Nonprofit: 69K gov’t contracts raise ‘red flags’ for possible irregularities
A new version of the online contratosenley.org tool that evaluates government contracting in Puerto Rico found that there are more than 69,000 public contracts that raise “red flags” that could represent a possible risk of corruption and/or inefficiencies, according to the tool’s developer, Sembrando Sentido.
The nonprofit stated that three red flags that the tool detects 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 does not necessarily point to an act of corruption, “it raises possible alerts in a preventive manner,” the nonprofit’s officials said.
From 2015 to August 2022, in estimated figures, the tool detected:
- 29,887 contracts to political donors for a sum greater than $3.1 billion.
- 558 contracts of more than $250,000 granted to corporations with less than 24 months of incorporation. These, for the most part, are LLCs, and they have contracts for $6.7 billion, representing 14.7% of the total funds granted to corporate contractors.
- 43,326 contracts with significant amendments. These contracts represent 48% of the total contracts with amendments, adding up to more than $48 billion, or the sum of contracts and amendments.
“The red flag tool is part of Contratos en Ley and is available to entities, journalists and citizens who wish to know and monitor the use of public funds, to achieve greater transparency of government transactions and avoid corruption,” said Issel Masses, director of Sembrando Sentido.
The red flag system is modeled after the methodology developed by international entity Open Contracting Partnership, which is based on studies on patterns of corruption and suspicious behavior in government contracting, Masses said.
The identification of a “red flag” does not mean that there is a risk of corruption, but rather invites a deeper evaluation of the highlighted process and the related context, to confirm that there is no real risk, she said.
In cases where it is determined that there is a real risk, by raising the flag preventively, it can be attended to in time and prevent the risk from becoming a reality and that public funds are diverted or lost.
Although the three raised flags only apply to 12% of the total contracts, “these represent a few flags out of over 90 internationally. The increase in government transparency allows more risks to be monitored in a preventive manner, protecting the resources of the people in real time,” said Masses.
“The government often contracts with third parties to provide essential products and services, from electricity to transportation. This represents between 30% and 50% of the public budget. Hiring processes are complex and contain contradictions and unattended spaces,” 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 attentive to audit and be part of the solution,” said Masses.