The San Juan Daily Star
Digital tool finds ‘red flags’ in over 69,000 gov’t contracts
By The Star Staff
A new version of the “Contratos En Ley” digital tool that evaluates government contracting in Puerto Rico found that there are more than 69,000 public contracts with “red flags” that could represent a possible risk of corruption or inefficiencies.
The three red flags detected by the tool are political donor contractors, corporations with less than 24 months of incorporation contracted for more than $250,000, and contracts whose amendments increase the original amount by more than 30%.
Although each red flag in itself does not necessarily point to corruption, it does raise potential red flags in a preventive manner. From 2015 to August of this year, in estimated figures, the tool detected, among others, 29,887 contracts to political donors in excess of $3.1 billion. It also found 558 contracts over $250,000 awarded to corporations less than 24 months incorporated. Those are primarily LLCs and have contracts for $6.7 billion, representing 14.7% of the total funds awarded to corporate contractors.
“Contratos en Ley” also found 43,326 contracts with a high number of amendments. These contracts represent 48% of the contracts with amendments, totaling more than $48 billion (sum of contracts and amendments).
“The red flags tool is part of Contratos En Ley and is available for entities, journalists, and citizens who wish to know about and monitor the use of public funds to achieve greater transparency of transactions in government and avoid corruption,” said Issel Masses, director of the nonprofit organization Sembrando Sentido, which developed the platform.
Masses said Contratos En Ley’s red flag system was inspired by the methodology developed by the international Open Contracting Partnership, which draws on studies on patterns of corruption and suspicious behavior in government contracting.
Identifying a “red flag” does not mean a risk of corruption, but rather invites a more in-depth evaluation of the highlighted process and the related context to confirm that there is no real risk. In cases where it is determined that a real risk exists, Masses pointed out, by raising the flag in a preventive manner the contract in question can be addressed promptly to prevent the risk from becoming a reality and public funds from being diverted or lost.
Although the three flags raised only apply to 12% of all contracts, “these represent a few flags out of 90 [recognized] internationally,” Masses said. “Increased government transparency allows more risks to be monitored in a preventive manner, protecting the people’s resources in real time.”
The Sembrando Sentido director stated that “the government often contracts with third parties to provide essential products and services, from electricity to transportation. This represents 30% to 50% of the public budget.”
“Contracting processes are complex and contain contradictions and gaps,” she said. “Strengthening these contracting processes could generate large savings, improvements in the quality of services, and greater competition. Our organization’s mission is to contribute to transparency and prevent corruption. We urge citizens, in general, to be vigilant in their oversight and be part of the solution.”
Sembrando Sentido presented this year the first “Evaluation of Public Contracting Processes in Puerto Rico,” a study that revealed numerous weaknesses in current contracting processes that expose the island Treasury to losses of up to $3.1 billion annually and the people to poor results in essential services. The study is available at contratosenley.org.