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Office Furniture Distributors Accuse CEAT Of Hurting Business

Claim existing laws gives priority to prisoners’ corporation; CEAT denies allegations


September 2, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Local office-furniture distributors are complaining that laws giving preferential treatment to the Corporation for Training & Job Businesses (CEAT by its Spanish acronym) are hurting their business. CEAT, a nonprofit subsidiary of the Puerto Rico Department of Corrections & Rehabilitation, which provides job training and skills to prisoners, has denied all allegations.

The problem for private office-furniture distributors in Puerto Rico started after Gov. Sila M. Calderon signed executive order No. 15 in 2001, which requires government agencies to give preferential treatment to CEAT when buying furniture and other products.

Since government agencies don’t have to open a bidding process when buying from other public agencies, and executive order No. 15 gives preferential treatment to CEAT, local furniture companies believe they have been shut out from potential business.

According to Carmen Edda Lugo, administrator of the General Services Administration (ASG by its Spanish acronym), private companies interested in doing business with the government are listed on the government’s public bidders registry, managed by the ASG, once they fulfill specified criteria. Government agencies are required to give priority to local distributors and to buy from companies listed on the registry. Local furniture distributors have claimed Gov. Calderon’s order, as well as the Puerto Rican Industry Investment Act also enacted by Calderon, have weakened this law to their detriment.

However, local office-furniture distributors said they don’t oppose the rehabilitation program; the real bone of contention for Jesus Nazer, president of Saad Nazer Inc., and others is CEAT’s decision to sell office modular systems, which he claims prisoners don’t even make or install. As such, he said government agencies have been buying modular systems from CEAT to assist the program, but with no true benefit to prisoners.

Saad Nazer also alleged that since CEAT doesn’t manufacture modular systems, it buys them from local office distributors and sells them to other government agencies with a markup. He added that CEAT is buying manufactured products from Brazil, Canada, Costa Rica, and the U.S. mainland.

Girard Manufacturing’s Jose Casal, who estimates the company has lost nearly $900,000 in government contracts in the past two years, has filed a complaint through the Comptroller’s Office to get it to investigate the matter.

CEAT denies allegations

CEAT Executive Director Juan Quintero denied local office furniture distributors’ allegations and said his agency has followed existing regulations and laws.

"The reorganization plan adopted in 1994 allows CEAT to do business to guarantee its operations. CEAT doesn’t receive government allocations to rehabilitate prisoners. That is a challenge we need to face," he said.

Quintero explained that to be competitive, CEAT needed to evolve, and selling office modular systems was part of that evolution, as government agencies are interested in purchasing modular systems in addition to desks, chairs, and conference tables.

"When we started receiving requests for modular office systems, we saw it as an opportunity for our participants. If modular office systems are the trend in office furniture, prisoners should also learn how to work with them, because once they complete their sentences, they can work for private companies," said Quintero.

As such, CEAT adopted regulation 6702 on Oct. 9, 2003, to enter into the modular office systems market.

When CEAT receives requests for modular systems, said Quintero, it asks for bids among businesses listed in ASG’s public bidders’ registry. Bidders must agree to train participants in assembling and installing modular systems. In fact, Quintero showed CARIBBEAN BUSINESS copies of letters sent to local office furniture distributors who committed to the CEAT’s training requirement.

"If a project exceeds $500,000, we don’t take it on because it would represent a big commitment for the agency," said Quintero. "Our goal isn’t to make a profit. Our budget covers employees’ payroll (including prisoners’) and new materials, machinery, and equipment. Many private companies have supported CEAT by buying from us. We would like many others to give our participants an opportunity to learn. We aim to develop more partnerships with the private sector. It could be the way to keep prisoners from relapsing," said Quintero.

According to the government’s budget, a total of 94 government agencies, 15 private companies, and 33 municipalities bought products from CEAT in 2003, when sales totaled $7.1 million. In 2002, CEAT earnings amounted to $268,692. CEAT also provides training in printing, sewing, woodworking, and other areas.

This Caribbean Business article appears courtesy of Casiano Communications.
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