RESTRICTED
WORLD TRADE S/WPGR/W/11/Add.15
21January 1997
ORGANIZATION(97-0409)
Original: Spanish Working Party onGATS Rules
COMMUNICATION FROM CHILE
Questionnaire onGovernment Procurement ofServices
Thefollowing communication isbeing circulated attherequest ofChile tomembers ofthe
Working Party onGATS Rules.
TheDelegation ofChile hassupplied theSecretariat withthefollowing documents which are
available forconsultation:
- Regulations oftheDAE Register ofSuppliers;
- Regulations oftheGeneral Register ofContractors, Supreme Decree No.15,1992,
Public Works.
________________
I. EXISTING PROCUREMENT REGIMES
Definition
1. What isthedefinition ofgovernment procurement usedincompleting thisquestionnaire?
InChile, government procurement ofservices comprises contracts forservices, tangible or
intangible, whether forownfunctions orforsupport, between anypublic entity (public service,
municipality orpublic enterprise) andanatural person orcorporate body, domestic orforeign.
Administrative structure
2. Howaregovernmentprocurementactivitiesadministered?Towhatextentareprocurement
activities centralized? Please specify theidentity ofanycentral procurement agencies andtheir
respective responsibilities.
(1) Chilean public sector
InChile, thepublic sector, likethesystem ofgovernment, corresponds tothatofaunitary
(non-federated) State. Itisbased onthepublic services, State enterprises andmunicipalities.
(a) Publicservices:Theseincludetheministries,theprovincialanddepartmentalauthorities
andtheServices established toperform theadministrative function.
(b) State enterprises: Aconcept which includes theState enterprises established bylaw
andthose organized asprivate corporations inwhich theStateholds amajority interest.S/WPGR/W/11/Add.15
Page2
(c) Municipalities (local government): These areautonomous public-law corporations,
withlegalpersonality, independent assets andtheirownresources, managed outside
theState budget, andareresponsible forthelocal government ofthecountry 's
communes.
(2) Administration ofgovernment procurement
InChile, there isnosingle government procurement system orprocedure. Thismeans that,
generally speaking, theprocurement process ishighly decentralized. Infact,mostgovernment contracts
areletatservice, enterprise ormunicipality level. Nevertheless, thecentral government hastwo
specialized government purchasing agencies, theCentral Supply Agency fortheNational System of
Health Services (Central deAbastecimiento delSistema Nacional deServicios deSalud -CENABASS)
forthehealth sector andtheState Supply Directorate (Direccion deAprovisionamiento delEstado -
DAE) forsupplying certain goods tothepublic services.
Government procurement canbedescribed byreference tothesystems usedbythepublic
services, State enterprises andmunicipalities respectively.
Public services
Independent procurement. Generally speaking, eachpublic service makes mostofitspurchases
ofgoods andservices independently, apower derived from itsownorganization actorforming an
exception tothegeneral procurement system. Most purchases areforgoods andservices andthe
purchasing programmes areplanned forone-year periods, inconjunction withtheState budget.
State Supply Directorate (DAE). TheDAE isapublic service operating under theMinistry
ofFinance towhich thepublic services turnwhenever theyneedtopurchase goods from stocks held
bytheDirectorate. Italsoprovides asingle central service: printing services. Ingeneral, theDAE
plans itspurchases forone-year periods.
Construction services. Thegeneral construction services procurement system isrunbythe
Ministry ofPublic Works (bridges, airports, seaports) andtheMinistry ofHousing andUrban
Development(basichousing,roadworks),theservicesbeingpermittedtocarryoutminorworksdirectly.
Theplanning period forconstruction services programmes varies withthenature oftheworks involved
(1to5years).
Central Supply Agency fortheNational System ofHealth Services (CENABASS). Thisis
agovernment department under theMinistry ofHealth which supplies goods suchasdrugs, equipment,
instruments andother necessary inputs required bytheNational System ofHealth Services. The
purchasing programmes areorganized onanannual basis, likethose ofthehealth services.
State enterprises
TheStateenterprises areindependent asfarasprocurement isconcerned. Accordingly, they
usethebusiness management criteria commonly applied byprivate enterprises forthese purposes,
obtaining goods andservices fromdomestic and/or foreign suppliers without distinction. Insomecases,
theirprocurement systems orprocedures areregulated bysupreme decree, particularly insome State
enterprises established bylaw. Inother cases theyaregoverned byinternal rules.
Themode ofprocurement isdetermined bythesums involved. Thus, itmaysometimes be
possible toproceed byrestricted tender, butwhere large purchases areconcerned public tendering
ismandatory.S/WPGR/W/11/Add.15
Page3
Municipalities
Each municipality enjoys autonomy asregards theorganization andimplementation ofits
procurement procedures. Nevertheless, theChilean Association ofMunicipalities provides allthe
municipalities withprocurement manuals andguidelines. Moreover, itkeeps themregularly informed
about domestic suppliers.
TheDAE'sorganization actalsoallows municipalities tomake theirpurchases through that
department, afacility ofwhich theymake frequent use.
Theprocurement programmes ofthemunicipalities generally cover aperiod ofoneyear.
Laws andregulations inforce
3(a) Please specify thelaws, regulations, rules, guidelines, decrees, decisions andother measures
governing government procurement. What isthescope oftheirapplication? Inparticular, please
describe anyexemptions thatexist. Please provide abrief summary ofthecontent ofeachof
these measures.
