Selling to the Government

Many governments finance public works projects through borrowing from the Multilateral Development Banks. 

Colombia’s Law 80 of 1993 is the foundation of public procurement, establishing principles such as transparency, economy, and objective selection. However, it has undergone significant reforms to modernize and streamline contracting processes.

Government entities, institutions, and commercial enterprises must follow the provisions of Law 80, which regulates purchases made and contracts entered into by the government and state industrial and commercial enterprises. Under Law 80, Colombian government contracting agencies must select contractors through a public competitive bidding process, typically found on Colombia Compra Eficiente’s (the national procurement agency) website.

There are some exceptions to the general rule of public bidding, as established in Article 24 of Law 80 of 1993. These exceptions authorize the use of direct contracting procedures (contratación directa) under specific, legally defined circumstances:

1. Contracts Below the Minor Amount Threshold (Contratos de Mínima Cuantía): Procurements below a certain value threshold are exempt from formal selection procedures and may be awarded through direct contracting. This threshold is tied to the Colombian legal minimum monthly salary (SMMLV), currently about $380 without the additional benefits and/or compensation pay. Depending on the annual budget of the contracting entity:

   •  If the entity’s annual budget is less than or equal to 6,000 SMMLV, it may directly procure goods and services not exceeding 25 SMMLV.
   •  If the entity’s annual budget is equal to or greater than 1,200,000 SMMLV, it may procure directly up to 1,000 SMMLV.

   These values are updated annually according to the legal minimum wage set by the government.

2. Statutory Exceptions under Article 24 of Law 80: Direct contracting is also allowed in specific situations, including:

   •  Loan agreements and inter-administrative contracts (between public entities).
   •  Contracts for professional, scientific, and technological services, particularly those involving individuals with proven expertise.
   •  Evident emergencies, such as natural disasters or public health crises, where immediate action is required to safeguard public interest.

3. Failed or Void Selection Processes: The entity may proceed with direct contracting when a public bidding process is declared void or fails due to a lack of bidders, unqualified proposals, or non-compliance with technical requirements. Similarly, direct contracting is permitted in cases involving:

   •  Agricultural and livestock products offered through legally organized commodities exchanges.
   •  Health service contracts executed by public entities within the national health system framework.

In July 2007, the Colombian government issued Law 1150, an amendment to Law 80, which introduced new selection methods, clarified bidder requirements, and incorporated risk management principles. This law also laid the groundwork for digitization and efficiency in procurement practices.

The following are the most relevant changes to Law 80: 

1. Classification of the four main procurement modalities: public tender, abbreviated selection, merit-based selection (mainly for consulting services), and direct contracting, each governed by specific criteria.
2. A new requirement for risk allocation mechanisms to be incorporated into the contract specifications, with clearly defined responsibilities for each party.
3. A clearer application of the principle of objective selection, ensuring that bidders are chosen based on pre-established, measurable criteria. While legal, financial, and technical capacities are no longer exclusionary prerequisites, they are used as part of a scoring system to rank and evaluate proposals.
4. Expands the possibilities of checking the conditions of the bidders through a National Bidders Registry (Registro Unico Empresarial or RUE).
5. Requires the application of sound fiscal and functional principles when contracting with the State in addition to the rules already established by the State.
6. Authorization for modifying or extending concession contracts (particularly for public infrastructure works) up to 60% of the original value under specific legal and technical justifications, regardless of the initial investment amount.

Subsequent regulations, including Decree 1082 of 2015, consolidated and clarified procedures across the public procurement cycle, establishing standardized tools like the Registro Único de Proponentes (RUP), framework agreements, and the Tienda Virtual del Estado. Law 1474 of 2011, known as the Anti-Corruption Statute, reinforced transparency by mandating the complete publication of contracting documents and strengthening oversight mechanisms. Law 1882 of 2018 refined contracting in infrastructure and public-private partnerships (PPPs), introducing standardized bidding documents and enhanced dispute resolution mechanisms.

In recent years, Colombia has accelerated its transition toward fully digital procurement. Platforms such as SECOP I and SECOP II now facilitate contract publication, offer submission, and contract execution monitoring. Colombia Compra Eficiente leads these efforts to improve accountability and promote open data. Current trends include integrating sustainability, encouraging SME participation, and deploying data analytics to detect irregularities, signaling a broader shift toward a more transparent and modern procurement system.

Foreign individuals or companies not domiciled in Colombia or foreign private legal entities without a branch in Colombia that are interested in government contracts must appoint an agent or legal representative, domiciled in Colombia, who is duly authorized to bid on and execute the contracts as well as to represent the foreign enterprise in and out of court. They also must provide a copy of their registration with the corresponding registry in their country of origin and submit documents proving their constitution or incumbency whichever is the case. This law applies to direct sales or international tenders.

