Sense of Ownership 4 minute read

Sanctions and disqualifications of contracts in the Panama Canal

A system to protect assets and transparency

The Panama Canal’s contracting system is based on the efficient and expeditious procurement of goods and services required by the organization for its operation.

In recent years, most of the Canal’s needs have been satisfied by the local market. Based on the average of the last three fiscal years (2019-2021), 88.35% of the Canal’s procurement of goods, services and works were awarded to Panamanian suppliers and contractors.

From 2017 to 2021, the Canal awarded an annual average of 10,541 contracts for goods, services and works, for an approximate amount of B/.235.5 million annually, with only 0.12% of objections received from system participants.

Dálida Lasso, Canal de Panamá
Dálida R. de Lasso

Dálida R. de Lasso, manager of the Purchasing and Contracts Division, explains to El Faro the system and its zero tolerance policy for unethical behavior.

How does the Canal ensure that corruption is avoided in its contracting processes?

The interoceanic waterway has different ways to achieve this objective: its Contracting Regulations, its people and its processes. The contracting regulations that govern us establish the requirement to make public all bids for goods, services and works. These are published on a computer platform called the Internet Bidding System, where interested national and international companies have access to the bidding documents and the requirements of each bid.

In addition, the Canal Administrator appoints contracting officers who are empowered to act on behalf of the Canal. These personnel receive constant training in regulations, ethics and values, and are kept up to date on market practices. The system is subject to many internal controls, different levels of approval, audits by the Office of the Inspector General and the Comptroller General of the Republic.

Can companies question and challenge the Canal’s contracting processes?

Protests are objections to the contractor selection process. Contractors may, for example, protest the solicitation documents if they consider them restrictive, and the awarding acts if they consider that the established procedure has not been complied with. Under this consideration, protests stop the selection process or the execution of the contract, except when it is determined that the operation of the Canal could be negatively affected.

Companies participating in the process may file protests, but at all times it is essential to satisfy the need for the good or service required and to comply with the uninterrupted service of the Canal.

What are the instances to file these protests to the contracting process?

It is an expedited process. Protests are submitted to the Procurement and Contracts Manager, who has 30 days to analyze and make the corresponding decisions. The next instance is the Supreme Court of Justice of Panama.

How does the Canal handle cases of non-compliance by contractors?

When contractors fail to comply with their contractual obligations, they are informed of the intention to terminate the contract for non-compliance and are given the opportunity to correct the faults. However, once the resolution for non-compliance is issued, the companies are sanctioned and cannot participate in our bids until the sanction period is over, which can range from 6 to 12 months.

The edicts that include the names of the sanctioned individuals and legal entities are published on the Canal’s website.

And what happens with the disqualifications of the companies?

Disqualification is different from the sanction for noncompliance. This occurs when the Canal Administrator excludes individuals or legal entities from participating in contracts with the institution for a period of between 36 and 120 months. The grounds for debarment include theft, forgery and bribery, commission of any act that indicates business misconduct or dishonesty in the actions with the Canal, use of any Canal employee for the purpose of obtaining a contract, crimes of money laundering, terrorism, embezzlement, corruption of public servants, fraud in public contracting acts, influence peddling, among others.

When the debarment process is initiated, the companies have the opportunity to present their defenses. However, when the final debarment is decreed, the Canal notifies its decision in edicts that are published on its website, and these companies or individuals may not participate in bids during the period of debarment.

All the information of the Panama Canal procurement system is available at the following link:

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