InChile, there isnobody oflawdealing comprehensively withthelegalregime applicable
togovernment procurement. Ingeneral, procurement isgoverned byrulesderived fromtheregulatory
powers (administrative rules andregulations) specific toeachpublic service, public enterprise or
municipality.
Municipalities
Inprocuring thegoods andservices theyneedtofunction, themunicipalities aresubject to
therules ofprivate orordinary law,asconfirmed byArticle 22ofthelaw-ranking Decree (DFL)
No.789of1978concerning national property. Nevertheless, thegeneral rulesofprocurement which
every municipality must follow arelaiddown inArticle 6ofLawNo.18.695 .
Public enterprises
Allpublic enterprises areindependent asfarasprocurement isconcerned. Therules stem
mainly from theirownorganization actsorinternal statutes. Ingeneral, themode ofprocurement
isdetermined bythesums involved. Alllarge purchases must bemade bypublic tender.
Central government
Inthecaseofcentral government, thequestions relating togovernment procurement havebeen
defined bytheadministrative authority (Office oftheComptroller-General oftheRepublic andthe
departments themselves) rather thanbythelegislative authority asinother countries. Nevertheless,
there arelaws, decrees andregulations specifically concerning government procurement ofservices
which extend tothewhole ofgovernment andaredescribed indetail below:
Procurement ofservices
1. Personal service contracts withpublic-sector corporations orentities
Contracts withpublic-sector corporations orentities, withmunicipalities, withStateuniversities
andvocationalcollegesandwithState-recognizedprivateuniversitiesandvocationalcollegesaregoverned
by:S/WPGR/W/11/Add.15
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Article 16ofDecree Law(DL) No.1608 anditsregulations Supreme Decree (DS)No.98
of1991 (Finance), iftheyinvolve theprovision ofthepersonal services ofemployees.
Theprovisions ofLawNo.18.803 anditsRegulations DSNo.21of1990 (Finance), ifthey
constitute theprocurement ofsupport forthefunctions ofapublic service which doesnotcorrespond
totheactual exercise ofitspowers.
Inbothcases, thelawsandregulations permit contracts tobeawarded directly totheentities
inquestion sincetheyprovide exemption fromcallsforquotations andrestricted invitations tonotless
thanthree firms. Moreover, inbothcases there isexemption from therequirement ofaguarantee
thattheentities donothaveamong theirpersonnel persons whoareemployees oftheState orhave
among theirpartners oneormore persons whoprovide State services asemployees andhold50per
centormore oftheshare capital.
2. Service orsupport contracts withprivate-law corporations orentities
(a) Personal service contracts. Application ofArticle 16ofDL1.608 of1976andDS98
(Finance) of1991.
Thefollowing conditions must besatisfied:
(i) Theservices procured mustbeindispensable fortheefficient performance of
theinstitution 'sownfunctions;
(ii) theservices cannot beprovided bytheinstitution 'sownhuman resources;
(iii) theprocuring entity must havesufficient funds available topaythefees;
(iv) thecorporate bodies maynothaveamong theirpartners oneormore officials
belonging toentities governed byD.L.No.249of1974whotogether represent
50percentormore oftheequity capital orhaveamong theirworkers persons
whoareatthesame timeofficials oftheabove-mentioned entities;
(v) atleastthree firms must beinvited tobidforacontract tobeawarded.
(b) Personal service contracts. Application ofLawNo.18.803 anditsRegulations;
DSNo.21of1990 (Finance).
Conditions:
(i) Must involve support fortheservice 'sfunctions andnottheactual exercise
ofitspowers;
(ii) thecorresponding tender conditions mustbeapproved bydecision ofthehead
oftheprocuring public service;
(iii) theremustbeaninvitation totender, public orrestricted, andinthelatter case
atleastthree private-law entities must participate asbidders;
(iv) when thecontracts involve theprovision ofthepersonal services ofthepartners
ortheirworkers, thebidding entities maynothaveamong theirpartners one
ormorepersons whoprovide services totheStateasemployees andhold50perS/WPGR/W/11/Add.15
Page5
centormore oftheequity capital orhaveamong itsworkers persons whoare
alsoofficials intheemploy oftheState;
(v) theprivate-sector tenderer mustagree toprovide security inremorintheform
ofadeposit toguarantee theperformance ofthecontract.
Theamount ofsecurity must bespecified inthecorresponding tender documents.
Anyfines orother penalties imposed ontheservice provider fordelay ornon-performance
willbecharged against these guarantees.
Depending ontheactivities forming thesubject ofthecontract, other requirements laiddown
bythelawanditsregulations must alsobemet,asdetermined casebycase.
3. Non-personal service contracts
3.1 Contracts withindividuals orcorporate bodies inaccordance withArticle 16ofDL2.879 of
1979 andmore specifically thefollowing:
- Repairs totheoffices andpremises ofthetaxservices;
- maintenance oftheservices 'furniture, machines andequipment, andcleaning;
- dataprocessing service: translation, reproduction, formdesign andthelike,asspecified
bytheservice.
3.2 Contracts withindividuals orcorporate bodies inaccordance withArticle 84ofLawNo.18.482
relatingtotheleasingofdataprocessingequipment,photocopiersand,ingeneral,officemachines
ofalltypes.
Public works procurement (construction services)
1. Decree 1340 of1964
Regulations concerning theevaluation, contracting andexecution ofpublic works. Amendments
inSupreme Decree No.15of1992.
