/ New Regulations of the Public Procurement Law

As part of the modernization of the public procurement system established by Law No. 21,634, the new Regulations of the Public Procurement Law introduce significant modifications to contracting procedures and the Supplier Registry. Additionally, they incorporate important changes regarding transparency, integrity, and the powers of the Public Procurement and Contracting Directorate. The regulations came into effect on December 12, 2024, with certain specific provisions taking effect at later dates.

Corporate Team

Alessandri

On December 12, 2024, along with the entry into force of the third phase of modifications to the Public Procurement Law (Law No. 19,886) introduced by Law No. 21,634, the Ministry of Finance issued Decree No. 661, which approves the new Regulations of the Public Procurement Law.

The key highlights are as follows:

1. Changes to Existing Procurement Procedures

The Regulations reinforce Public Tendering as the general rule for procurement procedures, thereby strengthening the principles of transparency, free competition, and fairness. Exceptionally, and with duly justified reasons, contracts may be awarded through Private Tendering, Direct Negotiation, Exceptional Direct Procurement with Publicity, or other special procedures.

The main modifications in this area are as follows:

1.1. Changes to Public Tendering and General Procurement Procedures

I. New evaluation criteria are introduced alongside technical and economic assessments, including support for social economy enterprises, gender equality promotion, women’s leadership, and the participation of underrepresented groups in the national economy.

II. Simultaneous bids from suppliers belonging to the same business group or with related ties must be declared inadmissible.

III. Reckless or high-risk bids may be declared inadmissible.

IV. Supplier guarantees thresholds and requirements are reduced.

V. Penalties and fines for suppliers are increased and expanded.

VI. The grounds for contract modification and termination are further specified and differentiated.

1.2. Changes to Direct Negotiation or Exceptional Direct Procurement with Publicity

I. Justification and publicity: The justification standard is raised, requiring all Direct Negotiations to be published on the Public Market platform.

II. Modification and restriction of grounds: The requirement for price quotes and the contract extension ground are eliminated. Additionally, the justification for certain grounds, particularly sole supplier, unsuccessful tendering, urgency or unforeseen events, security and trust, and acquisitions under 30 UTM, is restricted.

III. Prior publicity for certain grounds: In cases of sole supplier or urgency, the entity must first publish its intention to conduct Direct Negotiation, including details of the goods or services and the supplier. A five-day period is given for any other interested supplier to request an alternative procurement process.

IV. Right to challenge: In such cases, if the entity insists on Direct Negotiation, the affected supplier may challenge the decision through administrative and legal actions established by law.

V. Administrative liability: Improper justification of Direct Negotiation may result in administrative sanctions. In urgency cases, the entity must prove that the circumstances were genuinely unforeseeable and not due to poor planning.

2. New Special Procurement Procedures

I. Agile Purchasing: This pre-existing exceptional purchasing method is now formally regulated as a distinct and specialized procurement procedure. Its threshold increases from 30 to 100 UTM and is restricted to Small Enterprises (Large Enterprises will only be allowed in exceptional cases).

II. Quotation-Based Procurement: This procedure derives from Direct Negotiation and allows entities to negotiate with suppliers, requiring at least three price quotations without the need for public tendering or private proposals. It applies to early contract terminations where the remaining amount does not exceed 1,000 UTM and agreements with foreign legal entities for services executed outside Chile.

III. Electronic Reverse Auction: A newly introduced procurement procedure for standardized goods and services that are not available under Framework Agreements. It involves multiple electronic rounds without requiring public tendering or private proposals.

IV. Contracts for Innovation: This new competitive procurement method is focused on acquiring goods or services that address public needs where no existing market solutions are available.

V. Competitive Innovation Dialogue: A structured dialogue process for complex public procurement cases, allowing entities to refine technical specifications and adapt market solutions before contracting.

3. Transparency, Integrity, and New Powers of the Public Procurement and Contracting Directorate

I. Entities subject to the Public Procurement Law must maintain a record of public officials participating in each procurement process and contract execution.

II. Public officials must submit asset and interest declarations and update them annually.

III. The Public Market platform will include an electronic profile for each purchasing entity, detailing procurement records, average payment times, complaints, and legal actions filed against them.

IV. The Public Procurement and Contracting Directorate will manage an electronic complaints and whistleblowing channel to report violations of the Public Procurement Law and Regulations, ensuring confidentiality and security.

V. This authority will also oversee and issue binding instructions for public entities, except for municipalities, which may voluntarily adhere to these directives.

4. Changes to the State Supplier Registry

I. Suppliers must submit a new sworn declaration identifying related individuals or companies and the ultimate beneficiaries of registered legal entities.

II. Suppliers will be classified into categories based on their annual revenue ranges.

III. A contractual compliance evaluation section will be added, serving as a reference for future procurement processes.

IV. The list of ineligibilities is expanded, now including convictions for serious crimes, contractual breaches, labor rights violations, bankruptcy proceedings, and other disqualifications established by special laws.

5. Entry into Force of the Regulations

As a general rule, the Regulations take effect upon their publication in the Official Gazette. However, the following special rules apply:

I. Procurement contracts and procedures whose terms of reference were approved before December 12, 2024, will be governed by the rules in effect at the time of approval.

II. Provisions concerning supplier categories, Electronic Reverse Auction, Contracts for Innovation, and Competitive Innovation Dialogue will come into force on June 12, 2025.

III. Provisions regarding supplier evaluation will take effect on Jun

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