Author Topic: Capitol Denies Bidding Anomaly  (Read 1913 times)

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Capitol Denies Bidding Anomaly
« on: February 22, 2009, 08:44:21 AM »
By Kit Bagaipo
The Bohol Chronicle

Two Capitol officials found no improprieties in the conduct of bidding for P168-million worth of heavy equipment to be purchased by the provincial government.

Provincial Legal Officer Atty. Handel Lagunay conducted an assessment on how the Bids and Awards Committee (BAC) carried out the procurement process upon orders issued by Gov. Erico Aumentado who earlier declared a war against corruption at the Capitol.

Said to be the biggest single purchase of heavy equipment in recent years, the bidding took the spotlight after a disenfranchised Japanese supplier filed protests to the BAC for allegedly giving “undue advantage to preferred suppliers”.

Meanwhile, during the Sangguniang Panlalawigan (SP) session last Tuesday, provincial Board Member Cesar Tomas Lopez lashed out at the committee for its “failure to comply” with key provisions of the procurement law that again placed the provincial government “in a bad light due to the fact that the manner by which goods [are purchased] cannot face up to public scrutiny”.
However, Lagunay stressed there is “no basis to the allegation that the bidding for the P168-million heavy equipment is rigged”.

“The BAC followed the rules and procedures under RA 9184 (Government Procurement Law) and its implementing rules and regulations (IRR),” Lagunay said.

Speaking during the weekly radio program “The Governor Reports” on Friday, the provincial attorney recommended to the governor that the BAC should proceed as “there is no basis” to conclude that the bidding is a failure.

Lagunay also recommended that the protest filed by Japanese supplier Kowa Tsusho Ltd. be resolved first before the procurement contract is awarded to winning bidders.

Likewise, Provincial Administrator Atty. Tomas Abapo Jr. also believed that the BAC and its technical working group (TWG) “have done what is right and the bidding process had been done right since the start”.

Abapo recalled how he reminded BAC chair and General Services Officer Engr. Rosalindo Yu that “the bidding should be above board” considering the huge amount involved, and “there will be pressures along the way”.


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Han Delaguna

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Re: Capitol Denies Bidding Anomaly
« Reply #1 on: February 23, 2009, 06:33:08 PM »
Mike,

To give the complete picture how I assessed the situation, I am uploading my report: 

-oOo-


19 February 2009

For   :   THE GOVERNOR

Re   :   ASSESSMENT ON THE CONDUCT OF THE BIDS AND AWARDS
                COMMITTEE ON THE PROCUREMENT OF HEAVY EQUIPMENT WITH
                AN ABC OF P168 MILLION, PROJECT REFERENCE NO. 001.




   Acting on your directive, herewith is my assessment on the conduct of the Bids and Awards Committee (BAC) in the procurement for SUPPLY AND DELIVERY OF HEAVY EQUIPMENT with an Approved Budget for the Contract (ABC) of P168,296,000.00 following the complaint of Atty. Salvador Grupo on behalf of Kowa Tsoshu Co. Ltd.

   
On the period set from the first day of advertisement up to the submission and opening of bids

   The complaint alleged that considering the amount of the project, Section 21.2.2 of the IRR-A of R.A. 9184 should have been observed which provides that the periods from the date of advertisement and/or first day of posting of the Invitation to Apply for Eligibility and to Bid (IAEB) up to the opening of bids should be:

•   Maximum of 30 calendar days for goods;
•   Maximum of 36 calendar days for infrastructure projects worth P50 million and below; and
•   Maximum of 50 calendar days for infrastructure projects worth above P50  million.

   The complaining prospective bidder said that there was no ample time to prepare the bid because the period from the pre-bid conference on January 23 up to the submission of bids on February 9 is only 16 days. Accordingly, the 30-day period should be up to February 23.

A close reading of Section 21.2.2 shows that the 30-day period is counted from the date of advertisement or first posting of the IAEB, not from the date of pre-bid conference.

   It is worthy to note that the third paragraph of Section 38.1 of the IRR-A states:

“The maximum periods and earliest possible time for action on specific procurement activities are provided for in Annex “C” of this IRR-A. In case the deadline for each activity falls on a non-working day (i.e., Saturday and Sunday), legal holiday, or special non-working holiday, the deadline shall be the next working day.”

   The said Annex “C” provides that the earliest possible time to complete the bidding process from the date of advertisement or first posting up to the issuance of the Notice to Proceed, are as follows: goods, 28 calendar days (cd); civil works, 43 cd; and consulting services, 48 cd.

   A question was raised whether the heavy equipment should be classified as goods or infrastructure project (civil works). This question is answered in Section 5(k) of the IRR-A which states:

“k)   Goods. Refer to all items, supplies, materials and general support services, except consulting services and infrastructure projects, which may be needed in the  transaction of public businesses or in the pursuit of any government undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for construction, or personal property of any kind, including non-personal or contractual services such as repair or maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or analogous services, as well as procurement of materials and supplies provided by the procuring entity for such services. The term “related” or “analogous services” shall include, but not limited to, lease or purchase of office space, media advertisements, health maintenance services, and other services essential to the operation of the procuring entity.” [Underscoring supplied.]

   Based on the foregoing definition, there is no doubt the heavy equipment to be procured are “goods” because they are items needed in the pursuit of a government undertaking, project or activity.  In Annex “C” on the earliest possible time for procurement of goods, advertisement/posting of IAEB is 7 cd, and pre-bid conference is at least 12 cd before the submission of bids. The earliest possible time, therefore, is a minimum of 15 calendar days.

   Taking together Sections 21 and 38, the BAC is not bound to set the deadline for submission and opening of bids exactly at the maximum of 30 calendar days for goods because the rules also provides for the earliest possible period to complete the entire bidding process which is only 28 calendar days. 

   The IAEB was posted and published at various outlets. Based on the record provided by the BAC Secretariat, the actual dates of posting or publication and corresponding period up to the submission and opening of bid on February 9, 2009 are as follows:

               Date                 Period up to Bid Opening
Sun*Star Daily (Cebu)   January 8, 2009   32 calendar days
Cebu Daily News      January 15, 2009    25 calendar days
The Bohol Chronicle      January 11, 2009   29 calendar days
PGSO Bulleting Board   January 8, 2009   32 calendar days
Old Capitol Façade      January 8, 2009   32 calendar days
Provincial Library Lobby   January 8, 2009    32 calendar days
www.bohol.gov.ph      January 7, 2009    33 calendar days

   From the foregoing, the period up to the submission and opening of bids is well within the range of maximum and minimum periods allowed under the implementing rules and regulations. It will be noted also that the 30th day from January 8, 2009 is February 7 which is a Saturday. Thus, pursuant to Sec. 38.1 (3rd par.), the bids will be opened on the next working day, Monday, which in this case is February 9.


On the refusal of the BAC to postpone the deadline for submission and opening of bids


   We found no provision in the IRR-A that allows the BAC to postpone the bidding at the request of a prospective bidder. After the schedule of procurement activities have been published, to approve such request coming from a prospective bidder could be perceived as giving such bidder undue favor to the disadvantage of the other bidders managed to submit their bids as scheduled.

   Further, according to the end-user, they hope to take advantage of the favorable weather condition during which the heavy equipment will be used in the repair and improvement of provincial roads. Such favourable climate might be missed if the bidding process is delayed.

   On this point, pertinent provision of Section 25 of R.A. 9184 provides:

   â€œSec. 25. Submission and Receipt of Bids.—A bid shall have two (2) components, namely the technical and financial components which should be in separate sealed envelopes, and which shall be submitted simultaneously. The bids shall be received by the BAC on such date, time and place specified in the invitation to bid. The deadline for the receipt of bids shall be fixed by the BAC, giving it sufficient time to complete the bidding process and giving the prospective bidders sufficient time to study and prepare their bids. The deadline shall also consider the urgency of the procurement involved.” [Underscoring supplied.]

xxx   xxx   xxx



On the selection of newspapers where the Invitation to Apply for Eligibility and to Bid (IAEB) was published

   It is alleged that Cebu Daily News and Sun*Star Daily are only local newspapers based in Cebu City. Upon verification, however, it is established that Cebu Daily News (an affiliate of the Philippine Daily Inquirer) is also in circulation and sold at newsstands in the Provinces of Oriental Negros, Bohol and Zamboanga del Norte. Sun*Star Daily is also in circulation in Metro Manila, Davao City, and some parts in the Visayas. Obviously, these newspapers are not just “locals.” The fact that two (2) participating bidders are based in Quezon City bolsters the fact that the said newspapers are of nationwide circulation. Thus, we find no deviation from the rules committed by the BAC on this regard.


