PPP Center’s reaction to Calax commentary

This refers to David L. Balangue’s article titled “On Calax and the DAP” (Opinion, 7/26/14). Balangue stated that “the real issue with respect to this major infrastructure (Calax) project is not really whether the SMC Group should have been disqualified or not… The bidding process itself is flawed and potentially violates the Government Procurement Act (Republic Act No. 9184).”

The Public-Private Partnership (PPP) Center would like to clarify that Balangue’s reference to RA 9184 relative to the Calax project is erroneous. PPP procurement is governed by RA 7718, or the Amended Build-Operate-and-Transfer (BOT) Law, and its revised implementing rules and regulations (IRR).

The DPWH-SBAC (Special Bids and Awards Committee) faithfully complied with the provisions of the BOT Law and its Revised IRR and carefully evaluated the bid security, as part of the Technical Proposal submitted by Optimal Infrastructure and Development Inc. of San Miguel Corp. (SMC). In relation to the requirements under the Revised BOT Law IRR and the project’s bidding documents, SMC’s bid security failed to comply with the 180-day validity requirement. Section 7.1, in relation to Section 11.7 of the IRR, explicitly states that “bids and bid securities shall be valid for a period prescribed by the Agency/LGU concerned in the bidding documents but in no case beyond one hundred and eighty (180) calendar days from the date of opening bids.”

The article also stated that “the problem is that the project is intended to be awarded to the highest bidder rather than the lowest bidder.” Again, PPP procurement is governed by RA 7718, not by RA 9184, which allows as bid parameter the highest present value of proposed payments to the government.

The article further stated that “this Calax bid premium payment to the government is another example of such hidden taxes. What the winning bidder is going to pay to the government as premium on top of the estimated cost of constructing the toll road of P35.4 billion, as predetermined by the Department of Public Works and Highways, is nothing more than an advance payment of taxes which the toll road users will absorb by way of higher toll fees!”

The PPP Center would like to point out that premium payments for the Calax Project, just like in any other PPP contracts previously awarded, will not be passed on to the public through increased user charges as these charges are pre-determined prior to the bidding process and will be subject to the review and approval by the concerned regulatory agency (e.g., Toll Regulatory Board). These premium payments will go straight to the National Treasury which can then be used to fund other equally important projects of the national government.

—SHERRY ANN N. AUSTRIA,

deputy executive director,

Public-Private Partnership Center