An ammunitions dealer on Wednesday said Defense Secretary Gilberto Teodoro Jr. may have been misinformed by one of his undersecretaries into scrapping a P500-million ammunition deal that was supposed to be awarded to them.

The firm said Undersecretary for Finance and Armed Forces Modernization Antonio Romero II made an error in recommending the scrapping and re-bidding of the project.

Roperlynn Cruz, the Philippine representative of Talon Security Consulting and Trade Ltd. of Israel, denied Romero's allegations that Talon submitted “false documents“ during the bidding process.

In the recommendation, Romero noted that Talon declared that “it has not done business within the Philippines” but it has submitted completed contracts with the Armed Forces of the Philippines. Thus, Romero said one of the two submissions was false.

Cruz furnished reporters with the certification submitted by Talon to the DND-Bids and Awards Committee. It was from the certification where Romero appeared to have based his memorandum to the defense chief.

The certification said that the firm “has not previously done business in or derived income from sources within the Philippines subject to Philippine business and/or income taxes.”

Cruz explained that Talon having not done a business in the Philippines and the firm not doing a business subject to Philippine tax system are entirely different.

She said Talon has not engaged in any project in the Philippines where they paid taxes to the Philippine government because of a standing agreement between Israel and the Philippines that says Israeli firms should be paying taxes to the Israeli government.

Cruz said the firm is not paying taxes to the Philippine government because there will be a case of double taxation. She said Talon has had at least 10 prior completed contracts in the Philippines on ammunition delivery since 2007.

“Apparently,  undersecretary Romero deliberately omitted vital excerpts of the certification….With the omission of the excerpt ‘subject to Philippine business and/or income taxes’, there was an obvious misappreciation of the documents Talon had submitted to the bidding committee,” said Cruz.

“The country and Israel have an existing tax treaty, which had been signed to avoid double taxation. Thus, the certification saying Talon is not subject to any business and/or income tax in the Philippines is factual and valid."

Cruz also said that Talon was the lowest bidder for the 60mm and 81 mm ammunition, for P6,500 and P7,200 each round, respectively. She said the cost is "really low as compared to the previous contract that the AFP had entered into.”

Citing a previous contract signed approved by Teodoro, the budget for an 81 mm round was P7,780 while 60mm round cost P6,500.

“The AFP also conveniently failed to mention that Talon also submitted a bid price of P439,986,800 for 40mm mortar ammunition as compared to the approved AFP budget of P499,985  which would give the AFP savings of P59,998,200,” said Cruz.

Teodoro: No favoritism in decision

Teodoro, meanwhile, belied allegations that the agency was favoring a losing bidder when it cancelled and ordered a re-bidding of the P1 billion ammo contract.

The defense chief maintained his decision to scrap the contract was in response to the recommendation by ranking DND officials who were unanimous in saying that there were procedural lapses in the conduct of the proceedings.

“There were no other considerations in this decision other than the fact that glaring violations were committed from the pre-bid conference up to the opening of  bids, thus compromising the integrity and transparency of the whole proceedings,” he said in a statement.

Romero, meanwhile, denied deliberately misleading Teodoro to cancel the contract. “I did not mislead the Secretary because what was faulty was the procedure taken by the DND- BAC from the pre-bid conference relative to the appreciation of documents submitted by the proponents which outrightly led to the disqualification of the other proponents and the qualification of Talon despite questionable documents."

What also raised the suspicion of Teodoro was the fact that when the BAC declared the other bidders ineligible and Talon as the only qualified bidder for the contract despite having submitted questionable documents, representatives from the private sector, which normally act as observers during the proceedings, were excluded from the proceedings.

“Since there were clear indications that DND-BAC committed procedural lapses in evaluating the documents of the two disqualified bidders apparently to favor Talon which itself submitted questionable documents, the recommendation of the DND undersecretaries for a conduct of an investigation to determine possible culpability of the BAC members that handled the bidding would be in order,” he said.

The Bishop-Businessmen’s Conference (BBC), which has an existing memorandum of agreement with the DND to act as observer representing the private sector in bidding procedures for the procurement programs of the agency, has lauded the decision of Teodoro to scrap the contract.

Lawyer Pat Menzon, BBC co-chair and regular DND-BAC observer, said that even before Teodoro ditched the contract, they already suspected “irregularities” in the conduct of the bidding process.