Public procurement offers investors a vast field of opportunities to expand their business and participate in projects with governmental entities. However, investors must have in-depth knowledge about the different types of contracts and how each contract can affect investment strategies. Nevertheless, understanding and accepting that challenge can lead to a controlled risk business with outstanding value.
Types of Public Procurement in Panama
According to Article 56 of the Unified Text of Law 22 of June 27, 2006, ordered by Law 153 of 2020, which regulates public procurement, these are the types of open procedures to select contractors.
Minor contracting
This method facilitates the quick purchase of goods, services, or projects for a maximum value of fifty thousand balboas (B/50,000.00) with few formalities and compliance with the contracting principles established in the law.
Public Tender
Price is crucial in selecting contractors in this procedure as long as all conditions and technical requirements specified in the statement of objections are met. This process applies for contracts exceeding fifty thousand balboas (B/50,000.00)
Best Value Tender
It is a contractor selection process that a state entity can carry out when the complexity of the good, service, or project to be acquired requires it and the cost of contracting exceeds five hundred thousand balboas (B/.500,000.00).
During this process, the criteria specified in the statement of objections will be evaluated in depth. The contract is awarded to the bidder that achieves the highest score based on the established evaluating system and complies with the minimal essential requirements stipulated in the statement of objections.
Tender for the framework agreement
This procedure is lead by the General Directorate of Public Procurement which must choose one or more bidders based on the cost-benefit criteria of the goods and services and establish a contract called a framework agreement with the selected bidders. This framework agreement lasts a maximum of two years and is extendable for one additional year.
Reverse auction bidding
It is a competitive procedure involving an exchange of offers, bidding and rebidding, to achieve the lowest possible price for a good, service, or a work for the benefit of the institution or institutions involved, within a set period.
Auction of public properties.
It is the method that the State can use to sell o lease its properties through public auction, regardless of their monetary value.
On the other hand, the Exceptional Procurement Procedure and the Special Procurement Procedure are among the procedures to contract directly with the State.
Exceptional Procurement Procedure
Although the open procedure continues to be the first option of public entities to formalize a public procurement, it is essential to bear in mind that when facts or circumstances occur for which the celebration of any of the procurement selection procedures to which we have referred, put at risk the satisfaction of the requirements and interest of the State, the entities may use the exceptional procurement procedure as long as they carry out the correspondent market research and receives at least three proposals that must comply with the specifications provided by the institution.
Special Procurement Procedure
This procedure may only be carried out under the assumptions established in Article 84 of the Unified Text of Law 22 of 2006, ordered by Law 153 of 2020, which refers to inter-institutional contracts. These existing contracts constitute simple extensions of leasing contracts of goods or services, duly countersigned when the original contract is a maximum of three hundred thousand balboas (B/300,000.00). Contracts for legal services whose amount does not exceed three million balboas (B/3,000,000.00) or the equivalent in foreign currency to attend lawsuits abroad, including arbitration centers in which the Panamanian State is a party.
Special procedure for emergency procurement
It is applied in cases requiring a quick response, such as natural disasters or health crises declared by the Cabinet Council. This procedure requires that the resolution specify the total amount approved for the particular contract and the deadline to accomplish it.
In this case, speed and efficiency are crucial. The supplier must be able to respond immediately to the State’s urgent needs. Thus, it must be able to offer the goods, services, or projects as soon as possible. This type of contracting requires excellent time management and well-system knowledge to act effectively when every second counts.
Key strategies to participate as an investor
In Panama, bidding in the different types of public procurement requires considering that these are long-term strategy alliances between the public sector and private enterprise. It implies a comprehensive commitment and a long-term vision for the investor.
Financial, technical, and operational capacities are deeply analyzed, meaning they must have well-structured projects that can respond efficiently and effectively to the State needs.
Monica Castillo Arjona Law Firm offers legal, accurate, and strategic advice to investors seeking to enter Panama´s complex and competitive public procurement market.
Proper preparation, in-depth knowledge of the game’s rules, and expert advice can make your incursion into public procurement successful and sustainable and provide a useful asset to society.
