In Panama, similar to other legal systems, public procurement is governed by a set of laws, regulations, principles, and governmental entities that regulate and supervise the before, during, and after of any activity that requires the involvement of a non-state third party.
What is public procurement in Panama?
Public procurement refers to forming agreements between a government entity and a private party (such as a company or individual). The contracts are predominantly performance-based and relate to goods, services, or works of essential public use or benefit.
In Panama, the Public Procurement Law No. 22 of 2006 establishes the general regime of administrative contracting and, according to its article 1, must be complied with by:
“…the Central Government, autonomous and semi-autonomous entities, municipalities, community boards, financial intermediaries and anonymous societies in which the state owns 51% or more of its shares or assets, as well as those that are made with public funds or national assets for:
- The acquisition or leasing of goods by the State.
- The execution of public works.
- The disposition of State property, including its leasing.
- The provision of services.
- The exploitation or administration of real estate.
- The concessions or any other contract not regulated by special law.”
The only government entity in charge in Panama is the General Directorate of Public Procurement (Dirección General de Contrataciones Públicas), which regulates, interprets, supervises, and advises the procedures for selecting contractors carried out by state entities. It is also responsible for managing the PanamaCompra Electronic System, which contains the information the Panamanian public sector requires on goods, works, and services.
As a general rule, public procurement contracts are awarded through a transparent and fair tendering process that offers equal opportunities to interested parties. However, it is also possible to contract with the State directly through an exceptional procedure and a particular contracting procedure.
The open tender procedure consists of the following stages within the essential phase of the selection procedure:
1. Publication of the invitation to tender.
2. Reception of proposals.
3. Review of bids.
4. Award of the contract.
5. Formalization of the contractual stage.
Interested parties must meet legal and technical prerequisites and demonstrate their financial stability to be eligible for a contract.
The role of SMEs
Law 22 of 2006 and Law 153 of 2020 on Public Procurement and its subsequent revisions establish a legal framework that favors MSMEs (micro, small, and medium-sized enterprises) in procurement procedures for minor purchases, giving priority to these companies in minor contracts.
These contracts are made to purchase goods, services or projects for a maximum value of fifty thousand balboas (B/.50,000.00). The entity that makes it must give priority to companies registered as MSMEs within the Register of Bidders of the Electronic Public Procurement System ‘PanamaCompra’, provided that they meet the requirements of the statement of objections and with a proposed price no greater than 5% to the lowest price proposal presented by a non-MSMEs company. The one that offers the lowest price must be chosen among the MSMEs.
The value of legal representation
In Panama, understanding and maneuvering through the complexities of public procurement can be complicated and challenging. Given the significant consequences at stake, minimizing the potential for error is crucial. Therefore, having a knowledgeable and experienced lawyer on your side is an invaluable asset.
It is imperative to obtain legal assistance for the following reasons:
Navigating the regulatory landscape effectively
An experienced lawyer with a thorough knowledge of Panamanian procurement law and regulations can deftly navigate the intricate legal terrain, ensuring compliance and providing advice on optimal methodologies. They can also inform you of those aspects of the law that may negatively affect your contract.
MCA Law Firm’s specialized advice can guide companies through the bidding process, guaranteeing that the appropriate documentation is submitted, deadlines are met, and criteria are satisfied to increase the probability of successful bids.
Our lawyers have the necessary knowledge to review contracts, identify potential risks, and negotiate advantageous terms and conditions. These experiences are particularly crucial when dealing with contracts worth millions of dollars, as they mitigate the probability of future disputes or legal ramifications.
Dispute Resolution and Litigation
Contracting and execution may be the subject of disputes. Law professionals can offer advice and representation in any situation, including litigation, mediation, arbitration, or negotiation.
Our team has extensive experience in contentious-administrative matters. They can objectively, technically, and ethically advise you on your claims.
Risk management and regulatory compliance are areas in which MCA Law Firm’s legal professionals offer advice by ensuring that contracts conform to the object and conditions initially agreed upon and that their execution meets legal obligations.
In Panama or any other jurisdiction, obtaining legal advice for public procurement is a necessity, not a luxury. As your lawyers, we are your ally, advisor, and advocate. We will help you understand the complexities of public procurement, minimize the likelihood of non-compliance, and optimize the benefits of any public contract you enter into.
Emblematic Public Procurement Projects in Panama
Some of these projects that have had a significant impact on Panama’s economic and social development:
Panama Canal Expansion:
This megaproject, completed in 2016, is perhaps the most important. It involved the construction of a third set of locks, allowing the passage of larger vessels and significantly increasing the canal´s capacity. The project was carried out through an international public tender process.
Panama Metro:
The construction of the first line of the Panama Metro inaugurated in 2014, was a significant project that was created to improve public transport in Panama City. The public procurement process for this project included tenders for the construction, train supply, and operating systems.
Coastal Belt:
This urban infrastructure project transformed Panama City’s waterfront. It includes an avenue, recreational areas, and public spaces. The Coastal Belt has been developed in several phases, each carried out through public procurement processes.
