Those clueless Usecs of DOTC!

Why am I not surprised that after all the huffing and puffing and press releases about how seven interested bidders will compete for the right to build LRT1 extension to Cavite, only one showed up with an actual bid?

It will be recalled that DOTC had to rebid the LRT Line 1 Cavite Extension project last week after prospective investors backed out the first time around. The bidders were unanimous last year in saying that the terms of reference prepared by the DOTC usecs made no business sense at all.

Thus, I was laughing out loud when I read the press release of Cosette Canilao of the PPP Center the day after the bidding. The release had this completely hilarious paragraph:

“Undersecretary Rene Limcaoco explains, ‘It was back to the drawing board for us then. We had to unlearn some of our previous notions on project structuring and procurement. We learned to balance the interests of both the government and the private sector without compromising the project’s viabilities and its public service objectives. We are hopeful we will receive good bids for the LRT Line 1 project.’”

Hahaha! This is embarrassing, Timmy Limcaoco… apparently, you guys learned nothing from the first experience. As I told ANC’s Business Nightly when they asked for my comment last Wednesday, you guys simply have no idea what makes an attractive business proposal. And to think that Mar Roxas’s bright boys came from the private sector, supposedly hot shot lawyers with Ivy League or hot law firm credentials.

Well Timmy... I have no doubt you guys are working your butts off on these projects but somehow you guys just don’t get it. There isn’t one major DOTC project you guys had bid out that wasn’t controversial for violating your own rules or ignored by private business for simply being uninteresting.

I am not surprised that only MPIC/Ayala consortium took this bidding seriously. Having won the Automatic Fare Collection System (AFCS), a key component of this project, the bid makes more sense to them than to the other potential bidders... maybe it was even tailor made for MPIC/Ayala.

Maybe, if the AFCS was integrated to this LRT1 bidding, the other potential bidders would have taken the project more seriously. Then again, it isn’t just the AFCS being in the hands of another party that discouraged the others. Other project assumptions apparently suck.

SMC’s Ramon S. Ang said as much. “The figures did not pass our hurdle rate.” Ang pointed out the return on investments would likely only be after the 20th year even with the P5-billion subsidy to be extended by the government.

As reported by The STAR, a SMC representative brought five big boxes to the venue of the bidding. But they crunched their numbers some more and in the end, SMC submitted a letter informing the DOTC it regrets not joining the bidding process.

That’s funny… RSA isn’t normally risk averse… he is the same guy who paid P11 billion for the right to construct the NAIA expressway which made many of us wonder if his calculator was working or if he had too much San Miguel. If he says that this time the terms of reference of this bidding makes no business sense, you have to believe him.

Then too, DMCI also didn’t think much of the project. Herbert Consunji told media that even with the revised terms the deal “was not commercially viable.”

The press release of the PPP Center confirmed that “the Ayala-MPIC Consortium was the lone bidder who placed an offer for the right to build, operate, and maintain the rail project. MTD-Samsung Consortium, DMCI Holdings, Ecorail, Globalvia, Megawide Construction Corp, and, SMC Infrastructure Resources, Inc. all dropped out of the bidding.”

I sought the opinion of a source who is familiar with the innards of this project from the start and this was his reply:

“If Limcaoco’s statement is to be believed, then their transaction advisor IFC/DBP was inept. If so, why pay them Php105 million?

“The truth is the 1st bidding had very disadvantageous terms -which a good transaction advisor would flag down as deal breaker. After November 2013, they could have immediately (within a month) issued revisions to the bid parameters. It took them another 5 months to dish out several changes.

“Did you know that 2 bid bulletins were released on Monday (26-May) or 2 days before bid submission? Under their rules, there is 21 days allowance from last date of bulletin issuance.

“One of the bid bulletins was about time of submission - from 10am to 2pm, perhaps forgivable. The other one expanded the allowable pages in the technical proposal from 250 maximum, to something like 500. Guess who had difficulty compressing his bid to 250? The sole bidder.”

I agree with Usec Juju Lotilla who was quoted in media having said that they can no longer have delays on this project. That’s very true, given that this project was first proposed by a Canadian company in the early 2000s.

One can understand why the Arroyo era DOTC would negotiate this project to infinity… but Daang Matuwid should have resulted with a different outcome.

My best take on this fiasco is that the Aquino era DOTC usecs are just clueless. But then again, one can’t completely erase suspicions after that MRT 3 maintenance stink. That seems to indicate they are capable of that too.

I reluctantly take the position that we should just get this project going even if there was only one interested bidder. Our people simply need the service this infra project will provide and should not be made to wait longer.

Luckily, the lone bidder is a powerhouse of a consortium with two of the best placed local conglomerates in it. They should include the operation and maintenance (O and M) of the entire existing urban rail commuter system (LRT1/2, MRT3) as part of the package.

Indeed, assuming the project finally gets awarded to Ayala/MPIC, it may be easier for government to finally consider the proposal of MPIC to take over MRT 3.

MPIC earlier offered to take MRT 3 including the headaches of its convoluted legal problems and upgrade the system at no cost to the government. To me, this seems to be the quickest and cleanest way of solving the problems of MRT 3 that left unattended could lead to a tragedy of epic proportion.

Ironically, DOTC Sec Jun Abaya thinks they are finally doing it right which only proves, like his Usecs, he doesn’t get it too. Here is the quote of Sec Jun in Cosette’s press release:

“Transportation Secretary Emilio Abaya admitted that in the beginning, the due diligence needed in getting them off the ground was a huge challenge to the DOTC. ‘We had to carefully study these projects and ensure we complied with the legal and procedural requirements of the BOT Law and its Implementing Rules and Regulations (IRR). We had to learn by doing. There were critical decisions needed along the way, but eventually we got it right,’ Abaya added.”

“Eventually we got it right?” Sec Jun must be kidding. That’s the thing nga, Sec Jun. You guys haven’t figured out how to do your work right and that’s why you only got one bidder for LRT1. Unless of course having just one bidder, which is a habit of your Usecs, is the objective.

Then DOTC Sec Mar Roxas once claimed that the DOTC Usecs are taking time because they want to do everything right according to Daang Matuwid. The anomalies in the maintenance contracts for MRT 3 given to Vitangcol’s uncle in law, the lone Chinese bidder for the MRT rail cars, the unexplained awards against published policies for Palawan and Mactan airports, show we can’t assume Daang Matuwid for DOTC officials. Four years after, it seems DOTC is still being run by retired police officers of the ZTE deal infamy.

P-Noy’s tolerance of DOTC’s bureaucratic ineptitude is frustrating. Indeed, it already negatively affects the country’s economic development. Three strikes and the non performing bureaucrats should be out. The DOTC usecs should have been called out a long time ago.

It looks the country must suffer them until the end of P-Noy’s term. That’s so much time lost… time we cannot afford to lose.

Wife

From Atty Sonny Pulgar.

A guy sits down at the bar and orders drink after drink rapidly.

“Is everything okay, pal?”, the bartender asks.

“My wife and I got into a fight and she said she isn’t talking to me for a month!”

Trying to put a positive spin on things, the bartender says, “Well, maybe that’s kind of a good thing. You know, a little peace and quiet?”

“Yeah. But today is the last day”.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco