: ey Pies eee REPUBLIC OF THE ornate Mf vi fia COMMISSION ON ELECTIONS Intramuros, Manila EN BANC IN THE MATTER OF THE LEASE OF THE 70,977 UNITS Pity gg’) AD Chinn , ; sioner OF OMR MACHINES FOR paRRENo, A.A. Commissioner THE 2016 NATIONAL & GuUIA, LTE Commissioner LOCAL ELECTIONS LIM, A.D. Commissioner GUANZON, MRA.Y. Commissioner ABAS, S.M. Commissioner Promulgated: August 13, 2015 RESOLUTION NO. 998 WHEREAS, Section 1 of Republic Act No. 8436 (R.A. No. 8436”), as amended by Republic Act No. 9369 (“R.A. No. 9369”), declares that: “It is policy of the State to ensure free, orderly, honest, peaceful, credible and informed elections, plebiscites, referenda, recall and other similar electoral exercises by improving on the election process and adopting systems, which shall involve the use of an automated election system that will ensure the secrecy and sanctity of the ballot and all election, consolidation and transmission documents on order that the process shall be transparent and credible and that the results shall be fast, accurate and reflective of the genuine will of the people.” 1 An Act Authorizing the Commission on Elections to Use an Automated Election System in the May 11, 1998 National or Local Elections and in Subsequent National and Local Flectoral Exercises, providing funds therefor and for other purposes (22 December 1997), 2 An Act Amending Republic Act No. 8436, entitled “An Act Authorizing the Commission on Elections to Use an Automated Election System in the May 11, 1998 National or Local Elections and in Subsequent National and Local Flectoral Exercises’, to. Encourage ‘Transparency, Credibi irmess and Accuracy of Elections, amending for the purpose Batas Pambansa Blg. 881, as amended, Republic Act No, 7166 and other related election Jaws, providing funds therefor and for other purposes (23 January 2007) ,/Resolution No. 9980 Page 2of 9 WHEREAS, Section 5 of R.A. No. 8436, as amended by Section 6 of R.A. No. 9369, declares that “in succeeding regular national or local elections, the AES shall be implemented nationwide.” WHEREAS, in Roque v. Commission on Elections, > the Supreme Court held that: “In a democratic system of government, the peoples’ voice is sovereign. Corollarily, choosing through the ballots the men and women who are to govern the country is perhaps the highest exercise of democracy. It is thus the interest of the state to insure honest, credible and peaceful elections, where the sanctity of the votes and the secrecy of the ballots are safeguarded, where the will of the electorate is not frustrated or undermined. For when the popular will itself is subverted by election irregularities, then the insidious seeds of doubt are sown and the ideal of a peaceful and smooth transition of power is placed in jeopardy. To automate, thus breaking away from a manual system of election, has been viewed as a ant step towards clean and credible elections, unfettered by the travails of the long wait and cheating that have marked many of our electoral exercises.” WHEREAS, on 10 July 2009, the Commission and Smartmatic- TIM entered into and executed a contract for the provision of an automated election system for the 2010 National & Local Elections, and the procurement via lease with option to purchase of 82,000 Precinct Count Optical Scan (’PCOS”) or Optical Mark Reader (‘OMR”) machines. WHEREAS, on 21 March 2012, the Commission approved the exercise of the option to purchase, acquiring the remainder of the PCOS machines and related components, peripherals, and applications, including the Election Management System and all its related components, peripherals, and applications, for use in the 2013 National & Local Elections. WHEREAS, on 13 August 2014, the COMELEC Advisory Council formally recommended reusing existing technology for the 2016 National & Local Elections. 3 GR. No. 188456, 10 September 2009. ‘ Emphasis and underscoring suppliedResolution No. 9980 Page 3 of 9 WHEREAS, in view of this recommendation, the Commission intended to refurbish and upgrade the 81,896 PCOS machines and procure only 23,000 new units to meet the need for additional machines arising from the increase in the number of registered volers, as well as to reduce the number of voters per clustered precinct from a maximum of 1,000 to 800 voters. WHEREAS, on 23 December 2014, the Commission promulgated Resolution No. 9922 pursuant to its intent to reuse the existing PCOS machines, the pertinent portion of which provides: “NOW, THEREFORE, the Commission on Elections, by virtue of the powers vested in it by the Constitution, the Omnibus Election Code, Republic Act No. 9369 and other election laws RESOLVED, as it hereby RESOLVES, to APPROVE Smartmatic TIM’s PCOS Extended Warranty Proposal (Program 1) amounting to Three Hundred Million Pesos (Php 300,000,000.00) exclusive of Value Added Tax through Direct Contracting; RESOLVED FURTHER to let the Steering Committee implement this Resolution.” WHEREAS, after a period of negotiations, the Commission and Smartmatic-TIM entered into a PHP 268,800,000.00 Extended Warranty Contract on 30 January 2015 WHEREAS, on 24 March 2015, the Supreme Court issued a temporary restraining order enjoining the implementation of the said Extended Warranty Contract, and in a Decision on 21 April 2015,6 declared the same null and void, citing, among other things, the failure of the Commission to conduct a public bidding for the diagnostics and repair of the existing PCOS machines, to wit: “WHEREFORE, the petitions are GRANTED. Accordingly, COMELEC Resolution No. 9922 and the Extended Warranty Contract (Program 1) are hereby declared NULL and VOID. This Decision is immediately executory in view of the time considerations attendant herein.” WHEREAS, in view of the aforesaid ruling, and wishing to preserve its options given the time constraints, the Commission nphases in the original © Pabitto x. Commission on Elections, GR. Nos. 216098 & 216562, 1 Apel 2015 7 Emphases in the originalResolution No. 9980 Page 4 of 9 approved on 05 May 2015 the conduct of parallel bidding for the refurbishment with upgrade of the existing PCOS machines and the procurement of new OMR machines, creating for the purpose two Special Bids & Awards Committees (“SBAC-1” and “SBAC-2”) WHEREAS, on 09 June 2015, the Commission, through the SBAC-1, invited interested bidders to apply for eligibility and to bid for the provision of an integrated automated election system through lease with option to purchase of 70,977 OMR machines for the 2016 National & Local Elections, with a total approved budget of PHP 7,867,298, 140.00. WHEREAS, on even date, the Commission, through the SBAC- 2, invited interested bidders to apply for eligibility and to bid for the supply and delivery of the refurbishment with upgrade of the existing PCOS machines, its consumables, and official ballots for use in the 2016 National & Local Elections, with a total approved budget of PHP 2,880,000,000.00, but which