by ROEL R. LANDINGIN

Part 2 delves into how the absence of caps on bids, tied loans and conditionalities of lenders have favored foreign contractors and triggered cost overruns and project delays.

FOR ANTONIO Molano Jr. and other government engineers at the Department of Public Works and Highways (DPWH), it felt like being in “Groundhog Day,” the Bill Murray movie about a cynical TV reporter who kept reliving the same day over and over again.

	A portion of the Halsema road project that should have been funded under the National Road Improvement and Management Project - Phase 2, which was deferred in November 2007 by the World Bank. [photo by Harley Palangchao]

Over a span of four years, Molano and his colleagues at the DPWH bids and awards committee (BAC) held three rounds of bidding for two World Bank-funded road projects in Mindanao and the Visayas.

Each time, all the bids exceeded estimated costs by wide margins. Each time, virtually the same set of construction companies won the first and second rounds.

The road projects were part of Phase 1 of the $305-million National Road Improvement and Management Project (NRIMP) that the World Bank was supporting with a $150-million loan. Unhappy with the high bids, the World Bank rejected the bid outcomes not once or twice, but thrice.

	NEXT PART 3 reveals that seven in 10 projects reviewed have failed to deliver the promised economic benefits, and now posit to exacerbate the nation's debt burden. PREVIOUSLY PART 1 looks at how the National Economic and Development Authority (NEDA) and its project evaluation process have been weakened and violated by pressure from lobbyists and political sponsors of some projects.

The DPWH went to great lengths to boost competition in the bidding for the road-building projects. At one point, “an independent call line outside the DPWH was established for any party to report any deviation from the process,” says Molano. “We invited civil society groups such as Procurement Watch and the Volunteers Against Crime and Corruption as observers.”

But these and other measures proved to be no match to the persistence and power of some suppliers to dictate their terms on bids for government infrastructure contracts, often in defiance of government rules and policies.

RIGGED BIDS, SAME FIRMS
The contractors' doggedness underscores the huge and lucrative merits of building foreign-assisted projects, and is among the symptoms of what Rodolfo Lozada Jr., a Senate star witness in the National Broadband Network (NBN) scandal, has called a “dysfunctional” government procurement system.

Some of the construction firms that took part in the controversial projects were also among the most successful bidders for government public-works contracts. This is evident in a report prepared by the Construction Industry Authority of the Philippines and Philippine Domestic Construction Board (CIAP-PDCB) that the Philippine Center for Investigative Journalism (PCIJ) analyzed.

Nine mostly Chinese and local construction firms that joined the ill-fated bids for the road projects were also the big players in many other projects funded by foreign money.

These nine firms accounted for 46 percent of the total value of civil-works contracts of ongoing or completed foreign-assisted projects between 2004 and 2006, the CIAP-PDCB’s Constructors Performance Evaluation System report showed.

Bid-rigging and corruption were suspected by the World Bank, which carried out a year-long investigation into the matter. Last November, the Bank deferred approval of a $232-million loan for the national roads project’s second phase, pending completion of its probe.

But contractors and government officials alike say foreign lenders like the World Bank may also be to blame for the apparent corruption plaguing official development assistance (ODA)-funded projects.

International financial institutions had thumbed down a Philippine proposal to impose a cap on bids for these projects. Instead, the lenders have insisted on exempting foreign-assisted projects from new Philippine procurement rules that disallow bids above the so-called approved budget contract (ABC), the estimated cost that is calculated by third-party consultants at considerable expense.