Law No. 340-06 on the Procurement and Contracting of Goods, Services, Works, and Concessions

Law No. 340-06 on the Procurement and Contracting of Goods, Services, Works, and Concessions

THE NATIONAL CONGRESS

In the Name of the Republic

Law No. 340-06

CONSIDERING: That the efficiency sought by the Dominican State requires the availability of a new legal instrument that eliminates the shortcomings of the current legal framework and contributes to harmonization with international regulations and the most modern methods of public procurement and contracting;

CONSIDERING: That it is indispensable to enact a new law that establishes a unique, homogeneous legal framework incorporating the best international and national practices in the matter of public procurement and contracting;

CONSIDERING: That public contracting laws and the norms established therein must be consistent with the regulations and processes of the Integrated Government Financial Management System and its component subsystems;

CONSIDERING: That it is the duty of the State to achieve maximum efficiency in the management of public funds, additionally ensuring competitiveness and transparency;

CONSIDERING: That for this purpose, the State must establish methods of planning and programming for the use of public resources that respond to the needs and requirements of society and to budgetary and financing availability;

CONSIDERING: That it is the duty of State officials, as well as bidders and contractors, to respect and ensure compliance with laws, regulations, and complementary norms.

HAVING VIEWED Law No. 295, of June 30, 1966, on Government Supply;

HAVING VIEWED Law No. 105, of March 16, 1967, G.O. No. 9026, which subjects to competition for adjudication all engineering and architecture works exceeding RD$10,000.00;

HAVING VIEWED Law No. 322, of June 2, 1981, which establishes that for a foreign company or individual to participate in competitions, lotteries, or through any other method of adjudication or to be contracted by the Dominican State, such individual or company must be associated with a national or mixed-capital company;

HAVING VIEWED Law No. 200-04, of July 28, 2004, General Law on Free Access to Public Information;

HAVING VIEWED Law No. 126-02, of September 4, 2002, on Electronic Commerce, Documents, and Digital Signatures;

HAVING VIEWED Law No. 6160, of January 11, 1962, which creates the Dominican College of Engineers and Architects, and Law No. 6201, of February 22, 1963, which modifies it;

HAVING VIEWED Law No. 6200, of February 22, 1963, on the Practice of Engineering, Architecture, Land Surveying, and Related Professions;

HAVING VIEWED Law No. 27-01, of February 2, 2001, on Fiscal Funds;

HAVING VIEWED the Regulation of Law No. 322, issued under No. 578-86, of June 2, 1981, G.O. No. 9556, by which the Directory for Foreign Companies is created;

HAVING VIEWED the Regulation contained in Decree No. 262-98 which refers to Law No. 295, of June 30, 1966, on the Procurement and Contracting of Goods and Services of the Public Administration.

HAS ENACTED THE FOLLOWING LAW:

PUBLIC PROCUREMENT OF GOODS, WORKS, SERVICES, AND CONCESSIONS.

TITLE I OF THE CONTRACTING SYSTEM AND ITS COMMON NORMS

CHAPTER I OF THE SYSTEM AND ITS SCOPE

Art. 1.- The purpose of this law is to establish the principles and general norms governing public contracting, related to the goods, works, services, and concessions of the State, as well as the modalities that may be considered within each specialty. Therefore, the Public Contracting System is integrated by these principles, norms, bodies, and processes that govern and are used by public organisms to acquire goods and services, contract public works, and grant concessions, as well as their modalities.

Art. 2.- The regulations provided for in this law and its regulations apply to the organisms of the public sector that make up the following institutional aggregates:

1. The Central Government;
2. Decentralized and autonomous financial and non-financial institutions;
3. Public social security institutions;
4. Municipal councils of the municipalities and of the National District;
5. Non-financial and financial public companies, and
6. Any entity that contracts the acquisition of goods, services, works, and concessions with public funds.

Paragraph I.- For the purposes of this law, the Central Government shall be understood as that part of the public sector whose object is the political-administrative, legislative, judicial, electoral, and oversight leadership of the Republic, composed of the Executive Power, Legislative Power, Judicial Power, the Central Electoral Board, and the Chamber of Accounts.

