A company that operated the motorway concession requested an update of the costs of the contract. And they had reasons, the equation under that agreement to increase funding, had been amended seven times in three years. But the body that addresses these issues, the Highway Control Concession (OCCOVI, for its acronym in Spanish) never responded to the proposals of the firm and, therefore, the Federal Government must pay compensation for $ 30 million.
The company in question was America SA-UTE Helport Corporation, which was awarded in December 2006, the 30-year concession of the Pilar-Parchment Highway. According to a report by the General Audit Office (AGN, for its acronym in Spanish), until December 2009, "the variation factors in the contract changed in 7 opportunities, leading to the Concessionaire the requested rate adjustment or compensation. However, the OCCOVI did not issue it at any time, and the Technical Management estimated $ 30 million for the amount of compensation for frozen rates."
In this sense, the AGN said: "The lack of judgment on the relevance of rate adjustments requested by the Concessionaire placed the State in default, and impacted on the economy of the concession."
The America Corporation had to carry out construction and maintenance of the Pilar-Parchment Highway and exploit the three tolls of that highway. The total amount for the 30-year contract was $ 1,640,656,677. The route of the new road would benefit the counties in Pilar (with 233,000 inhabitants) Exaltación de la Cruz (21,155), San Antonio de Areco (18,870) Capital Sarmiento (11,474) Arrecifes (27,179) and Pergamino (95,091), involving private vehicles, buses for short and long distance and considering the commercial, industrial, and agricultural importance of the area.
The Audit states in its report adopted this year that the contract with the company was terminated by mutual agreement in 2010 "because of the 2008 and 2009 economic crisis which altered the economic and financial equation of our Concession and led to the contractual breach of the parties.”
Beyond breaches of the America Corporation, the AGN focused its analysis on the work of the OCCOVI when it came to overseeing the progress of the works and fulfilling the duty to punish the identified shortcomings.
As for supervision of the works, the Violations and Penalties Regime of the concession provided that "the verification of a single failure," the OCCOVI was required to begin the process of penalty. Despite the unequivocal standard, the audit found nine cases in which supervisors of the traffic control body informed the dealer before writing the fines "freeing the company from the punishment," says the report, and also states: "This method makes the sanctions regime ineffective, knowing beforehand that you will be applied a sanction and therefore giving the company a time lapse to remedy the problem."
Furthermore, according to the AGN, the details of the supervisions that the OCCOVI carried out did not provide enough information to monitor compliance with the obligations that the company had. It’s that "between the start of the grant (November 2006) and April 2007 no monthly reports were produced, but the monitoring activity was summarized in one (work) no details of the amounts invested were provided; tasks execution of major works were mentioned in a generic way, and they did not include an issue date or proof of receipt" the research exemplifies.
On possible sanctions on America Corporation, the contract provided that to fall back on the termination clause because the company needed at least six "serious offenses that are firm in administrative proceedings in a span of 12 months, 10, or 24 months." At the time of the audit, it was the OCCOVI itself who recognized the existence of 37 cases of hardship, of which only some had been initiated between February 2007 and January 2009, and "none were resolved." According to the AGN, "In this situation, the OCCOVI must act with greater diligence in the handling of penalties so to not cause further damage to the state".
That's not all. The same audit found five cases of penalties, and as documentation, they only had two pages: the cover and the record of findings by the supervisor.
In the beginning of the concession, America Corporation had a period of two years to complete the first stage of works, divided into two sections, one 12 kilometers of Route 8, worth $ 172,443,326, and the other 8 kilometers, for $ 84,478,624.
The AGN observed that the company had "begun implementing additional work without prior authorization from the OCCOVI" and that the penalties were not given, even though this situation is considered "serious" in the concession contract. However, America Corporation claimed for this work $ 34 million.
Moreover, during its investigation the auditors toured the Pilar-Pergamino Highway and noticed that the three lanes built in the first installment turned into one lane in the second section of the construction job that also had "longitudinal deformations and transverse deficiency in signaling and subsidence of road edges.” From that audit, it also emerged that "no tasks were running repair road surface in any sector despite the identified deficiencies", as was completed by the AGN.