SC justices say PCOS purchase sets bad example for gov’t agencies

They say other govt agencies may also purchase without public bidding

MANILA, Philippines – Allowing the Commission on Elections (Comelec) to enforce its P1.8-billion purchase of automated machines used in the 2010 elections under a “dead” contract may set a bad precedent, some Supreme Court justices said during oral arguments on the issue on Tuesday, May 8.

Justice Antonio Carpio said Comelec’s decision to exercise its option to purchase some 82,000 precinct count optical scan (PCOS) machines – even if the contract containing said provision expired in 2010 – may discourage other government agencies from going through the regular process of conducting a public bidding. 

Comelec exercised its option to purchase the PCOS machines from Smartmatic and its local partner Total Information Management Corp. on March 30, 2012. That option was supposed to end together with the contract in 2010, but Smartmatic extended it for third time up to March 31, 2012.

Smartmatic first extended the option in March 2011, then in April the same year, but the Comelec didn’t take the offer.

When Smartmatic extended the option this year, Comelec went for it, announcing it will use the PCOS machines for the 2013 mid-term elections.

Solicitor general Francis Jardeleza told the SC that this was the most advantageous deal for Comelec, which faces a funding constraint. Comelec sought P12 billion from Congress for next year’s automated elections, but was only given P7.9 billion. “P900 million of which will even go to the personnel,” he said.

Carpio pointed out, however, that the “mother” contract containing the option covered only the 2010 elections. 

“Despite the lapse, you accept the extension. You are resurrecting a dead contract,” Carpio told Jardeleza. 

Justice Teresita de Castro held the same view. “Consistent with the basic principles we have, you cannot extend a contract that has already expired,” she said. 

Public bidding

Carpio said that other government agencies could then follow suit. They will simply assert their right to exercise their option to purchase even if the contract has expired already, hence eliminating the need to hold a public bidding altogether, he said.

He added that the government procurement law – which requires public bidding – only allows certain exceptions. He challenged Jardeleza to give him one reason why Comelec’s deed of sale with Smartmatic can be considered an exception when the government submits its memorandum within 10 days to the high court. 

De Castro, on the other hand, said that Comelec could not say purchasing the PCOS machines was its best option because it did not allow other companies to show what they could offer. “If there is no public bidding, what will be your basis that that is what the best government could get?” she asked.

Jardeleza said though that Comelec’s hands are tied — it could not afford to buy new machines because only P2.2 billion of its P7.9-billion budget was allotted for the purchase of the automated machines. Smartmatic’s P1.8-billion offer was, therefore, practical.

But Carpio argued that it is only through public bidding where the government can best identify the terms most beneficial to it. He added that an acquisition without public bidding “is open to connivance.”

Jardeleza said they believe the vendors are honest. But Carpio was skeptical. “The law cannot assume honesty. That’s the reason for bidding,” he said. –