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: 2/17/2019

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.

Public procurement is governed by the Public Procurement Act (PPA) (Gazette No. 39165 and 39503).  The Decree-Law for the Promotion of Private Investment under Concessions Regime 1999 is the legislation that governs public-private partnerships for infrastructure and utilities projects.  The National Contracting Service leads the enforcement of the PPA.

Although Venezuelan procurement law and regulations encourage a transparent and competitive process, most government procurements are made without public tenders and with little transparency.  The GBRV is increasingly awarding contracts directly, thus avoiding the bidding process required by the government procurement law.

Firms wanting to sell to a GBRV agency are required to register with the National Register of Contractors, maintained by the National Service of Contractors.  If tenders are opened only to foreign companies, bidders might be exempt from registration requirements initially, but could have to register once short-listed.  Additionally, selling goods or services to PDVSA requires pre-registration with PDVSA’s contractor registry.  A labor solvency certificate, evidencing a firm’s compliance with Venezuelan labor laws, is also required to do business with the government or state-run enterprise.

U.S. exporters should be cautious if a Venezuelan partner requests changes to a contract after it has been signed.  Such requests must be in writing.  Litigating against the government is difficult, as is enforcing any judgment in the firm’s favor.  Venezuelan regulations prohibit jurisdiction selection clauses in government contracts designating anywhere except Venezuela, and also proscribe international arbitration.  PDVSA has signed sales contracts with U.S. firms through PDVSA procurement affiliate Bariven and PDVSA subsidiary Citgo in the United States, which allows for the pursuit of dispute resolution in the United States.

The GBRV promotes purchases from firms employing disadvantaged groups, called Social Production Companies (EPS).  Consequently, some wholly or partially government-owned companies are encouraged to procure as much as possible from EPS.

The GBRV also insists on “social” contributions as explicit inclusions in tenders on certain types of projects.  Bidders are expected to fund health, educational, or community development projects.  Such contributions vary from project to project, and potential bidders should explore them as part of the preparation of the bid for large projects.  U.S. companies should also be aware of the requirements imposed by the U.S. Foreign Corrupt Practices Act and ensure that their legal counsel review such contributions.

Types of Tenders
Procurements are supposed to fall into one of three classifications:

  • General Tender (Licitacion General)
  • Selective Tender (Licitacion Selectiva)
  • Direct Purchase (Adjudicacion Directa)
Tenders may be opened in one of three ways:  to domestic companies; to domestic and foreign companies; or exclusively to foreign companies.  In the case of public tenders open to foreign bidders, the GBRV sometimes stipulates that the foreign company, if it wins a tender, must form a consortium with a domestic firm or have a local representative.  GBRV officials are only permitted to conduct official business in Spanish.
The Bidding Process
Bid proposals usually must be separated into two parts:
  • Legal documentation regarding the supplier, description of experience, list of prior clients, and
  • Information on the actual technical offer and price.

The tender publication usually contains a time schedule for pre-selection, final offer submission, and final selection date.  The deadline frequently slips when several organizations are involved, and bidders are asked to provide a date up to which they will hold their prices.  Government agencies usually require that a supplier of specific types of equipment be an authorized seller for the foreign manufacturer.  Multiple bids by the same manufacturer may result in disqualification.  Authorization to sell is important where after-sale support might be needed.
If a U.S. company feels that the bidding process of a foreign tender in which it is participating is flawed or discriminatory, it may wish to contact the U.S. Embassy Caracas Economic Section (CaracasEcon@State.gov ).

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.