Contracting public works in an SLP municipality is one of the processes with the highest risk of OSFAE findings. Knowing the contracting methods and required documentation can prevent costly contingencies.
The three contracting methods
The Public Sector Acquisitions, Leases and Services Law (LAASSP) and its state equivalent establish three methods for contracting public works:
- Public tender: mandatory when the amount exceeds the annually established thresholds. Highest transparency and documentation requirements.
- Invitation to at least three parties: for intermediate amounts. Contractors with proven technical capacity are invited.
- Direct award: for lower amounts. Requires documented justification and carries the highest risk of findings if used without proper grounds.
Essential project file documentation
Regardless of the contracting method, each project file must contain:
- Budget authorization issued by the Treasurer
- Market study or technical justification
- Signed contract with performance bond
- Construction or supervision log
- Progress payment estimates with original invoices
- Completion and handover record
- Georeferenced photographs of progress and completion
The risk of poorly justified direct awards
A direct award without technical justification and without a market study is the number-one cause of findings in municipal public works. OSFAE requires documentation of why a public tender was not feasible or appropriate. Without that justification, the expenditure may be deemed irregular and result in financial charges against the municipality.
Steps to a bulletproof contracting process
Before starting any public works contracting process, we recommend: verifying current-year thresholds, compiling the prior technical file, documenting the contractor selection process, and appointing an independent external supervisor. Prior legal advice is always cheaper than resolving a finding after the fact.