Project Bangon Marawi, Year 1

A majority of Duterte allies will pick
Marawi’s ground-zero contractor

A SMALL COMMITTEE of seven persons, including four political appointees and associates of President Rodrigo R. Duterte from Davao City and elsewhere in Mindanao, will decide which business entities will win the multi-billion-peso contract for one of the major components of the rehabilitation efforts in Marawi City.

Except for three career-service personnel, the other members of the Selection Committee that Duterte’s Executive Order No.49-2018 created to serve as bids and awards committee for the project to rebuild the city’s so-called “most affected areas” or MAA are three lawyers and a human-resource person with little or no experience in contracting and procurement of major infrastructure and development projects.

The project covers some 250 hectares, including 24 of the 96 barangays of Marawi that make up the MAA, or those deemed to have been the most devastated during the five-month siege of the city by Islamist militants last year.

The committee members include Davao City’s city administrator and planning and development head from 2010 to June 2016, and a Duterte associate since the 1990s; the daughter of House Speaker Pantaleon Alvarez who served as spokesperson of the Partido Demokratikong Pilipino-Laban (PDP-Laban) in the May 2016 elections and is now an assistant secretary for communication at the Finance department; and a Duterte-appointed Tourism department undersecretary who now works at a housing agency but had no public service record prior to 2016.

Until a fortnight ago, a fourth Duterte appointee – a Public Works assistant secretary – was also a committee member. He was attending a meeting of the Selection Committee when news broke about the President’s order for him to resign for alleged corruption. His committee membership has since reverted to a career official and engineer who had been posted as regional director of Public Works in the Autonomous Region in Muslim Mindanao or ARMM.

MARAWI MAA Selection-Committee, PCIJF, may 2018

Despite their evident lack of experience in evaluating public contracts on technical and financial merits, the Duterte appointees and their co-committee members will pass judgment on the MAA deal that is now estimated at P17.2 billion to P20 billion by a proponent consortium of five Chinese and three Filipino companies.

And they would do so absent the usual rigorous rules that should apply to all public contracts worth P1 billion or more, according to the procurement law and the guidelines of the National Economic and Development Authority-Investment Coordinating Council (NEDA-ICC).

NEDA out, opts out

Duterte’s E.O. No. 49 dated Feb. 5, 2018 has exempted the selection of the private contractor for the MAA projects that would enter into a joint-venture agreement with the government from NEDA’s diligent review and evaluation.

Interviewed by PCIJ, officials of Task Force Bangon Marawi (TFBM) – an inter-agency body that oversees the recovery, reconstruction, and rehabilitation efforts in the city – said that NEDA had purposely requested to be excluded from the selection committee. NEDA, they said, had thought its presence in the committee would be “inappropriate” and that the committee “would not be following NEDA guidelines (but) NHA guidelines” anyway.

PCIJ confirmed this with NEDA Deputy Director-General Adoracion M. Navarro. She said that NEDA Director-General Ernesto Pernia had sent a letter to TFBM chairperson and Housing Secretary Eduardo D. del Rosario “asking that NEDA be excluded from the joint venture Selection Committee (the body that acts as the bids and awards committee) as well as from the Technical Working Group (the body that is responsible for the processing of eligibility documents and preliminary evaluation of proposals).”

“On the negotiations for the MAA rehabilitation, NEDA is not involved,” Navarro said, but “NEDA provided guidance as a resource institution during some of the meetings.”

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EO defines members

By some apparent design, Duterte’s EO defines with absolute precision that voting slots in the Selection Committee should be assigned to the following officials: the general manager of the National Housing Authority (NHA); the secretary general of the Housing and Urban Development Coordinating Council (HUDCC); the assistant secretaries of the Finance, Public Works, and Environment and Natural Resources departments; the NHA operations head; and the HUDCC deputy secretary general.

By some unusual turn of events, four of these positions are now occupied by Duterte’s political appointees and allies.

The seven voting members of the Selection Committee, which serves as the Task Force’s bids and awards committee, are:

Falconi V. Millar, HUDCC secretary general, as chairperson. Millar is a lawyer and certified public accountant. Duterte had earlier appointed him as undersecretary in the Department of Tourism (July 2016 – Sept. 29, 2017); he assumed his post at HUDCC the next day on Sept. 30, 2017, or just eight months ago. He had not served in public office prior to his appointment at HUDCC.

