TWO high-ranking officials of the Department of National Defense (DND) are allegedly in cahoots with some officers of the Armed Forces of the Philippines (AFP) in “fixing” contracts for favored bidders, such as in the case of the questionable procurement of 21 refurbished UH-1D helicopters.
The Senate and the House of Representatives are set to investigate the alleged anomaly where “witnesses” are expected to surface and “tell all” about the deal that was sealed with Rice Aircraft Services Inc. (RASI) and its partner, Eagle Copters Ltd.
According to DND insiders, the “duo” has been on top of big-ticket and “juicy” contracts awarded to favored bidders, among them a local supplier of defense materials, a woman with the initials “J.M.” Sources said the trader has a number of retired and active officials in her payroll.
Last week, The Manila Times columnist and veteran broadcast journalist Erwin Tulfo wrote about another questionable DND decision to purchase 28 M113 armored personnel carriers (APCs) for P880 million instead of shipping in 114 units of M113 donated by the United States.
It turned out, Tulfo said, that the 21 M113s bought from Israel, each of which costs at least P31.4 million, are APCs previously used in Belgium, the United States and Israel.
“In my Teleradyo 5 interview with Defense Undersecretary [Fernando] Manalo, he could not justify the DND’s decision to purchase 28 M113 APCs from Israel instead of spending less on transporting the 114 APCs from the US,” he added.
The Manila Times sources provided several documents and photos to back up their claim that the helicopter contract was “rigged” in favor of RASI, owned and operated by US businessman Robert Rice.
They said biddings were declared a failure to pave the way for a negotiated contract in favor of RASI.
Documents obtained by The Times showed that ranking Philippine Air Force officers “guided” the contractor on how to skirt strict rules on government procurement, which allows a negotiated deal after two successive failed biddings.
To make the “drama” more convincing, the bidding for the 21 helicopters failed not only twice but thrice and on all occasions, RASI emerged as the winner, only to be disqualified eventually because of a number of “irregularities.”
The quickest and surefire way to bag the deal was to declare a failure of bidding to relax the requirements for negotiation.
Interestingly, a bidder should have been declared blacklisted if it was found out that it faked its requirements or lacked the required facility and financial capacity as in the case of RASI.
The documents showed that there were two Post Qualification (PQ) inspections conducted at the facility of Rice. The first was on March 1-8, 2013 by PAF Brig. Gen. Conrado Parra and Maj. Oliver Casuncad.
The two officials gave a very impressive Post Qualification report but failed to satisfy government observers during deliberations on their mission.
They found out from the first PQ that Rice has no qualified facility and some of his documents were fake. The helicopter components were discovered to be non-compliant with the requirements from the start but the official report was favorable.
The second PQ inspection was conducted by on April 23-27, 2013 at Rice facility again by Parra and Casuncad, accompanied by two more PAF officers whose findings differed from the findings of the first two officers.
The documents again showed that there were papers found to be fraudulent but were kept away from view allegedly upon the instruction of the two ranking DND officials. The favorable report was to avoid the blacklisting of Rice.
Sources said Assistant Secretary Patrick Velez was informed that the documents submitted by Rice–statement of ongoing contracts, whereby contracts stated therein did not actually exist; audited financial statements; and net financial contracting capacity– were fraudulent.
As a part of PQ procedure, Rice had to present all the original documents and the individuals who signed them. In the audited financial statements, Rice failed to present the Certified Public Accountant who certified the report.
“They never mentioned the fake documents submitted by Rice. This is relevant to the discussions between the PAF official and Rice’s former representative on how to manipulate the bidding to arrive at negotiation. Velez knew that the papers were fake but the DND resolution turned out favorable. Rice should have been blacklisted on the second bidding,” one of The Times sources said.
The Manila Times was given what seems to be a copy of an authentic mail envelope addressed to Rice that contained a copy of a resolution passed by the DND Special Bids and Awards Committee (SBAC) 1.
The resolution states that there were failed biddings and that it was highly recommended that “Secretary of National Defense (Voltaire Gazmin) to resort to the adoption of an Alternative Mode of Procurement through Negotiated Procurement.”
Stating causes for the recommendation, it was dated May 13, 2013 and signed by Undersecretary Fernando Manalo as chairman; Velez, as vice chairman; Director Nebuchadnezzar Alejandrino as member; and Army Col. Joselito Reyes as member.
The other members of SBAC 1 who failed to sign the resolution were Lt. Gen. Gregorio Macapagal and Maj. Gen. Gabriel Dimatatac.
A copy of the resolution was given to Rice, proof that he was being informed to prepare to bag the contract under a negotiated scheme, the sources said.
Rice, by his own admission through a lawsuit in the US, claimed that he had prior economic relationships with the Philippine government.
The Times sources said these “economic relationships” were the beginning of his “partnership” with Philippine officials.