In review: governing rules and procedures for PPP projects in Argentina

All questions

General framework

i Forms of public–private partnership

Part 1 of the PPP Agreement Law sets forth that PPP contracts shall be designed in accordance with the particular attributes of each individual challenge and its fiscal needs.

Below that versatile criterion, Part 7 of the PPP Contract Regulation sets forth that the corporations in charge of the execution and effectiveness of a PPP deal may perhaps be organised as a distinctive purpose auto (SPV), a have faith in fund, or any other vehicle or associative organisation.

SPVs shall be integrated as corporations, while rely on money shall be organised as economic trust cash pursuant to the Civil and Commercial Code provisions on the make any difference. Further, PPPs may well be constituted and organised in this kind of a way that enables them to challenge securities beneath the provisions of Cash Market Legislation No. 26,831. In addition, the PPP Contract Regulation explicitly enables the condition to produce new businesses or rely on cash to carry out PPP projects.⁴

ii The authorities

Beneath the PPP Agreement Legislation, the general performance of a PPP contract is subject matter to the handle of the public contracting occasion or the public overall body developed for that objective in the suitable jurisdiction. In addition, the bidding conditions and situations of the PPP job might have to have the appointment of exterior independent auditors to supervise the functionality of the undertaking.⁵

Pursuant to Section 22 of the PPP Contract Law, the Common Audit Company shall supervise all PPP contracts, their general performance and benefits.

The new regime sets forth two new bodies: the Undersecretariat of PPPs, dependent on the Main Cabinet Minister, which shall centralise the regulation of PPP contracts, assist in the enhancement and regulation of PPP tasks and aid the general public procurement businesses in the design and style and structuring of PPP assignments, amid other responsibilities⁶ and the Congress bicameral fee, which is in charge of checking PPP projects’ general performance and compliance with the PPP routine.⁷

iii Basic requirements for PPP contracts

In accordance with the PPP Agreement Law, PPP contracts shall regulate, at a minimum amount, the items explained therein,⁸ including the pursuing:

1. the contractual phrase and opportunity extensions, which can’t exceed 35 decades in complete and must make sure recovery of investments, reimbursement of financing and a sensible financial gain
2. the parties’ duties and obligations and a good and productive distribution of the deal contributions and threats involving the get-togethers, making sure the greatest circumstances to reduce, assume or mitigate them and to minimise the value of the venture and facilitate funding circumstances (see Segment V.iii). The PPP contract shall foresee the contractor’s appropriate to transfer its obligations to a ‘performing company’, inside of the limitations established forth in the contractual files. In this circumstance, both equally the contractor and the undertaking business will be jointly and severally liable to the state occasion
3. the minimum amount technical requirements relevant to the infrastructure included in the job and the penalty routine (the application of any sanction in excess of the restrictions set forth in the PPP deal and regime getting forbidden)
4. the procedures for the revision of the agreement rate so as to preserve its economic–financial equation (see Segment V.iv)
5. the state’s ability to unilaterally introduce modifications should really be limited only to the challenge overall performance and less than no circumstance exceed 20 for each cent over or under the whole contract price. Any these kinds of modification shall be compensated so as to retain the unique economic–financial harmony (see Portion V.iv)
6. the promise of bare minimum revenue if these types of provision is agreed on (see Portion V.ii)
7. the gatherings and techniques relevant to the contract’s termination and relevant payment. If termination operates based upon general public interest grounds, no point out legal responsibility limitation established forth in administrative legislation can apply (see Area V.vi)
8. the assignment of PPP contract legal rights or receivables arising as collateral and the appropriate to securitise dollars flows
9. the suitable to quickly suspend efficiency of obligations in the situation of point out default
10. the contractor’s suitable to absolutely or partially assign the PPP agreement to the extent the assignee satisfies the correct ailments to be a contractor and at least either 20 per cent of the contractual term has expired, or 20 per cent of the committed expense has been produced. Agreement assignment shall be subject to the state contracting social gathering, funder and guarantor’s acceptance. Underneath these situations, the assignment releases the authentic contractor of all responsibilities
11. the assets regime (see Portion V.v) and
12. the processes and mechanisms of settling contractual disputes, including the possibility of setting up a complex panel to act during the contract’s existence and be in cost of resolving contractual disputes ahead of resorting to court litigation or arbitration. Arbitral agreements environment forth international venues shall be expressly authorized by the Executive and communicated to Congress.⁹ This solution is only offered for PPP contractors that have foreign shareholders, in accordance to a bare minimum share that must be founded in each individual challenge.