2. Supreme Decree No.294of1984 (Ministry ofPublic Works -MPW)
Establishes thepublic works procurement system.
3. Supreme Decree No.15of1992 (MPW)
Establishes therules andregulations forpublic works contracts awarded bytheMinistry of
Public Works anditsagencies. Alsorequires that,without prejudice tothecases inwhich suchwork
mustbedonebyother services inaccordance withtheirorganization acts,anyplanning, construction,
repair ormaintenance ofpublic buildings financed fromtaxesshould becarried outbytheArchitectural
Directorate oftheMinistry ofPublic Works.S/WPGR/W/11/Add.15
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4. Decree No.48of1994 (MPW)
RegulationsconcerningtheprocurementofconsultancyservicesbytheMinistryofPublicWorks.
Alsoregulates thehiring ofcontractors.
Exceptions
Withrespect tothelegalframework described intheprevious section there areexceptions for
certain types ofservices, asindicated below:
Purchase orlease ofmotor vehicles
Government public services needprior authorization from theMinistry ofFinance inorder
topurchase, onanybasis, motor vehicles ofanytypeintended forthetransport ofpersons orgoods.
Services withafixed maximum complement ofmotor vehicles require similar authorization tolease
suchvehicles (Article 12,LawNo.19.259).
"Leasing system" operations
Thepublic bodies andservices governed forbudgetary purposes byDLNo.1.263 of1975
require priorauthorization fromtheMinistry ofFinance inorder toenterintocommitments involving
theleasing ofmovables withoption topurchase theleased goodortoenterintoagreements topurchase
goods when allorpartofthepriceistobepaidinaperiod thatexceeds thebudgetary year(Article 11,
LawNo.19.259).
Electronic andoffice machines
Forleasingdataprocessingequipment,photocopiers,duplicatorsand,ingeneral,officemachines
ofanytypeandforletting contracts fordataprocessing, reproduction, formdesign andother similar
services specified bytheentity concerned, theHead oftheService ispermitted tocontract directly,
withtheauthorization ofthecorresponding Undersecretary.
Purchase orlease ofdataprocessing equipment andcontracting forcomputer services
Public bodies andservices covered bytheBudgets Actrequire prior authorization from the
Ministry ofFinance inorder topurchase orlease dataprocessing equipment andperipherals when
theprice orrental exceeds theamounts laiddown bytheMinistry (Law No.19.430).
Similar authorization isalsorequired inorder tocontract fordataprocessing services, whether
independently oraspartofabroader services agreement, orfortheirextension ormodification, when
theexpenditure involved exceeds theamount laiddown bytheMinistry inquestion.
Theauthorization oftheMinistry ofFinance doesnotneedtoberenewed when dataprocessing
equipment leases which itapproved inprevious years maintain theterms originally agreed.
Theseauthorizationsarenotneededwhentheequipmentinquestionformspartorisacomponent
ofaninvestment project oraninvestment study identified asrequired bytheBudgets Act.
Direct purchase, leasing andcontracting forservices bypublic bodies andservices
Itispossible toproceed inthiswayifthepayments involved donotexceed theequivalent in
national currency of2,000 "promotion units" (unidades defomento) .Under these conditions,S/WPGR/W/11/Add.15
Page7
procurement cantaketheform ofrestricted tendering withtheparticipation ofatleastthree bidders
(Article 10,LawNo.19.259).
3(b) Doestheprocurement regime distinguish between theprocurement ofgoods andservices?
Ifso,thenhowistheapplication ofrules determined incases ofjointprocurement involving both
goods andservices?
InChile, therulesofgovernment procurement dodistinguish between theprocurement ofgoods
andservices. Theapplication oftherules incases ofjointprocurement depends onthenature ofthe
procurement. Ingeneral, bothsetsofrules areapplied since there isnoconflict between therules
forgoods andthose fortheprocurement ofservices.
Procurement procedures applied
4(a) What procedures arefollowed intheprocurement process?
Procurement procedures could differ according totheopenness oftheinvitations totender.
Atleastthreebroad categories ofprocedures arecommonly distinguished: (i)public oropentendering
procedures under which allinterested parties maysubmit atender; (ii)selective orrestricted tender
procedures under which participation islimited toacertain number ofselected suppliers, andonly
thesesuppliers areinvited tosubmit atender; (iii)private contract orsingle tender inwhich theawarding
authority contracts suppliers individually, andsometimes onlyasingle supplier.
Theprocurement procedures ofthepublic services (procurement ofgoods, services and
construction services), public enterprises andmunicipalities areoutlined ingeneral terms below.
Public services
I. PROCUREMENT OFGOODS AND SERVICES
Ingeneral, theprocedures forprocuring goods andservices usedbytheChilean public services
canbeclassified infourcategories, namely:
Directquotation(enquiryamongsuppliers):Theprocurementunitsendsthreesuppliersasimple
quotation document specifying thegoods orservices required. Asupplier ischosen onthebasis of
thethree quotes received.
Restricted tender: Theservice invites alimited number ofsuppliers totender. Theinvitation
specifies thegoods orservices needed and,intheirturn,thesuppliers respond withatechnical proposal
(quality) andacommercial proposal (price) onthebasis ofwhich theservice makes itsdecision.
Public tender: Aninvitation totender forthesupply ofgoods orservices giving ageneral
description ofthetender procedure ispublished inthepress. Later, theinterested parties receive the
specifications inadocument entitled "Technical andAdministrative Conditions". Thesubsequent steps
aresimilar tothose oftherestricted tender procedure.
