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METS Advice: General Tender Process in Chile

Tender Documents

When you participate in a tender with a mining company in Chile, you will be provided with the following documents:

  • Tender Document: These documents refer to instructions and information on the tendering procedures, specifications, list of attachments, declarations, and information to be provided by the tenderer.
  • BAE or BTE: Bases Administrativas Especificas o Bases Técnicas Especificas this refers to the technical terms and conditions of the tender and the conditions and characteristics of the technical audits during the execution process of each project.
  • BAG: Bases Administrativas Generales, this is the administrative terms and conditions of the tender, which regulate the tender process. This includes administrative aspects, evaluation criteria of the proposals, the legal and commercial conditions of the tender. 

It is important to note that you will be bound by the BAE and BAG the moment you enter into the tender. Best practice is to study these documents with a qualified lawyer. Check out our blog post on the typical clauses found. During the questions and answer period –  you can request from the mining company that they clarify if certain terms in the BAG and BAE can be replaced, modified, etc. This allows you to evaluate your possibilities of modifying the terms set forth in such documents before participating in the tender. 

If these documents have certain unacceptable terms, then you should address them at this stage. If the mining company responds that they will not modify the terms, then it is at this stage that you do not participate in the tender. 

Proposal

Once this stage is over, you provide your proposal, knowing that you will be bound by the BAG and BAE, though there will be a window to negotiate certain changes of theses clauses once you reach the contract stage. You will have certainty of this because of the questions you asked and confirmed in the previous stage.

It is important that companies understand the taxation of their products and services before tendering on the project. This should be included in the proposal and built into your price.

Award Letter

If you are awarded the tender, then you receive the award letter. This document usually repeats certain clauses from the BAG and the proposal (regarding pricing and taxes).  The final terms and conditions can and should be negotiated in the Contract Stage if there are certain matters that you do not agree upon or already discussed in the question period.

Contract

Lastly, you enter the Contract Stage and in most cases an agreement is reached and the contract is signed. If an agreement is not reached, and you wish to walk away, one needs to read what the BAG indicates regarding any financial/legal consequences of doing so.

Here are some practical tips:

  • Have Chilean legal counsel review the BAG.
  • Make sure you understand what you are willing to negotiate and what is definitely a deal breaker in the BAG and BAE.
  • Make sure you understand the taxation of your products and services in Chile. It should be reflected in your proposal.
  • Be aware that in the contract stage, certain general terms set forth in the BAG can be negotiated and changed from a general term to a specific negotiated term or condition.
  • Make sure you read the award letter carefully and that the same reflects your proposal.
  • Sign the contract only once you are sure that you can comply with the terms and conditions set forth in the contract, the BAG, and the BAE. 

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. Over the last 18 years, we have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets. 

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.com