Direct contracting: when the State buys without tendering

The general rule of the public procurement system in Chile is the open tender: any supplier can bid and the contract goes to whoever offers the…

2026-05-31 · Public tenders

The general rule of the public procurement system in Chile is the open tender: any supplier can bid and the contract goes to whoever offers the best value against the established criteria. But the law also provides for exceptions. One of them is direct contracting, a mechanism that lets the State buy without a competitive process where the circumstances justify it. Understanding when it applies and how it works can open up opportunities you would otherwise overlook.

What direct contracting is

Direct contracting is an exceptional mechanism provided for in Ley N.º 19.886 on Public Procurement, under which a State body contracts directly with a supplier without running an open competitive process. Being exceptional means it cannot be used freely: it requires a reasoned resolution explaining why this route is used instead of tendering. The process is also published on Mercado Público to guarantee transparency, even though there is no competition.

Direct contracting is not a window for favouring a familiar supplier or for avoiding the work of tendering where tendering is possible. It is a specific tool for situations where a tender is not feasible or did not work.

When it can be used: the legal grounds

The regulations under the Procurement Act define the grounds that permit direct contracting. Among the most relevant in everyday practice:

Sole supplier: there is only one supplier able to deliver the goods or service required, whether for technical reasons, intellectual property or exclusive availability in the market.
Previous tender declared void: a tender was run and the process ended with no bids or no admissible bids. In that case, the law permits contracting directly to meet the need.
Unforeseen emergency or urgency: situations where the delay involved in tendering could cause greater harm. A classic example is repairing critical infrastructure after a disaster.
Services of a confidential nature or linked to national security.
Very small amounts: depending on the threshold, some minimum amounts do not require a competitive process.
Other specific grounds set out in the rules in force.

In every case, the body must document and justify why it is using this route.

Why it is exceptional and not the norm

The Chilean public procurement system rests on three principles: competition, transparency and equal treatment of all bidders. The open tender guarantees that any qualified supplier can take part and that the State obtains the best possible value. That is why direct contracting is confined to very specific grounds: using it where it does not apply is an irregularity that can lead to observations from the Contraloría General de la República.

For the supplier, this point matters because it confirms that direct contracting is not something negotiated informally: there must be a real, verifiable ground.

What it means for you as a supplier

Knowing how direct contracting works lets you read the public procurement market better and spot opportunities others miss:

If you are the only supplier of something specific (proprietary technology, a specialised service with no equivalent), you can be contracted this way without competition. That means it pays for the market to know what you offer, for your background to be in order and for you to be registered and in good standing.
If a tender in your sector was declared void, stay alert: the body will probably try to resolve the need through direct contracting or by re-tendering. In both cases, whoever was following the process has an advantage.
In emergency situations, bodies buy quickly and prioritise suppliers who are available and have a clear record. Being registered, in good standing on ChileProveedores where applicable, and able to respond fast can make the difference.
Even in direct contracting, the body may ask you for a quotation, technical background and basic documentation. Having it all ready speeds up the process.

How to monitor direct contracting in your sector

Direct contracts are published on Mercado Público, just like tenders. You can search the platform using the process type filter "Trato o Contratación Directa". Reviewing which direct contracts have been awarded in your sector gives you valuable information: what the State buys repeatedly, at what prices, from which suppliers and on what grounds. It is free market intelligence.

In short

Direct contracting is the legal exception that lets the State buy without a competitive process, but only on defined grounds: sole supplier, a previous tender declared void, emergency or others set out in the rules. It is not an informal or negotiable route: it requires a reasoned resolution and is published for transparency. For the supplier, knowing this mechanism opens up concrete opportunities in specific niches, especially when a tender in your sector failed or when you are the only one who can meet a particular need of the State.

— Mindset & Code. Source: ChileCompra and Mercado Público (chilecompra.cl, mercadopublico.cl); Ley N.º 19.886 on Public Procurement and its regulations. Information current as at 2025-2026. Informational content: it does not replace professional advice.