Constructors to Neda: Revise JV guidelines

TO promote transparency and accountability in public-private partnerships, the Philippine Constructors Association (PCA) Inc. is urging the Aquino administration to revise the joint-venture guidelines created by the Arroyo administration.

In an interview, PCA executive director Manolito Madrasto said the group would be submitting a letter to the National Economic and Development Authority (Neda) board, which drafted the joint-venture guidelines in 2008. The Neda board is chaired by the President.

“PCA is sending a letter for changes, amendments to the joint-venture guidelines. If you see that it’s an avenue for foolishness, shouldn’t you speak up already?” Madrasto said. “We’ve been pushing for PPP but not this way, not this way. It has to change.”

Madrasto explained that the PCA is specifically asking for the revision of the Swiss challenge provision in the guidelines and is pushing for the evaluation of joint-venture projects by the Neda Investment Coordination Committee (ICC).

Based on Annex C of the guidelines, which contains provisions on competitive challenge or Swiss challenge, parties are only given 30 calendar days to complete and submit a proposal to the government.

A Swiss challenge is a process by which other private groups could make an offer to match the bid of the proponent.

Madrasto said international standards state that a Swiss challenge allows parties to submit proposals for simple projects within a minimum of 180 days. For complicated projects, Swiss challenge proposals even take as long as a year.

He explained that making projections is crucial in creating a proposal. He said the final cost and proposal would hinge on careful inflation projections.

“There is a lack of open competition. Who on earth can come up with a proposal for 30 days? In essence they’re saying, ‘Don’t bother,’” Madrasto said.

Besides the Swiss challenge provision, Madrasto said crucial to transparency is a thorough evaluation which could be done by the Neda ICC. The ICC’s mandate includes evaluating and approving big-ticket government projects.

In the initial joint-venture guidelines drafted and approved by the Neda, all joint venture-funded projects will have to go through the ICC process.

However, the version approved by the Neda board under former President Arroyo, joint venture-funded projects will no longer be required to go through the ICC process.

This, Madrasto said, was a cause for concern for the PCA and other private-sector entities. He said under this arrangement, there will be a lot of room for abuse and misuse.

Under the guidelines, the head of the government entity concerned is given the authority to approve the proposed joint-venture agreement regardless of amount.

Clearance from the departments of Finance and Budget and Management will be required only when the joint-venture agreement requires national government undertakings, subsidies or guarantees.

“It doesn’t pass approval by the ICC [of] Neda. Only the head of the agency has the authority to push through with it. Imagine, the sizes of the projects under joint venture will only be approved by somebody of so many levels. Where is the countercheck? That’s the thing I’m worried about,” Madrasto said. “When there is no one watching, it will be abused. I’m sure of that.”

The Neda explained that the guidelines provide for two modes of selecting a joint-venture partner—open public solicitation and negotiated agreements. –Cai U. Ordinario / Reporter, Businessmirror