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Legislative framework

Relevant legislation

What is the relevant legislation regulating the award of public contracts?

The main regulation applicable to the award of public contracts is Supreme Decree 0181, 28June 2009 (Supreme Decree 181). Although this regulation is hierarchically inferior to a law, given the current legislative strategy of the Bolivian administration, it was the fastest and most efficient way in which to standardise public procurement procedures.

Given the many limitations included in Supreme Decree 181 (such as the limitation on awards of public procurement contracts to foreign companies and the limitations on negotiations of certain types of contracts), the Bolivian government issued a series of other regulatory supreme decrees whereby certain ambiguities were corrected. An example is Supreme Decree 26688, modified by Supreme Decree 2030, which provides that public entities will be able to award public contracts to foreign companies when such awards are justified through legal and technical reports, and as long as such goods and services are not available in the domestic market and offers cannot be received in the country. Before Supreme Decrees 26688and 2030, foreign companies wishing to take part in public procurements had to be incorporated in Bolivia.

In addition to Supreme Decree 181, the government created a series of productive public entities (PPEs) in economic areas into which the current administration was planning to venture, such as the export of almonds and almond-based products, the sale of paper and carton-based products, and the creation of a state bottling company. These PPEs are regulated and supervised by the Service for the Development of Productive Public Companies (SEDEM). The creation of PPEs and SEDEM gave the government an opportunity to expand the application of Supreme Decree 181and take foreign negotiation and contractual principles into consideration during public procurement procedures.

Sector-specific legislation

Is there any sector-specific procurement legislation supplementing the general regime?

Several sectors have been classified as ‘strategic development enterprises’. Such enterprises include:

  • the national oil and gas company;
  • the national electricity company;
  • the Bolivian mining corporation; and
  • the national telephone company.

Such strategic development enterprises have their own sector-specific procurement regulations, which, following the general principles of the general procurement norms (Supreme Decree 181), may have different requirements and exceptions.

In addition, as stated above, the government created a series of PPEs, which are currently dedicated to the following areas:

  • milk;
  • carton-based products;
  • sugar;
  • almonds and almond-based products;
  • cement;
  • bottles; and
  • any other public entity that the government believes would be beneficial for the state.

Each of these companies is supervised and developed by SEDEM. In order to differentiate public procurement procedures applicable to every other public entity from PPEs, the government issued a special regulation for SEDEM and Supreme Decree 2030, which allows PPEs to contract foreign companies for the provision of goods and services, as long as such goods and services cannot be procured within Bolivia and are beneficial for the state.

International legislation

In which respect does the relevant legislation supplement the EU procurement directives or the GPA?

Bolivia is not a part of the EU procurement directives or the World Trade Organization’s Agreement on Government Procurement (GPA). In this regard, it is worth mentioning that Supreme Decree 181provides principles that are manifestly the opposite to the governing principles of the GPA, mainly the difference in treatment between national and foreign companies, and the fact that dispute settlement may only be carried out pursuant to Bolivian law and generally before Bolivian tribunals.

Proposed amendments

Are there proposals to change the legislation?

No, there are no proposals to adapt the current legislation to comply with EU law requirements or to those of the GPA.

Applicability of procurement law

Contracting authorities

Which, or what kinds of, entities have been ruled not to constitute contracting authorities?

Law 466, also called the Law of Public Companies, provides the conditions under which public or mixed (a combination of both state and privately controlled) entities or companies may be called ‘public entities’.

Article 1of Law 466specifies that, according to article 248of the Bolivian Constitution, the executive power in Bolivia has the faculty to create and incorporate public entities and companies. In this regard, any state-owned enterprise, mixed enterprise, joint venture and intergovernmental state enterprise, or any other legal entity in which the Bolivia state takes part and carries out its activities within a state-private level, is considered a public entity under Law 466’s spectrum.

As a consequence, any company or entity not controlled, or that does not have the participation of the Bolivian state, is not considered a public entity and as such, may not fall within the standards applicable to contracting entities included in Supreme Decree 181, described above, for public procurement procedures.

