Public Procurement and Contracting Law of El Salvador
PURPOSE, SCOPE, AND SUBJECT OF THE LAW
Purpose of the Act
This Act regulates the procurement and contracting of works, goods, and services by public administration institutions to fulfill their goals. This regulation includes processes under this Act and extends to entities spending public or municipal funds.
Scope of the Law
The following are subject to this Act:
- Public administration institutions
- Entities spending public funds
- Purchases and contracts paid for with municipal funds
Subjects of the Law
Individuals or corporations, domestic or foreign, offering or procuring works, goods, and services for public administration institutions are subject to this Act. This includes unions of vendors, with joint and several liability for all members.
Exclusions
The following are beyond the scope of this Law:
- Agreements between institutions
- Procurement of personal services under the Wages Act, Contract, and Labor Law
Enforcement and Regulations
This Act and its Regulations follow administrative law principles. Common law provisions may be applied when the meaning or scope of the rules is unclear.
UNIT STANDARD PROCUREMENT AND CONTRACTS OF PUBLIC ADMINISTRATION (UNAC)
Policy and Establishment of the UNAC
The Ministry of Finance oversees the UNAC, ensuring compliance with annual procurement policies and proposing guidelines and procedures for procurement and contracting.
Powers of the UNAC
The UNAC reports directly to the Ministry of Finance and has the following powers:
- Issue policies and guidelines for the Procurement and Contracts Public Administration (SIAC)
- Issue instructions, manuals, and tools to facilitate the Act’s objectives
- Advise and train Institutional Procurement and Contracting Units (UACIs)
- Monitor UACIs for compliance with regulations
- Support SIAC improvement measures
- Review and update policies and tools
- Establish guidelines for procurement and contracting documents
- Maintain a National Register of Procurement and Contracts
- Other activities assigned by higher authority
Municipalities must conduct procurement and contracting in accordance with this Act and its regulations.
Head of the UNAC
The UNAC is headed by a Chief who must meet specific requirements, including a university degree, experience, and no conflicts of interest.
UNITS INSTITUTIONAL PROCUREMENT AND CONTRACTING (UACI)
Establishing UACI
Each institution establishes a UACI responsible for procurement and contracting activities. UACIs report directly to their respective institutions and may decentralize operations as needed.
Head of the UACI
The UACI is headed by a Chief who must meet similar requirements as the Head of the UNAC.
Value UACI – UFI
The UACI has an integrated relationship with the Institutional Financial Unit (UFI) regarding procurement and contracting, particularly concerning budget and financial availability.
Powers of the UACI
The UACI has the following responsibilities:
- Liaison between UNAC and institution units
- Develop annual procurement program
- Verify budget allocation
- Prepare bidding or competition documents
- Receive and open tenders
- Implement procurement processes
- Consult with technical experts
- Record receipt of goods and services
- Maintain vendor and contractor database
- Keep a register of contractors
- Assess potential vendors
- Report to the head of the institution
- Assist the bid evaluation commission
- Supervise and monitor inventory
- Provide information to the UNAC
- Other responsibilities as stated in the Act and its Regulations
Information Bank
The UACI maintains a Data Bank with information on vendors and contractors, classified by level and specialization.
Registration for Failure to Offerors and Contractors
Institutions maintain a register of suppliers and contractors with information related to breaches and other relevant situations.
Procurement Register
The UACI keeps a register of all contracts made in the last ten years for assessment and monitoring purposes.
PROGRAMMING AND BUDGETING
Annual Programming Procurement and Contracting
Institutions create annual programs for acquisitions and procurement, considering factors such as budget, inventory, pre-investment studies, and resource scheduling.
HIRING EXECUTIVES AND THEIR RESPONSIBILITIES
Holders
The highest authority of an institution, such as ministers, presidents, or mayors, is responsible for contract awards and compliance with the Law.
