Accident waiting to happen

Just recently, Light Rail Transit Line 2 (LRT2) spokesperson Hernando Cabrera announced the July 25 deadline for the submission of bids for the P1.33-billion three-year maintenance and operation (M&O) contract for LRT2.

The Light Rail Transit Authority (LRTA) has also published a notice of public bidding which sets an Aug. 13 deadline for the submission of bids for the P423.24-million one-year M&O contract for LRT1.

Unlike in LRT2’s case, the LRT1 contract is just for a year as the government expects to formally turnover by then the operations of the rail system to LRT1 Cavite Extension contract winner Metro Pacific Investment Corp. (MPIC)-Ayala consortium.

These developments bear watching because of the participation of certain parties who are believed to be responsible for the worsening system glitches and accidents at Metro Rail Transit Line 3 (MRT3).

They are also the subject of parallel investigations by the Office of the Ombudsman and the National Bureau of Investigation (NBI) in connection with the $30-million extortion charge by Czech Ambassador Josef Rychtar and Inekon Corp. boss Josef Husek and the allegedly fraudulent award of the train line’s interim M&O contracts over the past two years.

According to LRT spokesperson Cabrera, the eight companies that have expressed interest in bidding for the P1.3-billion LRT2 maintenance contract are Marubeni Corp. of Japan, DM Consunji Inc., Autre Porte Technique (APT) Global Inc., Telefonika Inc., Comm Builders & Technology Phils. Corp. (CB&T), Global Epcom Services Inc., Busan Transportation Corp. of Korea, and the tandem of Multi-Scan Corp. and Hyundai Rotem Corp. of Korea.

Two of these bidders—APT Global and Telefonika—make up the four-member consortium (along with STIV and Pacific) that is LRT2’s current maintenance service provider.

APT Global is also the current maintenance service provider of MRT3, the M&O contract of which expires in August.

APT Global took over the EDSA rail system’s M&O contract last year from the consortium of Philippine Trams Rail Management & Services (PH Trams) and CB&T, which, in turn, had won the contract under highly irregular circumstances following the 2012 decision by the Department of Transportation and Communications (DOTC) to dump longtime MRT3 maintenance operator TES-P of Sumitomo Corp. of Japan (TES-P/Sumitomo).

Although the bidders for the P423.24-million LRT1 contract are unknown at this point, it is not far-fetched to assume that APT Global and several others on the list of LRT2 contract bidders will also submit their offers on or before the Aug. 13 deadline.

Before even thinking of allowing APT Global to take part in the LRT2 bidding and, possibly, in the LRT1 bidding too, government should review the performance of APT Global as this system’s interim maintenance service provider before its contract expires in August, if not cancel this contract at once amid questions surrounding its award and this firm’s ties to its predecessor PH Trams.

The DOTC/LRTA, or better yet the MRTC, should properly bid out the MRT3 contract this time around to avoid a repeat of the irregularities that mired the award of interim contracts to the consortium of PH Trams-CB&T in 2012 and to APT Global in 2013—and that eventually led to Al Vitangcol’s unceremonious exit as MRT3 general manager.

Ombudsman Conchita Carpio Morales last week approved the recommendation by her agency’s Field Investigation Office to conduct a preliminary investigation and adjudication against Vitangcol not only over the $30-million extortion case but also in connection with the award of the M&O contract to PH Trams  just two months after its incorporation in 2012.

What happens if APT Global wins either of or both the LRT1 and LRT2 M&O contracts and the Ombudsman ends up filing charges against any or all of its executives in connection with either or both MRT3 scams?

MRTC executives have correctly noted in their letters to President Aquino that passengers’ complaints only took a turn for the worse following the DOTC’s dumping of decade-old M&O contractor in 2012, in favor of an interim provider that we all know now to be a fledgling, undercapitalized firm controlled by alleged Liberal Party (LP) campaigner  Marlo dela Cruz and Vitangcol’s uncle-in-law Soriano.

Aside from Soriano and Dela Cruz, the third of PH Trams’ six incorporator-directors was Wilson de Devera, a defeated Liberal Party (LP) mayoralty bet, who, according to Rychtar, was Vitangcol’s “emissary” who had tried to extort $30 million from Inekon’s Husek in exchange for this train manufacturer’s supply of 48 MRT3 light rail vehicles (LRVs).

