Monday 28 November 2022

“Cochinilla” opens the doors for smaller companies to build public works

Medium, large and even small companies could access the contracting processes for road works that were flawed for a long time and demanded more requirements that prevented a wide participation

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26 November 2022 - At The Banks - BCCR

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QCOSTARICA – The “Cochinilla” case, the biggest scandal related to the construction of road works in Costa Rica, has been making headlines daily for more than two weeks, and its consequences have led us to think about what will happen to the country’s public works in the medium and long term.

Medium, large and even small companies could access the contracting processes for road works that were flawed for a long time and demanded more requirements that prevented a wide participation

As reported, the corruption involves the mega road construction companies H. Solís and Meco, the Consejo Nacional de Vialidad (Conavi) – National Highway Council (Conavi) and the Ministerio de Obras Públicas y Transportes (MOPT) – Ministry of Public Works and Transportation.

For now, the first consequence is the Government’s request to the Treasury Commission of the Legislative Assembly to withdraw ¢47 billion colones from the extraordinary budget for the MOPT and CONAVI.

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The decision to withdraw MOPT resources is due to the need for that ministry to review the priorities for the execution of public works in infrastructure, as explained by Gianina Dinarte, Minister of the Presidency, and Rodolfo Méndez Mata, MOPT Minister, who recently appeared before a legislative commission to explain away things.

Once the doubts are clarified, an application would be submitted by the MOPT for funds to be used for the maintenance of roads, the expansion of the section on Route 32 (between the bridge over the Virilla River and the Doña Lela crossing), engineering services, contracting of rehabilitation designs, expansion and expropriations of Route 32, among others.

But does that mean that with the two largest construction companies in the eye of the hurricane, there are none left to take on the challenge?

According to Luis Guillermo Loría, civil engineer and former coordinator of the Laboratorio Nacional de Materiales y Modelos Estructurales (Lanamme, UCR) – National Laboratory of Structural Materials and Models, the answer is “not necessarily.”

“It opens the possibility that other companies can start doing public works, smaller companies that join together to have the economic capacity to carry out larger projects. That could be a major change,” Loría said.

Esteban Acón, president of the Costa Rican Chamber of Construction (CCC), thinks the same and saying that everything depends on how the country and the Government react to these events, correcting and improving the contracting processes.

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“One would hope that it is an opportunity to restore confidence to the country and for many medium, large and even small companies to access these contracting processes for road works that were flawed for a long time and demanded more requirements that prevented a wide participation,” commented Acón.

Unity builds strength

The saying goes that unity is strength and both Loría and Acón think that smaller companies could come together to participate in larger projects, in which financial and experience requirements could be a difficult obstacle to overcome individually.

“They could begin to provide certain services for intermediate projects and in larger ones create consortia between nationals or even with construction companies outside of Costa Rica,” said Loría.

Loría added that he always fought for smaller companies to have the opportunity to be competent in these types of jobs and with the recently approved Administrative Contracting Law, long-standing evils that the Cochinilla case brought to light could be corrected.

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“There are medium-sized companies that have not been able to develop and grow due to many impediments and construction companies that have never chosen to build roads precisely because of the type of vices that are heard within the union and with which they do not agree,” Acón detailed.

Among the “tricks” used in the past to exclude companies was, for example, requiring experience in handling very high square meters or tons of asphalt for projects that did not require such large quantities.

“The bids always have to seek the greatest participation of companies in order for the State to have the greatest benefits in terms of quality, costs and time,” Acón added.

The CCC president believes that the country should focus on seeing how it corrects the course because a lot of work is needed and not only roads.

 

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