Public Procurement Law (LCP)

Public Procurement Law (LCP)

Public Procurement Law (LCP)

Published on april 20 , 2023

Foto de Alan Stanley Santos Beltrán

Alan Stanley Santos Beltrán - Associate

On January 17 of this year, the Legislative Assembly was presented with the bill of the draft Legislative Decree comprising the new regulatory body called PUBLIC PROCUREMENT LAW, which will enter into force eight days after its publication in the Official Gazette. It is composed of one hundred and ninety-five articles that comprise the norms that regulate the acquisitions and contracting of works, goods and services of the public administration.

The main purpose of this new regulatory body is to modernize its application by using new technologies, with the purpose of streamlining the contracting processes to be carried out; these consist of using information and communication technologies, in real time, or according to the nature of the process, as well as the public procurement cycle, which is composed of the following phases: planning, selection of the contractor, contracting, follow-up and liquidation.

Likewise, a new mechanism will be implemented in this regulatory body consisting of the presentation of electronic verifications, which will replace the delivery of physical documents with electronic ones in order to avoid the accumulation of files and institutional wear and tear.

On the other hand, among the novelties introduced in this law is the creation of the Public Procurement System (SINAC), integrated by the National Directorate of Public Procurement (DINAC) and the Public Procurement Units (UCP).

This system replaces the Institutional Procurement and Contracting Unit (UACI), as established in Article 8 of said law.Among the new contracting methods contemplated by the law are the contractor selection procedures to be used by each institution to contract works, goods, services and consulting services. The selection process is as follows: Competitive Bidding, Price Comparison, Direct Contracting and Low Amount.

Another new figure provided by this law are the regulated contracts, contained in Article 131 and following; in spite of that, it has maintained 2 of the types of contracts regulated by the repealed Public Administration Procurement and Contracting Law (LACAP), which are: the Concession Contract and the Lease of Movable Property, with certain modifications introduced with the purpose of ensuring compliance with the general principles of public contracting and promoting equity between the institutions of the Public Administration and the contractor.

The Public Procurement Law seeks to modernize and take advantage of the use of new technologies, so that all administrative processes are resolved in an agile and efficient manner, respecting the deadlines regulated by law; also, with the implementation of electronic verifications, which replace the presentation of physical documents, which is a more feasible method to avoid the accumulation of files and the wear and tear of the same.
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Last June, the new Instructions for the Prevention, Detection and Control of Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction, issued by the Attorney General's Office (FGR), under the framework of the Anti-Money Laundering Law (LCLDA), came into force. In its Article 2, the LCLDA establishes that every person must submit information to the FGR that allows demonstrating the licit origin of any transaction he/she carries out. This leads us to conclude, then, that every person must prepare the manual and internal policies for the implementation of a money laundering prevention system, and the continuous development of these.

What is the difference between the new Instructions and the prevention systems elaborated before it came into force? Article 4 of the Instructions requires individuals to apply a risk-based approach, which consists of identifying, assessing and understanding the risks of their sector and operation, and applying resources aimed at ensuring that they are effectively mitigated. Therefore, it is necessary to update the manuals and policies that companies had developed in the past, so that they have a risk-based approach and comply with the new provisions.

From the manuals prepared, it is necessary to comply with other obligations, among them, to develop due diligence and KYC policies to identify the final beneficiary of the company's business relationships, to detect and mitigate all unusual or suspicious transactions and report them to the FGR (not only cash transactions), to train employees, to keep a historical record of the files analyzed, and above all, to appoint a compliance officer.

Why is it important to comply? Article 8 of the LCLDA establishes that, if there is any encumbrance due to negligence, impertinence or ignorance of the directors or employees of the companies, there will be a sanction of two to four years in jail.

Therefore, as a Firm we recommend:


We offer you our services, in order to comply with these legal obligations, so that your company has the peace of mind and support of a money laundering prevention system.

For more information about how this may affect your company, please contact our specialized team at bvaldez@bvaldezlaw.com  or  benjamin@bvaldezlaw.com