Two of the three local firms barred by the World Bank (WB) from participating in its foreign-assisted road projects are being investigated by the Philippine Constructors Association (PCA), which asked the WB to lift the "confidentiality clause" of its documents in order to help its own probe.

PCA executive director Lito Madrasto, in a forum on Thursday organized by the civil society group Bantay Lansangan (Road Watch), disclosed that proceedings are now underway to determine if sanctions should be imposed on E. C. de Luna Construction Corp., and Cavite Ideal International Construction and Development Corp. for alleged participation in collusive schemes to corner road projects with inflated costs.

Madrasto said a sanction is like a kiss of death as firms found "guilty" of violating the PCA’s ethical and professional standards would be ostracized by all the industry players. He said construction suppliers are bound not to conduct business with the guilty firm or firms, which would hurt their operations.

Madrasto said the probe is being conducted by the PCA's Ethics and Professional Practice oversight committee.

Confidentiality

At the same time, Madrasto said the PCA is asking the WB to lift the confidentiality clause of the WB documents so these could be used in its own investigation. “The name of the association, the integrity of the industry is at stake here,” he stressed.

E. C. de Luna and Cavite Ideal were among the seven firms blacklisted by the WB for alleged participation in collusive scheme to corner projects of the Department of Public Works and Highways (DPWH). E.C. de Luna, allegedly with strong links to First Gentleman Jose Miguel Arroyo, was debarred indefinitely while Cavite Ideal was sanctioned for four years.

A third Filipino firm, C.M. Pancho Construction, was also debarred for four years. C.M. Pancho, however, is not a PCA member.

The four other companies blacklisted by the WB are Chinese construction firms.

While the WB may have found cause to blacklist E. C de Luna and Cavite Ideal, Madrasto said these two firms deserve to be heard as part of due process. “We want to give them a fair shake,” he said.

Open to more bidders

During the forum, Madrasto confirmed that collusion among bidders is rampant at the DPWH, and colluders have always managed to go around attempts to stop it.

He noted that the PCA proposed that DPWH do away with the pre-qualification stage to attract more bidders. He confirmed that companies that have refused to participate in collusive schemes are disqualified in the pre-qualification bid for no apparent reason by those manipulating the system.
The few which qualify are then bought off by the favored bidder.

Pay offs

Allowing more participants to join the bidding, Madrasto said, discourages pay-offs since it would be costlier for the favored bidder to buy out more bidders. “With more players, the more it becomes harder for the game to be played,” Madrasto said.

Yet, when the post-qualification stage was adopted, erring firms resorted to “jacking up the margin (of cost) to cover for the pay-offs.”

In the WB report, those interviewed said about three percent of the total project cost go to the "losing" bidders. In all, total pay-offs,  including politicians and members of the cartel, amount to 15-27 percent of the total value of the contract.

Madrasto said graft and corruption may not be totally eliminated but efforts should be made to contain it.