On the period of making available the bid documents

   It is alleged that the bid documents were not made available at the time the IAEB was first published and posted nor at the time of the pre-bid conference. The BAC denied this allegation saying that just because the issuance of bid documents is set on January 23, 2009 it does not mean that the bid documents were not available for the bidders right after the IAEB was posted or published. The BAC further said that the fact 2 bidders were able to get their bid documents immediately after the pre-bid conference debunks the allegation that the same were not yet ready at that time.

After carefully reading of the letters of the counsel of the prospective bidder, it is found that there is no allegation or statement that the prospective bidder ever asked for copies of the bids documents after the invitation was first posted and published and was refused. Thus, the allegation that the bid documents were not yet ready at the time the IAEB was first published is a non-issue.

   The impression of the complaining prospective bidder that the bid documents were not yet prepared is based on the discussion which followed after a bidder asked clarification on the turbo-charge specification of the dump trucks and other equipment and the cost of the bid documents. 

Going over the minutes of the pre-bid conference, we find nothing to support the contention of the prospective bidder. A pre-bid conference is the time to clarify matters regarding the bidding, including the specifications of the equipment which are most responsive to the needs of the procuring entity and it is only natural that such discussions will occur. Discussions regarding specifications at the time of the pre-bid conference does not mean that the specifications were not yet finalized at that time. Further, the cost of the bid documents are already fixed and stated in the published IAEB to be in accordance with Provincial Ordinance No. 2004-21.


On the minimum specifications of the equipment

   The complaining prospective bidder alleged that the specifications of the equipment already show that there is a preferred bidder. In other words, the specifications were tailor-made for a particular brand.

   We sought clarification from the BAC and the TWG. They stressed that the specifications were only minimum requirements. As the BACH chair said during the pre-bid conference, the preference on specifications are only descriptive but not restrictive. Any bidder who can offer an equipment with specifications which are above the minimum requirement is not precluded from participating the bid and can be ultimately awarded with the contract.

   There should be no confusion between preferred specifications on one hand and a preferred brand or bidder in the other. The two are not the same. It is the latter which is prohibited by law while the former is a vital factor in awarding the project.


On the allegation that the bidding is rigged

   We find no basis to the allegation that the bidding for the P168 million heavy equipment is rigged. The BAC followed the rules and procedures under R.A. 9184 and its IRR-A. There are six (6) bidders who participated in the bidding. The BAC has already conducted post-qualification procedures.

As of date, the results are as follows:


1. Brand new backhoe/hydraulic excavator with breaker
(2 units) ABC: 16,236,000.00   
Bidders:
a. Camec JCB Corp., Quezon City
b. Civic Merchandising, Mandaue City
c. RDAK Transport Equipment, Cebu City   (lowest bidder)
Status at post-qualification: Failed. Line of business per Mayor’s Permit is for “trucks and jeepneys only”

2. Brand new bullodozer with ripper
(2 units) ABC: 36,372,000.00   
Bidders:
a. RDAK Transport Equipment, Cebu City (sole bidder)
Status at post-qual: Failed. Line of business per Mayor’s Permit is for “trucks and jeepneys only”

 
3. Brand new payloader
(2 units) ABC: 17,136,000.00   
Bidders:
a. Camec JCB Corp., Quezon City
b. JVF Commercial, Quezon City   (lowest bidder)
c. RDAK Transport Equipment, Cebu City
Status at post-qual: For further post qualification proceeding, technical inspection and testing of “Holland” brand being offered.
      
4. Brand new dump trucks
(10 units) ABC: 40,800,000.00   
Bidders:
a. Camec JCB Corp., Quezon City
b. Civic Merchandising, Mandaue City
c. RDAK Transport Equipment, Cebu City
d. Pasajero Motors Corp., Mandaue City (lowest bidder)
e. Isuzu Cebu, Inc., Mandaue City
Status at post-qual: Failed. Experience of relevant/similar projects does not meet 50% of the ABC.
      
