Secretary's Corner
HON.
HERMOGENES EDEJER EBDANE, JR.
UPDATE ON PANEL
INVESTIGATION OF WORLD BANK SANCTIONS
03 February 2009
The issue of World
Bank sanctions against several contractors requires that the DPWH
act with prudence and according to law. We have said from the start
that due process is required and due process will be followed.
The clamor for
outright blacklisting from DPWH projects of the World Bank-debarred
contractors has been raised with insistence by some sectors. They
base this call on the findings of the World Bank that ‘more likely
than not” there was collusion through clustering and rigging of bids
among the said contractors.
It has also been
suggested that said contractors should be prevented from further
participation in subsequent biddings of government projects in
general.
However, the
Guidelines of the New Government Procurement Act or RA 9184 are very
explicit on the blacklisting of contractors, foremost of which is
that such blacklisting be done through a process as defined in the
Guidelines. Furthermore, just to blacklist them without due process
has no legal basis, and is not an option in democracy.
In compliance with
the process defined by the Guidelines of the Government Procurement
Policy Board, The Department of Public Works and Highways is
duty-bound to conduct an investigation. The panel we have created
under Assistant Secretary Jaime A. Pacanan is activated and working
on the matter.
The on-going
investigation is bringing to light several key policy differences
which have contributed to the circumstances leading to the World
Bank sanctions.
First among those
differences is the non-applicability of the ABC, a key provision
under Philippine Law in the Government Procurement Act, for
internationally-funded projects. As a result, the ABC or the
non-compliance to it is not an issue to the World Bank.
All procurements of
the projects, under NRIMP1 followed the Procurement Guidelines Under
IBRD Loans and IDA Credits, which is markedly different from the New
Government Procurement Law or RA 9184, which is used in all locally
financed projects.
Our review of the
bids for NRIMP 1 show that there were a total of 9 projects for road
upgrading that were successfully implemented.
Of these 9
projects, three where above the Approved Budget for the Contract or
ABC, namely, Zamboanga-Pagadian Road, above by 25.85%; Surigao-Davao
Coastal Road, over by 12.80% and Davao – Bukidnon Road, by 32.46%.
The other 6 projects were below the ABC.
Despite the
variances from the ABC by some of the bids, which is prescribed by
RA 9184, ALL THESE 9 PROJECTS WERE APPROVED WERE APPORVED BY THE
WORLD BANK, AND HAVE BEEN IMPLEMENTED.
In NRIMP1, the
Approved Budget for the Contract which is prescribed as the standard
by our very own Philippine Law RA 9184 was not a factor or a
consideration at all. That is a key difference which continues to be
worked on with the World Bank.
The sanctions of
the World Bank underscore the difference in policy structures
followed, particularly in the light of the projects involving the
debbared contractors.
In Phase 1 of
NRIMP, there were two other projects that were bidded twhice, in
2002 and 2004, the Surigao-Davao Coastal Road (Marihatag-Borobo/
Tagbina-Hinatuan Section) and the Negros Occidental project which
was eventually split into two contract packages, the San
Enrique-Vallehermoso Road and the Kabankalan-Basay Road.
After a third
bidding in 2006, Secretary Ebdane recommended the withdrawal of said
projects from NRIMP1 because of the pressing schedule of completion.
These 3 projects,
which were withdrawn were the projects which involved the
contractors debarred by the World Bank. Their bids, in the three
rounds of bidding, complied with the prescribed ABC of RA 9184, yet
the bidding in every round was declared a failure by the World Bank.
And it must also be
emphasized that these projects were withdrawn from World Bank
funding, meaning no transaction took place involving these
contractors and the World Bank. Yet, the World Bank pursued the
investigation and imposed sanctions on them.
We respect the
decision of the World Bank, they are bound by their own rules.
Inasmuch as the DPWH is an implementor of the Govenrment Procurement
Act, we too are bound by the Guidelines created by the Govenrment
Procurement Policy Board, and we must follow our Philippine Laws.
After experiences
of NRIMP 1, one of the most critical discussion points between the
World Bank and the Department of Public Works and Highways was the
use of the ABC into the policy structure of NRIMP2. We have been
making strong representation that any bid above the ABC should not
be considered and be rejected.
The discussions led
to this proposal being considered all the way up to the Board of
Policy, but was ultimately rejected. Yet, we continue to work
closely with the World Bank not only on building roads but also
building the system that will effectively enable an even more
transparent procurement process.
The approval of
NRIMP2 in May 2008 proves that the steps taken by the PDWH to
improve the procurement process protection are recognized as viable
by the World Bank.
The words of World
Bank Philippines Country Director Bert Hofman delivered last January
27, 2009 at the Integrity and Human Rights Conference best summarize
the partnership we continue to build.
“ Finally, let me
say a few words about NRIMP. As we speak, the House is holding
hearings on the suspensions that the World Bank sanctions Board has
handed down, which followed a long and careful process of
investigation and evaluation of evidence concerning possible
collusion in the first phase of the project. This process, including
the investigation by the appropriate Philippine authorities and
institutions is important, and needs to have its due course.
However for today’s
topic, the more interesting part is that happened after we detected
signs of collusion and corruption in the first phase of the project.
The Department of Public Works and Highways, under the leadership of
Secretary Hermogenes Ebdane, and other oversight agencies worked
with the World Bank to strengthen anti-corruption controls in the
second phase of the program. The second phase of NRIMP was approved
by the World Bank’s Board in May 2008. In designing this phase, the
World Bank and the DPWH took into account the lessons learned in the
first phase. A battery of stringent anti-corruption measures was
incorporated:
-
Independent
procurement evaluation to improve
the transparency and integrity of procurement processes.
-
Enhanced
procurement controls in the
Department of Public Works and Highways to ensure the
reliability of contract cost estimates, detect over-pricing,
enhance supervision control over contract variations and give
people a means for making confidential complaints.
-
Stronger
internal controls and internal audit capacity
in the Department of Public Works and Highways.
-
Independent
Oversight by Civil Society- A
coalition of citizen and road user groups, formed in 2007 and
named “Road Watch’ (Bantay Lansangan) will give a stronger voice
and more influence to citizens in ensuring transparency and
proper use of public funds for roads.
So NRIMP 2, the
second phase, is not just about building roads but about building
stronger governance and fighting corruption in the public sector.
This may not mean the end to all corruption in the roads sector, but
I am confident that it is a major step forward, and I hope
implementation of the program will vindicate that judgement.”
We are heartened by
the World Bank’s words, and have shown them in words and actions
that we are determined to stay the course in building roads and in
building stronger governance against anomalies and other
malpractices.
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