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Thursday, December 13 2018 @ 04:19 PM UTC

Martinelli Administration Has Already Spent More Than $1 Billion on Government Contracts

Money MattersOne of the first scandals faced by the government of President Ricardo Martinelli, a few days after taking office, was the storm of criticism faced due to his administrations use of "direct contracts." Today, a few days before completing his first year in office, his use of "direct contracts" continues. The number of contracts does not exceed those granted through the normal public bidding process, however there are still thousands of "direct contracts" that have been granted. According to a report published by the General Directorate of Procurement, since 1 July 2009 (the first day of the Martinelli administration) to mid- May 2010 there have been 2,658 "direct contracts" worth more than $156.2 million dollars. By comparison, 68,439 contracts have been awarded through the normal public bidding process, worth more than $926.8 million dollars.

Millions Have Been Spent Without A Public Bid - Among the largest "direct contracts" handed out by the government include the hiring of the firm McKenzie & Co., on two occasions. One was to advise the Ministry of Economy and Finance (MEF) on tax reform, at a cost of $ 2.5 million dollars, and the other was to advise the Ministry of Government and Justice in security, for $ 2.8 million dollars. The "direct contracts" awarded to the construction company Odebrecht, to channel the Caldera river in Chiriqui was for $11 million dollars, and there was another for the second phase of the Coastal Strip for $52 million dollars. The contract given to Mer Security & Communications Systems (Panama Branch) to install perimeter fences at the La Joya and La Joyita prisons was worth $3.3 million dollars. Another was given to Clement & Sons Designer, worth $2.8 million dollars, for the development of the conceptual design of the prison system. Public disapproval of direct purchases even forced the MEF to push for changes to Public Procurement Law 22. Now, for example, the call for bids for contracts exceeding $ 5 million dollars can be done between 10 to 40 calendar days. However, for this to happen, the contracting institution must prove that it is an urgent case of social interest. And if the contract amount is less than $5 million dollars but more than $ 175,000 dollars, the call to bid can be done in less than eight working days.

PUBLIC ACTS - In the list of public bids that have been awarded are part of the largest projects being undertaken by the Martinelli administration. From this list, for example, is the project to renovate a Curundú, granted to Odebrecht, for $78 million dollars, the second phase of Panama - Colón highway, also granted to Odebrecht, for $218 million dollars. There is also the expansion of the Tocumen International Airport, which was awarded to the Aerotocumen consortium for $68.6 million dollars. Another is the construction of the road from Divisa to Chitré, granted to the Argentinian company Benito Roggio, worth $109.9 millones dollars.

The president of the National Council of Private Enterprise, Gaspar Garcia de Paredes, said it "appears" that "in general" there are now fewer complaints when it comes to the bidding and contracting process. However, he suggests further work is required in relation to the time it takes the government to pay businesses for the worth they have done, because many bills get stuck in the paperwork process and this discourages businesses. "The bills should be paid within 30 days as is done in the private sector," he said. (La Prensa)

Editor's Comment: First of all, when they say "direct contract" what they mean is that the government just picks the vendor they want to use for a particular job and they award the contract "directly" with no public bidding process. No other companies have the opportunity to compete or bid for the contract. Obviously this generates mistrust because it looks like the government is handing out money and work worth millions of dollars with no chance for someone else to have an opportunity to do the same work, maybe for less money. Secondly, the government of Panama under the Martinelli administration has already spent more than $1.08 billion dollars on government contracts, which is a good thing. The vast majority of that money stays right here in Panama, in the form of manpower, materials, equipment, logistics, services, supplies, fuel, or what have you. During the entire five year term of Martinelli's administration, they have more than $17 billion dollars programmed to spend on everything from the expansion of the Panama Canal, the new Metro system, roads, highways, bridges, and other stuff. The focus of this article is on the "direct vs. pubic" contract issue. I tend to focus more on the money and the impact it will have on the macro economy, strategically speaking. They are spending a lot of money which will even further stimulate the economic growth of this relatively small country.

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