DOTr terminates MRT-3 contract with BURI

MANILA, Philippines — After repeated threats, the Department of Transportation (DOTr) has officially terminated the contract of the Metro Rail Transit 3 (MRT-3) with its service provider Busan Universal Rail Inc. yesterday due to BURI’s poor performance. 

DOTr Undersecretary for legal affairs and procurement Reiner Paul Yebra said BURI did not perform well during its stint as service provider of MRT-3 and has failed to comply with the contractual requirements of a complete and updated Computerized Management System.  

Yebra added that the decision to terminate BURI’s contract with MRT-3 came after they evaluated its position paper on the notice to terminate the DOTr had issued against them earlier last month. 

“We enumerated in the notice to terminate, among others, poor performance that constitutes derailment, passenger unloading, stoppages. We also cited their failure to procure spare parts and their failure to deliver efficient and reliable contractually obligated trains,” Yebra said.   

“Those are the same grounds that we incorporated in our decision after evaluating their position paper,” he added.  

On Oct. 17, the DOTr issued a notice to terminate BURI’s contract with MRT-3.

BURI bagged the P3.8-billion three-year service contract with MRT-3, which is to end in 2019. 

DOTr Undersecretary for Railways Cesar Chavez said they received BURI’s position paper – its response to DOTr’s notice to terminate – last Oct. 24 while its decision to officially terminate MRT-3’s contract with BURI was signed by Transportation Secretary Arthur Tugade last Nov. 3. 

The decision to terminate the contract was received by officials of BURI yesterday, which means the contract has ended. 

While waiting for the next MRT-3 service provider, Chavez said they have created an “MRT Transition Team (MTT),” which will temporarily take over maintenance work, headed by Mike Capita, director for operations of MRT-3.

Chavez assured commuters of better service in the next months, but said they should not expect a “miracle” from DOTr. 

“Don’t expect a miracle, expect accountability. Hindi milagro ang offer namin dito kundi diligence (We don’t offer miracles but diligence),” he said. 

Chavez said there are three international firms that have signified intention to be the next service provider of MRT-3. These are Sumitomo Corp. of Japan, SMRT Corp. of Singapore and RAPT Dev., the service provider of Light Rail Transit System Line 1. 

DOTr senior technical assistant Hernando Cabrera said the government has no unpaid balance with BURI, but only withheld payment and penalties, belying BURI’s claim that the DOTr has unpaid balances with them.

From September 2016 to May 2017, Cabrera said the DOTr has withheld P59.4 million, which means that payment will be made only if BURI can provide papers on the procurement of spare parts, and a penalty of P27.490 million after they failed to provide enough operational trains.

Citing BURI’s contract with MRT-3, Chavez said the DOTr is paying for the items or spare parts procured from BURI and would be penalized if it failed to provide the sufficient number of operational trains per day.  

The DOTr explained that their record was only until May this year because they are still preparing the computation from June to Nov. 17.  

Before the DOTr terminated BURI’s contract, four technical problems occured yesterday morning at the Cubao, Magallanes and Santolan Anapolis stations.

DOTr takeover welcomed 

 “I’m really happy that Secretary Arthur Tugade has the political will to do the right thing for the sake of our hundreds of thousands of MRT-3 commuters,” Puwersa ng Bayaning Atleta party-list Rep. Jericho Nograles said yesterday. 

He lauded the DOTr’s decision to terminate the MRT-3 maintenance contract of BURI.  

“It’s better late than never,” Nograles stated in a statement. 

He added that terminating the contract should “not be enough in the government’s effort to finally improve the services of MRT-3 because those behind the P3.8-billion maintenance service deal should be pursued for their negligence and for plunder.” 

“This action of the DOTr has been a long time coming but it’s still better late than never. For this, I thank Secretary Tugade for finally taking action,” said Nograles, who was behind the series of exposés against BURI and its contract with MRT-3.

“However, I think that after the termination, the DOTr should start running after those who were behind the anomalous contract. This is one big step in President Duterte’s fight against corruption,” he added.

Nograles also urged the DOTr to conduct an investigation on the circumstances behind the replacement of the original Vehicle Logic Unit of MRT-3 cars that is blamed for the constant glitches in its system.

BURI bats for arbitration

“It cannot be overemphasized that what is at stake here is the welfare and interest of the riding public. This office could not just sit back and wait while BURI trifles and flirts with the lives of the commuting public with its substandard performance,” Tugade said.

The DOTr said the Philippine National Railways and the Light Rail Transit Authority would provide sufficient technical support and expertise for the smooth transition of MRT-3 maintenance work.

In a press conference yesterday, BURI external legal counsel Maricris Pahate said the firm wants to continue to perform its obligations under the contract with the government.

“We’re willing to finish the contract. That’s why we want to go through arbitration because that is what the contract requires. If there are disputes, we will talk about them and (provide fixes),” she said.

Last month, Quezon City Regional Trial Court Branch 105 ordered the DOTr and BURI to proceed with the arbitration proceedings before the Philippine Dispute Resolution Center Inc.

The arbitration proceedings are stated in the MRT-3 contract, in accordance with Republic Act 9285 or “An Act to Institutionalize the Use of An Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution.”

Pahate said BURI is also waiting for the court to resolve a protection order application it filed last month.

She said the order would stop the termination of the contract and compel the DOTr to pay the maintenance provider for its service.

BURI took over the maintenance of the MRT-3 system, which runs from North Ave. station in Quezon City until Taft Ave. station in Pasay City, in January last year as it was awarded the P3.81-billion contract by the then Department of Transportation and Communications (DOTC) through a negotiated or alternative mode of procurement approved by the Government Procurement Policy Board.

The DOTC resorted to an alternative mode of procurement after attempts to conduct a bidding for the contract in September 2014 and January 2015 resulted in failure due to non-participation of bidders.

MRT-3 currently carries more than 500,000 passengers a day. – With Delon Porcalla, Louella Desiderio