Ombudsman seeks COA help in graft probe on Drilon project

Ombudsman seeks COA help in graft probe on Drilon project

NEWS RELEASE

The Office of the Ombudsman-Visayas has asked the Commission on Audit (COA) in Region VI to undertake an audit of the P33.9-million contract to build the Esplanade II project along the Iloilo River which is alleged to be overpriced and the public bidding rigged.

In a 1st Indorsement dated May 6, 2014, Deputy Ombudsman Pelayo Apostol forwarded the complaint of Iloilo journalist Manuel “Boy” Mejorada against Senate President Franklin Drilon and key officials of the Department of Public Works over alleged violations of the government procurement reform law and the anti-graft and corrupt practices act.

Apostol addressed the request to COA VI regional director Evelyn P. Reyes. A copy of the transmittal letter was furnished Mejorada as the complainant.

In his complaint, Mejorada said the DPWH Bids and Awards Committee made a mockery of R.A. 9184 which established guidelines on the conduct of public biddings for government procurement.

Mejorada said that on the face of the information he obtained from the website of the Philippine Government Electronic Procurement System (PhilGEPS) on the contract, the bidding process was “rigged” with the winning contractor submitted an offer which is only 0.12% below the approved budget for the contract.

The DPWH had set an ABC of P33,950,000 for the development of a 700-meter long embankment on the Molo side of the Iloilo river.

Roprim Construction, which had also been awarded the contract for Esplanade I, submitted a bid of P33,908,791.50, which is just P41,208.50 lower than the ABC. Mejorada said this is an incredible winning bid, as it almost hit the ABC by a hairline difference.

Mejorada said the public bidding was apparently manipulated to favor Roprim Construction, which he described as a favored contractor of Drilon. This is the same contractor that cornered the overpriced Esplanade I two years ago at a total cost of P83.5 million.

On Sept. 10, 2013, Mejorada also filed a graft case against Drilon and the DPWH BAC before the Ombudsman for the apparent ghost implementation of a P13.5 million PDAF disbursement AFTER the project was already completed and inaugurated.

Moreover, the contract price for the project is overpriced by about P20 million, he said.

In addition to these “glaring anomalies”, Mejorada said the DPWH violated the revised implementing rules and regulations of R.A. 9184 with its failure to post the notices of award and to proceed to the contractor within the prescribed number of days.

He said this was done to hide the contract from other interested bidders.

Mejorada said Drilon is being implicated in this case because he is the prime mover for the development of the project. The project was funded from the controversial Development Acceleration Program (DAP) of the Aquino administration, he said.

The Ombudsman’s request for an audit is intended to establish the veracity of Mejorada’s claim that the contract is overpriced and that the bidding was rigged.

Aside from Drilon, Mejorada included DPWH regional director Edilberto Tayao and the entire Bids and Awards Committee of the DPWH Region VI as respondents.

The complaint was filed before the Office of the Ombudsman-Visayas Iloilo field office on March 27, 2014.

 

An empty threat

Few people showed interest when Senator Franklin Drilon led public officials in the ground breaking of a P300 million road widening project for the Benigno Aquino Ave. (better known as Diversion Road) in Iloilo City. Ilonggos were more interested in what he had to say about the controversial retrofitting of the Hall of Justice.

Reporters who covered the event remarked that Drilon’s face darkened in irritation, and even anger, when a question about the Hall of Justice anomaly was thrown at him. In arrogant fashion, Drilon threatened to send anybody found responsible for any anomaly. But he made it clear that whoever is complaining should show proof about the anomaly.

That remark (or threat) raised eye brows among Ilonggos. How could anybody be charged for the anomaly when Drilon himself isn’t too keen about conducting an investigation? Why didn’t he lead a Senate investigation into this project? After all, it’s his name that’s being dragged into this mess. It would be to his interest to clear the air on the issue.

Perhaps Drilon thinks he can glaze over the ugly scandal with promises of more projects. Ilonggos are sick and tired of the corruption here. The Pavia Housing Scam. The San Isidro relocation scam. The City Hall scam. So much money have been stolen from the people. The time to end all of this is now. And the elections on May 13, 2013 will provide that opportunity.

