Panama Public Procurement Act: A Comprehensive Guide
Panama Public Procurement Act
Direct Recruitment
Article 71 of the Panama Public Procurement Act allows institutions to engage directly with individuals or legal entities without following the standard procurement procedures, provided that competition criteria are maintained and predefined conditions and specifications are met. This decision requires a reasoned justification from the head of the institution.
Direct Contracting
Article 72 outlines situations where Direct Contracting is permissible, including:
- Protection of intellectual property rights where a single source is necessary.
- Void competitions or contests.
- Urgent contract revocations.
- Additional supplies or spare parts for existing equipment with no alternative source.
- Acquisition of military equipment.
- Emergencies as defined by the Act.
- War, public calamity, or grave disturbance.
Form and Timelines
Article 74 mandates timely notification of administrative acts affecting vendors and contractors. Article 79 specifies that contracts are formalized upon signing by involved parties, except for self-management cases where a Purchase Order and invoice suffice. Article 80 outlines the process for contract signing and submission of collateral.
Public Works Contracts
Article 104 defines a public works contract as an agreement between an institution and a contractor for the execution of construction or works of administrative benefit. The contract terms, specific documents, and applicable laws govern the obligations.
Turnkey Contracts
Article 105 allows for Turnkey Agreements under specific conditions, such as complex projects where consolidating engineering, equipment, and construction under a single contractor is advantageous. Change orders are prohibited in such contracts, and price adjustments and execution time are subject to force majeure only.
Monitoring and Oversight
Article 106 prohibits awarding supervision contracts to the same company responsible for the work or its design. Article 107 mandates preliminary engineering studies and complete work projects. Article 108 outlines procedures for work suspension and precautions to prevent deterioration.
Change Orders and Monitoring
Article 109 allows for contract amendments through change orders due to unforeseen circumstances, subject to approval by the Council of Ministers or City Council. Significant changes exceeding 20% of the contract amount require a new tender process. Article 110 emphasizes the importance of performance monitoring by designated technicians.
Scheduling, Deductions, and Completion
Article 111 mandates adherence to the agreed-upon work schedule. Article 112 requires institutions to retain a portion of the final payment as security for potential liabilities. Article 113 allows for work completion by the contractor’s surety in case of breach of contract.
Acceptance and Defects
Articles 114-116 outline the process for provisional and final acceptance of work, including a review period for identifying and rectifying defects. Article 117 addresses guarantee redemption after final acceptance. Article 118 establishes liability for latent defects, with the builder, supervisor, or consultant responsible as appropriate.
Supply Contracts
Article 119 defines Supply Contracts as agreements for acquiring or leasing goods or services through one or more deliveries. Article 120 emphasizes the importance of annual procurement plans and allows for single contracts with multiple orders and payments. Article 121 outlines procedures for goods reception, default, and penalties.
Defects and Deficiencies
Article 122 addresses the process for handling defects or deficiencies during the warranty period, including replacement, repair, or contract termination.
Consulting Contracts
Article 123 defines Consulting Contracts as agreements for obtaining specialized services such as data collection, research, project review, and technical assistance. Article 124 outlines requirements for consultants, including academic qualifications and relevant experience.
Prohibitions and Price Fixing
Article 125 prohibits awarding consulting contracts for design, supervision, or control of works to companies involved in the construction or related undertakings. Article 126 allows for various price-fixing methods based on costs, time, or project value.
Payments, Monitoring, and Deficiencies
Article 127 specifies that payments are made according to the agreed-upon schedule of results. Article 128 addresses monitoring of consultancy contracts related to work supervision, including payment procedures and handling of force majeure events. Article 129 outlines the process for addressing deficiencies and establishes liability for damages caused by defects or errors.
Concession Contracts
Article 130 classifies concession contracts into three types: Public Works, Public Service, and Natural Resources and Basements. Articles 131-132 define each type and outline the responsibilities of the concessionaire and the State.
Bidding and Prerequisites
Article 133 mandates public bidding for selecting concessionaires and allows for both public and private initiatives. Articles 135-136 specify requirements for concession contracts and implementation, including service guarantees, tariff structures, risk allocation, and environmental protection.
Limitations and State Property Use
Article 137 restricts the sale, mortgage, or taxation of assets acquired under a concession without authorization. Article 138 limits the use of State property to purposes necessary for fulfilling the concession contract. Article 139 excludes natural and archaeological resources from concessions and mandates environmental preservation.
Traffic, Obligations, and Expropriation
Article 140 addresses traffic management during construction works. Article 141 outlines the concessionaire’s obligations, including service continuity, compensation for damages, and compliance with regulations. Article 142 emphasizes the importance of work conservation. Article 143 allows for land expropriation when necessary for project execution.
Waiver, Termination, and Intervention
Article 144 allows for temporary service waivers in case of war, disturbance, or force majeure, with potential contract termination if the situation persists. Article 145 addresses the institution’s right to acquire the work in case of the concessionaire’s death, bankruptcy, or company termination. Article 146 grants the grantor authority to inspect and enforce the concessionaire’s obligations, with potential intervention or contract revocation in case of non-compliance.
Default, Sanctions, and Expiration
Article 147 allows for enforcement of guarantees in case of concessionaire default. Article 147-Bis outlines serious infringements and corresponding sanctions, including fines and potential suspension or revocation of the concession. Article 148 addresses the process for delivering works and installations upon expiration of the concession term.
Lease of Personal Property
Article 149 allows institutions to lease movable property with or without purchase options, following the prescribed procurement procedures and technical evaluation criteria.