Gloria's multibillion 'edifice complex'

Elections, inept execs, GMA bid for legacy mar contracts

IF IT seems as if President Gloria Macapagal Arroyo is omnipresent, even when on frequent travels overseas, that could partly be because of the proliferation of huge tarpaulins bearing her image.

 ARROYO billboard proclaims completion of the bypass road in Candelaria, Quezon. Photo by Weng Paraan.

ARROYO billboard proclaims completion of the bypass road in Candelaria, Quezon. Photo by Weng Paraan.

Indeed, in the last few years, practically every town across the country has at any one time a tarpaulin with a photo of a smiling Arroyo, sometimes wearing a hard hat, and often posing beside a congressman, governor, mayor, barangay captain and other allies.

The law requires that tarps or billboards mark a project site so that the name of the contractor, as well as the project’s cost and completion date, could be fully disclosed to the citizens. But most tarps either skip or make only token mention of these important details, and instead play up the photo of the president and her fellow politicos.

Such tarps, though, are minor nuisances compared to the other results of the Arroyo administration’s penchant for building roads and other infrastructure projects.

For one, the amount of money being poured into the Department of Public Works and Highways (DPWH) has surged multiple-fold, apart from myriad lump sums lodged with the agency for implementation. The DPWH has thus become a behemoth of various public works funds, a seemingly bottomless pit of cash for dispensing largess to political allies and favored contractors.

DPWH records validate this observation: The election years of 2004 and 2007 recorded a sharp spike in both volume and value of civil-works contracts that the agency awarded. A redux of this scenario looms in May 2010, when the nation will hold synchronized national elections yet again.

In fact, between 2007 and 2010, the Arroyo administration had planned to spend P2.03 trillion ($50 billion) on infrastructure, with transport-related projects taking the biggest share of the budget.

In 2005, the DPWH received P40 billion for infrastructure projects. Three years later, the figure had grown to P89 billion, or an increase of more than 100 percent. The amount increased further to P117 billion in the 2009 general appropriations act.

She wants it, gets it

Budget Assistant Secretary Evelyn V. Guerrero affirms that Arroyo has pushed the rollout of roads, bridges and other civil works, such that from 2006 to 2009, the annual average budget for DPWH project doubled from prior years.

“She wants infra, and you will agree, the impact is big, that’s why the focus is there,” Guerrero said in an interview with PCIJ and GMA-7 News.

Unfortunately, the DPWH is not only perceived as among the country’s most corrupt agencies, but has also consistently ended up with the most number of adverse findings in Commission on Audit reports in the last 15 years. Worse, oversight committees and agencies have had difficulty in monitoring procurement processes, not in the least because the Implementing Rules and Regulations of the Procurement Reform Act had been revised several times by President Arroyo herself.

These revisions have assured speed in the award of contracts, extended post-qualification appeal period in favor of contractors, and allowed “exceptions” from the competitive bidding rule, on approval of the heads of agencies and/or the Government Procurement Policy Board.

One result is that the DPWH has awarded projects to contractors that, when scrutinized by PCIJ, seem incapable of accomplishing the many projects each of them have won.

The top 10 contractors that snagged the biggest aggregate value of DPWH contracts from 2000 to 2008 included those with insufficient or doubtful registration and license records.

The PCIJ had conducted a two-month study of the DPWH contracts database as a follow-up to the January 2009 report of the World Bank’s anti-corruption unit, the Department of Institutional Integrity (INT), which established collusion and corruption in Bank-funded road projects implemented by the DPWH.

The PCIJ corroborated and correlated the DPWH database of 27,535 civil works contracts awarded form 2000 to 2008 posted on the agency’s website

Politics and public works

Aside from yielding names of winning contractors and the cost of projects, the DPWH online registry reveals that an intrinsic link between the surge in public works contracts, by value and number, with political events.

For instance, the Arroyo government loaded up the number of awarded contracts after 2004, owing apparently to two developments: the fiscal deficit was in part eased by the passage of the Revised Value-Added Tax Law in 2005, and the filing of impeachment complaints against President Arroyo in a series from the years 2005 to 2008.

Opposition lawmakers and civil society groups had filed three impeachment complaints against Arroyo in the three years of office of the 13th Congress (July 2004 to June 2007). During this period, the DPWH awarded 15, 292 contracts, a big jump from only 1,698 contracts in the 12th Congress (July 2001 to June 2004) listed in the DPWH website.

As politicians constantly change parties and survey after survey continue to highlight the president’s unpopularity, the civil-works-contract-awarding has only gathered even more steam. By the first 18 months of the 14th Congress (July 2007 to December 2008) a total of 10,542 contracts had already been awarded.