Private contract: Asupplier isasked toquote andawarded acontract forgoods orservices.
Thisisanexceptional measure usedmainly inemergencies orunforeseen circumstances.
Asregards thespecific aspects oftheprocurement procedure, despite thelackofuniformity
intheregulations thatgovern theprocess inthevarious institutions, mostpublic services align their
procedures onthose usedbytheState Supply Directorate (DAE) oftheMinistry ofFinance.S/WPGR/W/11/Add.15
Page8
Broadly speaking, thepublic sector procurement system ispredominantly based onpublic
tendering, withrestricted tendering anddirect quotation reserved for"marginal" situations suchas:
- Urgent procurement;
- domestic market restricted because ofthenature oftheproduct;
- small amounts. Below certain thresholds procurement isbyrestricted tender ordirect
quotation.
Ingeneral, theprocess istransparent andtheparties wellinformed, considering thattheyreceive
thegeneralandtechnicaldocumentationandthattheinvitationstotenderand,insomecases,theoutcome
ofthetender procedure arepublished innational newspapers.
Depending ontheamount involved, thedecision toaward acontract maybetaken byan
individual (head ofthepublic service inquestion) orbyacommittee (Awards Commission).
Asmentioned above, mostpublic entities use,asaprocurement model, theprocedure applied
bytheDAE. Consequently, aknowledge ofthelatter willgiveafairly accurate picture ofthe
procurement process throughout government. Theprocurement system oftheDAEisdescribed below.
TheDAE procurement system
Steps intheprocess ofprocurement bypublic tender:
(a) Tender documentation
Consist oftwoparts: theadministrative conditions andthetechnical specifications.
Theformer specify thegoods orservices tobeprocured, theplaceandtimeofdelivery,
theterms ofpayment andanyother tender requirements. Thetechnical specifications
describe thegoods orservices being putouttotender, thequality standards, minimum
acceptance requirements andanyother elements thatwillbetaken intoaccount inthe
appraisal (guarantees, samples, manuals, catalogues, etc.).
(b) Invitation totender
Whilethetenderdocumentationisbeingprepared,thecorrespondinginvitationtotender
ispublished, prominently inthree national newspapers.
(c) Issue oftender documentation andreceipt ofbids
Inthisphase, thetender documentation isissued orsold, anyqueries areanswered
andthebidsarereceived. Aprecondition formaking abidistobelisted intheDAE's
Register ofSuppliers.
(d) Opening ofthebids
Thebidsareopened inpublic byacommission appointed bytheDAE, theprocedure
being asfollows:
- Opening oftheenvelopes;
- verification ofthedocumentation;
- correlative numbering ofthebids;
- signing ofthedocumentation bythemembers ofthecommission;S/WPGR/W/11/Add.15
Page9
- taking ofminutes andreading outofthebids;
- incorporation ofcomments intheminutes;
- signing oftheminutes bythemembers ofthecommission andthebidders.
(e) Appraisal
Theprocurement department oftheDAE checks thatthetender conditions havebeen
satisfied andcompiles acomparative tableofprices bid.Subsequently, theTechnical
Sub-Directorate checks theextent towhich thetechnical requirements havebeenmet
andprepares areport, theresults ofwhich arecombined withthecomparative table
ofprices.
(f) Award
TheDirector oftheDAE analyses theinformation contained inthecomparative table
ofprices anddecides towhom thecontract should beawarded.
Iftheprice exceeds 7,200 UTM1(approx. US$380,000), theDirector passes onthe
information totheBoard oftheDAE, which takes thefinaldecision.
(g) Formalization
Theresult ofthetender process isformalized bymeans ofanexempt resolution signed
bytheDirector oftheDAE, afterwhich thecorresponding purchase orders, which
constitute acontract withthesupplier, areissued.
Ifthepurchase orders areforanamount inexcess of4,000 UF(about US$120,000),
theyarepublished intheDiario Oficial (Official Journal).
II. PROCUREMENT OFCONSTRUCTION SERVICES
Most construction services contracts areletbytheMinistry ofPublic Works andtheMinistry
ofHousing andUrban Development. Theworks programmes runforperiods of1to5years.
Thepublic works procurement system oftheMPW isdefined inArticle 86ofD.S.No.294
(Public Works) of1984, which specifies thattheworks shallbecarried outunder acontract awarded
bypublic tender.
However, thesame Article indicates thatpublic works mayalsobecarried outunder aprivate
contract oracontract awarded bydirect quotation orbyadministrative authority ordelegated
administrative authority, asdetermined bytheRegulations inthecases inquestion.
Ingeneral, mostpublic works procurement usesthepublic tender system, which consists of
placing notices intheOfficial Journal inviting construction firms listed intheGeneral Register of
Contractors inthespecialties andcategories inquestion tosubmit bidsforcarrying outtheworks
concerned. Thisnotice specifies thedateandthetimefortheopening ofthebid.
1Monthly TaxUnits (Unidades Tributarias Mensuales).S/WPGR/W/11/Add.15
Page10
Public works tendering system
(a) Qualification ofsuppliers
There isaregister ofcontractors capable ofcarrying outmajor works, maintained centrally,
andregisters ofsmaller contractors, maintained atregional level, inwhich construction companies
arelisted byspecialty, depending ontheirexperience, andbycategory, depending ontheireconomic
capacity, inaccordance withtheprovisions oftheRegulations forPublic Works Contracts (RCOP).
