By Daphne J. Magturo, Reporter

Consumer group asks CoA to suspend MRT-Busan contract

Posted on February 05, 2016

A CONSUMER rights group asked the Commission on Audit (CoA) to suspend the P3.8-billion maintenance deal of the Metro Rail Transit (MRT) Line 3, which the Department of Transportation and Communications (DoTC) awarded to a Korean-led consortium.

Up and running MRT units seen at EDSA near Guadalupe Station. -- philippine star_michael varcas
“[T]he negotiated procurement is highly irregular considering that the upgrading of the signaling system has already been awarded to Bombardier in September 2015, a highly regarded original equipment manufacturer,” read a copy of the Feb. 2 letter sent by lawyers of the Alliance for Consumerism and Transparency (ACTION) to DoTC’s Supervising Auditor Abenilda B. Torres.

On Sept. 29, 2015, the agency awarded a P53.37-million deal to Canada’s Bombardier Transportation Signal Ltd through direct contracting. Under the seven-month contract, Bombardier will upgrade the MRT-3’s signaling system to ensure safe distances between trains and control their speed.

But on Dec. 23, 2015, the DoTC awarded a separate P3.81-billion deal, through a negotiated procurement, to South Korea’s Busan Transportation Corp. and its Filipino partners: Edison Development and Construction, Tramat Mercantile, Inc., TMI Corp., Inc., and Castan Corp.

A copy of the three-year contract dated Jan. 7 said in part the government will pay the group P1.96 billion for the maintenance of the train system; P907.37 million for the general overhauling of the 43 light rail vehicle units; P888 million for total replacement of the signaling system; and P51.76 million for “additional maintenance works.”

In turn, ACTION’s letter said in part, “[T]he upgrading of the signaling system has already been accomplished and to enter anew with another maintenance service provider by replacing the signaling system, which has just been upgraded in the recently concluded maintenance contract, is clearly highly suspicious.”

Transportation Secretary Joseph Emilio A. Abaya said last month both maintenance contracts “overlap” with each other.

ACTION in its letter said to CoA: “These irregularities, coupled with the fact that the government has already spent [a] substantial amount of public funds on the first phase of the completed and systematic upgrading of signaling system undertaken by Bombardier, necessitates the attention and scrutiny of this Honorable Office.”

The group questioned the DoTC’s failure to release the details of the negotiated procurement on its Web site. It pointed out that Busan was organized only in 2007, “thereby lacking the 15 years of experience requirement.”

“A look into the other partners of Busan showed that they have no interest or knowledge in the rail industry whatsoever since Edison was just into construction, Tramat Mercantile is into agricultural equipment supply, TMI into trading, and Castan into plumbing,” the group said in a separate statement.

“We are respectfully requesting your good office to exercise your principal duty to ‘examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property owned or held in trust by, or pertaining to, the government,’ and subsequently to suspend the implementation of the aforementioned project pending investigation from the Ombudsman,” read the three-page letter to CoA.

ACTION, through its Secretary General Vito Gaspar Enrico C. Silo, filed last month a graft complaint against DoTC Undersecretary for Planning Rene K. Limcaoco and DoTC Undersecretary for Administration and Procurement Catherine P. Gonzales, as well as several DoTC and MRT-3 officials over the contract with the Busan group.

The DoTC and MRT-3 have yet to respond to a request for comment as of this reporting.