Huge cost savings

There has got to be a better way for government to get the best products or services at the least possible cost.

Bidding requirements for government procurement should focus more on the bid price than on technicalities, such as non-submission of documents.

Just look at the recent bidding conducted by the Department of Transportation and Communications (DOTC) and the Land Transportation Office (LTO) for the manufacture and supply of car and motorcycle license plates to LTO for five years.

The DOTC was bidding out the supply of 5.24 million pairs of motor vehicle plates and 9.97 million pieces of motorcycle plates.

How is it possible for instance that a company that can produce license plates for motor vehicles for only P163.85 per pair, and for motorcycles P46.16 per piece be outbidded by another company that will produce the motor vehicle plates for P388 per pair and the motorcycle plates for P188 a piece?

Pure and simple technicalities, that’s why.

If the Rules of Court can waive non-compliance with technicalities to further the ends of justice, then why can’t it be done in the case of government procurement?

Just recently, the DOTC-LTO bids and awards committee decided that in the case of the Motor Vehicle License Plates Supply Project, only two of the eight bidders were declared eligible. These were the joint venture of Netherlands’ JKG and local firm Power Plates Development Concepts; and that of Spain’s Industrias Samart and local company Datatrail.

Since they were the only ones eligible, their financial proposals were then opened, with the JKG-Power Plates group offering the lowest offers for both Lots 1, for motor vehicle (MV) license plates, and 2 for motorcycle (MC) plates.

For Lot 1, JKG-Power Plates proposed to supply the MV plates at a total cost of P1.98 billion while Industrias Samart-Datatrail offered the same at P2.03 billion.

Both companies did not breach the ceiling price of P2.356 billion.

For Lot 2, JKG-Power Plates offered to supply MC plates at a cost of P 1.196-billion, while Industrias Samart-Datatrail tendered a bid of P1.275-billion.

The maximum bid price for Lot 2 was P1.495 billion.

According to the DOTC-LTO BAC, the six other bidders were declared ineligible since they all failed to provide the required documents in their sealed bids.

These were RNA Holdings, (Philippines) and Utal Sp. Z o.o (Poland), which allegedly did not submit financial statements and a valid credit line certificate and did not conform with the delivery schedule and technical specifications; and Kolonwel Trading (Philippines) and Shanghai Fa Yu Industrial Co. Ltd. (China), because of the absence of a valid mayor’s permit and non-compliance with technical specifications.

Others declared ineligible were Utsch-Fereira Phils. and Utsch AG of Germany (non-conformity with delivery schedule and submission of a non-compliant lock washer); Uniforbes Phils. and EHA Hoffman of Germany (absence of a valid  mayor’s permit and other missing documents).

Also disqualified were DVK Enterprises Philippines and Jinjiang Hesheng of China (no valid certificate of reciprocity), and Proact Philippines (no reciprocity certificate).

In a motion for reconsideration, RNA and Utal claimed they submitted audit papers and not financial statements because that is the norm in Poland. The difference, they claim is more in form than in substance. They added that they have a P390-million credit backing from a bank, that they complied with the other requirements, that they have a manufacturing facility in the Philippines to ensure on-time deliveries (other bidders have to source the license plates from Europe), and that they are the only bidder that meets the latest US standards.

What’s even more strange about the bidding rules is that the bidders had to claim that they are abiding with the so-called “ASTM D 4956 8.5” standard when no such standard exist, according to RNA-Utal.

In a letter to Transportation undersecretary Jose Perpetuo Lotilla, who also heads the DOTC-LTO BAC, RNA challenged the technical working group about the existence of this standard, which purportedly is used by international testing bodies to evaluate the quality of reflective surfaces for traffic control purposes.

DOTC officials dismissed the complaint and swore that the requirement was accurate and did not have any typographical error.

But what is in the literature is “ASTM D 4956 7.5” and since the bidders certified under oath that they had conducted tests under the non-existent standard, what they did is false and perjurious, RNA said.

It added that government’s rules mandate that bidders’ claims that are not supported by evidence should be rejected.

A review of the whole bidding process might be the best thing to do, considering that some of those declared ineligible had lower prices. For instance, RNA has offered to produce the MV plates for P163.85 per set and the MC plates for P46.16 each. The qualified bidder from the Netherlands offered MV license plates at P380 per set and the MC plates for P120 while the Spanish joint venture partner offered P388.05 per set for the MV plates and the MC plates for P128.

In short, RNA’s bid would have cost government only P1.32 billion compared to JKG’s bid of P3.18 billion and Samart’s P3.31 billion.

One of the three China-backed joint ventures had a bid lower than JKG’s and Samart’s, but much higher than RNA’s.

The four other joint ventures had bids higher than those of JKG and Samart.

The huge price difference, and the resulting cost savings for motor vehicle and motorcycle owners and for the government as well, makes junking the results and reviewing what happened (including the erroneous standard being required) a must.

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