COA: Chinese firm got Kaliwa Dam contract through negotiated deal

Adrian Ayalin, ABS-CBN News

Posted at Aug 19 2019 03:58 PM

MANILA- The Commission on Audit questioned the awarding of the Kaliwa Dam project in Quezon province to China Energy Engineering Corporation Limited in what seemed like a negotiated contract under the guise of public bidding.

In the audit observation memorandum sent by the commission to Metropolitan Waterworks and Sewerage System Administrator Reynaldo Velasco, state auditors noted that the Consortium of Guangdong Foreign Construction Company Limited, and Guangdong Yuantian Engineering Co. lacked technical requirements such as mayor’s and business permit as well as Philippine Contractors Accreditation Board license and Philippine Government Electronic Procurement System platinum certificate.

Power Construction Corporation of China Limited meantime passed the technical requirements but gave a bid “surprisingly” higher than the approved budget by P842.743 million.

“In summary, it can be deduced that the 2 bidders/contractors were included merely to comply with the 'at least three bidders requirement' as stated under the Procurement Law," Audit Team Leader Reny Meryl Marquez said.

"Likewise, the procurement of the project is with the semblance of competitive bidding when in reality, it is a negotiated contract from the inception of the bidding process,” she added.

Auditors said the higher bid of PCCC raised doubts since the bidders were already informed that bids received in excess of the approved budget shall be automatically rejected. 

It was also noted that the winning bidder, CEEC as well as CGFCC, did not indicate the completion date of their construction projects, as stated in the requirements for contractors on their design, engineering and construction experience. 

The audit team recommended that an explanation be demanded from the technical working group of the MWSS for the acceptance of the bidders even if they did not comply with pre-qualification requirements. 

The notice of award was already issued to CEEC on Dec. 11, 2018 but the notice to proceed is yet to be issued pending the submission of documents.

The audit team said that the project manager already confirmed that the CEEC was already issued an Environmental Compliance Certificate by the Department of Environment and Natural Resources, while the Free and Prior Informed Consent from the National Indigenous Peoples is already on the 2nd of 5 stages of assemblies needed.

“Thus, management should expedite the processing of the requirements, otherwise the terms of the loan will be revised or the loan facility will be canceled,” the audit team said. 

It was also noted that the documentary requirements for the project were submitted 135 days after the execution of the contract, contrary to a 2009 COA circular requiring the submission of documents within 5 days.

Auditors emphasized that the MWSS should comply with the requirements as stated in the Manual of Procedures for the Procurement of Infrastructure Projects.


While it has yet to receive a copy of the COA report, Malacañang on Monday said it would review the contract and let President Rodrigo Duterte decide on the matter.

"Siyempre, (Of course) we will have to look at the report of COA then look at the contract," Presidential Spokesman Salvador Panelo said.

If the bidding is proven to be rigged, Panelo said it would be up to President Duterte to allow or suspend the contract.

“We’ll let the President decide on that,” he said.

The Kaliwa Dam project, which is being opposed by environmentalists and other sectors, would be funded through a loan agreement and would cost P18.7 billion.

-with a report from Arianne Merez, ABS-CBN News