Of that number, about 69 percent or 7,266 contracts were awarded in 2008, which translates to an average of 605 contracts a month, or 20 contracts per calendar day.

In contrast, the average number of contracts awarded by the department during the entire 12th Congress was just 47 a month.

Election projects?

Election years have also proved to be major contract-awarding time. In 2007, P47.9 billion worth of 9,355 total contracts were awarded. Notably, more than 1,000 projects of these were “enrolled in the civil works registry” and given “Notice to Proceed” on dates falling within the 45-day public works ban. In 2004, over 200 projects bear dates falling under the same ban.

Table 1. Projects in DPWH Online Database, 2000-2008

Source: DPWH

(in Philippine peso)
2000 11,695,838
2001 4,688,110
2002 1,084,614,659
2003 601,797,931
2004 4,738,376,841
2005 7,737,109,361
2006 25,498,158,712
2007 47,956,883,060
2008 50,821,645,432
TOTAL 138,454,969,944

The Commission on Elections (Comelec), however, could not issue a firm opinion when asked to clarify whether these projects had been duly exempted from the public works ban.

Comelec Law Department director Ferdinand T. Rafanan wrote the PCIJ: “We cannot make a definite declaration as to whether the contracts of the DPWH violated the provision of the Omnibus Election Code banning the award, release and disbursement of public funds 45 days before the election.”

He also said that “a prior complaint and preliminary investigation” must be filed and conducted “before any finding of violation” can be made.

The Omnibus Election Code requires voluntary reporting by agency heads of projects they want exempted from the public-works ban, but does not accord the Comelec authority, manpower, or resources to conduct investigation of possible violations motu propio.

Too, according to Rafanan, the DPWH database “is not an adequate basis to determine whether there is indeed a violation of law considering that what can only be culled from the list is the fact that the ‘Notice to Proceed’ was issued during the 45-day period before the 2004 and 2007 elections.”

Public Works Secretary Hermogenes Ebdane Jr. has also said that the data on the DPWH website are incomplete. In reply to queries from the PCIJ, he said that since 2004, a total of P186.451 billion has been allocated covering a total of 92,737 projects.

But figures supplied by Ebdane still show that the Arroyo government spent considerable sums specifically during election years: a combined amount of P82.6 billion in projects in 2004 and 2007, or 45 percent of the total for the five-year period.

By volume, the two elections years recorded a total of 45,575 projects, or 49 percent of the five-year period’s aggregate number.

Table 2. DPWH Projects, 2004-2008, According to Ebdane
Source: DPWH

(in billion pesos)
2008 17,775 60.391
2007 22,504 57.380
2006 14,691 19.931
2005 14,696 23.139
2004 23,071 25.610
TOTAL 92,737 186.451

DPWH’s own

Lawyer Ruby Alvarez, executive director of the Government Procurement Policy Board (GPPB) that oversees compliance by agencies with procurement laws, explains the discrepancy between Ebdane’s numbers and those posted on the DPWH website by saying that the agency has its “own registry system.” This is a problem, she says, because it makes it hard for non-DPWH people to track how diligent the agency is in updating the list. If it is not updated, “they (DPWH) are the only ones who know (about it),” she says.

DPWH Bureau of Research and Standards Director Antonio Molano Jr. meanwhile says that there might be a discrepancy in the numbers because engineering districts may not have entered all or updated the list of projects undertaken in their areas. He also says that possibly lump-sum allocations are not included in the online list.

Lump-sums galore

In truth, apart from the infrastructure budget that it must administer, the DPWH is also the implementing agency and repository — or fund transfer haven — for other civil-works funds of the other departments.

In 2007 alone, budget documents show that these civil works funds transferred to the DPWH for implementation totaled at least P6.64 billion.

A ROAD project in Bicol. Photo by Weng Paraan.

A ROAD project in Bicol. Photo by Weng Paraan.

These included the P2.2 billion for the School Building Program, P500 million for Agriculture and Fisheries Modernization Program and Agrarian Reform Program; P579 million for Priority Development Assistance Fund (PDAF or pork barrel), as well as P2 billion from the Calamity Fund, P1.1 billion from unprogrammed funds, and P249 million from Miscellaneous Personnel Benefits Fund, and P10 million from the Contingent Fund.

Lump-sum funds lodged with and being disbursed by the DPWH vest the agency, which is under control of the president, with enormous political clout and free rein over billions of pesos of public funds.

