Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Honduras is subject to all government procurement provisions contained in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). CAFTA-DR eliminated a local requirement that required foreign firms to act through a local agent partner company that was at least 51 percent Honduran-owned. CAFTA-DR requires fair and transparent procurement procedures, including advanced notice of purchases and timely and effective bid review procedures. Under CAFTA-DR, U.S. suppliers are permitted to bid on procurements covered by the agreement for most Honduran government entities, including most key ministries, on the same basis as Honduran suppliers. The anti-corruption provisions in the agreement require each government to ensure that bribery in matters affecting trade and investment, including government procurement, is treated as a criminal offense or is subject to comparable penalties, under local law.
At present, Honduras is not a signatory to the WTO Multilateral Agreement on Government Procurement (GPA).
Foreign companies may appoint a local representative, through a power of attorney, to help them navigate the government procurement. Bids are evaluated based on cost, delivery time, reputation of the firm, technical support, performance in previous contracts and specific aspects related to each particular bid.
Under the Government Contracting Law, all public works contracts over one million Lempiras/ $42,000 must be offered through public competitive bidding. Public works contracts between 500,000L and one million Lempiras/US$20,800 and US$42,000 can be offered through private bids. Contracts less than 500,000L/US$20,800 are exempt from the bidding process. Government purchases and project acquisitions are generally exempted from import duties.
Winning contracts with the Honduran government can be challenging, even for large companies. Some foreign firms have complained of mismanagement, bureaucratic delays, inadequate notification procedures, excessive direct contracting on the part of the government, and lack of transparency in the bidding process. However, efforts to strengthen the country’s procurement systems are underway. One way in which the Honduran government has tried to improve transparency and fairness in government procurement is by contracting with the United Nations Development Program (UNDP) to manage procurement for a number of specific projects and state-owned entities.
In 2015, Honduras also joined the Construction Sector Transparency Initiative (CoST), a global program supported by the World Bank that helps countries pursue infrastructure accountability. According to a CoST report published in 2017, Honduras has achieved a project disclosure compliance rate of 85.3 percent regarding its public-private partnerships, up from just 27 percent in 2014. In addition, the country is publicly sharing data on public infrastructure projects online.
In order to facilitate dissemination of public bidding opportunities, the Honduran government established an online contracting and procurement information system in 2005 known as “Honducompras”, which is administered by the State Procurement Agency (ONCAE). As part of ONCAE’s State Contracting and Procurement Efficiency Program, Honduras implemented a national “Standard Bidding Document” in 2007 that is deemed acceptable to multilateral financing entities such as the Inter-American Development Bank (IADB) and the World Bank. It improved several aspects of the government procurement process. Local government tender announcements and other pre-qualified trade opportunities may also be accessed through the U.S. Department of State’s Business Information Database System (BIDS).
The U.S. Embassy in Tegucigalpa strongly encourages all U.S. firms interested in government procurement or public-private partnership (PPP) opportunities to reach out to the Embassy’s Commercial and Economic sections prior to pursuing any procurement process with the Government of Honduras.
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. Advocacy Liaison for World Bank or the Advocacy Liaison Website for Inter-American Development Bank (IDB).
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 Center on Foreign Government Contracts and for additional information.
Financing of Projects
Long term financing for infrastructure, industrial initiatives, and other major projects is available from both U.S. and international entities. Multilateral organizations such as the Inter-American Development Bank and the World Bank are active players in development and project financing in Honduras, along with affiliated institutions such as the Inter-American Investment Corporation (IIC) and the International Finance Corporation (IFC), respectively. The Central American Bank of Economic Integration (CABEI) is also a leading source of multilateral financing.
The U.S. International Development Finance Corporation (DFC) is America’s development bank and is open in the Honduras market. DFC invests across sectors including energy, healthcare, critical infrastructure, and technology.
The Export-Import Bank (Ex-Im Bank), the official export credit agency of the United States, supports several trade transactions under a range of programs. It guarantees the repayment of loans, or makes loans to foreign purchasers of U.S. goods and services. Ex-Im Bank also provides credit insurance that protects U.S. exporters against the risks of non-payment by foreign buyers for political or commercial reasons. Ex-Im Bank does not compete with commercial lenders but assumes credit and country risks they cannot accept. Ex-Im Bank is not a development bank, and therefore looks for reasonable reassurance of repayment in all transactions.
Long-term financing is generally available only through special lines of credit that select commercial banks have with the Central American Bank for Economic Integration. The programs that are available concentrate on export projects, including export processing zones and industrial parks.
The U.S. Department of Agriculture (USDA) provides credit guarantees for a wide range of agricultural products exported from the United States, as well as export bonuses for selected products under the Export Enhancement Program and the Dairy Export Incentive Program. The USDA financing programs are aimed at encouraging U.S. agricultural exports.
The U.S. Small Business Administration (SBA) provides financial and business development assistance to encourage and help small business develop export markets. SBA offers both loans and loan guarantees.
The U.S. Trade Development Agency (TDA) provides grants for feasibility studies overseas on projects with high U.S. products and services export potential.
Regional and Multilateral Development Banks:
World Bank - Honduras
Boris Weber, Resident Country Representative
Edificio corporativo 777, 9no piso, Col. Lomas del Guijarro Sur Blv. San Juan Bosco
Tegucigalpa, M.D.C., Honduras
Tel: (504) 2264-0200; Fax: 2239-4555
Inter-American Development Bank (IADB)
Eduardo Almeida, Country Representative
Col. Lomas del Guijarro Sur, 1era Calle
Tegucigalpa, M.D.C., HondurasTel: (504) 2290-3500; Fax: (504) 2239-5752
Central American Bank for Economic Integration
Dante Mossi, Executive President
Edificio Sede, Boulevard Suyapa
Tegucigalpa, M.D.C., HondurasTel: (504) 2240-2243; Fax: (504) 2240-2185
U.S. Development and Finance Corporation
Export-Import Bank of the United States
Country Limitation Schedule
Trade and Development Agency
SBA’s Office of International Trade
USDA Commodity Credit Corporation
U.S. Agency for International Development
Central American Bank for Economic Integration
Honduran Association of Banking Institutions