The new Law of Administrative Procurement.

Law 1238, also known as the "Law of Administrative Procurement," was published in the Official Gazette on February 21, 2025. The law's main objective is to establish legal provisions for administrative contracts between contractors and public institutions in the Republic of Nicaragua.

The new law contains two types of administrative contracts: those with public institutions and those with municipal entities. Previously, such contracts were contained in two different laws: Law Number 737, the "Public Sector Administrative Procurement Law," and Law Number 801, the "Municipal Administrative Procurement Law," as well as their respective regulations.

Two notable additions are the new Administrative Procurement principles of remediability and local economic development. The first establishes the primacy of substance over formality. The second states that local authorities shall promote local suppliers in municipal procurement processes to encourage their participation and stimulate the municipality's development.

The law uses the term "state procurement" to replace previous terms that distinguished between the two processes.

The Ministry of Finance and Public Credit (MHCP) may update and increase the amounts established for administrative procurement by means of Ministerial Agreements, depending on the accumulated inflation rate and after consulting with the Central Bank of Nicaragua.

The different administrative procurement modalities are as follows:

1. Macro Agreements: These are agreements with suppliers that offer standard and commonly used goods and services. In this case, the amount is not limited.

2. Tenders:

a. Public: Contracts for amounts greater than ten million córdobas (C$10,000,000.00).

b. Selective: Contracts ranging from 2,000,001 Córdoba (C$2,000,001) to 10,000,000 Córdoba (C$10,000,000).

3. Simplified Contracting: This modality applies to cases established by Law 1238, regardless of the amount, and written and reasoned evidence.

4. Minor Contracting: State contracts that do not exceed two million Córdoba (C$2,000,000.00). The new law significantly increases the previous amount of five hundred thousand cordobas (C$500,000.00).

5. Consultant Bidding: Contracts for individual consultants or firms that do not require a specific amount and are based solely on technical and professional qualifications, regardless of the price of the service offered.

For certain binding trade agreements, administrative procurement processes will be convened exclusively for micro-, small-, and medium-sized enterprises (MSMEs) in accordance with the provisions of this law's regulations.

According to the legal definition of "international procurement" and Article 87 of Law 1238, procurement processes in force under international or free trade agreements are governed by the provisions of those instruments and are not subject to this law's regime.

On the other hand, the regulation for companies and the public financial sector of the state will be specially designed for their procurement processes and related contracts in their ordinary business through private law. This will be done by issuing a procurement manual that must be approved through an administrative agreement and prior validation by the General Directorate of State Procurement.

A significant new requirement for contracting with the state is established in Article 18, paragraph 6. This requirement stipulates that the Certificate of State Supplier Verification be presented. This certificate will be issued by the State Supplier Verification Commission of the National Assembly for amounts exceeding Minor Contracting.

Finally, administrative appeals are divided into two categories for public bidding, selective bidding, and bidding processes.

1. Appeal: It is filed with the Attorney General's Office (PGR) within two business days of receiving notification of the resolution. This resource is used when a bidder believes there were irregularities or a clarification is necessary. For Mayor's Offices or Municipalities, the appeal is submitted to the Mayor or the highest authority in the Municipal Sector within three business days of being notified of the award or the declaration of desertion in the contracting process.

2. 2. Nullity appeal: If the appeal is dismissed, a nullity appeal may be filed with the Government Accountability Office of the Republic within five business days of being notified of the appeal resolution. When a resolution is issued in this instance, the administrative process is exhausted.

   
   

Thanks to the unification of public procurement processes, it is possible to prepare more effectively for the procedures and gain clarity within the centralized legal framework.