Special Law for the Simplification of Public Infrastructure Investment Procedures

The purpose of this Law is to simplify and expedite the execution processes of public infrastructure projects, with the purpose of generating employment and achieving greater economic growth through the modernization of national infrastructure. The norms and procedures established in this Law shall be applicable to the executing units of the Centralized and Decentralized Public Administration in charge of public infrastructure projects of any nature.

The prompt formulation, contracting, and execution of public infrastructure projects under the responsibility of any dependency of the Centralized or Decentralized Public Administration is declared to be of public interest, and for such purpose, all public sector entities involved directly or indirectly in any of the implementation stages of these projects are ordered to proceed to give priority to all administrative procedures, legal processes, issuance of licenses, permits or registrations, and any other activity required for the prompt realization of the works derived from the projects.

The provisions of the preceding Article shall apply generally to all Centralized and Decentralized Public Administration, and in particular to:

• 1)

  The Ministry of State for Natural Resources and Environment (SERNA), regarding the issuance and renewal of environmental permits, licenses, and registrations;

• 2)

  The Institute of Property (IP), regarding cadastral matters, appraisal and regularization of real property;

• 3)

  The Ministry of State for Finance (SEFIN), regarding negotiations, execution and approval of financing, as well as timely transfer of financial resources;

• 4)

  The Executive Income Directorate (DEI), regarding effective, expedited and transparent exemption of natural and legal persons subject to exemptions, as well as exemptions for the importation of goods and services, in accordance with the respective financing agreements, letters of intent, memoranda of understanding, or any other official document executed for this purpose;

• 5)

  The General Directorate of Migration and Foreigners, regarding procedures and issuance of residence letters or permits for foreigners entering the country to work on these projects, as authorized by the respective financing agreements;

• 6)

  The Mining Promotion Directorate (DEFOMIN), regarding the issuance of technical standards for the extraction of non-metallic resources in rivers and quarries;

• 7)

  The Institute of Forest Conservation (ICF), regarding authorizations for tree cutting as required to construct the works, and regarding custody, conservation and allocation of forest resources;

• 8)

  And to the municipalities regarding the issuance of permits of all types related to the construction industry.

The Ministry of State for Natural Resources and Environment (SERNA), in order to guarantee the timely issuance and renewal of all classes of environmental permits, licenses and registrations in favor of public infrastructure projects, shall designate at least three (3) public servants, duly trained, to make the necessary rulings and provide constant follow-up to the requests submitted by State dependencies in charge of these projects, in such a way that under no circumstances shall these projects be unjustifiably delayed in their execution due to the lack of the respective environmental permit. To comply with what is ordered in the preceding paragraph, the provisions of Decree No. 181-2007, dated December 19, 2007, which contains the reform of Decree No. 104-93, of May 2, 1993, containing the General Environmental Law shall be taken into account. CHAPTER II. PROJECT FORMULATION. AVAILABILITY OF RESOURCES AND EXPEDITED DISBURSEMENTS.

The executing units in charge of infrastructure projects financed with external cooperation resources shall immediately enter into the Integrated Financial Administration System (SIAFI) all necessary information to put the Project into operation, including its budgetary formulation, as well as the corresponding creation of accounts and other procedures necessary for the implementation of the Project, from the moment in which the respective financing agreement, letter of intent, memorandum of understanding, or any other instrument executed for this purpose is approved by the competent body and ratified by the National Congress, when it is a matter of loans, without waiting for publication of the instrument in the Official Gazette La Gaceta.

For purposes of making budgetary modifications related to public infrastructure projects, the handling of requests and physical supporting documents is eliminated. The executing units and the Ministry of State for Finance shall carry out the corresponding procedures using electronic requests entered through the corresponding budgetary module in SIAFI. The authorization of such budgetary modifications shall correspond, when transfers or internal movements within the same institution are involved, to the General Directorate of Budget, and the responsibility for issuing the respective resolution shall fall to the Director of that office or his legal substitute; said authorization shall be issued through an internal resolution issued by the Directorate, without this resolution being subject to transcription or certification by the General Secretariat. It shall be sufficient for said Director to sign the administrative resolution authorizing the modification for it to take effect. The executing units in charge of public infrastructure projects may request budgetary modifications at any time during execution, up to November 30, inclusive, of the fiscal year in progress.

