Was the supposedly transparent bidding for the supply of new MRT 3 train cars geared for a Chinese manufacturer? Will this be another ZTE deal in the making?
DOTC Secretary Jun Abaya said last week that “Opening the project to bidding erases doubts as to any favoritism.†But sources familiar with the deal tell me there are ways of structuring an apparently transparent bid to favor a particular bidder.
For example, one key aspect that was missing from the terms of reference, my source told me, is the track record of the supplier. Track record is important if we remember a lesson learned in North Rail. The Chinese company tasked to do North Rail had zero experience in building a railroad.
If the TOR required at least 10-15 years of operating experience, my source thinks this would likely disqualify the two Chinese bidders and maybe would encourage the Japanese, Korean, German, Italian, Czech, Canadian (Bombardier) to bid. None of these other potential bidders participated.
There were only two Chinese bidders who participated and one of the Chinese bidders was eventually disqualified too. According to Sec Abaya, DOTC’s Bids and Awards Committee (BAC) is now conducting post qualification procedures on the lone Chinese bidder that qualified for the bidding.
A report of PhilStar’s Lawrence Agcaoili says that Abaya identified China’s Dalian Locomotive & Rolling Stock Co. CNR Group as having qualified for the bidding and submitted a bid of P3.759 billion or P10 million lower than the approved budget for the contract of P3.769 billion.
Another Chinese firm CSR Zhuzhou Electric Locomotive Co. Ltd. was disqualified by the BAC due to lack of certain technical requirements. Sec Abaya said a total of five groups bought bidding documents, but only the two Chinese companies submitted their bids last June 11.
My source told me that it was his understanding that Sojitz (Japanese), Hyundai-Rotem, Sumitomo, Bombardier, Inekon, Kinki Sharyo, all attended the pre-bid conference. None of these companies submitted a bid primarily because of the $1.8 million price cap.
Just to show how the bidding was not as transparent as Abaya claims, my source explained, the TOR contained a significant change from the 2008 NEDA approved budget. NEDA had a significantly higher price per LRV but required at least 15 years experience in the delivery of Light Rail Vehicles with a capacity of 500,000 passengers a day.
My source does not think CNR -- the Chinese company that was post-qualified and presumably the winning bidder -- can meet this. He believes the bidding was actually structured (by the same people who were reported to have allegedly asked for a bribe from the Czechs) to clearly favor a bidder.
In fairness to Abaya, he was reported to have said in the Agcaoile story that he would review the terms of reference for the bidding and would order a rebidding if he discovers that the terms favor a certain company or if any wrong doing is involved. But the DOTC Secretary declined to say how long the evaluation process would take.
Nevertheless, Sec Abaya announced that the prototype of the new trains is expected to be delivered by December next year and would be tested on the rails of MRT 3 along EDSA. He also said the new trains would be delivered by batches and the last batch of delivery of the 48 new trains is scheduled in May 2016.
The contract is worth P3.8 billion for the supply and delivery of 48 new trains to augment the existing 73 Czech-made trains. Almost 600,000 passengers take the MRT 3 along a 16.9-kilometer stretch from North Ave. in Quezon City to Taft Ave. in Pasay using the current fleet.
A single Chinese bidder for a major contract where other international manufacturers decided to stay in the sidelines can’t inspire confidence that everything is in order. Hopefully this does not become another ZTE-like mess involving a Chinese company again because this is the last thing P-Noy’s Daang Matuwid needs.
I do not personally know the DOTC usecs so I am not in a position to think they could be in on a potential problem. The only one whose family I know is usec Timmy Limcaoco and I don’t think Timmy is the type who would sully his family’s reputation. Timmy may be a technical misfit at DOTC like the other usecs but I believe he is clean. If there is any problem with this bid at all, the root is probably at a lower level. It is easy to take advantage of usecs more versed in the law but technically clueless.
The ideal situation is to have as many international bidders as possible competing. Now that the project itself is covered by dark clouds of doubt, with just one Chinese bidder, DOTC must make a special effort to assure everyone that everything is being done properly.
Water
So much have already been written about the so called unfair and improper items incorporated in our water bills. Worse, current officials of the MWSS like Gerry Esquivel have been blamed for the state of affairs they only inherited and have a mandate to implement.
I will keep things simple and just talk of the principle behind the privatization of water services for the Metro Manila area. Those who want numbers can refer to other articles about it or consult voluminous documents on it.
The basic principle is this: the private sector companies now managing our water services were contracted by government to do that after competitive bidding. The basis of the award was a guaranteed return based on a pre-agreed formula.
It so happened that the formula allows the private companies to charge back income tax paid as is often done with utilities. While that looks anomalous in the sense that income tax should be to the account of who earned the income, the formula agreed upon allows it.
The components of the formula could be changed, of course, with mutual consent but the private concessionaires should be kept whole somehow. To unilaterally change it outside of the agreed rate setting process would ruin the government’s credibility to enter into any contract. It would doom PPP forever.
Many of those clouding the issues here, specially those from the left, never believed in privatization anyway… specially of utilities like water and electricity. But we all know that if we left these services in the hands of government, service is the last thing we are going to have.
I still remember the bad old days. I live in an area of Metro Manila where we only used to get water less than five hours a day… sometimes in the wee hours of the morning only.
We needed two big drums as water tanks and a water pump. When Ayala took over our area’s water services, things changed for the better. We now get water 24/7 and the water pump broke down from disuse because water pressure is now strong enough. The price per cubic meter is also lower than when government was providing the non-service.
In one public hearing many years ago, it was weird to witness well dressed guys protesting the water rate and privatization while folks in more humble attire expressing appreciation for now having the blessing of getting clean water in their communities. Actually, they are now paying less for clean water than before when they got their water from ambulant vendors by the pail at several times the Manila Water rate.
Actually, the only real role of government today, other than review the rate every so often, is to provide new sources of raw water. If we are to fault Esquivel and company, this is probably it. After the Umiray River tunnel to Angat, no new source of raw water has been found and developed.
Metro Manila is over 90 percent dependent on Angat and that’s worrisome. A serious earthquake that damages the dam or a really bad drought would get Manila dry and thirsty. If we want to go after government for something, this is the right issue to take up.
We have so many problems today it is important we pick the right ones to bitch about and leave alone past solutions that already work well.
Ethical question
Lawyer Sonny Pulgar sent this one.
After drafting a will for an elderly client, the lawyer announced a fee of P1,000.
The client gave the lawyer a P1,000 note.
After the client left, the lawyer saw that the client had in fact paid P2,000, as two of the client’s P1,000 notes had stuck together.
Looking at the P1,000 overpayment, an ethical question arose in the lawyer’s mind: “Do I tell my partner?â€
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco