Secretary's Corner
HON.
HERMOGENES EDEJER EBDANE, JR.
Message:
Statement of DPWH Secretary
Hermogenes E. Ebdane Jr.
Senate Hearing on Resolution
Numbers 218/220/830
27 January 2009
We welcome this opportunity to provide
relevant information on the subject of Senate Resolution Numbers
218, 220 and 830.
The first two, Senate Resolutions 218
and 220, refer specifically to the deferment of the $232 million
World Bank soft loan. We would lie to respectfully inform the
Senate that the subject $232 million involves Phase 2 of the
National Roads Improvement and Management Program or NRIMP 2 which
was approved in May 2008 and is now on-going.
On Senate Resolution 830, we would
like to inform the body that after our inquiry with the Department
of Justice, their legal opinion is that RA 9184 otherwise known as
the Government Procurement Act, is not binding on foreign-funded
projects.
With these updates on the issues at
hand, we would like to talk briefly about key points of the World
Bank-funded NRIMP, Phase 1 and 2.
NRIMP 1
NRIMP 1 was a $150-million loan,
implemented from February 2000-March 2007, with 10 projects
resulting in the construction of 1,400 kilometers of roads.
Of the 10 projects, 2 projects were
dropped in view of 3 successive failures of bidding. Upon the
recommendation of the Department of Public Works and Highways to Her
Excellency Gloria Macapagal Arroyo, the Philippine Government
decided to withdraw these 2 projects from World Bank funding because
of the pressing schedule for completion.
The recommendation to drop these
projects from NRIMP1 was precipitated by the World Bank letter to
DPWH that in view of the alleged collusion they did not concur with
the results of the bidding.
This memorandum for PGMA dated
November 5, 2006 emphasized that with the withdrawal of these 2
projects from NRIMP, substantial savings will be realized.
To quote from the Memorandum for the
President dated November 5, 2006:
“The advantages of RA
9184 can be fully realized such as:
a)
Award of Project shall
be limited to the approved budget of the contract unlike in
foreign-funded project where the award may reach up to about 25% of
the ABC. For the above projects, a saving of about P500M could be
realized.
b)
Variation order shall be
limited to 10% of the Contract Price. For the above projects, a
savings of about P240M could be realized.
c)
No provision in the
contract for price escalation. For the above projects, a savings of
about P490M could be realized.
d)
Interest payment for
delayed payment of billing is not allowed.
Cost of construction supervision is
minimized once supervision will be undertaken by DPWH engineers
instead for foreign consultants. A savings of P85M could be
realized.”
The amount involved for these 2
projects was $33M, out of the total $150M total of NRIMP1. When
Phase 1 was completed, 2 out of 10 projects had been cancelled.
Upon review of these projects, they
were eventually repackaged into three projects: one, CW-RU-1.4B,
Rehabilitation of Surigao-Davao Coastal Road (Marihatag-Barobo/Tagbina-Hinatuan);
two, CW-RU-1.6A, Rehabilitation of San Enrique-Vallehermoso Road (La
Castellana-Canlaon Section); and three, CW-RU-1.6B, Rehabilitation
of Kabankalan-Basay Road (Hinobaan-Basay Section).
Once we gained the approval of
President Arroyo, local funding was allocated and the bidding was
conducted locally in the areas of the projects themselves.
To date, we have completed the
Rehabilitation of San Enrique-Vallehermoso Road and the
Rehabilitation of Kabankalan-Basay Road, plus two sections of the
Rehabilitation of Surigao-Davao Coastal Road. Three sections are
on-going and targeted for completion by the end of 2009.
Because of the withdrawal of these
projects, WB cancelled the $33M portion allocations for same and
initiated further investigation on the alleged collusion by their
Department of Institutional Integrity or INT.
The copy if these results have been
transmitted to the Ombudsman through the Department of Finance so
the Philippine Government can look into the administrative and
criminal aspects of matter. Furthermore, the World Bank issued a
public statement on the debarring of the contractors.
