Procurement process
Relevant procedure
What procedures normally apply to a PPP procurement? What evaluation criteria are used to award a PPP transaction?
The most commonly used procurement process is public bidding.
The evaluation criterion used to award a PPP is the offer that is the most convenient for the public interest based on the conditions established in the bidding or tender report to be issued by the PPP Secretariat.
The guidelines for selecting an awardee must promote criteria that determine comparative advantages of local companies over foreign ones, as well as those considered micro, small and medium-sized companies, as established in Law No. 25,300. The PPP Secretariat, by means of a substantiated report, may justify the desirability or necessity to exclude this privilege for local, micro, small and medium-sized companies, depending on the particular conditions and needs of the relevant project.
Before the public bidding is launched, the contracting entity must render a report regarding:
- the feasibility of engaging in a PPP;
- the fiscal impact of the expenses to be incurred;
- the financial and budgetary effect of the project;
- its effects on public resources and externalities caused;
- the impact of the project on the generation of employment and the promotion of small and medium-sized companies and the local industry;
- the environmental and social impact;
- an assessment of the equitable sharing of risks between the parties; and
- other relevant information.
Consideration of deviating proposals
May the government consider proposals to deviate from the scope or technical characteristics of the work included in the procurement documentation during the procurement process, without altering such terms with respect to other proponents? How are such deviations assessed?
The government may consider proposals that deviate from the scope or technical characteristics of the work included in the procurement documentation during the procurement process only if this alternative has been previously contemplated in the relevant bidding terms and conditions.
Furthermore, section 14 of Law No. 27,328 contains a novel ‘competitive dialogue’ procedure, which may be useful when the administration aims to achieve a certain goal or benefit but is unsure about the specific technical means of carrying it out. In this case, pre-qualified companies can be invited to file their own proposals and a process of competitive dialogue is engaged with all of these. It is through this procedure that the particular bidding terms and conditions are finally set out.
Section 14 of Decree No. 118/2017 further requires the PPP Secretariat to present a proposal for the regulation of this competitive dialogue procedure.
This procedure was successfully carried out during the Safe Highways and Roads Network PPP Programme – Stage 1 procurement process and is currently being carried out in the electrical interconnection project – Stage I: construction, operation and maintenance of the extra high voltage line in 500 kV E.T. Río Diamante – New E.T.
Unsolicited proposals
May government parties consider unsolicited proposals for PPP transactions? How are these evaluated?
The ‘private initiative’ legal framework set out in the National Regime of Private Initiative Decree No. 966/05, which applies to public works, concession of public works, concession of public services and licences and in General Public Procurement Decree No. 1,023/01 and the Procurement Manual with the Federal Administration, Disposition No. 62-E/2016, for the rest of the contracts under its regulation, allows private parties to make proposals to the federal government to carry out procurement processes (note that these Decrees provide a general regime and therefore they do not specifically regulate the unsolicited proposals for PPPs).
Government stipend
Does the government party provide a stipend for unsuccessful short-listed proponents or otherwise bear a portion of their costs?
Under the ‘private initiative’ regime, in the event of not being selected, the author of the private initiative will be entitled to receive from the awarded offeror a stipend of 1 per cent of the amount of the relevant project.
In any case, the government party will be obliged to reimburse expenses or fees to the author of the private initiative.
In general terms, the PPP framework does not provide any stipend for unsuccessful short-listed proponents nor bear a portion of their cost. It only provides the return of the bid bond.
Financing commitments
Does the government party require that proposals include financing commitments for the PPP transaction? If it does not, are there any mechanisms during the procurement process to ensure that the applicable PPP transaction, once awarded, is financeable?
Under the ‘private initiative’ regime, proposals must contain the estimated amount of investment, the source of funds, financing and the elements that demonstrate the legal, technical and economic viability of the proposal.
The PPP framework includes several provisions in order to foster the financing of this kind of project. Therefore, it allows for the assignment of receivables and contractual rights, as well as step-in rights, and also of contracting insurance or any other guarantee from local or foreign entities. Moreover, it allows for the creation of trusts as a security measure or for payment of consideration by the contracting entity, or both, which must provide for the existence of a minimum liquidity during the performance of the contract. The trust’s assets, which shall be under the charge of a trustee (a financial entity), shall consist of the resources provided by law, including taxes, and will allow for the issuance of securities and, therefore, the securitisation of cash flows arising from the regular fee payments.
Legal opinion
May the government ask its counsel to provide a legal opinion on the enforceability of the PPP agreement? May it provide representations as to the enforceability of the PPP agreement?
The government may request the issuance of a legal opinion regarding the enforceability of the PPP agreement from the federal attorney general. The federal government may also make representations in this regard.
The issuance of a prior legal opinion by the federal attorney general is mandated by law as regards public debt agreements. However, the PPP framework does not provide as mandatory the issuance of a legal opinion on the enforceability of the PPP agreement.
In any case, legal opinions rendered by the federal attorney general are not binding upon the contracting authority. Therefore, they are not enforceable per se, but they might provide the private party with some certainty as regards the enforceability of the PPP agreement.
Restrictions on foreign entities
Are there restrictions on participation in PPP projects by foreign entities? May foreign entities exercise control over the project company?
Argentina has a legal framework (Laws Nos. 27,437 and 18,875), called the ‘Buy Argentine’ regime, under which most federal public entities must give certain advantages to Argentine goods or companies in their procurement procedures.
However, even when the Buy Argentine regime is applicable it does not prevent foreign entities from exercising control over the project company. If 80 per cent of the management of the project company is Argentine, such a legal entity will be deemed local.
The PPP framework provides that national and international tenders may be launched. In this regard, national tenders are those aimed at bidders domiciled in the country, those that have their main place of business in the country or those that have a duly registered branch in the country.
Pursuant to section 12 of Law No. 27,328, bids that include the provision of goods and services shall fulfil the provisions of the Buy Argentine regime (ie, that such goods and services shall be made up of at least 33 per cent of local components), and therefore the preferences set forth in such a regime in favour of Argentinian goods and services will be applicable.
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