The United Nations Development Programme (UNDP) welcomes the House of Representatives’ House Resolution 1751 – Inquiry into the alleged irregularities and setbacks on the Free Wi-Fi Internet Access in Public Places Project implemented by the Philippine Government’s Department of Information and Communications Technology (DICT).

Given our commitment to transparency, accountability and efficiency, we affirm our commitment to support the review of the DICT-UNDP Free Wi-Fi for All project to bring clarity to the issues raised.

1.         Partnership with DICT

The DICT-UNDP Free Wi-Fi for All project supports the DICT’s commitment to accelerate the roll- out of the Free Wi-Fi for All National Program, under Republic Act 10929 - An Act Establishing the Free Internet Access Program in Public Places in the Country and Appropriating Funds Therefore. The project aims to connect 6,000 sites in remote, vulnerable, and off-grid communities in the country by December 2022, representing five percent of the DICT’s Free Wi-Fi for All National Program total target of 120,000 sites. The project also provides a feedback loop i.e., an opportunity for users of this Wi-Fi service, to monitor and report on the quality and responsible use of internet services as well as building capacity for DICT, to enhance their procurement and project management skills.

In its letter to the Commission on Audit in August 2019, the DICT mentioned that the “DICT-UNDP partnership is being undertaken to accelerate the delivery of the Free Public Wi-Fi project, noting, among other things, the repeated challenges encountered by DICT in rolling-out the project as identified in the 2017 Consolidate Annual Audit Report on DICT.”

The 2019 Project Document signed by DICT and UNDP states that “to hasten the implementation of Pipol Konek (now the Free Wi-Fi for All Project), the DICT and UNDP forged partnership to bring in viable options for building network infrastructure in unserved and underserved communities.”

For this project, the DICT transferred PHP 1,362,084,618.28 in three tranches to UNDP Philippines through a signed Financing Agreement in September 2018. This allows UNDP to provide assistance to DICT in the form of development support services, towards the implementation of its priority programs. It does not constitute a donation to UNDP.

The possibility to transfer of government resources to UNDP is foreseen in the the 1977 Standard Basic Assistance Agreement (SBAA) signed between UNDP and the Government of the Philippines, a treaty-level agreement ratified by the Senate of the Philippines. Under Clause 1, Article II of the SBAA: assistance such as the one of accelerating the implementation of national programmes offered by UNDP to DICT “maybe made available by the UNDP to the Government” upon request consisting, among others, of “services of advisory experts and consultants,” “equipment and supplies” and “any other form of assistance or form of execution, which may be agreed upon by the Government and UNDP.” 

2.         Role of UNDP, progress and challenges

DICT chose to partner with UNDP given its global experience and expertise in areas such as complex program oversight, its high standards of quality assurance, and its capability to desig for and implement the most appropriate technologies in remote and disadvantaged areas, establishing citizen monitoring mechanisms, and to support DICT in building its systems and capacity.

DICT recognized that UNDP has (1) demonstrated the capability in reaching at scale the most disadvantaged and disconnected communities, (2) can provide the full range of capacity building support required by the agency, (3) can draw on the technical expertise of International Telecommunications Union, and (4) has the expertise in implementing projects towards achieving the Sustainable Development Goals.

Working in partnership with DICT, UNDP tapped into a global network of service providers and experts to provide the required service.

As indicated in the Project Document, the strategic guidance and direction regarding the implementation of the project lies within the Project Board, established with DICT and UNDP, respectively as Chair and Co-Chair of the project board. All UNDP projects have an exit strategy, whereby UNDP gradually phases out its support based on the achievement of measurable milestones. The Free Wifi for All Project follows this rule.

The project first faced a significant challenge when it was issued a cancellation notice from DICT in August 2019, following negative media reports, on the 2018 Consolidated Annual Audit Report of the DICT, by the Commission on Audit. After two months, the cancellation was revoked by DICT through a letter delivered on 30 September 2019. Pandemic restrictions, mobility limitations, and commercial challenges faced by the contractor and its sub-contractor caused subsequent delays, particularly in site activations. All these challenges have been regularly communicated to and discussed with DICT. However, despite joint attempts to bring the parties to a mutual understanding with a series of re-negotiated catch-up plans submitted for the approval of DICT, PHILCOMSAT and SPEEDCAST did not manage to iron out their differences.

As of 30 April 2021, 882 free Wi-Fi sites have been installed and activated in public areas, benefitting more than 350,000 users in remote places, which had limited or no access to commercial internet. The free Wi-Fi service has been advantageous, especially during the COVID- 19 pandemic, to low-income communities in provinces such as Isabela, Cagayan, Benguet, Palawan, Davao del Sur, Lanao del Sur and Sorsogon.