In his curriculum vitae, Millar said that he had worked as a senior partner at the MVP Law Offices (2007-2016), professor of law for “various universities” (2007-2016), general manager of Dunkin’ Donuts Phils. for Metro Manila and Quezon operations and “in concurrent capacity” general manager of Antelope Enterprises Inc.’s real estate division (2005 to 2010). He graduated valedictorian of both his law class at Manuel L. Quezon University in 2006, and his accountancy class at Far Eastern University in 1991. Millar heads the secretariat of Task Force Bangon Marawi.

Marcelino P. Escalada Jr., NHA general manager, as co-chairperson. Duterte appointed him to the NHA only in 2016, but they had worked closely together much longer– since 1995, in fact. Escalada was Duterte’s first human resource management head before being assigned in Special Projects. He became city administrator in 2010 and served as head in concurrent capacity of the City Planning and Development Office, City Cooperative and Development Office before being appointed to the NHA. Between 2010 and 2013, Duterte was Davao vice mayor while his daughter Sara was mayor. By the next elections, Duterte would be voted as mayor again and would serve another three-year term. Beginning 1988, Duterte served as Davao City mayor for seven terms or a total of 22 years.

According to the NHA website, Escalada has a Master’s degree in Public Administration and is a PhD candidate for Development Management at the University of Southeastern Philippines. Said the website: “With his vast knowledge and experience in Public Administration, Development and Human Resource Management, Mr. Escalada spearheaded many strategic and innovative initiatives and under his leadership, the City government of Davao was hailed for best Human Resource (HR) practices.”

Escalada will be the person in charge and main signatory to the joint venture agreement that will be approved and signed with the winning developer in Marawi’s MAA.

Paola Sherina A. Alvarez, Department of Finance “assistant secretary for communications and special concerns,” as member. Daughter of House Speaker Pantaleon Alvarez, Paola is also DOF spokesperson. Paola has a law degree from the Ateneo de Manila University and an international studies degree from De La Salle University. Her official curriculum vitae posted online on a government agency website says that Paola at DOF “handles disaster-related concerns, Climate Change, and Legislative liaison,” and sits as “alternate board representative of the Secretary of Finance in different GOCCs (government-owned and -controlled corporations) where the Department of Finance has official membership.”

From November 2015, and during election campaign in May 2016, Paola served as “official spokesperson” of Duterte’s PDP-Laban party but has since taken a leave from this post. Paola has also worked closely with former Senate President Aquilino Pimentel III and Energy Secretary Alfonso Cusi.

Emil K. Sadain, DPWH undersecretary for Unified Project Management Office operations and undersecretary for technical services, as member. Sadain has the most experience of the seven committee members, having started his public-service career in 1986 as senior civil engineer at what was then the Ministry of Public Works and Highways. He has since held various positions in the department before being designated as undersecretary in 2016. Sadain actually replaced Engr. Tingagun Ampaso Umpa, former DPWH Assistant Secretary for ARMM, in the committee. Umpa was forced to resign due to allegations of corruption.

Michelle Angelica D. Go, Department of Environment and Natural Resources assistant secretary for Field Operations, Mindanao, as member. Go has held various positions in DENR. She was admitted to the Philippine bar in 1998. On occasion, the committee secretariat said that Dr. Sabdullah C. Abubacar, regional director of the Environmental Management Bureau in Northern Mindanao (Region X) attends for the DENR instead of Go.

Avelino D. Tolentino III, NHA deputy secretary general, as member. A lawyer, Tolentino has been with NHA for almost a decade. He held various positions before becoming NHA deputy secretary general. He has experience in corporate law and regional development planning.

Victor C. Balba, NHA head of operations, as member. As Group Manager of NHA’s National Capital Region’s Area Management Office and chairman of the NHA Bids and Awards Committee 1 for Infrastructure and Civil Works, an enormous cache of contracts, by value and volume, pass through engineer Balba’s BAC.

