Designated Survivors in Government Procurement

The Government Procurement Reform Act

Republic Act No. (RA) 9184, otherwise known as the “Government Procurement Reform Act,” promotes the ideals of good governance in all its branches, departments, agencies, subdivisions, and instrumentalities, including government-owned and/or -controlled corporations, and local government units.  The law focuses on transparency, competitiveness, streamlined efficiency, system accountability and public monitoring of the procurement process.

My first encounter with RA 9184 was in the bidding of the first nationwide Automated Election System in 2009 by the Commission on Election (COMELEC) as the procuring entity.   And it provided me firsthand experience how Bids and Awards Committees can blatantly disregard the law.

In that bidding, the Special Bids and Awards Committee (SBAC) allowed the joint venture of Smartmatic and TIM Corporation (Smartmatic-TIM) to submit the ISO 9001 certification of a Taiwan-based company called Jarltech. It is like applying for a job and submitting the NBI clearance of your relative.  And despite virulent objections from other bidders, the SBAC unbelievably evaluated Smartmatic-TIM as eligible!  There have been numerous procurement deficiencies of Smartmatic-TIM in the 2009 bidding but the SBAC readily and eagerly ignored these deficiencies.  Among 11 vendors who bought the 1M bid documents, Smartmatic-TIM was the designated survivor.

Since then, I have encountered numerous procurement anomalies either as an invited observer or as a bidder.  The brazenness of BACs in ensuring that their preferred vendor is the designated survivor is almost comical.  One procuring entity required bidders to submit original legal documents such as the Mayor’s Permit.  In my experience with previous biddings, the BAC allowed certified true copies of the legal documentary requirements. But this BAC required the original documents!

This same BAC also answered, when asked the specific number of licenses required, “to be determined by the consultant and the end-user/s during systems investigation (after determining the winning bidder)”.  This allows the designated survivor to be the only bidder who knows the exact requirement, allowing them to submit a feasible financial proposal.  While the other bidders will estimate the maximum number, thereby submitting a higher financial proposal.

The final resort of the procuring entity to muzzle complaining vendors is to ask them to file protests.  The challenge facing protesting vendors is the payment of the non-refundable protest fee which may range from .75% to .10% of the approved budget of the contract, depending on the Approved Budget of the Contract (ABC).  In the case of the COMELEC bidding in 2009, the ABC is 9.8B (if my memory serves me right). So the non-refundable protest fee is 9.8M.  The protest will be resolved by the head of the procuring entity, the same person who handpicked the head of the Bids and Awards Committee!

But what if the designated survivor actually gets disqualified and another bidder becomes qualified?  The recourse of the procuring entity is to remove the budget.  This is what COMELEC did when Indra was the winning bidder for the Voter Verification System in 2015 (to be used in the 2016 National and Local Elections).  Instead of issuing the Notice of Award, COMELEC sent a letter that the project is cancelled because the budget allocated for the project was realigned to purchase more Vote Counting Machines from, you guessed it, Smartmatic!

(Disclosure: I am now connected with Indra but was not yet an employee of the company when this incident happened.)

And despite several critical blunders of Smartmatic, they have not been blacklisted and have been allowed by COMELEC to continue participating in multi-billion bids.  In 2010, the flash cards were recalled one week before the elections. In 2013, Smartmatic admitted in the Joint Congressional Oversight Committee on AES that they deleted files in the Transparency Server during election day. And not learning from their stupidity, they again modified the script file during election day in May 2016. 

(Access and watch the videos.)

The sheer incompetence of this company should already blacklist them from doing any work in COMELEC. But RA9184 states that only the procuring entity can blacklist the supplier. 

This guarantees Smartmatic to be the designated survivor, and the Filipino voters to be the biggest losers.

About the Author
Mr. Leo Querubin is a Certified Management Consultant, a Master Project Manager, A Certified International Project Manager and a Fellow of the American Academy of Project Management with over 30 years of extensive, international experience in planning and implementing large scale IT projects. He is currently a Managing Consultant at Indra Philippines handling the Public Administration, Education and Healthcare markets.
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