The FTA’s Government Procurement Chapter provides significant opportunities for U.S. companies to supply their goods and services to the Colombian government with strong procedures that apply to the conduct of the procurement. At the same time, the agreement’s government procurement rules ensure that certain U.S. business sectors – such as small businesses or textile companies bidding on Department of Defense procurement – continue to receive the same protections they have in other agreements, and also ensure that U.S. environmental and labor safeguards will be maintained. For more in depth information refer to the U.S. Trade Representative’s U.S.-Colombia Trade Agreement webpage.

Generally, all individuals and legal entities wishing to enter into contracts with state entities must register with the chamber of commerce in their jurisdiction to be qualified, classified, and rated in accordance with the provisions of Law 80.

Although Law 80 has made the government contracting system more dynamic, Colombia is still not a signatory to the World Trade Organization (WTO) Agreement on Government Procurement (GPA) though they act as an observer to the GPA. There have been frequent, legitimate complaints of a lack of transparency and rule changes during the award of major government contracts.

Colombia is still struggling to refine the requirements of Law 80, which calls for open bidding in public tenders. Attempts are being made to amend the law to clarify procedures. Despite the law, transparency, fairness, and truly competitive bidding conditions in many tenders remain uncertain. The Colombian government is also resorting to auctions for the purchase of high tech or complex equipment or medicines. These factors continue to be significant market access barriers. U.S. companies interested in public sector contracts should obtain legal counsel in Colombia and contact the U.S. Commercial Service for assistance and possible advocacy.

Colombian military contracts above a certain amount (more than $3 million) require the foreign company to offer an “offset” proposal. Contact the U.S. Commercial Service for further information about this requirement.

Because of the CTPA, U.S. firms are given national treatment, and for all federal government tenders, U.S. companies are required to be treated the same as Colombian companies bidding on the tender.

U.S. companies bidding on foreign government tenders may also qualify for U.S. Government advocacy. Within 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 in competition with foreign firms in foreign government projects or procurement opportunities. 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 agency officials expressing support for the U.S. exporters directly to the foreign government. Consult the Advocacy Center’s program web page on trade.gov for additional information.

Project Financing

The government and the Central Bank are important sources of funding for the financial system. The Central Bank, in addition to providing the usual discount facilities to support system fluidity, manages several special government funds to promote lending into a number of sectors that have been determined to be important to national development or economically essential. The funding comes from government capital, bonds, and current fiscal appropriations, if needed to cover deficits. Access to the funds tends to require considerable paperwork; applicants must qualify, and margins are limited. Their importance as a funding resource has diminished in recent years. 

Leasing, domestic, and international (both operating and capital) financing are becoming popular, mainly because of tax benefits. Factoring and international credit insurance are available. Transactional financing is more associated with trade in consumer goods, while equity-based financing is more commonly used for project financing. 

Colombian exporters have access to credit offered by the Colombian Foreign Trade Bank (Bancoldex). This credit is also extended to Colombian importers for industrial imports. 

Foreign investors have full access to local credit. While the Colombian Government still directs credit to some areas (notably agriculture), credit is mostly allocated by the private financial market. Loans of foreign origin or foreign financing of imports are permitted. 

Ex-Im: The Export-Import Bank of the United States provides a full range of services in Colombia. Ex-Im offers a range of loan, insurance, and loan guarantee programs to facilitate exports of U.S. goods and services to Colombian government and private companies.

DFC: Development Finance Corporation is a U.S. government agency that supports, finances, and insures projects that have a positive effect on U.S. employment, are financially sound and promise benefits to the social and economic development of the host country. DFC assistance is available for new investments, privatization, and for expansion and modernization of existing plants sponsored by U.S. investors.

IDB: The Inter-American Development Bank supports Colombia through financial and technical assistance for projects in various sectors, including infrastructure, energy, and social development. The IDB also works to strengthen financial systems, promote trade, and integrate Colombia into global value chains.  

Additional multilateral agencies such as the International Finance Corporation (IFC), the Andean Development Corporation (CAF), the Export Import Bank of Japan, and the development agencies from Japan and Canada are actively providing financing for projects in Latin America and the Caribbean. 

The Andean Development Corporation (Corporacion Andina de Fomento) and the Non-Conventional Energy Fund and Efficient Energy Management (FENOGE) are the only organizations to provide major direct financing for greenfield projects in Colombia. They have provided direct financing to the private sector for the development of greenfield projects in various infrastructure sectors.  

Multilateral Development Banks

The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the Inter-American Development Bank and the World Bank. These institutions lend billions of dollars to developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructural 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 Advocacy Liaison to the World Bank or Advocacy Liaison Website to the Inter-American Development Bank (IDB).

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). The Guide to Doing Business with Multilateral Development Banks overviews how to work with MDBs. The 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 to the World Bank or the Commercial Liaison Website to the Inter-American Development Bank (IDB).