New guidelines established regarding Claim Action Bonds

New guidelines established by the General Directorate of Public Procurement (dgcp) regarding Claim Action Bonds to be submitted in prequalification and/or bidding acts in app projects.

I. Introduction

In line with our previous articles regarding the birth and regulatory evolution related to Public-Private Partnerships (PPPs) in Panama, and after the enactment and entry into force of Law No. 93 of September 19, 2019 and Executive Decree 840 of December 31, 2020, the General Directorate of Public Procurement has issued Resolution No. 1284 of 2022, dated October 14, 2022, whereby it is intended to regulate in an integral manner the issuance and the submission of claim actions against second appraisal reports in public acts of prequalification and/or bidding, specifically in projects that are carried out under the modality or special procedure for Public Private Partnership projects.

Under this scenario, the national government expects that, by strengthening the regulatory framework, this concept will gain strength and thereby generate the possibility of developing ambitious infrastructure projects without involving huge investments that compromise public debt levels in a risky manner, thus attracting private investment and at the same time generating social benefits such as jobs, infrastructure improvements, related informal work, and the like.

In addition to the above, let us not forget that Panama is a country of services that competes with its regional neighbors in tourism, logistics, maritime and port services and similar, so this option becomes an important link to strengthen our competitive position vis-à-vis those countries.

II. General Guidelines

Conceptualizing, the claim action bond is a bid bond required by Panamanian regulations as an admissibility requirement for such legal actions, but it is worth clarifying that the same is only required when the claim is filed against the second report of the evaluation commission within the prequalification or bidding process pursuant to the procedure of Law No. 93 of September 19, 2019.

A. Objective

This instrument allows guaranteeing possible damages and/or injuries that could be caused to the public interest in cases where it is determined that the claimant acted recklessly or with the intention of delaying the process at its convenience, thus harming the State or third parties that could well be the bidders and/or the final recipients of the object of the contracting whether it is the acquisition of a good, work or service.

B. Enforceability of the guarantee

The regulations on procurement and contractor selection procedures in Panama, both in its general procedure contained in the Unified Text of Law 22 of June 27, 2006, ordered by Law 153 of 2022, as well as in Law No. 93 of September 19, 2019, requires this bid bond to claim against the second commission report, since it presupposes that the control and procedural oversight body (DGCP), has already conducted a prior examination of both the first evaluation report, as well as the procedure and its rituals, for which there is a presumption of legality that up to that moment everything has been carried out according to law. It is for this reason that any proponent who intends to claim against the second report is required to submit a guarantee of seriousness of his claim, which could be executed in case the DGCP considers that the claimant acted recklessly or with the purpose of delaying or causing damage to the state or a third party.

C. Requirements

This guarantee must meet formality and content requirements as follows:

1. it must be issued in accordance with the template contained in Resolution No. 1284 of 2022, of October 14, 2022.
2. It must be available to the order of the General Directorate of Public Procurement having as beneficiary the bidding entity and the Office of the Comptroller General of the Republic.  
3. It may be constituted in cash, in credit instruments of the government, in bonds issued by insurance companies, or by means of bank guarantees or certified or cashier’s checks.
4. The amount of the guarantee must be equivalent to ten percent (10%) of the estimated investment value established by the bidding entity.
5. In no case shall it be issued for a term of more than one (1) year; therefore, we recommend that it be issued for exactly that term.

III. Vision of the Country

In summary, we consider that this is a national regulatory effort to continue filling gaps and integrally regulating the schemes for the development of Public-Private Partnerships, in order to promote the country’s credibility and legal certainty, thus seeking to increase the coverage and quality of the country’s infrastructure and public services, contributing to the growth of the economy, job creation, competitiveness and to improve the living conditions of general population.