Fiscal board flags flaws in gov’t procurement

By THE STAR STAFF

Puerto Rico’s government procurement process is facing renewed scrutiny after the federally appointed Financial Oversight and Management Board flagged systemic flaws that undermine transparency and market competition.

The oversight board’s latest report to Congress cites outdated practices, weak controls, and a lack of professional training as key obstacles to fiscal responsibility.

According to the report, many agencies still rely on paper-based procurement systems, despite efforts by the General Services Administration (ASG by its initials in Spanish) to digitize operations. This reliance on manual processes hampers tracking, slows approvals, and leaves room for discretion that can lead to fiscal risk, the board notes. Comptroller audits repeatedly uncover the same issues: contracts awarded without competitive quotes, work split to avoid bidding requirements, and missing documentation from winning bidders.

The oversight board has intervened in several cases, rejecting or conditioning contracts to enforce compliance with the Puerto Rico Oversight, Management and Economic Stability Act’s mandate for market competition. In one instance, the Puerto Rico Aqueduct and Sewer Authority was required to conduct a market study before renewing a consulting contract that had been continuously extended since 2008. Another high-profile case involved a proposed liquefied natural gas supply agreement that deviated sharply from its original bid terms, prompting renegotiations that could reduce its value by nearly $16 billion.

To address those vulnerabilities, ASG launched a Training and Continuing Education Academy in 2022, aiming to build expertise among procurement professionals. However, the board warns that lasting reform requires more than training. Puerto Rico lacks statutory caps on contract extensions and amendments, allowing deals to balloon in value without competitive review -- a practice most U.S. states restrict.

The report also highlights lobbying loopholes, including the legality of success fees, which are banned in major U.S. jurisdictions due to corruption risks. Without comprehensive legislation to regulate lobbying and strengthen procurement safeguards, experts fear Puerto Rico could remain vulnerable to inefficiency and undue influence.

As the oversight board pushes for modernization and transparency, the question remains whether Puerto Rico can implement those reforms before federal oversight ends, the entity noted.