Discusses the legal requirements for selling to the host government, including whether the government has agreed to abide by the WTO Government Procurement Agreement or is a party to a government procurement chapter in a U.S. FTA. Specifies areas where there are opportunities.
Last Published: 7/21/2019

On July 5th, the United States government sanctioned three individuals from Nicaragua who have been involved in serious human rights abuses or engaged in corruption within the government of Nicaragua under the Global Magnitsky Act (the first Nicaraguan was designated for sanctions in December 2017).  On August 24th, the US Congress called for four more individuals to be investigated and sanctioned.  On April 17, further sanctions were targeted  against BANCORP, the subsidiary of ALBA de Nicaragua (ALBANISA), and one individual with close ties to the investment promotion agency.  As a result of these actions, any property, or interest in property, of those designated within U.S. jurisdiction is blocked.  U.S. persons or firms are generally prohibited from engaging in transactions with blocked persons, including entities owned or controlled by designated persons.  U.S. firms should exercise caution and consult the Department of Treasury Office of Foreign Asset Controls for more information.  Additionally, custom delays, tax manipulations, delayed payments and other bureaucratic red tape have been used by the Nicaraguan Government to punish and coerce the private sector to bend to Ortega’s will.

The Government Procurement Chapter of the United States - Central America - Dominican Republic Free Trade Agreement (CAFTA-DR) requires that Nicaragua apply fair and transparent procurement procedures and rules and prohibits the Nicaraguan government and its procuring entities from discriminating in purchasing practices against goods, services, and suppliers from the United States.  Although Nicaragua is not a party to the plurilateral World Trade Organization (WTO) Agreement on Government Procurement, CAFTA-DR procurement rules are broadly based on that agreement, including the establishment of national treatment, and require the Nicaraguan government to treat suppliers of goods and services from the United States no less favorably than it does domestic counterparts.  CAFTA-DR also provides rules aimed at ensuring a fair and transparent procurement process.

CAFTA-DR applies to most central government entities for goods and services valued above $58,550, and construction services valued at $6,725,000 or more. The threshold for municipalities and other decentralized government entities is $477,000 for goods and services, and $6,725,000 for construction services.  Annex 9.1.2(b)(i) of the Government Procurement Chapter lists entities covered under the agreement; entities not listed are not covered. Purchases wholly or partially financed by foreign governments or international organizations are conducted according to the procedures of the donor organization.

CAFTA-DR also establishes additional rules designed to ensure transparency in procurement procedures. Nicaragua must publish its laws, regulations, and other measures governing procurement, along with any changes to those measures.  Procuring entities must publish notices of procurement opportunities in advance. The agreement provides that procuring entities may not write technical specifications to favor a particular supplier, good, or service.  It also sets out the circumstances under which procuring entities are allowed to use limited tendering. CAFTA-DR requires Nicaragua to maintain procedures to declare suppliers that have engaged in fraudulent or other illegal procurement actions ineligible for participation in future procurement.

The Government Procurement Law (amended 2010/737) and the Municipal Procurement Law (2007/622) provide detailed procurement procedures, including rules for open bidding, qualified bidding, limited tendering, and purchase by quotation. The Ministry of Finance Procurement Office operates an electronic portal for central government and municipality procurement, NICARAGUACOMPRA.

The Government Procurement Law establishes safeguards to encourage open competition among suppliers bidding on government contracts. It states that in order for the Nicaraguan government to purchase goods and services, it must allow suppliers to compete under equal conditions. All government purchases must be planned and approved by procurement committees within each public entity.

The law allows foreign contractors to bid on projects on equal terms with locally registered companies.  While foreign companies need not register locally in order to take part in the bidding process, they must present documentation from their home countries in order to prove that they are qualified bidders.  If a foreign company wins a bid, it will need to register with the Nicaraguan government.

U.S. Commercial Service Liaison Offices at the Multilateral Development Banks (Inter-American Development Bank, World Bank)

The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the Inter-American Development Bank and the World Bank.  These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development.  The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders.  Learn more by contacting the Commercial Liaison Offices to the Inter-American Development Bank (http://export.gov/idb) and the World Bank (http://export.gov/worldbank).

Web Resources

Commercial Liaison Office to the Inter-American Development Bank:http://export.gov/idb
Commercial Liaison Office to the World Bank: http://export.gov/worldbank. 

Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to “Project Financing” Section in “Trade and Project Financing” for more information. 
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.