The weakest link in the first nationwide automation might be the logistics

(First of 2 parts)

MANILA, Philippines—While concerns have been raised about some technical aspects of the first nationwide automation elections, the weakest link may be the logistics.

Election observers and political camps have raised questions on the integrity of the software and the Precinct Count Optical Scan (PCOS) machines, as well as the reliability of the transmission of results.

However, the windows for cheating, sabotage, or failure—if any party is contemplating this—is in the delivery of the vote counting machines, from the warehouse in Laguna to various parts of the country.

Newsbreak learned that this crucial and sensitive task has been assigned to layers of subcontractors with limited track record and with no direct accountability to the Commission on Elections (Comelec).

The layers, each involving different sets of companies and people in different localities, are therefore susceptible to infiltration or influence by partisan groups.

Handlers and stations
Smartmatic, the PCOS supplier, has contracted the services of three forwarding firms to deliver 82,000 machines to all clustered precincts nationwide a few days before the May 10 elections.

The firms are:

• Germalin Enterprises Inc., which will deliver in the National Capital Region (NCR);
• Ace Logistics Inc., in the rest of Luzon;
• Argo International Forwarders Inc., in the Visayas and Mindanao.

Except for Germalin, which has its own trucks and will be limited to Metro Manila, these logistics firms, in turn, are contracting different warehousing and trucking services in their assigned regions, provinces, cities, and municipalities.

The PCOS machines will be claimed by forwarders from the Comelec warehouse in Cabuyao, Laguna. The machines will then be stationed in regional sub-hubs for several days, then distributed to provincial sub-hubs where they stay several days, then delivered to city and municipal sub-hubs where they stay until they are brought to the precincts for which the PCOS are specifically programmed.

The logistics firms expectedly wouldn’t divulge the exact schedule of deliveries and warehousing periods, for security reasons. They just said they will start moving the PCOS machines by mid-April.

A source who had experience in delivering machines for past automated elections in Muslim Mindanao said that an average of two persons is needed to deliver a counting machine.

With 82,000 machines to be delivered within a tight period, 160,000 handlers at the most will be required. Less handlers may be needed, however, if we factor in the possibility that the same group of persons are utilized for separate days in one area or in neighboring areas. Either way, the forwarding companies do not have the manpower.

Little track record
The corporate filings of the three logistics firms contracted by Smartmatic indicated limited track record.

Germalin appears to be the most profitable, with gross revenues pegged at P63 million in 2006, its latest submission to the Securities and Exchange Commission (SEC).

Argo—which will have the biggest service area (the entire Visayas and Mindanao)—is the most obscure. Its latest filing with the SEC was for 2002 yet. That year, it reported a loss of P1.45 million, after generating a profit of P2.4 million in 2001.

Germalin and Argo had previous contracts with the Comelec delivering election paraphernalia.

Argo general manager Efren Zoleta said that his company bagged the contract to deploy the counting machines in the Autonomous Region in Muslim Mindanao in 2007. This probably explains why Smartmatic, which provided the Digital Recording Electronic machines in Maguindanao, chose Argo for Mindanao, Zoleta said. “We had the experience and we delivered.”

Ace Logistics, for its part, reported a service income of P18 million for 2008, a cut of more than half from its P34.9 million in 2007. Its property and equipment are pegged at only P1.774 million.

This is Ace Logistics’ first election-related contract.

The task ahead
In interviews with Newsbreak, the logistics firms confirmed that the PCOS delivery is their single biggest contract so far. Since the tight schedule and the exacting requirements of a nationwide automation leave no room for error, observers have raised concerns if the firms can deliver.

