Government Procurement Law

Key Aspects

In order to achieve a more efficient government procurement system in Guatemala, it’s necessary to develop a new regulatory framework that guarantees an adequate balance between contracting checks and balances and the necessary freedom to contract efficiently and competitively, without neglecting the need to strengthen transparency.

Thus, following the recommendations of the Public Governance Committee of the Organization for Economic Co-operation and Development, and the Agreement on Government Procurement of the World Trade Organization, it’s considered that any regulatory framework proposed over this topic should take into consideration the following strategic pillars:

Institutional Strengthening

The Government Procurement System must be endowed with a solid institutional infrastructure to promote efficiency and mitigate arbitrary decision-making. Therefore, it is necessary:

That any new regulation strengthens the entity with the legal mandate, within the Ministry of Finance, of coordinating and supervising the Government Procurement System by endowing it with legal hierarchy, resources, and clearly established institutional coverage to manage information, statistical databases, execute an administrative control, and, above all, establish the technical requirements to participate in bids, specifications of works, goods and services to be provided, criteria for evaluation of proposals, framework agreements, guidelines for the management of acquisitions, and model documents to which all entities in charge of Government procurement must comply in order to avoid the proliferation of scattered regulations subject to the different criteria of each government entity.

Professionalization

The efficiency of the system goes hand in hand with the professionalization of public officials. In this way, tools must be designed so that all of the officials in charge of public procurement have a high level of integrity, technical training, and skills for implementation. For this purpose:

A special administrative career for procurement managers that establishes the required capacities, defines their specific responsibilities and evaluates their performance should be created. This training has to be focused not only on legal aspects, but also on market structures, price monitoring, best worldwide practices, and efficiency analysis, among others.

Management quality control must be regulated and efficiency in acquisitions monitored through periodic evaluations of staff performance. The law must provide the specific profile for procurement officials and for members of Qualification Boards, as well as determine different levels of authorization to celebrate contracts. The law should establish the regulation of a constant training for the members of the boards, as well as for the specific departments of each executing unit in charge of contracting.

Public Budget and Planning

In order to make contracting processes more efficient and to optimize public spending, public procurement must be integrated into the management of public finances, in this way:

Procurement planning should be regulated in such a way that there exists coordination between procurement and budget management, establishing the obligation and procedure for multi-year budgeting and financing to optimize the design and planning of procurement cycle. It should be established that at the beginning of each fiscal year, all contracting entities have the obligation to schedule their purchases and contracts. This programming should be subject to review by the Ministry of Finance and then published on the entity's electronic portal and GUATECOMPRAS. The hiring ban when there’s no budget availability must be maintained in any new regulation. It’s necessary to establish accurate and fixed payment mechanisms since the absence of these represents a high risk for suppliers, promoting a lack of trust in the system.

Anticorruption System and Accountability

Linked to the above, the Public Procurement System must have internal controls, measures to ensure compliance with contracts and anti-corruption programs, aimed at both contracting entities and suppliers. Thus:

It must be ensured that public contracts include guarantees of exemption from corruption and carry measures to verify the veracity of statements and guarantees of suppliers that they did not participate in corrupt behaviors in relation to the contract and that they will abstain from this type of behaviors. The internal control of the procurement system must have a preventive approach. For this purpose, it’s necessary to strengthen the audit procedures by regulating the existence of a government audit specialized in public procurement to be carried out compulsorily at least once a year. The external control exercised by the Contraloría General de Cuentas must focus more on results and impacts than on processes. Also, it´s findings should be delivered on time.

There must be systematic management reports on basic aspects such as efficiency, opportunity quality, and paid prices, among others. There has to be a regulatory body on corruption in public procurement.

Accountability plays a decisive role, which is why supervisory and control mechanisms should be implemented that favor it throughout the cycle of public procurement, including the appropriate procedures for complaints and sanctions. Thus:

A simple procedure should be created to encourage the reporting of corruption acts, with specific deadlines for them be resolved. The applicable sanctions directed at both public and private sector participants must be clearly established proportionally to the level of illegality to be sufficiently dissuasive, but without generating unfounded fear of consequences or aversion to risk in public procurement personnel or among the suppliers.

Dispute Resolution

The efficiency of the contracting system will also depend on the functioning of the dispute resolution mechanisms established in the law. Because of that:

The non-conformities raised through GUATECOMPRAS must be considered by the entities and answered in a timely way. An administrative authority specialized on appeals should be created. There must be a guarantee of immediate application of arbitration awards.

Regulation Concentration

The public contracting system must be endowed with a wide margin of certainty to foster the confidence of the applicants and avoid the arbitrariness of the entities in charge of contracting. Therefore, the law must contain reasonable and solid provisions so that the terms for bidding and contracting are as clear and simple as possible, avoiding introducing conditions that reduplicate or contradict those of other laws or regulations. In this way:

The publication of "regulations" and "board of directors' agreements" must be regulated in such a way that all information relevant to the application of the law is found and is derived from a single regulatory body. This becomes a greater ease to inspect each government entity because there is no need to adapt to the regulations of each independent entity.

Minimum Exceptions

The abuse of exceptions has resulted in an unpredictable, ungovernable, difficult to control, inefficient system with very high risks of corruption. Therefore, exceptions should be limited, as well as hiring with a single provider. Likewise, the hiring process in cases of emergency and public calamity should be regulated.

Exceptions must be minimal and, in addition, the process must be established so that there must always exist requirements to comply with an efficient and transparent mechanism.

Specific Regulation for the Contracting of Goods and Services

A specific regulation must be created for different types of specialty goods and services, according to their characteristics, which deserve a different regulation, such as the contracting of public works, services, or medicines.

Contracting System and Accessibility of Information

It is essential that the regulatory framework fosters transparent and effective participation of all interested parties, seeking to boost efficiency throughout the public procurement cycle. The implementation of information and communication technologies is an important aspect to achieve this objective because it represents a means to guarantee transparency and access to public tenders, promoting competitiveness, simplifying contract award procedures and the management of these. For this purpose, the GUATECOMPRAS portal must meet the following requirements:

The obligation to publish comparative information should be established in which it can be verified who are the entities that buy and at what price they do it, efficiency indicators, price comparisons, execution status of the works, and concentration of suppliers. The obligation to carry out management reports on basic aspects such as efficiency, opportunity, and quality must be regulated. It’s necessary to regulate the restructuring of the purchase modalities and the incorporation of new ones. It must be established that the members of the qualification boards, responsible for technical and legal opinions, are identified in GUATECOMPRAS.