Andres Alvarez
Commercial Manager
Andres Alvarez
Commercial Manager
In light of the presidential and parliamentary elections, the various stakeholders in the public procurement market—particularly government entities, contractors, and suppliers—begin to assess the impact of the Guarantees Law on their ordinary processes. The most immediate perception is that the effects of Article 33 and the paragraph of Article 38 of Law 996 of 2005 are absolute, and that the provisions set forth in the regulation lead to a form of fiscal paralysis, whereby the State operates with minimal resources and contractual processes are suspended.
The onset of the electoral period not only prompts an urgent review of the law, but also reinforces the belief that public spending is significantly reduced as a result of procurement restrictions. It is common for businesses and trade associations to anticipate declines in public investment, recommending that contracting authorities drastically adjust their procurement plans in anticipation of a future fiscal drought. This behavior, to some extent, heightens concerns about the ability of public bodies—at the central and decentralized levels, as well as oversight entities and the judicial branch—to continue operating normally.
In reality, Article 33 and the paragraph of Article 38 of Law 996 of 2005 initially prohibit only two procurement modalities: direct contracting and administrative agreements. These restrictions will take effect simultaneously as of January 31, 2026, for the presidential elections, while in the case of parliamentary elections, the prohibition will apply solely to the execution of inter-administrative agreements as of November 8, 2025. In both cases, the prohibition becomes enforceable four months prior to the respective elections.
The real effect on public spending
The regulatory framework of the Guarantees Law and its material scope of application—clearly detailed and explained in External Circular No. 006 of 2025 issued by the National Public Procurement Agency, Colombia Compra Eficiente—reflects a reality that should reassure the various stakeholders in the public procurement market. While the two restricted modalities are significant in the context of ordinary State expenditures, they do not encompass all selection processes. Public tenders, merit-based competitions, abbreviated selection procedures, and minimum-amount procurement processes remain entirely unaffected.
Likewise, contracts executed prior to the restriction dates may be extended, amended, modified, or assigned, and inter-administrative agreements may still be entered into on a non-remunerated basis. An additional exception applies to entities within the defense sector, which retain the authority to enter into contracts related to national security, as well as contracts addressing educational or health emergencies or disaster response situations.
This framework allows for the conclusion, at a preliminary level, that public tenders and merit-based competitions—mechanisms essential to ensuring the execution of core public programs across all sectors—will continue uninterrupted, as will the procurement of essential goods and services. In other words, public spending does not come to a halt.
Direct contracting and its influence on public spending
With respect to direct contracting, which according to data from Colombia Compra Eficiente accounted for approximately 40% of the total value of public procurement between January 2023 and September 2024, concerns regarding its prohibition during electoral periods are understandable, particularly given that this modality often ensures the operational continuity of entities where service providers play a significant role.
Without engaging in a broader debate on the predominance of direct contracting as a selection modality and its effects on public spending and investment structures, it is nevertheless appropriate to urge public entities at all levels—particularly territorial entities—to adopt a targeted strategy within their procurement plans for the final quarter of the year. Such planning would allow contractors to continue their activities during the suspension period, without disrupting institutional operations or directly awarded investment projects.
Ultimately, concerns about an excessive reduction in fiscal spending resulting from the application of the Guarantees Law are not supported by the actual dynamics of the public procurement market. This is due not only to the continued availability of procurement modalities such as public bidding and merit-based competitions, but also to the capacity of public entities to plan and reorganize their spending strategies around a four-month suspension period affecting only two specific selection mechanisms. This approach enables the continuity of budget execution and ensures that public resources are used efficiently and in a timely manner, thereby avoiding a significant impact on contractual activity.
