What’s the fuss about?

posted October 13, 2015 at 12:01 am
by Victor Avecilla

To make up for the devastation the Japanese Imperial Army caused to East and South East Asian countries during World War II, Japan has taken the initiative to finance noteworthy infrastructure development projects of friendly governments in the region.  The Japanese agency tasked with this large-scale undertaking is the Japan International Cooperation Agency for Overseas Deve-lopment Assistance or JICA for short.

Actually, the JICA does not give out money—it lends money to developing countries to finance the construction of buildings, facilities, and roadways for public welfare.  The JICA receives proposals from interested governments, evaluates them, and if a proposal appears worthwhile and feasible, negotiations are undertaken between JICA representatives and officials of the government concerned.

Infrastructure projects financed by the JICA have to satisfy certain standards and conditions imposed by the lender, and comply with pertinent laws on procurement of the borrowing country. Often, the borrower must hire the services of certain experts endorsed by the JICA.

A recent JICA-funded project has attracted some attention lately—a five-year contract for the rehabilitation and maintenance of the 123-kilometer Surigao-Davao-Surigao (Lipata)-Agusan del Norte Road. This project is to be supervised by the Department of Public Works and Highways. The approved budget for the undertaking is P3,422,688,199.31. 

Under Philippine law, a public bidding must be conducted by the DPWH, and bidders must comply with bidding rules and regulations.   The bidding itself involves two basic phases—pre-qualification, where disqualified bidders are weeded out, and the bidding itself, where the bids are opened and the contract is awarded to the winning bidder.

An interested bidder must submit the required documentation to prove that it is capable of constructing the project within the stipulated period, and in accordance with the specified standards.   It must also submit documentation to show that it has sufficient experience in the large-scale construction industry, and that it has undertaken construction projects of a similar or near-similar nature or scale.   Of course, it must offer to complete the project in an amount within the approved budget. 

  Bidders who do not comply with the documentation requirement are disqualified in the pre-qualification phase of the bidding.   This measure is designed to, among others, protect the government from fly-by-night entities determined to win the contract without finishing the project.

Compliance with these guidelines is mandated by both Philippine law, and by the JICA. 

From the records available, it appears that three corporate entities expressed interest in the roadway project—China Wuyi Co. Ltd., Wijaya Karya (Persero), Tbk., and the joint venture of the Equi-Parco Construction Co. and Hebei Road and Bridge Group Co., Ltd. In the course of the pre-qualification phase, the Bids and Awards Committee (BAC) of the DPWH discovered that the first two bidders lacked the requisite documentation, and that they do not have adequate experience in the large-scale construction industry.   Only the third bidder, the joint venture of Equi-Parco and Hebei, passed the pre-qualification phase. 

In the end, only the Equi-Parco-Hebei joint venture submitted a valid bid in the amount of P3,321,551,974,95.   Accordingly, the contract was awarded to it.   

The JICA conducted its own evaluation of the bidding process, and on April 16, 2015, it found the process in order.   On Sept. 21, 2015, the JICA also upheld the award in favor of the Equi-Parco-Hebei joint venture.   Days thereafter, the chairman of the DPWH BAC reiterated that the bidding process and the evaluation that came thereafter complied with the guidelines provided by the JICA. 

The P3,321,551,974.95 winning bid of Equi-Parco/Hebei    is 2.95 percent below the revised approved budget of the contract (ABC) in the amount of P3,422,688,199.31 and   not 20 percent higher than the ABC as some quarters would have people to believe. Actually, of the approved budget of    P3,422,688,199.31, JICA’s share represents 76 percent or P2,365,786,178.42, with the government shouldering the remaining 24 percent or P1,056,902,020.89. The disinformation being peddled the public by those opposed to the project takes only into account JICA’s share of the budget and    excludes government’s financing share to make it appear that the winning bid was over the ABC. This is, of course, ridiculous.

A Mindanao-based politician with alleged interests in the large-scale construction industry, in alliance with other local politicians and business groups, likewise assailed the award in favor of the Equi-Parco-Hebei joint venture on the ground that it was rigged.   So far, however, no evidence to support this assertion has surfaced.   For whatever that allegation is worth, it may have a difficult time overcoming the earlier confirmation by the JICA that the evaluation and awarding processes have been above-board.

For the record, this observation is not intended to discredit or to throw cold water at public interest advocates who expose anomalies in government.   Public interest advocates are vital to a working democracy where the rule of law is upheld.   Without public interest advocates, corruption in the corridors of political power will go unchecked. 

Unless there is sufficient documentation which substantiates the allegations against the award of the roadway contract to the Equi-Parco-Hebei joint venture, however, further criticism of the award is unfair.   While shady contractors must be exposed and disqualified, care must be taken to see to it that legitimate winning bidders are not subjected to undeserved condemnation.  This way, legitimate bidders not to mention foreign funding agencies like JICA are not discouraged from dealing with the government on some future occasion.   It will be a nightmare, indeed, when only shady bidders participate in public biddings for government projects.

Topics: Victor Avecilla , JICA
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