We at the Stratbase ADR Institute have always pushed for collaboration among various stakeholders, a whole-of-society approach, in matters of national and local interest. Public-private partnerships (PPPs) are an example of such a collaboration.
We find it encouraging that this administration is demonstrating the value of PPPs and is actively pursuing undertakings in various sectors through these. Indeed, it is the government that should take the lead in identifying what the people need and how this need should be addressed. But the government does not have enough financial muscle and technical capability for long-term, high-impact, far-reaching, and sector-specific projects.
This is the reason partnerships with private companies are crucial. They bring to the table their access to capital, established track record, and technical know-how in the day-to-day running of the project. By nature, private companies are efficiency driven and transparent because of their responsibility to stockholders and are required to adhere to empirical and measurable performance indicators on a given period.
It goes without saying that PPPs must be entered into on no other basis than plain merit.
This brings me now to the issue of a 13-year-old joint venture agreement (JVA), a form of PPP, between the Subic Bay Metropolitan Authority (SBMA) on one hand, and Harbour Center Port Terminals, Inc. (HCPTI) on the other. SBMA manages the Subic Freeport Zone.
Sometime in late 2009, Harbour Center submitted an unsolicited proposal to undertake logistics activities in Subic. After only three months, or in February 2010, the JVA was signed between SBMA and HCPTI for the latter to have the exclusive mandate to operate, develop, and manage Subic’s Naval Supply Depot, and the Boton, Bravo, Alava, and Rivera Wharfs/Ports.
Three months was a short time for the SBMA to evaluate the proposal and determine that it served its best interest. There was no competitive challenge at all from another entity. Worse, the deal was awarded at a time when government contracts weren’t supposed to be awarded because of the coming elections in May of 2010.
Two years ago, the Supreme Court said the SBMA should honor the deal anyway. Many people were baffled at this order. Does this mean that guidelines that ensure transparency in undertaking government transactions are no longer important to our magistrates? Transparency and accountability in the procurement process are paramount. In this case, the JVA with HCPTI is cloaked by the opposite principles: secrecy, and a lack of accountability.
There are guidelines governing how proposals for government contracts should be evaluated. A rigorous selection process is undergone to ensure that the proponent indeed has the capability to perform what it promises in its proposal. Likewise, competition in the bidding process is a primary consideration, because it ensures that the government — and the people, on whose behalf it is acting — gets the best of the deal. Companies acting without competition will feel less compelled to perform well because the people have no choice but to deal with them, anyway. Competition keeps companies on their toes and fosters a healthy, merit-driven culture that can only benefit the people they are supposed to serve.
Similarly, the election ban on government contracts is there for a reason: it is a safeguard to keep government procurement free from political bias. This is often seen in the form of new projects launched with the intent to sway public opinion during the national and local elections.
These are not mere suggestions. Violating them has consequences. The Office of the Government Corporate Counsel and the National Economic and Development Authority (NEDA) both deemed the violation of these guidelines sufficient to call out the SBMA for the JVA. The utter lack of transparency in the deal gave the NEDA enough reason to invalidate the deal in 2011. This is also why succeeding Subic administrations have known better than to resurrect and implement it.
This Supreme Court order will be detrimental to other private companies that are now operating in Subic. It obliterates all their hard work over many years and threatens the viability of their business — not to mention huge investments and the jobs of thousands created for residents from Zambales, Tarlac, Pampanga, Bataan, and other places from which employees hail. It will destroy Subic’s stature as a global logistics and transportation hub.
The decision creates a cloud of uncertainty among ordinary people and investors alike. What are we to make, after all, of a ruling that compels the government to push through with an agreement that has been established as irregular and disadvantageous to the very same people it is supposed to serve?
All this comes at a critical time when the economy is picking up from the ravages of the pandemic, when supply chains are beginning to normalize, and yet when people are still struggling to cope with the high prices of goods.
PPPs are an ideal mode of getting things done, enhancing the opportunities in a particular locality, and improving residents’ quality of life. But PPPs cannot be done with just any private partner. It must be a partner that can deliver results and achieve the project objectives, instead of disrupting existing systems and endangering the sustainability of what is already there.
We hope the officials of SBMA bear this in mind as they ponder their next course of action.
Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.