The prioritization of resources in SIAFI for public infrastructure projects, financed with national funds or external cooperation funds, shall be delegated by the General Treasurer of the Republic to the Administrative Manager of the entity in charge of the Project, whether it is a Ministry of State, deconcentrated body, decentralized body, or executing unit without specific assignment. Allocations to the national funds notebook shall be made on a semi-annual basis, in accordance with the payment schedules submitted by the entity in charge of the Project to the General Treasury of the Republic; which shall authorize at least Eighty Percent (80%) of the required allocation, in order to ensure a stable and continuous cash flow to infrastructure projects.

The requests for disbursement of operations with external cooperation funds shall be prepared and signed by the head of the executing unit in charge of the project. There shall be no need for the heads of the Ministries of State to which the executing unit is assigned to sign the disbursement requests, as this is a merely operational procedure.

To make modifications or additions with external funds to the General Budget of Income and Expenses of the Republic, it shall not be required that the good or service be contracted nor that resources be available in the special account; the mere availability of resources in the respective financing agreement shall serve as support for carrying out such additions. The General Directorate of Public Credit shall control the availability of resources from external cooperation.

The Ministry of State for Finance shall proceed to create, within the institution, a technical unit that shall serve as Fiscal Agent for Public Infrastructure Projects. This unit shall supervise, support and follow up on all processes and procedures related to the financial administration of projects, including budgetary matters, payment prioritization, fund transfers, assistance in administrative procedures and use of SIAFI, and any other procedure required by the executing units in charge of infrastructure projects. The Fiscal Agent Unit for Public Infrastructure Projects (UAF-PIP) shall be created and structured following the parameters of the Fiscal Agent Unit of the Millennium Challenge Account Program – Honduras. The Ministry of State for Finance shall identify and assign the necessary resources to create and put the UAF-PIP into operation. This unit, within the structure of technical personnel, shall not exceed more than six (6) persons, professionals specialized in the matter, and must apply the procedures and mechanisms of agility that have worked for the Fiscal Agent Unit of the Millennium Challenge Account Program – Honduras. CHAPTER III CONTRACTING OF WORKS, GOODS AND SERVICES. SIMPLIFICATION OF ADMINISTRATIVE PROCEDURE. CHALLENGE OF CONTRACTING PROCEDURES

In any public or private bidding process and public or private tender, the Executive or Ministerial Agreement shall not be used to approve the award of a contracting process, nor the contract resulting from the award. Consequently, it shall also not be necessary for the General Secretariat of the different Ministries of State, deconcentrated and decentralized entities, to certify the agreements that approve those steps in the bidding process. To award a contract or approve a contract, it shall be sufficient for the competent body, the executing unit or the entity in charge of the process to notify the award to the selected bidder and execute the respective contract. Administrative resolutions shall also not be issued to approve these stages in the contracting process.

For the presentation and acceptance of bonds or guarantees in any contracting process, it shall not be necessary for these to be presented to the competent body in charge of the process through a representative. The bonds and guarantees shall be presented directly by the interested party, and reviewed and approved by a single public official, to whom the head of the body in charge of the contracting process shall delegate broad and sufficient powers to fulfill this responsibility. The acceptance of the bond or guarantee, following the provisions of the preceding Article, shall not require the issuance of a Ministerial Agreement or the certification of this agreement by the General Secretariat, nor the issuance of an administrative resolution. To approve the bond or guarantee, it shall be sufficient for the official responsible for reviewing it to notify acceptance to the interested party by means of a simple note and incorporate it into the file, together with a copy of the guarantee or bond itself. This review shall be carried out within a maximum period of two (2) business days, and the result must be notified to the interested party immediately upon conclusion of this period.

