Selling to the Government

Discusses the legal requirements for selling to the host government, including whether the government has agreed to abide by the WTO Government Procurement Agreement or is a party to a government procurement chapter in a U.S. FTA. Specifies areas where there are opportunities.

Last published date: 2019-10-13

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.

Since its creation in 2010, the government Public Private Partnership (PPP) Commission (COALIANZA) manages and facilitates the PPP solicitation process. COALIANZA as an entity is still growing and expanding its technical capacity to design and implement bids and the bidding process, focusing on large-scale projects involving energy, road infrastructure, airports, ports, and transportation sectors. 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 Trade Leads Program at the database of the U.S. Department of Commerce, as well as through the U.S. Department of State’s Business Information Database System (BIDS).

The U.S. 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 .  

The U.S. Embassy in Tegucigalpa strongly encourages all U.S. firms interested in government procurement or PPP opportunities to reach out to the Embassy’s Commercial and Economic sections prior to pursuing any procurement process with the Government of Honduras.

Many governments finance public works projects through borrowing from the Multilateral Development Banks. Please refer to the “Project Financing” Section in “Trade and Project Financing” for more information.