Consider the following:

• The PCOS machines must be delivered in good condition at the right time. This means the PCOS should be at the precincts three days before election day, or May 7 at the latest. Before that, they will be moved around, stationed, and move around again in regional, provincial, and city and municipal sub-hubs.
• Each PCOS machine is precinct-specific, meaning its configuration is unique to that precint number and its local candidates. When a machine is delivered to the wrong precinct, the election inspector cannot open it, and it won’t recognize the ballots there.
• Delivering the wrong machine to the wrong precinct would have a chain effect. Each wrongly delivered machine results in at least two precincts failing to automate. Voting and counting the votes manually will then create another window for cheating and sabotage.

Aside from delivering the machines to the remotest area, the logistics firms are also tasked to retrieve the machines from the polling precincts and bringing these back to the Comelec warehouse in Cabuyao, Laguna.

There are 76,340 clustered precincts nationwide, but around 82,000 precinct-specific machines will be deployed. Some of the machines will be on standby in case the others breakdown or malfunction.

While the Comelec says elections in some areas could go manual, the preparation is for total automation, Commissioner Gregorio Larrazabal said in an interview. “The objective is to automate in all precincts.”

Even remote polling areas—those that can be reached only by small boats, passable only by farm animals, or rebel-infested—will have their share of PCOS.

Missing big players
The limited track record of the logistics firms and the daunting task given them beg the question: Why are the big forwarding companies—like DHL Philippines, LBC Express, Federal Express, and its local franchisee Air 21—not involved?
Smartmatic spokesman Cesar Flores Zavarce offered no explanation.
We contacted these companies, but they have yet to issue any statement.

Where, to begin with, is 2Go Cargo, which Smartmatic listed as its logistics arm when it bid for the Comelec contract?

2Go Cargo is the transport and logistics firm of Aboitiz and Co., one of the biggest shipping companies in the Philippines. At the last minute, it backed out of its venture with Smartmatic, industry sources told Newsbreak.

Some sources said 2Go Cargo wanted to avoid controversies since some sectors expressed apprehension that its owners, the Aboitizes of Cebu, have close ties to President Arroyo and her husband.

Other sources said that 2Go backed out because of the low budget offered by Smartmatic. “It was more of financial consideration. It was a high risk project yet the financial gain is low,” an industry source said.

Zavarce refused to answer our question on why 2Go dropped the project.

The Comelec budget for logistics was pegged at P1.66 billion, but Smartmatic’s placed a bid of only P916 million. Other bidders considered the winning bid outrageously low. (Smartmatic bagged an overall automation contract, which logistics is part of, amounting to P7.2 billion, out the total P11.2 billion project cost proposed by Comelec.)

“When 2Go learned about the budget, they backed out,” another source privy to the negotiations said.

No takers
Smartmatic’s Zavarce said that several forwarding firms were invited to submit proposals for a nationwide delivery of machines. Based on the operational plans presented by the firms, three where awarded the contracts for Metro Manila, the rest of Luzon, and the Visayas, and Mindanao were awarded.

However, in separate interviews with the forwarding firms, Newsbreak learned that there was no competitive bidding at all. It appears that Smartmatic arbitrarily picked the forwarding firms, for lack of better options.

Argo’s Zoleta said Smartmatic initially offered them to cover Mindanao after 2Go backed out of the project. Later, they were also offered to cover the Visayas “because it appears nobody wanted to take the job.”

Zoleta said Argo was awarded Mindanao in October and the Visayas in December.

Lawyer Roger Nogales, spokesman for Ace Logistics which got the Luzon area, said the company attempted to back out after they learned of the steep penalties that Smartmatic will be imposing on them for any infractions of the contract.

As for the operational plan, it was Smartmatic “which drafted and we gave our inputs,” Nogales said.

Germalin was picked to service Metro Manila because its operational strength is in the NCR, said Germalin executive assistant Ireneo Padrigon.

“The showcase of automation is in the NCR, and Smartmatic does not want to take chances,” Padrigon said. Germalin’s main clients are newspapers, magazines, and textbooks. —Research assistance by Lilita Balane and Reynaldo Santos Jr.

Last of 2 Parts: Comelec yields total control over PCOS delivery