Since the last year, certain reforms to articles of the Public Works and Services Law have been drafted in the Congress of the Union. They are intended to, at least in the political discourse, adapt the Law to reality and circumstances in Mexico, benefiting and ensuring full compliance with and the termination of public works projects.
However, we have found a couple of aspects involving drawbacks. Contractors are placed at a disadvantage before agencies and governmental entities.
Such reforms, if enacted, will bring as a consequence the opposite of what they intend to. Particularly, this is seen when contractors have to perform an economic analysis of the new situation resulting from the execution of works contracts with the Government. As a result, these reforms will generate even more expensive projects, and in the worst case that such projects do not materialize, they will affect end users.
The above considerations will be spelled briefly out
1. Supervision of the works carried out by a third party.
The bill puts forward concerning projects not supervised by a public officer, but by a third party, the contractor shall cover the cost of such supervision when for the contractor’s responsibility, it does not finish the work on the date agreed for this purpose during the term of the extension.
This generates an additional obligation for contractors. They will eventually have to assess the cost of supervision concerning extensions of deadlines for the conclusion of the projects. In addition, it should be noted that instrumentalities and public entities are not willing to accept their responsibility before the need of such extensions.
2. Disqualification for damages
To this day, the Public Work and Services Law establishes that contractors generating serious damages to instrumentalities and public agencies arising from breaches to the public works contracts, such contractors may not participate in further public procurement procedures.
As a result of such disqualification, sanctioned contractors may not execute, during the period specified in the resolution, contracts with the Government. This notably brings important economic effects.
Now, the bill in regards to this matter, delete the word "serious". If the reform is passed, any type of damage and lost profit generated by the contractor to the instrumentality or public agency, may constitute a reason to impede the participation of the contractor in further public procurement projects.
We cannot agree with the foregoing. Virtually in all projects there are some kinds of events that can be legally qualified as damages. Contractors will be left at the mercy of the Government under the imminent possibility of being disabled with the negative consequences that this entails.
We expect to see enacted some reforms to the Public Works and Services Law. Nevertheless, the many complaints made by experts and contractors to the above two issues shall appeal to the sensibility of the lawmakers.