December 4, 2020

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The Board approves new regulations for purchases in the Government


The Fiscal Oversight Board (JSF) announced today, Wednesday, that it approved a regulation that seeks to “substantially improve” the practices of the Government of Puerto Rico in the acquisition of goods and services, as well as prevent the irregularities and inefficiencies that have plagued the country’s contracting system.

According to a press release, the approved regulation establishes a “single, rigorous and defined” procedure for all purchases, including exceptional purchases during emergencies or other situations in which the Government must act quickly.

Among other things, the regulation will promote competition in the market, transparency and accountability, and the necessary controls in the acquisition of goods and services.

“This regulation is a great step forward for Puerto Rico. The regulation will allow Puerto Rico to acquire goods and services efficiently and effectively at the best possible prices. The competitive bidding of goods and services, transparent contracting and defined controls are the guiding principle for the proper functioning of the procurement process, and that is what this new regulation allows ”, said the executive director of the Supervisory Board, Natalie Jaresko.

The Uniform Regulations for Purchases and Auctions of Goods, Works and Non-Professional Services – required by Law 73 of 2019 and which centralizes all purchases by government entities – was proposed by the General Services Administration (ASG) and reviewed by the entity federal imposed by Congress to control the finances of the archipelago.

“The acquisition of goods and services is like the plumbing that hides behind the walls of a house: it is essential for the lives of all residents, but above all it is noticeable only when it stops working, and when it does not work, it is dangerous . Puerto Rico’s faulty plumbing has caused tremendous damage. From acquiring emergency power grid services to inefficient supply purchases, contracting has been opaque and problematic, but the new regulation establishes the rules, policies and procedures that should put an end to many of the deficiencies that resulted in contracts. doubtful ”, Jaresko indicated.

The Board explained that many of the significant shortcomings of the government’s procurement process came to light during the Oversight Board’s review of the COVID-19 test kit purchase contracts earlier this year, revealing the lack of uniform rules for procurement during a government-declared emergency.

The Oversight Board’s review of the regulation proposed by ASG led to substantial changes:

  • Minimizes what qualifies as exceptional acquisition, allowing direct purchases of goods and services outside of normal acquisition processes.
  • It establishes a defined process for exceptional purchases, including purchases during emergencies.
  • It requires a new bidding process when no offers or proposals were received in the process of acquiring ordinary contracts for goods and services.
  • Open book tenders (also known as cost-plus contracts) to require suppliers to include all their costs, margins, and services to aid in transparent decision-making
  • Publication of all purchase orders, in addition to all contracts, following the same procedure.

The centralization of purchases is an essential element of the efficiency reform of government agencies outlined in the Certified Fiscal Plan, to achieve greater purchasing power and transparency. Coupled with proper procurement rules and procedures, it should generate significant savings in government agency budgets.

The regulation adds rigorous controls and audits, and penalties for non-compliance. In addition, it establishes that the review board is responsible for auditing all exceptional purchases on a quarterly basis and for making such audits public.

The federal entity pointed out that now the Government of Puerto Rico must guarantee that the regulations are rigorously implemented and applied, while establishing an impeccable audit program to ensure that the controls are fully implemented and result in the required transparency and expected savings.



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