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	<title>NewsCentral &#187; corruption</title>
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	<description>The business paper of the New Economic Corridor</description>
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		<title>Tendering Dysfunction</title>
		<link>http://newscentralsite.com/blogs/2008/11/15/tendering-dysfunction/</link>
		<comments>http://newscentralsite.com/blogs/2008/11/15/tendering-dysfunction/#comments</comments>
		<pubDate>Sat, 15 Nov 2008 17:08:51 +0000</pubDate>
		<dc:creator>Administrator</dc:creator>
				<category><![CDATA[Due Diligence]]></category>
		<category><![CDATA[Op-Ed]]></category>
		<category><![CDATA[Arnel Paciano Casanova]]></category>
		<category><![CDATA[corruption]]></category>
		<category><![CDATA[government]]></category>
		<category><![CDATA[public bidding]]></category>

		<guid isPermaLink="false">http://newscentralsite.com/blogs/?p=153</guid>
		<description><![CDATA[When public bidding (or tendering) fails, and sadly, this has become the rule rather than an exception, one cannot help but feel being pulled at the edge of despair for whatever ills this process.]]></description>
			<content:encoded><![CDATA[<p><img src="http://newscentralsite.com/blogs/wp-content/uploads/2008/11/newscentral-columnists-due-diligence.jpg" alt="newscentral-columnists-due-diligence" title="newscentral-columnists-due-diligence" width="139" height="111" class="alignleft size-full wp-image-426" />When public bidding (or tendering) fails, and sadly, this has become the rule rather than an exception, one cannot help but feel being pulled at the edge of despair for whatever ills this process.</p>
<p>For why one could not be when this same process primarily exists to supposedly promote the best terms and values for the tendering party through a fair and transparent competition.</p>
<p>In this country, the problem is more pronounced and subsisting in the cases of public infrastructure and public-private partnerships. While everyone seems to believe that the problem lies on corruption—which it does substantially—it would be a mistake to overlook the contribution of other major causes for bidding failure as well.</p>
<p>It can be argued, in fact, that corruption happens because of the presence of these other causes and factors. They become the avenue and the tools of unscrupulous rent-seeking party to corrupt the process.</p>
<p>One major factor for bidding failure is the vagueness of the terms of reference. And the ambiguity includes, among others, the unrealistic costing (e.g., overpricing/underpricing of unit costs), valuation (e.g., changing values and parameters in appraisals that results in undervaluation of assets being disposed or procured) , projections (e.g., highly optimistic assumptions) and timelines (e.g., unrealistic completion period).</p>
<p>This vagueness can be attributed to either malice (a deliberate intent for the bid to fail to have an excuse for negotiation) or sheer lack of skill and inexperience of the people involved to have a fuller understanding of the complexities of the technical issues and legal framework of the project.</p>
<p>Collusion is the reason when the bidding is made to fail deliberately. Here, we can observe the interplay of contractors/suppliers, brokers/middlemen, consultants and influential officials.</p>
<p>Once the process commences, all these players go to work in a network that expands horizontally and vertically, within organizations and among individuals, within all sectors—private, public and even in civil society. Hence, there is a direct correlation between the expanses of the network needed to secure the project with the cost of the project itself.</p>
<p>It has become public knowledge that, sometimes, this exponential increase in the project cost in works involving public infrastructure or undervaluation in the case of privatization and disposition of government assets is the effect of having to spread too much “rewards” to these players.</p>
<p>But even when the terms of reference are very clear and have been clarified in conferences prior to the submission of proposals, failures in bidding continue to exist.</p>
<p>It is surprising to see bidders who have been in the industry for so many years and who have implemented many projects in the past, fail even at the early stage of eligibility checks because of a very lame reason that they failed to attach a document as simple as a tax return in their eligibility documents.</p>
<p>It is all the more surprising that an unheard of bidder would eventually beat everyone in the process. Thus, it would be wrong to simply assume and even accuse a government agency for being dysfunctional in its bidding process.</p>
<p>When a bidder fails to submit eligibility documents, a checklist of which it has been earlier provided, the dysfunction rests with it and not the tendering organization.</p>
<p>True, the government bidding process is not insulated from corruption. It has to be admitted that it is plagued by it. But a question has to be asked: What role does the private sector play in its promotion or prevention? The answer lies not only in the government but in all of us. </p>
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