The Public Purchases Law enters into force – El Salvador

By: Norma Yaneth Villalobos

By Legislative Decree No. 652, the Legislative Assembly approved the Public Purchases Law, which was published in the Official Gazette No. 43 Volume No. 438 of March 2, 2023, which becomes effective 8 days after its publication in the Official Gazette, which means that it is already in force.

Some of the most important aspects are the following:

With this new Law, abolishing the Public Administration Purchases and Contracting Law (LACAP) and seeks to modernize public Purchases in El Salvador, through information and communication technologies to facilitate the operational management of government Purchases, as well as tools that allow control and auditing measures in such means.

The Public Purchases Law establishes the basic rules that regulate the public purchases cycle that covers planning, selection of the contractor, contracting, follow-up and contract liquidation, goods, and services of any nature that the Public Administration must carry out for the achievement of its purposes.

This law applies to all natural or juridical persons, national or foreign, that offer or contract with the Public Administration, the contracting of the State institutions, its dependencies, and auxiliary organisms; the contracting of a public or private nature that commit public funds, as well as municipalities’ acquisitions and contracting.

The National System of Public Purchases “SINAC” is created for the administration, implementation, coordination and follow up of the purchases of the State and the National Directorate of Public Purchases “DINAC” as the governing entity for public purchases at national level, the Electronic System of Public Purchases “COMPRASAL” to register the information on acquisitions and contracts of the State and the Public Registry of Suppliers of the State (RUPES) in which all natural or legal persons who wish to participate in the purchases processes must register, except for the cases mentioned in the law.

The Law considers the following as Contracting Methods:

1. Competitive Bidding: For purchases for amounts greater than the equivalent of 240 minimum wages of the Commercial Sector in force: ($87,600.00) and Concessions.
2. Price Comparison: For purchases in amounts less than or equal to the equivalent of 240 minimum wages of the current Commercial Sector: ($87,600.00).
3. Direct Contracting: And exceptional method applicable only in the cases provided by law and, therefore, not subject to a limit in its contracting amounts.
4. Low Amount: Applicable to acquire goods and services required immediately, which may be covered with circulating funds or petty cash, recurring minor purchases, emergent.

New public contracting methods are included, such as:

1. Fixed Price Contract: by lump sum, unit price or as applicable for the specific services, works, goods and consulting services that clearly define the content and duration of the same.
2. Contract based on time: When it is difficult to define the scope and duration of services, based on hourly, daily, weekly, or monthly rates,
3. General Purchase Agreements: to cover expected repetitive needs for supplies or services and exceptionally for consultancies.
4. Concession Contracts: for public works, public services and natural resources and subsoil.
5. Lease of personal property: with or without a purchase option, with base amounts according to the current price in the local market.

Public works and consulting contracts and guarantee to ensure compliance with contractual obligations are maintained.

The law states as from its effective date, all acquisitions and contracts entered under the LACAP, and those that have begun the process, will continue to be governed by said law until their conclusion, except if modifications are made to the contractual relationship after the effective date of the new law.

It is also established that, until technological implementation for purchases processes, the Single Registry of Suppliers “RUPE” and other components are in operation, the other contractor selection procedures must continue to be applied.

With the Regulation for the Law’s application, the President of the Republic is granted the power to approve it for the fulfillment of its purposes.

Finally, the law is granted a special character over any general or special law that contradicts it, including the Organic Law of the Financial Administration of the State.

For more information on this and other legal issues, please contact LatinAlliance El Salvador, Abogados y Notarios, at the following e-mail addresses: mssuter@latinalliance.co; mcosta@latinalliance.co; nvillalobos@latinalliance.co.