (MSMEs), representing half of employment opportunities worldwide. They are 90% of the private sector and 30% of national production in Panama. Thus, the Panamanian government recognizes the vital role of these businesses in the national economy and has implemented various legal measures to encourage their participation in public procurement.
Many small business owners dream of signing a public contract, but the complexity of the bidding process can be discouraging. However, it is possible to face this challenge by seeking the advice of lawyers for public tenders in Panama and the legal framework that supports Micro, Small, and Medium-sized Enterprises (MSMEs) in public procurement procedures.
Legal framework to support MSMEs
Law 22, 2006, of Public Procurement in Panama, and its later revisions constitute the backbone of the legal framework that supports the participation of MSMEs in public tenders. This Law includes several provisions designed to level the playing field for smaller enterprises.
For example, article 57 of the Consolidated Text of Law 22 of 2006 ordered by Law 153, 2020, states that in minor contracts, “entities must preferentially select micro and small businesses, as long as they comply with the requirements and demands of the statement of objections and the proposed price is not greater than 5% compared with the lowest price proposal presented by non- MSMEs.
Likewise, article 10 of the legal framework states that “the State will promote the competitive participation of micro, small and medium-sized enterprises in certain acts of selection of contractors carried out by public institutions.”
To qualify as MSMEs, be aware of the following, “micro and small enterprises must be classified as MiPymes (MSMEs in English) within the Bidders Registry of the Electronic Public Procurement System “PamamaCompra” so that the bidding entity can verify your condition following the law” according to article 57.
Challenges faced by MSMEs
Despite these legal advantages, MSMEs still face significant challenges when it comes to public bidding.
- Complex documentation: The documentation required for public tenders can be overwhelming for small businesses with limited administrative resources.
- Financial guarantees: Many tenders require substantial financial guarantees that MSMEs may take time to secure.
- Payment deadlines: Public administration payment cycles can be extended. It can cause liquidity problems for small businesses.
- Technical specifications: Some tenders have technical specifications which favor larger, more consolidated companies.
- Lack of information: MSMEs need to keep informed about upcoming bidding opportunities and changes in contract regulations.
Achieving success thanks to persistence
Suppose you want to participate in the vast world of public procurement or have previously intended to participate in a public tender; you have probably encountered several mishaps, and if you are reading these words, it is because you know the excellent opportunity these contracts can offer for your company.
The legal framework supports the participation of MSMEs in public tenders. However, getting into this complex landscape requires persistence, strategic thinking, and, often, expert guidance and the possibility of forming alliances with larger companies to participate in public events of significant amounts. MSMEs can compete successfully by understanding the legal advantages available and applying strategies to overcome the most common challenges.
The advice of Monica Castillo Arjona- Law firm, lawyers for public tenders in Panama, can provide valuable information on the nuances of the bidding process to apply for larger tenders and obtain public contracts.
Our advice seeks to help you understand the legal landscape, build capacity, and constantly improve your approach. Having the right strategy and support, MSMEs can transform the challenges of contractor selection procedures into a significant opportunity for success.