With 303 out of 882 (35 percent) of the activated sites located in public schools—141 of which are schools equipped with ICT gear under the UNDP K-12 Computerization Program—the free Wi-Fi service also has aided teachers and students, providing access to teaching and learning materials. In Sorsogon, 78 rural health units were provided with free Wi-Fi services, allowing health care workers and residents to access and share critical health information related to the ongoing pandemic. Ten of the activated sites in Sorsogon are included in the Government’s list of vaccination centers.

3.         Procurement and selection of contractor

In coordination with DICT, UNDP conducted detailed market research and the project was designed to solicit “fully-managed” Wi-Fi services. It was divided into three parallel phases for solicitation, namely Phase 1 (3000 sites) and Phase 2 (2000 sites) using very small aperture terminal (VSAT) technology, and Phase 3 (1000 sites) for fiber optic technology. Per design, the supplier would be paid for the Wi-Fi services provided, as per the agreed service level agreement and NO equipment was to be purchased or owned by either DICT or UNDP. This design is in line with the framework currently being used by DICT in the Free Wi-Fi for All National Program.

All procurement processes under this project were conducted following standard UNDP procedures on procurement that are publicly available, and abide by the principles of fairness, integrity, and transparency. All procurement processes were conducted through an open and fair international competitive bidding process. Bids were received from consortia of national and international bidders and evaluated as per the published criteria in the solicitation document. Technical evaluation was conducted by a panel of technical experts nominated by UNDP, whereas the financial evaluation was done by finance and procurement teams. DICT did participate as a member of the Technical evaluation panel.

UNDP procurement processes mandate that while examining, evaluating and comparing offers, both price as well as non-price factors are considered. These factors include full lifecycle cost (operation, maintenance, repairs); delivery/completion time; functional characteristics; terms of payment/guarantee; vendor’s past performance record; and vendor’s overall ability to provide the goods/services required by UNDP. Bids are objectively evaluated based on the information provided by bidders and include assessment of their financial capacity through review of previous years audited financial reports.

All the bids for the three phases of procurement were screened based on several parameters, including required permits, past experience of similar contracts, and financial standing. The technical bids were comprehensively evaluated on a pass/fail basis for compliance with the technical specifications identified in the bid document. After a thorough evaluation by the panel of experts (including international experts), the procurement process was reviewed and approved by UNDP’s independent Procurement Oversight Committee external to the Philippine.

The selected bids of Speedcast for Phase 1 and Phase 2 of the project were found to be technically compliant, most advantageous and presented best value for money amongst all the bids received under these processes. Speedcast bid was found superior amongst all bidders, based on previous experience, inter alia as they had completed a similar size deployment for a rural broadband project in Malaysia. UNDP conducted a site validation exercise through its office in Malaysia, and the results supported the overall assessment of Speedcast’s workmanship, quality and experience of delivering similar projects, which provided services to the public in remote locations.

For both the phases, the winning proposals were submitted by Speedcast Limited as lead contractor together with PHILCOMSAT as its sub-contractor. The proposal offered a strong combination of international and local expertise with Speedcast as the lead contractor providing overall management and technical direction, internet bandwidth and VSAT equipment; and PHILCOMSAT as the sub-contractor responsible for site surveys, installation of equipment and maintenance of sites. At the time of submission and evaluation, their bids displayed the best capacity to cover the number of sites required and the ability to reach and work in remote locations. Their bid provided a high degree of confidence in their ability to deliver a managed internet service for proposed contracts.  

4.         Declaration of Chapter 11 by the contractor

In April 2020, UNDP was informed that Speedcast voluntarily filed for balance sheet restructuring under Chapter 11 of US Bankruptcy Law. DICT was informed about it in a letter dated 4 May 2020. Sppedcast updated UNDP on the progress of the restructuring through regular meetings, until Speedcast emerged from Chapter 11 in March 2021. Since the U.S Chapter 11 process is a financial restructuring aimed at reducing funded debt and gaining access to new sources of investment, it did not affect the implementation of the WiFi Project. Most of the sites (613 sites) under this project were installed during the period when Chapter 11 proceedings were on-going. Delays in deployment cannot be attributed to the Chapter 11 proceedings, but rather to the health, safety, and mobility restrictions brought about by the COVID-19 pandemic, coupled with the challenges in reaching the target sites.

All information about all Chapter 11 legal filings on this case are available in the public domain and can be accessed at http://www.kccllc.net/speedcast.

