Wholesale ‘Swiss challenge’ will lead to greater, more hidden corruption–IBON

The Duterte administration’s proposal to do away with public bidding and replace this with the even less transparent ‘Swiss challenge’ system for all government projects could lead to more extensive and veiled corruption, said research group IBON’s executive director Sonny Africa.

Pres. Duterte’s push for the Swiss challenge system is supposedly aimed at getting rid of corruption and delays in the bidding process. There have been recurring allegations of corruption and collusion among contractors under the current competitive public bidding system for solicited build-operate-transfer (BOT) projects. There has also been criticism of the slow bidding processes with delays from losing bidders going as far as asking for temporary restraining orders on these, noted Africa.

The present public bidding system is imperfect but the proposed shift to the Swiss challenge system is a false solution to corruption and will make the bidding of government projects more secretive, said Africa. “Under the Swiss challenge system, the public will be unable to determine if the bid evaluation committee is giving undue favors to a project proponent,” he said. He added that the administration’s much-hyped freedom of information executive order is grossly ineffective and the public still does not have access to critical minutes, records and other documents of vital public interest such as for government projects.

The Swiss challenge of giving 60 days to others to match the bid of a corporation’s unsolicited proposal is meanwhile a sham competitive measure. “Especially on big-ticket items, other prospective bidders will balk at the trouble and expense of making counter-offers knowing that privileged negotiations between the original proponent and government will likely have already taken place,” Africa said. Or, worse, these other prospective bidders may themselves initiate their own shady back-room talks with government officials to clinch the contract from the original proponent, he added.

Africa recalled that the Ninoy Aquino International Airport (NAIA) Terminal 3 project in the mid-1990s, for instance, was controversial with allegations that the Philippine Air Terminals Co. Inc. (PIATCO) seized the deal from its original proponents, Lucio Tan-led Asia’s Emerging Dragon Corporation (AEDC), through a Swiss challenge. Despite doubts on the consortium’s financial capacity to carry out the project, the contract was supposedly awarded to the Vic Cheng Yong-led PIATCO.

The current system of public bidding is flawed, said Africa, and reforms are needed to ensure real transparency. Government must also see to it that the public genuinely gets the best deal in projects, meaning the least cost yet fully complying with all technical requirements, he said. “Without reforms such as greater public scrutiny of submitted bids and public knowledge of how decisions were arrived at, the large-scale shift to the Swiss challenge system in the context of deep-seated corruption will mean large-scale deals favoring oligarchs and even foreign corporations at the expense of the public interest.”

Africa stated, “If there is no free competition with public bidding there is even less with the Swiss challenge — and if there is corruption with public bidding there is even more with the Swiss challenge.” The country faces huge challenges including building the capacity of the state to responsibly design and take a direct role in developing the national infrastructure for national development. If implemented, the administration’s proposal will only worsen corruption and bring the country ever further away from this.




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