was later adjusted on 23 June 2015 to PHP 2,074,088,878.92 WHEREAS, on 30 June 2015, with no submitted bids for the refurbishment with upgrade of the existing, 81,896 PCOS machines, the SBAC-2 declared a failure of bidding, WHEREAS, also on 30 June 2015, the SBAC 1 opened the financial bids for the lease with option to purchase of 70,977 new OMR machines, with the bid of Joint Venture of Smartmatic TIM Corp, Total Information Management Corp, Smartmatic International Holding, B.V., Jarltech International, Inc. being the only responsive bid. WHEREAS, on 13 July 2015, the Commission embarked on a second round of bidding for the supply and delivery of the refurbishment with upgrade of the existing PCOS machines, ils consumables, and official ballots for use in the 2016 National & Local Elections, with an adjusted budget of PHP 3,130,670,549.98. WHEREAS, on 24 July 2015, the SBAC-1 submitted to the Commission En Banc SBAC-1 Resolution No. 2015-004, stating therein: “IN VIEW THEREOF, this SBAC-1 RESOLVED, as it hereby RESOLVES, as follows: . Abstract of Bids as Read dated 30 june 2015, Attached heretoas Arex "A"1. To DECLARE the Joint Venture of Smartmatic ‘TIM Corporation, Total Information Management Corporation, Smartmatic International Holding B.V., and Jarltech International Inc., as the bidder with the Lowest Calculated Responsive Bid with its bid offer for the provision of Integrated Automated Election System through Lease with Option to Purchase of 70,977 units of OMR for the May 9, 2016 National, Local, and ARMM Elections (SBAC Reference No. 0509-1-2016), to wit: No. 9980 Page 5 of 9 BIDDER WITH LOWEST THE LOWEST CALCULATED ITEM CALCULATED BID (LCB) RESPONSIVE BID Total Lease _(LCRB) Contract Price Provision of | The Joint Venture of | Php Integrated ‘Smartmatic TIM | 6,286,382,682,72 Automated Election | Corporation, Total System through | Information Lease with Option to | Management Purchaseof 70,977 | Corporation, units of OMR for the | Smartmatic May 9, 2016 | International National, Local, and | Holding B.V., and ARMM Elections | Jarltech International Inc. 2. To RECOMMEND to the Head of the Procuring Entity the issuance of the Notice of Award to the above-named Bidder for the Provision of Integrated Automated Election System through Lease with Option to Purchase of 70,977 units of OMR for the May 9, 2016 National, Local, and ARMM Elections; 3. To REQUIRE the above-named Bidder to post its performance security in an amount equal to a percentage of the total contract price in accordance with the following schedule: Amount of Form of Performance Security Performance Security (Equal to Percentage of the Total Lease Contract Price) a) Cash, cashier’s/manager check, bank draft/ guarantee confirmedResolution No. 9980 Page 6 of 9 by a Universal or Commercial Bank. Irrevocable letter of credit Five Percent (5%) issued by a Universal or Commercial Bank: Provided, however, that it all be confirmed by a iniversal_ or Commercial Bank, if issued by a foreign bank. Surety bond callable upon | __ Thirty Percent G0%) demand issued by a surety or insurance company duly certified by the Insurance Commission as authorized to issue such security. Any combination of the | Proportionate to share of foregoing, form with respect to total amount of security. °) 4. To AUTHORIZE Honorable Chairman J. Andres D. Bautista, or in his absence, the most senior Commission en banc Member available, to sign the Notice of Award, Contract/Purchase Order and Notice to Proceed in behalf of the Commission on Elections. ‘The SBAC 1 Secretariat is hereby directed to furnish copies of this Resolution to the above-named bidder which has been declared to have tendered the Lowest Calculated Responsive Bid and to all parties concerned.”? WHEREAS, on 01 August 2015, a single bidder submitted its bid for the refurbishment with upgrade of the existing PCOS machines, but was declared ineligible by the SBAC-2, as follows: “PREMISES CONSIDERED, the Special Bids and Awards Committee 2 RESOLVED, as it hereby RESOLVES TO DECLARE: I. the Joint Venture of DERMALOG, AVANTE and STONE OF DAVID as INELIGIBLE; and I. A FAILURE OF BIDDING in this Second Competitive Public Bidding for the Supply and ’ Emphasis in the original.Resolution No. 9980 Page 7 of 9 Delivery of the Refurbishment (with Systems Upgrade) of the existing Precinct Count Optical Scan (PCOS) Machines, its Consumables, and Ballots for the May 9, 2016 National, Local and ARMM Elections (Second Public Bidding) Reference No. SBAC2 01-2015-AES-Refurbishment.” WHEREAS, on 05 August 2015, the SBAC-2 denied the disqualified bidder’s motion for reconsideration. WHEREAS, on 30 June 30, the Secretary General of the National Citizen's Movement for Free Elections (/NAMEREL"), Er Jude Alvia, expressed NAMFREL’s position" favoring the lease of 70,977 machines in view of the time constraints, stating: “We are still not guaranteed that those that have been refurbished will be functioning _ properly Remember, wear and tear of a six year old machine; it’s a trust issue.” WHEREAS, on 29 July 2015, the House of Representatives Committee on Suffrage and Electoral Reforms emphasized “the importance of a foolproof system as the May 2016 presidential elections are crucial to the future of the country and as such, they prefer the lease with option to purchase of a total of 93,977 units and not use the old machines.”1! WHEREAS, on 06 August 2015, at the open session of the Joint Congressional Oversight Committee on the Automated Elections System, the Parish Pastoral Council for Responsible Voting or PPCRY, through its legal counsel Howard M. Calleja, urged the Commission to approve the lease of the 70,000 vote-counting machines,” stating that “[at] this point in time, I think what should be more important is the credibility of the 2016 elections|,] [and with whatever is happening now, we think that since there’s already a qualified bidder, a qualified winner actually... let us go ahead with that and prepare for the 2016 elections.” PCOS Refurbishment Bidding Fails (aonilable at _htp://www.youtube-com/ watch?v=BinfullrcyIk), ABS-CBN News Report, published 30 June 2015 1 Spot Report on the Meeting of the Committee on Suffrage and Electoral Reforms held on 29 July 2015, 1:30 PM. Attached hereta as Anex “B” PPCRV to Comelec: ‘Bite bullet’ lease more Smartmatic machines (auiluble al !utp:/ /sww.rapples;com/ nation, politics /elections/2016/ 101763-ppery-comelec-lease- smart), Esmaguel, Paterno 06 August 2015Resolution No. 9980 Page 8 of 9 WHEREAS, on 07 August 2015, in a letter to the Chairman and the Commissioners, citizen’s group Democracy Watch expressed its belief that “the limited time has limited our opiions,” and manifested ils preference for the lease option. 