Competency and Other Awards
The competent authority may delegate award authority for procurements below a certain amount. Laws of creation for institutions may establish a hierarchical structure for procurement and approval.
Monitoring and Accountability
The head of the institution is responsible for monitoring subordinates and reporting any crimes. Subordinates are personally liable for breaches or crimes committed and must report offenses to the Attorney General’s Office.
Tender Evaluation Committees
Institutions establish committees for bid evaluation, varying in composition based on the nature of the procurement. Committees must be formed for bids or tenders, and may be formed for direct recruitment and self-management.
TYPES OF CONTRACTS
Feature
Contracts under this Act determine obligations and rights between individuals and institutions. Exceptionally, it governs Property Leasing Contracts.
Regulated Contracts
The Act covers the following contracts:
- Works
- Supply
- Consulting
- Grant
- Leasing of personal property
Conditions of Contracts
Contracts are subject to this Act, its regulations, and other applicable rules. Common Law applies in the absence of specific provisions.
Standard Extra
Institutions may recruit using common law rules for contracts not mentioned in this chapter, but must adhere to the Act’s provisions where applicable.
Capacity to Contract
Individuals and legal entities, domestic or foreign, may contract with institutions unless disabled by specific situations, such as bankruptcy or insolvency, contract termination, tax insolvency, misrepresentation, or legal non-compliance.
Disabled for Tendering
Public servants and their close relatives may not participate as vendors in the same institution. Contracts violating this provision are null and void.
Rating Elements and Criteria
Qualification selects potential vendors based on criteria such as skilled personnel, capacity, financial situation, and existing obligations. The UACI performs the rating, which is reviewed and updated annually.
Prequalification
Prequalification is a stage where the UACI invites pre-qualified vendors to tender.
Co-qualification
Co-qualification is a stage where the UACI invites bidders to submit bids without prequalification, with analysis and evaluation occurring simultaneously.
Opinion Qualification Agreement
Qualification is generally used for complex or specialized procurements. The contracting institution issues a reasoned agreement for prequalification or co-qualification.
Rating
Bidders or contractors must provide guarantees to ensure good investment advance, contract compliance, and good work.
Guarantees species
Guarantees may include bonds, bank guarantees, or other securities. Foreign entities must issue guarantees through Salvadoran financial institutions.
Maintenance Guarantee Offer
This guarantee ensures the maintenance of bid conditions and prices. The winning bidder maintains its validity when submitting the Contract Performance Guarantee.
Good Investment Guarantee Advance
This guarantee ensures that the advance payment is used for the intended purpose. The advance may not exceed 30% of the contract amount.
Contract Performance Guarantee
This guarantee ensures the contractor’s compliance with the contract. It remains in effect until the absence of faults or damage is verified.
Effectiveness of Guarantee
A contractor violating the contract without cause must pay the surety contract, without prejudice to other liabilities.
Guarantee of Good Work
This guarantee ensures the contractor’s liability for failures and damages during the warranty period.
Contractor Liability and Prescription
The contractor’s liability for damages follows Common Law time limits.
Forms
The forms of recruitment for contracts are:
- Public Bidding
- Public Tendering
- Bidding or tendering by invitation
- Self Management
- Direct Contracting
- Stock Market
These forms may include foreign contractors. The tender procedure applies to goods and construction procurement, while the tender applies to consulting services.
Determination of Amounts to Proceed
The amounts for different forms of procurement are based on urban minimum wages.
Determination of Amounts for Contract
The amounts for individual consultant contracts are also based on urban minimum wages.
Contract Documents
Contract Documents, which form an integral part of the contract, include addenda, tenders, guarantees, resolutions, amendments, and change orders.
Tender or Tender
Guidelines are developed before any tender or tender, regulating the specific procurement. The bases must be clear and precise, ensuring equal conditions for bidders.
Minimum content Bases
The bidding or competition bases must contain specific information, including language requirements, bidder qualifications, specifications, prices, delivery terms, deadlines, guarantees, evaluation criteria, and payment terms.
