RESTRICTED
WORLD TRADE WT/WGTGP/W/13
16February 1998
ORGANIZATION(98-0551)
Original: Spanish Working Party onTransparency
inGovernment Procurement
NATIONAL PROCEDURES AND PRACTICES ONTRANSPARENCY
INGOVERNMENT PROCUREMENT
Communication from Uruguay
I. INTRODUCTION
IntheSingapore Ministerial Declaration (paragraph 21),theMinisters ofTrade agreed to
"establish aworking group toconduct astudy oftransparency ingovernment procurement practices,
taking intoaccount national policy, and,based onthisstudy todevelop elements forinclusion inan
appropriate agreement".
TheSingapore mandate isclear instating thatthisworking group must takeaccount, in
conducting itsstudy ontransparency ingovernment procurement practices, ofnational policies inthat
area.
Itisinthiscontext thatUruguay ispresenting theWorking Group withadescription ofits
national procedures andpractices withrespect totransparency ingovernment procurement, consisting
essentially ofanoutline ofthemost important aspects ofitsHarmonized TextonAccounting and
Financial Administration withRelevant andSupplementary Provisions (Texto Ordenado deContabilidad
yAdministración Financiera yNormas Concordantes yComplementarias ),hereinafter referred toas
theTOCAF.
Thisharmonizedtextincludes:provisionsregulatingStatefinancialandeconomicadministration;
theorganization ofaccounting andrevenue services; control requirements forpurchase anddisposal
ofproperty andforprocurement affecting government finances inorder toensure theefficiency of
preventive measures withrespect torevenue, expenditure andpayments; andtheresponsibilities and
guarantees governing theactivities ofofficials involved inthemanagement ofState property.
II. HARMONIZED TEXT ONACCOUNTING AND FINANCIAL ADMINISTRATION WITH
RELEVANT AND SUPPLEMENTARY PROVISIONS (TOCAF)
UndertheUruguayanlegalsystem,governmentprocurementisdefinedasprocurementinwhich
oneoftheparties isthegovernment, i.e.aState body withadministrative functions.
InUruguay, theprovisions regulating government procurement areforthemostpartcontained
intheTOCAF.
TheTOCAF isabody oflawsadopted byExecutive Decree andcontaining legalprovisions
which drewtheirinspiration chiefly from Budget LawNo.11,925 of27March 1953. Harmonization
bytheExecutive oftherelevant provisions hasnotaffected theirlegalhierarchy. TheDecree simplyWT/WGTGP/W/13
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harmonizes andupdates therules ofaccounting andfinancial administration fortheState asawhole
andforthecentral administration inparticular.
TheTOCAFwasfirstadoptedbyExecutiveDecree95/91andamendedbysubsequentprovisions.
Itwasadopted initscurrent formbyExecutive Decree 194/97 of10June1997, published intheOfficial
Journal of20June1997.
Article2oftheTOCAFdefinesitsscopeofapplicationasextendingtodeeds,actsandoperations
leading totransformations oralterations inpublic finances andcarried outbytheExecutive, the
Legislative ortheJudiciary, theCourt ofAudit, theElectoral Court, theAdministrative Court, the
Departmental Governments, theautonomous entities anddecentralized services, public education
institutions and,ingeneral, anyState organs, services orentities.
Theadministrative actsthataresubject totherulesofaccounting andfinancial administration
include procurement. Inthisrespect, theTOCAF laysdown theuseofpublic tendering procedures
asageneral principle ofprocurement involving operating costs orinvestment orexpenditure bythe
State, andauctioning orpublic tendering forcases which generate income orrevenue.
Without prejudice totheapplication ofthisgeneral principle, other government procurement
procedures arealsopermitted.
When theamount ofthetransaction doesnotexceed acertain value, thelawprovides foran
accelerated tendering procedure andsingle tendering. Cases inwhich theState mayusebothforms
ofprocurement areexpressly mentioned inArticle 33oftheTOCAF, which alsoprovides forselection
bytheregulating authority ongrounds ofproper administration.
