Public Administration Works Contracts: Key Definitions and Procedures

T.7: Works Contracts of Public Administrations (PAs)

Technical Specifications

A document that sets out the characteristics of a product or service. It may include requirements relating to terminology, symbols, testing, and more.

Standard

A repetitive and continuous technical specification for products, processes, or industrial facilities. It is established by agreement of all parties concerned and approved by a recognized national or international body for legislative activity, with which compliance is not mandatory.

Technical Regulation

Mandatory technical specifications for products or industrial facilities, defined by the administration, regardless of agreement. These can refer to standards or technical specifications.

Labor Contracts with Government

Construction contracts are defined as those which aim to:

• Construction of a building or structure.
• Carrying out work to alter the form or substance of the soil or subsoil.
• Alterations, repair, maintenance, or demolition of the above.

Additional classifications include:

• Works of first establishment, alteration, or major repair.
• Simple repairs or minor repairs.
• Repair and maintenance works.
• Demolition.

Figure 1. Outline of the recruitment procedure with the administration

Termination of Contracts

Contracts can be terminated by:

• Compliance: When the contractor meets its commitment in full and the government pays for the work.
• Resolution: Specific causes for resolution and compensation can be fixed in the contract. Common causes include:

• Breach of clauses in the contract.
• Changes in the works that exceed preset percentages.
• Temporary suspension of works.
• Death or extinction of the legal personality of any party.
• Bankruptcy or insolvency of either party.

Types of Bonds

Some entities are exempt from bonds due to legal privileges.

• Provisional Bond:
  • Necessary to present to attend auctions and tenders (2% of the total construction budget).
  • Can be in cash, government bonds, or a surety bond.
• Final Deposit:
  • Mandatory for state works contract tenders (4%).
  • Can be in cash, government bonds, or a surety bond.
  • Definitive securities answer to the following:
    • Penalties imposed on the contractor during the execution of the contract if they could not be deducted from the certifications.
    • Damages caused to the contractor management.
    • Possible confiscation in the event of contract termination.
• Additional Security:
  • Treated as a final deposit.
  • For special cases, heads of departments may agree to establish an additional security (6% of the budget allocation) where the administration takes the biggest risk.