NIA controversy

Controversy continues to hound the recent bidding conducted by the National Irrigation Authority (NIA) for the P1.423 billion procurement of hydraulic excavators and truck tractors with trailers to be used for its restoration of irrigation and drainage canal project.

After inviting prospective bidders to take part, seven companies submitted letters of intent. They were Civic Merchandising Inc., International Heavy Equipment Corporation (IHEC), Maxima Machineries Inc. (MMI), Transport Equipment Corporation (TEC), Wilan Merchandising Phils., Transtar Corp., International Heavy Equipment Corp. And TKC Heavy Industries Corp.

Some of the bidders are saying that problems arose when the NIA bids and awards committee (BAC) imposed a rule that required distributors to have been in existence for at least 25 years and to have 10 years experience as distributor to be qualified. Those who did not meet these periods are outright disqualified.

They are claiming that the rule has no basis in law and is in direct violation of the Government Procurement Act (RA 9184) and its implementing rules.

According to NIA, it has the right to exercise business judgment to make sure that the winning bidder is an A-1 company. They say that since the equipment last 20 to 25 years, they have to make sure that the company will last another 25 years and that having a 25-year business existence will ensure this. In short, NIA equated 25 years of business existence as a guarantee of track record and reliability.

But anybody would know that longevity does not mean reliability. There are other factors that need to be considered: financial health, yearly growth, management organization, unique expertise, contribution to government revenues, leadership in the industry, and profitability.

As a result of NIA’s rule, only two suppliers were found to be qualified to bid: Civic with a capitalization of P8.5 million pesos and TEC, which is said to be a bankrupt company. Eliminated in the process were Monark with P1-billion capitalization and Maxima (P800 million).

Both Civic and TEC had been in existence for more than 25 years while Monark and Maxima had existed for 22 years and 21 years, respectively.

Observers have also noted deviations by the NIA from the usual bidding procedures.

First, NIA registered in the Government E-procurement System (GEPS) the tender as agricultural machineries instead of heavy equipment, which some suspect was a way of  blinding and limiting bidders.

Second, they say that on the day of the bidding itself, bidders were required to submit bids at the BAC chairman’s office instead of Classroom A at 2 p.m. as stipulated in the bid document. Civic’s bid was found to have been submitted as early as 9 a.m. followed by TEC. Isn’t this pattern similar as pointed out by World Bank in some of its road projects in the country?

Third, there have also been claims of overpricing which NIA has tried to debunk by saying that the bid price of both bidders were below the budget price. In Package 1, Civic offered $135,000 a piece, $1500 lower than TEC while in package 2, TEC offered $120,000 a piece, $1700 lower than Civic. It will be worthwhile to know how much discount they can give for a fleet sales of 139 units. Senator Mar Roxas II believes that the price difference would be at least P250 million.

Fourth, the IRR of RA 9184 or the Government Procurement Law states that for a bidder to be qualified, a company must have experience in supplying a single contract that is equivalent of 50 percent of the Approved Budget Contract (ABC). This means that for any bidder to qualify, it must have a single contract of at least P700 million. Records from the Securities and Exchange Commission however have shown that neither Civic nor TEC had an accumulated sales of P250 million a year for the last 10 years.

Some sectors are now suspecting that NIA is implementing new rules to discard qualified bidders and favor two anointed bidders who are offering prices way above the current market price.

Senator Roxas, who is spearheading the investigation of the NIA bidding process, has said the NIA may be paving the way to overpricing the procurement project by as much as P300 million.

Fact or fiction? Real or imagined? We have had enough of anomalous transactions in government and the earlier we resolve these doubts about the integrity of this recent NIA bidding, maybe via a Senate investigation, the better for the Filipino people.

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