Even worse, notes Arroyo’s first budget secretary, University of the Philippines professor Emilia T. Boncodin, these lump-sum funds allow the president and her deputies multiple opportunities to circumvent expenditure ceilings enrolled in the General Appropriations Act.


In a study she conducted on seven executive departments with command over huge civil-works and other funds, Boncodin has found that the DPWH might have over-released up to P43.4 billion for projects and operations in 2007.

Congress passed the 2007 budget four months into the year so agencies had to work within the parameters of the reenacted 2006 budget in the first quarter. The DPWH should have deducted the funds it had disbursed based on the reenacted budget, from its total authorized appropriations for 2007. It did not, Boncodin says.

Hence, Boncodin estimates that the DPWH had over-released funds, or more than its total authorized appropriation of P153.1 billion, in 2007. Senior budget officials, she adds, have acknowledged this error to her in private.

And because Arroyo herself has willed that roads and infrastructure projects must be the bedrock of her legacy as president, the DPWH has rolled out projects with precipitate haste over the last seven years.

Lack of skills

But that undue speed has been combined with apparent ineptitude in the evaluation of contractors, among other things.

Procurement officials themselves admit that members of Bids and Awards Committees (BAC), especially on the local level, lack the most basic of skills: verifying the credentials of contractors to safeguard the integrity of contracts.

ARROYO tarpaulin announces another road project in Albay. Photo by Weng Paraan.

ARROYO tarpaulin announces another road project in Albay. Photo by Weng Paraan.

GPPB’s Alvarez acknowledges a big capacity gap among members of bids and awards committees in verifying the credentials of bidders.

She explains that the government requires bidders to submit from 16 to 20 “eligibility documents” and to the last, “all these documents are there, with the government agencies.”

But many BAC members from national to local levels find great difficulty even securing the registration records of bidders — mostly available online, in fact — with the Securities and Exchange Commission (SEC) and the Department of Trade and Industry (DTI), says Alvarez.

This verification skill is most important, she adds, in the eligibility check or post-qualification of winning bidders.

The mandatory post-qualification requirements of procurement laws include the submission of financial statements and corporate records three years prior to the award of contracts.

Alvarez rues that on account of the corrupt and collusive practices of some contractors, “sobrang takot ang mga BAC, kung contractor ka parang kailangan lumusot ka sa butas ng karayom (BAC members are so careful, contractors seem to have to pass through the eye of the needle).”

“We are making rules for the 10 percent who are corrupt, punishing the 90 percent who are not,” she says.

Nonetheless, BAC members clearly failed to check most of the top 10 companies in terms of volume and value of contracts won with the DPWH had belatedly submitted or lacked registration documents before the SEC or DTI.

Mostly obscure business entities, they seem to have operated largely under the radar; little is known about them even in construction industry circles.

Curiously, not even one of the top 10 contractors of the DPWH is enrolled as a member — regular, associate or affiliate — of the Philippine Constructors Association of the Philippines (PCA), the largest industry association with a 54-year history.

The best and biggest contractors in the country are members of the PCA, which aims to “serve as the voice of the Philippine construction industry and the guardian of construction professional integrity.”

Clues to corruption

The DPWH online database also presents a cache of clues to possible instances of collusion and corruption in the award of public-works deals that have apparently escaped monitoring agencies.

  • For instance, the DPWH contracts registry shows that in many cases:
  • Multiple contracts were awarded to the same contractor for the same or contiguous road stretches
  • The same entity or beneficial owners and their relatives, including half a dozen lawmakers and local officials, are behind several companies.
  • Winning bidders post bids just a few hundred pesos below approved budget for contract (ABC). In a number of cases, only one contractor participated in the bid.
  • Identical amounts (to the last digit) were awarded for road projects with different specifications (length, width, depth) in different barangays, to the same or several contractors.

In other cases, comparatively high and low contract prices were awarded for similar road regraveling projects.

In a handful of cases, differently numbered contracts were awarded for the same road projects.

Incidentally, while the cost of tarps and billboards — which run from P5,000 to 20,000 each — are not shown in budgets, there are contracts in the DPWH database for taking them down.

One entry, for instance, lists the “dismantling of billboards along national roads, Quezon City” under the Quezon City First engineering district. The contract, worth P296, 975.00, was awarded to P.J. Cruz Construction and Trading in April 2008.

Another entry in March 2007 showed that EP de Guzman Consulting Engineers was to dismantle “billboards along national roads, QC” for P694, 950.00 – enough to build a two-classroom school building. — with additional reporting by Tita C. Valderama