Contract value

Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?

As long as the procurement is carried out by a public entity, no contract and no value is excluded from public procurement conditions.

The threshold values are divided as follows:

  • minor procurement: one to 20,000bolivianos;
  • national support for production and employment: 20,001to 1million bolivianos;
  • public bidding: from 1,000, 001bolivianos;
  • contracting by exception: unlimited amount;
  • emergency contracting: unlimited amount; and
  • direct contracting of goods and services: unlimited amount.

Amendment of concluded contracts

Does the legislation permit the amendment of a concluded contract without a new procurement procedure?

Supreme Decree 181allows for the modification of concluded contracts without the need of a new procurement process the following conditions are met:

  • the modifications are supported by technical and legal reports and are contained in a modification contract;
  • the modifications’ costs must not exceed 10per cent of the principal amount; and
  • there are a maximum of two modifications, provided they do not exceed the term of the main contract.

In case of construction contracts (EPCs), modifications may be carried out through change orders; again, such orders may only be applicable when the required change involves a modification of the price of the contract or its term, without giving rise to the increase of unit prices or the creation of new items.

Change orders must be approved by the entity responsible for monitoring the work and may not exceed 5per cent of the principal contract’s amount.

Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?

There have been many cases regarding modification contracts. However, no case law amends the regulations applicable to concluded contracts or discusses modifying contracts in depth.

Privatisation

In which circumstances do privatisations require a procurement procedure?

Since the current administration reached office in 2009, no privatisation procedure has been concluded. The applicable regulation to the subject at the moment only focuses on expropriation and nationalisation of private entities.

Public-private partnership

In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?

At the moment, there is only one very broad PPP supreme decree applicable in Bolivia that regulates the general content required in future Joint Venture Strategic Alliance Contracts, but it does not yet provide anything about procurement procedures.

However, Supreme Decree 3469provides suggestions and clues that public procurement will be required for PPPs of strategic sectors (see question 2), where the Bolivian state will need to have a majority participation, and, as a consequence, will need the use of Law466 (Law of Public Companies) and Supreme Decree 181.

Advertisement and selection

Publications

In which publications must regulated procurement contracts be advertised?

Procurement contracts must be advertised in the official state website called the system for public contracting (SICOES).

Participation criteria

Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?

Supreme Decree 181does provide for certain specific criteria when contracting for tender procedures. Based on a publication by the Ministry of Finances on 29June 2006, the day on which Supreme Decree 181was issued, this regulation provides convenient criteria for contracting, but also incorporates mechanisms of social control. Among the modifications, article 14provides that the reference price will be public, and included into the Basic Document of Contracting (DBC). This will avoid the discretionary use of information and, therefore, of corruption.

Supreme Decree 181provides criteria and parameters that limit certain contracting procedures. Another example of these types of limitations is article 30, which provides that certain conditions will be given an additional margin when grading. In this regard, companies with participation of Bolivian partners holding more than 51per cent of the company get a 5per cent margin increase when competing against other international companies.

In conclusion, Supreme Decree 181does provide for a series of limitations when organising public tender procedures and most of such limitations are based on the preference of contracting Bolivian nationals over international competitors.

Is it possible to limit the number of bidders that can participate in a tender procedure?

Article 59of Supreme Decree 181states that an indeterminate number of bidders may take part in a tender procedure. Generally, when there are less than three bidders, the tender may be declared deserted and a new tender should be convened, with bidders that took part in the first tender invited to bid again.

Regaining status following exclusion

How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?

Article 43of Supreme Decree 181provides for problematic conditions in tender procedures. In this regard, the Article divides such conditions into two categories: those that cannot be regulated and those that, after a certain amount of time has elapsed, may be regulated.

