In brief
On 30 April 2021, through Ministerial Resolution 141-2021-EF/54, the Draft Law on State Contracts (LCE in Spanish) was published in the official journal El Peruano for a period of 15 days so that the general public can present opinions, comments and suggestions through the link: https://forms.gle/wGpRQbjLGV1KqMYV7.
From the revision of the Draft LCE, there are important differences with respect to the Draft General Law of the Supply Chain that aroused multiple comments or questions. The following are the more salient points in the Draft LCE:
- The State Procurement Monitoring Agency (OSCE in Spanish) is maintained as a public procurement actor.
- The ceiling for direct contracting, which was intended to be increased to 15 Taxation Units (UITs), remains at 8 UITs. We believe that this is right, since it promotes competition and allows entities to contract, through a selection procedure, amounts that are important and that therefore should be carried out in a transparent manner and with a plurality of bidders.
- The option for foreign institutions to provide the training service of interest for direct recruitment remains. The Draft LCE sought to exclude them, limiting services to national institutions.
- The percentage of participation in legal entities is maintained at 30% in order to create impediments, which was intended to reduce the participation by 5%.
- It does not provide for the creation of the Registry of Contracting Entities or the National Registry of Public Purchasers, which contradicts the government's policy of simplifying procedures.
- It does not limit the possibility of disputing, through appeal, "the evaluation of the offer of the one who questions the result"; however, it requires precision to avoid improper interpretations.
The Draft LCE derives the regulation of multiple new tools or mechanisms to the regulation (for example, the employment of collaborative methodology for information digital modeling for construction; the execution under fast-track and standard engineering contracts for international use; centralized purchasing; public procurement of innovation; among others), so it will be necessary to wait for the Draft to go into this matter in more detail.
Without limiting the foregoing, we share with our clients the comments we have made to the text of this Draft and that we presented to the Ministry of Economy and Finance:
Article 4
We consider it appropriate that it be established that Contracting Entities implement "risk management" to identify and manage risks that affect the purpose of the procurements under their responsibility. However, it is pertinent that through the Regulations or directives, greater guidelines be developed on how to apply such management and monitor whether it is carried out effectively, so that its reference does not become a mere formality or seeks to justify arbitrary actions by public entities in favor of risk management.
Article 7
It does not mention, among the cases excluded from the scope of application of the LCE, the contracting of the Peruvian state with other states; however, this is inferred from the scope of the Third Final Complementary Provision of the Draft. What this Provision omits is to expressly mention whether these procurements will be subject to supervision by the OSCE, as the current LCE does, in addition to the fact that information on the performance of the respective contract or agreement must be forwarded to this body. We consider it appropriate to maintain the competence of the OSCE to monitor these procurements, or to indicate whether this is the responsibility of the Directorate-General for Supply.
Article 10.3
The competence of the OSCE to interpret the public procurement rules in a binding manner (Opinions) and to issue Pronouncements on observations to the bases and integration should be maintained, in order to ensure specialization and impartiality.
Articles 16.2.a) and 59.1
In article 16.a) of the Draft is indicated, as a function of the State Procurement Tribunal, 'a) Resolution of disputes relating to the result procurement procedures'. Article 59.1 of the Draft, however, rightly states that, through an appeal, the acts dictated during the course of the procedure up to before the conclusion of the contract, and not only the result of the procedure, may be challenged.
We therefore suggest that in Article 16.2.a) of the Draft, the wording of such a function in the current LCE be maintained, which establishes: "Resolve, if appropriate, disputes that arise between Entities, participants and bidders during the selection procedure and the procedures for implementing or extending the validity of the Electronic Catalogues Framework Agreement, maintaining consistency between their decisions in analogous cases."
