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Puerto Rico builders, contractors reject fiscal board move to recover payments

By on May 21, 2019

Puerto Rico Builders Association Chairman Emilio Colón Zavala, PE (Screen capture of

Say move stymies government procurement; panel working on dispute resolution mechanism

SAN JUAN – The Puerto Rico Builders Association (ACPR by its Spanish initials) rejected Tuesday the legal action of the island’s fiscal oversight board against contractors of the Highways and Transportation Authority (HTA) to recover payments made to the agency’s bondholders.

The fiscal board filed so-called avoidance claims in court over payments received by creditors that the panel believes were avoidable under the Puerto Rico Oversight Management and Economic Stability Act (Promesa).

The Puerto Rico Chapter of the Associated General Contractors of America (AGCPR) also urged the fiscal board to establish a dispute resolution or mediation process to handle suits against contractors filed by the Puerto Rico government for payments made between 2013 and 2017 that were higher than $2.5 million.

“We understand that the Board has an obligation to comply; however, we want a dispute resolution process that would allow us to address these cases in an expeditious way and at the lowest possible cost for the parties involved,” AGCPR President Alejandro J. Abrams said in a statement. “These suits cause uncertainty in the contracting with the government, and could cause the cancellation of services to the government, thus affecting the stability of hundreds of direct and indirect jobs and the quality of the services offered by the government to its constituents.”

Board spokesman Edward Zayas told Caribbean Business that the panel is working on creating a dispute resolution mechanism to deal with some of the claims filed against holders of government debt and government vendors.

“Yes, they are working on an alternate option in line with what they have asked for,” Zayas said.

The board said it seeks “to ensure that about $190 million in payments to vendors were made appropriately” but that it will try to settle disputes out of court. The identified vendors received payments of more than $2.5 million “without a valid contract, or the payments didn’t match the respective contract” during the four years before May 2017, when the board filed for bankruptcy on behalf of the HTA.

“The questioning that the Fiscal Control Board makes in its claims against the contractors puts the burden of proof on the contractors and not on the Board, which is where it belongs. We all know how difficult and complicated it is to contract with the government and these actions affect the climate of certainty for investment and fulfillment of contracts,” the association’s chairman, engineer Emilio Colón Zavala, said.

“The strategy of seeking to convert insured creditors into uninsured will undoubtedly affect the availability of companies to contract with the government on reconstruction projects. Puerto Rico does not need additional uncertainty to what already exists,” the Builders Association chairman said, while urging the board to contribute to a climate of sustained economic development, working closely with the government in its efforts.

CyberNews and Caribbean Business senior reporter Eva Lloréns Vélez contributed to this article.

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