Ex-DOTr Chief, 16 Others Rapped Over PHP4.2-B MRT Upkeep Deal

Ombudsman Conchita Carpio Morales on Monday filed graft charges against former Department of Transportation (DOTr) secretary Joseph Emilio Abaya and 16 others in connection with the alleged irregular Metro Rail Transit (MRT) 3 maintenance contract.

The other respondents are former DOTr Undersecretaries Edwin Lopez, Rene Limcaoco and Catherine Jennifer Francis Gonzales; former MRT-3 General Manager Roman Buenafe, Camille Alcaraz (Assistant Secretary for Procurement), Ofelia Astrera (Vice-Chairperson, MRT3 Bids and Awards Committee), Charissa Eloisa Julia Opulencia, Oscar Bongon, and Jose Rodante Sabayle.

Also included in the indictment are private respondents Eldonn Ferdinand Uy of Edison Development and Construction, Elizabeth Velasco of Tramat Mercantile Incorporated, Belinda Tan of TMI Corporation, Inc., Brian Velasco of Castan Corporation, and Antonio Borromeo, Jun Ho Hwang and Elpidio Uy from Busan Universal Rail, Inc. (BURI).

The special panel of probers found that in October 2014 and January 2015, the DOTr conducted two biddings for the three-year maintenance service contract for the MRT3.

Both biddings failed due to non-submission of bids.

On Jan. 28, 2015, Abaya issued a Special Order creating the MRT3 BAC for the procurement of goods, infrastructure projects and consulting services of the MRT3 system.

In March 2015, the MRT3 BAC issued Resolution No. 002, Series of 2015, recommending that the government resort to Negotiated Procurement through Emergency Cases under the Government Procurement Reform Act.

Documents showed that the contract was set to be awarded to a single maintenance service provider that would establish a single point responsibility for the maintenance of the MRT3 system at PHP2.270 billion for three years; general overhauling of 43 units of light rail vehicles at PHP1.013 billion for three years; total replacement of the signaling system at PHP900 million for two years; additional maintenance works at PHP67.940 million for six months; or for a total approved budget for the contract of PHP4.2 billion.

On Oct. 21, 2015, the following companies submitted their proposals: Busan Joint Venture; Joint Venture of DM Consunji, Inc., Beta Electric Corporation, Baudis Bergmann Rosch Rail Automation GmbH, and Hamburg Consult GmbH; and Joint Venture of Schunk Bahn-Und Industrietechnik GmbH and Comm Builders and Technology Philippines Corporation.

The Busan JV is composed of the Edison Development and Construction; Tramat Mercantile Incorporated; TMI Corporation, Inc.; Castan Corporation; and BURI.

During the evaluation process, all offers were found to be deficient in their eligibility and technical documents and were given the opportunity to cure the defect.

On Oct. 28, 2015, the negotiating team declared the Busan JV as being the sole entity, which passed the eligibility on technical and financial documents evaluation.

As a result, the negotiating team recommended to the MRT3 BAC that the bid of Busan JV be declared as the single calculated officer and that post-qualification proceedings be conducted.

After post-qualification, the negotiating team recommended to the MRT3 BAC the award of the MRT3 long-term maintenance contract to the Busan JV in the amount of PHP3.8 billion as the legally, technically and financially eligible joint venture.

On Dec. 21, 2015, the MRT3 BAC issued Resolution No. 14 Series of 2015, recommending that the project be awarded to Busan JV.

On Jan. 7, 2016, the DOTr, the MRT3 and the Busan JV entered into a contract for the long-term maintenance contract.

In its Consolidated Annual Audit Report for 2016, the Commission on Audit (COA) said the “DOTr still failed to provide the riding public with a safe and comfortable transport system even with the procurement and delivery from August 2015 to January 2017 of 48 new LRVs (light rail vehicles) with a total cost of PHP3,759,382,400.”

The special panel of probers found that the respondents extended unwarranted benefits, advantage and preference to the contractor when it awarded the project to Busan JV, an ineligible and unqualified entity.

In its 88-page consolidated resolution, the Ombudsman said “as the Busan JV’s offer was still considered as successful, the potential JV partners must enter into a Joint Venture Agreement (JVA) in accordance with its rules. But they did not. Still, the Busan JV was awarded the contract- yet another violation of the rules under R.A. No. 9184.”

Procurement documents showed that it was only Eldonn Uy of Edison Development and Construction that executed a “Statement to enter Into a Joint Venture” purportedly as the authorized representative of all the members of the Busan JV.

“Since only one potential partner of the Busan JV submitted the required statement, it should have been disqualified from participating further in the negotiated procurement since it lacked an eligibility requirement,” the Ombudsman added.

The special panel also found irregularity in the award when Busan JV was allowed to simply submit a Certificate of Registration of BURI as a Special Purpose Company (SPC) instead of a valid JVA.

The action becomes even more suspect as it was Alcaraz who wrote the Securities and Exchange Commission to facilitate the registration of Busan JV as an SPC.

“This Office notes that [Alcaraz] was the DOTr Assistant Secretary for Procurement and the Chairperson of the MRT3 BAC. Her action thus reeks of impropriety as it gives the impression that she was acting in favor of the Busan JV,” the Ombudsman said.

The special panel also cited irregularities in the amendment of the original net worth requirement and absence of Bill of Quantities (BOQ), which favored Busan JV.

Based on their 2014 audited financial statements, the net worth of Tramat in 2014 was only PHP1.9 million while Edison’s was PHP383.5 million only, both below the PHP1-billion requirement under the amended Instructions to Offerors.

In its financial offer, Busan JV failed to include its BOQ as required in the Instructions to Offerors.

“There are no existing BOQs for the overhauling of the 43 LRVs and the total replacement signaling system components of the MRT3 long-term maintenance contract. Having failed to submit the required BOQ, the Busan JV should have been disqualified outright from the procurement process,” the Ombudsman said.

The Ombudsman said Busan JV was not technically, legally and financially capable to undertake the MRT3 long-term maintenance contract.

Despite its being unqualified, the contract was still awarded to it by the DOTr, in violation of Section 53 of the RIRR of R.A. No. 9184, which requires that in negotiated procurement, the procuring entity should negotiate with a technically, legally and financially capable supplier, contractor or consultant.

The Ombudsman added said “as then DOTr Secretary, Abaya had supervision and control over the officials under him and was immediately and primarily responsible for all government funds and property pertaining to his agency at the time of the questioned transaction.”

“By allowing the award of the contract to the Busan JV despite the attendant glaring irregularities, Abaya deliberately ignored applicable laws, rules and regulations, and standard operating procedures, falling short of or disregarding the required competence expected of him in the performance of his official functions,” it added. (PNA)