More open bids, savings up
amid project delays

Happy and blessed Easter to you all!

Our latest offering is a two-part report on public works contracts awarded under the “daang matuwid” regime of President Benigno Simeon C. Aquino III, compared with those awarded under the administration of former President Gloria Macapagal-Arroyo.

This report by PCIJ Fellow Roel R. Landingin, who is also the Manila correspondent of The Financial Timesof London, looks at the 2.600 biddings conducted by the Department of Public Works and Highways in the last 38 months – 18 months before and 20 months after President PNoy came to power on June 30, 2010.

The DPWH under Secretary Rogelio Singson, an Aquino appointee, had suspended 19 flood-control projects awarded in the twilight months of the Arroyo administration. These were eventually bidded out and implemented in late 2010 and 2011.  Hence, despite or precisely because of the project delays, the DPWH got much lower prices for the contracts to carry out the projects.

There is apparent testimony to transparency in the DPWH under Singson. The agency promptly granted a PCIJ request for a copy of its awarded contracts database in spreadsheet format; a similar PCIJ request filed in early 2009 with Arroyo’s DPWH secretary Hermogenes Ebdane Jr. was rebuffed.

Part 1 of our report offers a few pieces of good news. For instance:

• The average number of bidders for large projects worth P50 million and more went up from 1.3 under the Arroyo administration to 4.4 under Aquino. For projects valued at less than P50 million, the number of bidders rose only a bit from 1.3 to 2.4. More bidders suggest more competition, which should result in lower price bids for DPWH projects.
• The average “price cut,” or the difference between the ABC (authorized budget ceiling) and the lowest bid, for projects worth P50 million more than doubled to 10.9 percent under Aquino, from only 4.2 percent under Arroyo, suggesting more competition perhaps because of the increase in average number of bidders.
• The DPWH says savings, or the difference between ABC and the awarded amount, on 106 contracts for civil works, goods and consultancies tendered by the central office and project management offices between July 2010 and November 2011 averaged 15 percent.
• However, savings on 5,091 contracts tendered by regional offices and engineering districts averaged only 10 percent, according to the DPWH’s 2011 accomplishment report. Interestingly, post-Typhoons Ondoy and Pepeng rehabilitation projects, which include contracts cancelled by Singson and tendered again in 2011, yielded the biggest savings of as much as 30 percent.

Yet again, Part 2 of our report reveals the not-so-good news: Singson’s early gains in instituting transparency and integrity in the awarding of public works contracts do not resonate as well with local politicians and lawmakers who continue to this day, contractors say, to impose exactions and collect payoffs.

The contracts that remain most vulnerable to corruption are those being bidded out by local DPWH engineering districts, and those being implemented using the “pork barrel” funds of the members of Congress.