5. Brand new articulated motor road grader
(4 units) ABC: 34,000,000.00   
Bidders:
a. JVF Commercial, Quezon City (lowest bidder)
b. RDAK Transport Equipment, Cebu City
Status at post-qual: Passed.
   
6. Brand new road roller/vibratory compactor
(4 units) ABC: 14,432,000.00   
Bidders:
a. Camec JCB Corp., Quezon City
b. Civic Merchandising, Mandaue City (lowest bidder)
c. RDAK Transport Equipment, Cebu City
Status atpost-qual: Passed
   
7. Brand new water truck with pump (6-wheeler, 6,000 ltrs tanker capacity)
(1 unit) ABC: 4,720,000.00   
Bidders:
a. Civic Merchandising, Mandaue City
b. RDAK Transport Equipment, Cebu City
c. Isuzu Cebu, Inc. Mandaue City (lowest bidder)
Status at post-qual: Passed.

8. Brand new fuel tanker with pump (6 wheeler, 6,000 ltrs tanker capacity)
ABC: 4,600,000.00   
Bidders:
a. Civic Merchandising, Mandaue City
b. RDAK Transport Equipment, Cebu City (lowest bidder)
c. Isuzu Cebu, Inc. Mandaue City
Status at post qual: Passed.
   

   Bidders declared to have failed in the post-qualification proceedings are given seven (7) days to file a motion for reconsideration upon receipt of the notice.


Company profile of Kowa Tsusho Co. Ltd.

   It will be noted that the reason why RDAK Transport Equipment failed the post qualification proceeding in its bid for the backhoe and bulldozer is that its Mayor’s Permit stated that its business line is for “trucks and jeepneys only.” This procurement activity is for heavy equipment.

   Incidentally, the website of Kowa Tsusho Co. Ltd. (http://www.kowa-tsusho.com) states that it is an authorized exporter of Japanese automobiles, used cars, auto parts, generators, Chinese motorcycles. In another website (Alibaba.com), the product/service of Kowa Tsusho Co. Ltd covers Chinese new tires, Chinese new motorcycles, Japanese used motorcycles.
   

Formal Protest

   On February 18, 2009, the counsel of Kowa Tsusho Co. Ltd filed a formal protest and urged for a re-bidding. Glaringly, there is no Board Resolution or any document from Kowa Tsusho Co. Ltd (a company that deals on used cars and Chinese tires) authorizing the counsel or any person for that matter to file the said protest (in a bidding for heavy equipment).

   Nonetheless, the BAC will still need to treat the protest accordingly and in pursuance of the IRR of R.A. 9184.


Recommendation

   Finding no basis to support the allegation that the BAC committed any irregularity or questionable behaviour in conduct of the bidding process for the SUPPLY AND DELIVERY OF HEAVY EQUIPMENT, Project Reference No. 001, it is recommended that the BAC be allowed to proceed to the next steps in the procurement activity.

   The protest filed cannot delay or interrupt the bidding process as expressly provided in Section 57 of the IRR-A, R.A. 9184. However, such protest must first be resolved before any award is made.

   Respectfully submitted.




HANDEL T. LAGUNAY
Provincial Legal Officer





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thegirlnextdoor

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Re: Capitol Denies Bidding Anomaly
« Reply #2 on: February 24, 2009, 05:48:04 AM »
Well any notice even if it is a rental notice should also be given a 30 day notice.

You know what they say would you pay for dinner if all you get is the water?

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grazie7y

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Re: Capitol Denies Bidding Anomaly
« Reply #3 on: February 24, 2009, 06:15:19 AM »
Attorney Handel, thanks for sharing to us your thorough analyses of the formal allegations filed by one participating bidder, Kowa Tsusho Co. Ltd. I actually read all of your report, though I can not claim everything stuck to my little brain and that I fully understood the intricacy of the bidding system.  It seems to me like some kind of legal audit.  :)

First questions came to mind, Attorney, why did the pre-bidding conference scheduled on February 23 and not before the first advertisement was published in the local paper?  It seems difficult to understand, at least to me,  why the date of advertisement can supersede the actual date of pre-bid conference.  Was this properly communicated to the bidders?  Also, how do we go about getting all these bids?  Do we send out letter of invitation to prospective bidders or the advertisement takes care of that? 

Pasensya na, Attorney, my questions may seem insignificant to you or to others but I am just wondering.

