The usual suspects

People are beginning to suspect something amiss because of the delays being encountered in the award for the contract involving the P8.2 billion Land Transportation Office (LTO) information technology improvement project.

Last Feb. 10, the 13-year contract with Stradcom Corp. which involved the development of a system integrated information solution infrastructure that will interconnect LTO’s district offices nationwide, enable on-line transaction processing and integrate its mission critical business processes ended.

According to the Department of Transportation and Communications, a new system was needed to provide a viable and long-term solution to improve the current system which was no longer responsive to current land transportation regulation requirements.

As early as Nov. 26 of last year,  five companies participated in the bidding for the multi-billion peso project, with Digitext Asia Corp. offering the lowest bid at P3.8 billion, followed by Fritz and Macziol Asia with P5.3 billion, and Eurolink with a bid of P5.8 billion. Other bidders were Kaisa Consulting and Ceragon Network but their financial bids were not opened due to lack of technical requirements.

In February this year, Digitext Asia Corp. was informed that it failed in the post-qualification process due to lack of a valid mayor’s permit for year 2012 and non-submission of bill of quantities of items proposed, said DOTC Undersecretary Jose Perpetuo Lotilla, head of the agency’s bids and awards committee (BAC).

After the lowest bidder was disqualified, the second lowest bidder, German firm Fritz & Macziol, also received the same disqualification notice.

It is being claimed that “the evaluation done by the technical consultants exaggerated the non-essentials and trivialized the essentials and the core solution.”

Others say that too much authority has been given to a particular DOTC consultant, who happens to be a fraternity brother of the DOTC BAC chairman, and who is also rumored to belong to the same religious denomination as one favored bidder.

The public cannot afford further delays in the award of a very important project such as this. But equally important is the fact that the public cannot allow an P8.2 billion project to be awarded for reasons other than being qualified to undertake it.

Shenanigans at PCSO?

Publicly listed Berjaya Phils. Inc., through its wholly owned subsidiary Philippine Gaming Management Corp. (PGMC), is asking the Philippine Charity Sweepstakes Office (PCSO) to explain why Pacific Online Systems Corp., whose exclusive contract to supply PCSO lotto equipment in Visayas and Mindanao expires this month, was awarded a contract to supply PCSO in Luzon without the benefit of a public bidding.

Berjaya and PGMC, which has been the exclusive supplier of PCSO in Luzon for the past 15 years and until 2015, also wants to know why no bidding was called by PCSO before the lotto equipment supply contract of Pacific Online for Visayas-Mindanao expired.

PGMC legal counsel Jose Bernas, in a letter to PCSO chairperson Margie Juico, claims that 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.”

He noted that “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,” Bernas pointed out.

Bernas added that what is worse is that 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, he emphasized.

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.

He said that this was a contrived alibi to favor Pacific Online 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.

Bernas stressed that 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.

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