Buyer beware
The country has Metro Rail trains without engines. Now we are told that the Bureau of Fire Protection, which suffers from a lack of fire trucks, has defective vehicles provided by a Chinese firm and a local partner.
This is according to a report prepared by the Commission on Audit. Out of 469 fire trucks procured in February 2015 at a cost of P2.577 billion, 176 had defects, the COA report declared. The defects range from busted lights and damaged side mirrors to sudden engine acceleration and unintended swerving as well as engine shut-off during operation. Such defects can put at risk the lives of firefighters and the public.
While the contract was awarded through bidding, product quality and the background of the bidders apparently lacked proper vetting. As bidders focused on meeting the low price ceiling, providers of quality fire trucks stayed away, the COA report noted.
After two bidders were disqualified, the contract was awarded to a joint venture of Hubei Jiangnan Special Automobile Co. Ltd. of China and its local partner Kolonwel Trading, supposedly the majority owner. But Kolonwel had declared assets of only P1.4 million in 2012 and P1.6 million in 2013, government auditors pointed out. The COA report doubted the capability of Kolonwel to put up its share of P60 million in initial funding for the project. The joint venture promised to repair the defective fire trucks, but as of May this year, auditors reported that 107 still could not be used.
Apart from launching a graft investigation, the government should learn from this case and remember the caveat about letting the buyer beware. President Duterte should reiterate what he thinks about awarding contracts with the price as the overriding consideration, with product quality suffering as a result.
This emphasis on securing the lowest bid is understandable. Officials tend to worry about potential lawsuits and a graft case if they are accused, usually by a losing bidder, of procuring overpriced goods or services. But there must be a way of balancing product quality with reasonable pricing. The President is not buying soldiers and police personnel cheap “paltik” guns. Substandard products should also not be inflicted on other agencies, especially those involved in saving lives and property.
Different industries know which products deserve higher price tags. Government procurement laws can be refined to factor in such considerations. As the fire trucks and MRT trains without engines are showing, cheap could cost more for taxpayers in the long run. Those responsible for this fire truck deal must be held accountable.