Abaya, 16 others indicted

Ombudsman finds probable cause to charge them over MRT3 maintenance contract

Ombudsman Conchita Carpio Morales has indicted former Department of Transportation (DOTr) Secretary Joseph Emilio Abaya and 16 others over the 14.2-billion MRT3 maintenance contract.

The Office of the Ombudsman found probable cause to charge them with graft for violation of Section 3(e) of Republic Act (RA) 3019 or the AntiGraft and Corrupt Practices Act.

Aside from Abaya, also indicted were DOTr Undersecretaries Edwin Lopez; Rene Limcaoco, head of the Negotiating Team; Catherine Jennifer Francis Gonzales, vice head, Negotiating Team; MRT3 General Manager Roman Buenafe; Camille Alcaraz, Assistant Secretary for Procurement; Ofelia Astrera, vice chairperson, MRT3 Bids and Awards Committee; Charissa Eloisa Julia Opulencia, Attorney V; Oscar Bongon, chief of

the Engineering Division; and Jose Rodante Sabayle, Engineer III.

The private respondents are Eldonn Ferdinand Uy of Edison Development and Construction, Elizabeth Velasco of Tramat Mercantile, Inc., Belinda Tan of TMI Corporation, Inc., Brian Velasco of Castan Corporation, and Antonio Borromeo, Jun Ho Hwang, and Elpidio Uy of Busan Universal Rail, Inc. (BURI).

The Ombudsman's Special Panel of Investigators discovered that in October, 2014 and January, 2015, the DOTr conducted two biddings for the threeyear maintenance service contract for the MRT3.

The biddings were considered as a failure due to the non-submission of bids, so Abaya took action on January 28, 2015 and issued a Special Order creating the MRT3 Bids and Awards Committee (BAC) for the procurement of goods, infrastructure projects, and consulting services of the MRT3 system.

In March, 2015, the MRT3 BAC issued Resolution No. 002, Series of 2015, recommending the resort to Negotiated Procurement through Emergency Cases under Section 53.2 of the Revised Implementing Rules and Regulations (RIRR) of the Government Procurement Reform Act (Republic Act No. 9184).

The contract would be awarded to a single maintenance service provider, which would provide a Single Point Responsibility for the General Overhauling of 43 units of light rail vehicles (LRVs), total replacement of the Signaling System, and additional maintenance works. All in all, the contract amounted to 14,251,900,000. The proposal for the contracts was submitted on October 21 by Busan Joint Venture (Busan JV); Joint Venture of DM Consunji, Inc., Beta Electric Corporation, Baudis Bergmann Rosch Rail Automation GmbH, and Hamburg Consult GmbH; and the Joint Venture of SchunkBahn-Und Industrietechnik GmbH and Comm Builders and Technology Philippines Corporation.

The Busan JV is comprised of Edison Development and Construction, Tramat Mercantile, Inc., TMI Corporation, Inc., Castan Corporation, and BURI.

But all these joint ventures fell short during the evaluation process because they lacked eligibility and technical documents. However, the Negotiating Team declared on October 28 that Busan JV is the sole entity that passed evaluation.

The Negotiating Team then recommended to the MRT3 BAC that the bid of Busan JV be declared as the Single Calculated Officer and that post-qualification proceedings be conducted.

In turn, the MRT3 BAC issued Resolution No. 14 Series of 2015 on December 21 and recommended that the project indeed be awarded to Busan JV.

The recommendations pulled through on January 7, 2016 when the DOTr, the MRT3 and the Busan JV entered into a contract for the long-term maintenance contract.

The Commission on Audit (COA), however, stated in its Consolidated Annual Audit Report (CAAR) for 2016 that the "DOTr still failed to provide the riding public with a safe and comfortable transport system even with the procurement and delivery from August 2015 to January 2017 of 48 new LRVs with a total cost of 13,759,382,400.00."

"Despite four years in the procurement process and total payments of 1527,761,083 (equivalent to 14 percent of the contract price) to Dalian, the LRVs remain inoperational and unaccepted by the DOTr as of reporting date due to glitches in the power supply and signaling system. These resulted from the DOTr’s poor planning and other major procurement lapses," it added.

Based on its investigation, the Ombudsman's Special Panel of Investigators discovered that respondents extended unwarranted benefits, advantage, and preference to the contractor when it awarded the project to Busan JV despite its ineligibility.

"As the Busan JV’s offer was still considered as successful, the potential JV partners must enter into a Joint Venture Agreement (JVA) in accordance with its rules. But they did not. Still, the Busan JV was awarded the contract – yet another violation of the rules under RA No. 9184 (Government Procurement Act)," the Ombudsman said in its 88page Consolidated Resolution.

The Special Panel also found irregularity in the award when Busan JV was allowed to just submit a Certificate of Registration of BURI as a Special Purpose Company (SPC) instead of a valid JVA.

Records from the companies' 2014 audited financial statements revealed that the net worth of Tramat was only 11.9 million, while Edison's net worth was 1383.5 million. This fell below the 11 billion required under the amended Instructions to Offerors.

The Ombudsman stressed that Busan JV was not technically, legally, or financially capable to take on the long-term maintenance contract for the MRT3. Still, the respondents chose to award the contract to them.

"Occupying an executive position, Abaya is required to exercise diligence in the highest degree in the performance of his duties," the Consolidated Resolution read. "There is a given authority and responsibility to Abaya as DOTr Secretary to regulate the acts of the DOTr officials responsible for the procurement of the MRT3 long-term maintenance contract and he cannot simply evade such responsibility by invoking reliance on his subordinates, especially considering that the subject contract is one with a scope and magnitude affecting a big portion of the commuting public in Metro Manila, with an accompanying financial impact on the coffers of the government amounting to more than 14 billion."

When Abaya allowed the award of contract to Busan JV despite the irregularities, he “deliberately ignored applicable laws, rules and regulations, and standard operating procedures, falling short of or disregarding the required competence expected of him in the performance of his official functions,” added the Consolidated Resolution.

Atty. Enricka Gonzales, spokesperson of Abaya, said that the Ombudsman's resolution was "unfortunate" since the complaint against him filed by Department of Transportation (DOTr) Undersecretary for Legal Affairs and Procurement Reinier Paul Yebra and Bayan Muna party-list were "poorly-crafted and unsubstantiated."

"Secretary Abaya will consult with his lawyers once they receive an official copy of the decision about his next course of action," she said.

Meanwhile, Bayan Muna's Renato Reyes Jr. said in a statement that they "welcome" the Ombudsman's resolution. "These maintenance contracts involving what we alleged are unqualified providers were partly to blame for the sorry state of the MRT3," he said.

The complaint against former administration officials – Manuel “Mar” Roxas, Florencio Abad, Cesar Purisima, Carlos Jericho Petilla, Mario Montejo, Voltaire Gazmin, Rogelio Singson and Arsenio Balisacan, who acted as members of the Government Procurement Policy Board — were dismissed by the Ombudsman due to lack of probable cause.