Article 16.4
It seems relevant to us that, for the sake of uniformity of the pronouncements of the different chambers of the State Contracting Tribunal, the possibility of adopting full chamber agreements is maintained, which constitute precedents of mandatory observance through which the rules established in the LCE and its regulations are interpreted in general, as well as the express obligation that the resolutions issued by this collegiate keep criteria of predictability, as is currently included in Article 59 of the current LCE.
Article 24.2
This provision refers to a term that is unprecedented in public procurement law. Neither is it mentioned elsewhere in the Draft: juries, as a collegiate body other than (selection) committees. We understand that their scope of action and roles will be duly regulated in the regulation.
Article 27
It is necessary to specify that the validity of the registration of the National Registry of Suppliers remain undetermined.
Article 28
- Impediment a.: Type A authorities include the vice presidents of the republic, who are barred from any recruitment process at the national level. In a recent ruling of the Constitutional Court in Case File. 03150-2017-PA / TC, it was pointed out that this impediment, for any process, is only justified when the vice presidents assume the presidency of the republic. Otherwise, their scope of influence does not extend over the entire state apparatus. Therefore, we consider it pertinent that the wording of the impediment be adjusted to indicate that it arises when such authorities assume the office of president of the republic.
- Impediment g.: We consider it correct that in the case of the relatives of the authorities, the impediment only reaches the scope of the Entity to which the corresponding authority belongs, and while it exercises the position. This encourages the participation of suppliers in the public procurement market.
- Impediment k.: It is configured in case of subjects "hired" to intervene in the recruitment process, which would allow subjects who have provided free services to the Entity for the determination of the technical characteristics of the contract, participate in the process despite having inside information. It is appropriate to maintain a broader scope, which does not refer specifically to a procurement, but to the effective intervention of the subject in the procurement process.
- Subparagraph m.: It should be detailed to those who are considered as "members" for the purpose of the configuration of the impediment, since there is no explanation about which subjects qualify as such. It should be specified whether the term "members" refers to those mentioned in subparagraph n), that is, legal representatives, members of the administrative bodies, partners, shareholders, stakeholders or holders.
- Subparagraph q.: The mere fact of absorbing or merging with an impeded legal person without establishing an illegal intention is established as an impediment, as it would be to try to circumvent the impediment. In our opinion, this violates the constitutional right to freedom of enterprise of the supplier on whom the impediment falls and on who wishes to absolve it and ignores the effects of these forms of corporate reorganization, which determine the extinction of the legal person absorbed.
- Subparagraph l.: We consider it extremely harmful for suppliers that the failure to pay the fine imposed by the State Procurement Tribunal constitutes an impediment "until the fine is paid," without any time limitation. Under the Draft, the fine has increased to up to between 10% and 20% of the economic offer or contract (in the current LCE it ranges between 5% and 15%), so that the actual amount of the fine can be extremely high, to the point that payment is determined by the defunding or supplier's loss of liquidity. Thus, there may be cases where the amount of the fine is so high that the supplier is never able to pay it, which would amount to permanent disqualification, contrary to the principle of reasonableness and "non bis in idem." Thus, we consider that the provision contained in the current LCE that establishes a period between three and 18 months of suspension of the rights of the supplier to contract with the state in case he fails to pay the fine be maintained.
Article 43
In general, reference is made that this regime will collect Competitive Procedures, but it does not identify what these would be or under what object of contracting they would be used, which should be provided for in the LCE in accordance with Article 76 of the Peruvian Constitution.
We are also of the view that the LCE should include a minimum description of the scope of the new mechanisms for competitive dialogue and long-term contracts.
Article 60
We believe that the LCE must include the expiration periods to submit a dispute to the mechanisms contained in the contract (conciliation and/or arbitration), and not leave this norm to the regulation, which has no status as a law and whose modification requires minor formalities.
Article 61
- Subsection 61.1: This indicates that the Contracting Tribunal sanctions residents or supervisors of work for the sanctions listed therein, but only the sanction of subparagraph e) is applicable to them.
