Saturday, July 4, 2015

Opinion: Editorial -- A growing reputation as a bad customer

Editorial from the Manila Times (Jul 3):  Editorial -- A growing reputation as a bad customer

IT was not, as both the spokespersons for the Aquino Administration and the Department of Defense have explained, a ‘suspension’ of three contracts to acquire military aircraft that the Commission on Audit issued last week. It was rather a ‘suspension in audit,’ which requires further documentation and explanation from the government before the audit could continue.

The semantics are unbecoming. The purpose of an audit is to determine whether proper procurement and contract procedures have been followed, and whether money disbursed went where it was supposed to go. While it is true that a project such as equipment procurement can proceed while an audit is ongoing, ‘suspension in audit’ is a serious matter. It indicates that the auditors have encountered issues serious enough to warrant stopping the audit until they are explained, and have the practical effect of suspending the project because of strong indications of anomalies.

 One of the three contracts in question was the P1.2-billion deal to purchase refurbished Bell UH-1H helicopters from US-based Rice Aircraft Services Inc.; The Manila Times first broke the story of grave problems with the deal, including apparently favoritism in the crafting of the contract to ensure that Rice would win the deal, and the substandard, completely unusable aircraft that were delivered as a result.

That deal was stopped after Senate hearings on the matter, but the remaining two, a purchase of Bell 412 helicopters in a government-to-government deal with Canada, and a similar government-to-government contract with South Korea for the purchase of a dozen FA-50 advanced jet trainers, were by all appearances straightforward and properly-handled transactions until the COA spoke up last week.

We are not going to second-guess the work of the COA with regard to the government-to-government deals. If there are anomalies, then it is to the greater benefit of the people that those are discovered and corrected, even if it means canceling a purchase of equipment that the AFP (Armed Forces of the Philippines) desperately needs. But, if the Canadian and Korean deals are proper, as the Palace and military officials insist, then that indicates a certain level of inefficiency on the part of the COA.

Whichever the case, the result is the same: The ‘suspension in audit’ simply makes the present government of the Philippines look like an unreliable customer, one which suppliers cannot be certain will abide by what are fairly conventional agreements and contracts. The reputation as a bad customer is one President BS Aquino 3rd has been cultivating for some time; it began with his arbitrary cancellation – against the recommendations of his own legal, environmental, and engineering advisers – of the Laguna Lake Rehabilitation Project, continued with his virtual abolition by decree of the 1995 Mining Act, and goes on through his at least tacit approval of the shenanigans involved in important projects like the acquisition of an automated voting system, contracting a competent maintenance provider for the barely-functioning MRT-3, and providing a few reliable aircraft for the armed forces.

Having government-to-government deals interrupted is particularly damaging, because those same governments often support private-sector projects to some extent. And while the Aquino Administration’s mouthpiece can plead misbehavior by individual officials (or, in not a few instances, on the part of blameless contractors), this old saying certainly seems to apply: “The common denominator in all your unsatisfying relationships is you.”

If the Administration is incapable of entering into a normal, non-controversial agreement with a supplier without the oversight and assistance of the COA, then perhaps it is time that procurement processes be changed to include the auditors from step one. There just are not that many excuses that can be created by the President’s spokespeople, let alone be convincing to the government’s continually jilted business partners.

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