Argentina: New Procurement Rules For The Federal Public Administration

On June 7, 2012, the National Executive issued Decree No. 893/2012, implementing regulation of Delegated Decree No. 1023/2001, which in turn approved the Federal Procurement Regime (the "Implementing Decree" and "Decree 1023"). The Implementing Decree expressly derogates the former implementing regulation approved by Decree No. 436/2000 (the "Derogated Decree") and the General Bidding Terms and Conditions for the Procurement of Goods and Services by the Federal Government, approved by Decree No. 834/2000, among others. The aim of this article is to outline some of the most important differences between the Implementing Decree and the Derogated Decree.

The scope of the Implementing Decree presents the first modification with respect to the Derogated Decree. All jurisdictions and entities of the Federal Executive Branch are still comprised within the scope of the regulation for their goods and services' procurement operations, except for those cases expressly excluded by the regulations. To those existing exclusions, the Implementing Decree added the exclusion of public works contracts, public works concession agreements and utilities and license agreements. However, the Implementing Decree can be applied to exclude contracts, jurisdictions and entities on a voluntary adherence basis.

Contracts covered by the Implementing Decree are governed just as they used to be under the Derogated Decree by said Implementing Decree; by the Bidding Terms and Conditions; by the contract, agreement or purchase order, as applicable. Additionally to those sources, the remaining administrative law norms are to be applied and, lastly, private law rules through analogy. The inclusion of private law rules is an innovative feature of the Implementing Decree, whose true extent will be known as the new rules are actually applied in specific cases.

Along the same lines, the Implementing Decree has modified the obligation to keep filed bids into effect. In contrast to what the Derogated Decree had established, under which each jurisdiction or entity was empowered to determine the timeframe of such obligation, the new Implementing Decree establishes as a default rule a 60-day term as of the opening of the bids throughout which the bid must be maintained and guaranteed, except in those cases where said default rule is expressly left aside by the jurisdiction or entity in the Bidding Terms. The term so imposed is automatically renewable except for express notification to the contrary by the bidder.

As far as appeals to selection decisions are concerned, the Implementing Decree allows jurisdictions and entities to establish mandatory bonds to guarantee the challenges.

Among the main modifications introduced by the Implementing Decree is the preference given to bidders that export and abide by the requisites imposed to that extent by the Chief of Cabinet. The preference can result in: (a) the contract being awarded even when there are lower bids within a 7% price gap by offerors that do not meet the exporting requirements; or (b) the exporting bidder being granted the opportunity to match the best offer made by a bidder that does not meet the exporting requirements as long as it is within the 7% price gap.

According to the Implementing Decree, every bid must be filed together with an affidavit in which the bidder informs, "for statistical purposes and for a better assessment of the development of national industrial complexes", the use and/or supply of imported goods and/or raw materials, as well as the exporting balance of the bidder in the last year and the projections for the current one. The Implementing Decree does not specify whether said data will be used to make the selection among the bidders, a matter that is expected to be clarified as the new regulations are applied to specific cases.

The Implementing Decree establishes a preference for offers made in national currency (peso) rather than foreign currency, an option that, although available for jurisdictions and entities, must be fully justified in the files preceding the call for bids. In those cases where the bids are called for in foreign currency but the payment is to be made in Argentine currency, the amount should be calculated using the exchange ratio as the day of issuance of the purchase order or of the day the money is credited in the corresponding bank account.

The Implementing Decree has also modified the default rules for products' imports. The Bidding Terms should be aligned with customary terms of international trade, such as INCOTERMS. As opposed to what the Derogated Decree had imposed (F.O.B.), the Implementing Decree established C.I.F. as the default rule for the importation of goods in procurement operations.

Moreover, the Implementing Decree has added a new cause for ineligibility of an offeror. Those bidders that have been sanctioned in the past three years, either by administrative or judicial bodies, on the grounds of anti-trust or anti-dumping proceedings, or on the grounds of collusion in procurement proceedings, are ineligible to become contractors with the Federal Government.

With regard to mistakes introduced in the offers, the Implementing Decree distinguishes between non-rectifiable mistakes -listed in the decree, among which is the dumped price- and those that are rectifiable because they do not affect the equal standing of the bidders.

This article is only a brief outline of some of the main innovations introduced by the Implementing Decree. It will be important and necessary to follow up its actual application and its construction by the Public Administration and the Judiciary to fully assess the extent and impact of the reforms so passed by the Implementing Decree.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.