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Commission on Audit vs. Link Worth International Inc. (G.R. No. 182559. March 13, 2009)

08 Apr

COMMISSION ON AUDIT represented by its chairman GUILLERMO CARAGUE, petitioner,

vs. LINK WORTH INTERNATIONAL INC.respondent.

[G.R. No. 182559.  March 13, 2009]

FACTS:

Petitioner COA conducted bidding for various information and communication technology equipment which include 3 units of document cameras. Not having made the lowest financial bid among the “passing” bidders, Link Worth thought that it had lost the bidding, until the COA-BAC asked Link Worth and Audio Visual for product demonstration of their document camera. Link Worth, later, learned that the COA-BAC disqualified the first 2 lowest bidders for failure to meet the technical specifications. Link Worth told the Technical Working Group (TWG), before whom the project demonstration was conducted, that the equipment offered by Audio Visual failed to satisfy the technical specifications required for the document camera. Link Worth identified the following technical specifications which Audio Visual failed to satisfy:

Bid Specifications Audio Visual Specifications
Frame Rate 15 frame/second 2-way Filter Control
Power Supply DC 12V 6V Power Supply
Maximum Weight 1.5 Kg 1.7          Kg.

Respondent insisted that the technical specifications should be strictly complied with. Audio Visual did not dispute that their equipment, the Aver Vision 300 camera, failed to meet the product specifications required. After the product demonstration, the TWG asked Audio Visual to submit a clarification as to the frame rate of the document camera. Thus, Audio Visual submitted a certification, issued by AverMedia Technologies, Inc., that Aver Vision 300, complies with the 15 frames/second specification. AverMedia, Inc. is the manufacturer of the Aver Vision 300, the document camera offered by Audio Visual. In a Memorandum, the TWG recommended that the contract be awarded to Audio Visual for the following reasons: (1) Performance, in terms of capture, projection of images on the screen, digital zoom and pan and 1800 rotation function; (2) Sharper image projection than that of the Lumens DC80A; (3) Ease of Use; (4) Compact and Sturdy; (5) With remote Control; and (6) The 0.27kg. weight excess is immaterial. Respondent filed a Motion for Reconsideration but the COA-BAC proceeded with the award of contract to Audio Visual. Respondent wrote the COA-BAC questioning the said award but was dismissed. Respondent filed a formal protest with COA Chairman but was likewise dismissed.

Pursuant to Section 58 of R.A. No. 9184, otherwise known as the Government Procurement Reform Act, respondent filed a Petition for Certiorari under the 1997 Rules of Civil Procedure, ascribing grave abuse of discretion to the COA “when it denied Petitioner’s protest, which denial effectively sanctioned the disregard of technical specifications by COA-BAC in the subject procurement, and sanctioned the clear violations of the Procurement Law and its IRR-A.” The RTC granted the said petition, nullifying the subject award, and awarding exemplary damages, attorney’s fees, and costs. The Court of Appeals affirmed RTC’s finding that Audio Visual failed to comply with several technical specifications of the document cameras and that COA violated certain provisions of R.A. No. 9184 and its Implementing Rules. However, the appellate court deleted the award of damages to respondent, holding that petitioner cannot be held liable for damages as this would violate the commission’s immunity from suit. Petitioner and Audio Visual were directed to make mutual restitution.

ISSUE:

Whether or not the petitioner violated R.A. No. 9184 and its Implementing Rules.

RULING:

Yes. The decision of Court of Appeals was affirmed. No pronouncement as to costs.

RATIO:

Public bidding as a method of government procurement is governed by the principles of transparency, competitiveness, simplicity and accountability.  These principles permeate the provisions of R.A. No. 9184 from the procurement process to the implementation of awarded contracts.  It is particularly relevant in this case to distinguish between the steps in the procurement process, such as the declaration of eligibility of prospective bidders, the preliminary examination of bids, the bid evaluation, and the post-qualification stage, which the Bids and Awards Committee (BAC) of all government procuring entities should follow.

In this case, the bidders ranked as the two lowest bidders were disqualified by the BAC presumably at the post-qualification stage when their bids failed to meet the technical specifications for the project.  Remarkably, however, despite the fact that there also existed technical variances between the bid specifications and Audio Visual’s document camera, the BAC did not post-disqualify Audio Visual.  COA’s Technical Working Group (TWG) declared, during post-qualification, that there is no frame speed variance between Audio Visual’s document camera and the required specification because Audio Visual’s document camera is compliant with the 15 frames/second requirement.  It is well to point out that it was initially unclear whether Audio Visual’s document camera met the bid specification requiring a frame rate of 15 frames/second.  What Audio Visual indicated was that its document camera, Aver Vision 300, featured a “2-way Filter Control.” However, this feature does not even pertain to the camera’s capture frame rate, or the frequency at which the camera produces unique consecutive images called frames. As its User Manual indicates, the flicker filter refers to how the camera is synchronized with an external projector or display.

Assuming that there is no frame rate variance between Audio Visual’s document camera and that required in the bid specifications, the TWG’s, and the BAC’s, disregard of the fact that Audio Visual’s document camera exceeded the specified weight by 0.27 kg. and used a 6V power supply instead of the required 12V power supply, was still unwarranted and highly irregular.   The post-qualification procedure, under which the Lowest Calculated Bid undergoes verification and validation to determine whether all the requirements and conditions specified in the Bidding Documents, have been met, should have effectively weeded out Audio Visual’s bid.

The function of post-qualification is to verify, inspect and test whether the technical specifications of the goods offered comply with the requirements of the contract and the bidding documents.  It does not give occasion for the procuring entity to arbitrarily exercise its discretion and brush aside the very requirements it specified as vital components of the goods it bids out. The fact is all too glaring that during the post-qualification stage, the BAC considered some factors which were extraneous to and not included in the bid documents, such as ease of use, compactness and sturdiness, and the remote control of Audio Visual’s document camera, and, at the same time, glossed over two of the requirements which were indicated in the bid documents, i.e., the weight and power supply requirements.  Had the prospective bidders known that all of the above factors formed part of the bid specifications, a different set of bids might have emerged.  Essentially, it can be said that the eligible bidders did not bid upon the same thing.

It is remarkably ironic that petitioner COA, the constitutional watchdog, signed its imprimatur to a transaction which resulted from an irreparably flawed bidding process. The Commission, in this case, has displayed a lamentable disregard of its mandate as the sentinel of government resources.  The nullification of the award of the contract to Audio Visual and the mutual restitution directed by the Court of Appeals are both appropriate consequences.  It is, however, paramount that COA be reminded of its most important role, seemingly forgotten in this case, in the promotion of transparency and accountability in public financial transactions.

 
 

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