You get what you pay for

In a Bosch factory in Germany, an American visitor asked an engineer how long a tool he was assembling would last. The engineer didn’t understand, not because of the language barrier but because Bosch tools are designed to last a lifetime. A Chinese-built drill is cheaper; it’s designed to last long enough to sell it. I know, I know, I’m exaggerating, but I want to reinforce the point: Cheapest is not the best deal. In fact it’s probably the worst deal over time.

Yet that’s what the government is forced to do. An ill-considered law — aren’t too many ill-considered? — Republic Act No. 9184, mandates that the government must accept the cheapest offer. That leads to products and systems built in the cheapest possible way, to ensure a profit. It ends up expensive in the long run, as subsequent repair, necessary rehabilitation, and poor service send the cost skyward.

You can buy a watch for P1,000, and sigh in resignation when it fails after a year or two. Or buy a Rolex and pass it on to your children, still ticking.

RA 9184 also doesn’t allow the government to negotiate a deal. It must go to public bidding. That takes time, lots of time. In effect, politicians are saying they don’t trust the bureaucrats. And certainly there have been instances where that mistrust was justified (as Sen. Francis Escudero says in a bill he filed, Senate Bill No. 274, the ZTE deal comes to mind). But that can be dealt with through transparent negotiating processes and passage of the freedom of information bill, which for some inexplicable reason is stalled in Congress. Its passage would help by giving the public access to details on any project that the government takes up.

A strengthened, expanded Commission on Audit (COA) would also help. Escudero’s bill calls for the appointment of two private sector reps, to sit with the bids and awards committees as observers, to ensure the honesty of the deal and eliminate undue influence by interested parties. It would also do away with the postqualification evaluation which can disqualify winning bidders for the flimsiest reasons in order to favor a losing bidder. To eliminate this problem, bidders should have qualified with all the requirements and conditions before the bids are opened. And only be challengeable during that period.

But Escudero’s bill doesn’t allow for negotiating a contract, and that is needed. It is there, in Congress in a request by the President for emergency powers (House Bill No. 5521). But that bill is not being treated with the emergency it deserves. It would be good if it were. And it would be sensible if negotiated deals are generally allowed for all government deals, not just in infrastructure, on emergency mode. Escudero should add it to his bill. It’s time to give public servants the ability to make judgments and not be shackled with a mindless dictate. Just put adequate controls in place.

Escudero’s bill also needs to control the issuance of temporary restraining orders. The courts have acted with complete irresponsibility on this in the past. Judges will issue a TRO at the drop of a hat. One should be issued only for strong cause, and if it’s sought by a losing bidder, only the Supreme Court should be allowed to issue it — which I think is now the case for infrastructure projects. And that should be done with great reluctance.

There’s a related area where you can get what you pay for if you pay handsomely for it. TROs have been a major hindrance to national progress, and getting right of way is another. The government has the right of eminent domain, but is rarely able to enforce it without drawn-out litigation. Again (an overused word), why do the courts accept every application for delay?

But here the solution is simple. Don’t pay the totally inadequate appraised value, as it used to be, and not even market value, as it is now, but 1.5, even 2, times market value. Given the huge time saving, it would be cheap. No one would decline to accept double what their property is worth, or would have a very weak position of objection if they did.

Progress on approving and starting government projects has been disappointingly slow. These are some of the reasons why. Here are some of the solutions to achieve speed. Let’s do so.

E-mail: wallace_likeitis@wbf.ph. Read my previous columns: www.wallacebusinessforum.com.