Is it Brinkmanship?

The position apparently taken by the Sangguniang Panlungsod of Cebu City to allow a Filipino-Japanese (in the process of) consortium to use 1.2 hectares of a prime lot located in the South Road Properties for free for five years is a study of some kind of brinkmanship, if we were to concede to its definition as a practice in international politics of taking advantage by creating the impression that one is willing and able to pass the brink of war rather than concede.

For our purpose, there is an imagined marketing war for locating a retirement facility. The city has the advantage of owning a valuable piece of property. Yet, it is asking for no rent for its initial use rather than lose the chance of clinching its stay here.

There was an offer submitted by a Japanese firm that claimed to be operating a retirement facility in japan. While the letter came from a company unknown to many, it carried a big punch of a leading local construction company for its future partner.

To avoid being caught napping, the city, in the earliest stage of the project, asked its appraisal committee to find out what could be a reasonable rental for the SRP lot that was initially identified as the site. That was regular. Appraisal, of course, is the official function of that committee and its findings carry authority.

After careful study, the committee passed a resolution pegging the rental at Fifty Pesos per square meter per month. Therefore, in the collective minds of the city officials whose job is appraisal, the city should get a minimum rental of about Six Hundred Twenty Five Thousand Pesos (P 625,000.00) every month for the 12,500 square meters of the city's reclaimed land. Not bad, at all because for a year's rental, the city is supposed to get Seven Million Five Hundred Thousand Pesos (P 7,500,000.00).

The resolution approved by the city's appraisal committee meant that if a bidding would eventually be conducted, the Bids and Awards Committee, taking into consideration the committee's work, as it should, would peg the minimum bid at the suggested rate.

For one reason or another, the Bids and Awards Committee did not do as expected. In the subsequent bidding guidelines prepared by the BAC itself, the minimum bid was Fifty cents (US$ 0.50) per square meter per month. To repeat, the word used was CENTS. No, the BAC did not adopt the recommendation of the City Appraisal Committee of Fifty Pesos per square meter per month. The BAC completely disregarded the recommendation of the appraisal committee.

To add strength to the bidding guidelines it wrote, the BAC was reported to have written a Term of Reference (TOR). This is a requisite document before proceeding to a bidding. The same amount of US$ 0.50 was contained in the TOR.

What is troubling is that the detailed letter submitted to the city by the Fil-Jap consortium, offered to rent the SRP lot at US$ 0.50. In other words, the amount written in the Bidding Guidelines, as well as in the TOR was exactly the same figure stated in the Fil-Jap's letter.

What is wrong with that? The rent to be expected by the city, if the recommendation of the appraisal committee were to be followed, would be more than double than that offered by the consortium. According to the appraisal's resolution, Cebu City stands to receive P625,000.00 monthly. But if the bid were based on the bidding guidelines (and the TOR), the rent would only be in the vicinity of P270,000.00, per  month.

During the city council session, an officer of the BAC argued that the rental amount pegged by the appraisal committee was only recommendatory. The BAC was under no obligation to heed it. If it be the case that the BAC would not give any weight to city appraisal recommendation, where did it get the idea that the reasonable rental would be US$ 0.50?

It is not difficult to conjure that the BAC copied the offer of the Fil-Jap. A comparison between the unsolicited offer, on one hand, and the bidding guidelines (as well as the TOR), on the other hand, would show uncanny similarities in their language leading me to imagine that the author could be one person. Considering that the result could be grossly disadvantageous to the city, and conversely beneficial to a private party, I just call it brinkmanship rather than say I smell a rat!