1. Concept and subject of public sector procurement

1.1 Definition

How is public sector procurement defined?


Article 55 of the Accounting Decree-Law Number 23,354/56 ? ratified by Law 14,487 ? defines government procurement as any purchase or sale on account of the Nation, as well as any lease, rent, work or supply contract.

Article 1 of the Public Works Law Number 13,064, considers as national public work any construction or work or industry service that is carried out with funds of the Treasury of the Nation.


Public sector procurement is defined as the purchase, contracting, or subcontracting of goods, services, and personnel by the Government, governmental agencies and/or statutory corporations and institutions.


Public sector procurement refers to the purchase of goods and services for use by the Ministries and Departments. Therefore, public sector procurement may only refer to those goods and services acquired with public funds, not including gifts.


The basic regulations of the Goods and Services Administration System (SABS), approved through Supreme Resolution Number 216,145 of 08/03/95, do not provide for a definition.

However, they are considered to be the contracting carried out by public entities for the purchase of goods, contract services and/or public works, for the consumption of the entities itself and public in general.


Government procurement includes all purchases of goods and services carried by any government entity. The purchase of goods, (for example, leil„o de sucata) is also included in this definition. Other applicable definitions to government procurement are stated in Section 6 of Act 8,666/8,883.


Government procurement is generally defined in terms of purchasing for the direct benefit and use of government entities.


In Chile, procurement by the public sector is composed by the supply function of the State, through the procurement of goods and services for consumption or production, and construction services. Public services, public companies and municipalities are included.


In Colombia there is no express definition for public sector procurement. However, the terminology is generally understood when used in the procurement of goods and services by government entities for the development and performance of their objectives.


Until the promulgation of the Executive Decree Number 25515-MP, published in the Official Gazette on October 21, 1996 there was no legal precept which defined the concept.

Since the issuance of the above mentioned Executive Decree, according to regulations which implement Article 20 of Law Number 7,428 (September 7, 1994) (Organic Law of the General Controllership of the Republic which makes mandates the authorization of certain government procurement contracts), it is understood by government contracts "those entered into by the Supreme Powers, the Elections Supreme Tribunal, the Office of the Public Defender and the General Controllership of the Republic". We can see then, that the definition encompasses one part of the universe which, in general, the term government procurement includes. This one includes, among others decentralized entities and municipalities.

Except for this definition, which is applicable to the aforementioned entities, the constitutional, national and international regulations in force make reference to the scope rather than provide a definition. Therefore, we have opted to present a doctrinal definition of government procurement, which includes the scope of the regulations in force: "a contract entered into by the Public Administration, which has the objective of directly satisfying the collective needs, or in general, the accomplishment of the procuring entities? own purposes."

This definition may include many other methods of procurement besides the purchase of goods and services and concession of public works. In general terms, this information covers the most relevant legal provisions related to these three areas: purchase of goods, contracting of services and concession of public works.

The Public Works Concessions Law contains a definition of "concession of public work" in its Article 1: "it is the legal public institution through which the Government entrusts in another person the execution of works and temporarily conveys the legal title necessary to exploit the work, through the payment of a fee which will be charged to the users, with the authorization, control and vigilance of the administration, but on the account and risk of the concessionaire". (Article 1, Public Works Concession Law Number 7,404 published in the Official Gazette on May 12, 1994).


In Ecuadorian legislation, government procurement refers to the purchase of personal and real property, services not considered consulting services, execution of works, lease of personal and real property and consulting services. External and internal credit contracts and purchases related to national safety and defense are not included in this analysis.


They are procedures for the acquisition of goods, services and public works for the Administration of the Government through a bidding procedure depending on the amounts established in the legislation currently in force. These bidding procedures shall be carried out achieving increased national and international competition applying commercial criteria, in order to use the fiscal income of the Government efficiently in the procurement of its supply and at the most favorable prices for the procuring entity.


It refers to governmental purchases made in a decentralized way with a centralized record handled by a Public Administration regulating authority.


It refers to the expenditures made by the Government to purchase goods and services in exchange for ownership, through prior compliance with legal requirements. Among them, we have budget allocation, issuance of purchase and payment orders, internal resolutions, and credit reserves.


Public sector procurement is the acquisition of goods, works and services, from public funds, on behalf of the government.


In Mexico, public sector procurement refers to the purchase, lease and service of personal property, as well as to public works and services related therewith, with partial or total charge to federal resources, and contracted by agencies (State Secretariats and administrative departments) and entities (governmental companies) of the Federal Public Administration.


Defined as: An administrative procurement for the purchase of goods and services by the Central Government, decentralized and autonomous entities, and municipalities.


There is no legal definition of the term, but the area of application is set forth, stating that it will apply to procurements by the State, its independent or quasi-autonomous entities, depending on the amount, for:

  1. the execution of public works;
  2. the purchase or lease of property;
  3. the provision of services;
  4. the administration or operation of property; and
  5. the management of administrative functions.


All acquisitions by the Central Administration or by the decentralized entities on account of the Paraguayan State.

These purchases are governed by regulations in the area of purchase and provision of goods and/or services and in the corresponding legislation in the public works area.


Procurement is the technical process of supply, formed by a set of technical, administrative and legal actions, towards obtaining the ownership, the right of use or the access to the provision of non-personal services.

The following concepts are considered within the above mentioned definition:


Public sector procurement is defined under the law as:

  1. the acquisition of articles or undertaking of works in any services in connection therewith; and
  2. the appointment of consultants in connection with any project.

"Articles" means all goods, materials, stores, vehicles, machinery, equipment and things of all kinds. "Works" means buildings and engineering works of all kinds. "Project" includes any works or undertakings and means any proposals for the supply of articles or for the undertaking of woks or for the operation of any enterprise and any services in connection therewith.


Procurement is generally defined in terms of purchasing for the direct benefit and use of government entities. The Office of Federal Procurement Policy (OFPP) Act (41 USC 403) defines procurement on the following basis:

The term procurement includes all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and close-out.

Procurement generally does not include non-contractual agreements or any form of government assistance, including cooperative agreements, grants loans, equity infusions, guarantees, fiscal incentives, and governmental provisions of goods and services to persons or governmental authorities not specifically covered under US annexes to the WTO Government Procurement Agreement (GPA) and NAFTA Chapter 10.


There is no clear and precise definition of government procurement within the legal regulations.

Nevertheless, we can say that government procurement is considered as those contracts entered into by the State with public and private persons, real or legal for the purpose of purchasing goods or services necessary for the State to effectively fulfill its objective.

Article 2 of the TOCAF establishes that the deeds, actions or operations that result in the transformation or variation in the Public Finance, are covered by the present Law, which establishes the area of application of the rule.


In Venezuela, there is no established definition of government procurement. However, Article 1 of the Law of Tender Procedures states that it applies to procurement carried out by the public administration for the execution of works, acquisition of goods and services.