TheExecutive, subject toafavourable ruling bytheCourt ofAudit, mayauthorize special
procurement systems andprocedures based ontheprinciples ofpublicity andequality ofbidders when
thenature ofthemarket orofthegoods orservices inquestion sowarrant. Suchauthorizations must
betransmitted totheGeneral Assembly andpublished intwonationwide newspapers.
III. CONCEPT AND PRINCIPLES OFPUBLIC TENDERING
Uruguayan lawdefines public tendering asaprocedure fortheconclusion ofcertain contracts,
whose purpose istodetermine theperson offering theGovernment themostadvantageous conditions.
Itconsists ofaninvitation tointerested parties tosubmit bidsonthebasisofcertain conditions contained
intheso-called tender documentation, from which theadministration selects themost advantageous
bid.
Inorder toachieve thedesired result, theentire procedure wasbuiltonthegeneral principles
governing theoperational andcontrol activities ofStatebodies inthefieldofprocurement (asexpressly
setforth inArticle 134oftheTOCAF), i.e.flexibility, delegation ofauthority, avoiding excessive
formality andensuring authenticity, presumption oftruthuntilproof tothecontrary, publicity, equality
among bidders andcompetition incompetitive tendering andselection procedures.
Itshould alsoberecalled thatArticle 2ofDecree 500/91, regulating administrative procedure
inUruguay ingeneral, stipulates thatthepublic administration must serve thepublic interest inan
objective manner andinfullcompliance withthelaw,andthatitmustactinaccordance withthegeneral
principles (alsoapplicable togovernment procurement).
Beforeproceedingtotheirexamination,itisimportanttopointoutthatunderUruguayanpositive
law,thesebasicprinciplesofadministrativeprocedure(andgovernmentprocurement)formthefoundationWT/WGTGP/W/13
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onwhich theadministrative procedure model wasbuilt, andalsoserve asabasis forinterpretation
andincorporation where there isnoregulation explicitly covering agiven point orarea.
Thebasic principles are:
(a) Impartiality: inorder toguarantee theimpartiality ofadministrative procedures, the
officials involved maywithdraw orbechallenged when there isevidence thattheir
impartiality could inanywaybeaffected either byaninterest intheprocedure inwhich
theyareinvolved orarelationship ofaffection orenmity withtheparties, orbytheir
having specifically expressed anopinion onthematter atissue (prejudgment).
(b) Objective legality: theadministrative procedure seeks notonlytoprovide protection,
butalsotodefend theobjective ruleoflawwithaview tomaintaining legality and
justice intheadministrative system. Thismeans notonlystrict compliance withthe
law,butalsoensuring thatadministrative activity isinkeeping withtheprinciple of
proper administration.
(c) Exofficio instigation: anadministrative procedure maybeinitiated attherequest of
aninterested person orexofficio. Ifitisinitiated exofficio, thecompetent authority
mayactoninstruction fromahigher body, onitsowninitiative, onsubstantiated request
bytheofficials concerned oroncomplaint.
Thisprinciple alsoensures thattheaction cannot lapse orbediscontinued for
lackofaction onthepartoftheadministration; indeed, Decree 500/91 stipulates that
theexpiry ofthetime-limits laiddown inthatrespect shallinnocasefreethecompetent
authority from itsobligation toissue adecision, togiveanexpress opinion onthe
substance ofthematter andtoissue aresolution ontheaction.
(d) Material truth: theadministration must actinaccordance withthematerial truthof
thefactswithout being bound bysuchagreements asmaybereached between the
interested parties inrespect ofthose facts, norexempted from investigating, hearing
andacting inaccordance withthem bythefactoftheirnothaving beeninvoked or
proved bytheparties.
(e) Economy, speed andefficiency: theproceedings must beconducted withspeed,
simplicityandeconomy,avoidinganyproceduresorrequirementsinvolvingunnecessary
orarbitrary formalities orprecautions thatwould simply serve tocomplicate orhinder
them.
