Public infrastructure tenders: towards a competitive model

Due to Covid-19, countries are facing an economic crisis and, for this, governments have had to intervene with different measures, such as encouraging investment in public infrastructure. Chile has not been left behind. In effect, the “Plan Step by Step, Chile recovers” was announced, which is destined to execute in the 2020-2022 period a total of US $ 34,000 million -of which US $ 9,360 million corresponds to execute Public Works-, with the impact that this produces on the offer of projects to be tendered.

In the tenders that the State administration conducts, it acts as an economic agent and the relevant market will be the one in which the goods or services tendered affect, consequently it is imperative that said processes consider the principles of free competition from their design, to avoid that distortions can be introduced that prevent, restrict or disturb it.

Thus, it is necessary to focus attention on the evaluation criteria for tenders, which have been criticized in the free competition venue for constituting artificial barriers to entry, the most common questions being experience and financial capacity. In this way, it seems necessary that the bidding agencies integrate competition criteria, so that together with ensuring the public policy objectives that underlie the process and ensuring the correct investment and execution of public resources, the traditional criteria do not end up excluding by secretariat the benefits that a truly competitive process brings.

These matters are especially relevant if we consider that there has been a growing interest from Chinese construction companies to participate in tenders for infrastructure projects in areas such as highways (Talca and Chillán section of the South Route), hospitals (Hospital del Maule), among others, and that new local actors who want to diversify their activity could join.

We have a great opportunity in this matter. Recently the Tribunal for the Defense of Free Competition (TDLC) began a consultation process regarding the design of the bases for the Bidding for the Construction of Healthcare Infrastructure, in which it proposes, along with analyzing the evaluation criteria of said specific bases, also that General instructions are issued to set objective, general, uniform and non-discriminatory conditions to encourage the participation of as many bidders as possible in the bidding processes for health establishments, guaranteeing the entry of new players to the market.

If this is successful, rules would be issued that oblige public organizations to incorporate competition criteria in future bidding processes, the observance of which is controlled by the FNE and non-compliance may be sanctioned.

The door is open for the requirements of the criteria that must be considered to participate and assign the infrastructure tenders to be discussed and which ones can constitute a legitimate barrier to entry to ensure the quality of the construction of the tendered works, as well as compliance with the contract, establishing a trade off in the way the factors are scored, as well as their relative weighting.

The Court has already invited to participate by providing information to the National Economic Prosecutor’s Office, the Ministries of Health and Public Works and the Chilean Chamber of Construction. However, it seems essential that as many visions and interests as possible be in view, in order to consider different national and international realities and experiences.

Given the importance of having public infrastructure, the amounts involved and many times the extension of the concession’s operating period, it will be necessary to be attentive to how this process is carried out at the competition venue and what definitions will be taken, given that mechanisms such as the followed in the Court could become criteria to be implemented in other tenders that seek to improve the infrastructure of our country.

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