Private Initiative Projects

A private initiative is a mechanism through which any private person, whether an individual or a legal entity, national or foreign, is allowed to present a project to meet a previously identified public need or a need from the public administration related to a good or a service.

This mechanism drastically reduces costs and the involvement of the state apparatus in project development for executing works and providing public services.

The object of the private initiatives can be very broad and diverse. They can be activities that can be performed directly by the government or under concession.

Under this regime, the purchase, execution, repairs or conservation of public works may be proposed, as well as the concession or provision of services and/or goods.

A concession is a contract through which a government entity (“the grantor”) commissions a third party (“the grantee”) the construction and/or maintenance of a public property (concession of public works), or the management of a public service (concession of a public service) at its sole expense, which will allow it, in return, to charge for a fee to those who use the property or the public service, for a certain period of time.

In Uruguay, public works concession is the method under which a large part of the road infrastructure network operates; the construction and maintenance of the main national roads are in charge of concessionary companies that amortize their investment by charging tolls.

Works or services that at the time of the submission of the proposal are already being studied by the government entity to which said proposal is aimed at cannot be the object of a private initiative.

Services that are exclusively provided by the government cannot be the object of a private initiative, be it because they are essential services (for instance, public safety or national defense) or because even though they are public services, and could therefore be granted to a private party, a constitutional or legal regulation states that they should be exclusively provided by the government (for instance, the drinking water supply service).

In case the initiative is accepted by the corresponding government administration, if the promoter participates in the subsequent competitive procurement process, they will receive the following benefits:

• They will not pay for the cost of the tender documents of the competitive process.
• They will have the right to benefit in the assessment of their bid in at least 5 % and up to 20 % of the bid value.

If the promoter does not participate in the subsequent competitive procurement process, the only benefit they will have is the right to a compensation equivalent to the costs incurred in the stage prior to the process, which must be proved. This compensation will be paid by the resulting successful bidder of the competitive process.

For further information, the applicable regulation is listed below. Decree number 442/002 which regulates the Law number 17,555 articles 19 and 20 related to the process of concession of public works.

The initiative must be submitted to the Presidency Office of the Republic, unless it relates to goods or services for tourism purposes, in which case the proposal can be submitted to the Ministry of Tourism or to the corresponding Local Government interchangeably.

The initiative must contain:

The opening of the initiative will take place on the date and at the time previously notified to the promoter. In this act, there will be a record of the proposal, as well as the participants, the compliance of the formal requirements and the clarifications or exceptions that the interested parties wish to make.

Once the initiative is opened, except for the cases related to tourism goods or services, it will be referred from the Presidency Office of the Republic to the corresponding entity, according to its object. In the case of initiatives related to tourism goods or services, the recipient of the initiative (Local Government or Ministry of Tourism, as previously mentioned) will have to process it jointly with the entity in charge of the good or service.

Once the initiative was received, the entity who received it will have 90 calendar days from the date of receipt to assess it and, while it has not been accepted, all information relative to the proposal will remain confidential.

In case the government administration accepts the initiative (totally or partially), its confidentiality will be lifted, and it will request feasibility studies from the promoter.

The feasibility studies must be conducted by the promoter at their sole expense but must be controlled by the government administration. If the promoter does not conduct the feasibility studies, the administration might conduct them itself or outsource them, but the promoter will lose all right to the benefits established under this regime.

If the government administration approves the feasibility studies conducted by the promoter, it will have 120 calendar days to call for a competitive process with the purpose of selecting their co-contractors to execute the project. Also, in this case, the private initiative submitted by the promoter is transferred to the administration by operation of law. However, if the administration does not call for the competitive process in the above-mentioned term, the promoter will keep all their rights to the initiative for a period of 2 years.

The competitive process will be governed by the general regulations of public procurement and, in addition to submitting a bid, the promoter will have the benefits established under this special regime, particularly, the preference margin in the assessment of their bid.

Notwithstanding, the bids will be assessed in view of the characteristics inherent to the object of the project and according to the weighting factors provided in the corresponding specifications.

Once all bids have been assessed, the award will be made to the bid that the administration deems more favorable or, by the contrary, all of them can be rejected for being inadmissible or unfavorable.

The award may be made to the bid of the promoter or to another bidder participating in the process.

In the first case, after the corresponding formalities have been met, the promoter will become a contractor of the administration and they will execute what was originally their initiative, according to the contract, the specifications in force during the process and the regulations applicable to the object of the contract.

If the promoter was not the successful bidder of the competitive process, they will have the right to request a bid improvement.

The administration may decide not to receive more proposals, to cancel the call or competitive process, to reject all proposals or to declare the call unsuccessful at any stage of the process, and this will not entitle the bidders to make any claims.

The promoter will keep the rights to the initiative for a period of 2 years.