Allende & Brea – Estudio Jurídico

This report cannot be considered as legal or any other kind of advice by Allende & Brea. For any questions, do not hesitate to contact us.

Public Health Emergency: COVID-19 Special Procurement and Contracting Procedure within the Framework of the Public Emergency

The National Procurement Office issued Disposition No. 48/20, published on March 20, 2020 in the Official Gazette, approving the complementary procedure to that established in Administrative Disposition No. 409/20 for the procurement of goods and services within the framework of the public health emergency declared by Law No. 27,541 and extended by Decree No. 260/20.

This regulation was recently interpreted by the National Procurement Office and amended by Disposition No. 53/20, published in the Official Gazette on April 11, 2020. This amendment was reportedly issued in response to certain complaints regarding alleged overpricing in contracts awarded by the Ministry of Social Development of the Nation.

Below are the points we consider relevant regarding this special procurement procedure.

  • Legal Framework

In response to the global pandemic outbreak, the National Government had to adopt urgent measures aimed at allocating State resources to mitigate the spread and health impact of COVID-19.

Within this framework, on March 12, 2020, Decree of Necessity and Urgency No. 260 was issued, extending for one year the scope of the public health emergency declared by Article 1 of Law No. 27,541.

Article 2 of the mentioned decree authorized the Ministry of Health to make direct purchases of goods, services, or equipment necessary to address the emergency, based on scientific evidence and strategic health information analysis, without being subject to the national administration’s procurement regime, expressly establishing that all cases must subsequently be published.

This possibility of direct procurement within the COVID emergency framework was expanded by Decree No. 287 dated March 17, 2020, allowing not only the Ministry of Health but also all jurisdictions, agencies, and entities covered by Article 8, sections a) and b) of Law No. 24,156 to make such exceptional procurements, subject to mandatory subsequent publication on the National Procurement Office’s website and the Official Gazette.

In this context, Administrative Decision No. 409, issued by the Chief of Cabinet, set out the general principles for this type of exceptional emergency procurement, which were complemented by the National Procurement Office through Disposition No. 48/20, recently amended by Disposition No. 53/20.

  • File Naming

Disposition No. 48/20 establishes that all initiated files must be named “COVID-19 Emergency Procurement No. XXX/YEAR,” and all actions, from the start of proceedings to contract execution completion, must be linked to the electronic file generated.

  • Procedure

Regarding the procedure, Disposition No. 48/20 requires inviting at least three suppliers registered in the Supplier Information System (SIPRO) associated with the National Administration’s Electronic Procurement System (COMPR.AR) to participate in the selection process.

However, exceptions apply when it is impossible to invite only registered suppliers, either due to the absence of registered suppliers in the specific category or other reasons. In such cases, the contracting jurisdiction or entity must justify this in the respective file, and invitations may be extended to interested parties not yet registered, with email addresses used for this purpose considered valid until the interested parties register.

Offers may also be submitted by those not invited, provided they are duly registered in SIPRO.

It is important to note that the National Procurement Office, through General Communication No. 06/20, stated that the obligation to be registered in SIPRO does not apply to foreign bidders participating in procedures regulated by Administrative Decision No. 409/20, who may be awarded contracts without meeting this condition.

  • Prices of Goods and Services to be Procured

Disposition No. 48/20 obliges contracting authorities to request from the General Audit Office of the Nation (SIGEN), on a priority basis, reference prices or benchmark values for goods and services to be acquired via SIGEN’s Web Benchmark Prices System when the estimated amount equals or exceeds that established in Resolution No. 36-E/2017. The information provided has a validity of 60 days and may be used in other similar procedures.

Disposition No. 53/20 further stipulates that contracting entities cannot consider offers exceeding the maximum prices approved in Resolution No. 100/2020 of the Secretariat of Domestic Trade of the Ministry of Productive Development.

  • Invitation to Offer and Offer Content

Disposition No. 48/20 details the mandatory elements in the invitation emails sent by contracting entities, including: (i) technical specifications; (ii) delivery timeframe; (iii) partial and total quantities; (iv) place and manner of delivery; (v) place, date, and time for offer submission; (vi) email address for receiving offers; (vii) selection criteria; (viii) payment terms and method; (ix) required guarantees and deadlines for their submission.