(f) Avoiding excessive formality: Uruguayan administrative procedure isgoverned by
theprinciple ofavoiding excessive formality indealing withnon-compliance with
unessential formal requirements thatcanbemetsubsequently.
Innowaymustthisprinciple provide apretext foruncertainty, insecurity or
lackoflegal protection, orprovide theadministration withabsolute freedom toact
atitsowndiscretion without observing established forms.
(g) Flexibility, authenticity andconcentration onsubstance: theconcept offlexibility
stresses theinstrumental nature oftheproceedings, rejecting excessive rigidity and
uniformity.WT/WGTGP/W/13
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Theconcept ofauthenticity places theemphasis onwhatistrulyimportant,
which alsoimplies thatforms mustbeinkeeping withtheaimspursued; inotherwords,
ifaruleisviolated, themeasure issustained aslongastheaimisaccomplished without
detriment totherights andguarantees oftheparty concerned.
Concentration onsubstance implies thattheform isameans andnotanend
initself, andthatadministrative actsshould bejudged onthebasis ofsubstance and
notform, etc.
(h) Delegation ofauthority: decentralization initsvarious forms (allocation offunctions,
delegation ofauthority, dispersion) seeks toovercome theusual bureaucratic
centralization inwhich thesolution tothemostroutine administrative problems depends
onaformal decision from higher authorities.
(i) Dueprocess: under theConstitution, domestic legislation andtheprovisions of
international lawapproved byUruguay, theparties inanadministrative procedure enjoy
alloftherights andguarantees inherent indueprocess.
Thisprinciple embodies therighttobeheard, publicity ofproceedings with
respect totheparties concerned, therightofaparty tostateitsdefence before theruling
isissued, therighttodueconsideration andappreciation ofthearguments submitted
andtheevidence provided, therighttobedefended byalawyer, therighttosubmit
andproduce evidence, therightasubstantiated decision, etc.
(j) Adversaryproceedings:thisprincipleappliestocasesinwhichtheconflictisnotsimply
between anindividual andtheadministration, butalsoinvolves another individual that
isindispute withthefirstindividual, which isthecaseforchallenges against tender
awards.
Tender proceedings involve conflicting interests between individuals inwhich
theadministration mustensure thatbothparties aretreated inanequal fashion, failing
which theimpartiality bywhich theadministrative bodyisbound would beundermined.
(k) Good faith, fairness andpresumption oftruthuntilproof tothecontrary: theparties,
theirrepresentatives andlawyers, public officials, andingeneral allparticipants in
theproceedings mustactinaccordance withtheprinciples ofmutual respect, fairness
andgood faith.
(l) Substantiation ofthedecision: thisprinciple follows logically from thepreceding
principle. Anyadministrative act(inthiscasetheaward ordecision nottoaward a
contract inconnection withpublic tender proceedings, anaccelerated procedure, etc.)
must beaccompanied byaclear statement ofthereasons orgrounds onwhich itis
based andanexplanation ofthescope ofitsoperative provisions, itsaims, andthe
conditions governing itsvalidity.
Thus, thearticles governing tender proceedings andtheprinciples onwhich
theyarebased clearly provide thecontracting parties withmaximum guarantees, which
aresupplemented bythose deriving from thechallenge mechanisms provided forin
Uruguayan positive lawwithrespect toadministrative actsassociated withthesaid
proceedings.WT/WGTGP/W/13
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IV. CRITERIA FOR THE SELECTION OFBIDS
Under Uruguayan legislation, thecriteria fortheselection ofbidsaredivided intoquantitative
criteria (measurable parameters) andqualitative criteria (subjective considerations).
Without prejudice totheabove, Uruguayan positive lawprovides foraseries ofpreferences
intheconsideration ofbids,among which thepreference relating todomestic production deserves special
mention (Articles 42and52oftheTOCAF).