The first category includes the following situations:

  • having unresolved debts with the state;
  • executed sentences prohibiting the bidder to exercise trade activities;
  • executed criminal sentences regarding crimes included in Law No. 1743of January 1997, which approves and ratifies the Inter-American Convention against Corruption or its equivalent crimes provided in the Bolivian Criminal Code;
  • bidders that are associated with consultants that advised in the elaboration of the content of the DBC;
  • bidders declared as bankrupt; and
  • bidders whose legal representatives or whose shareholders or controlling partners have a marriage or kinship relationship with the maximum authority in charge of the tender, up to the third degree of consanguinity and second degree of affinity, in accordance with the provisions of the Bolivian Family Code.

The category that allows for the regulation of impediments includes the following situations:

  • former public servants who performed functions in the convening entity, until one year before the publication of the tender, as well as the companies controlled by them;
  • public servants who currently exercise functions in the convening entity, as well as the companies controlled by them;
  • bidders that, after having been adjudicated, have withdrawn from executing the contract, may not participate until one year after the date of withdrawal, except for reasons of force majeure or fortuitous events, duly justified and accepted by the convening entity; and
  • suppliers, contractors and consultants that have had contracts terminated due to causes attributable to them, causing damage to the state, may not participate until three years after the date of the termination, according to information registered by the corresponding entity in SICOES.

The procurement procedures

Fundamental principles

Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?

The relevant legislation specifically states the fundamental principles for tender procedures, providing such principles from the public officer’s perspective.

Independence and impartiality

Does the relevant legislation or the case law require the contracting authority to be independent and impartial?

Supreme Decree 181, which includes every type of public procurement, does provide that public officers in charge of public procurement procedures must be impartial in their decisions. The principle of independence for contracting authorities is not mentioned.

Conflicts of interest

How are conflicts of interest dealt with?

Conflicts of interest are taken seriously within public procurement procedures. This principle is included in article 236of the Bolivian Constitution, that provides that public officials are prohibited from:

  • acting when their private interests conflict with those of the entity where they provide their services;
  • entering into contracts or conduct business with the public administration directly, indirectly or on behalf of a third person; and
  • appointing individuals in public positions with whom they are related up until the fourth degree of consanguinity and second of affinity.

This principle is, in turn, repeated in Supreme Decree 181, which provides that officers in charge of reviewing the bidding participants’ documents may not delegate their responsibility ‘except in cases of conflict of interest’, and article 44, which specifically deals with conflicts of interest by providing that individuals or companies (whether associated or not) advising a public entity in a procurement process, may not participate in the process under any reason or circumstance. However, individuals or companies, and their corresponding subsidiaries, contracted by the convening entity to provide goods, perform works or provide general services, may provide consulting services in respect thereof.

Bidder involvement in preparation

How is the involvement of a bidder in the preparation of a tender procedure dealt with?

In accordance with article 44, any consultant participating during the drafting of the bidding may not take part in such process, under any circumstances. The prohibition is absolute.

Procedure

What is the prevailing type of procurement procedure used by contracting authorities?

The prevailing type of procurement procedure depends on the goods being bought or the service needed.

For example, and given the many restrictions for foreign bidders to take part in national bidding procedures, practise has shown that many specialised services or technological goods are often contracted by means of the direct contracting of goods and services process, which bypasses the bidding phase completely. The reason for this is there are no minimum or maximum amounts to these types of contracting procedures and offices such as SEDEM, so strategic development sectors developed their own regulations that permit them to turn to foreign bidders whenever the specific services or goods that are needed cannot be found in Bolivia.

Separate bids in one procedure

Can related bidders submit separate bids in one procurement procedure?

There is no provision regarding an applicable procedure whenever related bidders submit bids during procurement processes. As a consequence, and given that it is not prohibited, the requirements and conditions applicable are the same as with any other bidder.

Negotiations with bidders

Is the use of procedures involving negotiations with bidders subject to any special conditions?

