• The Star Staff

Oversight board approves new rules for gov’t purchases

By The Star Staff

The Financial Oversight and Management Board for Puerto Rico announced Wednesday that it had approved a set of rules that should substantially improve the island government’s practices in purchasing goods and services, and should prevent the irregularities and inefficiencies that have plagued Puerto Rico’s procurement system for too long.

The Uniform Regulation for Purchases and Bids of Goods, Works, and Nonprofessional Services of the General Services Administration (GSA), required by Act 73-2019, which centralized all purchases by government entities, was proposed by the commonwealth’s GSA and revised by the oversight board to align with best practices and comply with the Certified Fiscal Plan and the fiscal responsibility mandated under the Puerto Rico Oversight, Management and Economic Stability Act, the 2016 federal law commonly known as PROMESA.

The approved regulation establishes a single, robust and sound procedure for all procurement, including exceptional purchases in emergencies or other situations during which the government must act quickly. The regulation will promote market competition, transparency and accountability, and necessary controls in the acquisition of goods and services.

“This regulation is a big step forward for Puerto Rico,” said the oversight board’s executive director, Natalie Jaresko. “The regulation will enable Puerto Rico to efficiently and effectively procure goods and services at the best possible prices. Competitive bidding for goods and services, transparent contracting, and sound controls are the guiding principle of a well-functioning procurement process, and that’s what this new regulation enables.”

“Procurement is like the wiring behind the walls of any house: it is essential to the lives of every resident, but mostly noticed only when it isn’t working -- and when it isn’t working, it’s dangerous,” Jaresko added. “Puerto Rico’s faulty wiring has done tremendous harm. From procurement of emergency electricity grid services to inefficient supply purchases, contracting has been opaque and problematic, and the new regulation puts in place the rules, policies and procedures that should put an end to many of the shortcomings that resulted in faulty contracts.”

Many of the significant deficiencies of the government procurement process came to light during the oversight board’s review of the contracts to purchase COVID-19 test kits earlier this year, revealing a lack of uniform rules for purchases during a government-declared emergency.

The oversight board’s review of the regulation proposed by the GSA led to substantial changes, including: minimization of what qualifies as exceptional procurement, a loophole that has allowed direct purchases of goods and services outside the normal procurement processes; the establishment of a defined process for exceptional procurement, including purchases during emergencies; the requirement that a re-bid process take place when no offers or proposals were received in the process of procuring ordinary contracts for goods and services; bids in open-book format (also known as cost-plus contracts) to require suppliers to include all of their costs, mark ups, and services to assist in the transparency of decision making; and publication of all purchase orders, in addition to all contracts.

The regulation adds robust controls and audits, and penalties for non-compliance.