The importance of the fulfillment of the obligations by the contractor in public contracts

As a general rule, every contract must be fulfilled in the form and time agreed, otherwise, such breach will give rise to the other party. Obligations are fulfilled when requesting the termination of the contract or its forced compliance, and in either case, towards the payment of damages.

However, when we are faced with breaches that derive from contracts of a public nature, that is, those contracts referred to in the recent Law on Public Purchases -LCP-, it is necessary to attend what the law mentions. The LCP contemplates a regime of liability to individuals, contemplating the imposition of sanctions in the case of a delay or untimely fulfillment of obligations, when for example a certain good or service is delivered late, but also contemplates the expiration of the contract as early termination of the same for breach of the contractor, and other sanctions of greater gravity such as the disqualification to participate.

The disqualification to participate in public procurement procedures is one of the most serious sanctions contemplated by the LCP, this sanction applies, for several reasons indicated in Art. 181 of the aforementioned law, however, on this occasion we will focus on the cause relating to the breach of contract by the contractor.

Art. 181 of LCP, section II., establishes a disqualification for two years in the following cases:

a) Unjustified breach, failing totally or partially, to comply with the conditions, technical specifications or any other obligation agreed in the contract or purchase order.

b) Not to supply or supply a property, service or work that does not comply with the technical specifications or application documents of the request agreed in the contract or purchase order.

c) Failure to present the Guarantee of Contract Performance within the period granted, without justified or proven cause.

The aforementioned provision establishes that a disqualification will take effect in all the institutions of the public administration, and that the Public Procurement Units -UCP- must incorporate the information to the registry and inform the National Public Procurement Directorate -DINAC- for its corresponding disclosure.

This implies that the contractor who is disqualified may not participate as a bidder in public procurement procedures with any institution of the public administration, for a period of two years.

As aforementioned, it is important that every contractor, participating as a bidder in any procurement procedure, verifies that it is able to comply in a timely manner, with the respective contracting conditions, since in case of not doing so, that is, if they are unable to fulfil their obligations under the agreed terms, technical specifications or any obligation agreed in the contract; including not submitting the guarantee of performance of the contract within the period granted, shall be exposed a disqualification period of two years.

It is worth mentioning that such disqualification is not an automatic decision, on the contrary, to impose the disqualification of a contractor, an administrative procedure must be followed and the rights contemplated by the Law on Administrative Procedures -LPA- must be guaranteed, among others, the contractor must be informed of the terms of infringement attributed, the infringements and penalties to which the acts attributed give rise, and the article attributing competition to the competent authority. In addition, administrative procedures should be processed in order to recognize the contractor's right of hearing and defense.

Therefore, every contractor, as a good practice, must carry out a proper management or administration of contracts, not only prior to their celebration, but more importantly, during their execution, in the sense of having documented any unforeseen situation, attributable to third parties, or existence of force majeure to prove before the contracting institution or before a Judge,where the breach of contract is not attributable to the contractor or is not in their liability. Finally, it is advisable to have proper legal advice when facing a sanctioning procedure of this nature.