“Buy Argentine” Bill

The “Buy Argentine and Supplier Development” bill (the “Bill”) abrogates Law 25,551 and Decree 5340/63 to clarify the “confusing situation of all cases that, from any position, are related to the application of the law”.  However, in everything that does not conflict with the Bill, it leaves in force Law 18,875 related to the contracting of services.

In order to increase the participation of local production in public procurement, it provides for improvements in existing benefits and the creation of new ones. Among those, the following stand out:

• Sphere of Application:
  The Bill broadens and clarifies the scope of application of the preference regimen provided therein, including not only centralized and decentralized administration, but also the individuals and legal entities who were granted licenses, concessions, permits or authorizations granted by the Federal Government for the supply of public works and utilities and to their direct subcontractors. The Bill also includes within its scope the Federal Legislative Branch, the Judiciary and the General Attorney’s office and Public Defense, as well as Compañía Administradora del Mercado Mayorista Eléctrico S.A. (CAMMESA, after its Spanish acronym).
• Increase in the preference margin percentage regarding offers of goods of Argentine origin:
  In the event of identical or similar bids, the Bill provides for a 15% preference for SMEs and 8% for other companies. Currently, in the same situation, Law 25,551 provides for smaller margins as it regulates a 7% preference for SMEs and 5% for other companies.
• Increase in the percentage to classify a good to be of Argentine origin in public works:
  A good must be considered national when produced or extracted in Argentina, as long as the cost of the imported raw materials, inputs or supplies does not exceed a certain percentage of its gross production value.
  The Bill maintains the 60% figure of the gross value of local production for a good to be considered national, as stipulated in article 2 of Law 25,551. However, a distinction is established regarding public works, providing that goods must be of national origin when at least 50% of the materials used meet the national origin requirements.
• A new legal concept is created - productive cooperation agreements:
  These agreements consist of a formal commitment on the part of the awardee to contract local goods and services linked to the object of the relevant public bidding. The means and conditions in which they are to be carried out will be subject to the Bill’s implementing regulations.
  In turn, when the entities encompassed by the Project proceed to the acquisition, rent or lease of goods not produced in the country, they must expressly include in the bidding terms and conditions the obligation of the successful bidder to sign productive cooperation agreements for a percentage of at least 20% of the total value of the works.
• Role of the Enforcement Authority:
  The Executive Branch will designate an enforcement authority which, among other functions, must: issue verification certificates for goods that are not of national origin –certifying compliance with the national market rules as well as the payment of the corresponding taxes; approve the drafts of specific bidding terms and conditions, and collaborate with the contracting agency for the implementation of the productive cooperation agreements.
• Creation of the Federal Supplier Development Program:
  The Bill creates the Federal Supplier Development Program within the scope of the Ministry of Production, which will aim to develop national suppliers in strategic sectors to boost industry, diversify the national productive matrix through greater value generation and promote competitiveness and productive transformation. The enforcement authority must establish the qualification requirements and other characteristics of the program.

We recommend following the legislative process of the Bill and any possible amendments that may be introduced by the Senate, as well as regulations that may be issued by the Federal Executive Branch to make the Project’s compliance quick and efficient.