Paragraph II.- For the purposes of this law, decentralized and autonomous financial and non-financial institutions shall be considered as administrative entities that act under the authority of the Executive Power, have legal personality, separate patrimony from the Central Government, and responsibilities in the fulfillment of specialized governmental and regulatory functions.

Paragraph III.- Non-financial public companies, autonomous financial decentralized institutions, and financial public companies must apply the provisions of this law. The acquisition of inputs, materials, and spare parts required by these institutions shall be subject to special provisions established by the regulation of this law. Likewise, they may have access to the price information systems provided for therein.

Paragraph IV.- All information related to the object of this law shall be freely accessible to the public in accordance with what is established in the General Law on Free Access to Public Information of the Republic. Except for those referring to matters of national security.

CHAPTER II

GENERAL COMMON NORMS FOR ALL ORGANISMS INCLUDED

Art. 3.- Purchases and contracting shall be governed by the following principles:

1. Principle of efficiency. The offer that best suits the satisfaction of the general interest and the fulfillment of the purposes and duties of the administration will be sought to be selected. The acts of the parties shall be interpreted in a manner that favors the fulfillment of objectives and facilitates the final decision, under conditions favorable to the general interest;

2. Principle of equality and free competition. In administrative contracting procedures, the equal participation of all possible bidders shall be respected. The regulations of this law and provisions governing specific contracting procedures shall not include any regulation that impedes free competition among bidders;

3. Principle of transparency and publicity. The public purchases and contracting included in this law shall be executed in all their stages in a context of transparency based on the publicity and dissemination of actions derived from the application of this law. Contracting procedures shall be made public through the means corresponding to the requirements of each process. Any interested party shall have free access to the administrative contracting file and complementary information. The use of information technology facilitates access by the community to State management in this matter;

4. Principle of economy and flexibility. The norms shall establish clear rules to ensure the selection of the proposal evaluated as the most technically and economically convenient. Additionally, regulations contributing to greater economy in the preparation of proposals and contracts shall be contemplated;

5. Principle of equity. The contract shall be considered as a whole in which the interests of the parties condition each other. Between the rights and obligations of the parties, there shall be a correlation with equivalence of honesty and justice;

6. Principle of responsibility and morality. Public servants shall be obliged to ensure the correct execution of the acts involved in contracting processes, the full fulfillment of the contract object, and the protection of the rights of the entity, the contractor, and third parties who may be affected by the execution of the contract. Public entities and their servants shall be liable before the justice system for legal infractions;

7. Principle of reciprocity. The Government shall seek fair treatment for Dominican bidders when they participate in other countries, granting similar treatment to foreign participants regarding conditions, requirements, procedures, and criteria used in tenders;

8. Principle of participation. The State shall seek the participation of as many natural or legal persons as possible who have the required competence. At the same time, it will seek to stimulate the formation of new local companies with financial and technological capacity that contribute to national development;

9. Principle of reasonableness. No action, measure, or decision by a competent authority in the application and interpretation of this law shall exceed what is necessary to achieve the objectives of transparency, legality, competition, and effective protection of the interest and public order pursued by this law. Such actions, measures, or decisions shall not order or prohibit more than what is reasonable and just in light of the provisions of this law.

Art. 4.- Basic Definitions

Public Administration: The generic denomination encompassing the institutions, entities, or organisms of the Dominican State defined by Article 3 of this law, as well as the dependencies of said institutions and entities.

Contracting Administration or the Contractor: The Public Administration that carries out a contractual process and celebrates a contract. In the case of Public Contracting of Concessions, it shall be called the Granting Administration or Grantor.

Goods: Objects of any kind, including raw materials, products, equipment, other objects in solid, liquid, or gaseous state, as well as accessory services to the supply of these goods, provided that the value of the services does not exceed that of the goods themselves.

Concession or concession contract: As defined by Article 72 of this law.

Concessionaire: Any natural or legal person beneficiary of a concession contract.