3 WHEREAS, the Commission recognizes that there is less than nine months before the 2016 National & Local Elections. WHEREAS, the Commission is cognizant of its primary duty to enforce and administer all laws, rules, and regulations relative to the conduct of elections under Section 2 (1), Article IX-C of the Constitution, and in particular the mandate under R.A. No, 9369 to conduct automated elections. IN VIEW OF THE FOREGOING, the Commission En Banc RESOLVES to APPROVE with CLARIFICATION the recommendation of the SBAC-1, as embodied in SBAC-1 Resolution No. 2015-004," as follows: 1. To ISSUE the Notice of Award to the Joint Venture of Smartmatic-[IM Corporation, Total Information Management Corporation, Smartmatic International Holding B.V.,, and Jarltech International Inc., as the bidder with the Lowest Calculated Responsive Bid, with its bid offer for the provision of an Integrated Automated Election System through Lease with Option to Purchase of 70,977 units of OMR for the 2016 National & Local Elections, with a bid amounting to Six Billion, Two Hundred Eighty-Six Million, Three Hundred Eighty-Two Thousand, Six Hundred Eighty-Two Pesos, and Seventy-Two Centavos (PHP 6,286,382,682.72), PROVIDED that this award pertains solely to the LEASE of the aforementioned units of OMR, and PROVIDED FURTHER that the Commission will not exercise the option to purchase; 2. In view of the Commission’s recognition of the need to enhance the transparency and credibility of the 2016 National & Local Elections, the Commission shall ADOPT MEASURES such as, but not limited to, providing PCOS machines at canvassing centers for purposes of contingency, in case transmission fails, and increasing the number of precincts to be subjected to Random Manual Auidit; "Letter to the Chairman and Commissioners of the Commission on Elections, Democracy Watch, 07 August 2015, Attached kereto as Annex "C”, “4 SBAC Reference No. 0500-1-2016. ofResolution No. 9980 Page 9 of 9 3. Immediately after the conduct of the 2016 National and Local Elections and within the same calendar year, the Commission shall CONDUCT a PUBLIC BIDDING for the maintenance, refurbishment, and/or upgrade of the existing 81,896 PCOS machines for use in the 2019 National & Local Elections; and 4. To AUTHORIZE the Honorable Chairperson J. Andres D Bautista, or in his absence, the most senior member of the Commission En Banc available, to sign the Notice of Award, Contract/Purchase Order, and Notice to Proceed on behalf of the Commission. . Let the Special Bids & Awards Committee-1 implement this Resolution. SO ORDERED. CO), Jpeg J. ANDHES D. BAUTISTA Chairman Bu Lo cuifetstiaN ROBERTS. LIM AL f Comfissioye: ss : Tf asset FE LUIE TIT Guia 3 fr ARTHI Commussioner — Othay'oua Commissioner wa Xe ie SHBKIFF M. ABAS Commissioner CommissionerREPUBLIC OF THE PHILIPPINES = CC) COMMISSION ON ELECTIONS Intramuros, Manila pera Cores 1 freien ae rr : oe rise MEMORANDUM ae ip FOR ‘THE HONORABLE COMMISSION EN BANC SUBJECT : Remaining Parallel Biddings of Lease of 70,977 New OMR Units and Refurbishment of 81,896 PCOS Machines DATE: — 13 August 2015 CONCURRING OPINION Relative to the remaining parallel biddings of Lease with Option to Purchase (OTP) of the 70,977 units of Precinct-Based Optical Mark Reader (OMR) and the Refurbishment of 81,89 Precinct Count Optical Scan (PCOS) machines, undersigned hereby votes in favor of the lease of the 70,977 units of OMR for the reasons stated hereunder. Admittedly, refurbishment of the 81;896 PCOS machines is more economical and advantageous to the government, as the same would put to good use these existing machines and is cheaper by billions of pesos than the lease option. However, undersigned is mindful of the fact that the Commission only has roughly nine (9) months left before the conduct of the May 2016 National, Local and Autonomous Region and Muslim Mindanao (ARMM) elections. The highly technical and operational work needed for the refurbishment of the machines would demand several months for completion, from the software customization to the delivery of the refurbished machines. This period would have to be added to the procurement timeline which is yet to be completed considering the recent failure of the second round of bidding for refurbishment. In other words, opting to refurbish puts the timely conduct of the 2016 elections in possible jeopardy.At this point, the timely conduct of a free, peaceful, orderly and clean elections in 2016 is primordial and should be above all other concerns. It is for this reason that the undersigned, albeit with a heavy heart, voles for the lease of the 70,977 new sets of OMR, oe Commissioner‘OSCE OF TE COMELEC SEAR bag tos ALC Ore pac Republic of the Philippines COMMISSION ON ELECTIONS Intramuros, Manila EN BANC Sse rHe PPR IN THE MATTER OF AWARDING TO THE JOINT VENTURE OF SMARTMATIC TIM CORPORATION, TOTAL INFORMATION MANAGEMENT &Y — CORPORATION, SMARTMATIC "TE INTERNATIONAL HOLDING B.V., AND JARLTECH INTERNATIONAL CORPORATION, THE 70,977 PRECINCT COUNT OPTICAL SCAN (PCOS) MACHINES UNDER A CONTRACT OF LEASE WITH OPTION TO PURCHASE x SEPARATE CONCURRING OPINION T agree with the majority of the Commission En Banc to award the 70,977 Optical Mark Readers (“OMRs") to the Joint Venture of Smartmatic TIM Corporation, Total Information Management Corporation, Smartmatic International Holding B.V., and Jarltech International Corporation (’Smartmatic JV”). a At the onset, it must be underscored that it is the Commission’s original plan to resort to the refurbishment and upgrade of the existing PCOS machines and lease of new 23,000 PCOS machines for the 09 May 2016 elections. I agree that this is the best option for us. This intended result however was not achieved because of time and opportunity lost, and at present the viable option for the Commission to take is to resort to the lease with option to purchase of the 70,977 OMR units. Thence deem it imperative to clarify further my position on the matter. For this purpose, allow me to revisit significant factual antecedents surrounding the bidding for the Lease (with Option to Purchase) of Optical Mark Readers to be used on the 09 May 2016 Elections.On 10 July 2009, the Commission on Elections (“Commission”) entered into a Contract with Smartmatic JV for the provision of an automated election system for the 10 May 2010 Synchronized National and Local Elections (2009 AES Contract). Under the 2009 AES Contract, the Commission leased 81,896 PCOS machines from Smartmatic JV, with option to purchase (COTP”) the same at a cost of Php1,833,274,457.09. Under the 2009 AES Contract, the OTP was exercisable no later than 31 December 2010; it was however extended several times by Smartmatic JV, the last of such extension gave the Commission until 30 March 2012 to exercise the option Hence on even date, or on 30 March 2012, the Commission executed a Deed of Sale with Smartmatic JV for the purchase of the PCOS machines under the 2009 AES Contract at a cost of Php7,191,484,739.48, to be used for the May 2013 elections. The validity of the extensions given by Smartmatic JV to the Commission, as well as the 30 March 2012 Deed of Sale, was