Procuring Infrastructure Public-Private Partnerships

PPP in Dominican Republic are subject to the main following laws and regulations: (i) Law No. 340-06 on Public Procurement of Goods, Services and Concessions -Ley sobre compras y contrataciones de bienes, servicios, obras y concesiones- (the "Law No. 340-06") adopted on August 18, 2006 as amended by Law No. 449-06 of December 6, 2006. The amendment operated by Law 449-06 (December 6, 2006) intended to exclude concessions from the scope of Law 340-06, in order for concessions to be ruled by a separate law. However, to date a Concessions Law has not been approved; (ii) Ruling of Application of the Law, Decree No. 543-12 of September 6, 2012 (The Decree No. 543-12) (iii) Law 189-11 for the Development of Mortgage Market and Trusts in the Dominican Republic.

(i) http://www.comprasdominicana.gov.do/documents/10180/13765/Ley_No_340_06_y_449_06.pdf (ii) http://www.comprasdominicana.gov.do/documents/10180/13765/Decreto_543_12_lowres.pdf;

Executive Branch adopted Decree 15-17 on February 8, 2017, effective, March 1st, 2017 intending to assure compliance by procuring authorities of budge and public expenses norms and legal requirements, by having them first certify approved funds under the national budget before initiating a procurement process.

Article 2 of Law No. 340-06 establishes that the operating organisms of the public contracting entities are: a) The Central Government; [http://presidencia.gob.do/] b) The financial decentralized and autonomous institutions and non-
financial; c)Public institutions of social security ; d) The councils of the municipalities and the National District ; e) public non-financial and financial companies and, f) Any entity that contracts the acquisition of goods, services, works and concessions with public funds. The supervision of all PPP contracts would be in the hands of the Governing Body; the operating units of the public entities shall be responsible for managing the agreements. http://www.comprasdominicana.gov.do. Finally, the Ministry of Finance (http://www.havienda.gov.do/) through its' General Directorate of Public Procurement (http://www.comprasdominicana.gov.do), will act jointly with the Goods and Services Branch and the Works and Concessions Branch as Governing Body of the System.

Article 3 of Decree 15-17 provides that all the bodies that comprise the public administration shall not start purchases or procurements procedure of goods, services, works and concessions, nor transfers to private sector, without having the "Certificate of budgetary appropriation" ("Certificado de apropiación presupuestaria") setting forth the existence of enough balance for the total amount of the provided expenditure in the corresponding budgetary account. The Ministry of Finance has overall responsibility about the issuance of such certificates following the rules established in the mentioned Decree 15-17. Article 3 paragraph I of the same Decree 15-17 further states that when contracts imply expenditures that will continue for longer than a budgetary year, the total amount will be registered in the transaction portal. Also, the budgetary authority will take into account this ammount to incorporate it the corresponding anual budget.

According to Article 50 of Law 340-06, any concession contract implying an investment by the concessionaire and a duration of more than 5 years, must also be approved by the Executive Branch, through a Presidential Decree (to the extent that the procuring authority is not the Executive Branch) and through a resolution from the General Administration of Public Procurement. If the concession implies tax exemptions and/or the conveyance of real estate properties, the contract or concession must also be approved by the Dominican Congress. Moreover, article 10 of Decree 15-17 provides that the General Comptroller Office will reject all petition to register a contract, if it has not previously confirmed the following: (a) that the body or public entity has the "Certificate of budgetary appropriation" ("Certificado de apropiación presupuestaria"); (b) that the process has been published in the transactional website, as suitable, and in the institutional website; (c) that it complies with Law 340-06 and its amendments; (d) that it complies with Law No. 423-06 on Organic Budget for the Public Sector and with its related provisions; (e) that it has the National System Public Investment ("Sistema Nacional de Inversión Pública" or "SNIP") code, assigned by the Ministry of Economy, Planning and Development if it is an investment project; (f) that it complies with the requirements set forth in Law No. 498-06 on Planning and Public Investment.

