VERA FILES FACT SHEET: The P536-M deal between F2 Logistics and Comelec

The Commission on Elections (Comelec) has so far found “no grounds” to cancel its P536-million contract with F2 Logistics for the transport of equipment, supplies, and paraphernalia in the 2022 elections amid concerns of a possible “conflict of interest” raised by poll watchdogs.

Recently, Kontra Daya urged Comelec to cancel the deal because of the company’s links to Dennis Uy, a Davao-based businessman and the fourth-largest campaign donor of President Rodrigo Duterte in 2016.

Comelec Spokesperson James Jimenez, however, said there has to be a “valid reason” to rescind the contract.

“There will have to be some sort of violation on the terms of the contract … by F2 or a change in circumstances na (that) all of a sudden, hindi na kailangan ng Comelec ‘yung kontrata (Comelec no longer needs the contract), I suppose a case can be made for rescission then,” he said in a Nov. 2 interview on ABS-CBN News Channel.

Comelec Chairman Sheriff Abas signed the contract with F2 Logistics on Oct. 29.

Here are three things you need to know about the deal:

1. What does the contract between Comelec and F2 Logistics contain?

On Aug. 25, the Comelec en banc awarded a P535.99-million contract to F2 Logistics Philippines, which submitted the lowest bid among three other qualified firms: LBC Express, Airspeed International, and 2GO Express, Inc.

“If you have the lowest responsive bid, that’s who you award it to and ‘yun po ‘yung nangyari dito (that’s what happened here). F2 Logistics did offer the lowest responsive bid and, therefore, nag-qualify siya, sa kanya mapupunta ‘yung kontrata (it qualified and the contract will go to it),” Jimenez explained.

The deal, which had an initial approved budget of P1.61 billion, became official two months later following a post-qualification assessment that verified the legal, technical, and financial requirements of F2 Logistics.

The contract covers the following:

This is not the first time that F2 Logistics bagged contracts with Comelec.

In the 2018 elections for the barangay and Sangguniang Kabataan, it was awarded four contracts to transport election forms, supplies, and paraphernalia worth P5.91 million (for CAR, Regions I, II, and III), P6.07 million (for NCR, Regions IV and V), P9.06 million (for Regions VI, VII, and VIII), and P16.33 million for Regions IX, X, XI, XII, CARAGA, and ARMM).

For the 2019 midterm elections, the company secured two deployment contracts, broken into P143 million for Northern Luzon and P248 million for Mindanao. The lots in Metro Manila and Southern Luzon, and in the Visayas went to AirFreight 2100 and LBC Express, respectively.

“Every single time we have a project, we have to bid it out and so there’s always a chance that you will not get the same contract twice in a row,” Jimenez said.

2. What’s the controversy on the deal?

The owners and board members of F2 Logistics contributed substantially to Duterte’s campaign kitty in the 2016 presidential race. This has raised concerns of a potential “conflict of interest” in its obligation as the sole logistics provider for the upcoming elections.

F2 Logistics is a subsidiary of Udenna Corp., a Davao-based holding company founded by businessman Dennis A. Uy in 2002.

Based on a 2016 report of the Philippine Center for Investigative Journalism (PCIJ) on the campaign contributions and expenses of candidates, Uy contributed P30 million and his wife Cherylyn, corporate treasurer of Udenna, P1 million for Duterte’s presidential campaign.

Efren E. Uy, F2 Logistics president and chief executive officer, also contributed P3.5 million. He also sits on the board of Chelsea Logistics Corp., another Udenna Corp. subsidiary.

The Comelec Special Bids and Awards Committee (SBAC) said in a message to VERA Files Fact Check that Efren and Dennis have “no relation by consanguinity or affinity.”

Under Republic Act No. 6713, or the Code of Conduct and Ethical Standards for Public Officials and Employees, “conflict of interest” occurs when:

“A public official or employee is a member of a board, an officer, or a substantial stockholder of a private corporation or owner or has substantial interest in a business, and the interest of such corporation or business, or his rights or duties therein, may be opposed to or affected by the faithful performance of official duty.”