Supreme Decree 27328of September 2015provides for two types of situations when bidders may negotiate bidding terms with public officials:

  • Small bidding procedures (equal to or less than 160,000bolivianos), in which case, public officers may use negotiation tables and inverse fairs, which consist of fairs organised by public entities and governmental authorities in order to offer their different programmes to possible bidders. In order to be applicable, these types of negotiations may only be for amounts that are less than 160,000bolivianos and may be granted through direct contracting procedures or comparison of prices procedures.
  • Calls for bids based on expressions of interest, which consist of bidding procedures for consulting firms and may only be applicable to amounts equal or more than 800,000bolivianos. The only additional condition is included in article 105of Supreme Decree 27328, which provides that under no conditions may the negotiations be carried out between the bidders, and the entity calling the bid modify the contract.

If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?

Given the difference in prices, each negotiation is applicable to different situations and, as such, they cannot be equally compared. However, and given recent advertising, we could conclude that the negotiation most regularly used in recent practice is the one carried out by means of negotiation tables and inverse fairs.

Framework agreements

What are the requirements for the conclusion of a framework agreement?

A framework agreement is called a ‘basic document for contracting’ (DBC) in Bolivia.

Supreme Decree 181provides one draft DBC that may be adapted by the corresponding entity calling for bids, in accordance with the conditions issued by the maximum executive authority (MAE), and it must include the necessary technical conditions, evaluation methodology, procedures and conditions for the hiring process under which the public procurement procedure shall be based.

Given its importance for public procurement procedures, and with the intent of equalising and making such procedures more transparent, the current administration included a draft DBC to be included in every public procurement of more than 20,000bolivianos. Any modification to this draft must be first informed and approved by the applicable MAE. In consequence, the strength of this document surpasses that of a mere contract, given that its terms are provided by a national regulation, and are very difficult to modify, if at all.

As was previously mentioned, and depending on each procurement process, some aspects of the contract contained in the DBC may be modified by the contracting entity and the adjudicated bidder, as long as such modifications do not exceed 10per cent of the main contract’s price and units.

May a framework agreement with several suppliers be concluded?

Article 24of Supreme Decree 181provides that in cases of technical or economic advantage procurement processes, the contracting of goods and services may be adjudicated by items, lots, tranches or packages, through one single call and framework agreement.

In order to be applicable, the DBC must list and refer to each item, lot, tranche or package, individually.

Only in cases when one of the items, lots, tranches or packages is not awarded is an additional competitive procedure necessary.

Changing members of a bidding consortium

Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?

There are no specific provisions regarding changes in consortia during the course of a procurement process. However, and given the provisions of Supreme Decree 181with regard to the various forms that need to be filled by consortia in order to take part in procurement procedures, we believe that such a change would lead to the rejection of such a consortium.

Participation of small and medium-sized enterprises

Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?

The specific mechanism included to increase the participation of small and medium-sized enterprises in procurement processes is provided by article 31of Supreme Decree 181, which provides that in the procurement of goods and services under the modalities of public biddings and national support for production and employment (ANPE), a margin of preference of 20per cent shall be granted to the price offered for micro and small companies, associations of small urban and rural producers, and farmers.

Regarding the division of contracts into lots, as was previously pointed out, DBCs may be divided into items, lots, tranches or packages, in cases when construction of services require. There is no limit to the proponents who may bid, since each condition would be provided by the corresponding DBC.

With regard to the award of certain items or lots to single bidders, article 24provides that when a bidder submits his or her proposal for more than one item, lot, tranche or package, he or she must only submit one set of legal and administrative documentation, and one technical and economic proposal for each item, lot, tranche or package. As a consequence, there are no limits to the lots a single bidder may beawarded.

Variant bids

What are the requirements for the admissibility of variant bids?

Typically variant bids are not acceptable, and the bidder must present only one bid. The only case in which variant bids may be presented is where there are different items or lots being bid simultaneously, in which case bidders may be allowed to provide as many as they can, provided the DBC allows for various lots and items within the procurement process.

In this regard, bidders must adjust their proposals to the DBCs published by the bidding authority at SICOES.

Must a contracting authority take variant bids into account?

During the presentation stage of procurement procedures, article 27of Supreme Decree 181provides that public officials may declare a bid asvoid:

  • if no proposal had been received;
  • if all economic proposals exceed the reference price; or
  • if no proposal complies with what was specified in the DBC, amongothers.

