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COA calls out MIAA for awarding 123 lease contracts without public bidding

The Manila International Airport Authority (MIAA) has awarded 123 lease contracts without public bidding in violation of existing laws, the Commission on Audit (COA) said.

MIAA manages and operates the four terminals of the Ninoy Aquino International Airport (NAIA) as well as freight and cargo services and general aviation.

Based on COA’s annual audit report on MIAA, the awarding of 123 lease contracts to businesses without public bidding was contrary to Executive Order No. 903, as well as MIAA Memorandum Circular No. 35 which could deprive the MIAA of obtaining better/higher rental rates.

Executive Order No. 903 provides that the MIAA General Manager should, as far as practicable, grant permits or concessions to trade or business within the areas controlled by the MIAA to the highest bidder after a competitive public bidding, provided, that the bidding requirements may be waived in the case of banks, branches of post office, Bureau of Telecommunications and other government agencies with airport-related activities and those who are engaged in airline operations or where the fees, rates or assessments to be charged have been fixed by the Board. "

“Verification disclosed that the 123 concessionaires/lessees which were awarded contract without the benefit of public bidding are engaged in the business of ground handling, services, food and beverages, retail, advertisement, gasoline station, and other similar businesses not falling within the business type or group exempted from public bidding. This practice is contrary to the aforementioned law, rules and regulations and is disadvantageous to the best interest of MIAA,” state auditors said.

“While these concessionaires are paying the rates prescribed in Administrative Order (AO) No. 1, these were determined/computed based on the conditions prevailing during year 2000, hence, are lower than the current rental rates. Had public bidding been conducted in the award of lease contracts, MIAA could have probably obtained better or higher rental rate offers,” COA added.

Likewise, COA said that the absence of public bidding runs counter with the government's transparency principle in the awarding of contracts.

COA has called on MIAA to refrain if not stop the practice of awarding contract of lease without public bidding and strictly comply with EO 903 and MIAA MC No. 35.

In response, MIAA told COA that Executive Order 903 allows the MIAA General Manager to grant exemptions to public bidding when he or she “deems it impractical to award an area thru public bidding.”

Further, the MIAA management argued before state auditors that Executive Order 903 also allows MIAA to “prescribe, revise or adjust the rates, dues, charges or assessments for the use of the properties, facilities and services and provide a satisfactory return on its assets.”

“The General Manager deemed it impractical to award spaces to certain concessionaires thru public bidding as the demand for food and retail stores to passengers and well-wishers have increased tremendously in the terminals and the need to promptly provide for these amenities is imperative. Moreover, thru Memorandum Circular No. 35 grants the General Manager the discretion to decide which contracts may be awarded by public bidding,” MIAA told state auditors.

In its rejoinder on the same COA report, state auditors maintained that MIAA should comply with the requirement of public bidding in the lease of MIAA properties and spaces as provided EO 903 and MIAA MC No. 35 Series of 1999, except for those expressly stated.

Shortened bidding

COA also questioned the practice of MIAA’s Bids and Awards Committee (BAC) of shortening the period from advertisement of the bid to the Receipt and Opening of Bid Envelope (ROBE) to an average of 25 days instead of availing the maximum period of 45 to 65 days as provided in the implementing rules and regulations of the Procurement law.

State auditors said that such shortened period in calling for bids “may have precluded other prospective bidders from completing the bid requirements and/or submitting their bids, thus depriving the MIAA from obtaining the most reasonable price and offer for the projects.”

COA cited 15 sample contracts entered into by MIAA which include:

  • Replacement of Cooling Coils for the 30 Air Handling Unit (P28 million)
  • Replacement of Switch gear and Transformers and Medium Voltage Fixed Type Capacitor (P22.7million)
  •  Infrastructure and others bus gates in NAIA Terminal 2 (P20.5 million)
  • MIAA Computerization Project Phase 1 (P29.7 million)
  • Supply and installation of Virtual routing and forwarding airconditioning System in Terminal 2 (P15 million)
  • Repair and Maintenance of Asphalt Pavement within NAIA Complex (P50 million)
  • Thermoplastic Repainting of Pavement Markings in Terminal 1 and Terminal 2 (P22.8 million)
  • Rapid Exit Taxiways - Civil Works (P212 million)
  • Rapid Exit Taxiways - Electrical Works (P96 million)
  • Repair and upgrading of Taxiway - Hotel and Charlie (P881 million)
  • Repair and Overlay of Runway involving electrical work (P165 million)
  • Repair and Overlay of Runway involving civil works (P540 million)
  • Rehabilitation of NAIA Terminal 2 (P615 million)
  • Supply and installation of Stop Bar lights at Runways Rehabilitation of Lines and Airfield Lighting System, including Grading of Airfield Mounds (P345 million)
  • Supply and Installation of Stainless Seismic Expansion  (P96 million)

The average number of days from advertising the bid to the ROBE of 15 abovementioned contracts is just 25 days which is way short than the 108 days as provided for under the procurement law.

“The contractors, before they can complete and submit their bids on these projects have to perform tedious and complex activities like the conduct of site inspection, preparation of detailed plans/drawings, cost estimates, manpower allocation/pooling, financing and other similar other actions plus the various documentary requirements. The BAC did not avail the maximum 45 to 65 days, even in big ticket projects,” COA said.

“Unless the contractor is familiar with the MIAA facilities/structures, and/or the contractor has advance information about the project before it was officially made public, which is a prohibited act, the 25 day period seem not reasonable and feasible,” COA added.

COA said that while the 25-day period is within the recommended earliest possible time, state auditors could not find a logical reason why the BAC had not availed the maximum periods considering that the bidded projects were not urgent.

“To shorten the period absence the urgency of the project/requirements and/or without a valid reason, is not in line with the cited provisions of law and is disadvantageous to MIAA as it may have precluded other prospective bidders to timely complete and submit their bids, thereby depriving the MIAA from obtaining the most reasonable price and offer, and defeating the purpose of public bidding,” COA said.

COA recommended that MIAA direct the BAC to observe the maximum periods provided in the Procurement law in the absence of urgency of the requirements/project and/or some valid reasons.

In response, MIAA told state auditors that the 45 to 65 days is the maximum, not the minimum period required and that the observance of the maximum period of 45 to 65 days is no guarantee that more bidders will participate in the bidding.

“There are number of reasons why only few bidders join the bidding such as the approved budget of the contract is too low, lack of expertise and experience to handle the project, complexity of the projects, among others,” MIAA told COA.

Likewise, MIAA said it is the one preparing the technical plans/drawings, not the bidders/contractors, making the 25-day average period reasonable.

MIAA also invoked that its Board of Directors has a directive to the management that all projects requiring Board approval—including big ticket projects—should be submitted to the Office of the Corporate Secretary at least two weeks prior to any board meeting for the projects to be included in the agenda of the meeting.

In its rejoinder, state auditors maintained that the BAC should consider observing the maximum periods provided by laws, particularly the period from advertisement to the opening of bids, except in urgent requirements/projects and/or some valid reasons; or at least provide a reasonable or ample time to interested bidders/contractors to prepare and submit their bids.

GMA News Online has already reached out to MIAA officials for further comments but it is yet to receive a reply as of posting time. —LDF, GMA News