Uncured

Those were strange words emanating from DICT Acting Secretary Eliseo Rio: “Congress can cure the inadequacies of Mislatel’s franchise, taking into consideration the public interest.”

The health of that franchise has been put in doubt the past few days. It is at least arguable that Mislatel’s franchise could be considered revoked because it violated the conditions of the grant.

Mislatel was obligated by the franchise it holds to operate a year after the privilege was granted. That was over two decades ago. The company, according to its own filings with the SEC, never operated.

Furthermore, the franchise holder was required to submit to the Philippine Stock Exchange 30% of its shares of stock to be sold to the public. That, too, was never done.

If Mislatel’s franchise is considered revoked, then the sky falls on the company’s bid to be named the third major telecommunications player in the country. The whole effort to bring in a new player to challenge the “duopoly” of the existing telecoms providers will be for naught.

No one saw this problem cropping up – not the least the DICT that was supposed to check the credentials of all accredited bidders for the third major telecoms player. But it was first and foremost DICT’s responsibility to do the due diligence in this case. They disqualified all the other bidders ostensibly because they failed in one or another of the voluminous requirements for qualification in the bidding. The Mislatel-Udenna consortium won the bid by default.

If we go by the stringent procedures set forth by the DICT, the Mislatel-Udenna consortium might have been itself disqualified. That would have left the effort to groom a third telco player empty-handed.

Fortunately for the Mislatel-Udenna group, franchises do not extinguish themselves. In the existing rules, it is not clear who voids a franchise granted by legislative power. If DICT failed in doing its due diligence, Congress failed to invalidate an awarded franchise when it failed to start up operations during the prescribed period.

Sen. Grace Poe, chair of the Senate public services committee, proposes a “cure” to this comedic situation. She is seeking Senate approval for the transfer of the franchise held by Mislatel to the consortium the non-performing company is now part of. That will help protect the DICT designation of the third major telecom player from prospective lawsuits arising out of the failings associated with the original award.

This is, of course, workable. But it leaves a disturbing question among the disqualified players: Shouldn’t they have been given the same opportunity to “cure” their own deficiencies in the course of bidding process?

That question is now academic in the face of a clear consensus to get a third player to start up as soon as possible. Doing so is considered the “public interest,” outweighing procedural failings and all the red flags raised.

Sloppy

It is not only in processing the bidding for a third telecoms player that the DICT may be found sloppy in its procedures. The department responsible for marking out the country’s technological future has flip-flopped in the bidding process for a P512 million cyber security project for government.

When the DICT conducted bidding for this project, the head of the bids and awards committee (BAC) was Assistant Secretary Allan Cabanlong. During this time, Cabanlong was concurrently the head of the DICT cyber security management center. Therefore, he is also the end-user of the project being bid out.

That is a red flag, to be sure. Cabanlong, as end-user, should have inhibited himself from sitting at the BAC.

On Aug. 6, 2018, the DICT-BAC received bid submissions for the project. Five companies submitted bids: Micro-D International, Verint Computer Systems, Inter-Island Information Systems, Blackwater Philippines Security Solutions and Questech.

George Tadrio, a member of the BAC and subordinate of Cabanlong at the cyber security management center, quickly dismissed the bids of all other bidders apart from Verint. The other bidders were dismissed on technicalities that might have been tackled during the post-qualifications process. Both Cabanlong and Tadrio, sitting beside each other during the opening of the bids, were observe to be lenient toward Verint, whose submission also contained similar technical issues.

The Cyber Security Community of the Philippines (CSCP), sitting as an independent observer during the bid proceedings, raised several red flags. Cabanlong took up two slots – as chairman and as member – in the BAC to meet the required quorum. He did not clearly disclose he was end-user of the project.

On Aug. 10, 2018, Acting Secretary Rio ordered the cancellation of the project and declared a failed bidding. He cited the failure of the BAC to have the required five members present during the opening of bids.

Cabanlong appealed to the Government Procurement and Policy Board – but without disclosing he was end-user of the project. He later circulated to other DICT officials an article showing President Duterte signing an MOU with Verint. This seemed to imply the President preferred that particular company.

On Oct.22, 2018, the DICT issued a letter granting Verint’s motion for reconsideration. This basically upheld the decision of the undermanned BAC.

On Nov. 26, 2018 the DICT technical working group (TWG) rejected Verint’s proposal, finding it deficient on several aspects. After a few days, the TWG surprisingly changed its own assessment and found Verint to be fully compliant.

On Dec. 7, 2018, the other bidders (who had assumed the bidding failed) were informed Verint passed post-qualification. A notice of award was issued a week after.

Something is really odd here.