‘DPWH was consistent’

We wish to clarify the points raised in Mr. Boo Chanco’s column in The Philippine Star on June 30, 2014, particularly on the bidding of the Cavite-Laguna Expressway (CALAX) project and the Daang Hari connector road project.

Mr. Chanco draws a comparison of DPWH’s behavior in Daang Hari and CALAX bidding, and concludes that DPWH is being inconsistent with its implementation of bid rules. Mr. Chanco asserts that DPWH was ‘lenient’ with design-related issues in Daang Hari, but was strict with the bid security issue in CALAX:

“As I pointed out in an earlier column, there were changes in design after the [Daang Harij project was awarded to Ayala. Because of this accommodation by DPWH, taxpayers will have to pay P500 million more in right of way costs.

Enough changes were made after the award of Daang Hari that should have made are-bidding necessary. But that didn’t happen. DPWH’s behavior in Daang Hari makes them less credible when they insist on a strict adherence to the letter of the bidding rules in the CALAX bidding. N

We categorically state that there is no truth to such assertions.

Firstly, no rules were compromised in the Daang Hari bidding as has been falsely suggested. The bidding rules issued by the DPWH prior to bid submission on Dec. 12, 2011 allowed all bidders (i.e. not exclusive to Ayala) to connect the Daang Hari road directly to the South Luzon Expressway (SLEX):

“Segment /I shall be designed and constructed by the Concessionaire in accordance with these MPSS [Minimum Performance Standards and Specifications]. The DPWH has provided the indicative alignment for Segment /I shown in Figure 1 and the indicative plan and profile shown in Annex C. Further, it is also provided that the concessionaire has the option to submit an alternative design that will connect Daang Hari Road from the end point of Segment I, Km 2+300 directly to the South Luzon Expressway/Susana Heights Interchange complying with the design standards in Part 11/ of these MPSS that is acceptable to the Government agencies, Local Government Unit and private sectors. “

Given this, Ayala submitted an alternative design in its technical proposal, which comprises a tunnel that will connect the SLEX and the Susana Heights Interchange; it is well within the parameters set forth in the bidding rules. The alternative design is based on studies showing that a tunnel will be more efficient and convenient for motorists compared to a roundabout in Susana Heights, which can be prone to bottlenecks. The DPWH clearly recognized this when it approved Ayala’s alternative design, which again, was submitted as our official bid. This was done before Ayala won and before it was awarded the project. No design amendments were triggered by Ayala subsequent to bid submission.

Secondly, the DPWH has the right to cause the Concessionaire to make modifications to the design if the government deems it necessary to do so. This is clearly stated under the Variation Provision (Section 10.6.a.) of the Concession Agreement which provides that DPWH may initiate variations as long as it meets the Minimum Performance Standards and Specifications as set out by the same Concession Agreement. Furthermore, the reference to PSOOmn additional right of way cost is inaccurate.

Thirdly, the bid security requirement of 180-day validity in CALAX is an explicit rule that all bidders must comply with.

In all three instances above, DPWH was consistent in implementing according to the letter and spirit of the rules that they made: (1) alternative design was allowed in Daang Hari prior to bid submission for all bidders (2) variation order from DPWH is provided for in the Daang Hari Concession Agreement, and (3) bid security validity for CALAX is for 180 days from bid submission. DPWH was consistent in implementing the rules for both Daang Hari and CALAX. We also wish to reiterate that keeping the sanctity of the rules and process is critical for the success of PPP.

The transparent and level regulatory framework that we have seen in the government’s PPP program has been the key enabler for several business groups to participate in the bids that have been put out to market by the government. These include also global companies, particularly internationally-recognized engineering, design, and construction contractors who thrive in a process they can discern to be transparent and that gives them comfort to participate in such process.

It is hoped that these points raised properly inform the readers of this esteemed newspaper.

Please feel free to reach out if you need further information.

Thank you.

Sincerely,

Noel Kintanar

Executive Director

Ayala Corporation