Wednesday, August 12, 2020

PRMA: More Local Participation in Construction

By on July 31, 2017

Editor’s note: The following article originally appeared in the July 27 print edition of Caribbean Business.

SAN JUAN — Despite the existence of a law dating back to 1985 that requires the use of construction materials manufactured in Puerto Rico for government projects, agencies constantly ignored the public policy to the detriment of the local economy, according to the P.R. Manufacturers Association (PRMA).

Act 109 of 1985 was approved to strengthen and promote jobs by increasing the use of locally manufactured products. This was done by recognizing the contributions of the construction sector, identifying the Puerto Rican cement industry as a direct and indirect source of jobs, a source of resources for contributions, taxes, patents and other revenues that benefit the government.

On the other hand, the Government Procurement Preferential Policy Act of 2004 also guarantees greater participation of Puerto Rican producers of goods and services in government purchases by providing mechanisms and structures that allow them to access the government’s purchasing market.

(File Photo)

“However, we continue to have little involvement of local manufacturers and producers in government procurement processes, where more than 75% of imported products are consumed. The local industry is unable to participate effectively in these processes, in the same circumstances as in 2004 when Law 14 of 2004 was enacted, but that is now completely ignored by those who lead the government’s purchasing processes,” said Rodrigo Masses, president of the PRMA.

Many of the association’s members face situations in which they compete to provide certain manufactured products from Puerto Rico, but face roadblocks in the bidding process.” Examples such as Olein Recovery Corp., which has had to challenge bidding processes because Act 14 of 2004 is not enforced, because agencies alleged that the company does not meet requirements, but provide no evidence or justification to that effect. On multiple occasions, they have gone to the Investment in the Puerto Rican Industry Board to file complaints, and the result usually is a fine and adjudication to a supplier that exports products,” he said.

“The association has filed complaints on behalf of members such as Danosa P.R., only to find agency heads ratifying the illegal action and simply delegating the responsibility to the ‘technical judgment’ of a procurement officer, with no justification that prioritized the imported products,” Masses said.

There are numerous excuses to support or favor specifications that have the effect of excluding local suppliers and that favor imported products and are hurting the Puerto Rican industry, he indicated. “Worse yet, when there are challenges to the process and there is evidence of noncompliance to the highest level, it is incredible to see agency chiefs who prefer to litigate against local firms in defense of imported goods or services, instead of correcting the mistake.”

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The controversy, in fact, is the object of an investigation by the P.R. Senate Committee on Social & Economic Revitalization. Ricardo Álvarez, president of the Builders Association, stressed that the issue is an example of a law that does not apply. “We have to give priority to local suppliers and contractors,” he said.

Ralph A. Kreil Rivera, president of the Engineers & Land Surveyors Association, said that as part of the investigation, Law 109 has too many exceptions that render it unusable. “There are also state and municipal government officials who fail to enforce the law. It should be noted that a public official who fails to enforce the law can be declared in insubordination,” he said.

Although there are legal remedies such as a mandamus to require agency heads to obey the law, he said: “We are of the belief, that since there is a single political party in control of the executive and legislative branches, there is no need to resort to extraordinary legal procedures to enforce the law…. There should be no controversy.”

The House is evaluating Senate Bill 437, whose goal is to establish the Preference Law for Local Contractors or Construction Suppliers to ensure the largest-possible participation of Puerto Rican producers of goods and services in purchases. It has the backing of private-sector organizations.

Issue of Federal Funds

Government officials said part of the problem is the lack of local funds to finance projects, which are mostly provided by federal sources that ban preferential treatment.

P.R. Housing Secretary Fernando Gil said his entity’s projects are mostly financed by federal funds that prevent the use of geographical limitations to restrict competition. “This does not mean the Public Housing Administration does not support the use of locally produced building materials. It promotes the voluntary use of local materials,” he said, arguing that it reduces the environmental impact from long-distance transportation.

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