Bidding and tender processes for infrastructure undertaken by the Public Administration, under national regulations or under regulations derived from financing agreements executed by the State, may be challenged through the mechanisms and remedies provided in those regulatory instruments. No challenge filed by a bidder may stop, suspend or postpone an executed work contract or work supervision. The court hearing the case may order correction of a violation of the contracting regulations applicable to the respective bidding or tender, in the event that execution of the awarded contract has not commenced. In the event that the court's ruling is made after the contract awarded in the process for which the challenge was filed is already being executed, the Court may order compensation for damages to the aggrieved party for any loss or damage suffered, in case of awarding compensation to the aggrieved party, in addition to properly documented damages, the Court shall consider at least the cost of preparing the offer and the costs of the challenge filed. The executing units shall be obliged to provide bidders or tenderers a period of at least thirty business days before proceeding to execute the awarded contract, so that bidders have the opportunity to file challenges prior to the commencement of execution of the respective contract. Once the contract award resulting from the contracting procedure is final, suspension of the challenged action shall not be admissible, and the contract shall continue its regular proceedings without any delay until its completion. Executing units must expressly provide in the Tender Documents or Bidding or Tender Bases the obligation of bidders to exhaust the alternative mechanisms for resolution of challenges provided in the regulations applicable to the respective process prior to resorting to judicial proceedings. CHAPTER IV PROJECT EXECUTION, RESETTLEMENT OF PERSONS AND PROPERTY, FORCED EXPROPRIATION, ACCESS TO MATERIAL BANKS

Unless otherwise stipulated in the respective financing agreement, the State, with respect to natural or legal persons who are legitimate owners of movable or immovable property required to carry out public infrastructure works, shall apply, through the respective executing unit in charge of the project, the measures and compensations required in the Involuntary Resettlement Policy (OP 4.12) of the World Bank, in effect at the time of approval of the Project to be executed and officially published by the World Bank.

The privately owned lands required for public infrastructure works shall pass to the domain of the State, community lands or of the decentralized entity as applicable, through transfer, purchase and sale, compensation or forced expropriation. When the required land is community land or national land, the possessor shall only have the right to the value of improvements constructed on the part whose resealing has been completed, unless otherwise provided in World Bank Policy OP 4.12. In any case, such persons shall have the right, as appropriate, to compensation for the economic value of the improvement or to their relocation under conditions equal to or better than those they had before the execution of the works.

In order to acquire the movable property required to carry out public works, the respective executing unit shall be permanently authorized to provide the resources necessary to carry out such acquisitions and to manage the registration of ownership at the Institute of Property by means of a trust established in an authorized banking institution for this purpose. Once said property has been acquired by the trust, there shall be a transfer of ownership in favor of the State, the municipality, or the decentralized entity, as applicable.

When the property required for the execution of public works cannot be acquired due to the rejection by the affected party to receive the offered fair value, the respective executing unit shall be authorized to request that the Cabinet of Ministers or the National Congress declare the forced expropriation of the real property. Once the declaration of forced expropriation has been issued, it shall be personally notified to the affected party, and in the absence thereof, when this is not possible due to difficulties in locating them, by means of two (2) newspapers of national circulation and on the Internet site of the respective executing unit. The owner or, as applicable, the persons who dispute the ownership of the real property to be expropriated, may appeal to the judicial route to challenge the determined fair value, subject to the provisions established in numeral 4) of Article 82 and Article 84 of the Property Law. Once the expropriation is declared, as established in articles 81, 83 to the extent applicable, 84, 84-A, 85, 86, and 88 of the Property Law.

The provisions of articles 85, C, and 126 of the Property Law shall be applicable to the property acquired in accordance with this Law, relating to the prohibition of registering acts or contracts that affect the regularization process and the exemption from taxes applicable to titles issued by the Institute of Property as a result of regularization processes.

The price to be paid in favor of the affected parties, in cases where they are legitimate owners of the required parcel, shall be determined taking as a basis the minimum requirements stipulated in the Voluntary Resettlement Policy (OP 4.12) of the World Bank, which defines a prompt and effective indemnification equivalent to the total replacement cost.

