Challenged Swiss challenge

A few months ago, President Duterte made a surprising announcement that he wanted to implement the Swiss challenge system in doing government projects instead of going into public biddings.

Not surprisingly, this statement drew reaction from various sectors, and even from the President’s men, especially since bidding for government projects is very much within the ambit of Republic Act  9184, or the Government Procurement Reform Act.

The President cited his preference for a Swiss challenge system as a way of expediting government projects. And in his characteristically vague manner of speaking, the President  explained that the Swiss challenge is a way of assigning projects to a contractor who would be paid as long as the project is done correctly and without corruption.

“Huwag na tayong mag-bidding. Pag mag-bidding, ganun rin. Mas lalo nang [sic] matagal. All projects of the Philippines would be something like a Swiss challenge…ito gawain mo, pagkatapos niyan, if you do it correctly at walang corruption, I will pay you.”

Fair play

The Presidential spokesman was quick to clarify that the President’s statement was in relation to Republic Act 7718, or the Philippine BOT Law, where the Swiss challenge system comes into play when the government receives an unsolicited proposal for a project.

A set of distinct rules in this case kicks in, one that is generally regarded by the business sector as procedures that foster fair play. In fact, the Public-Private Partnerships Center that oversees any Swiss challenge for unsolicited projects was recognized for its preparation procedures, transparency, and fair bidding policies.

So far, of the more prominent projects subjected to a Swiss challenge system, only the NAIA Terminal 3 approved by President Estrada became controversial because of alleged irregularities that surfaced during the administration of President Arroyo.

It must be pointed out, however, that the NAIA 3 project is an offshoot of the early years of the BOT system. Since then, many changes have been introduced that has strengthened its procedures, including that of the Swiss challenge, in accordance with international best practices.

Nevertheless, unsolicited projects that were approved by the Philippine government through Swiss challenge system are not that many. Some of them include North Luzon Expressway (NLEX)-South Luzon Expressway (SLEX) Connector Road and the Metro Rail Transit Line 7 (MRT-7).

Not necessarily faster

These two projects, however, are proof that the Philippine Swiss challenge system, while relatively free of corruption, is not necessarily the fastest way of bringing projects to completion – or even to groundbreaking stage.

The NLEX-SLEX Connector Road project was proposed by Metro Pacific Tollways Corp. in 2010, but the government’s go-ahead for a Swiss challenge came only in December 2015. The deal was approved in September 2016.

The connector road is an 8-kilometer, four-lane elevated toll road that joins the C-3 Road in Caloocan City to PUP Santa Mesa in Manila to SLEX through Skyway 3.

However, failure by the Department of Public Works and Highways to deliver the right-of-way on portions of the Philippine National Railways track has pushed back groundbreaking and construction mobilization up till today.

If its any consolation, had the connector road project been completed on time, it would have been partially useless because of the delay of  the Skyway 3 project which would join it to SLEX. The Skyway 3 project is also delayed by right of way issues too.

The connector road project is now a decade in the making.

With the MRT-7 project, San Miguel Corp. presented this in 2001, and received approval to start construction in 2008. However, delays caused by problems in the financial closure and changes in the original scope of work had pushed back its groundbreaking to 2016.

MRT 7 is 22.8-kilometer rail transit system with 14 stations connecting San Jose, Bulacan to Quezon City. Project completion is targeted for the end of 2019. That’s almost two decades from the time the proposal was submitted to the government.

Haste makes waste

When President Duterte expressed his preference for the Swiss challenge system, it seems he had already one specific project in mind: the multi-billion-peso rehabilitation of battle-scarred Marawi in Mindanao.

In December 2017, or more than a month before the President’s controversial declaration, a consortium of five Chinese and three Filipino companies submitted a proposal to rebuild a large portion of what had been destroyed during the battle to rid Marawi of armed ISIS warriors.

Calling themselves the Bangon Marawi Consortium, their P17.2-billion proposal included underground utilities for water, electricity and telecommunications, centralized waste water treatment, parks, health centers, schools, public market, government offices, and even a 5,000-seating-capacity conference hall.

A Swiss bidding was immediately called where five other companies submitted challenging bids. BMC was chosen, but after months of waiting, BMC was not able to submit all the needed documents needed by the government’s technical working group.

After declaring a failed bid, the government is looking at another Chinese firm, one of the five companies that challenged BMC’s proposal, to take over. Unfortunately, questions of irregularities and absence of transparency are contributing to delays. Is this another NAIA 3 project in the making?

Meanwhile, Marawi’s rehabilitation proceeds at snail’s pace. This is definitely one example where fast-tracking a Swiss challenge did not deliver the goods fast enough.

The Swiss challenge system has its good and bad points, and close to three decades of it being used for bidding of Philippine infrastructure projects should have shown what areas it needs to be improved on. For sure, however, it should not be abused.

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