As a consequence, we can conclude that if a variant bid is filed that does not comply with the DBC, then such bid will be declared void.

Changes to tender specifications

What are the consequences if bidders change the tender specifications or submit their own standard terms of business?

The applicable regulation provides that whenever bids do not comply with the conditions of DBCs, where the tender specifications and technical standards are included, the procurement process must be declared void.

Award criteria

What are the award criteria provided for in the relevant legislation?

Article 23of Supreme Decree 181provides that the following methods of selection and adjudication will be considered for procurement procedures of goods and services:

  • quality, technical proposal and cost;
  • fixed budget;
  • lower cost; and
  • lowest evaluated price, according to what is established in eachDBC.

Each of these adjudication conditions are in turn supported by preference margins, which range from products and services created and provided in Bolivia, to a preference margin for companies where less than 49per cent is owned by foreign companies or individuals.

Abnormally low bids

What constitutes an ‘abnormally low’ bid?

There is no definition in Bolivian law of what constitutes an ‘abnormally low’ bid. However, looking into published DBCs, abnormally low bids do not have a specific amount but do include a verification procedure, which includes a comparison between the estimated price that was included in the framework agreement, and the price list provided by the bidder, in order to confirm the consistency with the methods and proposedcalendars.

What is the required process for dealing with abnormally low bids?

As in question 31, bids containing abnormally low prices must be compared with the original price proposed by the framework agreement. If the price of the offer proves to be abnormally low, the offer may be rejected for lack of consistency. If adjudicated, and having evaluated the price, taking into consideration the terms of payment envisaged, the public entity may request that the amount of the bidder’s compliance guarantee be increased to a sufficient level in order to protect the state from any loss in case of non-compliance with the terms of thecontract.

Review proceedings

Relevant authorities

Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?

The authorities that rule on review applications are ratings commissions.

Each member of a ratings commission is appointed by the person responsible for the recruitment process; who is, in turn, appointed by the MEA in charge of the procurement process.

It is possible to appeal against review decisions, by means of an administrative challenge, which may only be filed against decisions regarding the content of the DBC, adjudication decisions and bids that were declared void.

If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?

The only authority in charge of ruling over administrative challenge recourses is the MEA in charge of the conflicted procurement process.

Timeframe and admissibility requirements

How long do administrative or judicial proceedings for the review of procurement decisions generally take?

Article 97of Supreme Decree 181provides that these types of procedures should take up to 10days. However, in practice, administrative proceedings for the review of procurement decisions take between two and four months.

What are the admissibility requirements?

In order to be admissible, an administrative appeal must be accompanied by a renewable, irrevocable and immediate execution guarantee.

Regarding the standing capacity of bidders, article 11of the Administrative Procedure Law provides that any individual or entity, public or private, whose subjective right or legitimate interest is affected by an administrative action, may appear before the competent authority (in this case the MEA) to assert their rights or interests, as appropriate, without having to prove personal and direct interest in relation to the act that motivates their intervention.

What are the time limits in which applications for review of a procurement decision must be made?

Article 97of Supreme Decree 181provides that the MEA must issue an express decision within a maximum of five days, counting from the filing of the administrative appeal.

The resolution that resolves the administrative appeal does not allow further administrative appeals, opening the way to judicial involvement.

Suspensive effect

Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?

Article 96of Supreme Decree 181provides that the filing of an application for review will suspend the contracting procedure, which may restart once the administrative recourse is exhausted.

There are no provisions regarding the lifting of such a suspension.

Based on administrative legislation applicable to administrative recourses, theoretically it would be possible for the suspension to be lifted if a bidder files and wins a constitutional claim (amparo) based on the grounds that the suspension has affected the bidder’s constitutional right to work, or some other constitutional right.

Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?

There are no provisions regarding the lifting of automatic suspensions, and none have taken place so far.

Notification of unsuccessful bidders

Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?

The analysis and adjudication of a procurement process is public information, and must be published at the SICOES.

Access to procurement file

Is access to the procurement file granted to an applicant?

