DOTC STANDS BY DECISION

Nothing but the law and country’s interests.

The spokesman of  the Department of Transportation and Communications yesterday said  they are standing by their decision to award the P17.5 billion Mactan-Cebu International Airport modernization and expansion project to a partnership between Megawide Construction Corp. and India’s GMR Infrastructure.

DOTC spokesman Michael Sagcal yesterday said  it took the  transportation department several months to arrive at last Friday’s decision and they were confident the awarding was warranted.

“From a legal and objective standpoint, we are confident there should be no reasonable challenges,” Sagcal said. “We needed to make sure everything is defensible.”
“Amid all the noise drummed up in different forums the past few months, the DOTC has allowed nothing but the law and the country’s interests to matter in awarding the project,” he said in a press statement.

Executives of GMR and Megawide flew into Cebu yesterday to celebrate the awarding of the contract. The consortium offered a Mass at the Basilica del Sto. Niño and hosted  dinner at the Yap-Sandiego ancestral home in Parian, Cebu City.

GMR deputy chief executive officer Andrew Acquaah-Harrison said that they are looking at a period of seven months to start managing and operating the Mactan-Cebu International Airport and plan out construction of the new terminal.

“We are looking at early next year to really start construction works of the airport, which we should deliver within 36 months or three years after start of construction,” said Megawide chief communications officer Louie Ferrer.

DOTC’s Sagcal said their priority was to get the project moving forward for the winning bidder.

The awarding of the government’s first public-private partnership (PPP) involving airports had been delayed by almost three months from January 6 because of issues raised by No. 2 bidder Filinvest, the partner of Singapore’s Changi Airports International.

Filinvest questioned the financial capability of GMR and also alleged conflict of interest in calling for the disqualification of Megawide-GMR, which outbid six other bidders during the opening of financial proposals last Dec. 12.

Megawide-GMR denied all allegations.

The DOTC said the project would be implemented in the next  three to four years.

The DOTC said Megawide-GMR had 20 days to complete post-award requirements before signing the concession agreement as provided by the build-operate-transfer law.

But recent experiences proved that delays can happen even at this late stage.

The 20-day provision, for example, was stretched for the automated fare collection PPP as winner Ayala Corp. and Metro Pacific Investments signed the concession agreement only last week after being awarded the project in late January. The reason for the delay was a motion for reconsideration filed by the second-closest bidder.

“A delay is possible but, of course, we will try to expedite everything,” Sagcal said. “This project should have been done a long time ago.”

Lapses

A day before the DOTC announced the award on Friday, Sen. Sergio Osmeña III had asked the Supreme Court, the only entity with power to halt an infrastructure project, to issue a temporary restraining order against it, alleging lapses in the bidding process.

“The Filipino people, especially the Cebuanos, do not deserve another PIATCO,” he said in the petition, referring to a contract involving the Ninoy Aquino International Airport’s Terminal 3 which the High Court voided years ago.

Osmeña filed a separate motion for the immediate raffle of his the petition.

“We filed a petition for the immediate raffle on Monday so they can decide on it,” he said in a TV interview yesterday.

Asked on the chances that the High Court would grant his petition for an injunction, the senator said, “We’re pretty confident, but it all depends on which way you look at it.”

“We feel we have a very strong legal position and the other side, I think feels that way too so let’s see. It’s up to the court.”

Osmeña argued in his 33-page petition, the public does not need to be serviced by an operator “with a derogatory track record and a recent history of financial operating losses.”

More than a decade ago, the Supreme Court voided the franchise of the Philippine International Airport Terminals Co. Inc. (PIATCO) to operate the Ninoy Aquino International Airport’s Terminal 3 after finding it did not qualify as a bidder.

Osmeña asked the High Court to nullify the finding by the pre-qualification, bids and award committee (PBAC) that the Megawide-GMR consortium was a qualified bidder.

He likewise prayed that it stop the PBAC, the DOTC  and the Mactan-Cebu International Airport Authority (MCIAA) from issuing a notice of award, or a concession agreement in favor of the consortium.

Named respondents were Transportation Secretary Joseph E. A. Abaya, the MCIAA, the PBAC headed by Undersecretary Jose Lotilla and the consortium.

Osmeña voiced “serious misgivings” in a Feb . 25 privilege speech before the Senate about the competence of GMR to undertake the project, citing media reports of GMR’s “shaky” financial standing and its partnership with the German firm Frankfurt Airport Services Worldwide or Fraport.

As acting chairman of the Senate committee on public services, Osmeña conducted two hearings on the controversy.

The consortium of Megawide and GMR emerged as the highest bidder for upgrading the Mactan-Cebu airport with a bid of P14.4 billion, surpassing that of Filinvest-CAI consortium and other developers.

Osmeña cited several grounds to justify his petition to stop the award of a concession agreement to the consortium.

For one, he argued that the PBAC qualified the consortium despite its “patent violation” of the conflict-of-interest rule.

The senator said the PBAC also refused to disqualify the consortium despite evidence of its poor financial health and track record in operating international airports.

He added that the government agencies not only failed to disqualify, but gave undue advantage to the consortium.
Conflict of interest

To prove conflict of interest, Osmeña pointed out that a Mr. Majid was a member of the boards of the consortium and the First Philippine Airport Consortium that also made a bid for the public-private partnership project.

“It is crystal clear that the conflict of interest rule was violated,” he said, arguing that such violation could only result in disqualification.

Osmeña also said that the consortium confirmed its lack of financial stability during the Senate hearings. He said for instance that GMR’s net operating losses surged to $176 million in the last nine months of 2013.

Megawide, on the other hand, has failed to complete its first school building in a separate contract with the government despite several extensions, he added.
“Under the procurement law, if a bidder is more than 15 percent delayed in any of its infrastructure projects, it cannot be awarded a new contract,” the senator said.
The negative financial findings should have compelled the PBAC to disqualify the consortium, he said.