MANILA— The Bases Conversion and Development Authority (BCDA) gave undue advantage to MTD Capital Berhad, the contractor for P8.510 billion in sports facilities constructed and used for the 2019 Southeast Asian Games, according to the 2019 report of the Commission on Audit (COA).
State auditors noted that the sports facilities in New Clark City in Tarlac province was negotiated into an unsolicited proposal rather than going through competitive bidding.
The report noted that while the project was subjected to the Swiss challenge, where other parties are invited to bid, competitiveness was compromised because MTD had more time to study BCDA’s proposed project.
“The Minutes of Board meetings show there have been discussions between BCDA and MTD about the sports facilities even before September 6, 2017 or more than two months before the issuance of the Certification of Successful Negotiation on November 10, 2017, while prospective bidders were only given 30 days to study the specifics of the project,” the audit team said.
The BCDA management, however, stressed that the development of the Philippine Sports City in Tarlac had been approved by the National Economic and Development Authority (NEDA) to be undertaken in 2021 for the supposed 2023 hosting of the SEA games.
But the country's earlier hosting of the regional games in 2019 necessitated that BCDA explore all legal modes of developing the facilities that would pass rigorous certifications for the international sports meet.
The BCDA emphasized that there was no undue advantage given to MTD and that the company only had advantage in terms of time and preparation, which is usual in cases of unsolicited proposals.
“Nevertheless, it did not have any undue advantage because the proposal still underwent both the required rigorous negotiation process, as can be seen in the dramatic reduction in the project cost and, equally important, the required Swiss Challenge or Competitive Challenge,” the BCDA told the audit team.
The report also stated that the construction of the facilities through a Joint Venture Agreement (JVA), even while the terms fall under the Build-Operate-Transfer Law, is prejudicial to the interest of the government.
Auditors recommended that the BCDA justify the JVA, which resulted in government paying an additional cost.
The initial project comprising of government buildings amounted to P4.185 billion, which grew to P8.510 billion when sports facilities such as the aquatic center, athletics stadium and athletes village were included.
The report noted that as of Dec. 31, 2019 the BCDA already paid the joint venture a total of P5.488 billion for the sports facilities.
“Although, BCDA was given flexibility on the mode of disposition of government assets, it should not be exempted from laws governing public infrastructure projects especially when it involves expenditure of public funds,” the audit team said.
The BCDA insisted they were fully aware of the modes of development of infrastructure projects available under Philippine laws but after a careful study and with the guidance of the Asian Development Bank (ADB), it deemed that the JVA was best suited for the project.
“BCDA trusts in ADB's advice that the said mode is not only legal, but is likewise the most advantageous arrangement for the government,” the BCDA management told the audit team.
The audit team also noted that there was no prior appropriation of funds, contrary to Presidential Decree 1445 or the Government Auditing Code of the Philippines, for the joint venture agreement.
The BCDA, however, told the audit team that there was no prohibition against its use of its corporate operating budget before the actual appropriation of funds in the 2019 national budget.
A copy of the report uploaded on the COA website was received by the BCDA board of directors on Sept. 23, 2020.