As early as August 2017, Balba has been signing notices of bids for eight various projects for the “Supply and Installation of Pre-Fabricated Shelter including Civil, Electrical and Sanitary/Plumbing Works (Pre-painted Steel Panels with Expanded Polystyrene (EPS) Insulation) for Marawi Affected Families.” To this day, though, the NHA website does not disclose the notices of award of the same projects to the winning contractor.

On Oct. 20, 2017, the sample units of the temporary shelters for the internally displaced population of Marawi were showcased on People’s Television 4, exclusive to the program of broadcast journalist Erwin Tulfo. On site, Balba said that NHA promises to build 600 such units by the end of 2017, even as he praised the President.

Said Balba: “Si President Duterte laging hands on doon [sa Marawi], talagang halos almost every two weeks andoon siya, umabot na doon sa ground zero, umabot na doon sa transition center (shelter). Iba yung Presidente natin ngayon, masipag, siguro dahil na rin meron siyang political will (President Duterte is always hands on there [in Marawi], he’s really there almost every two weeks, going as far as ground zero, the transition center. Our current President is really different, hardworking, perhaps because he has political will).”

The 22-square-meter single detached temporary shelter has a kitchen and shower room and could accommodate from five to seven persons, according to the NHA. It reportedly costs only P160,000, much lower than the P800,000 the Aquino administration paid for each 10-square-meter temporary shelter built for Typhoon Yolanda victims in the Visayas.

The Selection Committee also includes one non-voting member from the Public Private Partnership (PPP) Center and one observer each from the City of Marawi and the Commission on Audit.

Model units of the 'Biyaya ng Pagbabago Temporary Shelter' in Marawi City, Philippine Information Agency photo posted Dec. 27, 2017 http://pia.gov.ph/mindanaohour/articles/1003450

Model units of the ‘Biyaya ng Pagbabago Temporary Shelter’ in Marawi City, Philippine Information Agency photo posted Dec. 27, 2017 http://pia.gov.ph/mindanaohour/articles/1003450

Del Rosario’s role

Then again, on top of the selection committee, Task Force Bangon Marawi chair and Housing Secretary del Rosario assumes command. The unchallenged story by most sources is that del Rosario commands, too, the President’s full trust and confidence.

As a first lieutenant in the Philippine Army, del Rosario was assigned in Davao from 1983 to 1989. Across many more years later, he said, “I worked with the president (Duterte, then Davao City mayor) since 2000 as battalion commander for three years, Task Force Davao (commander) for two years and five months, and as brigade commander for one year.” It was during this period that he worked with the Lumad of the Davao region and was later installed as an honorary datu or limbutong, that he said means “protector of the Lumad.”

But, he stressed, “my relationship with the President is completely professional,” adding that “perhaps he saw me, how I work, and with those number of years siguro, he can ask his friends, people around Davao City about my performance, he was satisfied.”

The lead role for housing agency officials in the Selection Committee for Marawi’s ground-zero projects derives clearly from Duterte’s designation of del Rosario as Task Force Bangon Marawi head.

Del Rosario chairs the HUDCC, an agency under the Office of the President, which by law serves as “the oversight, the over-all coordinator, initiator, and facilitator of all government policies, plans, and programs for the housing sector.”

By mandate and operations, HUDCC’s implementing agencies — NHA, National Home Mortgage Finance Corporation (NHMFC), Social Housing Finance Corporation (SHFC), Home Guaranty Corporation (HGC), and Housing and Land Use Regulatory Board (HLURB) — have expertise largely in “housing finance, housing regulation, housing production, and institutional development.”

By all accounts, infrastructure and development projects as huge and as complex as those being planned for Marawi are not a strong suit of these agencies.

Yet still, while having the selection committee dominated by Duterte allies may be discomfiting to many, there are those who say that it may actually be an effort to avoid or at least limit corruption.

After all, said one local observer who has monitored similar situations in Mindanao, ARMM has, rightly or wrongly, an unsavory reputation when it comes to handling funds.

The argument then is that by having some of the President’s trusted lieutenants there, the monies and services would have a better chance of going where they should. Then again, being trustworthy is not synonymous with being competent, or having the ability to outsmart or spot those who are experts in subverting the process.

