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Certain gov’t orders require fiscal board approval, according to its new policy

By on August 7, 2018

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced Tuesday its adoption of two “new policies to foster accountability, transparency and efficient dealing in certain government transactions and public projects.”

The fiscal panel said its new Rules, Regulations and Orders Policy (RRO Policy) requires that it approve of “certain rules, regulations, administrative orders, and executive orders proposed to be issued by the Governor or the head of any department or agency to assure that they are not inconsistent with certified Fiscal Plans.”

The policy applies to matters related to proposed Puerto Rico Electric Power Authority  (Prepa) transactions, the “management and operation” of the Office of the Chief Financial Officer, the “right-sizing of the Commonwealth and covered instrumentalities—including those related to procurement, contracting policy, or employee compensation or benefits—among others,” according to the board’s release.

“Oversight is required in all areas impacting the Commonwealth’s ability to deliver on the certified Fiscal Plans,” said Natalie Jaresko, the board’s executive director. “This policy will help keep everyone accountable to help Puerto Rico achieve fiscal responsibility, regain access to capital markets, restructure outstanding debt, and return to economic growth.”

In addition, the board’s new “Process Policy” for so-called critical projects to be considered under Title V of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa), now requires “obtaining a contract award or request for proposals (“RFP”) award from a Commonwealth government agency or a public corporation (not including municipalities) before they can be executed….”

If the project sponsor “believes that such a contract award or RFP award is necessary,” that must be pointed out as well to be considered under Title V. According to the board’s new policy, its revitalization coordinator “will use the information to determine whether to consider the project under Title V or to direct the project to the appropriate Commonwealth Government agency or public corporation.”

The board’s amended Title V policy also entails that energy-related projects that require a power purchase and operating agreement (PPOA) from Prepa must first have one “that is validly assumed under Title III” of Promesa.

Fiscal board Executive Director Natalie Jaresko and Revitalization Coordinator Noel Zamot (Screen capture)

“This is a policy adjustment in the process we have established for the consideration of potential Critical Projects under Title V that is well justified in terms of transparency and fair dealing when it comes to Public Projects. It would be inefficient for a proponent of a project that requires a contract or RFP award from the government to put the project through PROMESA’s Title V process before having obtained the requisite award from the government, as it may give its proponent an unintended advantage over its competitors,” Jaresko wrote.

“If we determine that a project is a Public Project, we will request and confirm evidence of the requisite contract or RFP award; otherwise, will return the project submission to the project sponsor and direct the project sponsor to obtain the requisite award. Non-Public Projects—i.e., those projects that are private-to-private or that are with a municipal government—will be considered through the Title V process, as it has operated thus far,” board Revitalization Coordinator Noel Zamot added.

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