COA flags BCDA’s P8-B New Clark City project

The Commission on Audit (COA) questioned the Bases Conversion and Development Authority (BCDA) for bundling the sports facilities in Tarlac that were used for the 2019 Southeast Asian Games with a Malaysian firm’s unsolicited proposal to build a national government administrative center (NGAC).

In its 2019 audit of the BCDA, the COA said the agency erred in bundling the sports facilities with the 2017 unsolicited proposal of the Malaysian construction conglomerate MTD Capital Berhad to build the NGAC—which they said would be similar to Putrajaya in Malaysia—at the 60-hectare New Clark City at the border of Tarlac and Pampanga.

But the BCDA returned the unsolicited proposal to MTD Capital and asked the firm to include the sports facilities that would be used in last year’s Southeast Asian Games under a joint venture with the government.

State auditors said the terms of the project fall under Republic Act No. 6957, or the build-operate-transfer law, and the BCDA prejudiced government interest when it pursued the project under a joint venture agreement (JVA).

Stringent requirements

“If only the BCDA did not incorporate the construction of its sports facilities with the National Government Administrative Center joint venture project, but rather subjected to the more stringent requirements of RA 6957, as amended by RA 7718, the government will not entail additional expenses by paying interest or construction cost,” the COA said.

“We would like to emphasize that the whole amount of financing cost could have been avoided if only the project was procured through RA 9184 (Government Procurement Reform Act) and was not incorporated in a joint venture,” it said.

State auditors noted that while the P8.51-billion project was subjected to a Swiss challenge—a process where third parties are invited to submit better cost bids, MTD group had a longer time to study the proposed budget because it was part of their unsolicited proposal.

BCDA prerogative

The COA said there had been discussions between the BCDA and MTD about the sports facilities even before Sept. 6, 2017, or more than two months before the issuance of the certification of successful negotiation on Nov. 10, 2017, while prospective bidders were only given 30 days to study the specifics of the project.

“Competitiveness was compromised because MTD had more time to study the BCDA’s proposed project,” the state auditors said.

The BCDA issued a statement on Friday to defend its decision and argued that it was the prerogative of the BCDA to decide on how to implement a project.

“It is our opinion that the choice of modality or legal framework of the project is part of the business prerogative of the BCDA in pursuance of its statutory mandate to develop and accelerate the sound and balanced conversion of Clark military reservations and its extensions,” the BCDA said in a statement, quoting the October 2, 2018 legal opinion of the Office of the Government Corporate Counsel (OGCC).

Still quoting the OGCC, the BCDA said “the provisions of the executed JVA and the legal framework of the project are in compliance with the existing laws, rules and regulations.”

According to the BCDA, the multibillion project was supported by Asian Development Bank, which provided transaction advisory services “to ensure transparency and swiftness of the project.”

The BCDA insisted that there was no undue advantage and MTD “only had an advantage in terms of time and preparation, which is usual in cases of unsolicited proposal.”

The COA, however, said the BCDA is not exempted from laws governing public infrastructure projects and expenditure of public funds.

State auditors said the BCDA could have gotten more from the NGAC project if the sports facilities were not included in the JVA.