Article 22of Supreme Decree 181provides that once an adjudication has been made, the proposals that were not awarded will not be made public, and their subsequent use for other purposes will be prohibited, unless written authorisation of the bidder is received.

In public tenders, the proposals may be returned to the corresponding non-adjudicated bidders, at their request, as long as the contracting entity keeps a copy. This option is not available in public procurement processes related to national support for production and employment.

Disadvantaged bidders

Is it customary for disadvantaged bidders to file review applications?

Given that there is no public information available with regards to applications for review, it is very difficult to determine the exact number of filings, or the type of bidders who filed such recourses.

However, based on current practice, it is not customary for disadvantaged bidders to file review applications, given that such a procedure is very lengthy and expensive, and the outcome is almost always granted in favour of the contracting authority, given the way in which the procedure is created and given that it is the contracting entity itself that must resolve a decision of the officer appointed by it.

Violations of procurement law

If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?

As long as such violation of procurement law generated direct damages to disadvantaged bidders, it is possible for them to claim damages. In order to be able to prove this, the bidder would need to prove that the violation of such procurement laws generated loss of profit and damages that were a direct consequence of such violation.

May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?

Yes, a decision regarding review proceedings can deal with the adjudication of the contract and declare such adjudication as invalid. If that is the case, the decision must specifically annul the adjudication ‘down until the oldest vice in proceedings’.

Legal protection

Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?

In case of fraudulent adjudications, without a proper procurement process, the legal protection for the party interested in the contract would be based on a criminal procedure against both the officer who granted the contract and the bidder.

Typical costs

What are the typical costs of making an application for the review of a procurement decision?

The costs of making an application for the review of a procurement procedure depend on the guarantee that needs to be provided at the beginning of the procedure, the lawyer who is overseeing the case, the amount of the contract and any other miscellaneous costs, such as legalisation, translation and notary costs in case of foreign bidders.

Update and trends

Update and trends

Are there any emerging trends or hot topics in public procurement regulation in your country? In particular, has the scope of applicability of public procurement law been broadened into areas not covered before (eg, sale of land) or on the contrary been restricted?

In recent years, Bolivia has been going against the trend followed by neighbouring countries concerning the implementation of public-private partnerships (PPPs) and regulation on the subject. It is well known that countries such as Peru and Chile have PPP regulations that cover every single aspect related to PPPs, from the way in which they are procured to their forms and limitations.

Given these types of regulations and taking into consideration that neighbouring countries have been able to complete vast projects such as the building of highways and water facilities without conflict, it may be possible that the current Bolivian administration has just realised that, in order to be able to complete the public works it undertook in recent years, it will need to relinquish some of the works that the state assumed in favour of PPPs.

The basis for moving towards PPPs in Bolivia was established by Law 466 (Law for Public Companies), whereby article 8provides that public companies may execute ‘strategic alliance’ contracts with public and private subsidiaries and branches, if their corresponding ‘social development’ requires it.

Given that the conditions for these types of alliances is extremely broad and subjective, the current administration took a further step and issued Supreme Decree 3469on 24January 2018.

Supreme Decree 3469could be considered as the beginning of a more lenient view on private investment for big estate projects, given that its purpose is to set the principles and guidelines that will rule over what will be called Joint Venture Strategic Alliance Contracts (JVSACs). As provided by article 4of Supreme Decree 3469, JVSACs will govern the relations between private and public investors, both national and foreign, and the Bolivian state.

However, the provisions as to how these relations will be governed, their limitations and conditions, remains to be seen, given that Supreme Decree 3469provides extremely general conditions with regards to the basic conditions that will need to be included into JVSACs, and instructs the Bolivian Ministry of Development to regulate, coordinate and create the corresponding JVSACs, in order to ‘attract and strengthen both national and foreign investment, within the Plurinational State of Bolivia’.

Consequently, even though Supreme Decree 3469does not yet set Bolivia on a course to executing PPPs with private investors any time soon, it has already shown that these types of relations might take place in the future.