Guatemala Reforms State Contracting Laws

Guatemala’s Congress has approved reforms regarding how the government awards and issues service contracts, a key anti-corruption measure after a series of historic scandals.

On November 17, with 107 votes in favor, Guatemala’s Congress modified the country’s state contracts law, in order to provide a more open and competitive bidding process for government-issued contracts. The intent is to allow for better and more accountable state contracting by making information publicly available, while at the same time lowering prices for contracts by opening competition.

Congress President Luis Armando Rabbe Tejada said the law brings transparency to government functions and “improves controls regarding [state] purchases and contracts.”

The reforms limit Congressional representatives and family members from bidding for state contracts, in order to combat nepotism and influence trafficking. The reforms also place restrictions upon political party and electoral campaign financiers — only those whose annual contributions total less than 30,000 quetzales (about $4,000) would be able to participate in bids. 

In recent weeks, there was doubt the measure would pass due to concern among some legislators over certain provisions, such as the open bidding process. Throwing his weight behind the reforms, however, was Ivan Velasquez — head of Guatemala’s UN-backed anti-impunity body CICIG — who emphasized the importance of these reforms for combating corruption.

Before the decree’s measures begin to take effect, the text will be revised by a Style Commission and then submitted for final Congressional approval.

InSight Crime Analysis

As suggested by a Siglo21 editorial, reform of Guatemala’s state-contracting laws would have been unlikely in years past. But a series of high-profile government scandals have placed immense public pressure on officials to implement anti-corruption measures.

Perhaps most significant of these recent scandals is the so-called “La Linea” customs fraud scandal, which resulted in the resignation and arrest of Guatemala’s ex-President Otto Perez Molina and Vice President Roxana Baldetti.

SEE ALSO: Guatemala News and Profiles

Another high-profile scandal — one which would presumably be difficult to repeat, if the new contracting reforms are effectively implemented — involved Guatemala’s social security institute (IGSS). This involved contract irregularities to pharmaceutical companies and medical providers, with government officials allegedly pocketing millions of dollars off fraudulent contracts. Not uncommonly, these contracts were issued as political and personal favors for government officials.

The majority of IGSS’ service contracts were issued via no-bid processes, which facilitated the corruption. As such, Guatemala’s recent legislative reforms are a key step in the right direction, and offer hope the country can begin limiting the rampant graft and government nepotism of years past.