Public Contracting in Mexico

March 10, 2013
Public Contracting in Mexico

Given the likelihood of a much commented and controversial energy reform that would allow greater participation by the private industry in the energy sector, it is necessary to be aware of the proceedings and formalities present when private parties enter into contracts with Mexican federal or local government bodies. On the federal level, the laws that govern public contracting are the Public Sector Acquisition, Leasing and Services Law and the Public Works and Related Services Law, depending on the subject matter of the contract in question. However, in 2008, various reforms were published, excluding acquisitions, leases and contracting of public works and services from the application of these laws, dealing exclusively with substantive production activities referred to in the Regulatory Law of Article 27 on the Petroleum Industry, in which case the provisions of the Mexican Petroleum Law will apply. According to both laws, public contracting may occur through: a) public bidding; b) invitation to at least three parties; or c) direct award, with public bidding being the main form of contracting. In this regard, and without discussing the specifics of each one of the above-referenced laws, it must be noted that in public contracting in Mexico participants must comply with each and all of the rules and requirements of the bidding process or contracting process, as minor or insignificant as some elements may seem. This is because for the purpose of carrying out a transparent and objective contract proceeding, unless an express exclusion applies under such requirements or in the corresponding meetings held to brief participants and clarify contracting questions, the respective entity or authority will likely dismiss a non-complying proposal even if such proposal is better or more convenient technically and/or economically. Those considering potential participation in Mexican public bidding and procurement opportunities should obtain timely advice in order to fully comply with the requirements established by the respective entity or authority and the applicable law, noting that the time periods established for each stage of the proceeding are of utmost importance.

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