GSIS files graft case vs ex-senior vice president, IBM country manager

MANILA, Philippines - The Government Service Insurance System (GSIS) has filed a graft case against one of its former senior vice presidents and the country general manager of IBM Philippines for engaging in a contract that was not authorized by the agency’s budget office.

The GSIS legal department headed by Estrella Elamparo filed the complaint against former GSIS senior vice president for information technology services group Edilberto Ocampo and IBM Philippines chief James Velasquez before Pasay City Assistant City Prosecutor Evangeline Mendoza-Francisco.

In the complaint, Elamparo averred that Ocampo and Velasquez illegally extended the use by the GSIS of IBM’s OS/390 software program from April 1 to June 30, 2008 at the cost of P4,878,686.40 per month in a mere “conforme” letter they had signed.

The contract extension was forged by the two parties reportedly without the necessary certification by the GSIS General Accounting and Budget Office as to the availability of funds, as well as a confirmation that the extension had been included in the 2008 Annual Procurement Plan of the GSIS.

“To highlight the irregularity of the transaction, the request for the direct contracting and payment of the use of the IBM OS/390 software license from April 1 to June 30, 2008 was submitted for approval only after the execution of the aforementioned unlawful extension between respondent Velasquez and respondent Ocampo,” said Elamparo in the complaint.

Elamparo had also sought, in a complaint-letter dated Feb. 11, 2009, an investigation by the National Bureau of Investigation (NBI) into an apparent attempt by IBM Philippines to dictate the bid price and to pressure a bidder of a GSIS project to back out.

She told NBI Director Nestor Mantaring that sometime during the last quarter of 2008, the GSIS Bids and Awards Committee invited bids for the supply, installation, configuration, testing and implementation of an additional IBM Unix Server, drawing three prospective bidders, namely Questronix Corp., AC Corp. and Strategic Inc.

While all three bidders turned out to be authorized dealers of IBM Philippines, AC Corp. complained to GSIS of IBM’s attempt to convince them to back out of the bidding process.

An initial inquiry by the GSIS revealed that IBM Philippines grants different discount percentages to its dealers or distributors, from a high of 70 to 80 percent to a low of 30 percent, Elamparo said.

“Naturally, this means that a dealer with a bigger discount can afford to submit a bid price much lower than the bid price of dealers with lower discounts. Considering that all the bidders are dealers or distributors of IBM Philippines, it is as if IBM Philippines actually dictated the price of its dealers,” she wrote Mantaring.

Meanwhile, IBM said it conducts business with the highest standards of integrity, and has done so throughout its engagement with GSIS.

IBM expressed opposition on the allegations made by the GSIS.

“IBM and GSIS have worked closely to address the concerns raised and IBM continues to deliver on our commitments to GSIS. We also continue to have a broad relationship with the Philippine government. It would be inappropriate to discuss further details,” a statement from the IBM Marketing and Communications Office read.

If the charges are proven, the act of IBM Philippines will be a circumvention of the proscription to manipulate the outcome of the competitive bidding under Republic Act 9184 (Government Procurement Reform Act), specifically but not limited to Section 65 (b 1 to 4).

The cited provisions deemed illegal the following: When two or more bidders agree and submit different bids knowing that the bid or bids of one or more was so much higher that it cannot be honestly accepted; 2) when a bidder maliciously submits different bids through two or more persons, corporations, partnerships, etc.; 3) when two or more bidders enter into an agreement which calls upon one or more of them to refrain from bidding or to withdraw bids; and 4) when a bidder, by himself or in connivance with others, employs schemes which tend to restrain the natural rivalry of the parties.

The GSIS-IBM contract for the IBM OS/390 software was good only for a one-year period from Jan. 1, 2007 to Dec. 31, 2007, but it was extended for three months from Jan. 1, 2008 to March 31, 2008 pending the migration by the GSIS to an “Open” computer application system.

The January-March 2008 extension went through the proper processes, but the April to June extension forged by Ocampo and Velasquez reportedly did not.