Possible discussions for December19 Special Session that shall tackle Magsaysay Park bidding

D I S C U S S I O N S that shall be part of today's special session at the Sangguniang Panlungsod Session Hall.

Light Text is the report of the Committee on Laws and Ordinances.

Bold Highlighted TEXT are possible arguments that shall be raised.

These are the common questions asked during the deliberations conducted by the Sangguniang Panlungsod:

1. Whether the capitalization of P1.1 Million by the Metrostate qualifies it to bid for the project?

The answer is in the affirmative. Despite the fact that the prospective bidder has an authorized capital stock of only P1.1 Million, he may legally participate and be qualified as a prospective bidder provided that he can show to the Bids & Awards Committee that at the time of the pre-qualification conference, he has a credit guarantee from a reputable bank equivalent to the value of the project. The law merely provides that, “the private sector entity which shall have contractual responsibility for the project and which shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit line to cover the total estimated costs”. (Section 2 – R.A. 7718)

METROSTATE is a separate juridical personality that was not prequalified and qualified. It is a separate personality from S&F and LXS. It can not show its financial capability at the time of pre qualification because it was not yet a corporation during the pre qualification, qualification, pre bidding. It organized itself into a corporation only sometime September of 2006 this year.

2. Whether track record and experience of the project proponent is essential in the determination of the person who shall undertake the project?

The provisions of Republic Act 7718 gave the following definition of terms for the following individuals who are essential participants in a built-operate-and-transfer scheme.

“ Sec. 2 Definition of Terms. The following terms used in this Act shall have the meanings stated below:

(k) Project proponent – The private sector entity which shall have contractual responsibility for the project and which shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit line to cover the total estimated costs.

(l) Contractor – Any entity accredited under Philippine laws which may or may not be the project proponent and which shall undertake the actual construction and/or supply of equipment for the project.

The requirement that the highest bidder is a contractor duly licensed under the Philippine Contractor’s Board does not apply in a Built-Operate-And-Transfer Scheme. The private proponent may not be a contractor and vice versa. The requirement that the highest bidder is a licensed contractor only holds true if the project is financed by the government. What is essential under a B-O-T scheme is that the private proponent shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit line to cover the total estimated costs.

It is essential however that the contractor who undertakes the actual construction and/or supply for the project shall have the adequate competence and experience in managing projects similar to the subject project.

METROSTATE is a separate juridical personality that was not prequalified. It does not have any track record and experience. If the logic is that Metrostate shall use LXS Construction which is a Class C or Class B contractor to build the BOT project amounting to 84million, then the law should not have indicated the Track Record and Performance requirement for the BOT proponent. If this shall be the case ANY OPERATOR/PROPONENT CAN CLAIM TRACK RECORD AND EXPERIENCE by simply recruiting any contractor with experience. It is also clear that for an 84million project, a contractor that maybe hired by Metrostate should be a Class AA and shall have a track record of building such HUGE Amount of Infrastructure project AMOUNTING TO 84MILLION PESOS.

3. Is it necessary for the City Engineer to pre-approve the technical plan that will be submitted for bidding?

It depends. In a public bidding where the scheme is that the lowest bidder shall be adjudged the winner, there is a need for a common plan which shall be bided. The plan needs the approval of the City Engineer and/or the City Planning Officer. However in case of a “Design and Build” scheme, the City Engineer need not be consulted. In the latter scheme, the local government unit shall only give the specifications. The private proponents shall submit their design which shall be evaluated by the Bids & Awards Committee. The design that conforms best to the specifications and the terms of reference issued by the committee shall be adjudged the winner. In the latter scheme, the bid price constitutes only fifteen (15%) percent in the evaluation of the project. The design constitutes eighty-five (85%) percent of the entire project determination.

It is Section 302 of the Local Government Code which mandated the City Engineering to prepare Technical plan. As to the issue of the PCAB License (Philippine Contractors Accreditation Board). It was the SBAC who bided this. It was the SBAC who made this PCAB License a requirement. It was the SBAC who disqualified GAMA Construct because it did not have the PCAB license. If this was not a requirement, then there should be a rebidding.

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