5.         Customs related issues

UNDP requires all its contractors to abide by national laws in performing and fulfilling their obligations. In issues related to allegations of mismanagement and other irregularities, UNDP’s policies and procedures on transparency and accountability are clear, robust and in accordance with international standards.

On the alleged undervalued shipments of telecommunications equipment imported between January and June 2020 by the contractor, UNDP was made aware of the alleged irregularities in import duties by PHILCOMSAT, on 21 July 2020. While no evidence was produced, UNDP contacted Speedcast to take immediate action and solicited PHILCOMSAT to clarify the matter with Speedcast. UNDP also requested Speedcast to self-report to the Bureau of Customs (BOC), to comply with national laws. As a precautionary measure, regardless of the missing evidence, UNDP has referred all allegations received to its independent Office of Audit and Investigation (OAI), in accordance with policies and procedures.

The matter, following the release of the BOC report dated 12 April 2021 and officially shared with UNDP on 14 May 2021, is now under investigation. To aid in OAI’s investigation, UNDP has requested from DICT the documents cited in the BOC report.

Until the OAI investigation is finalized, UNDP cannot further comment on this matter.

6.         Site selection and validation process

All sites under the Project adhere to guidelines provided under RA 10929 or Free Internet Access Program in Public Places. These are public sites were selected using the following criteria:

a.         Schools already provided with ICT equipment under the DepEd-UNDP Computerization Program, as the core access point or VSAT sites; In addition, having two or more public places within a five-kilometer radius of this primary school location

b.         Located in geographically isolated and disadvantaged areas (GIDAs) or 4th to 6th class municipalities

c.          No or limited internet connection at present

The initial master list for the 3,000 sites were prioritized by DICT and UNDP during the bidding process with tentative site information (e.g., coordinates, site name, power profile). Bid documents (Item 10 of the Schedule of Requirements) for Phases 1 & 2 state that “upon completion of full site survey by the contractor, final VSAT sites may change due to new information." Companies that applied for the international bid therefore had to assess and calculate appropriate costing to validate sites location and it had to be incorporated into the bid document.

The guiding principle of the project is to maximize the number of connected sites, with the available budget, by deploying the most viable technology in the targeted remote communities. As agreed with DICT, the bandwidth requirements followed the minimum required speed of 2Mbps per RA 10929. The requirement of the Project included that the supplier also install solar panels to provide consistent wi-fi services, at these locations. The geographic characteristics of sites - GIDAs - were clearly communicated and considered during procurement.

To ensure smooth implementation, UNDP conducted a pre-deployment workshop with DICT cluster offices, all LGU representatives, and Speedcast and PHILCOMSAT representatives, to acquaint them with the project and share relevant information regarding site locations. UNDP continuously conducted coordination meetings with partner provincial LGUs and received commitment for assistance through the signing of partnership agreements and issuances of executive memorandums. UNDP also coordinated with the Department of Education (DepEd). participating at DepEd conferences, provided project orientation to school beneficiaries, and received commitment from DepEd through issuance of memorandum circulated to more than 1,400 target schools. All signed agreements, executive issuances and the DepEd memorandum were provided to the contractor. UNDP has also shared the list of LGU focals with contact details and DICT clusters/provincialresponsible officislas for coordination, to the contractor.

The Project requires a robust and participatory site validation and approval process. The final list of sites for installation is vetted by concerned Provincial LGUs, DICT regional/provincial Clusters and the Project Management Office of DICT. Similarly, all installed sites are subject to review of quality of service and acceptance by the UNDP Project Management Team prior to issuance of payment. Sites that do not pass the service level agreements or do not have the required documentation submitted by the contractor are not approved for payment.

7.         Conclusion

UNDP continues to have regular interactions with senior officials of DICT. UNDP and DICT have mutually agreed on guiding principles moving forward, including the return of unused funds to DICT. As of 27 May 2021, a first amount of Php PHP 283,992,240 has been returned to DICT, through the Bureau of Treasury account, following the termination of contract mutually agreed with Speedcast on 10 May 2021 that relates to Phase 2.

We have also expressed to DICT, the need to ensure that the 882 free Wi-Fi sites, installed and activated by the project, continue to provide services to the 350,000 citizens in those geographically isolated and remote areas.

UNDP believes that in order to ‘leave no one behind’, we must maintain our commitment to working in complex contexts in some of the most challenging places across the world. In the same vein, UNDP Philippines remains dedicated to working with our partners in harnessing technology to address the digital divide and to create digital solutions to reach marginalized and vulnerable communities, during the pandemic and beyond.

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