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DBM shortcuts bid process for P2.8 billion ASEAN hosting deal

The Department of Budget and Management-Procurement Service (DBM-PS) has allegedly violated the government procurement law when it bidded out the gargantuan P2.8 billion events management contract for the hosting of the Association of Southeast Asian Nations conferences this year, a company excluded from the bidding said.

Jan 2, 2017



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THE Department of Budget and Management-Procurement Service (DBM-PS) has allegedly violated the government procurement law when it bidded out the gargantuan P2.8 billion events management contract for the hosting of the Association of Southeast Asian Nations conferences this year, a company excluded from the bidding said.

The contract is supposedly the biggest of its kind and involves the management of 48 international conferences from January to December 2017, the 50th anniversary of the ASEAN’s founding and the year the Philippines is ASEAN chair.

The sole bidder and apparent winner is Stagecraft International which offered P1 billion at the bidding held Dec. 1, 45 days before the commemorative launching of the Philippine chairmanship of ASEAN on Jan. 15, 2017 in Davao city.

But Events Organizer Network Inc. (EON), a company that participated in the initial procurement process, alleges that the DBM-PS bidded out the contract as “goods” instead of “services,” in violation of the government procurement law Republic Act 9184.

EON also alleges that the DBM imposed unlawful, unreasonable and restrictive requirements that barred competition. In its letter to the DBM-PS, EON asked government to reject the sole bid and either declare a failure of bidding or stop the award of the contract.

VERA Files wrote DBM-PS Executive Director Bingle Gutierrez requesting for an interview and followed it up eight times but she was always out of the office. All her secretary could say was they got the letter-request.

VERA Files also sent StageCraft head Francisco Zabala a request for an interview but did not get a reply.

The P2.8 billion earmarked for the contract is part of the 2017 General Appropriations Act under the ASEAN National Organizing Council – Office of the Director General for Operations headed by retired diplomat Marciano Paynor, Jr.

Included in the 48 meetings are two summit meetings, one in April with the 10 leaders of ASEAN and another in November which will include ASEAN leaders plus eight leaders of dialogue partners including the United States, China, Japan, and Russia.

EON officials say the DBM-PS departed from the standard bidding procedures and used the standard bidding documents (SBD) for goods instead of “Consulting Services” even when the job called for a “Technical and Conference Integrator” and required technical services such as microphone, lights, audio and video recording; conference services such as interpreters; and integrator services similar to project management services.

The Government Procurement Law, Republic Act 9184, states, “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.”

The law says the goods could come in the form of equipment, furniture, stationery, materials for construction, or personal property of any kind. This includes non-personal or contractual services like the repair and maintenance of equipment and furniture, or trucking, hauling, janitorial, security, and related services.

The same law says “Consulting Services” refers to services for infrastructure projects and other types of government activities requiring external technical and professional expertise that are beyond government’s capability to undertake. These include advisory and review services, pre-investment or feasibility studies, design, construction supervision, management and relates services and other technical services or special studies.

The process for the procurement of consulting services, however, takes longer because it first requires an evaluation and ranking of the bids of the short-listed bidders based on, but not limited to, experience, performance, quality of personnel, price and methodology.

The Bids and Awards Committee (BAC) then asks the highest-ranking bidder to clarify its financial proposal, terms of reference, scope of services, methodology and work program, personnel to be assigned to the job, services, facilities, or data to be provided by the government agency concerned, and provisions of the contract. The whole process applies to the next in rank if the top bidder fails. The process is repeated until the bid is awarded to the winning bidder.

For the procurement of goods and infrastructure projects, the BAC only evaluates the financial component of the bids. From the preliminary examination, the “Lowest Calculated Bid” is already determined.

Simply put, procurement for goods is based on cost while consulting services is about quality.

For consulting services, bidders are required to submit personal information of the individuals who will be part of the team providing the services.

Printscreen of Bid Notice Abstract by PhilGeps for the 2017 ASEAN hosting.

DBM prerogative

Despite provisions in the law requiring the use of correct Philippine Bidding Documents (PBD), BAC 1 chairperson Rosa Maria Clemente stressed in a reply to EON’s request for consideration that the “the decision on the use of PBD is the sole authority of the Procurement Service, not on the understanding of the prospective bidder.”

