The Procurement Laws, mainly the Works Law and the Acquisitions Law, set forth remedies to challenge an award or protest in a tender process. The remedy is called “non-conformity”. This procedure is intended to declare null and void any action or omission of the contracting entity that breaches or avoids the application of the law in the following stages:
- calls and instructions for public tenders and clarification meetings;
- tender evaluation and award;
- cancellation of the bidding process;
- acts or omissions by the contracting entity calling the bidding process that prevent the execution of the contract.
Once the bidding procedure is completed and the contract is awarded, those parties which were not favored with the results of the procedure are entitled to challenge any part of the outcome through the procedures of: (i) non-conformity appeal, (ii) appeal of review, (iii) contentious administrative trial, and (iv) amparo suit (constitutional trial). In the event that any of these challenge procedures are presented, it may delay or suspend the commencement or progress of the schedule for the awarded contract.
All the legal remedies against any action or omission of any contracting entity should be pursued under the applicable laws. However, some private entities have used public opinion as leverage to put some pressure on the contracting entity.
It is possible to file damage claims under civil law against the public agency, however before that filing it is necessary to obtain a favorable resolution issued under a procurement legislation that recognize that the public entity has acted illegally.
A non-conformity action may be filed before the SFP in the event a breach is claimed in connection with any stage of the public bid process or invitation to at least three interested parties. After analyzing the case and the evidence produced, the SFP should issue a resolution. Such resolution may:
- declare that the non-conformity action is, or is not, duly founded in law;
- declare the annulment of any action of the respective entity; or
- declare the execution of the contract.
Some common reasons for filing a dispute within a bidding procedure or exemption procedures are the late delivery or performance of the works, the amount of the corresponding penalties, delays in payment or demand for payment for additional works.
Also, suppliers may always file a request for conciliation with the SFP due to disagreements resulting from the performance of contracts. The SFP will hold a hearing in order to reconcile the parties and try to reach an agreement. The conciliation procedure is not admitted when the contracts are terminated or under litigation, or when those contracts have been subject to conciliation before and no agreement was reached.
Moreover, other procedures may be initiated before different federal courts in addition to the foregoing remedies, such as the Tribunal Federal de Justicia Administrativa (Administrative Federal Justice Tribunal) and the Poder Judicial de la Federación (Federal Judicial Power). If the contract does not have any arbitration clause, the litigation will occur before the Administrative Federal Justice Tribunal and/or Federal Judges.
Generally, an affected party has six business days to file an application for non-conformity. In case of international public tenders under the coverage of treaties FTAs, the term to file a non-conformity action is 10 business days.
In some cases, a non-conformity action may suspend a procurement procedure (e.g., by preventing the performance of the contract with the awarded company). In such cases, suspension will be guaranteed through a bond. Such guarantee should be posted for an amount equivalent to 10% to 30% of the amount of the economic proposal of the affected party filing the non-conformity action.
The “non-conformity” appeal should be filed by any bidder that demonstrates its participation in the bid procedure, against any of the following resolutions:
- Calls and instructions for public tenders and clarification meetings
- Tender evaluation and award
- Cancellation of the bidding process
- Acts or omissions by the contracting entity calling the bidding process, which prevent the execution of the contract.
The non-conformity writ must include some specific information, such as the reason to challenge the resolution, the harm caused, the information and documentation that demonstrate the legal arguments, as well as the documentation that demonstrate the participation in the public bid procedure.
Any violation within a bid procedure could be appealed by the bidders. The most common grounds for starting an appeal are violation of the competitive bidding requirement, disqualifications of a proposal without legal grounds, not fulfilling the legal terms set forth in the procurement laws for a public bid procedure, etc.
With the filing of a non-conformity appeal, it is possible to request the suspension of a procurement procedure (e.g., by preventing the performance of the contract with the awarded company). In such cases, suspension will be guaranteed if the party that protests posts a bond. Such guarantee should be posted for an amount equivalent to 10% to 30% of the amount of the economic proposal of the affected party filing the non-conformity action.
The non-conformity appeal has the purpose to declare null and void any action or omission of the contracting entity that breaches or avoids the application of the law. A successful appeal could cause a cancelation of an agreement, a change in an award decision, or the re-initiation of a bid procedure.
The non-conformity appeal could take around 6 to 8 months to be resolved. If after such appeal the case is presented before the Administrative Federal Court the judicial proceeding takes around 1.5 years to be resolved.
According to the Procurement Laws, all the bidders should receive a notification of the award at the same time, and the award shall be uploaded in CompraNet. In most of the cases, the notification is made the day of the decision, or within the next days. Again, it is important to mention that the public entity has the obligation to submit the award decision through CompraNet the same day of the award.
No, because damages must be filed under the civil law before a Civil Court. Such procedures take a lot of time to be resolved.
In Mexico, jurisprudence is the consistent interpretation that federal higher courts give to the laws as a result of litigation cases. The Federal Courts regularly issue decisions regarding the procurement regime.
Some of the judicial resolutions and interpretation of the law in connection with public procurement related to, among others: (i) early termination of public contracts; (ii) submission of proposals; (iii) electronic public bidding; (iv) the principles of the public bidding; and (v) definitive suspension of claimed actions.