Morena Pushes to End Government Contracts at Will

Photo: Deposit Photos


A new legislative proposal sent to the Mexican Chamber of Deputies by the in-power National Regeneration Movement (Morena) and its leader President Andrés Manuel López Obrador (AMLO) on March 23 is seeking to change the way the Mexican federal government terminates its contracts with suppliers and put all the bargaining power in the state’s hands, a set of reforms that are expected to pass through Mexico’s Chamber of Deputies swiftly due to Morena’s simple majority in the legislative body.

The reforms, which seek to alter 23 Mexican laws, propose the inclusion of “exorbitant clauses” throughout all of Mexico’s international and national government contracts, allowing Mexico to terminate agreements with supplies early and at will with no compensation in return.

“Except in the cases provided by other laws, compensation for damages or losses does not proceed when the revocation or early termination of the contract is motivated by facts or acts of public, general or social interest, or in the preservation of common goods, or in the security or integrity of people and national institutions,” read the proposal.

The alterations also propose setting a maximum limit on payouts for cancelled contracts in arbitration or judicial proceedings in an attempt to avoid “fraudulent or disproportionate claims,” citing the 500 percent increase in payouts Mexico was ordered to pay in international arbitration between 2011 and 2019, as well as the 4.27 billion pesos Mexico reportedly paid out in 2020 alone.

Likewise, the proposed legislative reforms posture modifying Article 19 of the Public Works and Related Services Law to allow priority projects “of notorious and urgent need for the social and economic development of the country and those related to national defense and security” to be carried out without legal permits, which could help to accelerate the work on AMLO’s favored pet projects like the Tren Maya.

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