Backhoe scam: NIA justifies 25-year rule

Carlos S. Salazar, National Irrigation Administrator, reacts to my two pieces on irregularities in his agency’s P1.4-billion bidding for backhoes (Gotcha, 27 and 30 Mar. 2009). Verbosity and bombast pared down to fit:

“At the outset we categorically deny that the bidding was anomalous; it was conducted in strict conformity with the Government Procurement Reform Act and its Implementing Rules and Regulations-A.

“There is no irregularity in the timeline, although some procurement activities fell within the long holidays last Dec. 2008. The period from advertisement to bid opening complied with Government Procurement Policy Board prescriptions. Procurement was synchronized with scheduled fund release of the National Development Company. Timeline considered the 2009 dry season, best to repair and rehabilitation of irrigation systems.

“Posting of bid invitation on the Philippine Government Electronic Procurement System (Phil-GEPS) as ‘agricultural machineries and equipment’ was consistent with the purpose for which the heavy equipment will be used. Per the NIA employee who registered the bid invitation, Phil-GEPS requires the inputting of category of goods to be procured. In the Phil-GEPS list it appeared that the nature of the NIA procurement fell under ‘agricultural machineries and equipment’ as these will be used in rehabilitation-restoration of irrigation facilities. NIA cannot be faulted if Monark Equipment Corp. was confused because it could have browsed the Phil-GEPS website to find out the exact nature of NIA’s procurement. The invitation to bid was published in a newspaper where it was clearly specified that NIA intended to procure hydraulic excavators and truck-tractors. Monark did not submit a letter of intent or any communication expressing interest to participate in the bidding. Neither did it request for reconsideration to allow it to purchase the bid documents.

“No provision in the procurement law states that bidders must be at least three years in existence. On the contrary, the law expressly recognizes the authority of the procuring entity to prescribe the minimum eligibility requirements of bidders (such as track record), additional documents, or specifications (such as summary of data, facilities and services) where applicable and necessary to complete the information required for bidding.

“Setting the 25-year business existence requirement was for no other purpose but to ensure that the procurement will be beneficial to the NIA, given the substantial amount involved. It was made to protect the interest of the government. The requirement was a means to ensure that NIA will not be dealing with a second-rate supplier or distributor. It will assure NIA excellent after-sales service to prolong the life of equipment to be procured.

“The Bids and Awards Committee found complete the documents submitted by Civic Merchandising Inc. and Transport Equipment Corp. (TEC). Thus they were rated “passed” in eligibility, technical and financial requirements. But there is no assurance yet that either will be awarded the contract. The procurement process is not yet finished. Consistent with provisions of IRR-A, the firms will be subjected to bid evaluation and post-qualification processes. The submitted documents will be scrutinized and validated to determine responsiveness to NIA requirements.

“It is speculative for disqualified bidder Maxima to claim that it can offer a much lower amount than Civic and TEC. Our records show that the bid offers of Civic and TEC were opened in public while that of Maxima was not by virtue of its disqualification for non-submission of SEC registration certificate. What is certain at this point is that the public already knows the offer of the eligible bidders.

“Regarding the recommendation of the Procurement Transparency Group (TPG) to declare a failure of bidding and to re-bid, we are asking further clarification. In its report, the PTG categorically stated that NIA did not violate RA 9184 and its IRR-A, and yet it recommended that our procurement be declared a failure. In another instance, the PTG recommended strict enforcement of the non-discretionary pass/fail criteria, but there is no finding of violation. We wrote them on Mar. 13 about these inconsistencies. Sadly, we remain unanswered.”

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Salazar acknowledges his bidding process “fell within long holidays.” He didn’t say, though, that there was eleven days of official no work during the month-long period, not counting Saturdays and Sundays.

Salazar then shows unfamiliarity with his job and the law. Like, he insists that irrigation repair-rehab is an agricultural, not construction, work. Would he swear by it before the Senate blue ribbon, which has begun to gather records to investigate this scam? He also claims there’s no provision that bidders only be at least three years in existence. He would do well to read Sec. 23.11.1 (2c) of IRR-A. It sets such minimum age in case no bidder meets the tougher requirement of having previously sold in one deal in the past ten years at least half of the amount now up for bidding.

Speaking of which, Salazar fails to explain that basic flaw: neither Civic nor TEC have sold in the past decade half of P1.4 billion in backhoes. He dwells instead on his contrived 25-year age rule that ostensibly protects government interest and ensures NIA of after-sales service. Yet, why set 25 years; why not 15, or 20 or 30? If going for maintenance-repair, why not a rule instead for nationwide outlets, which Monark and Maxima have but his winners don’t? And why doesn’t he look into industry reports that Civic and TEC were once spare parts dealers, and went into heavy equipment sales only 10 and 15 years ago, respectively?

Lastly, the Procurement Transparency Group, of five government agencies and nine rotating NGOs, did find the 25-rule wrong. It nixed too NIA’s last-minute change in bidding venue without official notice. Salazar misquotes the PTG as finding no violation of the law or its IRR; that portion pertained only to the complaint that one notice of bidding was inadequate. Maybe he thinks I don’t have a copy of the PTG report.

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