Should Calax be rebid?

The controversy over Calax (Cavite-Laguna Expressway) is a difficult one, and one that President Benigno Aquino should be very careful about intervening. It is not just about who should win this project, but also what sort of process can be expected if one takes part in future PPP (public-private partnership) projects. It will set a precedent that will be seen to apply to all, so the President must be very thoughtful, and fully explain the reasons for whatever decision he makes.

The issue isn’t: 1) Should a proposal be rejected on a technical failure or 2) Should a proposal be rejected that gives P9 billion more to the government. It’s: 1) What effect will there be on future PPP projects and 2) What policies should be institutionalized to prevent similar occurrences in the future, and should they be retroactive.

Two of the President’s most respected and effective Cabinet members have made a difficult decision. They have put strict adherence to bidding rules over what could be justifiable accommodation. They have put a stop to the far too often personal judgments, political intervention, or court interference that have put prior government projects into uncertainty, something businessmen hate.

I have studied this issue quite intensively. It boils down to whether a 4-day shortfall uncovered on the opening of the first envelope (of three, technical and price to follow) could be corrected, or not. After days of discussion, the special bids and awards committee (SBAC) decided that the rules must be stringently followed. It is indeed unfair that San Miguel Corp. should be disqualified because it screwed up on a measly four days of bond coverage. But it did screw up; somehow, all the people who I’m sure went over its submission carefully missed it. It made the bid ineligible, and the SBAC rejected it.

Whatever you think of that decision, it was made after careful reflection. An override by the President will open up future projects to challenge. There is little question that SMC’s offer is a better deal, so it’s tempting to accept it. But with the envelope being opened outside the SBAC’s jurisdiction, it could be legally challenged that it wasn’t the originally submitted offer. What a mess.

It’s a viewpoint that the President would have to consider in making a decision. A problem he could avoid by leaving the award with Ayala or, as he has suggested, by calling for a rebid. But if he does that, it will bring all kinds of associated problems that he won’t want if he thinks about it.

One can argue, and I certainly would, that a minor error should not be sufficient reason to disqualify. But if you make such an allowance, where do you draw the line? At what point does discretionary decision shift from acceptable to unacceptable? One of the weaknesses in the past was that because of all the criticism and uncertainty, flexibility in judgment was created. Whether you agree or not, the decision was made based on careful thought as to the overall impact on the PPP program.

If I were Ramon Ang, I’d be firing some people for carelessness and incompetence. He had, it seems, come up with a much superior bid at least on the premium offered. I don’t know about the other facets of the project, yet they’re just as important, if not more so. Money is not everything; it’s just one parameter of a complex project. And no one, as far as I know, got to see SMC’s second (technical) envelope, yet I consider that the most important. Yet no one seems to be talking about the quality of the bid.

I wonder if the President is reviewing that, too. But before he does, he should consider what the boards of eight leading local and foreign business chambers have said in a strongly worded statement: A decision has been made. Whether right or not, it’s made. The government must remain committed to its word.

Not wanting to lose some P9 billion is understandable. But as the business groups have said, it puts all future PPP projects into question: Will an award stick, or will it be challenged legally or politically? I feel so sad for SMC: On price it should have won. It seems to me that the President really has little choice. He could put the entire PPP program at risk for a one-time price advantage if he makes what basically will be a political decision.

I believe all bidders have access to their competitors’ bids, except for the price. What is needed in the future is that once all have submitted their bids, they can then raise whatever objections they have for the government to answer. Once that’s satisfactorily done—within an announced, nonextendable deadline—the government can make the final decision and award the project.

What then has to happen is that once the award is made, no objection will be entertained. If this requires a law, pass that law quickly so we can get infrastructure built and projects done. We have the worst infrastructure in Asia, or very close to it. It’s time to act decisively, and that means not accepting interminable delays. That means the courts have to cooperate, too. The ease of getting a temporary restraining order or a writ of kalikasan for almost anything has to stop. And the Supreme Court should certainly not be one of those courts. It has far more important things to do. Issuing TROs should be a function of the lower courts only.

The PPP program is taking off in a country that ever so desperately is in need of infrastructure (six hours on Edsa tells me that). That can’t be put at risk. It’s bad enough that we have power problems. Let’s not have road ones, too.

Let me try to put it simply: SMC should have won the bid but its bid team screwed up. What I object to, whether in this or in any other project, is the delay. The delay must stop if this country is ever to get anywhere.