For the appraisal of movable and immovable property to be acquired, the executing units shall form and preside over an Appraisal Commission, an entity that must have representatives from the General Accounting Office of the Republic, the Cadastral Unit of the respective municipality, and the Institute of Property. The expenses generated by the activities performed by the members of these commissions shall be covered by the executing unit in charge of the project. In everything that does not contradict this Law, with respect to the composition and operation of the appraisal commissions, the provisions of Article 114 of the Organic Budget Law and Article 40 of the General Enforcement Regulation of the Organic Budget Law shall apply. To define the value of the property, the appraisal commissions shall not consider the cadastral value of the property, but rather the commercial or market value, which shall be established on the basis of a technical opinion formulated by professionals specialized in the matter. For this purpose, the executing units must contract the services of professional appraisers authorized by the National Commission of Banks and Insurance (CNBS).

Non-metallic mineral resources required for the achievement of public infrastructure projects executed by the Public Administration through different competent entities in this matter may be exploited rationally by the State as long as there exists a prevailing public interest regarding the exploitation and extraction of these materials.

The owners of parcels contiguous or adjacent to any public infrastructure work whose properties have been identified by the respective executing unit in charge of the project as suitable to serve as material banks are obligated to facilitate and permit the extraction of all material that may be necessary for the opening, construction, and maintenance of the project, at no cost to the State and its contractors, prior notification to the Property Owner.

The executing unit in charge of the project shall, at its own expense and through the respective contractor or by itself, make repairs for any damages that may be caused as a result of the extraction of materials from the parcels referred to in the preceding Article, once the work has been completed.

In order for the State to carry out the rational exploitation of required materials, the Ministry of State in the Offices of Public Works, Transport and Housing (SOPTRAVI) may grant authorizations to state organs, including municipalities and decentralized entities, in charge of executing different public infrastructure projects and/or to construction companies contracted by said executing organs, so that they may proceed with the extraction and hauling of materials, in accordance with the respective public works contracts.

The extraction of materials carried out by the State or its executors shall not affect the simultaneous exploitation that holders of mining concessions may carry out, in case there exists a concession prior to an Agreement that SOPTRAVI authorized the extraction. For this reason, SOPTRAVI shall issue the respective authorization so that the state organ may carry out the extraction of materials from a concession bank or quarry, provided that there does not exist another site of better suitability. In the referred authorization, SOPTRAVI shall establish that the exploitation by the State or the respective municipality shall be conducted without substantially interfering with the normal development of rational exploitation activities carried out by the concession holder, thereby safeguarding the acquired right of the existing concession holder. The simultaneous exploitation carried out by the State or the respective municipality and the concession holder shall be subject to technical standards issued by the Executive Office for the Promotion of Mining (DEFOMIN), for which it shall take into account the need to guarantee equitable exploitation between the parties. If no concession exists over the identified materials bank, the State may carry out exploitation in accordance with the rational exploitation of those natural resources, subject to the limitations established by the Office for the Promotion of Mining (DEFOMIN) in the respective technical standards issued for this purpose. The Office for the Promotion of Mining (DEFOMIN) shall take precautions regarding financial resources and the identification of personnel necessary to fulfill these functions.

The authorizations granted by SOPTRAVI shall be issued ex officio, by means of an Agreement issued by the Head of this Ministry of State, and shall be executed immediately, based on the needs expressed by the executing organs and/or the contractors, according to the respective public works agreement. Prior to the issuance of the Agreement, SOPTRAVI shall communicate, ex officio, to DEFOMIN so that it may verify the environmental, technical, and legal status of the identified materials bank. If there is no impediment to carrying out the extraction, without further proceedings, DEFOMIN shall proceed to issue the technical standards applicable to the exploitation, extraction, and hauling of materials. With the technical standards issued and communicated to both SOPTRAVI and the interested executing organ, this Ministry of State shall proceed to issue the corresponding authorization Agreement, which shall be notified to both the executing unit and the owner of the real property identified to serve as a materials bank. Without prejudice to the supervision of other state entities, DEFOMIN must supervise compliance with the technical standards it issues in relation to the extraction and hauling of materials, in order to report to the State's oversight organs and the general public the results of said supervision. The authorization issued by SOPTRAVI, as regulated in this Law, constitutes the sole extraction permit necessary for the executing organ or the contractor of the project to carry out the extraction of materials, without prejudice to any other permits that may be required by law in municipal, forestry, and environmental matters.

