Government action needed

If the present administration is really serious in its campaign against graft and corruption, then it should immediately look into one government project which has raised a lot of eyebrows due to the seeming callousness of those involved.

Sources revealed that the Department of Transportation and Communications (DOTC) has awarded Package 1 of the Communications, Navigation and Surveillance/Air Traffic Management (CNS/ATM) Systems Development Project contract to lone bidder Sumitomo-Thales and is about to award Package 2 to the same bidder.

The project, designed to replace aging surveillance and air traffic control facilities in selected airports in the country, will be financed via a ¥22.049-billion untied loan from the Japan International Cooperation Agency. Package 1 is about $80 million while Package 2 will cost around $120 million.

In response to a resolution filed by Samar Rep. Ben Evardone, Congress’ transportation committee led by Rep. Roger Mercado is reportedly about to conduct an investigation into the alleged anomaly in the DOTC bidding process as well as reports that Sumitomo’s partner Thales is the same Thomson CSF NCS-France that has been blacklisted by our Commission on Audit for failure to deliver on a previous bungled government project.

As early as 2009, the COA has already concluded that the previous DOTC management committed “glaring management errors” when it failed to bar the Sumitomo-Thales joint venture from bidding for the CNS/ATM contract, noting that Thales (Thomson CSF) was the same contractor that abandoned the DOTC’s P1-billion Global Maritime Distress Safety Project in 2000. 

State auditors also said the DOTC bids and awards committee failed to consider the “unsatisfactory performance of Thales” in its previous contract with the department when it evaluated the eligibility requirements of the joint venture.

They added that DOTC should re-evaluate the proposed CNS/ATM project and “make prudent and sensible decisions” to guarantee that government funds “will be spent wisely.”

But despite these warnings, DOTC proceeded with awarding Package 1 to Sumitomo Thales, and is in the process of awarding Package 2 to the same bidder.

Transportation Secretary Jose “Ping” de Jesus has been quoted as saying that the bidding process was in order. However, concerned parties are wondering why the DOTC has jumped the gun and cleared the winning bidder without the benefit of an investigation.

The CNS/ATM project, like the infamous national broadband network (NBN) project of the DOTC, is funded by overseas development assistance (ODA) loan, and classified as an untied loan project. Being an untied loan anybody can participate and win even without a Japanese partner.

Thales has been a consistent winner in other equipment procurement contract biddings by the DOTC and its line agencies. The latest contract it won was the installation of a P189-million instrument landing system (ILS) for the Ninoy Aquino International Airport (NAIA) bidded out by the the Manila International Airport Authority (MIAA).

But Thales has had a very bad reputation not only here, but in other countries. It was brought to court by the Taiwanese government for giving illegal commissions to local officials in a $2.8-billion contract that would provide the Taiwanese navy with Lafayette frigates. The International Chamber of Commerce (ICC) International Court of Arbitration has since ordered Thales to pay Taiwan more than $591 million as settlement for the dispute.

Former Senator Mar Roxas had blamed Thomson CSF NCS-France for the string of sea tragedies that claimed hundreds of lives in 2008, including the sinking of the M/V Princess of the Stars.

The GMDSS is a ship distress and safety communications system designed by the International Maritime Organization and implemented in 1999. Under the GMDSS, all passenger and cargo ships over 300 gross tonnages on international voyages have to carry specific satellite and radio communications equipment for sending and receiving distress alerts, and for general communications.

There is this growing perception that JICA, which is funding the CNS/ATM project, was favoring Sumitomo-Thales group to get the entire project. In fact, letters from JICA to the DOTC gave specific instructions for the latter to ban certain bidders.

Observers have also noted that Sumitomo-Thales is already a shoo-in for Package 2 because whoever gets Package 1 will have an advantage. This is because the bulk of the expensive software that will be used for Package 1 will be needed for Package 2. Hence, the winner for Package 1 can afford a much lower bid for Package 2.

There are a number of issues that the present DOTC management has to look into. For one, there are reports that the technical specifications prepared by a consultant and later approved by the DOTC bare similarities to the Thales proposal. Also, some quarters have questioned why certain bidders have been disqualified for flimsy reasons.

There are those who say that DOTC may have bowed down to pressure from JICA to disqualify one of the bidders in spite of the fact that twice, the department justified the qualification of the said bidder.

CSR code for mining

A private think-tank founded by former Solicitor General Alberto Agra has urged government to codify a legally binding set of standards on corporate social responsibility (CSR) for the local mining industry, as a way of rebuilding public confidence in an industry whose reputation has been smeared by environmental disasters.

Forensic Law and Policy Strategies Inc. said a codified CSR will also “ensure just and equitable sharing of benefits and available resources; provide an appropriate venue for multi-stakeholders engagement; generate acceptance and support from host communities and other stakeholders; and assure long-term sustainability of the minerals industry.

In a paper co-written by Agra and Faye Rañola, Forensic Solutions said several voluntary non-binding CSR policies could be used by the government as guides in coming out with a legally binding, codified CSR for the mining industry.

These include the United Nations Global Compact, a strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment, and anti-corruption.

The Global Reporting Initiative, which aims to make reporting on economic, environmental and social performance by all organizations as routine as and comparable to financial reporting could also serve as model, they said.

Other examples include the Voluntary Principles on Security and Human Rights, a set of non-binding principles developed through multi-stakeholder participation in 2000 to address the issue of balancing safety needs while respecting human rights and fundamental freedoms, as well as the planned ISO Corporate Social Responsibility Standard (ISO 26000).

They added that the Chamber of Mines is finalizing its Guidebook on CSR for the Philippine mining industry, revolving around six primary concerns - environmental management, community engagement and development, safety and health, security and human rights, labor, and management, and governance. The guidebook is however non-binding.

Agra and Ranola said the CSR Code should address issues encompassing the mining life cycle and include a system of reporting and disclosure, and of enforcing accountability, including the imposition of fines, suspension or revocation of licenses and permits, compelling enough to ensure full and meaningful compliance.

Not so hidden agenda

In a recent Globe Business-sponsored Enterprise Innovation Forum, Globe president and CEO Ernest Cu emphasized the need for innovation as a strategic growth driver in any industry fraught with competitive pressure and changing market dynamics.

In his speech, Cu quoted Scott Anthony’s latest publication, “The Silver Lining: An Innovation Playbook for Uncertain Times,” where Anthony noted: “For many companies, the challenge is steeper than simply eking out incremental improvements or expanding into new markets. The challenge is reinvention, or transformation. Simply doing what companies are doing better won’t be enough. Companies have to fundamentally do something quite different from today. Perpetual transformation is the only way to thrive during the Great Disruption.”

Unfortunately, when Cu’s speech was written about in the papers, some writers inadvertently quoted the above statement of Anthony as having been made by Cu, without referring to the fact that Cu’s speech made the proper attribution to Anthony’s book.

In the light of growing concerns about plagiarism, the clarification is definitely called for.

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