Article 56 Paragraph I of Law 340-06 states that the procuring authority will be the unit authorized to asses the bids. The procuring authority will do its assessment with the support of professionals from different disciplines, who will vary according to the type of project that wants to be developed. Further, Law 340-06 provides that advisors involved in the procurement process or the elaboration of bidding conditions are prohibited from bidding on such procurement processes, a provision which implies that such advisors may be used by the procuring authority. Ruling of Enforcement of Law 340-06 (comprised by Decree 543-12) also provides for the appointment of experts to assist in the preparation of the technical specifications of the tender documents and to evaluate proposals during the bidding process.

Article 38 of Law 340-06 sets forth that all the public administration offices subjected to law 340-06 are required to create annual plans of public procurement, which should be made according to the Finance State Secretary's guidelines. Also, Article 10 of Decree 15-17 provides that the General Comptroller Office will reject all petition to register a contract, if it has not previously confirmed the following: (e) that it has the National System Public Investment ("Sistema Nacional de Inversión Pública" or "SNIP") code, assigned by the Ministry of Economy, Planning and Development if it is an investment project; (f) that it complies with the requirements set forth in Law No. 498-06 on Planning and Public Investment.

Decree 15-17 provides that there are still important challenges in the coordination of the planning, budgetary and public procurement systems, as well as in the improvement of the payment system, that require of controls allowing for the resources to flow to prioritized programs and projects (Third Whereas of Decree 15-17).

Article 33.a) of law 498-06 states that public investment projects have a prefeasibility stage in which different assessments must be conducted. The assessments must be: economic, social, and environmental, as well as on the potential production capacity and the operational and maintenance costs of the project.

Article 41 of Law 64-00 (General Environmental Law) enumerates the different projects that are required to present an environmental impact assessment. Subsection 4) especially mentions highways, roads, and railways.

Law 64-00 (General Environmental Law) and, more in particular, the details provided by the Compilation of regulations and procedures regarding for environmental authorizations in the Dominican Republic (that includes the procedure for environmental impact assessment). Available at: http://ambiente.gob.do/wp-content/uploads/2016/10/REG-03.pdf

Article 53 of Law 340-06 states that, prior to launching the procurement process, a public hearing has to be done. That public hearing has to be done in the place of greatest importance for the project, to which the civil society can attend.

Final engineering studies, traffic studies or other public services, availability of environmental licenses and legal easements, risk allocation policies, as well as the results of the consultation process required by article 53 of the Law 340-06

The Memorandum with the specifications to the bidders shall provide all necessary information related to the object and the procurement process in order for the interested party to be able to prepare its proposal (Art. 20 of Law 340-06)

Under Article 27 of Law 340-06, as amended, contracts executed by the procuring authority must be consistent with the draft included as part of the bidding specifications, as required also under Article 55 of Law 340-06

Article 55.7 of Law 340-06 provides that the tender documents shall broadly contain the purpose of the concession, the contracting process and a guide to assist the stakeholder in order to present its offer with certainty and clarity, in accordance with the exact characteristics and nature of the good, work or public service to be granted in concession. Its minimum content shall be, in the matter of works to be constructed or rehabilitated, the delivery of the final engineering studies, traffic demand studies or services requirements on behalf of the users, availability of environmental licenses and legalization of rights of ways. Considering the above legal provision, contributors consider that its content should be interpreted as providing for the tender documents/contract to establish such obligation.

Article 58, Paragraph I of Law 340-06 provides that the concession contract and the tender documents shall set forth the amount and that the rights of way and expropriations shall be charged to the concessionaire. In our contributors view, the system would be better characterized by a combination of both and an obligation of the private partner with a facilitation role from the procuring authority that shall be agreed by the contracting parties and set forth in the concession contract.

Article 58, Paragraph I of Law 340-06 provides that the concession contract and the tender documents shall set forth the amount and that the rights of way and expropriations shall be charged to the concessionaire. In our contributors view, the system would be better characterized by a combination of both and an obligation of the private partner with a facilitation role from the procuring authority that shall be agreed by the contracting parties and set forth in the concession contract.

