All questions

General framework

i Types of public-private partnership

Section 1 of the PPP Contract Law sets forth that PPP contracts shall be designed in accordance with the special features of each project and its financial needs.

Under that flexible criterion, Section 7 of the PPP Contract Law sets forth that the PPPs in charge of the execution and performance of the PPP contract may be organised as a special purpose vehicle (SPV), a trust fund, or any other vehicle or associative organisation.

SPVs shall be incorporated as corporations. Trust funds shall be organised as financial trust funds pursuant to the Civil and Commercial Code provisions on the matter. Further, PPPs may be constituted and organised in such a way that allows them to issue securities under the provisions of Capital Market Law No. 26,831.

Further, the PPP Contract Law explicitly allows the state to create new corporations or trust funds to perform PPP projects.

ii The authorities

Under the PPP Contract Law, the performance of the PPP contract is subject to the control of the public contracting party or the public body created for that purpose in the relevant jurisdiction. In addition, the bidding terms and conditions of the PPP project might require the appointment of external independent auditors to supervise the performance of the project.

Pursuant to Section 22 of the PPP Contract Law, the General Audit Agency shall supervise all PPP contracts, their performance and results.

The new regime sets forth two new bodies: the Undersecretariat of PPPs, an official government entity, which shall centralise the regulation of PPP contracts, assist in the development and regulation of the PPP projects and support the public procurement agencies in the design and structuring of PPP projects; and the Congress bicameral commission, which is in charge of monitoring the PPP projects' performance and compliance with the PPP regime.

iii General requirements for public-private partnership contracts

In accordance with the PPP Contract Law, PPP contracts shall regulate, at a minimum, the items described in the law, including the following:

  1. the contractual term and potential extensions, which cannot exceed 35 years in whole and must ensure recovery of investments, repayment of financing and a reasonable profit;
  2. the parties' duties and obligations and a fair and efficient distribution of the contract contributions and risks between the parties, ensuring the best conditions to prevent, assume or mitigate them and to minimise the cost of the project and facilitate financing conditions (see Section V.iii). The PPP contract shall foresee the contractor's right to transfer its duties to a 'performing company', within the limits set forth in the contractual documents. In this case, both the contractor and the performing company will be jointly and severally liable to the state party;
  3. the minimum technical requirements applicable to the infrastructure involved in the project and the penalty regime (the application of any sanction in excess of the limits set forth in the PPP contract and regime being forbidden);
  4. the procedures for the revision of the contract price so as to preserve its economic–financial equation (see Section V.iv);
  5. the state's power to unilaterally introduce modifications should be restricted only to the project performance and under no circumstance exceed 20 per cent above or below the total contract price. Any such modification shall be compensated so as to keep the original economic–financial balance (see Section V.iv);
  6. the guarantee of minimum income if such provision is agreed upon (see Section V.ii);
  7. the events and procedures applicable to the contract's termination and applicable compensation. If termination operates based upon public interest grounds, no state liability limitation set forth in administrative laws can apply (see Section;
  8. the assignment of PPP contract rights or receivables arising as collateral and the right to securitise cash flows;
  9. the right to temporarily suspend performance of obligations in the case of state default;
  10. the contractor's right to totally or partially assign the PPP contract to the extent the assignee meets the proper conditions to be a contractor and at least either 20 per cent of the contractual term has expired, or 20 per cent of the committed investment has been made. Contract assignment shall be subject to the state contracting party, funders and guarantors' approval. Under these conditions, the assignment releases the original contractor of all duties;
  11. the assets regime (see Section V.v); and
  12. the procedures and mechanisms of settling contractual disputes, including the possibility to establish a technical panel to act throughout the contract life and in charge of solving contractual disputes before resorting to court litigation or arbitration. Arbitral agreements setting forth foreign venues shall be expressly approved by the Executive and communicated to Congress. This option is only available for PPP contractors that have foreign shareholders, according to a minimum percentage that must be established in each project.

Bidding and award procedure

i Expression of interest

Pursuant to Sections 1 and 4(a) of the PPP Contract Law, the submission of a project to the PPP regime requires a previous justification by the state on the reasons why the PPP structure is suitable for the satisfaction of the public interest pursued through it.

By the same token, Section 13 sets forth that, before any invitation for a PPP public tender, the tender authority shall issue an opinion on, inter alia, the feasibility of the PPP project and the reasons underlying the submission of the project to the PPP regime as the most suitable solution for the public interest. That opinion shall be communicated to the Undersecretariat of PPP for its publicity.

ii Request for proposals

The contractor shall be selected by public or competitive, national or international tender depending on the complexity of the project, the ability of local companies to participate, economic or financial reasons connected to the project's special features, or the origin of the funds in the case of projects that require external financing. Direct adjudication (i.e., without public and competitive tender) is forbidden.

Pursuant to the PPP Contract Law, the provision of assets and services made in the context of PPP contracts shall have a minimum domestic component of 33 per cent. This legal requirement may be exceptionally set aside or limited by the Executive if the project special features require so.

If the PPP contract commits resources from the public budget, prior to the call for tenders or competition, it must obtain the authorisation to commit future fiscal exercises, as provided in Section 5 of Law 24,156. The availability of the public funding shall be also confirmed prior to the execution of the contract.

If necessary, when the complexity or size of the project requires it, a transparent procedure of consultation, discussion and exchange of views between the contractor and the prequalified parties may be established, allowing the development and definition of the most convenient solution to the public interest on the basis of which the tenders should be formulated.

The PPP Contract Law puts special focus on the need for transparency, publicity and competitive conditions for bidders, including specific anti-corruption provisions.

iii Evaluation and grant

The contract shall be awarded to the most convenient offer, in accordance with the conditions established in the bidding terms and conditions. This regime also requires the inclusion of selection guidelines that give comparative advantages in favour of domestic companies and small and medium-sized enterprises. Nevertheless, these comparative advantages may be excluded if that is deemed necessary or convenient because of the particular features of the project.