The Secretariat of National Defense of Mexico: A construction Company with the vices of any other real estate agency

Mauricio Romero @mauricio_contra - 14 Jun 2015 a las 2:00 am

The Federal Judicial Council  of Mexico (Consejo de la Judicatura Federal) closed the public bid for the construction of the new seat of the Judicial Power of (the State of) Oaxaca to assign it directly to the new contractor: the Army. The Judicial Power argued its decision based on the fact that the Secretariat of National Defense (Sedena) would warranty efficient work and would reduce public expenditure. However the Superior Federal Auditor (Auditoría Superior de la Federación, ASF) detected quite the opposite: charges for buildings with lesser dimensions than originally projected, the lack of verification of received resources, delayed documentation…in addition to leaving the impression that such real estate tasks distract the armed forces of their main role.

These were the final stages of the administration of Felipe Calderón. Only a few weeks remained before the end of the second presidential period led by the PAN-party in the history of Mexico. Among post-electoral turmoil, the permanent violence and the imminent handover of the government, the Federal Judicial Council (CJF) projected the construction of a new seat of the Judicial Power of the Federation (Poder Judicial de la Federación, PJF) of the State of Oaxaca.

It would be a lucrative business for the winner of the bidding process CJF/SEA/DGIM/LP/44/2012, that was set with an estimated budget of 728,259,400 pesos, excluding the value-added tax (IVA), and an advanced payment of 35% of the amount. According to what was established by the very own CJF, the lucky winner would get the news just five days before the handover of the government.

Insofar 44 participants were left expectant, with the bank accounts ready and with the bottles for the celebration, as Enrique Peña Nieto assumed the presidency and the union’s power rearranged to the new order dominated by the PRI.

The same thing happened with the PJF and its projects, including the new building in Oaxaca. Thereby it “wasn’t until the 26th of March 2013 that the bid was declared null and void and the 1st of April of that year the participating companies were notified of it”, tells the Superior Federal Auditor (ASF) related with the audition of 2013.

The works were supposed to start on the 19th of December 2012. And it wasn’t any kind of construction: “the building (of) the headquarters of the Judicial Power of the Federation at San Bartolo Coyotepec, in the State of Oaxaca-specifies the ASF- is made up by a main nine-storey building of circular shape of offices that will shelter eight district, two unitary and six collegiate courts, common service areas and parking lots for 152 vehicles; also a second building that will serve as parking space with the capacity of 464 vehicles.

“The total construction area is of 54,678.67 square meters, which includes balconies and open circulation, over 12,047.36 square meters of gardens and roads.”

Faced with the closing of the bid, the CJF came up with a solution: to hire the Secretariat of National Defense, an armed force that already was performing police functions in the region and that would extend along with the regime its tasks towards architecture, engineering and civil masonry.

The Army, the official constructor of the CJF

Before notifying on the 26th of March the companies that were dreaming with the millionaire contract, that the bid was null and void, the Council of the federal Judiciary was already preparing the path to appoint the Armed Forces as the official constructor of the courts needed to implement the oral trials.

“In the agreement of the administrative Commission OM-DGIM-ACUERDO of the 22nd of March 2013 […] the Technical Secretariat of the Administrative Committee was solicited to raise to the Plenum of the CJF for its analysis, and in the event, to approve the subscription of the Inter-institutional Cooperation Agreement with the Secretariat of National Defense (Sedena)”, states the ASF.

The Plenum did not hesitate and on the 15th of April 2013 the then-Minister-President of the Supreme Court of Justice of the Nation, Juan Silva Meza, put his signature beside the one of the Secretary General of Defense, Salvador Cienfuegos, to celebrate the Framework Contract SE PLE./ADM/.006/1513/2013 between the Council of the Judiciary and the now also real estate agency Sedena.

Over 300 courtrooms in 44 Centers of the Federal Criminal Justice System are being projected, which the PJF plans to build in Mexico before the end of the presidential term, pointed out before several reporters the magistrate José Nieves Luna Castro back in November 2014.

