ASEAN 2017 bid rules skewed to favor one company?

By CHARMAINE C. DEOGRACIAS and ELLEN T. TORDESILLAS
VERA Files

Conclusion
WHEN the government bidded out the P2.8 billion events management contract for the 50th anniversary of the Association of the Southeast Asian Nations to be held in the Philippines this year, it tailor-made the criteria so that a favored company would bag the deal, a company excluded from the bidding said.
In fact, sources say, when the bidding was held Dec. 1 at the DBM-PS office on Cristobal Street in Paco, Manila, only one company showed up: StageCraft International.

With a bid of P1 billion, StageCraft, headed by Francisco Zabala, logically got the gargantuan contract, the biggest in Philippine history of events management.

But Events Organizer Network Inc (EON), a company which took part in the initial process, wrote the executive director of the DBM-PS and asked her “to reject the sole bid of submitted, declare a failure of bidding, or not to award the contract to the sole bidder.”

EON cited three reasons, among them that competition was restricted, therefore nullifying the essence of “competitiveness” stated in the Procurement Law, and that the bidding process benefitted a single bidder, to the disadvantage of government.

EON also said the bidding violated Republic Act 9184, the government procurement law, because the DBM-PS used procedures inappropriate for the service being bidded out. It used the procedure for “goods” instead of for “consulting services.”

Requirements tailor-made for StageCraft?

The DBP-PS lumped 48 meetings from January to December 2017 into one single enormous contract for which DBM imposed the qualification that bidders should have had a past contract with government worth at least P1.4 billion or 50 percent of the contract budget.

This was later amended to allow bidders to have two previous contracts with an aggregate value of P1.4 billion.
StageCraft, which had won the P1.5 billion job for the hosting of the 2015 Leaders Meeting of the Asia Pacific Economic Conference (APEC), was the only one qualified to bid.

The 2015 APEC contract was for consulting services and not for goods although the job description for both APEC 2015 and 2017 ASEAN contract is the same: “Technical and Conference Integrator.”

Another qualification imposed on bidders was experience in having “provided and/or consolidated technical and conference equipment, scenic and aesthetic components, on a Rental Contract Agreement for a Philippine Government-hosted multilateral summit participated in by at least 10 Heads of State/Government within the last 10 years prior to the publication of this TOR (Terms of Reference.)”

StageCraft, founded in 1987 as a lighting and audio company, is the favored contractor of the Philippine government, having handled the 1996 APEC under the Ramos administration, the 2006 ASEAN under the Arroyo administration, and the 2015 APEC summit under the government of Benigno Aquino III. It also handled the January 2015 Papal visit.

In its website, StageCraft boasts of having garnered for the company “all the major shows and events in the last decade and a half” in the country.

Upon representation by EON, the BAC waived the original questionable requirement for joint-venture entities intending to bid for the gargantuan contract of having been in the business in the Philippines for the last three years.

Sources say experience is a valid criterion but it could be misleading because of the possibility the composition of the company has changed. Unlike in the procurement of goods where only corporate experience is required, the procurement of consulting services requires the submission of the curriculum vitae of professionals who will be involved in the project.

BAC 1 chairperson Rosa Maria Clemente allayed fears that without the requirement of CVs, they risk awarding the job to people without technical expertise. “But we just cannot surmise. The bidding documents in this procurement have required documents to show proof of technical capability,” she said.

Proof of technical capability refers to completed contracts and track records of projects. These requirements are enough to bar technically incompetent bidders from being awarded contracts, she said.

Nullifies essence of competition in Procurement Law

Coordinating and supervising all the ASEAN meetings, which have grown from the original 48 to 102, is the Director-General of the ASEAN-National Coordinating Council (NOC), Marciano Paynor, Jr. a retired diplomat who has handled the 1996 APEC, the 2006 ASEAN and the 2015 APEC summit. He has also been in charge of managing all presidential foreign visits since the administration of President Fidel Ramos.

One of the reasons for the delay in the preparation for the ASEAN 2017 hosting which the DBM-PS-BAC is using as reason for shortcutting the bidding process, is the change in the presidency.

The administrative orders creating the national organizing councils for the country’s hosting of APEC 2015 and ASEAN 2017 meetings were all signed under the government of former president Benigno Aquino III. Both AOs constituted the NOC and the Executive Committee and identified their functions and authority. The election of a new president and formation of a new cabinet also changed the membership of the NOC which is chaired by the Executive Secretary.

EON, which had handled the 2012 Asian Development Bank Annual Board of Governors Meeting in Manila and the 2014 World Economic Forum on East Asia, proposed dividing the contract as a solution to the lack of time.

Instead of one lot of 48 meetings, EON suggested dividing it four lots: Lot 1 for the two Leaders’ meetings, Lot 2 for the three commemorative meetings, Lot 3 for the 14 ministerial meetings, and Lot 4 for 29 ministerial meetings.

“There is urgency to procure services for the meeting in Jan. 2017, but no urgency to procure services for the other 47 meetings,” EON said.

BAC rejected the proposal citing its intention “for efficient and easy management of contract. Comparing it to contracts for several integrators, the current packaging is more advantageous to the government given the urgency, technical requirements and contingencies that we are looking forward to.”

Officials also said “it would be difficult for ASEAN-NOC to be working with different suppliers for the meetings since it aims to provide a standard hosting for all meetings.”

Lawyer Andre Palacios, EON’s Senior Adviser for Policy, Public Affairs and Government Relations, said giving “unwarranted benefit to StageCraft was grossly disadvantageous to the government.”

He said, “The bid price could have gone lower, if there was genuine competition, because genuine competition will ensure government will get the best price and the most competent provider. While the government has a budget of P2.88 billion, it will only pay what the best bidder offered, in this case P1-billion. But there can always be addendum or supplemental cost that the contractor may ask but limited to 20 percent of the total approved procurement budget.”
“The obligation of government under the law is to ensure competitiveness to grant equal competitive opportunity to all eligible bidders. That’s the law, the law requires that. So you need to balance between your requirement of selecting what you consider the best as well as ensuring competition,” Palacios said.

VERA Files had tried getting in touch with DBM-PS Executive Director Bingle Gutierrez, asked for an interview and followed it up eight times but she was always out of the office. Her secretary would only say their office got the letter-request.

VERA Files also sent StageCraft’s Zabala a request for an interview but did not get a reply.

(VERA Files is put out by veteran journalists taking a deeper look at current issues. Vera is Latin for “true.”)