SC HEARS PCOS PURCHASE

SUPREME COURT hears PCOS purchase

May 02, 2012. Supreme Court justices started the oral arguments on three petitions consolidated into one seeking the nullity of the Commission on Elections’ P1.8 billion purchase of 2010 automated election system (AES) provider Smartmatic-TIM’s precinct count optical scan (PCOS) machines. Petitioners allege that the Commission on Elections (Comelec) committed grave abuse of discretion and violated Republic Act No. 9184 or the Government Procurement Act when it bought on “option purchase” 82,000 precinct count optical scan (PCOS) machines from Smartmatic-Total Information Management (TIM) without public bidding. Petitioners also added that there were glitches, delays, defects and technical problems in the May 10, 2010 National and Local elections that violated Republic Act No. 9369 (Automated Election System Act).

First to present arguments are petitioners,  Davao City Archbishop Fernando Capalla, former Marawi City Mayor Omar Solitario Ali and former Quezon City Rep. Mary Ann Susano, through her lawyer Dean Abraham Espejo of the New Era College of Law, who said that Comelec committed grave abuse of discretion when it inked a deal to buy 82,000 PCOS machines, with the deed of sale signed last March 27, 2012. He said that since Comelec was purchasing PCOS machines for another set of elections, impliedly, a new bidding process among possible providers must have been conducted by the Commission on Elections since the former contract expired on December 31, 2010 and said contract covered only the 2010 polls.

Dean Abraham Espejo told the High Tribunal that the Deed of Sale signed by Smartmatic-TIM and the Comelec for the purchase of the PCOS should be nullified for violating the Government Procurement Act. Dean Espejo claimed that the September 2009 Comelec and Smartmatic-TIM contract was for the lease of an automated election system for purposes of 2010 elections, while the option to purchase recently entered into by the Comelec and Smartmatic-TIM was intended to be use in the May 13, 2013 National and Local Elections, thus making said contract unlawful, thus illegal. Espejo stressed, “Comelec could not validly accept the extension of time unilaterally extended by Smartmatic because that is tantamount to the Comelec entering into another agreement…that under the law requires a different bidding,” Espejo told the high court. They added that any purchase of technology and election systems for use in the 2013 midterm polls should have to undergo public bidding.

During interpellation several magistrate asked Dean Espejo if the contract to purchase may fall under any of the 5 exceptions to the conduct of public bidding found in the Government Procurement Act? Dean Espejo answered negative.

Associate Justice Presbitero Velasco said the contract pertained to the same set of PCOS machines, and that it should not be confined to the 2010 polls and was intended to be used in the next election.

"The title of the [original] contract pertains to the 2010 elections. There was no mention of the 2013 elections. We contend that if there will be an expansion, there should be expanded provisions of the contract if it would pertain to future elections," Espejo said.

Justice Velasco, on the other hand, asked Espejo if the purchase of the PCOS machines for the 2013 elections could qualify as direct contracting, which is also an exception under the government procurement act.

Under the law, direct contracting could be done under the following conditions:

a. Procurement of goods of proprietary nature, which can be obtained only from the proprietary source, i.e. when patents, trade secrets and copyrights prohibit others from manufacturing the same item;

b. When the procurement of critical components from a specific manufacturer, supplier or distributor is a condition precedent to hold a contractor to guarantee its project performance, in accordance with the provisions of his contract; or,

c. Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the government.

Velasco further asked, "Is there any supplier in the world of PCOS machines in these kind?" Espejo answered in the negative.

He noted though that Comelec should still be held liable because it did not specify in its recent contract with Smartmatic that the purchase of the PCOS machines is an exception under the law.

Justice Martin Villarama asked Espejo if his camp was assailing the purchase of the PCOS because they preferred using Optical Mark Reader (OMR) machines.

Espejo said his camp does not prefer any kind of machine to be used next May, adding that he will let the Comelec make the choice.

Associate Justice Arturo Brion, meantime, asked questions regarding the timeline from the signing of the 2010 automation contract up to the date the option to purchase lapsed. He asked Espejo, if at any point in the said period, did Comelec decide to purchase all 82,000 machines.

Espejo answered in the negative, but said he did not know why the Comelec “mysteriously” did not do so and only decided to purchase the machines two months ago.

It was during Brion’s questioning where it was established that the machines, while purchased at a relatively lower price, are not brand new.

Associate Justice Maria Lourdes Sereno asked Espejo if the purchase may not be considered a “repeat order” in which case a bidding may not be undertaken. A repeat order, as defined in the law, is allowed when "the procuring entity directly procures goods from the previous winning bidder whenever there arises a need to replenish goods procured under a contract previously awarded through competitive bidding."

Lawyer Abraham Espejo, however, pointed out that this will amount to an “overstretching of the law.”

Associate Justice Sereno,  said that the Comelec took over 360 days to finalize the contract with Smartmatic-Total Information Management’s (TIM), which provided the PCOS machines in the 2010 elections. Justice Sereno pointed out that there may not be enough time for the Comelec to conduct a public bidding and prepare for the technology and system to be used in the 2013 polls. “Do we have enough days to do another bidding?” Sereno asked the counsel for petitioners.