 

Adjacent and contiguous

Nobody seems to be challenging the plan of the Mabilog administration to procure the P294 million in equipment, facilities and other furnishings to make the new Iloilo City Hall ready for occupancy by Aug. 25 through “negotiated procurement”. But as I pointed out in a previous blog post, “Revisions and change orders”, the move might be flawed, as it runs counter to the general principles of RA 9184, or the Government Procurement Act. It will make the city government vulnerable to overpriced transactions, or at the least open the terms that would be “grossly disadvantageous” to it.

I’ve been told that this planned move was reached in order to accomplish Mayor Mabilog’s desire to get the City Hall ready for occupancy in time for the celebration of the LGU’s charter day anniversary on Aug. 25. He has been quoted as warning the contractor that if this doesn’t happen, “then there will be no more city hall”. The deadline he gave sounded so absolute everybody seems afraid to displease him, and the city government could be headed to a legal disaster if it is allowed to proceed.

The Mabilog administration is anchoring its plan on Section 53.4 of the Implementing Rules and Regulations (IRR) of RA 9184, which allows negotiated procurement for projects that are deemed “adjacent and contiguous”. As it involves the same project, they assert the planned phase II of the project meets the criteria for one of the exceptions to the general rule of subjecting all procurements through public bidding. The key phrase under this section is that the new contract must be “similar in nature or scope of work”.

Question: do the items of work listed for Phase II of the project meet this requirement of being “similar in nature or scope of work”?

The city government, after consultation with COA regional technical chief Jun Cabahug, says “yes”. I felt otherwise. And I wrote about my reservations in the previous blog. But I went a step further. Yesterday (May 16), I got in touch with Atty. Quintin “Kits” Magsico, who is an authority on the subject. “Kits” worked with the Government Procurement Policy Board (GPPB) and has left government to do consultancy work with procurement as his specialty.

After explaining to “Kits” the details of the case, he didn’t hesitate to tell me that negotiated procurement would not be a proper thing to do for the city government. He pointed out that the first contract involved civil works, or the construction of a building. Most of Phase II involves the supply of elevators, generators, airconditioners, furnitures, fixtures, water pumps and tanks, power and data transmission lines, etc. Under the purview of RA 9184, these items are “goods” that cannot fall under Section 53.4 of the IRR. Public bidding is the proper method of procurement, he said.

Indeed, the exception provided under Section 53.4 of the IRR contemplates a smooth continuity in construction work. It provides a safeguard in the sense that it mandates that the new contract must not exceed the unit cost for the first contract. On this point alone, the plan suffers serious flaws. What will be the basis for determining the unit cost for elevators, airconditioners and other items included in Phase II? By entering into a negotiated contract with FF Cruz, it leaves gaping holes on the pricing of the items. How do we know the city government will obtain the best possible prices for the items? Zilch. It will literally give the contractor blanket authority to do its own shopping.

As Atty. Magsico pointed out, “there is no way you can compare apples with apples”. Phase I is about concrete, steel, glass and wood. Phase II is mostly about equipment and its installation to make the premises ready for occupancy. They are entirely different animals. Hence, the essence of the law in mandating competitive bidding for procurements will be defeated.

Mabilog’s desire to finish the project by Aug. 25 is not justification enough to set aside the mandate of the law. And the scandalous amount of P294 million for the items of work makes it imperative for Mabilog to avoid suspicion (as in fact it has already drawn heavy flak) that it is an elaborate scheme to pad prices and carry out a robbery in broad daylight. The project’s consultant, Conrado Goco, has admitted the original amount of P455 million which the previous administration had approved is enough to get the City Hall finished.

Mabilog should be reminded again and again he is spending the taxpayers’ money. He can’t just tell us he wants the best of everything to be put into the project. Quality need not be expensive, and I am not convinced the “upgrading” of several items which involves jacking up the cost estimates by the millons of pesos is intended to improve the quality. There must be a sinister motive to all of these.

The city loses nothing if the City Hall isn’t finished by Aug. 25. What is more important is that any cloud of doubt already hanging over the project must be allowed to dissipate by proceeding with prudence and transparency. I am certain the cost estimates of P294 million can be trimmed by more than two/thirds and still be adequate to complete a City Hall every Ilonggo can be proud of.