“MAP Insights” Column in BUSINESSWORLD – 20 April 2010
COMELEC Lapses?
Manuel A. Alcuaz Jr.
The P700 million contract for over specified secrecy folders is just the latest in a string of COMELEC lapses.
The most applicable definition I could find for “lapse” from Encarta World British Dictionary include: error, a
momentary fault or failure in behavior or morality.
I think “lapse” is too polite a word to describe COMELEC’s many “sins”, “transgressions”, “misbehavior”, etc.
Before we analyze the P700 million lapse, let me review COMELEC’s many other lapses which are costing the
nation very dearly.
Lapse in Payment Terms
When COMELEC prepared the bid specifications for the automated election system, it conveniently failed to
mention payment terms.
While some may call this failure a lapse, I would say it was intentional.
When talking about billions of pesos, advance payment of P2 billion could earn a supplier P20 million a month in
interest!
By not specifying payment terms, COMELEC could make life hard for a vendor they did not like or favor a
preferred vendor like Smartmatic.
While government rules do not allow downpayments, COMELEC and Smartmatic invented payment terms that
were very advantageous for Smartmatic.
The first payment for Project Initialization Set Up Management Team and Project Systems including SW
Licenses and Firmware was 10% or P719 million!
It is common in large construction projects to have a mobilization fee but this usually involves moving in a lot of
manpower and equipment.
Smartmatic does not need to mobilize a lot of manpower till December thru February when the machines will
arrive.
About P43 million of the P719 million is software. The entire bid for project management was only P99,999,999.
An over payment of P576 million!
The next payment is 5% for development set (20 units). This will be P359 million, nearly P18 million per
machine. Are we back to the mainframe days when computers cost millions?
One does not need an MBA degree to realize that this is clearly ridiculous and unfair to the country. A smart
grade six student would tell you so.
The next 5% or P359 million is for a report on Transmission and Logistics. Is this report written on pages made of
gold? P359 million would pay for the actual transmission and a substantial amount of logistics!
This is clearly an attempt to get money from the project without substantial delivery.
Expensive Software Agreement!
The next 5% or P359 million is for the delivery of the functional system and software agreement!
What are these? Must again be written in gold. Or they must have the world’s most expensive system designers
and lawyers crafting the agreement.
A number of the payments in the contract specifically violate the provisions of COMELEC’s Bid Terms.
Section 7.3 of the RFP states that the ownership of the analysis, design, and executable programs of all the
applications developed should be given to COMELEC at no additional cost.
In Smartmatic’s bid, all analysis, design, and executable software is P0.00!
The vendor obviously does not need P1.795 billion for the activities and deliveries described above.
Some people may wonder if this is intended to be able to pay certain parties who maneuvered the contract to
Smartmatic.
It is interesting that the delivery of the 80,200 machines will only require payment of 35% of the budget when in
the original COMELEC budget and Smartmatic bid, the rental of equipment was 72.5% of the total budget.
This is an obvious proof that the payment terms are front loaded.
Lapse in Design and Evalution of the System
Smartmatic Bid was as follows:
ITEM
Component 1
 1-A (EMS) and 1-B (PCOS)
 1-C (CCS)
 Services (1-A, 1-B, 1-C) and
other
 Ballots
Component 2 Transmission
Component 3 Project Mgt
TOTAL AMOUNT OF BID
BID
P 6,891,484,742.96
4,187,876,280.00
139,999,999.86
1,563,618,399.00
999, 990,064.10
199,999,997.57
99,999,999.00
7,191,484,739.48
The bulk of the cost of the system were P4.188 billion for the EMS and PCOS machines and P1,563,618,399,
more than 80% of which would be attributable to the PCOS machines.
Very small by comparison are the P139,999,999 for consolidation and canvassing and P199,999,997 for
Transmission.
Let us assume that COMELEC’s primarily objective is to speed up the counting, transmission, canvassing and
consolidation.
A smart six grader would wonder why the PCOS machines which would speed up counting by less than 8 hours
would cost about P5.75 billion.
Whereas, transmission and canvassing which can shorten the process by several weeks would cost only P240
million?
A smart Six Grader would wonder why COMELEC would like to spend P5.75 billion on the PCOS machines.
There are two answers to that question:
Assuming that COMELEC was an honest institution, it was just a lapse in their process. They don’t really ask and
analyze WHY? something should be done. COMELEC started with HOW?
The HOW? question had three alternatives to choose from:
1. DRE (Direct Recording Entry) Touch Screen Machines
2. Centralized OMR
3. Decentralized OMR (Precinct Count optical Scan)
The DRE alternative would have required a million machines (250,000 precincts x 4 machines/precinct) and its
cost would have been very high, P25– P30 billion!
Centralized OMR which was actually tested in ARMM without any untoward incidents would have cost 1/5 as
much as the PCOS alternative.
Since the centralized OMR alternative would have been much less expensive, there is a reason to suspect that
some people in COMELEC are in the commission to make money. So they preferred the more expensive PCOS.
The P700 million Secrecy Folders
The P700 million secrecy folder contract speaks for itself. There are very business-minded people in the
Commission. Unfortunately, their business acumen does not help the country.
Let us look into the P700 million contracting process. Assuming that the BAC was composed of honest and grade
six level intellects, a much more affordable solution could have been competitively bidded out.
For voters to be able to mark their ballots secretly and keep their votes secret, all that was needed was an
oversized card board folder.
In fact with the OMR ballot, the folder is probably not even needed. People are complaining that the names and
ovals are hard for the voters to see. How can a person that is an arm length away see who you voted for.
With handwritten ballots, one can from a distance tell the difference between a vote for AQUINO or DE LOS
REYES.
The BAC members may be suspected of dishonesty but they seem to be smart.
They made use of the faults of RA 9184 the Procurement Reform Law which provides for pass or fail criteria and
award to the lowest qualified bidder, and also allows a single bidder bid.
If one uses OTC’s specs as part of the pass or fail criteria, one could eliminate all other bidders.
How did the Commission En Banc not notice the huge amount? In a professional organization, that would be
unlikely.
But there is a Commissioner who makes a lot of noise who has not read the bid specs and the Smartmatic
contract. Maybe the rest also don’t like to read!
It is strange that when Senator Escudero suggested during the March 3 Joint Congressional Oversight Committee
meeting that projectors be provided in all canvassing centers so that watchers and concerned citizens could
compare the canvassed ER’s with their copies of PCOS ER’s, COMELEC said that they could only afford
projectors for the provincial canvassing centers not for the municipal canvassing center.
Our sixth grader is still around and he says that 1,700 projectors at P30,000 each would cost P51 million. That is a
lot less than P700 million.
His Math is good but his values are still honest. So he asks WHY?
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management
Association of the Philippines. The author is President of Systems Sciences Consult, Inc. Feedback at
map@globelines.com.ph. For previous articles, please visit <map.org.ph>.)