And lastly - for now :), Attorney, I noticed that in your report, the bid amount were not written.  Is it legally not acceptable to include bid amounts to the report?  Ga wonder lang pod akong mind what could be the lowest bid amount.  :)

Thank you so much, Attorney Handel.  God bless you!

 

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Han Delaguna

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Re: Capitol Denies Bidding Anomaly
« Reply #4 on: February 24, 2009, 09:30:11 AM »
Attorney Handel, thanks for sharing to us your thorough analyses of the formal allegations filed by one participating bidder, Kowa Tsusho Co. Ltd. I actually read all of your report, though I can not claim everything stuck to my little brain and that I fully understood the intricacy of the bidding system.  It seems to me like some kind of legal audit.  :)

First questions came to mind, Attorney, why did the pre-bidding conference scheduled on February 23 and not before the first advertisement was published in the local paper?  It seems difficult to understand, at least to me,  why the date of advertisement can supersede the actual date of pre-bid conference.  Was this properly communicated to the bidders?  Also, how do we go about getting all these bids?  Do we send out letter of invitation to prospective bidders or the advertisement takes care of that? 

Pasensya na, Attorney, my questions may seem insignificant to you or to others but I am just wondering.

And lastly - for now :), Attorney, I noticed that in your report, the bid amount were not written.  Is it legally not acceptable to include bid amounts to the report?  Ga wonder lang pod akong mind what could be the lowest bid amount.  :)

Thank you so much, Attorney Handel.  God bless you!

 


Grazie, thanks for your questions.

The posting and publication of the invitation to bid is the first step in letting the public know that the government is going to buy certain items (goods, services, civil works). The invitation to bid already contains the schedule of procurement activities (including the pre-bid conference date). This answers your query why it seems the invitation to bid takes precedence over the pre-bid conference.

The pre-bid conference should be at least 12 days from the date of submission of bids.

Bidders get to join the bid (after the invitation is published) by sending a letter of intent if it involves consultancy services or civil works. If procurements of goods, no need of LOI.

Bidders will buy the bid documents, accomplish the legal requirements and complete their bid and financial proposals and submit them on or before the deadline set.

Sorry I was unable to include the amount of financial proposals of the bidders from the Bids and Awards Committee  in my report. The data I got was only for the lowest bidder. For sure, the amount of bid did not exceed the ABC (approved budget of the contract). The amount of bids is available at the BAC. When I have the opportunity, I will add the amount of bids.

Nonetheless, the assessment focused on whether there is rigging and if the bidding procedures were properly followed, not on the amount of bids.



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Re: Capitol Denies Bidding Anomaly
« Reply #5 on: February 24, 2009, 01:11:39 PM »
:-)

Han Delaguna

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Re: Capitol Denies Bidding Anomaly
« Reply #6 on: February 25, 2009, 09:28:03 AM »


Grazie, thanks for your questions.

The posting and publication of the invitation to bid is the first step in letting the public know that the government is going to buy certain items (goods, services, civil works). The invitation to bid already contains the schedule of procurement activities (including the pre-bid conference date). This answers your query why it seems the invitation to bid takes precedence over the pre-bid conference.

The kind of conference that will be held before the advertisement is called "pre-procurement conference" where the end-users discussed with the BAC the specifications needed and when the schedule of the procurement activities are set,

The pre-bid conference (which already involves the interested and prospective bidders) should be at least 12 days from the date of submission of bids.

Bidders get to join the bid (after the invitation is published) by sending a letter of intent if it involves consultancy services or civil works. If procurements of goods, no need of LOI.

Bidders will buy the bid documents, accomplish the legal requirements and complete their bid and financial proposals and submit them on or before the deadline set.

Sorry I was unable to include the amount of financial proposals of the bidders from the Bids and Awards Committee  in my report. The data I got was only for the lowest bidder. For sure, the amount of bid did not exceed the ABC (approved budget of the contract). The amount of bids is available at the BAC. When I have the opportunity, I will add the amount of bids.

Nonetheless, the assessment focused on whether there is rigging and if the bidding procedures were properly followed, not on the amount of bids.



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grazie7y

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Re: Capitol Denies Bidding Anomaly
« Reply #7 on: February 25, 2009, 09:30:51 AM »
Thank you so much, Atty. Handel, for taking time to answer my questions.   :)

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