assailed in the case of Archbishop Fernando R. Capalla et al. vs. Commission on Elections. The Supreme Court however, in the case of Capalla, upheld the validity of the extensions and the 30 March 2012 Deed of Sale. On October 2014, under former Chair Sixto Brilliantes Jr., the Commission on Elections Bids and Awards Committee (“BAC”) published an Invitation to Bid for the Lease of the Election Management System and 23,000 Precinct-Based Optical Mark Reader (“OMR Project”). Smartmatic JV was among, those who submitted their eligibility documents for the OMR Project. On January 30, 2015 and without a public bidding, the Commission and Smartmatic-TIM entered into the Extended Warranty Contract Program, allegedly pursuant to the warranty clauses under the 2009 AES Contract and the 2012 Deed of Sale, for the repair and refurbishment of the PCOS machines within a five (5)-month period. This Extended Warranty Contract Program was the subject of the Pabillo et al. vs. Commission on Elections et al.2 based on separate petitions filed with the Supreme Court against the Commission on Elections, among others, on 02 and 18 February 2015. On 24 March 2015, the Supreme Court issued a temporary restraining order (“TRO”) enjoining the implementation of the Extended Warranty Contract. However, by Decision dated 21 April 2015, the Supreme Court declared the Extended Warranty Contract null and void. Notably, from the date of the Petition until the Supreme Court rendered its decision, the COMELEC already lost seventy-eight (78) days. ‘Archbishop Fernando R. Capatia et al. vs. Commission on Elections, G.R. No. 201112, Solitarily for Sovereignty (S45) et al. vs. Commission on Elections, G.R. No. 201121, Tesfislo T. Guingona et al. vs. Comission on Elections et al., G.R. No. 201127, Tanggulang Demokrasya 9Tan Dem) Inc. et al. vs Conunission on Elections etal, G.R. No. 201413, 23 October 2012. 2 Bishop Roderick S, Pabill et al. vs. Conmnission on Elections etal, G.R. No. 216098, and Integrated Bar of the Philippines vs, Commission on Elections et al., G.R. No. 216562, 21 April 2015, 2In view of the nullification of the Extended Warranty Contract by the Supreme Court in the case of Pabillo, on 05 May 2015, the day after I assumed office as Commissioner on 05 May 2015, the Commission En Banc issued Minute Resolution 15-0355. In the said Resolution, the Commission En Bane resolved, among others, to approve the conduct of parallel bidding for the refurbishment of the existing Precinct Count Optical Scan (“PCOS”) machines, and the lease with option to purchase of new OMRs divided into Lot 1 consisting of 23,000 OMRs and Lot 2 consisting of 70,977 OMRs. This parallel bidding strategy was the consensus of the Steering Committee (composed of the En Banc and Executive Director Jose Tolentino, Jr.) of the Commission in view of the time constraints. It is worth noting at this juncture that the Approved Budget for the Contract (“ABC”) for the Lease with Option to Purchase of the new 23,000 OMR units amounted to Php2,503,518,000.00; for the 70,977 OMRs, the ABC under Resolution No. 15-0407 was Php7,867,298,140.00; and for the Refurbishment (with systems upgrade) of the existing PCOS machines, the ABC was Php2,880,000,000.00. Notably, the Special Bids and Awards Committee 1 (SBAC1) was assigned to handle the Lease with Option to Purchase of the 23,000 OMR units, while the SBAC2 was assigned to handle the Lease with Option to Purchase of the 70,977 OMR units and the refurbishment and upgrade of the existing PCOS machines. It bears stressing that also during the 05 May 2015 En Banc meeting, I suggested to include a “condition” that the bidding parties should conform to the condition that the Commission on Elections shall have the option to abandon the lease of the 70,977 PCOS machines should the bid for the refurbishment and upgrade of the existing PCOS machines succeed. But, the weakness of the parallel bidding is that the three biddings were done simultaneously, with only Smartmatic JV as the dominant player or supplier. Smartmatic JV also supplied the 81,896 PCOS machines, so that it has the technical advantage over other companies. Further to this, on the same date, 05 May 2015, and during the post- qualification stage of Smartmatic JV for the Lease with Option to Purchase of OMR units, Smartmatic JV was declared post-disqualified by the BAC for the following reasons: sd and then increased spectively, 3 Note that the ABC for the 70,977 PCOS machines was subsequently redu uring the Commission En Bane meeting on 23 June 2015 and 08 July 201a. Failure of Smartmatic JV to submit valid Articl Incorporation, and b. Failure of Smartmatic JV’s demo unit to meet the requirement that the “OMR/OpScan system shall accommodate at least two (2) storage devices, and shall be capable of writing to the same all data/files, audit log, statistics and ballot images simultaneously. Such declaration of post-disqualification was embodied in BAC Resolution No. 9. Accordingly, Smartmatic JV filed with the BAC its Motion for Reconsideration. On 12 May 2015, the Commission En Banc issued Minute Resolution 15- 0359 approving the creation of the two (2) Special Bids and Awards Comunitlee (SBAC) and two (2) Technical Working Groups to assist each SBAC. During the pendency of Smartmatic JV’s Protest, the Commission Ext Banc issued Resolution No. 15-0407 dated 25 May 2015, which directed SBACI to “continue the conduct of the second round of bidding of the twenty three thousand (23,000) Precinct-Based OMR, in parallel with the public bidding for the 70,977 OMR.” In the same Resolution, the Commission En Banc also directed the “Regular BAC to turn over to SBACI all the documents pertaining to the procurement of the 23,000 PCOS machines.” When I reviewed the ABC for the refurbishment, I found Twenty Nine Million Pesos (Php29,000,000.00) too high or overpriced for the hauling, of the PCOS machines from COMELEC to the warehouse, which is only about thirty (30) meters away. In a Steering Committee meeting, I asked the Information Technology Department Director, Ferdinand P. De Leon, how he arrived at Twenty-Nine Million Pesos (Php29,000,000.00). Having failed to elicit sufficient answers from Director De Leon, | initiated a review by the En Bac and the SBAC2 of the ABC for the refurbishment of the existing PCOS machines. The SBAC2 found that the refurbishment lot included the lease of 3,276 PCOS machines, which should have already been excluded from the refurbishment costing because the same represents the 4% unrepairable units (which cost Php294,840,000.00), which are due for replacement and not refurbishment. By Resolution approved on 23 June 2015, the Commission En Banc reduced the ABC for the Refurbishment of existing PCOS from Php2,880,000,000.00 to Php2,074,088,878.92.On 29 June 2015, by a vote of 4 in favor, 2 dissenting, and 1 abstention the Commission En Banc issued a Decision granting the Protest filed by Smartmatic JV and