Splitting contracts: The secret to corruption

Do you know how unscrupulous lawmakers, contractors and district engineers (DEs) have gotten away for years with corrupting flood control and other similar projects?

One modus operandi is splitting the contracts into small packages for two main reasons:

1) To evade procurement laws. For DEs, the delegated authority to approve infrastructure projects is only for those amounting to up to P150 million. Anything above that is beyond the authority of the DE. That is why they split the contracts and keep these below P150 million.

2) To keep the funds exclusive within their small circle of corruption so that even smaller but favored contractors can bid.

Here’s how the scheme goes: if a district has a budget of say a P100 billion for a project, this would be split into smaller contracts. It’s no wonder that the amounts are similar, almost identical in certain districts, as earlier pointed out by Sen. Ping Lacson in his bombshell exposé on flood control projects.

If you comb through the list of projects, some of which were later found to be ghost or substandard structures, you will see that the contracts go to the same favored companies, which, as the investigations have already shown, are in cahoots with the DEs.

For example, in the first district of Bulacan, I got hold of a copy of the DPWH’s Post-contract Award Disclosure for January 2024. There were 83 projects on the six-page list, which identified the Bulacan first district engineer’s office as the implementing agency.

I will not go into detail about each of the 83 projects but to illustrate, I will focus on the first 16 projects on the list – mostly Riverbank Protection Structures – which totaled P1.35 billion.

One look at the list already raises suspicions because of the uniform amounts – they were all eerily similar:

I. Riverbank Protection Structures along Balagtas River, Balagtas Bulacan:

1) P96.499 million

2) P96.499 million

3) P96.499 million

4) P96.499 million

5) P96.499 million

6) P96.499 million

II. Riverbank Protection Structures at Hagonoy, Malolos and Calumpit.

7) P77.199 million

8) P77.199 million

9) P77.199 million

10) P77.199 million

11) P77.199 million

12) P77.199 million

13) P77.199 million

14) P77.199 million

15) P77.199 million

16) P77.199 million

The whole list of 83 projects shows similar distinct amounts.

This is something like the Mary Grace Piattos, etc. list, flood control edition.

‘Hello Darcy – and Anna’

Interestingly, the first 16 projects were divided only among five contractors with Darcy and Anna Builders & Trading – the contractor that Sen. Ping Lacson earlier dubbed as seemingly a “ghost” company – getting six of the 16 projects while Wawao Builders, which ranked 12th on the Top 15 favored contractors, got four of the first 16 projects in this Bulacan district.

The ongoing investigation at the Senate must look into this splitting of contracts, which is not allowed under Republic Act 9184 or the Government Procurement Reform Act.

The Commission on Audit, citing Section 54.1 of the implementing rules and regulations of RA 9184, states:

“Splitting of Government Contracts is not allowed. Splitting of Government Contracts means the division or breaking up of GOP contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and this IRR, specially the necessity of public bidding and the requirements for the alternative methods of procurement.”

Section 54.3 states:

“For infrastructure projects to be implemented by phases, the Procuring Entity shall ensure that there is a clear delineation of work for each phase, which must be usable and structurally sound. It shall also ensure the conduct of the detailed engineering activities for each phase as provided for in Annex ‘A’ of the IRR of RA 9184.”

Penalties

Furthermore, under RA 9184, splitting of contracts is not a minor infraction. It is a serious offense. The law is explicit: any public officer who divides a project into smaller contracts to evade public bidding requirements will face administrative and criminal sanctions.

“Officials who engage in this practice can be charged under the Anti-Graft and Corrupt Practices Act (RA 3019), the Revised Penal Code and other applicable laws. The penalties are heavy: from suspension or outright dismissal from service, to perpetual disqualification from holding public office, civil liability for damages and even criminal liability with fines and imprisonment,” according to Section 65 of the law.

But the law does not stop at public officials. If contractors collude in splitting contracts, they too are punished.

They may be blacklisted and their licenses revoked. They may also be charged with plunder.

In short, splitting contracts is not only an abuse of process but a crime. RA 9184 treats it as a betrayal of public trust, punishable by dismissal, blacklisting and even jail time.

Against this backdrop, newly appointed Public Works and Highways Secretary Vince Dizon must race against time to fix the problems he inherited at the DPWH, including this malpractice.

The Marcos administration must also by now already be filing charges against those found guilty of these abuse of process and criminal activities.

Ugly reality

Saturday’s floods, which submerged parts of Quezon City, some for the first time ever, should serve as another warning. If we don’t act now and punish those guilty of corrupting flood control projects, every barangay, city, municipality and province in this country may soon be submerged in deep waters.

We are no doubt living in dangerous times, drowning in calamities and the ill effects of corruption.

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Email: [email protected]. Follow her on X @eyesgonzales. Column archives at EyesWideOpen on FB.