A 'model home'  awarded in December 2017 to Marawi families reportedly made of prefabricated fiberglass imported from Korea. Philippine Information Agency  photo. http://pia.gov.ph/news/articles/1003855

A ‘model home’ awarded in December 2017 to Marawi families reportedly made of prefabricated fiberglass imported from Korea. Philippine Information Agency photo. http://pia.gov.ph/news/articles/1003855

Exempted deal

Already controversial due to the pre-selection of a Chinese-led consortium, the ongoing negotiation for the Marawi rehabilitation has also put a spotlight on traditional procedures being set aside to supposedly “fast-track” the reconstruction of Marawi. (See PCIJ story: Project Bagong Marawi: A patchwork of sketchy plans, loose rules, uncertain funding)

Under Duterte’s E.O. No. 49-2018, the selection of the private entity for the MAA projects by the National Housing Authority (NHA) is exempted from NEDA’s Guidelines on Joint Venture Agreements. A procurement expert comments that this move essentially reverted the process to pre-2005 arrangements, which would then exclude reforms introduced by E.O. No. 423 in 2005 by the Arroyo administration.

E.O. No. 423-2005 set the policy that all government contracts of agencies shall be awarded through open and competitive public bidding except for certain cases provided by law. The executive order likewise triggered the creation of NEDA’s JV guidelines to promote “transparency, competitiveness, and accountability in government transactions, and where applicable, complying with the requirements of an open and competitive public bidding.”

According to the procurement expert, who was in government up until recently, the 2005 reforms introduced by E.O. No. 423 were principally intended “to cure the use of joint-venture agreements to circumvent the requirements of transparency, minimize corruption, and avoid contracts disadvantageous to government and the public.”

If the NHA were to follow NEDA guidelines, the approving authority for the Marawi project would have to be the NEDA Board Investment Coordinating Committee, which has long been designated to review and approve proposed major capital projects of the government.

But these guidelines are now all set aside as per Duterte’s E.O. No. 49-2018. In fact, NEDA has no member or representative in both the Selection Committee and the Technical Working Group of the Task Force.

The evaluation of the project, said the former public official, will depend on who were assigned to be members of the TWG. “While not all may be expected to be knowledgeable on project development and evaluation, a significant number of the members should be. It would have been better if NEDA was made a member of the TWG, but maybe the presence of PPP Center was deemed sufficient.”

Under TFBM’s selection committee, a 14-person Technical Working Group has been formed with the following members:

1. Chairperson, Deputy Secretary General from HUDCC (Tolentino);
2. Vice Chairperson, Bases Conversion and Development Authority (BCDA);
3. Member, two from the NHA Legal and Finance;
4. Member, one from the HUDCC;
5. Member, one from the DOF;
6. Member, one from the DENR;
7. Member, one from the Office of Civil Defense (OCD);
8. Member, one from the DPWH;
9. Member, one from the DILG;
10. Member, one from the PPP Center;
11. Member, one from the Mindanao Development Authority;
12. Member, one from the Local Government Unit of Marawi City;
13. Member, one from the Provincial Government of Lanao del Sur; and
14. Observer, one from COA.

PCIJ has a pending request for a list of the officials designated as members of the Technical Working Group.

Under the NEDA guidelines, too, the technical part of the proposal would need to be done by the Public-Private Partnership Center before submitting it to the cabinet committee — the second technical group in NEDA — before finally elevating it to the NEDA Board for approval.

TFBM chair del Rosario says that what is typically done in 20 months is now being done in four to five months. But he says that even though the NHA has been exempted from the NEDA process, the Task Force is also following its own detailed guidelines.

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Guidelines, principles

Two days after Duterte’s EO came out, the Task Force approved on Feb. 7, 2018 its own 13-page guidelines on their selection of the private-sector entity in the JVA, how the JV company will be formed and operate, and what scope of work it should undertake.