In a Nov. 8 interview with VERA Files Fact Check, lawyer Ona Caritos said, “legally speaking, there is no conflict of interest” in the deal between Comelec and F2 Logistics. Caritos is executive director of the Legal Network for Truthful Elections (LENTE), a group of lawyers and paralegals working for “truthful elections” in the Philippines.

However, she said Section 95 of the Omnibus Election Code prohibits persons or corporations holding contracts with any government agency from making any contribution, directly or indirectly, “for purposes of partisan political activity.”

But after the 2016 elections, Caritos said Section 35 of the revised Corporation Code allowed domestic corporations to “make reasonable donations in aid of any candidate or electoral party or for purposes of partisan political activity.”

The Corporation Code, enacted in 2019, empowers and capacitates incorporated domestic corporations to, among others: “make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no foreign corporation shall give donations in aid of any political party or candidate or for purposes of partisan political activity.”

Ona said this provision does not repeal or modify the Omnibus Election Code, but left it to the Comelec “to define what ‘reasonable’ means.”

Earlier in August, Abas said being a campaign contributor is not a ground for automatic disqualification of a company from bidding, adding that most big businesses have been contributing to candidates.

In Section 47.1 of the 2016 Revised Implementing Rules and Regulations of the Government Procurement Reform Act, a bidder can be automatically disqualified only if he is related to the head of the procuring entity, members of the BAC, the technical working group, the BAC secretariat, the head of the Procurement Management Office, the implementing unit, or the project consultants “by consanguinity or affinity up to the third civil degree.”

3. Will this impact the electoral process?

Augusto Lagman, former Comelec commissioner, has pointed out that the contract with F2 Logistics could “undermine the elections.”

“I think prudence dictates that you don’t give it to one who is a major contributor to your election campaign… It leaves a very bad taste in the mouth even assuming that there’s nothing illegal about it,” said Lagman, who now chairs the National Citizens’ Movement for Free Elections (NAMFREL), in an interview on ABS-CBN News Channel on Nov. 2.

Lagman added that Comelec could “consider it a failed bidding” and invite other vendors to participate in the repeat auction.

On the same day, Jimenez countered in a series of tweets that “whoever delivers the vote counting machine does not affect the count.”

He explained, “At no point is the logistics provider able to tamper with the election outcome, either because of process safeguards or the fact that the VCMs have practically nothing to do with the results once the results have been reported out.”

In an email to VERA Files Fact Check on Nov. 17, Comelec’s Administrative Services Department (ASD) said, “insofar as the deployment projects [of Comelec] for the previous elections are concerned, we did not experience or receive complaints or reports of cheating involving our logistics providers, including F2 Logistics.”

Julio Thaddeus Hernan, director IV of the ASD, added that “such anomaly is a remote possibility considering that security measures required under the Terms of Reference are strictly observed.”

Under the terms and conditions of the delivery, F2 Logistics must give Comelec “direct access” to the persons in charge of its system, including the warehouse facility, delivery, local hubs, polling and canvassing centers, and command centers.

The company should also have an internet-based tracking system to enable Comelec to monitor “all processes and functions” and facilitate “timely management of accidents or breakdowns, route diversion, or any other relevant information” in case of delay in the deployment.

If there is any loss, theft, robbery, or damage to the cargoes, F2 Logistics must notify Comelec within 24 hours from discovery and the cost “will be deducted from the claims of the provider,” subject to the approval of the Comelec en banc.

Although the contract awarded to F2 Logistics would not affect what happens on election day, Caritos said it is “reasonable and understandable for people to feel apprehensive” about the possibility of cheating.

She added that the public should remain vigilant throughout the electoral cycle, not just the transportation of election paraphernalia.

To allay public concern, LENTE is calling for transparency in the Comelec-F2 Logistics deal, and for them to open the process of transportation and warehousing of election equipment and paraphernalia.

Editor’s note: This article was updated to include the comment of Comelec’s Administrative Services Department (dated Nov. 17).