After the PH Trams-CB&T contract ended last year, the DOTC then awarded to APT Global a one-year P685 million maintenance contract which expires this August.

The contract is said to be void ab initio for being manifestly and grossly disadvantageous to government and for giving undue and unwarranted benefits to the two favored contractors in violation of the Anti-Graft and Corrupt Practices Act.

It is also claimed that MRTC’s authority as the private operator of the EDSA train system  as provided in the firm’s Build-Lease-Transfer (BLT) agreement with the government has been violated since the BLT deal requires the review and prior approval or consent by MRTC for any MRT3-related contract entered into by the government with any other private party.

In both instances, the DOTC did not submit the Terms of Reference (TOR) of the M&O contracts to MRTC before signing them with PH Trams-CB&T and APT Global, as so provided in their 1999 BLT accord.

The DOTC has to explain the circumstances surrounding the award of the current M&O contract to APT Global, amid reports that it is under the control of the same PH Trams-CB&T group and that PH Trams-CB&T’s contract was no longer extended in favor of APT Global in a shrewd bid to sweep the PH Trams issue under the rug at that time when Vitangcol was already under heavy media fire as a result of Rychtar’s expose against him and De Vera.

The best action that government could take is to cancel the M&O contract at once and let MRTC do its BLT job of choosing the maintenance provider for MRT3.

Our transport officials are also being questioned for their act of endorsing a plan to use public funds for the purchase of 48 coaches from DOTC-chosen Dalian Locomotive and Rolling Stock Co. under the MRT3 capacity expansion project, in view of a Commission on Audit (COA) report questioning the allocation of P5.6 billion for two of the DOTC’s major projects.

These are the P4.5 billion that the DOTC released three years ago to LRTA  for the MRT3 capacity expansion project and P1.1 billion to the Manila International Airport Authority (MIAA) for the rehabilitation of the Ninoy Aquino International Airport Terminal 1 (NAIA 1) despite the absence of the mandatory Program of Work (POW) and Cost Benefit Analysis for both transport initiatives.

With last week’s Supreme Court ruling declaring as unconstitutional four components of the Disbursement Acceleration Program (DAP), this P4.5 billion allocation has become even more legally dubious, considering that the Department of Budget and Management (DBM) had realigned supposed “savings” for this MRT3 capacity expansion program by virtue of DAP.  (This P4.5-billion outlay is part of the P72.1 billion in DAP funds that the DBM released in 2011.)

The same COA report noted that the release of funds for the purchase of MRT3 coaches likewise lacked the Government Procurement Policy Board (GPPB) guidelines on carrying out the implementing rules and regulations (IRR) of Republic Act No. 9184—or the Government Procurement Reform Law—for negotiated procurement, which is the mode of purchase for the trains as specified in the Memorandum of Agreement (MOA) between the DOTC and LRTA. Should the DOTC/LRTA pursue this plan to buy 48 trains from Dalian Locomotive,  LRTA administrator Honorito Chaneco and DOTC Secretary Joseph Abaya could end up in jail.

Government could not use taxpayers’ money to buy trains for MRT3 as this rail system—pending the implementation of the long-pending, Malacañang-proposed Equity Value Buyout (EVBO) plan for a 100 percent government takeover—is still technically owned by a private company (MRTC).

The original 1999 BLT between DOTC and MRTC also gave the private operator the exclusive right to purchase additional coaches.

There is also an urgent need for a technical audit of MRT3 to able to assess if the DOTC-selected maintenance provider was financial and technically competent to undertake the maintenance requirements, taking into account such factors as recent incidents or accidents and lower number of available trains owing to deteriorating coaches.

MRTC officials, in a letter to President Aquino, have pointed out that after such technical audit, a public bidding should be conducted so that a financially and technically qualified maintenance provider, with adequate experience, may be properly selected the MRT3 System.

An independent audit of the MRT3 system is rather urgent, given the recent warning by rail consultant Rolf Jhann Bierithat that the 15-year-old trains are in dire need of new motors and that the successive breakdowns were symptomatic of “metal fatigue.”

This means that without a system upgrade, the DOTC-approved capacity expansion project might not actually solve the recurring breakdowns and hitches as MRT3 is probably not capable of handling 48 new trains because of this “metal fatigue” issue.

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