Possibility of Reviewing Procurement Processes, Pending or Under Execution, in the Autonomous City of Buenos Aires
On May 12, 2020, Law No. 6,301 was published in the Official Gazette of the Autonomous City of Buenos Aires. Through this law, a state of Economic and Financial Emergency was declared in the jurisdiction, effective from the date of its enactment (May 12, 2020) through December 31, 2020.
The provisions of this law apply to the Central Administration (Legislative, Executive, and Judicial branches), local communes, decentralized agencies, autonomous entities, state-owned companies and corporations, majority state-owned corporations, and the Economic and Social Council.
The law contains several significant administrative law provisions, among which the following stand out:
(i) the possibility of carrying out budget restructurings — with certain limits and exceptions;
(ii) the prohibition on making new appointments of any kind or with any source of funding, as well as the prohibition on expanding the functional organizational structure of senior authorities and the executive management system of the Executive Branch; and
(iii) the ability to review procurement and contracting processes.
With respect to this last point, the law clearly establishes that the entities subject to its provisions may review all procurement and contracting processes — whether pending or ongoing — related to the acquisition of goods, services, supplies, public works, concessions, and permits that were entered into prior to the law’s effective date. They may proceed to suspend, terminate, revoke, rescind, or modify the essential conditions of such contracts.
These powers may be exercised on grounds of opportunity, merit, or convenience, provided that doing so is financially or economically more advantageous for the public interest, and must be supported by a prior opinion issued by the Office of the Attorney General of the City of Buenos Aires.
Should any of these situations occur, contractors, suppliers, or concessionaires will only be entitled to reimbursement of expenses that they can reliably prove were incurred as a result of the contract, subject to the scope and in the manner determined by the contracting agency. Claims for lost profits or interest on capital required for financing will not be admissible. Such reimbursements will be made once the state of Economic and Financial Emergency has ended and will be subject to the availability of financial resources.
Finally, it is worth highlighting that the law created the Special Commission for the Oversight and Monitoring of the Health Emergency declared by Emergency Decree No. 1/20. This commission is tasked with overseeing and monitoring the measures implemented and their outcomes.
This law is of vital importance, as we believe the State must make every effort to ensure the continuity of ongoing contracts in pursuit of the common good and the general interest embedded in them.