Thecategories inthemajor works register range from3to1foreachspecialty. Thisdetermines
thecontracts thatcanbebidforinterms ofthecontract sumandthetypeofwork, whether itbe
roadworks, earthworks, concrete structure, etc.
(b) Invitation totender
Open invitations totender areissued byplacing notices intheOfficial Journal andthemain
newspapers; acertain minimum period mustelapse between theissuing oftheinvitation andthedate
ofopening ofthebids(Article 65RCOP).
(c) Selective tender procedure
Thisprocedure, which canbelikened torestricted tender, consists insending awritten invitation
tovarious construction companies listed intheRegister ofContractors inthespecialty andcategory
inquestion tocarry outspecified works.
Theletter indicates theplace, dateandtimeofopening ofthebids.
Thefirms invited receive theplans, thegeneral conditions, thetechnical specifications and
theofficial estimate.
(d) Time-limits fortendering anddelivery
Theminimum periods oftimeforsubmitting bids,reckoned fromthedateoffirstpublication
ofthenotice intheOfficial Journal, arelaiddown inArticle 65oftheRegulations forPublic Works
Contracts.
Nevertheless, theinviting authority maymodify theperiods laiddown, inaccordance with
therelevant provisions oftheabove-mentioned Article 65.
(e) Tender documentation
Toenable bidstobeproperly submitted thefollowing documents aresupplied:
- plans oftheproject andcubage, structures, etc.;
- general andparticular administrative conditions;
- technical specifications;
- official estimate;
- tender form.S/WPGR/W/11/Add.15
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(f) Negotiation
Negotiation would beusedifnocontractors responded toapublic invitation totender inwhich
case,inaccordance withArticle 86ofDecree No.294of1984, itwould benecessary tohaverecourse
toaprivate contract.
(g) Submission, receipt andopening ofbidsandawarding ofcontracts
Thebidsaresubmitted, received andopened inthepresence oftheauthorized officials ata
bidopening ceremony atwhich therepresentatives ofthebidders handintheirbids.
Once thebidshavebeenopened, theirvalues aremade known inthepresence oftherival
bidders.
Theopening proceedings arerecorded inMinutes which include adescription oftheworks,
thedateandtimeoftheceremony, thebidders present andthevalue oftheirbids.
Once thebidshavebeenexamined andchecked forerrors, thecontract isawarded byissuing
aresolution infavour ofthemost advantageous bid.
(h) Limited tender
Limited tender, which maybelikened toprivate contract, isappropriate inthecaseofworks
declared urgent bySupreme Decree, when thework needs tobebegun withtheutmost urgency, and
inthesituations envisaged intheabove-mentioned Article 86ofDecree No.294.
Public enterprises
Asalready mentioned, Chilean State enterprises areindependent asfarasprocurement is
concerned. Therefore theyusetheeconomic management criteria commonly applied intheprivate
sectorforsuchpurposes,obtainingtheirsuppliesfromdomesticandforeignsupplierswithoutdistinction.
Insomecasestheirprocurementsystemsorproceduresarespecifiedatsupremedecreelevel,particularly
insome statutory State enterprises; inother cases theysatisfy criteria established autonomously.
Themode ofprocurement isdetermined bytheamount offunds involved. Thus, restricted
tendering mayoccasionally beused, butwhere larger amounts areinvolved public tendering is
compulsory. Under theConstitution, neither theState noritsagencies maydiscriminate arbitrarily
among bidders, whether domestic orforeign.
TheComptroller-General oftheRepublic isempowered tooversee theprocurement procedures
ofState enterprises.
Municipalities
Aspreviously mentioned, eachmunicipality isautonomous asfarasprocurement isconcerned.
Article60ofLawNo.18.695,theMunicipalityConstitutionalOrganizationAct,obligesthemtoprocure
goods ofavalue exceeding 200UTM (US$10,275) bypublic tender.
Themunicipalities 'procurement procedures comply withinternal regulations and,generally
speaking, thequotation system andpublic andrestricted tendering areused.S/WPGR/W/11/Add.15
Page12
Theorganization actoftheState Supply Directorate alsoprovides forprocurement through
thatdepartment towhich themunicipalities frequently haverecourse since theyarethenabletoavoid
quotation ortender procedures.
TheComptroller-General oftheRepublic oversees themunicipalities 'procurement procedures.
4(b) Under what circumstances aredifferent procedures used? Forinstance, ifthemethod
useddepends onthevalue oftheprocurement, thethresholds should begiven.
Ingeneral, theprocurement procedure employed depends ontheamounts involved. Thus,
ifthequote isbelow acertain threshold, direct purchase orrestricted tender isused; ifitisabove
thatthreshold, thepublic tender procedure isfollowed. Thethreshold fordetermining which procedure
tousevaries from oneentity toanother. Thefollowing tableillustrates thesituation:
Government Procurement ofGoods andServices byValue (Average)
Public tender Restricted tender Direct quote
Public services >US$150,000 <US$150,000 <US$10,000
Municipalities >US$10,000 <US$10,000
*Values asofNovember 1996.
4(c) What arethetime-limits forthesubmission ofbids?
Thetime-limits varyaccording totheentity andthegoods orservices involved. Theminimum
time-limits generally employed areasfollows:
Minimum Time-Limits fortheGovernment Procurement ofGoods andServices
(From thePublication oftheInvitation)
Public andrestricted tender: 7calendar days
Direct quotation: 3calendar days
International tender: 60calendar days
Publicity forinviting tenders
5(a) How areintended procurements publicized? Areinvitations totender published? Isso,
where, andinwhat languages?