declaring it the bidder with the lowest calculated responsive bid in connection with the Lease with Option to Purchase of the 23,000 OMR units at Php1,724,712,697.56. The same Decision also cancelled the Second Round of Bidding for the 23,000 OMR units: WHEREFORE, the instant Protest is hereby GRANTED. Accordingly, the Commission hereby declares the Joint Venture of Smartmatic TIM Corporation, Total _ Information Management Corporation, Smartmatic International Holding B.V. and Jarltech International Corporation, as the bidder with the lowest calculated responsive bid in connection with the public bidding for the lease with Optian to Purchase of 23,000 units of precinct-based Optical Mark Reader or Optical Scan System for use in the May 9, 2016 national and local elections. Corollarily, the scheduled opening of financial proposal and eligibility documents for the Second Round of Bidding is hereby CANCELLED... On 30 June 2015, Smartmatic JV filed a Letter with the SBAC2 manifesting its decision not to participate in the tender or bidding for the Refurbishment of the existing PCOS machines. It cited the reduction of the ABC for the Refurbishment project as reason for its decision not to participate in the bidding: “However, the present budget reduction . . . for the Refurbishment and Upgrade, renders the project no longer feasible.” Consequently, the SBAC2 declared a failure of bidding. Notably on even date no supplier joined the bidding. Smartmatic JV tendered its bid for the Lease with Option to Purchase of the 70,977 OMR units. On 09 July 2015, pursuant to the 29 June 2015 Decision of the Commission En Banc, SBAC1 issued its Resolution No. 2015-004 recommending to the Commission En Banc the issuance of the Notice of Award to Smartmatic JV for the lease with Option to Purchase of the 23,000 OMR units with Php1,724,712,698.24 as the total lease contract price. Meanwhile, on 09 July 2015, upon mandatory review of the ABC, the Commission En Banc approved the increase of the ABC for the Refurbishment of the existing PCOS machines to Php3,130,670,549.98. A second round of public bidding was thereafter scheduled on 01 August 2015. However, Smartmatic JV again wrote a letter dated 03 August 2015 Commissioners Christian Robert S. Lim, Al A. Parrefio, Arthur D. Lim, and Sheriff M. Abas vote in favor. Chair J. Andves D. Bautista and Commission Luie Tito P. Guia dissented, | abstained.informing the SBAC2 that it would not participate in the bidding for the refurbishment of the existing PCOS machine. Smartmatic JV explained that this decision is founded on its inability now to deliver the requirements in time for the May 2016 elections, to wit: Unfortunately, the schedule requested by COMELEC is no longer achievable, due to the delays’ accumulated until this point in time. The risk to commit to said schedule is too great for us, with the possibility of over-committing brings with it unthinkable repercussions for our company and for the country, It is worth noting that another joint venture, Dermalog, Avante, and Stone of David Tactical Equipment Company Joint Venture, joined the bidding for the refurbishment of the existing PCOS machines. It however wai disqualified on account of its failure to comply with, among others, the Net Financial Contracting Capacity ("NFCC”) or CLC requirement, the requirement on the Technical Specifications of the Bidding Documents, and submission of sample ballots for testing purposes. Thus, the SBAC2 declared a failure of bidding in the second public bidding, for the Refurbishment of the existing PCOS machines. In a perfect market, where there are several qualified bidders in honest competition with each other, the government would come out a winner. Republic Act 9184, or the Government Procurement Reform Act mandates that all government procurement shall be done through competitive bidding. Among others, government procurement shall be governed by the principle of competitiveness, which is realized by “extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding.”* The Commission, as with all government agencies and entities, are guided by this legal principle. The purpose is to ensure that procurement contracts entered into by the government are the most advantageous to it. Ultimately, this principle seeks to ensure that the most gain redounds to the benefit of the people. As the money and funds expended for these contracts come from public coffers, we, in government service, are laden with the fundamental obligation to spend them wisely and judiciously, in full accord with the law and the Constitution. As public servants, we are stewards of the sovereign Filipino people, who have entrusted us with the duty and reposed upon us TION, STANDARDIZATION AND OF THE GOVERNMENT AND FOR 5 AN ACT PROVIDING FOR THI REGULATION OF THE PROCURE! OTHER PURPOSES, 6 Id, Section 3, MODERNIZ T ACTIVITsuch faith and mandate to govern, and govern well with the best interest of the people in mind. Nevertheless, as shown hereinbefore, the Commission is now burdened with time constraints in the preparations for the May 2016 National and Local Elections. The May 2016 National and Local Elections are drawing nigh---with only eight (8) months and twenty-eight (28) days from Election Day-—-but the Commission could not complete the preparation for the 2016 Elections on account of the matter as to the procurement and/or refurbishment of the PCOS machines. What is further deplorable in this whole state of affairs is that Smartmatic JV seemed to have taken advantage of the time constraint the Commission is confronted with. Their refusal to participate in the bidding for the refurbishment of the existing PCOS machines is, to my mind, pushing the Commission to the edge so that it is left with no choice but to award to Smartmatic JV the Lease with Option to Purchase of the 70,977 OMR units, which it bidded for Php6,286,382,682.72 and which it would not have preferred over the less costly refurbishment of the existing PCOS machines. This is indeed tragic in the face of the hard fact that the Commission still is currently in possession of 81,896 PCOS machines~-which were leased and then purchased from Smartmatic JV and used during both the 2010 and the 2013 Elections at a total cost of Php9,024,759,196.57---which remain unrefurbished and unmaintained. It is indeed most regretful that precious time was even more put to waste when the Commission entered into an Extended Warranty Contract? by way of direct contracting with Smartmatic JV and later on litigate the same before the Supreme Court, only to find in the end that the same contract is annulled and voided for being, legally infirm. Our hands are tied, but it is not of our own making. If only there is enough time for the Commission, it is my opinion that the refurbishment of the existing PCOS machines is the more advantageous course to take. However, the urgency to be able to move forward with the preparations for the 2016 