Back then the headquarters of Oaxaca were already in the midst of construction works, as from the 9th of May 2013 on the CJF had started applying the Inter-institutional Cooperation Agreement granting the military personnel the mission to erect the complex “up to an amount of 813,284,000 pesos”, which should have been inaugurated last December.

The irregularities

Seemingly the Council of the federal Judiciary hired the Army-Constructor “due to the fact that they offered the lowest prices of the market; extra hiring of external supervision would be avoided, with the subsequent saving of 3 to 6%; the reimbursement of resources in exchange of financial products once the work is finished; excellent execution quality of the works, supported by laboratory tests and the required warranties of the equipment and the technical solutions without an extra charge”.

In this way the decision of the CJF was justified. But the Superior Auditor of the Federation detected the opposite when revising the facts at the headquarters of the Judicial Power of Oaxaca, located at Aldama Street No. 106, El Tule District, in San Bartolo Coyotepec.

To start with, points out the ASF, “the contracting of the Sedena did not obtain the best conditions in the market, contrary to what was established [by the CJF]”, as the construction works in charge of the military personnel cost 14,6% more than the amount stipulated in the base process, when the bid was open.

“Furthermore, in the mentioned contest the bidding companies presented proposals which in terms of direct costs one was lesser than the estimated budget and 15 are even lower in direct cost than the proposal of the Sedena”, adds the Auditor. Thereby the Army should not have been hired, if the factor of the efficient use of public funds was thought of.

The CJF declared “improper, groundless and contradictory” the observation of the auditing organism, inasmuch as according to him, “the economic factor is not the only condition on which to be taken into account in the hiring”.

He also based his disapproval on the fact that in 2013 the basic budget, in a single strike, was raised to 853,330,800 pesos, “meanwhile the contracted amount with Sedena is of 747,441,900 pesos, value-added taxes included”, i.e., underneath the newly built storey by the Judiciary in favor of the sole proposal of the military institution.

The Auditor solely audited 71.8% of the 123,475,900 pesos spent in 2013. “Out of the 144 verified concepts via estimates a sample of 32 concepts were revised for an amount of 88,647,200 pesos”. With this evidence the deficiencies of the project were largely demonstrated.

To start with “the excavation, the foundation, the structures of buildings A and B and the outer works”, the CJF paid in advance 270,703,800 pesos, 9,177,900 more than stipulated in the contract, excluding the value-added tax.

For the phases 2 and 3 (set to start on the 10th of October 2013 to the 9th of November 2014 and from the 31st December 2013 to the 14th of November 2014, for “the related works of masonry; the hydronic, sanitary and gas systems; and the elevators and precast concrete of the façade”, as well as the works related “aluminum works, furniture and topcoats”), the Council deposited in the National Bank of the Armed Forces, Air Force and Navy (Banco Nacional del Ejército, Fuerza Aérea y Armada) SNC 150,535,300 pesos more. For the last phase that should have been met on the 1st of December 2014, further 189,951,200 pesos were assigned.

On December 2013 the Council had transferred to the military institution 412,239,100 pesos, but “the Sedena only proved it through estimates the exertion of resources for an amount of 123,475,900 pesos”. Not even half of what was given, and neither the CJF did demand “the audit of the granted resources”.

This observation was considered as “inappropriate” by the entity in charge of the Mexican justice, as some works would be finished by 2014, but did not explain the reasons for which the Sedena delivered other estimates with months of delay.

Therefore the ASF issued a “recommendation to the Council of the Federal Judiciary to check the physical investments that were contracted, the appropriate of the delivered resources”, which was not done.

Even more serious is the fact that works paid were of lesser dimensions than the ones specified by the armed constructor. “The CJF recognized to the Sedena quantities for the works incorrectly audited for an amount of 10,017,200 pesos” in 19 concepts of the building A, 4 in the building B, and four more.

“Since the paid quantities don’t correspond with the ones included in the plans provided by the entity; there is a duplicity of waste […]; the volume in the retaining wall was doubled of the buildings A and B; the length of the pillars charged with 23 and 28 meters, when in the project was established in 22.20 and 27.20 meters”, specifies the ASF. “For the quantification of the average concrete the width of the ribs corresponding to the reticulate slabs of the building B [and applied to building A]; however these differ in width and quantity, thus being incorrect to use an average to quantify them […]; the connecting plates are oversized at the connections points.”

