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ARTICLE

A New Law that Modernizes the Public Procurement System Enters into Force

Ignacio Gillmore, Jose Santos Ossa, Jaime Henriquez, Carolina Baeza, and Emilia Corbo

Summary

  • Chile’s new law modernizes public procurement to enhance the quality of public spending, elevate standards of probity and transparency, and integrate principles of the circular economy into public procurement processes. 
  • The law expands procurement options by introducing mechanisms such as Purchase by Quotation, Dynamic Purchasing Agreement, Contracts for Innovation, Competitive Dialogue, and Electronic Reverse Auction.
  • The law mandates registration in the Suppliers Registry for participation in procurement processes, creating a behavior record for future dealings. It also promotes small and medium-sized enterprises in public procurement.
A New Law that Modernizes the Public Procurement System Enters into Force
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Chile Law No. 21,634 (“Law”), which modernizes Law 19,886 on Public Procurement (“LCP”), was enacted by the President on November 28, 2023, and published in the Official Gazette on December 11, 2023. The Law seeks to improve the quality of public spending, increases the standards of probity and transparency, and introduces circular economy principles in public procurement.

In addition to expanding the Agile Purchasing and Framework Agreement systems, the Law incorporates new procurement mechanisms such as Purchase by Quotation, Dynamic Purchasing Agreement, Contracts for Innovation, Competitive Dialogue and Electronic Reverse Auction, as well as other special procedures.

The Law also introduces amendments to the Public Procurement and Contracting Court (“TCP”), expanding its jurisdiction to include disputes over the execution of public contracts. Additionally, it generates a new procedure and processing of legal actions before the Court and increases its personnel.

Moreover, the Law strengthens the Public Procurement and Contracting Department, including the possibility of receiving complaints and adopting measures to amend purchasing procedures such as: (i) suspension of the procedure; (ii) nullity request before the TCP; and (iii) review before the General Comptroller of the Republic. Furthermore, it may also issue general mandatory instructions, create standard contracts, and elaborate clauses of common application.

To promote and encourage probity and transparency, the Law expands the scope of application of the LCP by including public bodies not previously covered, such as Congress, the Judiciary, and ONGs in which the Presidency of the Republic participates, among others. It also expands the Mercadopublico.cl platform and the procedures of the LCP to contracts previously excluded, such as concession contracts and execution of public works. Lastly, it makes the registration in the Suppliers Registry mandatory to participate in a procurement processes, generating a behavior record for future processes, and promotes the participation of small and medium-size companies in public procurement procedures.

In connection to its entry into force, the transitory rules state that the Law will enter into force one year after its publication in the Official Gazette, except for those provisions related to probity and transparency, which will enter into force upon its publication. On the other hand, the regulations referred to in the Law must be issued within a maximum period of 180 days from the publication of the Law.

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