One who, having been properly notified by the competent authority, executes acts intended to prevent the State or its contractors from accessing the real property identified to serve as a materials bank shall commit the crime of disobedience as defined in the Penal Code. One who prevents or hinders the extraction of materials within a materials bank that is to be exploited by the State or who attempts to obtain remuneration for the value of extracted materials shall incur in the same offense. When private parties prevent access to the real property or the extraction of materials therein, the responsible executing unit shall immediately present the corresponding report to the Office of the Attorney General of the Republic, so that the private party may be held responsible for the criminal liability that corresponds. CHAPTER V FAST-TRACK PAYMENT PROCEDURE

The Fast-Track Payment Procedure is created, applicable to all public infrastructure projects covered by this Law, which shall generate expedited mechanisms and reduce unnecessary procedures to speed up payments in favor of contractors and consultants who implement public infrastructure works. To ensure fast-track payment, the creation of trusts in state, private, or semi-private financial institutions is authorized, to serve as complementary payers for the State, in order to maintain a stable and continuous cash flow in favor of State contractors. The Ministry of State in the Office of Finance may execute agreements with social security entities, so that these, with their resources, constitute trusts in state or commercial banks that may serve to complement the State's payment capacity. The Private Investment Regime (RAP) shall be authorized to constitute trusts of this nature in public or private banks, in order to provide this payor service to contractors and the State. The Regulation of this Law shall govern the scope and limits of the provisions of this article. CHAPTER VI FINAL AND TRANSITORY PROVISIONS

The Forced Expropriation Law contained in Decree No. 113 dated April 9, 1914, shall not be applicable to Public Infrastructure Projects, which shall henceforth be regulated by this Law. The processes of forced expropriation that have been initiated prior to the effectiveness of this Law shall continue to be processed following what is stipulated in the Forced Expropriation Law.

The acquisition of property for the construction of the sections of the CA-5 North Highway, covered by Decree No. 47-2006 dated May 29, 2006, shall be carried out applying the provisions of this Law.

The Executive Branch shall establish, within five (5) days following the effective date of this Law, a special commission that shall be responsible for overseeing its compliance, with transparency and efficiency. This Commission shall be composed of:

• 1)

  A representative designated by the President of the Republic, who shall preside over it;

• 2)

  A representative of the Honduran Council of Private Enterprise (COHEP);

• 3)

  A representative of the Honduran Chamber of the Construction Industry (CHICO);

• 4)

  A representative of the College of Civil Engineers of Honduras (CICIH); and,

• 5)

  A representative of the Honduran Chamber of Construction Companies (CHEC); and,

• 6)

  A representative of the State Secretariat of the Office of Finance. In addition to the representatives indicated in the preceding numerals, representatives of the State Secretariats and deconcentrated and decentralized entities in charge of public infrastructure projects shall be integrated into the Commission. The Commission shall report quarterly to the National Congress on the progress in the implementation of this Law, during the first two (2) years of its validity.

The public official who unjustifiably delays any of the procedures provided for in this Law shall be sanctioned with a fine of twenty (20) minimum salaries at their highest value. For the purposes of the sanction established in the preceding paragraph, the maximum term established in this Law shall be applied; and if there is none, the term provided for in the State Contracting Law and its Regulations shall apply. If there is no term provided for any act or procedure referred to in this or that Law, it shall be considered that the act or procedure should have been fulfilled by the responsible public official within a maximum term of ten (10) business days.

The Regulations of this Law shall be formulated by the Oversight Commission referred to in Article 31, and issued by the Executive Branch through the State Secretariat of the Office of the President, within thirty (30) days following the effective date of this Law.

This Law shall take effect as of the day of its publication in the Official Gazette "La Gaceta". Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the eighteenth day of the month of May of two thousand eleven. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT RIGOBERTO CHANG CASTILLO SECRETARY GLADIS AURORA LÓPEZ CALDERÓN SECRETARY To the Executive Branch. Therefore; Let it be executed. Tegucigalpa, M.D.C., June 23, 2011. PORFIRIO LOBO SOSA PRESIDENT OF THE REPUBLIC THE STATE SECRETARY OF THE OFFICE OF THE PRESIDENT MARÍA ANTONIETA GUILLÉN VÁSQUEZ