Further tothereplies tosection 3ofthequestionnaire, inChile public sector procurements
arepublished inthenewspapers withthebiggest national circulation: ElMercurio, LaNación, La
Época andLaTercera, aswellasinthefinancial andbusiness press: Estrategia andElDiario
Financiero. Ingeneral, theinvitations areinSpanish.
Procurements arealsopublished intheOfficial Journal, which appears daily. Moreover,
depending onthetypeofprocurement andthenature oftheentity orenterprise, thelatter isinformed
through thespecialized publications ofthenational trade associations.S/WPGR/W/11/Add.15
Page13
Theprincipal public sector procurements arelisted intheRevista Licitasur ,aregional weekly
(Argentina, Brazil, Paraguay andChile) accessible bye-mail. Forsubscription ratesandinformation,
contact Compania No.1068 of.901,Telephone: 6724189-6729410,Fax: 6724192.
5(b) Dotheextent andform ofpublicity differ according totendering procedures applied and/or
thevalue oftheprocurement?
Except inrarecases, direct quotation procurements arenotpublished inthepress. Public
procurements areallpublished andinthesame wayfordifferent bidding entities. There areno
differences inpublicity according tothevalue oftheprocurement. Procurements financed withcredits
fromcredit institutions suchastheWorld BankortheInter-American Development Bankareadvertised
slightly differently.
5(c) What details oftheintended procurement arenormally published? Isthere aminimum
setofinformation thatisrequired tobepublished? Ifso,please specify.
Details could include adescription oftheservice tobeprocured, tender opening andclosing
dates,conditionsofparticipation,procuringentity,enquirypoint,procurementplans,procurement
outcomes -contract award notices, etc.
Public tender notices must contain thefollowing information:
- Procuring entity;
- tender number;
- goods orservices tobeprocured;
- time-limits forsubmission ofbids;
- price oftender documentation (ifsold);
- place andhours ofsaleordistribution oftender documentation.
5(d) Arethere anycharges forobtaining thefullsetoftender documents? Ifso,please specify
anddescribe howthese charges areset.
Thelawdoesnotrequire thetender documents tobesold. Thepublic services arefreeto
setacharge forthesaleoftheirtender documentation. Even though there arenoprecise figures, it
canbestated thatinthecaseoftenders fortheprovision ofservices thedocumentation ismostly free
ofcharge. Nevertheless, thepower tosetacharge forthetender documents ispresent intheinstitution 's
regulations andgenerally vested inthedirector oftheservice, theheadofadministration orapurchasing
commission.
5(e) Areelectronic means usedtoadvertise procurement opportunities? What isthenature
ofthesystems inplace? Aredifferent tendering provisions applied tocontracts advertised in
thismanner? Ifso,please describe.
Inaddition totheinformation channels previously mentioned, some public services suchas
theMinistry ofPublic Works andtheState Supply Directorate useelectronic means forpublicizing
theirprocurements. Theinformation andthetendering provisions arethesame aswhen other means
areemployed.S/WPGR/W/11/Add.15
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Requirements laiddown forpossible suppliers
6(a) Arethere registration, residence orother requirements forpotential suppliers?
Itisnotveryoften thatinprocuring services theentities useregisters ofsuppliers. Where
theprocurement ofconstruction services isconcerned, suchregisters areveryoften used. This
procedure, which isfullyregulated, isdescribed under 4(a).
6(b) What isthenature ofanyconditions forparticipation required from suppliers -suchas
financial guarantees, commercial standing andtechnical qualifications? Dotheconditions of
participation varyaccording tothenature ofthetender process and/or thevalue oftheintended
procurement?
Inmostpublic andrestricted tendering, financial guarantees arerequired forthesubmission
ofbidsandfortheperformance ofthecontract. These areretained untilthetender process iscomplete
ortheservice hasbeenrendered. These guarantees donotvarywiththenature ofthetender process;
onthecontrary, apercentage ofthevalue ofthebidorthevalue ofthepurchase order isapplied.
Theguarantee summustbespecified inthecorresponding tender documents. Fines andother penalties
imposed onthesupplier fordelay ornon-performance canbeapplied against these guarantees.
6(c) Dothere exist listsofapproved suppliers? Ifso,what aretheprocedures forchecking
thecapability offirms applying forinclusion ontenderers 'mailing lists? Arelistsofapproved
suppliers, ifany,regularly reviewed/updated?
Inthecaseoftheprocurement ofservices ingeneral, thepublic entities donotkeeplistsof
approved suppliers. Thetechnical oreconomic requirements arespecified inthecorresponding tender
documents. Where theprocurement ofconstruction goods orservices isconcerned, listsofsuppliers
aregenerally used. Theprovisions relating tobothcases areappended tothisquestionnaire.
Criteria forassessing bidsandawarding contracts
7(a) What criteria aretaken intoaccount intheaward oftenders? Arethecriteria foraward
ofcontracts made available inadvance topotential suppliers?
Forinstance, whether obtaining thebestvalue formoney spent istheaimandwhether
criteria other thanprice aretaken intoaccount.
