DPWH ignored COA on erring contractors

MANILA, Philippines - The Commission on Audit (COA) had repeatedly asked the Department of Public Works and Highways (DPWH) to blacklist and file charges against contractors who do not honor their obligations with the government.

Reports reviewed by The STAR showed that in 2007, state auditors had taken note that P1.036-billion worth of projects implemented by DPWH field offices were not completed within contract time, “thus depriving the public of the benefits that could have been derived from their immediate and maximum use.”

COA said the DPWH should collect liquidated damages from defaulting contractors and terminate the contracts of infrastructure projects with negative slippage of more than 10 percent resulting from the contractor’s fault or negligence.

State auditors said the primary consideration of the government for entering into a contract is the timely completion of the infrastructure projects.

“Consequently, the contracting parties are bound to adhere faithfully to the agreed terms and conditions of the contract,” the 2007 COA report said.

Among the uncompleted projects cited by COA are bridge and road construction projects in Region II, Region IV-A, Region IX, Region X, and Region XI.

“We recommended that management facilitate the settlement of the road right-of-way problems to avoid further delay in project implementation. In addition, management should impose liquidated damages to defaulting contractors and terminate or rescind contracts of infrastructure projects with negative slippages of more than 10 percent resulting from contractor’s fault or negligence,” COA said in the 2007 report.

In 2009, COA again called the attention of the DPWH after “no legal actions were instituted” to recover the P54.717 million in advances granted to contractors whose contracts were terminated because of “abandonment of the projects.” The government had to recover P5.2 million from BC Garay Philwide Builders for the terminated contract to construct modified, conventional type single storey school buildings in Batangas province and Region VI.

The DPWH also had to recover P2.7 million from Bandila Construction and Development Corp. for three abandoned projects in Lanao del Sur, and P501,801 from Rely Const. & Supply for the Aliwagwag Bridge and Approaches project in Compostela-Cateel Road, Davao Oriental in which a final payment was made but recovery of advance payment was not deducted.

The biggest portion of collectibles from contractors is the P44.8-million cost of projects in Region VII that were not even started. “In the analysis of the advances to contractor at Regional Office No. VII, it was noted that several advances which were granted to contractors for mobilization expenses totaling P44,813,321.62 were not recouped as of Dec. 31, 2009,” COA’s 2009 report said.

COA believes the chances of recovering these advances are slim because these have been unpaid for more than five years. Some of the contractors granted the advances no longer engaged in business with the DPWH.

 Despite the situation, state auditors said DPWH should instruct concerned accountants to trace back all available records and to identify the contractors with outstanding advances. Legal action was also recommended to help in collection.

In its 2010 report, COA reiterated its recommendations that erring contractors should be sued and blacklisted for delayed completion of projects.