Article 56, Paragraph I states that the procuring authority will evaluate the bids, with the support of professionals with relevant experience for the particular concession contract

Article 18 of Law 340-06 and Articles 61 and 62 of the Rulings of Enforcement 543-12 require that the notice of the bidding process must be published online in the General Administration of Public Procurement´s website and in national/international newspapers depending on the domestic/international nature of the process. Specifically for Concessions, article 54 of the Law 340-06 requires "means of extensive national and international dissemination; Web site of the General Directorate of Public Procurement and website of the procuring entity

Paragraph to Article 54 of Law 340-06 provides the obligation of granting a reasonable period of time to present bids. In no case the period of time shall be less than 30 working days if the bid refers to the purchases of goods and services; and not less of 60 working days if it refers to works concessions, or if a significant investment must be made.

Article 15 (3) states that an administrative ruling will be necessary for the prequalification on bidders when procurement processes are substantiated in two stages

Article 55 of Law 340-06 provides that tender documents shall include the provisions on the process for the bidding parties to obtain the concession and requirements that must be met.

Article 56 Paragraph II of Law 340-06 provide that conditions for qualification of technical offers must be defined in the Bidding Specifications. Also, article 8 of the same Law 340-06 makes the same provision more in general for all procurement processes.

Paragraph III to Article 55 of Law 340-06 grants the capacity for bidders to request clarifications about the bidding in writing and the procuring entity shall answer by the same means, with copy to all of the bidders. The procuring entity can not answer consultations made after 15 days prior to the closing of the bidding process.

According to Paragraph III of Article 55 of Law 340-06 the consultation phase consists of the opportunity for bidders to request in writing clarifications concerning the tender, that shall be answered by the procuring entity by the same means, with copy to all bidders. Article 78 of Decree 543-12 provides that the procuring entity can call meetings to inform observations to certain bidding specifications project, or to promote the debate among the interested bidders about its content. Minutes of the issues discussed at said meetings with the observations received, shall be drafted and signed by the bidders present who wish to do so. The observations to the certain bidding specifications project made in writing by the interested bidders as well as the mentioned minutes shall be included as part of the procurement file. Finally, article 79 also requires equal access to all information exchange between bidders and the procuring authorities.

Article 53 of Law 340-06 states that, previously to the bidding process, there is going to be a public hearing. The public hearing will take place in the place of greatest importance for the project and government authorities, and the civil society can attend. Further, Paragraph II of Article 20 of Law 340-06 states that the procuring authority will held a hearing to answer questions the bidders may have after the procurement procedure is launched. Finally, Article 78 of Decree 543-12 provides that the procuring entity can call meetings to inform observations to certain bidding specifications project, or to promote the debate among the interested bidders about its content. Minutes of the issues discussed at said meetings with the observations received, shall be drafted and signed by the bidders present who wish to do so.

Article 20 paragraph II states that the answers to the questions formulated in the hearing will be reflected in acts that all the bidders can have access to. Also, Article 78 of Decree 543-12 provides that the procuring entity can call meetings to inform observations to certain bidding specifications project, or to promote the debate among the interested bidders about its content. Minutes of the issues discussed at said meetings with the observations received, shall be drafted and signed by the bidders present who wish to do so. Article 79 also requires equal access to all information exchange between bidders and the procuring authorities.

Paragraph II of Article 56 of Law 340-06 mandates the presentation of financial conditions to be evaluated by the procuring authority. Specifically, item (6) requires to include reference to the appropriateness of the Internal Rate of Return or any proposed changes to the one indicated by the procuring authority.

According to Article 57 of Law 340-06 the contract shall be awarded to the one who has been selected as the best technical and economical bid that completely satisfies the needs of the purpose of the concession. Article 26 of Law 340-06 provides that the awarding shall be made in favor of the bidder whose proposal complies with the requirements and is qualified as the most convenient for the institutional interests and of the country, taking into account the price, quality, suitability of the bidder and other conditions set forth in the regulation, according to the deliberations made known to the bidders through the respective bidding specifications.

