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Friday, March 29, 2024

Playing with the bidding

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"Why is the BSP now handling this project?"

 

 

Around April early this year, I wrote an article regarding the Philippine Statistics Authority’s attempt to grant the production of the national ID to JV Idemia, a company allegedly blacklisted in other countries. 

I’m really not sure what happened to the P683-million project since then, until a source contacted me, presenting me voluminous documents, all 240 pages of them, indicating it is now the Bangko Sentral ng Pilipinas which is undertaking the bidding for the production of 116 million pieces of the Philippine Identification System or PhilSys.

While RA No. 11055 called for the creation of the PhilSys Policy and Coordination Council to be composed of representatives of different government agencies, including the BSP, tasked with formulating the corresponding policies and guidelines for the PhilSys, the same law provides that it would be the PSA which “shall be the primary implementing agency to carry out the provisions” of the said law.” It was tasked to maintain the national registry for the PhilID and to issue the cards to all qualified cardholders. In fact, it could be for that reason why PSA granted Idemia the contract earlier this year, but which we do not know what happened thereafter

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So, why is the BSP now handling the bidding for the project?

Anyway, as per documents provided by the source, the original bidding date for the project was set by the BSP-SPC BAC on July 1, 2020.  However, for some reasons, the BAC declared a failure of bidding and rescheduled another one last September 14, 2020.  As with the prior bidding the BSP-SPC BAC issued an Invitation to Bid  or ITB with corresponding Terms of Reference (TOR).

The ITB was for the Supply, Delivery, Installation and Commissioning of two Lots – Lot No. 1 Lease of Card Production Equipment for a period of three (3) years; and Lot No. 2 Lease of Card Personalization Equipment for a period of four (4) years.  Both lots includes the provision of Technical and Maintenance Support Personnel, Training of BSP/PSA Personnel, and Supply and Delivery of Raw Materials, Consumables, and Wear-and-Tear Spare Parts for 116 Million pieces of PhilID Cards, as per BSP Technical Specifications and Terms of Reference.

The ITB provisions at a glance seemed to be in consonance with the requirements of Republic Act No. 9184, commonly known as the Government Procurement Reform Act.  However, a close scrutiny of the TOR for both Lots reveals a blatant violation of the said law.

Under Section II, the Project will include the “supply and delivery of raw materials xxx sufficient to process 116 million pieces of pre-personalized PhilID cards for three years on two-shift 8-hour operations.”

The procurement of the raw materials, which accounts to a substantial portion of the Project, is disguised as part of the lease of the Card Production Equipment.  This scheme does away with a separate bidding for the raw materials and conceals a plan to procure the materials from a favored bidder.

The Approved Budget for the Contract is P2,563,875,000.00 and half of it is allocated for the raw materials, which does away with the required public bidding.  In fact, under Rule IV, Section 10 of the Implementing Rules and Regulations of R.A. 9184, “All procurement shall be done through competitive bidding.” 

This nefarious scheme was further exposed in Section V, paragraph C. Scope of Work, sub-paragraph a. (Page 4), with a specific reference to a brand name of Kinegram. It states in full –

“a. all raw materials inclusive of the Diffractive Optically Variable Image Device (DOVID) to be procured by the Contractor by rolls or on polycarbonate sheets from Kinegram sufficient for printing, production and packing of 116 million pieces of printed and packed PhilID cards in fulfillment of the approved design and specifications6;”

Specifying any brand name is violative of Section 18 of the applicable law.  To wit –“Section 18. Reference to Brand Names.- Specifications for the Procurement of Goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed.”

This illegal method was  even emphasized in the subsequent Section VI, Paragraph A., item 1., sub-paragraph e. (Page 9) – 

“e. Coordinate with Kinegram on the arrangements to be made for the delivery and supply of the DOVID (in rolls or in sheets) and its compatible raw materials directly from Kinegram to the BSP for the production of 116 million pieces of pre-personalized PhilID cards. Should DOVID be delivered in rolls, stamping application shall be done here at BSP-SPC, Quezon City. Corresponding costs for additional equipment and labor shall be shouldered by the Contractor.”

There was even a price commitment supplied by Kinegram which should be accepted by the winning bidder. The price in USD is 0.098 (exclusive of VAT) for 116 million elements.  This alone forgoes the bidding for the amount of USD12.7 million or P636 million for Lot 1 and a similar amount for Lot 2. 

Lot 2 has an ABC of P498,525,000.00, and as in Lot 1, half of it goes to the purchase of raw materials from Kinegram.

Why is this Switzerland-based company being favored?  Why “surreptitiously” award it half of the ABC, without undergoing the required public bidding?  

According to its own website, “OVD Kinegram AG, based in Zug, specializes in the design, production and supply of the KINEGRAM® optical security feature to protect government documents and banknotes.”

But, one must realize that Kinegram  does not monopolize the production and manufacture of optical security products.  Holograms are part of a family of technologies known as Diffractive Optically Variable Devices. 

The International Hologram Manufacturers Association (www.ihma.org) is made up of almost 100 of the world’s leading hologram companies. Members include the leading producers and converters of holograms for banknote security, anti-counterfeiting, brand protection, packaging, graphics and other commercial applications around the world, and actively cooperate to maintain the highest professional, security and quality standards.

There are other technology providers, which should have been allowed to bid publicly for the supply of raw materials for PhilID.

So, why the need for a bidding when it is very clear they want a specific supplier to corner the project? 

The law is clear that any public official, conspiring with private bidders, in violation of the GPRA, shall be administratively and criminally liable.  Who approved and signed these bidding documents?

The BSP BAC, in conducting the bidding for Lots 1 and 2 of the PhilID Project, had clearly transgressed the provisions of R.A. 9184, awarding the supply of DOVID materials to Kinegram without the required public bidding.

These people could be liable for this gross violation of the law. Even the Head of the Procuring Entity, if he had approved and awarded the project, is similarly liable. Aside from that, they can also be slapped with administrative complaints.

I am just asking questions and would be happy to be corrected if needed. Still, the President has vowed to dedicate his remaining years in office to combat corruption. Maybe he should look into this matter seriously.

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