Consultant: Natural or legal persons, public or private, including consulting firms, engineering firms, construction managers, procurement agents, inspection agents, United Nations agencies, and other multinational organizations, investment banks, universities, research institutions, government agencies, non-profit associations, and individuals, in short, proponent or service contractor, according to the definition given in this law.

Constructor: The proponent or contractor of works, according to the definition given in this law.

Contractor: Any natural (individual) or legal (corporate) person to whom an award has been granted and with whom a contract has been celebrated, the other party being the State.

Public Contracting: The obtaining, by contract, by any method, of works, goods, services, or granting of concessions, by entities of the Dominican public sector.

Main Contract: The document or legal instrument signed between the authorized representatives of the contracting authority and the contractor for the acquisition of goods, concessions, and the execution of projects, works, or services, in which the obligations and rights of both parties are fixed in harmony with this law, its regulation, the terms of reference, and other prevailing legal provisions.

Call for Bids: Public and formal call to participate in some public contracting process.

Contracting Entity: The organism, body, or dependency of the public sector, within the scope of this law, that has carried out a contractual process and celebrates a contract.

Public Funds: Those obtained through the collection from natural or legal persons who pay taxes in the Dominican Republic, from the General Budget of the Nation, from national or international financing, or any other lawful method of obtaining funds by the Public Administration, for a purpose or end of a state nature.

Law: This, the Law on Public Contracting of Goods, Services, Works, and Concessions.

Highest Executive Authority: The holder or legal representative of the contracting entity or whoever has the authorization to celebrate contracts.

Bidder, Proponent, Offeror, or Bidder: Natural or legal person, legally qualified to participate by presenting an offer or proposal in tenders for goods, works, services, or concessions.

Works: Works related to the construction, reconstruction, demolition, repair, or renovation of buildings, roadways, transport, structures, or installations, land preparation, excavation, building, provision and installation of fixed equipment, decoration, and finishing, and accessory services to these works, such as drilling, topographic work, satellite photography, seismic studies, and other similar services stipulated in the contract, if the value of these services does not exceed that of the works themselves.

Additional or complementary work: That not considered in the bidding documents or in the contract, whose execution is indispensable and/or necessary to fulfill the intended goal of the main work and which gives rise to an additional budget.

Regulatory Body of Public Contracting or Regulatory Body: As defined by Article 36, Paragraph I of this law.

Terms of Reference: Documents containing the bases of a selection and contracting process, in which the background, objectives, scope, requirements, plans in the case of works, technical specifications or terms of reference, and more conditions that guide or limit interested parties in presenting offers are indicated.

Proponent: See definition of Bidder.

Supplier: The proponent or contractor of goods, services, including the service of construction of works according to the definition given in this law.

Regulation for the application of the law or regulation: The regulation that the Regulatory Body will prepare and that the Executive Power will enact by decree.

Consulting Services: Specialized professional services, whose object is to identify, plan, elaborate, or evaluate development projects, at their pre-feasibility, feasibility, design, or operation levels. It also includes supervision, oversight, and evaluation of projects, as well as advisory and technical assistance services, preparation of economic, financial, organizational, administrative, audit, and research studies. That is, those of a strictly intellectual nature, the results of which do not lead to physically measurable products.

Support Services for Consulting or Other Services: Those auxiliary services with physically measurable results, which do not imply professional opinion or judgment, such as accounting, topography, cartography, aerial photogrammetry, the performance of geotechnical tests and drilling without interpretation, computing, data processing, and the auxiliary use of special equipment.

Subcontract: Any contracting made by the contractor with a third natural or legal person, for the execution of a part of the main contract.

Terms of Reference: The terms of reference for consulting services are what technical specifications are for goods and works; that is, technical conditions to be met to achieve the objectives with the required quality.

Art. 5.- The processes and persons subject to this law are:

Processes:

1. Purchase and contracting of goods, services, consulting, and rentals with purchase option and leasing, as well as all those contracts not expressly excluded or subject to a special regime;
2. Contracting of public works and concessions.

