Obligated

For better or for worse, government has to continue dealing with contractors. There are tens of thousands of projects lined up and government neither has the expertise nor the equipment to undertake these.

Remember 2011. Former president Noynoy Aquino abruptly cancelled public works projects because they had become infested with corrupt syndicates. The results were dramatic. Our GDP growth plunged. Unemployment rose. Our roads and ports became even more congested.

To correct the error, Aquino later introduce the Disbursement Acceleration Program to speed up public spending. The program caused a spike in corruption. It brought forth the likes of Janet Napoles and her network of fake NGOs.

Last year, after the flood control projects scandal blew up, government cancelled further funding for these – across the board. The results were as dramatic as what we saw in 2011. Our economic expansion lost momentum. Slower economic growth brings its own penalties for our citizens.

In the face of declining growth numbers, President Marcos Jr. ordered prompt payment for the “good” contractors – those with a record of delivery. There was no need for such an order. Government is obligated, by contracts signed, to pay for what has been duly rendered.

These days, with government contractors tarred wholesale and with payments schedules abruptly terminated, fewer people have been willing to step forward and do government contracts.

This compounds a problem that was already there: the more prestigious engineering firms have long been hesitant doing business with government. Payment for work done is often delayed. Bureaucrats hold things up until the contractor produces something “for the boys.” The delays jack up costs and cut profitability. Banks are hesitant to lend for public projects. The reputational risks are always too high.

Yet we need to get our public projects going. They meet real needs. Our domestic growth is underpinned by public spending. If we cancel public works, our economy will stagnate. Congestion will haunt everything.

True, many contracting companies were there for the looting. They connived with corrupt bureaucrats and politicians. They short-changed the public by delivering substandard results. Sometimes, they collected without delivering anything: the so-called “ghost” projects.

The flood control scandal tells us that corruption has run amuck. There was a complete breakdown in bureaucratic controls. A mafia of politicians directed public spending to where the most illicit profit may be made, not where public good is served. The entire national budget was mangled so that this powerful mafia could get what they wanted.

Government was brilliantly misled. Coordinates were altered to mislead inspectors. Projects were fully paid even without any work done on them. Foreign assisted projects were moved to unprogrammed funds to create space for puny flood control projects. The government audit system was corrupted.

When the looters win, it only means the system failed.

The solution is not to cancel public spending. The solution lies in better bureaucratic management and failsafe auditing systems. We need better government, not less public spending.

Failing to undertake the necessary public works projects will trap all of us in decrepit infrastructure. Over a hundred thousand classrooms will remain unbuilt. Tourism destinations will remain unreachable. Our runways will forever be short. The cost of moving basic commodities across the archipelago will continue to be prohibitive.

This is not the formula for economic success. It is a formula to keep millions trapped in poverty.

The work begins entirely on the side of government. For instance, many projects were flagged nonexistent only to be rediscovered late on because the database recorded inaccurate grid data. The first thing to do is to clean up the database.

Corrupt district engineers need to be replaced immediately. Progress reports and site inspections must be conducted with utmost integrity.

The whole messy system of accounting for public works projects must be reformed. If additional auditors are needed, government must provide for them.

If certain contractors are deemed corrupted, they ought to be blacklisted. This has partially been done with the most notorious ones associated with the flood control scam.

The role legislators play in determining which projects to undertake needs serious review. The entire flood control scam operated on the basis of legislators overreaching into the sphere of execution. This must end. Public works projects must no longer be rewards for political loyalty.

What is important is to keep the projects moving. The public needs these projects – especially the provision of enough classrooms even as the profit rate for this activity may be lower. The economy in general needs the public spending and the multiplier effects this has for domestic activity.

We need to clean up the system for accrediting civil engineers. The last scandal demonstrated how even the accreditation system has been corrupted.

In order to attract the better contractors, government must deal with this class of businessmen fairly. Payment schedules must be observed or else private businesses will face runaway financing costs. An even playing field must be maintained to encourage the meritorious to participate.

Needless to say, the system of kickbacks must be dismantled convincingly. At worse, this system produced ghost projects. At the very least, they encourage substandard construction.

We do not want for respected engineering contracting firms. But many of them would not touch government projects with a long pole. The stench of corruption has become too much to bear.

This has to change.