The project contradicts at least two key legal frameworks: Law 340-06 on Public Procurement, which requires formal contracting and prior procedures to carry out works, and Organic Budget Law 423-06, which prohibits making commitments without budgetary appropriation
SANTO DOMINGO. – The bill seeking to enable the payment of state debts to contractors proposes an exceptional mechanism that, while aiming to resolve a historical accumulation of claims, introduces tensions with basic principles of the Dominican legal system regarding public procurement and the management of funds.
By allowing the validation of debts derived even from works without a contract and without a defined amount, the initiative makes essential principles of legality, spending control and fiscal planning more flexible.
Below are the key points to understand its scope and the points of conflict.
1. What does the law do?
The initiative creates a procedure to review and eventually pay debts to 400 creditors, derived from works carried out for the State, including cases with formal contracts and others without contractual documentation.
To do this, it establishes a commission that will evaluate each file and decide whether the debt is valid in full, in part, or not.
2. What does the current legal framework say?
The Dominican public procurement system, governed by Law 340-06 on Public Purchases and Contracts, establishes that:
- All state-funded projects must be backed by a formal contract
- There must be a prior bidding or awarding process
- Payments must be supported by certifications, measurements, and budget availability
- In parallel, Organic Budget Law 423-06 stipulates that obligations cannot be contracted without budgetary appropriation; public spending must be previously authorized and registered
In summary, the legal framework requires formality, planning, and budgetary support.
3. Where is the collision?
The project introduces a critical point: it allows for the review and eventual recognition of debts arising from works carried out without a formal contract.
This directly conflicts with the principle of administrative legality, public procurement rules, and spending controls established in the budget law
In practical terms, the law opens the door to regularizing ex post situations that, in their origin, did not comply with the legal framework.
4. What role does the commission play?
The Claims Review Commission becomes the central hub of the system:
- validates or rejects files
- determines whether the debt is recognized in full or in part
- It serves as a technical filter before any payment
However, its design raises questions: it does not replace a judicial process, it operates with a wide margin of appreciation, and it does not establish detailed and public decision criteria
This introduces a component of administrative discretion.
5. Is there an obligation to pay?
Not immediately. The project stipulates that the Ministry of Finance will decide whether to accept the payment terms, and disbursements will depend on budget availability. In other words, acknowledgment of the debt does not automatically equate to payment.
6. What is the main gap?
The project does not establish the total amount of the debt or the value of each claim. This means that the fiscal impact is unknown, there is no official cost estimate, and Congress approved the mechanism without quantifying its economic scope.
7. What risks have been identified?
From a legal and tax perspective, several risks are identified:
- Legal certainty: validating debts without a contract can set precedents for future claims outside the legal framework
- Transparency: the absence of detailed amounts and criteria hinders public scrutiny
- Discretion: the commission has broad discretion to decide on a case-by-case basis
- Uncertain fiscal impact: it is not known how much the State will have to pay
8. Why had the Executive Branch noticed it?
The Executive Branch had already returned the project at an earlier stage, amid questions about:
- the validation of debts without sufficient documentary support
- the need for greater control and traceability
- the risks to the legal system and public finances
Lawmakers claim they are trying to solve a real problem, a debt accumulated with contractors over decades, but they are doing so through an exceptional mechanism that relaxes and, above all, contradicts key rules of the current legal system.
The result is a delicate balance between addressing long-standing grievances and preventing that solution from weakening the principles governing public procurement and the management of state spending.
Recommended readings:
- Once again, lawmakers hastily approve a law to pay contractors for projects the State left in limbo
- Key meeting: sectors and congressmen seek to define steps after the Executive returns the law on payments to contractors
- Congress approves new law to settle debts without defining amount, tax burden, or budget appropriation