Disposition No. 53/20 adds two essential considerations to be included in invitation emails: (i) that payments above the maximum prices set by Resolution No. 100/2020 or future adjustments will not be made; and (ii) that offers will be evaluated considering breaches in prior contracts, specifying the number and type of breaches leading to offer rejection.

Moreover, Disposition No. 48/20 requires that the offer content be included in the body of the email sent to the contracting authority’s institutional email address; merely attaching the offer file is insufficient.

Regarding pricing, Disposition No. 48/20 allows requesting price improvements from the most favorable offer. If the preselected offer exceeds SIGEN’s reported price by more than 10%, a formal price improvement mechanism may be initiated to align the best offer with the referenced values. Should the competent authority proceed with awarding despite the higher price, the approval act must include a reasoned justification.

Disposition No. 53/20 explicitly states that despite the control exercised via the Web Benchmark Prices System, under Administrative Decision No. 472/2020, offers exceeding the maximum prices established by Resolution No. 100/2020 or future adjustments will not be considered.

If one or more quotes exceed the established maximum prices for the goods or services involved, the entity will request price improvements from interested bidders; otherwise, the offers will be rejected.

  • Causes for Offer Rejection

Disposition No. 53/20 provides that offers shall be rejected outright at any stage if, among others:

a) There are indications that bidders have colluded or coordinated positions in the selection process;
b) There are indications suggesting simulated competition or participation;
c) Offers show breaches of previous contracts, according to the terms set in invitations.

Such defects may also cause automatic contract termination with forfeiture of the corresponding guarantee.

  • Awarding

After analyzing offers and with prior legal service intervention, the contracting entity may issue the award act and purchase orders.

If the emergency procurement procedure, or any part thereof, fails or is deserted, the head of the jurisdiction, entity, or agency may directly select suppliers to fulfill the need.

Disposition No. 53/20 states that no award shall exceed the maximum prices established by Resolution No. 100/2020 or future updates and that awards may be made even if only one offer is received.

  • Guarantee and Exceptions

The contracting party must provide the contract performance guarantee within five days after notification of the purchase order or contract. Failure to do so may result in a formal notice, a new deadline, or contract termination with claim for the guarantee amount. If the contractor defaults, the entity may award the contract to the next highest-ranked bidder with their consent, and so forth.

Exceptions to guarantee submission apply when:
(i) The order or contract amount does not exceed “one thousand modules” (M 1,000), the module value defined by Article 28 of the Regulation approved by Decree No. 1,030 dated September 15, 2016, and its amendments;
(ii) The service is executed within the guarantee submission period;
(iii) The bidder is a jurisdiction or entity belonging to the National Public Sector under Article 8 of Law No. 24,156 and its amendments;
(iv) The bidder is a provincial, municipal, or Buenos Aires City Government agency.

  • Competent Authority

To determine the authority competent to issue the administrative act concluding the procedure, Annex I of Article 9 of the Regulation approved by Decree No. 1,030/2016 applies, considering thresholds set for abbreviated bidding and simple awarding procedures, and Annex to Article 35, section b) of the Regulation approved by Decree No. 1,344/07, with amendments, except for limits established for jurisdiction heads. In these cases, the highest authority without amount limits will be the minister or the highest authority of decentralized agencies or entities under Article 8, section b) of Law No. 24,156.

In all cases, the administrative act concluding the procedure must be published on the National Procurement Office website and in the Official Gazette for one day within ten days of notification. Contracting entities must also disseminate it on their portals.

  • Final Considerations – Interpretation by the National Procurement Office (ONC)

Although Dispositions No. 48/20 and 53/20 do not provide for inquiries about bidding documents, offer observations, or procedural challenges, agencies may submit questions related to Administrative Decision No. 409 procedures via the designated email: onccovid19@jefatura.gob.ar.

In this context, the ONC issued an interpretive document clarifying obscure or unclear aspects of this emergency selection procedure. The authority expressly recognized that the general national administration procurement regime (Decree No. 1023/01 and Decree No. 1030/16) does not apply to this type of contracting, establishing this as an exceptional regime governed by its own rules.

This report cannot be considered as legal or any other kind of advice by Allende & Brea. For any questions, do not hesitate to contact us.

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