Other Contents of the Tender
The bidding or tender includes demands on technical, economic, legal, administrative, and general aspects, along with a model contract.
Partial Award
The tender or competition may provide for a partial award, dividing the procurement into lots.
Call Functions
The call for national competitive bidding is made through newspapers and other technological means.
International Call
For international bids or competitions, the call is made through national and international media.
Withdrawal Rights and Bases
Interested parties may request and withdraw the bidding or competition documents for a fee.
Addenda, Amendments and Notification
Institutions may make written addenda or amendments to the bidding or competition, notifying all interested parties.
Consultations
Written questions may be submitted before the deadline for receiving tenders, with answers communicated to all concerned.
Tendering Arrangements
The bidding or competition specifies the modes of bid presentation. Tenders must be submitted with the Maintenance Guarantee Offer.
Public Opening of Bids
The UACI representative opens the envelopes publicly at the specified time and place. Late tenders or those without the Maintenance Guarantee Offer are excluded.
Prohibitions
Information regarding bid examination and evaluation is prohibited from being disclosed to unauthorized individuals.
Tender Evaluation
The Bid Evaluation Commission evaluates bids based on technical, economic, and financial criteria. For consulting contracts, technical aspects are the determining factor.
Recommendation for Award, its Elements
The Commission prepares a report with a recommendation for the award or declaration of the bidding or competition. The report includes the classification of bids and options for consideration.
Notice to Participants
The UACI notifies all participants of the award outcome and publishes the results in print media.
Ban Fractionation
Splitting procurement to change the amount and avoid requirements is prohibited.
Public Bidding
Public bidding is the process of inviting all interested parties to provide works, goods, or services (excluding consulting).
Public Bidding
Public competition is the process of inviting all interested parties to present consulting services.
Suspension of Bid or Tender
The competent authority may suspend the bidding or competition for justified reasons, notifying all participants and providing explanations.
Causes of Suspension
Suspension may occur due to force majeure, duly proven irregularities, or the need for substantial modifications to the bases.
Effects of Suspension
If the cause of suspension is resolved, the process resumes from the point of interruption. Otherwise, the bidding or competition is declared void.
Declaration of Desertion
The bidding or competition is declared void if no bids meet the requirements or if all bids exceed the available budget.
Bidding or Tendering by Invitation
This process involves inviting a minimum of three pre-qualified or co-qualified bidders to submit bids.
Self Management
Self-management is used for procurements below a certain amount, involving price and quality comparisons among at least three bidders.
Direct Contracting
Direct contracting is allowed in specific cases, such as emergencies, unique goods or services, or artistic works.
Contract
The contract is formalized in writing and includes essential elements such as identification of parties, object, price, term, and guarantees.
Contract Amendments
Amendments require a reasoned agreement from the competent authority and must not alter the nature of the contract.
Contract Termination
Termination may occur due to mutual agreement, force majeure, non-compliance, or other causes specified in the contract.
Effects of Termination
Termination may result in compensation, depending on the cause and contractual provisions.
APPEALS
Appeal of Award
Bidders may appeal the award decision within five business days of notification. The appeal is submitted to the head of the institution.
Appeal Resolution
The head of the institution resolves the appeal within ten business days, considering the arguments presented.
Appeal to the UNAC
If the appeal is denied, bidders may appeal to the UNAC within five business days. The UNAC’s decision is final.
SANCTIONS
Administrative Sanctions
Violations of the Law may result in fines, disqualification, or other administrative sanctions.
Criminal Sanctions
Certain violations may constitute crimes and be subject to criminal prosecution.
FINAL PROVISIONS
This Act repeals previous legislation on public procurement and contracting. The Ministry of Finance issues regulations for implementation.
TRANSITIONAL PROVISIONS
Existing contracts remain valid until their expiration. Ongoing procurement processes continue under the previous legislation.