Government entities, institutions, industrial, and commercial enterprises must follow the provisions of Law 80 of October 31, 1993, which regulates purchases made and contracts entered into by the government and state industrial and commercial enterprises.
Under Law 80, Colombian government contracting agencies must select contractors through a public competitive bidding process. There are a few exceptions to this rule, which are clearly established in Article 24 of Law 80. The following are some exceptions for a direct contracting procedure:
(1) Contracts for minor amounts: minor amounts are expressed in multiples of the established Colombian legal minimum monthly salary (currently about USD 261 without the additional benefits and/or compensation pay). A minor amount may range from 25 minimum monthly salaries to 1,000 minimum monthly salaries, depending on the annual budget of the contracting entity. For instance:
(a) If the annual budget of the contracting entity is less than or equal to 6,000 minimum monthly salaries, it is allowed to acquire goods and services under direct contract that do not exceed 25 minimum monthly salaries in value;
(b) If the annual budget of the contracting agency is equal to or exceeds 1,200,000 minimum monthly salaries, under direct contracts it may purchase goods and services that do not exceed 1,000 monthly salaries in value;
(2) Loan agreements: inter-agency administrative contracts, professional, scientific and technological services, and evident emergencies and;
(3) Non-award: Whenever bidding is not awarded for reasons such as: lack of proposals submitted, when the bids do not meet the terms of reference or specifications, when there is only one bidder, when products originating in or destined to agriculture or livestock breeding are offered through legally organized commodities exchanges, and in contracts executed by state (government) entities for the rendering of health services.
Foreign individuals or companies not domiciled in Colombia or foreign private legal entities without a branch in Colombia that are interested in government contracts must appoint an agent or legal representative, domiciled in Colombia, who is duly authorized to bid on and execute the contracts as well as to represent the foreign enterprise in and out of court. They also must provide a copy of their registration with the corresponding registry in their country of origin and submit documents proving their constitution or incumbency whichever is the case. This law applies to direct sales or international tenders.
Under Law 80, Colombian bidders enjoy preferential treatment. Given equal contracting conditions, domestic goods and services are preferred. The Colombian government has strongly recommended that all-official entities, and decentralized government industrial and commercial organizations “buy Colombian.” Under similar conditions, for all Colombian government acquisitions, preference must be given to Colombian products and services whenever competitive prices and quality are found versus “foreign” products and services. The same procedures must be followed in connection with concession and association contracts signed with Colombian government entities. When foreign firms bid under equal conditions, the contract is awarded to the firm that includes a greater number of domestic workers in its workforce, more domestic content in its products, and better technology transfer conditions.
As a general rule, all individuals and legal entities wishing to enter into contracts with state entities must register with the chamber of commerce in their jurisdiction in order to be qualified, classified, and rated in accordance with the provisions of Law 80. Foreign bidders and/or suppliers of equipment and services are also required to register with a Colombian chamber of commerce under the Bidders Register (Registro Unico de Proponentes) and, in most instances, must be pre-classified and pre-qualified by the chamber and, in some cases, by the Colombian government contracting agency.
The requirement for both the Bidders Register and the Merchants Register with a local chamber of commerce will be replaced shortly by a Sole Entrepreneurial Register (Registro Unico Empresarial or RUE), which comprises a more complete profile on all business people, businesses, enterprises, contractors, and bidders for qualifying for executing contracts with government entities.
The State Contracting Information System (Sistema de Información de Contratación Estatal or SICE) is a database introduced on May 1st, 2002. Its purpose is to register and provide certificates for foreign and domestic suppliers of all types of commodities and services, their products, and prices in order to be able to enter into contracts with state agencies and industrial and commercial enterprises. One can also register via Internet in accordance with the Sole Catalog of Goods and Services (Catalogo Unico de Bienes y Servicios or CUBS), which is a listing of goods and services classified, standardized, and codified with the products that may be acquired by government entities. Registration is subject to a minimal fee, which depends on the net profit of the company. SICE is expected to become a database with 3,000 municipal, state and national entities, and more than 100,000 suppliers.
Although Law 80 has made the government contracting system more dynamic, Colombia is still not a signatory to the World Trade Organization (WTO) government procurement code (GPA) though they act as an observer to the GPA. There have been frequent legitimate complaints of a lack of transparency in awarding major government contracts. The RUE and SICE systems explained above are expected to become useful tools for better transparency in the process of contracting with government entities.
Colombia is still struggling to refine the requirements of Law 80, which calls for open bidding in public tenders. Attempts are being made to amend the law to clarify procedures. Despite the law, transparency, fairness, and truly competitive bidding conditions in many tenders remain uncertain. The Colombian government is also resorting to auctions even for purchase of high tech or complex equipment or medicines. These factors continue to be significant market access barriers. U.S. companies interested in public sector contracts should obtain legal counsel in Colombia and contact the U.S. Commercial Service for assistance and possible advocacy.
Certificate of Reciprocity: The Colombian Government procurement statute seeks to establish simple procedures based on the principles of transparency and objective selection; it provides equal treatment of foreign companies on a reciprocal basis. The procurement statute impedes complete access by U.S. firms since it requires a certificate of reciprocity. The principle of reciprocity embodied in Laws 80 and 816 ensure national treatment under the same conditions for Colombian bidders in other countries. The U.S. Government is unable to provide such a certificate, as each of the 50 U.S. states acts as a separate commercial jurisdiction. The Department of State, however, provides a certificate that U.S. companies may offer in lieu of a statement certifying reciprocity. Certificates can be obtained from the Economic section of the U.S. Embassy in Bogotá. Companies requiring this document should be prepared to provide the following information: company name, tender name, tender number, name of the Colombian entity letting the tender, and the general purpose of the tender.
Colombian military contracts above a certain amount (more than one million dollars for equipment and more than five million dollars for ammunition) require the foreign company to offer an “offset” proposal. Contact the Commercial Service for further information about this requirement.