PCSO asked to explain award of contract to Pacific Online

MANILA, Philippines - The Philippine Charity Sweepstakes Office is being asked to explain why Pacific Online Systems Corp. was awarded a contract to supply PCSO in Luzon without a public bidding.

Listed Berjaya Phils. Inc., through its wholly owned subsidiary Philippine Gaming Management Corp. (PGMC), which has been the exclusive supplier of PCSO in Luzon in the past 15 years till 2015, also wants to know why up to now no bidding has been called by PCSO just days before the expiring lotto equipment supply contract of Pacific Online for Visayas-Mindanao.

Pacific Online’s foray into Luzon is an encroachment into PGMC’s exclusive territory, but what is alarming about this contract is it was given on a silver platter, said PGMC legal counsel Jose Bernas in a letter to PCSO chairperson Margarita Juico.

“Even if we were to concede theoretically that PCSO was not restricted from appointing other service providers in Luzon aside from PGMC, still the award to Pacific Online is indisputably void because it creates a government contract awarded without a prior public bidding,” the letter dated Feb 28, 2013 and addressed to Juico said.

Worse, Bernas said the PCSO not only allowed Pacific Online to operate in Luzon but also helped it to roll out terminals rapidly when it reduced the minimum distance between two lotto agents from 100 meters to 50 meters.

This has the effect of allowing the VisMin operator to install 1,000 outlets in Luzon in one year. In contrast, PGMC installed 3,900 terminals over 15 years. 

This will eat into PGMC’s revenue, Bernas added, and by doing so, PCSO has effectively “expropriated” PGMC’s business.

The reduction of minimum distance limits and the refusal to bid out the VisMin contract “in our view are unabashed demonstrations of unjustified favoritism,” he said.

In his letter, Bernas also recounted the efforts of PCSO, under Juico, to force PGMC to reduce its rental rate for its lotto equipment by claiming the reduced rate was ordered by the Senate last year in a report that investigated PCSO.

This was a “contrived” alibi to favor Pacific Online, he said, because PCSO initially “demanded” that PGMC reduce its rental rate from 10 percent to 6.5 percent, which would have cut by 50 percent PGMC’s revenues since PCSO also told PGMC to absorb the cost of thermal paper and betting slips which is equivalent to 1.5 percent.

In contrast, PCSO allowed Pacific Online to reduce its rate in VisMin from 10 percent to 9.85 percent and yet at this rate, PCSO was to shoulder the paper costs, he said.

“The encroachment over PGMC’s exclusive territory, the unilateral demand to reduce rental rates, the disregard of a valid and subsisting contract, and the award of a contract without public bidding discourages foreign investment in the Philippines and transparency in government contracting,” he added.