Bidding and award technique

i Expressions of fascination

Pursuant to Sections 1 and 4(a) of the PPP Agreement Law, the submission of a project to the PPP regime needs a previous justification by the point out on the reasons why the PPP framework is ideal for the pleasure of the public fascination pursued via it.

By the very same token, Segment 13 sets forth that, just before any invitation for a PPP general public tender, the tender authority shall challenge an belief on, inter alia, the feasibility of the PPP task and the factors fundamental the submission of the challenge to the PPP regime as the most appropriate solution for the public interest. That opinion shall be communicated to the Undersecretariat of PPP for its publicity.

In addition, on 6 December 2019, a ‘Methodological Guide for the elaboration of the view of Article 13’¹⁰ was authorized, that contains the pointers for the preparing of the referred feeling.

ii Requests for proposals and unsolicited proposals

The contractor shall be chosen by public or competitive, countrywide or intercontinental tender depending on the complexity of the project, the potential of neighborhood firms to take part, financial or economical good reasons related to the project’s specific functions, or the origin of the cash in the situation of initiatives that call for exterior funding. Direct adjudication (i.e., devoid of general public and competitive tender) is forbidden.

Pursuant to the PPP Contract Law, the provision of assets and services made in the context of PPP contracts shall have a minimal domestic ingredient of 33 for every cent.¹¹ This legal requirement may be extremely set aside or limited by the Government if a project’s particular characteristics involve so.¹²

If the PPP agreement commits means from the general public finances, prior to the connect with for tenders or competition, it have to acquire an authorisation to commit potential fiscal routines, as presented in Area 15 of Legislation No. 24,156 on Monetary Administration and Command of the Public Sector.13 The availability of the community funding shall be also verified prior to the execution of the deal.

If important, when the complexity or sizing of a undertaking necessitates it, a transparent procedure of consultation, dialogue and trade of views in between the contractor and the prequalified events may perhaps be set up, enabling the improvement and definition of the most effortless answer to the public fascination on the basis of which the tenders must be formulated.¹³

The PPP Agreement Regulation puts particular aim on the need for transparency, publicity and competitive conditions for bidders, which include certain anti-corruption provisions.

The PPP framework does not foresee unsolicited or choice bids, nor it avoids that the chance of admitting them. Nevertheless, Decree No. 1030/2016 on Standard General public Procurement –which is not applicable to PPP but may perhaps provide as an interpretative guideline- states that alternative bids consist of proposals that satisfy all the technical requirements established forth in the bidding terms but supply assorted specialized methods that may possibly outcome in distinct selling prices for the same product or service or assistance. Beneath that regime, alternative bids shall be admitted in the tender and compete with the remaining kinds.¹⁴

Decree No. 1030/2016 also foresees variant bids, that is proposals that differ from the technological requirements set forth in the bidding terms that provide a far better solution, which would not be in any other case possible. In this circumstance, the contracting entity may perhaps only contemplate the variant bid of the offeror whose major bid is the most handy in the tender. Moreover, variant bids shall only be admitted when the bidding phrases expressly accept them.¹⁵

On the other hand, Segment 17 of the PPP Contract Legislation specifies that tenders less than this regime are suitable with private initiative proceedings. Decree No. 966/2005 sets forth the National Personal Initiative Regime.¹⁶

Despite the fact that Decree No. 966/2005 refers to contracts beneath Rules No. 13,064, 17,520 and 23,696,¹⁷ which where expressly excluded from the scope of the PPP Contract Regulation, Segment 17 of the latter states its applicability to PPPs.

Appropriately, personal persons may post projects to be executed below the PPP Deal Law to the Nationwide Federal government for their investigation and, if regarded hassle-free, their implementation¹⁸ by way of a PPP contract.

Underneath Decree No. 966/2005, private initiatives that set off a contracting proceeding give rise to competitive pros for their authors in the last tender.¹⁹

iii Evaluation and grant

The contract shall be awarded to the most practical provide, in accordance with the specifications recognized in the bidding conditions and conditions. This regime also necessitates the inclusion of choice tips that ensure comparative strengths in favour of domestic businesses and little and medium-sized enterprises. Nevertheless, these comparative advantages may well be excluded if important or easy simply because of the specific functions of the undertaking.²⁰