Argentina: President Miles Dissolves AFIP, Cuts Jobs and Wages</strong></p>”>President Milei‘s Government to Disband Public Works Construction ‘Club’
Just as a majority of its longstanding members await judgment in the so-called "notebooks corruption" trial, Argentina’s government is set to dismantle the controversial "club" of public works contractors. A key regulation that once functioned as a barrier to entry for new players will soon be repealed under President Javier Milei’s administration.
The targeted law, Article 13 of the Public Works Act, established a National Registry of Public Works Contractors. This registry certifies constructors’ capacity and has effectively restricted new entries into the market, fostering a lack of competition among established firms. Now, the Ministry of State Transformation, led by Federico Sturzenegger, aims to eliminate this bottleneck.
Under the new policy, contractors will no longer need to be certified by the registry to participate in public tenders. They will only need to submit a sworn statement declaring their ability to undertake the project. bidding and declares that new players will face no obstacles to competing for public contracts.
However, Milei’s administration has not overlooked issues surrounding quality control and integrity. While the new system may allow more companies, both domestic and international, to tender for public projects, it also introduces risks. Companies may overbid their capabilities, potentially leading to substandard works or abandoned projects. To mitigate this, the government will rely on inspections to enforce quality and honesty in construction processes.
Moreover, the government argues that the existing registry, while granting a certification of capacity, has also hindered free competition. Many projects are divided amongst several contractors, which have little incentive to reduce prices, knowing there’s a high likelihood of securing a share of the project due to the limited number of certified contractors.
Despite these reforms, the government still faces challenges in its contractor selection process. Currently, many high-profile contractors are under investigation in the "notebooks" scandal, involving accusations of paying bribes to secure contracts. Despite this, they continue to win tenders without facing any penal or reputational consequences.
Adding to the changes in the public works sector, the government recently ordered the decay of a billion peso fund earmarked for infrastructure projects. This unexpected move, coupled with the reduction of funds allocated for affordable housing projects, signals a significant shift in the government’s approach to public spending.
The changes underway in Argentina’s public works sector aim to increase competition and foster a more transparent procurement process. However, the success of these reforms will depend on the government’s ability to enforce high standards and assurance of ethical conduct amongst contractors. As the "club" of established contractors begins to disband, the public will be watching closely to ensure that the new system delivers on its promises.