Article 102 of Decree 543-12 provides that the procuring entity shall grant the award by means of an administrative act and shall notify it to the successful bidder and to all the other bidders, within a term of 5 working days from the awarding act.

According to article 102 of Decree 543-12 the notification to the winner and all other bidders the result of the procurement process must contain the grounds for the selection of the winning bid.

According to Article 27 of Law 340-06 amended by Law 449-06, the contracts that the public entities execute for the acquisition of goods or the procuring of works and services, can be executed indistinctively, in writing with paper support or in digital form, in the conditions set forth by the regulation and will be adjusted to the model that is part of the bidding specifications, with the amendments approved until the moment of the awarding.

Paragraph I of Article 57 of Law 340-06 provides that the signed contract, shall be public, for which purpose each entity shall send the information to the Governing Body of Procuring and Concessions, that shall publish an executive summary of the contract on the web page of the General Directorate of Public Procurement ("Dirección General de Contrataciones Públicas"). Article 107 of Decree 543-12 provides that the Contract/Purchase Order/Service Order that is subscribed must be disclosed through the website of the Governing Body and on the institutional website.

According to Article 60 of Law 340-06 the procuring authority is responsible to oversight and monitor compliance by the concessionaire. This responsibility can be perform by their own means or by contracting specialized firms.

According to Article 60 of Law 340-06 the procuring authority is responsible to oversight and monitor compliance by the concessionaire. Article 51 (5) establishes, amongst the obligations of the procuring authority, to supervise all the stages of the concession (expressly mentioning construction), quality, implementation and compliance; and article 55 (8), provides for the tender documents to include the characteristics of the supervision of the project in its different stages of implementation. Ergo, the PPP authority is obliged by law to track the progress of the project, but the regulations do not provide the specific system or way of executing this obligation.

According to Article 60 of Law 340-06 the procuring authority is responsible to oversee and monitor compliance by the concessionaire. More in general for all kind of contracts, according to article 31 (6) and (7) of the Law 340-06 the procuring authority is responsible for the technical, administrative and financial management of the contracts and must monitor and evaluate the quality of the provided services, work or supplies. For that, the procuring authority has control, inspection and direction authority over the private partner. Further, According to Article 51.5 of Law 340-06 public entities authorized to carry on concession process, sign contracts and their management from its beginning up to the culmination of the term of the concession contract shall have minimum obligations including the supervision of all phases of the concession, quality of the execution, certify the investment, compliance with the operation, compliance with the levels of service, up to the liquidation of the contract.

According Article 57 of Law 340-06 all concession agreements include as a mandatory provision (10) the performance of technical, accounting and environmental audits by the procuring authority

Articles 31.2 and 31.4 of Law 340-06 provide the right of the procuring entity to modify the contract and article 127 of the Decree 543-12 regulates contract modification with further detail.

According to article 31.2 of Law 340-06 the procuring entity can modify, reduce or increase up to twenty five percent (25%) of the amount of the original contract work, as long as the object is maintained when circumstances arise that were unpredictable at the time of commencement of the procurement process, and that is the only way to fully satisfy the public interest, and pursuant to article 31.4 of Law 340-06 the procuring entity can amend, reduce or increase up to fifty percent (50%) in case of procurement of services, for justified causes set forth in the regulation.

Article 49 paragraph I of Law 340-06 states that the duration of the contract can be exceptionally extended, and only for one time and for a period of up to 50 % of the original duration of the contract, when it is proved that this extension will be beneficial for the Government and the users.

According to article 31 of the Law 340-06 the procuring authority can modify, reduce or increase up to twenty five percent (25%) of the amount of the original contract work and up to fifty percent (50%), as long as the object is maintained and when circumstances arise that were unpredictable at the time of commencement of the hiring process, and this is the only way to fully satisfy the public interest.

Articles 31.5 and 61.1 of Law 340-06 set forth the possibility of suspension due to Force Majeure or Acts of God. Article 32 of Law 340-06 considers force majeure and acts of God as an exception to the obligation of compliance of the contractor.