Four “principles” will govern the selection of the private-sector entity and the JV agreement, according to the Task Force’s guidelines:

• “The JV activity shall involve the recovery, reconstruction and rehabilitation of Marawi City. The minimum scope of work is provided in Annex A, which may be further amended by the NHA”;

• “The JV activity shall provide a master development plan, that includes the following, but not limited to, land use, urban design standards and guidelines, environmental protection guidelines, implementation plan and city management structure for Marawi City to ensure the promotion of a vibrant community and healthy business environment”;

• “The JVA activity shall, to the extent possible, require minimal government subsidy or guarantees in the JV except for the provision of public access roads, right of way, government permits necessary for the immediate implementation of the JV activity, and others as may be deemed necessary and required”: and

• “The JV activity may allow takeover by the private sector partner of the government’s share in the JV Activity subject to divestment procedures.”

Queried about the possible lack of experience of the selection committee members in the procurement of infrastructure projects, Task Force chair del Rosario said that the committee has sought and secured help from foreign and Filipino consultants from the Asian Development Bank (ADB) under its $5-million technical assistance fund for Marawi’s rebuilding program. The World Bank (WB) has also reportedly pledged its own consultants.

But while these consultants may fill in some gaps in expertise for the Duterte appointees, they would not share with the selection committee accountability and liability for whatever bad contracts or projects could result from the effort.

Pool of consultants

NHA’s Escalada acknowledges the selection committee’s gap in experience and expertise. Interviewed by PCIJ, he said: “The technical team can check roads… we made a pool of consultants and four were identified — one mechanical, one civil, one electrical, and one business consultant. That is the gap of the competency of NHA.”

NHA, Escalada said, does not have persons adept in mechanical/electrical work because “mostly our personnel are architects and civil engineers.” For this reason, he said, “I deliberately hired a consultant that will handle mechanical/electrical kasi may mga elevators diyan at powerlines and everything. So somebody should be technically equipped to also check.” In Marawi, too, he said, “I am aided by a pool of consultants, and they will stay with the team in Marawi.”

Another public procurement expert interviewed by PCIJ sees red flags in the situation. “Getting technical experts from development partners such as ADB and WB is typical in any big-ticket projects of the government,” said the expert, who has worked on public-private partnerships. “The question here, however, is how involved they are.”

To be clear, the expert said that the safeguards of the two multilateral banks are “well-structured” and their experts “will not provide their go signal if safeguards are not met.”

But then, said the source, “expertise is difficult to establish especially if there have been no PPP projects implemented before. This is the reason why the PPP Center exists because they are supposed to have technical expertise.”

The PPP Center facilitates the implementation of the country’s PPP program and projects. In the rehabilitation of the most affected areas of Marawi, however, the PPP Center’s involvement is rather limited. While a PPP Center representative is a member of the technical working group, he or she is a non-voting member of TFBM’s selection committee.

Rushed must be right

A former senior official of the Public Works department stressed that the law requires NEDA-ICC review of all procurement contracts above one billion pesos. “I am okay with their decision to rush the project, pero ilagay naman nila sa tama (but they will just have to do it right).”

The ex-official rues that the lack of contracting capacity and experience with infrastructure projects of the selection committee members and the agencies they represent is a core context problem with Duterte’s E.O. No. 49.

“NHA is a housing production agency,” observed the source. “Ano plano nila sa site development issues? May electric coop, water district diyan for sure. Sino mag-o-organize niyan, ang laki ng project.” (What are their plans for site-development issues. There is an electric coop, a water district for sure in the area. Who will organize all that, this is such a huge project.)”

Still, del Rosario sounded confident that what his Task Force may lack in expertise, the technical assistance from ADB and the World Bank, as well as 30 technical experts from NHA itself, could help fill in gaps.

“For horizontal, there will be technical assistance from the Asian Development Bank,” said del Rosario. “In the construction of the Convention Center, there will be a technical assistance. We have to be sure that the standards will be of the right standard and quality and the project cost will be reasonable. That’s the reason for tapping the experts.”

Should the developer say the Convention Center with 1,500 seating capacity will cost P1 billion, the experts’ role is to check whether or not such facility will cost such proposed amount, he said.

The financial group of the consortium and financial group of the Selection Committee, he said, will also sit down and confer on the terms of payment.— PCIJ, May 2018