Selling to the Government

Government expenditures account for a significant portion of Bolivia’s GDP.  Central, state, and local governments and other public entities are important buyers of machinery, equipment, materials, and other goods and services.  The Ministry of Defense and the Ministry of Government can make purchases for unlimited amounts.  The government may issue tenders for national security purchases, for the armed forces, or for goods and services of national interest, with no limit in value.  Information about government procurement including local entities can be found in the Government’s Procurement System (Sistema de Contrataciones Estatales SICOES), and also on the websites of all public companies (Electricity, Hydrocarbons, Mining).  Bolivia is not a signatory to the WTO Agreement on Government Procurement nor does Bolivia have a free trade agreement with the United States with commitments on government procurement. Under the current rules, government procurements under $145,000 must give priority to the small business or small enterprise sector, micro-producer associations, and small farmer associations.  Vendors that fall under these categories are required to provide fewer guarantees and prerequisites than the rest of the business sector.  U.S. companies hoping to participate in these processes should have a Bolivian partner.   Bolivian companies and local providers (both of which can be representatives of foreign companies legally established in Bolivia) are given priority for government procurement bids from $145,000 to $10 million.  Importers of foreign goods can participate in these procurements only when locally manufactured products and service providers are unavailable, or when the Bolivian government does not select a domestic supplier.  In such cases, the government can call for international bids.  International public tenders are required when purchases exceed $10 million.  To encourage local industrial development, the government gives domestic bidders a 10 percent to 25 percent preference, depending on the bid.          

Suppliers must comply with the prerequisites established in the bidding documents, which are exclusive to each purchase. Bid specifications containing technical and commercial requirements are available through either the government tender’s website or the relevant office controlling the tender.  Tenders may also be available through local newspapers.  The head of the ministry or entity that issued the request for bids determines qualifying procedures and makes award decisions.  Officials consider both price and quality when awarding contracts.  If the requirements for an international tender are not met in the process of reviewing the proposals, then a direct contract with the government is allowed to be signed without a tender.

The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the World Bank and the Inter-American Development Bank.  These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development.  The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders.  Learn more by contacting the Commercial Liaison Offices to the World Bank and to the Inter-American Development Bank.

U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.

Financing of Projects

Credit is allocated on market terms, but foreign investors may find it difficult to qualify for loans from local banks due to the requirement that domestic loans be issued exclusively against domestic collateral.  Since commercial credit is generally extended on a short-term basis at high interest rates, most foreign investors prefer to obtain credit abroad.  Interest rates are influenced by the Central Bank’s monetary policy, as well as by high administrative costs resulting from general operational inefficiency of local banks.  Still, the impact of the Central Bank’s monetary policy is moderate due to the dollarization of the economy (approximately 15 percent of deposits and less than one percent of credits are denominated in U.S. dollars).  Although there are no formal restrictions on foreign companies’ borrowing locally, few large investors do so because of the financial system’s limited capacity.

Established Bolivian firms may issue short or medium-term debt in local capital markets, which act primarily as secondary markets for fixed-return securities.  Bolivian capital markets have sought to expand their handling of local corporate bond issues and equity instruments.  With greater frequency, several Bolivian companies and some foreign firms have been able to raise funding through local capital markets.  The stock exchange is small, with the value of total transactions a year hovering around one-third of the GDP, and it is highly concentrated in bonds and debt instruments (more than 97 percent of transactions).  Most companies do not issue stock. The Overseas Private Investment Corporation (OPIC) and U.S. Export-Import Bank (EXIM) do not currently operate in Bolivia.

Multilateral Development Banks and Financing Government Sales

Price, payment terms, and financing can be a significant factor in winning a government contract.  Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.

Learn more by contacting the:

• Commercial Liaison Office to the Inter-American Development Bank
• Commercial Liaison Office to the World Bank.