Article 32 of the Law 340-06 considers acts or failure to comply of the procuring authority that make impossible the execution of the contract, as an exception to the obligation of compliance by itself in all circumstances of the contractor.

According to article 32 of Law 340-06, there is a 50% subcontracting cap. Subcontracting should also be approved by the Government

Article 28 of Law 340-06 provides that in order for the contract to be considered valid it must contain mandatory clauses including dispute resolution and arbitration. Article 55.9 of Law 340-06 requires that specific dispute resolution mechanisms shall be included in the PPP contract but does not regulate them. Article 67 of Law 340-06 as amended by Law 449-06 sets forth that any claim of a provider to the procuring entity must be in writing and follow the steps set forth in said article. Article 69 of Law 340-06 provides that disputes shall be submitted to the Administrative Tribunal or to arbitration by agreement of the parties.

Article 68 and 69 of Law 340-06 provides that disputes shall be submitted to the Administrative Tribunal or to arbitration by agreement of the parties.

Chapter VIII of Law 498-08 on awards enforcement. Law 489-08 regulates domestic and international arbitration proceedings that are carried out in the Dominican Republic, and the enforcement of domestic (art 42) and international (art 43) awards.

Dominican Republic is part of the New York Convention on the Enforcement of Foreign Arbitral Awards. Further, Law 489-08 regulates domestic and international arbitration proceedings that are carried out in the Dominican Republic, and the enforcement of domestic (art 42) and international (art 43) awards.

Pursuant to article 62 of Law 340-06 the concession shall terminate due to any of the following causes: 1. Expiration of the term of the concession, including its extensions duly legalized; 2. Mutual agreement between the grantor and the concessionaire; 3. Failure to comply with any of the obligations of the concessionaire, previously classified by the grantor entity and with the criterion and authorization of the Procurement and Concessions Governing Body; 4. Additional causes set forth in the bidding specifications and in the contract. Article 128 of the regulation approved by Decree 543-12 sets forth the causes for anticipatory termination of the administrative contracts include: (i) insolvency; (ii) public interest or national security; (iii) failure to meet social security obligations; (iv) any other provided under the contract or bidding specifications.

Article 33 of Law 340-06 amended by Law 449-06 and articles 129-132 of the Regulation approved by means of Decree 543-12 provide and allow for unsolicited proposals ("iniciativa privada").

Article 129 of Decree 543-12 sets forth that said proposals must be new or original or imply technological or scientific innovation, and must contain the guidelines allowing for their identification and understanding, as well as enough suitability to demonstrate the juridical, technical and economical feasibility of the project. Article 130 of Decree 543-12 provides that unsolicited proposals must be declared of public interest by the highest authority of the procuring entity, prior technical expert advice.

Although the law does not evaluate the consistency of the unsolicited proposals with the government priorities, the regulation does establishes a minimum criteria that such proposals have to meet: it has to be modern and original or implicate a technological or scientific innovation; it must contain the guidelines for its identification and comprehension, as well as be legally, technically and economically viable (Art. 129 Law 340-06). However, according to some of our contributors, the government priorities at large are not taking into account

The unsolicited proposal shall be taken as the basis for the selection of the bids in accordance with the public bidding procedure. Therefore, the term shall be the same for all the bidders since a public tender process shall be conducted. The reasonable term between the call and the filing of the bids shall be set forth by the procuring entity. The minimum period of time shall not be less than 30 working days ("días hábiles") if the bid refers to goods and services; and of 60 working days if it refers to works concessions, as provided under Paragraph of Article 54 of Law 340-06.

Article132 of Decree 543-12 provides that in the event that the proponent is not awarded, the proponent of the PPP and the selected bidder are called to present new offers in closed envelopes to be revised by the procuring authority. If offers are similar the offer from the original proponent is preferred over the other bidder. Under Paragraph II of Article 47 of Law 340-06 the proponent shall be reimbursed with the total costs of studies incurred for the proposal should it not be awarded with the concession.