ACTIONS TAKEN
Given the turn of events in NRIMP1,
the DPWH has taken a number of steps to address the issues raised
with regard to malpractice and other anomalies.
After the first round of failed
biddings, we created a committee to investigate the allegations on
collusion, chaired by then Officer-In-Charge, Director of Internal
Audit Service Camilo Foronda, in June 2003.
In December 2003, the DPWH initiated
an Independent Call Line system with Procurement Watch, Inc. taking
on the challenge of being the NGO watchdog, particularly to report
the complaints and other feedback on the rebidding of the project.
In 2004, further revisions were
incorporated into the procurement procedures with the agreement of
the World Bank.
These include the advertisement of
projects in the United Nations Development Business newsletter and
dgMarket, and the inclusion of contractors for NRIMP1 in the Civil
Works Registry, both of which boost transparency in the process.
NRIMP 2
Since the November 2007 announcement
of the deferment of the discussions fro NRIMP2, the DPWH has been in
pro-active discussions with the World Bank on how to address the
collusion perception issue.
We believe that we have been able to
show the sincerity of our efforts to learn from past experiences and
have been successful in obtaining approval of NRIMP2 in May 2008.
As a backgrounder, Phase 2 of NRIMP
involves 14 projects with a budget of $232 million under the three
different components.
One component focuses on National Road
Improvement of 450 km of national arterial roads and related
bridges, including the upgrading of 146 km and rehabilitation of 304
km.
Another aspect tackles Road Asset
Preservation with the institutionalization of a road maintenance
program through long-term performance-based contracts and
preventive, routine and emergency maintenance.
We also have another on Institutional
and Capacity-development, enabling the upgrade and modernization of
the processes and operations of the DPWH, and targeting improved
organizational effectiveness and integrity of public road management
in services of the DPWH.
Under the Institutional and
Capacity-development, there is also included a sub-component for
Strategic Sector Reform, focusing n strengthening the operations of
the Road Fund and the framework for subsequent sector restructuring.
NRIMP 2 Safeguards.
With the approval and signing of the
agreement, the DPWH has instituted project-specific measures that
are intended to deter collusion and prevent further opportunities
for corruption.
These are:
First, the adoption of
post-qualification procedures that will determine the contractor’s
capability after bids are submitted. While there are
pre-qualification requirements, the post-qualification procedures
protect the process. This also encourages the participation of more
bidders, an indicator that the process is healthy and viable.
Second, the full participation of our
NGO partner Bantay Lansangan or Road Watch which is supported by
Australian Aid (AusAid), our institutional partner in
capability-building. Bantay Lansangan is fulfilling its mandate to
check on the procedures and process of on-going and future projects
of the World Bank and other institutions.
Third, the organization of a new
Project Management Office for World Bank NRIMP2 headed by
Undersecretary Romeo Momo and Director Carlos Mutuc.
Fourth, the presence of additional
observers during the bidding, including representation from the
Church.
Fifth, the use of Independent
Procurement Evaluators, Independent Technical Audit, Financial
Management Advisors, Organizational Effectiveness Advisors and
Internal Audit Strengthening, all co-financed by institution partner
Australian Aid (AusAid) to improve transparency and integrity of the
procurement process.
We conducted the first bidding for
NRIMP 2 last Wednesday, 21 January 2009, with representatives from
the Commission on Audit, Bantay Lansangan, other NGOs as well as the
media.
CLOSING
While it took an independent entity
such as the World Bank to point out further weaknesses, their
participation emphasized the importance of vigilance and
assertiveness to prevent any further opportunities for collusion and
corruption.
We believe that there must be
collective responsibility to safeguard the process against
malpractice and other anomalies. This is why we have continually
reached out to as many concerned sectors as possible and welcome
their involvement to take part and take responsibility for the
process.
Public interest can best be protected
if vigilance becomes not the exception but the standard. |
