Sloppy

When time is of the essence, controls could become sloppy. Government contracts could be awarded recklessly, injuring public interest.

So many questions are now asked of a P100 million contract awarded to clean up the oil spill threatening the livelihood of fishermen in northern Iloilo province. The contract appears to have been awarded recklessly and, as a consequence, the cleanup, if it happens at all, might be improperly done.

On Nov. 8, as Typhoon Yolanda lashed through the Visayas, Power Barge 103, moored off Estancia, Iloilo, was grounded by strong winds. The grounding resulted in damage to the hull of the power barge. Tens of thousands of liters of bunker fuel began spilling out to the sea.

The PSALM announced bidding for the cleanup of the spill soon after. The bidding happened on the evening of Nov. 20. Two bidders qualified for the bid.

After the first round of bidding, the first of the two bidders was disqualified for lack of key documents pertaining to the bid. The second was also disqualified for submitting a bid above the approved budget of P96.8 million for the cleanup job. That round of bidding was declared a failure.

Because of the emergency nature of the cleanup job, a second round of bidding was scheduled just 30 minutes after the first. That was barely enough time for the two original bidders to correct their submissions.

As a concession to the bidders, the budget for the project was raised to P100 million, exclusive of VAT. The Terms of Reference were likewise amended to allow the winning bidder to adjust the price for the contract as work proceeds.

On the second round of bidding, a third bidder came in and won the bid. This third bidder was Kuan Yu Global Technologies.

According to SEC documents, Kuan Yu Global Technologies was previously registered as Maxx Ionized Alkaline Water, Inc. Its 2013 General Information Sheet says the firm has paid up capital of only P62,500 and assets of only P75,000.

Immediately, serious questions were raised. Why was Kuan Yu allowed to participate in the second round? Why were the COA representatives present in the first round of bidding and not on the second? What happened to the post qualification proceedings where the bids and awards committee would evaluate the financial and technical competence of the winning bidder.

Kuan Yu explains their representatives arrived late for the first round of bidding and were thus excluded. That does not answer the question: If they were disqualified, why did they hang around to participate in the second bidding? Did they know the initial bidding process would fail?

The COA, for its part, says that since the process was getting late into the night, its representatives went home. At any rate, they were there merely as observers and were not integral to the process. Fine.

The very next morning (Nov. 21), the PSALM bids and awards committee (BAC) convened to evaluate the winning bidder. They recommended disqualification of Kuan Yu because the company did not have the financial capacity to undertake the project.

On the afternoon of the same day (Nov. 21), quite oddly, Senate President Franklin Drilon announced that PSALM awarded the cleanup contract to Kuan Yu. Nothing was heard since about the BAC recommendation to disqualify Kuan Yu for having insufficient financial resources to credibly undertake the project.

According to the company’s filings with the SEC, the company’s industry classification is “collection, purification and distribution of water.” The company likewise reported its business address as Lot 25, FTI Complex, Western Bicutan, Taguig City. No such company holds office in that area, a detail that calls up the practices of the Napoles NGOs.

As required by the contract, the supposedly winning bidder did deploy to the site of the oil spill a couple of days after award.

A check on the oil spill site showed several pieces of equipment of the Coast Guard Marine Environment Protection Command (MEPCOM) being used. It turns out, the president of Kuan Yu used to be a former officer of this unit.

When a team from the Department of Health visited the site of the oil spill, they were alarmed that the people hired for the cleanup job were not wearing any protective gear. It turns out, they were local residents hired to clean up the oil spills using dirt rags, plastic pails and tin cans.

Instead of oil spill booms, the firm had deployed used tire interiors. To make matters worse, the grounded barge continued to spill its deadly fuel content. Elsewhere, oil spills are cleaned up using hi-tech equipment and proper solvents. Not in this case.

Good luck to the Ilonggo fishing communities threatened by this calamity.

Reply

I have written in this space about the incredible business model evolved by Mighty Corp. that allowed the company to sell cigarettes at P1 per stick and still come off with a profit.

In response, Might sent me a letter explaining that unlike their foreign competitors, they do not pay royalties abroad, are not required to shell out branch profit remittance and hire no foreign consultants. Therefore, the company is able to price their products at just over P14 per pack wholesale so that Filipinos get the chance to “enjoy international grade cigarettes without burning holes in their pockets.”

They deny that revenue agencies are investigating their company and insist there is not a shred of proof of revenue losses to government. The company will reveal their production data only if the revenue agencies say there has been wrongdoing.

Fine. I remain as impressed as ever with their business model.