Under the Procurement Law, the BAC “shall be responsible for ensuring that the Procuring Entity abides by the standards set forth” by the law and its Implementing Rules and Regulations (IRR).

EON Managing Director Carlos Mori Rodriguez pointed out in a letter to Clemente that Section 6.2 of the IRR of the Procurement Law mandates the use of correct PBDs.

Rodriguez said, “The BAC cannot whimsically and arbitrarily decide to use the bidding procedure for goods when the Procurement Law and its IRR clearly prescribe the bidding procedures for consulting services.”

BAC claimed in Bid Bulletin 2 that goods constituted 86 percent of the whole project. Andre Palacios, EON’s Senior Adviser for Policy, Public Affairs and Government Relations, refutes this saying, “There are no goods to be procured.”

EON pointed out, “The bidding documents contain no provision for the winning bidder to transfer—or for DBM-PS to acquire—ownership of any item, supply, material, equipment, furniture, or other good.”

Clemente argued that the law is explicit that goods include “support services” which may be needed in the transaction of public businesses or in the pursuit of government undertaking.

Rodriguez pointed out that under the Procurement Law and its IRR, the term “general support services” refers to “non-personal or contractual services such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security and related or analogous services.”

Technical and Conference Integrator services, meanwhile, require, “technical and professional expertise and thus are beyond the scope of General Services,” Rodriguez further told Clemente.

In the 2015 summit of the 21 Asia Pacific Economic Cooperation (APEC) Leaders, also hosted by the Philippines, the DBM-PS used the standard bidding documents for consulting services to procure the Technical and Conference Integrator with a budget of a little over P1.5 billion.

An official of the ASEAN-NOC, who declined to be named, said the main reason DBM-PS classified the project as goods instead of consulting services was the time element. “As the procuring entity, DBM-PS considered the complexity of the requirement and the tight timeline when it adopted the goods bidding since it will only entail 26 days as compared to the consultancy bidding which will take 36 days,” the official said.

He added if the DBM-PS classified the Philippine hosting of ASEAN 2017 as “consulting services,” the earliest the contract would have been awarded was by end of January 2017 or early February 2017, when the activities would have already begun. Aside from the launching on January 15, two meetings for senior economic officials and ministers will begin in late January also in Davao. Aside from the two leaders’ conferences, the package of 48 meetings also covers three commemorative conferences, 14 ministerial and 29 senior ministers.

An ASEAN-NOC source said more meetings have been added to the schedule, and there are now 102 ASEAN meetings from the level of technical working group all the way to heads of state, so that it’s possible a supplemental budget will have to be passed.

The first summit will be that of the 10 ASEAN heads of government on April 26 to 29. On Nov. 10 to 14, the leaders of Australia, China, India, Japan, New Zealand, Russia, South Korea and the United States will join their ASEAN counterparts.

ASEAN leaders will also have meetings with the heads of the United Nations and the European Union.

EON’s proposal of dividing into four lots

EON had suggested an alternative packaging of the immense 2017 ASEAN hosting without violating the Procurement Law. It proposed dividing the 48 meetings into four lots: Lot 1 for the two leaders’ meetings, Lot 2 for the three commemorative meetings, Lot 3 for the 14 ministerial meetings, and Lot 4 for 29 ministerial meetings.

EON said under its proposal, the bidding for consulting services on the meetings that would be held in the first three months of 2017 could be held ahead of the meetings scheduled for later.

DBM-PS rejected this, again invoking its discretion in the packaging of the bidding.

A source said the ASEAN-NOC has decided to adopt only one Lot so that the entire project is covered by only one contract. There will be a possibility of four awardees if divided into four Lots.

“It would be difficult for ASEAN-NOC to be working with different suppliers for the meeting since it aims to provide a standard hosting for all meetings,” the source said.

EON alleges that aside from violating the procurement law, the BAC skewed bidding rules to favor StageCraft, “resulting in a transaction that is manifestly and grossly disadvantageous to government.”

“This procurement now threatens our country’s image and President Duterte’s policy of zero-tolerance for illegality,” EON’s Rodriguez said in a letter to DBM-PS.

(To be concluded.)

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