“The Comelec has enough time,” lawyer Abraham Espejo said, adding that the Comelec has enough intelligent people to study and come up with a new contract.

Sereno also asked if there would be enough time to train election officers to use the election machines. Espejo said the correct posture would be for the Comelec to hire experts that would assist in the operation of the machines.

“Are you now telling us that the Comelec violated the procurement law… regardless of the consequence, we must now proceed with a new bidding. That’s what you are telling us right now, that we have no moral responsibility at all… whether the 2013 elections succeed or not,” Sereno told Espejo.

However, Dean Abraham Espejo  stood his ground and stressed that the Comelec should not be allowed to violate the law.

“The choice is not whether or not we will have automated elections in 2013. I think the choice is whether we will allow the Comelec to violate the Procurement Law. Beyond that is a matter of policy… and I’m sure that the Comelec, with all its resources, can find a viable alternative. We cannot abandon the law simply because it looks good to abandon it and neither can we abandon the law because of a stretched interpretation of the law,” he said.

When asked by Justice Antonio T. Carpio if they would have objected if the Comelec exercised the option to purchase before the original Dec. 31, 2010 expiry date, Mr. Espejo said: "That is debatable."

"Our position is it is illegal to extend the period for another purpose (the 2013 elections)," Atty. Espejo said. "For as long as the extension has something to do with the 2010 elections, we will have no objection. Otherwise, this would be subject to regular bidding."

At this point, Justice Carpio said: "Your legal theory does not stand scrutiny. You have to do better than that."

Ex-Comelec Commissioner Augusto "Gus" Lagman supporting the petitioners, on the sidelines of the oral arguments stress that the purchase is not an exception. He said it is not allowed under the procurement act because extending the option in itself is a violation of the terms of reference of the original contract.

“The (deadline for) purchase already expired and the extension of deadline means substantial modification of the reference,” Lagman said.

Lagman said Comelec should have not renewed the contract with Smartmatic because the technical glitches in the PCOS machines were not addressed. “Proof of the problems is that they were trying to repair it. That is an admission that there is problem with the machines,” he said.

He cited the use of “worm,” or a medium where results are recorded and which is not rewritable. He said this means the machines may be tampered with using an ordinary laptop. “It was very vulnerable to tampering. It does not have enough security features and has no digital signatures, which were supposed to be given by election inspectors rather than the machine,” he said.

Lagman, an expert in poll automation whose appointment to Comelec failed to pass the confirmation of the powerful Commission on Appointments (CA) was not renewed by President Benigno Aquino III, also revealed that the PCOS machines used in the 2010 polls had no mechanism “to check the authenticity of the ballots and votes supposedly shown.”

Lagman likewise said Comelec committed grave abuse of discretion in approving the contract through Resolution No. 9376, in spite of the recommendation of the Comelec Advisory Council (CAC) under a resolution issued last Feb. 8. CAC said Comelec should look for better options for the May 2013 elections.

The petitioners said the contract also violated Section 10 of RA 9369 or the Automated Election System law, which mandates that for the May 10, 2010 election and succeeding automated elections, the system to be used “must have demonstrated capability and been successfully used in a prior electoral exercise here or abroad.”

When asked by Associate Justice Ma. Lourdes Sereno if he thinks the technical glitches were irreparable, Lagman said: “I just don’t think they still have the time to do it. Smartmatic had the last two years to correct it but they did not,” he said.

Ask for comment Comelec Chairman Sixto Brillantes on the matter, he did not address the question on Comelec's transaction as a possible exception, but said that he is puzzled by the arguments of the petitioners. He dismissed the argument of petitioners and stood firm too on his belief that the new contract did not violate any law.

“They said there should be new bidding because supposedly we can’t use the machines for 2013 since they’re only for 2010. But that is incorrect because there’s an option to purchase,” he told reporters after the hearing.

Chairman Brillantes also said they had intended to use the PCOS machines in subsequent elections, insisting that the Comelec need not explicitly state in the original contract whether it plans to use the same machines for the 2013 elections.

He said it was only a matter of time when the Comelec would purchase the machines, adding that the government did not buy the machines before 2012 because it had no use for them yet.

“That would have required expenses for warehousing, manpower, maintenance when those are not yet necessary. What do you want us to do – for the government to spend for those expenses when the machines were not yet needed until 2013?” he said.

Petitioners are Davao City Archbishop Fernando Capalla, former Marawi City Mayor Omar Ali, and former Quezon City Rep. Mary Anne Susano, Solidarity for Sovereignty (S4S) represented by Ma. Linda Montayre, Ramon Pedrosa, Benjamin Paulino, Sr., Evelyn Coronel, and Nelson Montayre and the Automated Election System (AES) Watch led by former Vice President Teofisto Guingona. They all sought the issuance of a temporary restraining order and nullification of the extended contract between Comelec and Smartmatic-TIM.

 online reports