Article 52oftheTOCAF stipulates thatinallpublic entity procurement proceedings "preference
shallbegiven todomestic products thatareequal inquality andpotential toforeign products", and
that"such preferences inrespect ofdomestic production shall begoverned byexisting orfuture
promotional laws, andtheirlimits andnature shallbestated inthegeneral terms andconditions".
Uruguayan lawdefines promotional lawsasthose enacted withaviewtostimulating certain
activities byplacing them inamore favourable situation thanwould havebeenthecaseinthefree
course ofeconomic relations.
These lawsinclude Article 654ofLawNo.16,170 of28December 1990which stipulates that
themargin of40percentestablished byLawNo.13,032 of7December 1961 would bereduced to
25percentasfrom thefirstdayofthemonth following thepublication oftheLaw, to15percent
asfrom 1July1991 andto10percentasfrom 1January 1992.
Thus, preference todomestic production remains atapermanent 10percent.
Article 52oftheTOCAF alsostipulates that"Inawarding public works contracts, where there
isalikeness inthedifferent elements ofthebids, preference shallbegranted tothose which involve
greater utilization ofdomestic labour andrawmaterials."
Finally, Article 52oftheTOCAF establishes that"Iftheprocurement takes place abroad, the
agreements withthecountries members ofthetrade bodies, communities orcustoms, integration and
production agreements towhich Uruguay belongs, inparticular theLatin American Integration
Association, shallberespected."
V. ADMINISTRATIVEREVIEWORJUDICIALREVIEWBYTHEADMINISTRATIVECOURT
OFDECISIONS CONCERNING AWARD PROCEEDINGS
TheUruguayan legalsystem guarantees bothadministrative review andjudicial review before
theAdministrative Court ofadministrative decisions toaward ornottoaward contracts inconnection
withprocurement andpublic tender proceedings.
Theregime derives directly fromtheConstitution, Articles 317and319ofwhich provide for
remedies against administrative acts, andArticles 307and313regulate thecompetence ofthe
Administrative Court aswellasthejudicial remedies against administrative acts.
Article 317oftheConstitution stipulates thatduring theadministrative phase, implicit ortacit
acts(inthiscasetheadministrative decision toaward ornottoaward acontract inpublic tender
proceedings) maybechallenged through remedy ofreconsideration (before thebody responsible for
theact),hierarchial remedy (when thebody responsible fortheadministrative actforms partofa
hierarchy), andappeal forannulment, which islodged together withtheappeal forreversal asan
accessory action. Theappeal forannulment must bebased onthenullity provisions setforth in
Article 309oftheConstitution, i.e.itmustconcern administrative decisions thatarecontrary toaruleWT/WGTGP/W/13
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orright orrepresent anabuse ofpower. Thespecific procedures andtime-limits areregulated by
Decree 500/91.
Iftheadministrative decision wasmade byadepartmental government, itmustbechallenged
through anappeal forreversal before thatbody.
Once theavailable administrative remedies havebeenexhausted, theUruguayan Constitution
provides forjudicial review (Articles 309to313)through anaction forannulment.
Actions forannulment arebrought before theAdministrative Court, which isanindependent
judicial body created bytheConstitution.
TheAdministrative Court hasthepower toconfirm orannul thechallenged administrative
actandmayalsodetermine whether there aregrounds fortheparty whose rights havebeenviolated
tobring anaction forpecuniary damages.
Asmentioned above, Uruguayan positive lawprovides thecontracting parties withmaximum
guarantees, bothduring theadministrative phase andduring thesubsequent judicial phase, byproviding
thepossibility ofaction forannulment oftheadministrative actbefore theAdministrative Court and
action forpecuniary damages.
VI. SUBREGIONAL CONTEXT
AttheMERCOSUR level, theCommon Market Group adopted Resolution 79/97 of
13December 1997creating anadhocgroup ongovernment procurement withthetaskofdeveloping
acommon system forgovernment procurement ofgoods andservices inthemember countries.
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