elections cannot be overemphasized. Unfortunately, the hands of time cannot be reversed to regain the precious days lost and foregone opportunities. Notwithstanding all these, what remains true is the solemn duty of this Commission to carry out and ensure that a credible, honest, orderly, and peaceful elections are carried out on 09 May 2016.8 This duty similarly proceeds from the 7 Resolution No, 9922 dated 23 December 2014, approved by the majority members of the Commission En Banc, Chair Sixto Brilliantes Jr., Commissioners Lucenito N. Tagle, Elias R Yusoph, Christian Robert S. Lim, and Al A. Parreno, with Commissioners Lue Tito F. Guia and Arthur D. Lim dissenting, : Section 52 of BP Blg. 881, o the Omnibus Election Code, provides:fundamental right of our people to a free, orderly, and honest elections that will truly be reflective of their sovereign will. It is in this context that I pray that the people will understand our difficult predicament. It is with great sadness that I vote for the award of the 70,977 PCOS machines under a contract of Lease with Option to Purchase to the Joint Venture of Smartmatic TIM Corporation, Total Information Management Corporation, Smartmatic International Holding B.V., and Jarltech International Corporation for the amount of Php6,286,382,682.72. However, the En Banc has also resolved that the old PCOS machines shall be refurbished and/or upgraded immediately after the May 2016 elections, This should put to rest the complaint of the public that we are allowing these machines to rot, wasting precious public funds. MA. KOWENA AMELIA V. GUANZON, Commi Section 52. Powers and functions of the Commission on Elections. - In addition to the powers and functions conferred upon it by the Constitution, the Commission shall have exclusive charge of the enforcement and administration of all laws relative to the conduct of elections for the purpose of ensuring free, orderly and honest elections, and shallREPUBLIC OF THE PHILIPPINES oe COMMISSION ON ELECTIONS" 4 Intramuros, Manila, es Office of tite Chairman oy FOR The Commission Enbanc SUBJECT Lease of all new voting machines (23,000 OMR, Lot 1) and (70,977 OMR, Lot 2), for use on May 9, 2016 DATE i 13 August 2015 join the majority Resolution and wish to add the following observations. 100 days ago, I assumed office on 4 May 2015, together with Commissioners Rowena Guanzon and Sheriff Abas. That was two weeks, since the Supreme Court promulgated its decision, nullifying COMELEC Resolution No. 9922—for, as the Court noted, while “there are no qualms about the task of having the PCOS machines repaired and refurbished xxx there are serious and unignorable legal flaws about how the COMELEC intends to pursue this undertaking.” “Bluntly,” the Court concluded that “the COMELEC xxx failed to justify its reasons ‘for [direct contracting]” and, thus, it was found and declared to have committed grave abuse of discretion amounting to lack or excess of jurisdiction, At that time—with barely a year left—doubts started to be raised as to whether or not the 2016 elections would proceed as scheduled. The nullification of COMELEC Resolution No. 9922 had the effect of voiding the so-called “Extended Warranty Program” previously contracted. As the Court declared, “with due deference to the COMELEC, it should be made to understand that this Court does not stand to thwart the 1[Pageconduct of automated elections; but only steps in to preserve its sanctity, After all, in a democracy, nothing is more vital than an unimpaired vote.” Proceeding upon this same understanding — the following day that we assumed office, I presided over our first En Banc meeting, with the firm and steeled resolve that that vital democratic process, our elections, will proceed as scheduled on May 9, 2016. In order to make up for lost time—and to secure a fallback position—the COMELEC conducted parallel biddings, as we sought to decide between the refurbishment of the §1,000+ existing Precinct Count Optical Scan (PCOS) machines, or to lease 70,977 new Optical Mark Readers (OMRs). We kept our options open, and kept an open mind. For this reason, we proceeded to consult with other stakeholders, participated in various demonstrations of alternative automated election systems, and seriously considered the feedback, inputs, and counsels of various groups. Suffice it to say that the decision we reached today did not come easy. In truth, even saying this, does not suffice to fully contextualize the realities, difficulties, and exigencies that this COMELEC has had to face—and still is facing Even before we could reach today’s decision, a cacophony of various legal challenges have been brought against the COMELEC— threatening to sideline our ongoing preparations or, worse, risking to frustrate the conduct of our elections next year. No doubt: from our decision today, others will see another opportunity to find fault—unmindful and inconsiderate of the reality that we are running out of time to properly and adequately prepare for next year's elections. For the overwhelming majority of our people who look forward to elections as the opportunity to take part in the running of our government by speaking their voices on who our leaders of the day shall be: we remain firmly committed to discharge our Constitutionally-mandated duties It is for them that we are making this decision, and it is on their side that we are standing by. Neither intellectual sophistication nor sophistry should crowd out the undiluted voices of our people that are made manifest and heard on election day. Elections are not about arguing over whose system is better, or who has the more brilliant idea. Elections are, first and foremost, about our people. And as 21°our Constitution mandates—that is, we, as a people command—our elections should be free, honest, orderly, peaceful, and credible. And that is what we are working hard and committed to delivering on May 9, 2016 On these premises, there is a lot more work to be done. For our elections to be inclusive, we need to ensure that those who are qualified to vote and not otherwise disqualified from voting are able to participate in next year's elections. We only have 79 days left for our mandatory biometrics voters registration as mandated by Republic Act No. 10367. And then, there is the difficulty of getting our first-time voters—the 18-21 year olds—to register for next year’s elections. And then, still, the added challenge of encouraging our people—the youth, especially—to turn out for and participate in our elections. We can only hope that our people’s optimism for and anticipation of our upcoming elections is not dampened by the cynicism and skepticism of a few. We will deliver credible elections, and not allow others to hold us back from conducting the 2016 elections and our people from participating in them. Honest elections are premised on the sanctity of the ballot: that our votes are properly counted, as we had cast