Public contracting becomes inefficient due to bureaucracy, corruption and ignorance
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Loading... - Dario Guaman
- 07 Apr 2022
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The elimination of unnecessary requirements, the establishment of true market studies and the training of officials are needed.
Inefficiency and corruption in Ecuadorian public procurement is a constant complaint from citizens, suppliers, and even multilateral organizations such as the International Monetary Fund (IMF).
In November 2021, the Minister of Production, Julio José Prado, acknowledged that around $1,500 million per year is lost for these reasons.
This situation is a consequence of unresolved structural problems . According to Norma Puente, an economist and university professor, the Organic Law on Public Procurement (2008) , and its regulations (2009), are extremely bureaucratic , with a series of unnecessary requirements .
"A contracting process involves an excessive amount of documents and formal requirements that, instead of facilitating and making it transparent, make errors and directing them to a specific economic group or company easier," he explains.
Ider Salgado, president of SD Abogados and university professor, points out that in addition to the paperwork, the national public contracting system does not have a mechanism for analyzing and comparing market prices .
“There are no mechanisms and the norm does not require that real market studies be carried out, to really know how much a good or service costs. For example, on March 4, 2022, the Market Power Control Superintendency issued a press release announcing the sanction of a cartel detected in the public contracting of textiles. Four companies, with family ties, colluded to manipulate clothing sales prices in 46 processes on a national scale, ”he argues.
structural problem
According to María Sara Jijón, general director of the National Public Procurement Service (Sercop) , state purchases fail and open the door to irregularities because they are planned at the last minute and without major criteria, only to meet formal requirements and to approve the budget for next year.
“There is talk of corruption and it is important, but that is not the biggest problem in public procurement . The biggest problem is the errors and horrors that are committed by the contracting entities, because there is no good planning , a good annual purchasing plan”.
To this is added that there is no real career in the public sector, and officials without adequate specialization and technical knowledge are put in charge of purchasing processes .
“If everything is planned at the last minute, contracted in a hurry, and an absurd amount of paperwork must be reviewed, an official without sufficient knowledge opts for the quickest solution, which is to go to the offer that has the cheapest price, without taking other issues into account. The public contracting law must be reformed , but also the regulations for public servants,” said Salgado. (JS)
$5,320.5 million was added to spending on public purchases in 2021. That was 5% more than in 2020.
In total, the system has 3,600 contracting entities between local governments, public companies, ministries, among other agencies.
Measures to change the public procurement system
Given the challenges that arise to make state purchases efficient, the Government is promoting the following key actions:
1.- Work is being done on a reform to the regulations of the Organic Law. One of the main goals is to streamline and, if possible, eliminate most of the resolutions that slow down the system and hinder processes. There is no set date, but it is assured that results will be seen from this 2022.
2.- Simplification of the procedure to be part of the electronic catalogue. Currently, the catalog only covers 8.7% of annual contracts, despite being a more direct and less bureaucratic mechanism. There are 3,463 registered providers, although in matters such as medicines the number only reaches 37.
3.- Until June 2022, the corporate reverse auction of medicines is expected to take place. So far, specifications and calls for 168 medicines have been published, but the goal is to catalog at least 750. In the second half of 2022 and most of 2023, progress is planned in the corporate reverse auction of strategic health goods.
4.- According to María Sara Jijón, general director of the National Public Procurement Service (Sercop), there are agreements with the private sector and the academy, to simplify the specifications for the contracting of works. Read More...