Therules statethatinawarding service contracts thefollowing aspects should betaken into
account:
- Thesolvency andtechnical qualifications ofthebidders;
- thespecialized professional qualifications ofthose directly responsible forproviding
theservice;
- theexperience ofthebidders and,inparticular, ofthose responsible forproviding the
service;
- thecontract price;
- thetimewithin which theservice willbeprovided;
- therelationship between timeandprice;
- themanner ofpayment inrelation totheprogress ofthework;
- thefinesandother penalties proposed foranydelay ornon-performance.S/WPGR/W/11/Add.15
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7(b) Isprocurement subject toanyoffset conditions, suchaslocalcontent, technology transfer
orcountertrade requirements?
Asdistinct from other countries, Chile hasnoprovisions ofthiskindinitsgovernment
procurement regulations norisanytypeofoffsetting encountered inpractice.
7(c) Ispreference given toanyparticular enterprises orgroup ofenterprises? Ifso,please
specify.
Asdistinct from other countries, Chile hasnoprovisions ofthiskindinitsgovernment
procurement regulations norisanypreference given inpractice.
7(d) Dotheprocurement criteria differ according tosector orregion oftheeconomy?
Theprocurement criteria donotdiffer according tothedifferent sectors orregions ofthe
economy.
7(e) What isthemargin ofchoice ordiscretion allowed tothepurchasing authority? What
doestheextent, ifany,ofdiscretion allowed depend upon?
Themargin ofchoice ordiscretion could relate to(i)therelative weight/importance ofeach
contract award criterion; (ii)margins ofpreference, ifany,inrespect ofspecific criteria; and
(iii)threshold values, ifany,above which referral toahigher levelofpurchasing authority isrequired.
Thediscretion allowed tothepurchasing authority could varyaccording towhether there is
(i)automatic tender, where thecontract isawarded onthebasis ofpredetermined criteria, either the
simple criteria ofprice, orpriceandother criteria; (ii)discretionary tender procedures which involve
acceptance ofthebidwhich ismostadvantageous -theaward ofthecontract isbased onseveral criteria,
some ofwhich arepredetermined, butwhich ingeneral leave theawarding authority acertain measure
ofchoice; and(iii)negotiated tender inwhich theawarding authority negotiates freely withthepotential
supplier orsuppliers astotheconditions ofthecontract.
With respect tobothgoods andservices there isamargin ofdiscretion forthepublic entities
intheirprocurement process which isrelated tothevalue oftheprocurement. Theprocurement of
goods withavalue ofmore than2,000 UTM (approx. US$117,000) andservices withavalue ofmore
than1,000 UTM (US$58,000) issubject toreview bytheComptroller-General 'sOffice (State
administrative authority) which verifies compliance withitsrulesofcompetence andtheadministrative
regulations.
Disclosure ofbidsreceived andcontracts awarded
8(a) How aretenders received, registered andopened?
Seereply toquestion 4(a).
8(b) Areentities required topublish details ofthecontracts awarded and/or notify unsuccessful
tenderers?
Entities arenotobliged topublish details ofservices contracts awarded. Neither isthere a
requirement tonotify unsuccessful tenderers.S/WPGR/W/11/Add.15
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8(c) Areentities required topublish, orprovide tounsuccessful bidders, pertinent reasons
whytheir bidwasrejected?
There isnolegalrequirement, butinpractice itiscustomary toprovide thereasons forrejecting
bidsattherequest oftheinterested parties.
Treatment granted todomestic andforeign services and/or suppliers
9. What laws, regulations, procedures orpractices accord domestic services and/or suppliers
treatment more favourable than thataccorded toforeign services and/or suppliers, oraccord
services and/or suppliers ofaMember more favourable treatment thanthose ofanother Member?
Please specify how, ifatall,more favourable treatment isaccorded. Please alsospecify the
working definition of"domestic" inrelation todomestic services andsuppliers.
InChile, asdistinct fromother countries, neither inthelegislation norinpractice isitstipulated
thatanyparticular bidder foragovernment procurement contract should beaccorded more favourable
treatment. Inparticular, Article 57oftheChilean Civil Code states thatthelawdoesnotrecognize
anydistinctions between Chileans andforeigners asregards theacquisition andenjoyment ofcivilrights.
Procedures forhearing andreviewing complaints/appeals
10. What, ifany,aretheprocedures available forparties, domestic andforeign, tolodge
complaints against theaward ofacontract? Please provide details.
Details could include:
- Institutional status: whether challenges areheard byanadministrative tribunal,
acourt oranyother review body;
- time-limits forcomplaints/appeal;
- typeofremedy, ifany,thatmaybegranted.
Inpractice, theChilean public sector hasadecentralized procurement system. Asexplained
earlier,eachentity,enterpriseandmunicipalityprocuresitssuppliesdirectlyinthemarketsinaccordance
withitsownregulations andprocedures. Consequently, theprocedures forchallenging anaward vary
from oneentity toanother. Usually, challenges aretreated asfollows:
- Duringtheopeningofbids,anysuppliermaymakeanycommentsheconsidersrelevant,
these being recorded inthecorresponding minutes;
- afterthebidshavebeenopened, tenderers maymake anycomments theyconsider
appropriate inwriting;
- oncethecontract hasbeenawarded, anybidder whoconsiders himself injured may
request anexplanation ofwhyhisbidhasbeenrejected. Ifheisnotsatisfied with
theexplanation, hecanseekredress from theOffice oftheComptroller-General or
thecourts.
Without prejudice totheabove, public sector procurement processes aresubject tothefollowing
checks: institutional control, government control, control bytheOffice oftheComptroller-General,
political control bytheChamber ofDeputies, judicial control.S/WPGR/W/11/Add.15
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1. Institutional control
Thiscontrol isexercised internally bytheentities themselves, inparticular bytheaudit and
internal inspection units.
