COA questions award of Kaliwa Dam contract to Chinese firm

The Commission on Audit (COA) questioned the selection of the contractor for the New Centennial Water Source-Kaliwa Dam Project which would be funded through an Official Development Assistance loan.

According to the COA report released on Sunday, the results of its bidding was "in the guise of being a competitive procurement process" because the non-compliance to qualification requirements of two out of the three Chinese contractors seemed to be intentional.

The Consortium of Guangdong Foreign Construction was found to be non-compliant with eligibility requirements during the opening of bids, despite confirmation from the Technical Working Group (TWG) that the nominated contractors had "proven track record and work experience."

On the other hand, the financial bid of another bidder Power Construction Corporation of China Limited was "surprisingly higher" by 6.91 percent than the approved budget for the contract.

"It can be deduced that the two bidders/contractors were included merely to comply with the at least three bidders requirement as stated under the Procurement Law," the report read.

"The procurement of the project is with the semblance of a competitive bidding when in reality, it is a negotiated contract from the inception of the bidding process," it added.

The bid was awarded to China Energy Engineering Corporation Limited in December 2018. The Notice to Proceed, however, was still pending because some required documents had yet to be submitted.

Thus, COA also questioned why the CEEC had started its preliminary project activities.

"The contract agreement between the MWSS and CEEC expressly provides that the winning contractor shall only begin mobilization by conducting topographic mapping and geologic drilling after the receipt of Notice to Proceed," the report stated.

"The MWSS cannot assume any liability in case the loan agreement is not perfected nor declared effective. Thus, the contractor shall bear all the risk of loss and damages, if any, as a result of its actions," it added.

According to the COA report, the project manager confirmed that the CEEC was in the process of securing the required documents such as the Environmental Compliance Certificate, BSP Letter of Guarantee, and the Free and Prior Informed Consent (FPIC) of the indigenous people who would be affected by the project.

"Compliance of the project requirements should be within one year from the signing of the Preferential Buyer's Credit Loan Agreement or 20 November 2018," the COA report said.

"Management should expedite the processing of the requirements, otherwise the terms of the loan will be revised or the loan facility will be canceled," it added.

Moreover, it recommended that responsible TWG officers should be held responsible for "failure to conduct vetting of the project and/or request for replacement of the two not qualified bidders which deprived the MWSS to select the most qualified contractor."

The multi-billion peso Kaliwa Dam, a China-funded venture in Quezon Province, was expected to help meet the growing water demand in the National Capital Region.

It had been opposed by some militant groups due to the risk that the project would displace indigenous people and submerge their ancestral lands. — DVM, GMA News