Persons:

1. Natural or legal persons, national or foreign, who make an offer for goods and services required by public administration institutions or contract works or concession works or services or both.
2. Two or more persons who present an offer as a set acting as one, establishing in a notarial act that they act under that condition, that they are not different persons, the obligations of each of the actors and their role or functions and the scope of the set relationship and the parties with the institution object of the offer.

Paragraph I.- Natural or legal persons who form or present offers as a set shall be jointly liable for all consequences of their participation in the set, in contracting procedures and in their execution.

Paragraph II.- Natural or legal persons who form part of a set shall not present other offers individually or as part of another set, provided that it concerns the same object of the contracting.

Paragraph III.- Natural and legal persons must register in the records established in the regulation of this law. Likewise, institutions shall keep a public record where they will establish a list of bidders and contractors, establishing non-compliance and other information of interest that serves as a background to determine a new contracting or disqualification to offer goods and services to public institutions subject to this law and to contract works.

Art. 6.- The application of this law excludes the processes of purchases and contracting related to:

1. International treaties, commercial or integration agreements, loan or donation conventions from other States and entities of international public law, when so determined by the treaties, agreements, and conventions, which shall be governed by the norms agreed upon;
2. Public credit operations and the contracting of public employment, which are governed by their respective norms and laws;
3. Activities that for reasons of national security, emergency, or manifest urgency that could affect lives or the country's economy, prior qualification and substantiation by decree when it concerns entities of the Central Government, decentralized and autonomous bodies, and by resolution of the highest competent authority when it concerns other entities. The typification of this qualification shall be established in the regulation of this law;
4. The realization or acquisition of scientific, technical, and artistic works, or restoration of historical monuments whose execution must be entrusted to companies, artists, or specialists who are the only ones capable of carrying them out. When it concerns the acquisition of goods and technical and scientific services where there is no more than one national offer in first place, and international in second place, or goods and services that without substitute and having an exclusive and specialized character are only offered by a single natural or legal person, the formalities and procedures of this law may be dispensed with with the prior publication of a description of the requested services and the granting of a period of twenty (20) days for the receipt of offers. When it concerns goods, technical or scientific services of education and health, having the same character, the formalities and procedures established in this law and the publication requirements established in this article shall be dispensed with;
5. The purchases and contracting of goods or services with exclusivity or that can only be supplied by a specific natural or legal person;
6. Purchases with petty cash funds, which shall be carried out in accordance with the corresponding regime;
7. The activity that could be contracted between entities of the public sector;
8. The purchases and contracting carried out for the construction, installation, or acquisition of offices for the foreign service;
9. Rescinded contracts whose termination does not exceed forty percent (40%) of the total amount of the project, work, or service, in accordance with the mechanisms established by the corresponding regulation.

Paragraph I.- The respective regulation of this law shall establish the procedures to which the cases enumerated in items 4), 5), 6), 7), and 8) of this article shall be subject.

Paragraph II.- When purchases or contracting are carried out with simultaneous internal and external financing, the application of the norms of this law shall be made only when the internal financing is greater than or equal to fifty-one percent (51%) of the total.

Paragraph III.- In no case shall petty cash fixed funds exceed fifty thousand pesos (RD$50,000.00), and they may only cover expenses that do not exceed five thousand pesos (RD$5,000.00) in each case. These amounts may be adjusted for inflation annually according to the multiplier published for such purposes by the General Directorate of Internal Taxes (DGII).

Paragraph IV.- When the delivery period for the purchase of a good or service exceeds six (6) months or requires a credit operation whose payments or financing exceeds the fiscal year and requires the approval of the National Congress, it cannot be considered a situation of public calamity and therefore the provisions of the main part of this article shall not apply. Likewise, when a purchase of goods and services, contracting of work and its construction exceeds a delivery period of six (6) months, or when in a phased execution the set of phases exceeds a period of six (6) months and when a concession exceeds the same period, they shall not be considered within a situation of public calamity and such purchase, contracting, or concession shall be governed by the provisions of this law.

Paragraph V.- Institutions subject to the provisions of this law when they have an annual budget allocation equal to or less than twenty million pesos (RD$20,000,000.00), both for current expenses and capital expenses, may contract for the acquisition of goods and services, without the formalities