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Study: Inefficiencies, lack of transparency sinking competition, delaying Puerto Rico’s recovery

Despite the allocation of federal funds that exceed $62 billion, Puerto Rico’s recovery has faced multiple delays, and because a large portion of reconstruction projects are delegated to contractors, nonprofit Sembrando Sentido carried out a study on public contracting processes with Community Development Block Grant (CDBG-DR) funds, to identify the causes of the delays, their impact, and potential solutions.

The study identified that while the Puerto Rico Department of Housing discloses information on procurement and contracts in their CDBG-DR website, the agency does not publish key information on needs assessments, contract progress, and/or payments.

Additionally, municipalities, agencies, and non-governmental organizations (NGOs) implementing reconstruction projects with CDBG-DR funds, with allocations of over USD 838 million are not required to disclose information regarding their procurement processes on the CDBG-DR page.

“If information is published in dozens of different media channels and formats, local companies will struggle to learn about contracting opportunities, and citizens won’t be able to know how CDBG-DR funding is used, its progress and results,” said Issel Masses, executive director of Sembrando Sentido. 

In terms of efficiency, the evaluation revealed that competition (with an average of ~3.4 eligible bidders per tender) is limited, and the period of evaluation and award of contracts (~147 days or ~4.8 months on average), points to significant delays in contracting.

The study also includes an equity analysis that shows how the disparity between funds awarded to Puerto Rican (~ 36%) versus the United States contractors (~ 63%) persists.

“Even when accounting for subcontracts, local vs. foreign contractor distribution does not improve,” said Masses, stressing the need to explore strategies that promote and increase the participation of local companies in public procurement to promote local economic development and facilitate the transfer of skills. 

Sembrando Sentido also presented recommendations for each of the identified weaknesses. Among these, the organization calls for the centralization of all contracting data with CDBG-DR funds under a single website.

“We also urge greater accountability and continuity in participation efforts, so that anyone can become an active part of the reconstruction projects that affect them,” said Masses. 

The study is part of ContratosEnLey.org, an initiative by Sembrando Sentido, a nonprofit organization that “aims to advocate, develop, and maintain robust, transparent, responsive, and inclusive public contracting processes in Puerto Rico.”

Masses founded the organization after more than a decade of professional experience in international public policy, working from Washington with the World Bank and other institutions, and collaborating with organizations such as the Organization of American States and the United Nations.

After Hurricane Maria, Masses decided to return to Puerto Rico to contribute to efforts that promote a more inclusive, open, and robust governance, at a time when billions of dollars are to be invested in the reconstruction and recovery of the island.

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This story was written by our staff based on a press release.

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