Contractors hit alleged government bias vs unsolicited proposals

MANILA, Philippines - The National Constructors Association of the Philippines (NACAP) has expressed concern over the seeming bias being shown by key government agencies and officials against unsolicited proposals in the development of infrastructure projects.

The group, in a letter to President Aquino, a copy of which was furnished The STAR, took exception to statements made by Finance Secretary Cesar Purisima, Socioeconomic Planning Secretary Cayetano Paderanga and Public Works and Highways Secretary Rogelio Singson favoring solicited as against unsolicited proposals, especially in the implementation of the Public-Private Partnership (PPP) program, the cornerstone of the Aquino administration’s economic strategy.

“The bias is particularly disturbing for private sector players who are more willing to invest in projects they themselves have originated,” NACAP said.

It, however, reminded government that the build-operate-transfer (BOT) law and the NEDA joint venture guidelines allow a particular form of private initiative to be exercised through unsolicited proposals, and that even with the advent of the PPP, the two main modes – government coming up with the idea for the project and undertaking a competitive bidding for it; or the private sector promotes the project via an unsolicited proposal – are still in effect.

The group cited Purisima saying that “there will be no midnight deal; there will be no backroom deal… everything will be transparent… and that’s why the focus will be on solicited projects rather than unsolicited projects.”

Paderanga has also said that with the BOT Center having been transferred to NEDA and being renamed the Public-Private Partnership (PPP) Center, “we would really prefer to do solicited proposals and subjected to public bidding under transparent rules and regulations.”

Meanwhile, Singson said they are completing the feasibility studies on several road sections within a 200-kilometer radius of Metro Manila since they will be going through a solicited route, in terms of solicited mode for PPP projects.

NACAP president Willy Castor pointed out that these statements seemed like an expression of a concrete government policy handed down by the President or that they were merely expressing a common personal bias against unsolicited proposals.

The group warned that if is indeed the stated policy of the present administration to “focus” on solicited proposals in order to prevent “midnight deals,” then it places proponents of unsolicited proposals automatically under suspicion, virtually requiring private sector originators to present evidence of good motives in addition to proving the merits of the project.

“This clearly violates the spirit, if not the letter of the BOT Law… What makes these pronouncements especially unfortunate is that they are based on the erroneous assumption that corruption is the result of some inherent flaw in the unsolicited proposal mode of developing infrastructure projects, and that by simply taking away that avenue, corruption will be prevented,” it said.

It added that one does not need a Cabinet appointment to realize that corruption occurs even in government procurement contracts where the project is awarded strictly through competitive bidding. “Thus, it would be wrong to attribute the existence of midnight deals on the partially negotiated nature of unsolicited contracts.”

NACAP also pointed out that the concern about the supposed lack of transparency in negotiations for solicited proposals is more apparent than real, noting that the implementing rules of the BOT Law and the joint venture guidelines provide ample opportunity for the contracting agency on the government side to scrutinize the risks of an unsolicited proposal and allows it to back out of the negotiations in case the proponent fails to satisfy the government that the risks are within the latter’s thresholds.

“The fact that unsolicited proposals can drown out priority projects for solicited BOTs is not the private sector’s fault. It merely shows that government often finds it difficult to get its act together. That the private sector is faster at developing projects should come as no surprise and should not be a justification for condemning these projects… Government’s thrust should not be focused on killing competition but on improving its own products,” it added.