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government contracts Contracts awarded without tender are indicated in red, those with public tender in green and by invitation in orange. imco

Contracts without tenders, an invitation to corruption, hit record numbers

In 2020, 80.9% of all government contracts were awarded without competition

Federal government spending on contracts awarded without a competitive tendering process hit a record high in 2020, according to a public policy think tank.

The Mexican Institute for Competitiveness (Imco) said in a new report that the government spent almost 205.2 billion pesos (US $10.2 billion) on directly awarded contracts last year.

“The constitution and purchasing laws establish that public purchases must be carried out through public tendering except in exceptional cases. Despite this, almost one of every two pesos spent by the federal government in 2020 was contracted through direct adjudication or restricted invitations. The processes established as the exception have become the rule in federal government contracting,” the think tank said.

Imco, which analyzed data on the government’s online transparency platform CompraNet, said the amount represents 43.3% of all money spent on government contracts in 2020. The figure is up from 29.5% in 2017, 34.9% in 2018 and 38.9% in 2019.

“In the second year of this administration, this figure [43.3%] broke a historical record, exceeding any other type of contracting,” Imco said.

The outlay on contracts that were awarded following a public tendering process accounted for 39.9% of total spending in 2020, the think tank said, while the percentage of resources allocated to contracts awarded following an invitation-only tendering process was 3.1%.  The other 13.7% of the total outlay was spent on contracts awarded via other processes not specified by the report.

“This is the first time that the resources allocated to contracts directly awarded by the federal government are higher than [the amount allocated] to contracts [awarded] through public tendering,” Imco said.

The percentage of government resources spent on contracts awarded via an open, competitive tendering process has been on the wane since 2018, the final year of the administration led by former president Enrique Peña Nieto.

The figure declined from 65.2% in 2017 to 57.7% in 2018 and 46.1% in 2019 before falling to 39.9% last year.

Public tendering is the contract awarding process that “most promotes competition,” because it allows a higher number of participants and favors lower prices through competitive bidding, Imco said.

The growing number of directly awarded contracts — 80.9% of all government contracts were awarded that way last year, according to Imco — is a “red light for competition” and “represents a corruption risk,” the think tank said.

The corruption risk comes about because “the absence of objective criteria to select contractors opens spaces in which the decision [to award a contract] could be influenced by unlawful agreements,” Imco said.

Source: Reforma (sp) 

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