Clarifications on the MRT-3 maintenance contracts

I write in reference to recent columns of Mr. Jarius Bondoc published in your newspaper regarding the maintenance service contracts of the Metro Rail Transit III (MRT-3) system. Specifically, these are the columns published on April 21 , 23, and 25, as well as May 26, 28, and 30, 2014.

I would like to make the following clarifications in order to set the record straight.

As you are aware, the MRT -3 project was realized in the 1999 through a Build-Lease Transfer (BL T) arrangement pursuant to the Build-Operate-and-Transfer Law (Republic Act No. 7718, as amended).

The BL T Agreement between the Department of Transportation and Communications (DOTC) and the Metro Rail Transit Corp. (MRTC) provided that the procurement of MRT-3’s maintenance requirements is MRTC’s obligation. In exchange, the DOTC would pay MRTC for the cost of maintaining the system.

During his stint as DOTC Secretary, Mar Roxas implemented a policy environment wherein the department’s existing contracts were subjected to review, in order to determine whether they were advantageous or disadvantageous to government. The purpose was to ensure that government was not on the losing end of the stick of its multi-million and even multi-billion peso contracts.

At that time, MRTC’s maintenance provider was Sumitomo. Its contract was in the amount of $1,433,333 per month plus $17,200,000 per year. It had been providing its services to MRTC for more than ten (10) years.

On 4 October 2012, MRTC wrote the DOTC, informing the latter that it would no longer procure a maintenance service contractor once Sumitomo’s contract would expire on 19 October 2012.

Given the short period of time left before said contract would expire, the DOTC resorted to a simplified bidding process in line with the Procurement Law (Republic Act No. 9184) beginning in the first week of October 2012. This decision was made in order to prevent a stoppage of MRT-3’s operations, which would have severely disrupted the daily transportation needs of its close to 600,000 riders.

The alternative would have been to continue operations despite the lack of a maintenance provider, which we never even considered since it would have endangered passenger safety.

In these situations, RA 9184 allows what is commonly called an emergency procurement, wherein the government agency directly negotiates with a single entity to provide the services required.

In the DOTC’s case, we had no choice but to pursue the emergency procurement mode for MRT-3’s maintenance services in order to avert a stoppage of operations. We, however, deemed it more prudent to invite three qualified companies to submit proposals, instead of directly negotiating with only one (1) company. Hence, the DOTC resorted to a simplified bidding process to address the situation, capping the project cost at $1,433,333.00 per month.

The 3 entities invited to participate in the simplified bid were: Sumitomo, which as mentioned had experience in maintaining MRT-3 itself; Comm Builders and Technology Philippines Corp. (CB&T), which had been the maintenance contractor of the Light Rail Transit Authority (LRTA); and Miescor Rail, which had also been a maintenance contractor of LRTA. Sumitomo partnered with TES-P, and submitted a proposal to provide the services in the amount of $2,000,000 per month. It, however, made a reservation that it would not warrant its services.

Miescor Rail partnered with Genials, and also submitted a proposal, in the amount of $1,433,333 per month, which was exactly the ceiling price of the bid. CB&T, meanwhile, partnered with Philippine Trans Rail Management and Services Corp. (PH Trams), and submitted a proposal in the amount of $1,150,000 per month.

The DOTC thus awarded the maintenance contract to the CB&T-PH Trams Joint Venture, since its bid was the most advantageous of the 3 submissions. This also ensured that MRT-3 operations would continue even after Sumitomo’s contract with MRTC would expire, to the benefit of the riding public.

Let me be clear that, in awarding the contract, passenger safety was at the forefront of our minds. Nevertheless, despite the urgent action required, we still managed to undertake a bidding process which allowed us to solicit an advantageous contract in accordance with the Procurement Law.

In spite of the fact that this contract was substantially less costly than the previous Sumitomo contract, we were assured that a qualified company with sufficient track record would provide the maintenance services. To be specific, it was CB&T — not PH Trams — whose track record was considered for the simplified bid.

I  hope that this clarifies certain questions or doubts raised in connection with MRT-3’s maintenance contracts. Thank you for allowing us to convey our side, and I wish you the best as you continue informing the public of the DOTC’s much-needed efforts to improve the country’s transportation systems. — JOSEPH  EMILIO AGUINALDO ABAYA, Secretary, Department of Transportation and Communications