Risks in doing business with government

The turnabout from withdrawal threat by a local partner in the consortium that won the poll automation project of the government is not something that we could thank them for. We refer to last Friday’s dramatic reconciliation between the feuding consortium of Smartmatic and Total Information Management (TIM) Corp. that won the P11.3-billion poll automation contract of the Commission on Elections (Comelec).

Ironically, it was the government that was put in a situation where a contract ready for signing and implementation is almost aborted because a partner of a winning bidder nearly caused it. Worse, there is a very specified timetable within which the government must implement this contract in time for the holding of the May 2010 elections. That would be barely eleven months left to go. 

Both parties, the Smartmatic and TIM, are very well aware of time constraints they must comply with, under Comelec’s timetable to implement the automated elections next year. Thus, it was a master stroke for the TIM to raise its internal conflict with its partner, Smartmatic, to press for better terms under its joint venture agreement for the poll automation. But I give it to TIM for having the guts to hold hostage the government into making its private partner to acquiesce to their terms.

The usual and almost normal way of undoing business here with the government is for a disgruntled bidder to throw allegations of wrongdoings like overpricing, rigged bidding, sub-standard products, etc., against a contractor, whether it’s a done deal already or not.

The latest example of such case was the decision by Department of Education Secretary Jesli Lapus to abort a done deal by his agency over complaints of a disgruntled bidder. It involved the procurement contract for the P427-million worth of noodle product from an alleged “favored” supplier under his agency’s feeding program for this school year.

The DepEd chief took these actions after the Senate committee chaired by Sen.Mar Roxas II looked into allegations aired in media by a bidder against DepEd’s noodle contract. A self-styled whistleblower on the questioned noodle deal, a certain Prudencio Quido alleged “over-priced” noodle deal of DepEd with Jeverps Manufacturing Corp. The Jeverps has been the principal supplier of DepEd’s school-feeding program for the past five years until this controversy erupted. Quido, on the other hand, is identified as former sales manager of another government supplier, Kolonwell Trading.

Quido denounced that the noodle products supplied by Jeverps were priced at P18 per pack under its contract last year with DepEd compared to ordinary noodle products that could be bought at P5 to P6 per pack. He further assailed Jeverps’ defense for their higher priced product that these are “fortified noodles with eggs.” The Kolonwell executive initiated investigation into these Jeverps claims and submitted samples of their rival’s noodle products for laboratory tests in Vietnam, Thailand and elsewhere. He subsequently claimed these lab tests failed to confirm the nutritional content of the noodle products of Jeverps.

To settle this issue of nutritional content once and for all, DepEd submitted samples of Jeverps noodle products for testing, no less by the Bureau of Food and Drugs. The DepEd later divulged the BFAD officials’ findings that confirmed indeed the noodle products supplied by Jeverps were “fortified” with egg and malunggay nutrients like vitamins, protein and iron. But the Kolonwell executive would hear none of it, citing contrary unverified claims that BFAD has no such capability to determine the nutritional content of the questioned noodle.

What is the value then of the BFAD findings if just because a supplier — which did not even bid in the first place for this year’s contract — has been very vocal in denouncing it in media? The Kolonwell executive went on further to file graft complaint against Jeverps president Alex Billan, the DepEd Secretary and five of his deputies before the Office of the Ombudsman.

 I’m glad to learn, though, from Lapus that he will order a rebidding of the noodle contract. He vowed to implement this government school-feeding program as mandated by law and a priority program of the DepEd every year since 1999. The contract calls for the supply of 20 million packs of fortified noodles to feed some 400,000 students in the 13 hunger-prone poor provinces of the country. In pushing for this program despite the pending Ombudsman case against him, I don’t think Lapus is going to complicate his present situation, especially with his plans to go back to politics in the coming May 2010 polls.

Before DepEd aborted last month their deal with Jeverps, the latter has already mobilized the delivery of the first batch of their noodle products. As I gathered, Jeverps is willing to join the rebidding if only to show they have not committed any of Kolonwell’s accusations against them. That should be a good challenge for Kolonwell to join this rebidding to prove their company has a better offer and they are not just a disgruntled bidder out to avenge their loss in a fair-and-square bidding.

But a disgruntled bidder is not the case that has stalled the Smartmatic-TIM contract with Comelec. As I’ve said at the outset, the irony of it all is the fact that the troubles that are causing delay is due to a disgruntled partner of the winning bidder.

The TIM is a 100-percent Filipino-owned firm that has been in operation since 1985. The TIM spearheaded the official launch of the National Computer Center’s (NCC) Philippine Government e-Services Portal. It also has a contract with the Government Service Insurance System (GSIS) for the agency’s computerized documentation and archiving system.

After winning together the Comelec bidding for the poll automation, the TIM threatened to withdraw last week from their partnership due purportedly to financial disagreements with Smartmatic. But after Comelec intervened, their deal is on again, for now.

Apparently, the TIM has been doing business with government for so long that it has more or less known the calculated risks to press their luck with Smartmatic. Risks are part of the costs of doing business. But these hard-nosed businessmen have no right to put our country’s first automated polls at greater risks in their kind of wheeling-and-dealing.