them. With this being the paramount consideration, even as we balanced our options—weighing the costs and benefits — today’s decision reflects our belief in the true price of democracy. In the final balance, there is only one net effect that we aspired for and sought to ensure: to see to it that every person counts and their vote is properly counted. With barely a year left, the best way to guarantee that the conduct of our elections shall be credible is to adopt the automated election system that has been tried and tested during real elections. For sure, the 2010 and 2013 elections were not perfect but so were the elections before them. We need to learn from the mistakes of 2010 and 2013 and endeavor not to repeat them. It is with these full disclosures—of the context of our decision-making, our challenges, and commitments—that we are working to deliver and ensure credible elections by, first, being ourselves credible stewards of our elections. Credibility comes from speaking the truth—consistently and fully. From day B| Pageone, we have been fully transparent, and committed to telling the truth. And the ‘ruth is that this has not been an easy decision, much less a foregone conclusion as others have boldly-but-baselessly claimed. This decision was made following consultation with a broad range of sectors and stakeholders, and after careful deliberation and thought. The resolution of this important decision paves the way for other decisions and equally important preparations that this COMELEC will have to take and make. The time to act is now; we have no time to waste on further debates and arguments, It is a betrayal of our people for our elections to be held hostage by a few. Itis a disservice to our people to keep us from discharging the duties we swore to do— which we are doing as accountable Constitutional officers, Indeed, the very little time that we still have left is time needed to get actual work and real preparations done— the work that we are duty-bound to fulfill, bound by our sacred oath. It is our people turning out for next year's elections that will determine the merits of our decision today and our succeeding efforts in the following days. As we countdown to May 9, 2016, our people can continue to count on us and hold us to our commitment to deliver credible elections in 2016. a J. ANDRES D. BAUTISTA August 13, 2015Republic of the Philippines COMMISSION ON ELECTIONS Intramnros, Manila Re: Lease of all new voting machines (23,000 OMR, Lot 1) and (70,977 OMR, Lot 2), for use on. May 9, 2016. : a ARA'T i OPINION Voting machines do an election make.! The crux of subject Resolution is to lease all new voting machines (23.000, Lot 1) and (70,977, Lot2) from Smartmatic the winning biddet, for use in 2016 ata staggering cost to the Pilipino taxpayer of Pht 8,011,095,380.960. The existing, PCOS will not be used for the 2016 elections: Vo recall, on 29 August 2014, the Commission En Bane adopted the COMELEC Advisory Council's (CAC) recommendation to use the existing PCOS as primary technology and consider the use of optical mark readers (OMR) along, with direct recording electronic technology (DRE) as secondary technology? for the 2016 national, local and ARMM elections Thus, on 21 October 2014 the En Bane approved the use of 410 DRE machines to be pilot tested in Pateros. The 23,000 OMR machines were planned to be used in Metro Manila other than Pateros. The test of the country would use the 81,896 Precinct Count Optical Systeny (PCOS) machines owned by the Commission. The DRE project was eventually scrapped These PCOS were leased by COMELEC from Smartmatic in 200 at a cost of P7,191,484,739.48 and purchased in 2012 for P2,130,635,048.15 for a total cash ouglay of P9,322,119,784.63, The amount thus expended for these PCOS leaves no room for doubt that a serious accountability issue arises were these to be left to With apologies to Richard Lovelace, 17" century English poet who immortalized the lines, “Stone walls do not @ prison make, Mor iron bars a coae", in “To Althea from prison’ Miuute Resolution 14-0628, ( iprot in a warehouse in Laguna for which the Commission pays a huge monthly rental of P800,000.00. In my view, non-use of these PCOS raises a serious accountability issue as undue injury would be caused to the government through gross inexcusable negligence (Sec. 3[e], R.A. 3019). With the subsequent invalidation by the Supreme Court of the Extended Warranty Agreement for the refurbishment and upgrade of these PCOS by way of direct contracting to Smartmatic, the Commission decided during the Regular En Banc Meeting on 05 May 2015 to conduct a parallel bidding for: (1) the refurbishment with upgrade of the PCOS machines, and (2) the procurement of all-new OMR machines (23,000, Lot 1, and 70,977, Lot 2). e I have always maintained that refurbishment with or without upgrade of the existing PCOS should be top priority because the machines are still usable and would be of least cost, hence, I advanced the position that the award of any contract for new voting machines should be a fallback position and only in the event the bidding for the refurbishment fails. Ivoted in Minute Resolution No. 15-0355, thusly: “If the bidding for Letter A (Refurbishment of existing PCOS) is successful, Notice of Award should be issued only for it. Letter B (New OMR) should only be a fallback position for the Commission.” Unfortunately, and rightly or wrongly, the bidding for the refurbishment has failed twice, and has ceased to be an option. All indications point to the inevitability of the lease for all new voting machines totaling 93,977 at a cost, to repeat, of P8,011,095,380.96.! But all is not lost. The present Resolution directs in very clear terms the mandatory refurbishment of these PCOS machines for use in the 2019 elections, and the Commission will not exercise the Option to Purchase (OTP) for the said machines. This sufficiently addresses my deep-seated misgiving that the old PCOS were being sacrificed in the altar of commercialism as the supplier will naturally be salivating for the product with the bigger ABC and higher margin of profit. * Minute Resolution No. 15-0355, “Ifonly to make the bidding attractive, the Commission even adopted a seesawing ABC, the third and last ‘ABC even surpassing the original one! 2With the benefit of hindsight, one cannot help but get the impression that as the ABCs were far too disparate, the idea of bidding out the refurbishment side by side with the lease of all-new voting machines was not too sound in that the successful bidding for the new machines, which came ahead, rendered totally unattractive putting upa bid for the refurbishment which had a much lower ABC and presumably a much lower margin of profit for the supplier. A final word: the time is ripe for intense soul-searching on the part of the Commission. While foreign technology plays a vital role, is it necessarily a superior one? Assuming it is superior to what we