2. Government control
In1994, theGovernment began carrying outministerial audits ofalltheservices andenterprises
ofeachDepartment. Theaimoftheseaudits istoensure anhonest andefficient civilservice including,
interalia,thecorrect useoftender procedures forprocuring goods andservices.
Moreover, theGovernment indirectly exercises control overgovernment procurement through
theprocess ofpreparation ofthenational budget anditscontrol overbudget administration since
government entities mustjustify totheBudget Directorate, abodyunder theauthority oftheMinistry
ofFinance, theirrequirements foranduseoftheresources allocated tothem bytheBudget Act.
3. Control bytheOffice oftheComptroller-General
Inaccordance withitsorganization act,theOffice oftheComptroller-General oftheRepublic
oversees thepurchases made, directly orthrough tendering andbidding processes, bythepublic services
(including municipalities), Stateenterprises andjoint-stock companies inwhich theStatehasatleast
a50percentstake. Thecontrol islegalandfinancial andmaybecarried outatanystage ofthetender
process.
Ifafaultorirregularity isdetected, whether asaresult ofacomplaint orasadirect consequence
ofitsowninvestigation, theOffice oftheComptroller-General informs theauthority concerned inorder
thatthefaultorirregularity maybeputright. Ifthesituation sowarrants, thelatter mayinstitute
proceedings, administrative, civilorcriminal, against theofficials involved before theappropriate court
ortribunal.
4. Political control bytheChamber ofDeputies
Intheexercise ofitspowers ofoversight, theChamber ofDeputies isauthorized toinvestigate
irregularities committed bycivilservants intheperformance oftheiradministrative duties.
5. Judicial control
TheConstitution provides fortheremedy ofapplication forprotection tothehigher courts
ofjustice (Courts ofAppeal) when constitutional guarantees, including those relating toillegal acts
ofthepublic authorities, areinfringed. Theproceedings arespecial andsummary.
II. MEMBERSHIPOFPLURILATERAL,REGIONALAND/ORBILATERALAGREEMENTS
11. IstheMemberpartytoanyplurilateral,regionaland/orbilateralagreementswithprovisions
ongovernment procurement? Ifso,please describe therelevant provisions.
TheGovernmentofChilehasenteredintocommitmentswithrespecttogovernmentprocurement
inthefree-trade agreements ithassigned withMexico, Ecuador, Colombia andVenezuela andinits
cooperation agreement withtheEuropean Union.
Allitsinternational agreements include thefollowing clause:S/WPGR/W/11/Add.15
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"Inthefirstyearinwhich thisAgreement isinforce, theAdministrative Commission,
established bytheArticle inquestion, shalldefine thescope andconditions ofgovernment
procurement between thesignatory countries. Tothisend,itshalltakeintoaccount thecriteria
laiddown intheGeneral Agreement onTariffs andTrade (GATT) inorder thatthesignatory
countries mayenjoy open, transparent, fairandcompetitive access where public sector
procurement isconcerned."
Thecooperation agreement withtheEuropean Union provides asfollows:
1. Theparties agree tocooperate toensure, onthebasis ofreciprocity, open,
non-discriminatory andtransparent procedures intheir respective government
procurement processes andtheprocurement processes oftheirpublic service sector
entities, atcentral, federal, regional andlocallevels.
2. tothisend,theParties agree toexamine thepossibility ofconcluding anagreement
onaccess toprocurement inthese sectors bycreating conditions thataretransparent,
fairandsubject toclearly defined challenge procedures.
3. thecooperation between theParties inthissector shallalsohaveasoneofitsobjectives
technical assistance inmatters relating totheAgreement onGovernment Procurement
(AGP).
4. theParties areconsidering thepossibility ofholding annual consultations inthissector.
III. ECONOMIC IMPORTANCE OFSERVICES PROCUREMENT
12(a) Please provide statistics (ifavailable) onthenumber andvalue ofservices procurements
- onbothanaggregate andasectoral basis;
- byorigin ofservices andsuppliers.
Inordertoenhancethecomparabilityofdataprovided,Membersmaychoosetoprovidestatistics
according totheservices sectoral classification indocument MTN.GNS/W/120 (dated 10July1991)
attheappropriate levelofaggregation.
TheGovernment ofChile doesnotcompile central records indicating theorigin ofservices
andsuppliers ortheclassification indocument MTN.GNS/W/120. Itonlymaintains thisinformation
forsome ofitsdepartments. Nevertheless, information ongovernment procurements fortheperiod
1991-1994 isavailable. Chile would beinaposition toprovide suchinformation inthefuture.
Procurements oftheCentral Government ofChile (1991-1994)
(atCurrent Prices inThousands ofUSDollars)
CG-CH/MIN/ITEM 1991-94 (thousands ofUSdollars)
Item/year 1991 1992 1993 1994
Goods 423,065 469,438 469,653 453,294
Services 454,702 557,934 596,625 649,894
Construction services 668,025 925,662 1,183,118 1,407,406
Total 1,545,792 1,953,034 2,249,396 2,510,594S/WPGR/W/11/Add.15
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Asregards theshare ofservices procurement indomestic output andconsumption, itisnot
possible toprovide reliable information since thedataontheconsumption andoutput ofservices in
thenational accounts areclassified differently fromthose usedforcompiling government procurement
data. Chile would beinaposition tosupply thisinformation inthefuture.