Also the Council of the Federal Judiciary dismissed this point. It said that it had not paid –in August 2014, when the revision was under way- such works, that “the expressed volumes in the generators of the presented estimates had been to check the realized works and not the payments”.

“As a result the work meetings held with the personnel of the auditing entity, the observed amount was of 10,017,200 pesos, the CJF recognized the incorrect verification of 8,991,200 pesos.”

Hence the ASF asked the Internal Control Body of the CJF to start an “administrative procedure corresponding the acts and omissions of public servants that in their management authorized the estimates for the verification of the resources granted with major volumes of works major that those actually executed”.

The Oaxacan compound should have been inaugurated in December 2014. But this did not occur:

-No, No. The headquarters have not been inaugurated nor is it in use- as confirms in an interview to Contralinea Jorge Camargo, the General Director of Communication and Social Liaisons of the Judicial Power of the Federation.

Army-constructor, at “the expenses” of its substantial functions

Lastly “the CJF did not verify that the Sedena counts with the attributions for the execution of the works”: constructions apart from the national Defense.

The Auditor points out “that the powers conferred to the Sedena in the Article No. 29 of the Organic Public Federal Administration Act (la Ley Orgánica de la Administración Pública Federal) does not mention that its counts with attributions to celebrate agreements or contracts to execute public works other than the construction, adjustments, maintenance and demolition of fortifications, fortresses, and any class of premises for the own Secretariat”.

The latter was also dismissed by the Council of the Federal Judiciary. They argued that the Secretary-General of Defense has the attributions to sign any “competence” of the Secretariat. “Thus it shows that the instruction of the Secretary of National Defense was implicated in the framework agreement dated on the 15th of April 2013, inasmuch he himself authorized and subscribed it”.

On the other hand he claimed that according to “the Article No. 38, Section I of the Interior Regulation of Sedena” the Army can realize “any type of works of national interest as long as it is instructed”, and that the Administration of the Federal Justice (sic) is of public nature, thus “resulting in national interest (of) the construction of buildings necessary to shelter the federal jurisdictional bodies”.

Also, the CJF continued, the Armed Forces have already “executed public works for other government entities of the executive branch, such as the Semarnat [Secretariat of the Environment and Natural Resources], the Senasica [National Service for Agro-Food Safety and Quality], the Sagarpa [Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food] and the Tax Administration Service”.

The sections VII and VIII of the Article No. 29 of the Organic Public Federal Administration Act, when referring to the ASF, solely points out the construction of fortifications, fortresses and any kind of military premises for the use of the Army and the Air Force, as well as the administration and preservation of barracks and hospitals and other military premises”, as well as the military assessment for the “construction of any kind of routes of terrestrial and air communications”

Therefore, underlines in its conclusions the Superior Auditor in the revision on behalf of the Chamber of Deputies, “the Sedena acting as a contractor of other entities of the public federal administration [goes] at the expenses of its substantial functions”, which in the law are 18 more, apart from the real estate agency and focused on the military exercise.

Despite the detected irregularities, of surpassing by dozens of millions of pesos the initial budget; despite that they shoe the same vices of private constructors, the CJF insists anyway before the audit, in a tone close to advertisement, that the offer of the Sedena had “the best security conditions, execution times, costs, quality and experience”.

Contralínea requested an interview with the General Salvador Cienfuegos, the Secretary of National Defense; with the Minister Luis María Aguilar, the President of the Supreme Court of Justice of the Nation, also with the Comptroller of the Council of the Federal Judiciary, Marino Castillo Vallejo. The response of the minister was that he does not grant interviews, while the comptroller solicited a questionnaire that he later refused to answer because the observations of the Auditor were still under “revision”.  No response was obtained of the Secretary-General.

Mauricio Romero, @mauricio_contra

(Translated by: Axel Plasa)


Related Texts:

Contralínea 441 / del 15 al 21 de Junio 2015