By Myrna M. Velasco

The Department of National Defense (DND) has ruled to award the P4.416 billion worth of petroleum, oil and lubricants (POL) procurement contract to leading oil firm Petron Corporation after establishing that its lower cost offer will be highly advantageous to the government agency.

In the August 14, 2018 resolution issued by DND Secretary Delfin N. Lorenzana, who is also the department’s Head of Procuring Entity, the agency has effectively junked the earlier ruling of its Bids and Awards Committee (BAC) disqualifying Petron’s tender. Taking off from that, the award of the fuel supply deal shall already be pursued with the oil firm.

In the Lorenzana-led ruling, it was explicitly stipulated that “the decision of the DND-BAC disqualifying Petron Corporation for Lot 1 of the DND-wide POL procurement for CY (calendar year) 2018 is hereby reversed and set aside.”

Hence, the DND chief has given his imprimatur and directed the DND-BAC “to proceed with the procurement process of petroleum, oil and lubricant (POL) products with Petron Corporation.”

Petron had been ultimately held the winner in the May 29, 2018 DND fuel supply auction, as the other bidder – Phoenix Petroleum Philippines Inc, had been finally disqualified for “failure to comply with financial requirements,” as the Uy-led oil firm had not appealed the ruling of the department’s bids and awards body.

The defense department’s decision further emphasized that Petron’s bid “is more advantageous to the DND” because it was lower than the approved budget contract of its P4.549 billion DND-wide petroleum requirements for this calendar year. The department similarly reiterated that its DND-BAC “failed to appreciate the effects of the bid with a lower WPP (Wholesale Posted Price).

The cost-offers of Petron across products which were also established to have been lower than the Visayas and Mindanao WPPs have been at: P62.808 million for 1,322,234 liters of regular gasoline; P536.430 million for 11,238,447 liters of premium gasoline; P1.646 billion for 39,562,826 liters of diesel; P48.498 million for 1,134,438 liters of premium diesel; P1.883 billion for 28,821,602 liters of Jet A-1; P141.730 million for 2,555,745 liters of aviation gasoline; P64.596 million for 178,571 liters of JP5; and P32.643 million worth of Helium.

The initial verdict of the DND’s bids and awards committee to disqualify Petron stemmed from a circumstance wherein the oil firm’s bid had not been based on Department of Energy-issued WPP for Visayas and Mindanao delivery points.

The oil firm nevertheless apprised the DND-BAC and the agency’s leadership that the WPP for Visayas and Mindnao had not been included in the “invitation to bid” issued to the oil firm – and despite the formal query it lodged to the department, there had not been formal response accorded to it.

And while Petron was not furnished a copy of the WPP for Visayas and Mindanao, it raised that on the contrary, “Phoenix Petroleum was able to provide a bid offer for Visayas and Mindanao.” Hence, it stressed that “while we do not want to insinuate anything at this point in time, we cannot help but speculate that the Committee provided the information to Phoenix and withheld the correct WPP for Visayas and Mindnanao to Petron.”

It added that it was “only the WPP for Metro Manila and Luzon (that) was provided by the Committee, and it was provided only on May 24, 2018,” which is essentially just five days before the submission of bids, prompting Petron to argue that it “should not be faulted for applying the WPP for Metro Manila and Luzon,”

The company similarly contended that as the current supplier of petroleum products to the DND, it has applied the same WPP that it has already been utilizing on the deliveries of fuel to the agency.

“As your incumbent supplier, the WPP we used for Visayas and Mindanao is the same WPP that we are billing you for deliveries to your location at Visayas and Mindanao,” the oil firm stressed. (MMV)