Selling to the Government

An Expert's View about Sales in Panama

Last updated: 25 Apr 2011

The law (Law 22) regulating government procurement and other related issues went into effect at the end of 2006. It created the Direccion Nacional de Contrataciones Publicas (National Procurement Office), and was designed to streamline and modernize Panama’s contracting system. One of the highlights of the law is the establishment of an internet-based procurement system All purchases must be announced in this system, in turn providing greater flexibility, transparency and speed in government purchases. The law also regulates the use of performance bonds, creates an administrative court to deal with procurement-related issues and an office to monitor public tenders (National Directorate for Public Tenders), allows for interest payment in the case of late payments to suppliers, and provides more expedited information access for all participants in the procurement process.

U.S. and other bidders for important government contracts continue to complain of lack of transparency, excessive delays, and bureaucracy in the bid selection process. Requirements may at times be designed to exclude competition and favor a particular supplier. Excessive bureaucracy has been also responsible for the government’s slow payment record. Typical payment schedules range from three to six months, after goods or services have been invoiced.

The Panama Canal represents significant business opportunities for U.S. exporters, with annual purchases of as much as $250 million, including port and marine equipment, building materials, industrial equipment and transportation materials and equipment. The $5.25 billion Canal expansion program, currently underway, is opening additional business opportunities for U.S. exporters in a wide range of products and services; to date, the prime contractor for the Canal Expansion has announced over $450 million in U.S. purchases. Despite being a government agency, the Panama Canal Authority (ACP) is a unique organization that by constitutional law is autonomous, runs a profitable and efficient operation, has full control over its budget and enjoys an excellent payment record.

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Posted: 25 April 2011, last updated 25 April 2011

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