- Sanction d): It is pertinent to clarify what is referred to when indicating "when the subcontractor does not comply with the requirements that enable it to contract with the State directly" as an infringement. The subcontractors do not contract directly with the Entity but with the supplier of the Entity so it is not understood what this infringement refers to, especially because the project does not provide for regulation on subcontracts. It should be noted that the wording of this infringement is different in the explanatory statement, which does not refer to the phrase directly.
- Subsection 61.2: For contracts under 8 UITs, the infringement should not apply for "causing the Entity to terminate the contract," since these are contracts excluded from the scope of application of the LCE, being that generated costs would be higher than the amount of the contract for submitting the dispute of contract resolution to conciliation and arbitration, with the risk of being disqualified from contracting with the state for a procurement not subject to this regime.
- Subsection 61.3: By provision of the General Administrative Procedure Act, the rule of attribution of responsibility is subjective, which is violated by imposing strict liability as a basis.
- Subsection 61.4: There is a new approach that includes much more burdensome sanctions for suppliers that have no justification in the Statement of Reasons of the Draft, do not correspond to the principle of reasonableness, and are definitely contrary to the very purpose of the LCE since they will not allow to achieve the value-for-money approach by discouraging the greater concurrence of suppliers that generate competition in the contracting processes and better offers.
Subparagraph a): The percentage of the fine is increased to between 10% and 20% of the amount of the economic offer or contract (it currently ranges between 5% and 15%). The general rule is that the fine (no longer temporary disqualification) does not in any way support the increase in the percentages for its determination.
Subparagraph b): A compound penalty has been created with temporary disqualification, which includes the payment of an amount between 10% and 20% of the amount of the economic offer or contract as "civil reparation". This sanction openly violates the principle of "non bis in idem" because in all fairness, a penalty of disqualification is applied together with a fine (even having the same percentages) and only for the fact of committing a second offense (not necessarily for the same conduct). It does not correspond to the law to assess an amount for reparation (without requiring that the damage be proven and quantified), even less so when the same article indicates that the penalties provided for are independent of the civil and criminal liability determined in the corresponding way.
Subparagraph c): It indicates that the definitive disqualification is applied by the "third infringement" and not necessarily by the same conduct. Not all conduct classified as an infringement is equally serious, so it is not understood why such an extreme position is taken when supposedly, greater openness in the public procurement market is being sought.
Subsection 61.5: We suggest keeping the penalty level below the minimum, as permitted by the current LCE.
Final Second Supplementary Provision
The inclusion of a privileged body to hear appeals and disputes against the decisions of the OSCE and the Contracting Tribunal affects access to justice, since it prevents recourse in really urgent cases to obtain legal protection, arguing the "equally satisfactory way." In many cases, the need for legal protection and an injunction against court decisions that may result in the nullity of a contract award, for example, can be extremely urgent.
First Supplementary Amending Provision
We consider appropriate to focus on the professionalization of activities of "public buyers" (logistics personnel) and to resort to international technical cooperation agencies or multilateral agencies and, where appropriate, that the universities and academic institutions in charge of professionalization be duly selected and have an operating license from SUNEDU.
This professionalization should be differentiated from the current certification process, which basically applies a knowledge test and where they are asked to show that they have taken courses without identifying the training needs and the type of course that is important, beyond the difficulties that were evidenced by the expiration of the term of the certifications that were granted, which led to the OSCE to have to extend its validity. It is important that the continuity of procurement processes by entities should not be affected by such procedures.
Second Transitional Supplementary Provision
The rule in force at the time of the call for "selection and/or recruitment procedures" is established. However, we understand that recruitment procedures do not necessarily have a call-in date, only selection procedures. To avoid confusion, we suggest retaining the wording of the provisions of the current LCE, which states that: "The selection procedures initiated before the entry into force of this rule are governed by the rules in force at the time of its call."
We trust that this information will be relevant to you. If you need to delve into the subject, please contact us.
