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The Financial Oversight and Management Board sent a letter to La Fortaleza Chief of Staff Francisco Domenech expressing their objections to a new law that would allow municipalities to avoid launching tenders for construction or public improvement projects valued at less than $500,000 because it goes against established procurement best practices.
Additionally, the new law permits contracts valued at up to $1 million to bypass public auction requirements in cases where an emergency declaration is issued by a mayor, the governor of Puerto Rico, or the president of the United States. However, such contracts must comply with emergency procurement criteria.
“The Oversight Board understands the importance of facilitating the procurement of construction projects and public improvements, especially during emergencies,” the oversight board stated in the letter. “Nonetheless, as detailed below, Act 141 directly contravenes procurement best practices and undermines market competition. Thus, Act 141 impairs or defeats the purposes of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act].”
By raising the public auction and competitive procurement threshold for municipalities from $200,000 to $500,000, and allowing contracts up to $1 million during emergency declarations, Act 141 discourages market competition and increases the likelihood that municipalities will face higher costs for construction projects, the oversight board said.
Furthermore, the change diverges from the fiscal responsibility aimed at by PROMESA, the oversight board added. The new construction project threshold for municipalities is double that of similar states’ construction thresholds and some 10 times greater than those of other states with significantly larger economies than Puerto Rico, according to the board.
Both the island Office of Management and Budget and Treasury Department have indicated that there would be no costs associated with the change in the procurement threshold; however, the oversight board has deemed those entities’ analyses insufficient.
Despite the concerns, the oversight board expressed a willingness to meet and discuss alternatives to amend the law in question. It said it is open to allowing a limited exception to the public procurement requirements exclusively in cases of declared emergencies, contingent upon the establishment and implementation of safeguards to ensure fiscal responsibility and compliance with PROMESA.
Feds nix proposal to bring in foreign labor for construction
Separately, the federal government has rejected a proposal from the Puerto Rico Construction Association to bring in foreign labor to address the construction demand on the island.
As a result, more than 60,000 workers needed for construction projects will not receive visa approval.
Specifically, the proposal sought to utilize the H-2B visa program, which allows U.S. employers who meet certain regulatory requirements to bring in foreign workers temporarily for jobs that are not related to agriculture. The information was provided by Agustín Rojo, president of the Puerto Rico Construction Association, according to NotiUno.
Rojo noted that the response from the previous administration under President Joe Biden was not encouraging.