can produce locally, it is worthwhile that the Commission entertain other locally invented election systems, like TAPAT, which reputedly holds promise for the future. It is submitted that the Commission must consider systems of automated elections other than that sourced from abroad. The Commission should take the lead in proposing possible amendments to Republic Act No. 9369 to enable it to make full use of any locally invented election system that may prove viable, reliable and of least cost, in future elections. Filipino talent and ingenuity must be tapped, and encouraged to flourish. After all, no one can love the Philippines more than the Filipino. For that matter, no one loves the Philippines except the Filipino. Whatever the future holds, what matters for now is the present. No other vote is possible than to CONCUR to the lease of the all new voting machines, as heretofore stated. But at the risk of repetition, I would like to stress that my vote of CONCURRENCE is subject to the following conditions, to wit 1. The existing PCOS machines will be refurbished and upgraded immediately after May 9, 2016 to give the Commission all the lead time for bidding, etc., prior to the May 2019 elections; 2. The Commission will not exercise the option of buying and acquiring ownership of the all-new voting machines subject of the Resolution totaling 93,977;3. The existing PCOS machines as thus refurbished will definitely be used in the May 2019 elections. Should all or any of these conditions be not met or complied with, my vote of concurrence becomes ipso facto a dissenting vote to the lease of said new voting machines. RESPECTFULLY SUBMITTED. ARTHUR D. LIM CommissionerREPUBLIC OF THE PHILIPPINES ee sree Commission on Elections lishis Intamuros, Manila Office of Commissioner Cuie Tito Guia MEMORANDUM FOR The Commission En Bane SUBJECT : Separate Opinion to the Resolution Opting for the Lease of 70,977 new Optical Mark Reader (OMR) machines DATE: 13 August 2015 iat In consideration of the very limited time before the scheduled 2016 clections, the technical risks and uncertainties of repairing, refurbishing, and/or upgrading the old PCOS machines, the need to employ a system that is generally more acceptable to the voters, candidates and elections workers, as well ag considering the critical nature of the 9 May 2016 National and Local Elections in the country’s road to progress and development, 1 am constrained and compelled to vote with the majority in the decision to opt for the lease of 70,977 pew machines. While this option is going to cost more than the other options it has come to the point that such option became the most viable, practical, safest and generally more acceptable at this time. My initial inclination, however, was to opt for the Commission to pursue negotiated contract as _a consequence ‘of the two failed biddings for the refurbishment services. The refurbishment option had always been most preferred option by the members Commission. The alternative for me, should negotiations fail, is to opt for manual elections or to consider the alternative Solutions offered by various groups, such as the TAPAT and PATAS system, 1 Wasand still am of the firm belief, that while itis going to be extremely difficult, ‘we can still work for, and have, credible manual elections, It became apparent, however, that at this time the refurbishment option can no longer give us certainty that the refurbishment of the 81,896PCOS machines is going to be completed in time, whoever does the refurbishment, and how ever the refurbishment is done. This is based on the assessment of our own technology people as well as those from other groups.On the other hand, the option for manual elections and for PATAS would certainly be questioned by people who are of the belief, which to me is not justified, that existing laws Prohibit manual elections and would, therefore, likely encourage legal questions The TAPAT, acknowledged as promising by the Commission itself, appears to be unreadly to cover the entire country or a significant portion of it and that the led system cannot give us sufficient comfort. At best TAPAT, as well as the S, can possibly be piloted in the coming electionspossibly in limited constituencies, as I will be proposing, to determine their viability for use future elections,Page |2 It must be stressed further, that officials of the Commission fiom the main office to its field offices have practically pleaded to the Commission En Bane not to go back to manual elections. They cite the marked decrease of election related! violent incidents as having been due to the quickness of the announcement of the results. While I am open to that holding manual election as an ultimate contingency and I honestly believe that it can still be made honest and credible and its results acceptable to the people, itis a position that unfortunately will not find support even among most of my co-workers in the poll body. ‘The prevailing paradigm in the Commission is “automation or bust” - that a system that is net automated will bring the country to perdition. With all due respect, the attitude of “automation or bust,” which has dominated the thinking in the Commission for the past eight years, has somewhat diverted the Commission’s attention from achieving goals along the principles of genuine democratic elections. It has unnecessarily complicated how we should see elections. It is this paradigm that has brought us to the situation where our options have become limited as all other options are shut off at the culsel. Also, it has mostly likely given technology providers the impression that they can dictate the terms and weaken the position of the Commission in negotiations. In principle, I personally am of the strong belief that it is not the use of machines or modern technology that makes Philippine elections free, fair and credible. There are more fundamental principles that define how an election van be free and fair. Inclusive, transparent and accountable elections are key to achieving what is universally considered as genuine democratic elections Secrecy of the ballot, identified by international observer missions in the 2010 clections as problematic amidst the novelty of the use of the PCOS machines, is another key principle. These principles can be realized without the use of sophisticated machines promoted by international conglomerates Nevertheless, 1 have to concede that at this time the public generally seem to be more accepting of the PCOS automated system. As an election manager, it 's my job to be conscious of what the public prefers. Elections are generally a matter of perception. In this regard,due to the very limited time, the technical risks and uncertainties involved, the need to employ a system that is generally more acceptable, as well as in view of the critical nature of the 9 May 2016 National and Local Elections, | am compelled to join my colleagues, (fe LYfE TITO F, GUIA