COA cites ‘red flags’ in construction of Makati parking building

MANILA, Philippines - The special team of the Commission on Audit (COA) has found six “red flags” in its audit of the allegedly overpriced Makati City Hall parking building.

A preliminary report prepared by the COA team conducting a special audit of the controversial building was presented to the Senate Blue Ribbon subcommittee during its seventh public hearing yesterday.

Lawyer Alexander Juliano, director-in-charge of the fraud audit office of the COA and head of the special audit, initially aired his reservations about disclosing the initial findings because they have not gathered the comments of the city officials of Makati as part of its entrance conference.

With an assurance from Senate Majority Leader Alan Peter Cayetano that he would not be prosecuted for disclosing the preliminary report, Juliano presented the findings of his team, which was highlighted by the six “red flags.”

The first red flag was related to the undue haste that the project was supposedly implemented based on the fact that even without the presence of any construction plan, it was bidded out and awarded to

Hilmarc’s Construction Corp., which undertook all five phases of construction that started in 2007.

It was noted that the publication of the advertisement for bidding of the project was done just a month after the appropriation ordinance was approved by the City Council of Makati.

“While the swiftness of the action taken by the city government may be considered as efficiency, the same could be also considered as a red flag because this project with such a huge budget will surely require a careful conceptualization and planning,” the COA report stated.

The COA also found that the variances between the approved budget for the contract (ABC) and the bids tendered by Hilmarc’s for the five phases were less than one fourth of one percent of the ABC.

This meant that the bids made by Hilmarc’s for the project were too close to the ABC.

The COA also that found it was very unusual that in phases two to five of the project, there were no other bidders who tendered their bids apart from Hilmarc’s.

For the third phase of the project, the COA noted that the City Council had not yet passed an appropriations ordinance when the city started the procurement process.

The COA explained that since there was no appropriation yet for phase three, the ABC prepared by the city had no legal basis.

Based on the inspection report of the COA done in July 2011, the parking building was already habitable and ready for use when phase three was completed.

“Thus it is highly questionable why the city had to disburse an aggregate amount of P793,740,601.96 for phases four and five,” the report noted as the fourth red flag.

The COA report indicated, as its fifth red flag, that the ABC and contract cost showed very significant variances above the estimated costs for phases three and four that the technical experts of the commission came up with.

It was noted that “there was a total variance between the ABC and the COA evaluated cost amounting to P126,098,550 while the contract cost vis-à-vis the COA evaluated cost had a total variance of P124,676,158.

“These amounts are very significant. Further, the percentages of variance for phases three and four are within the borderline of the 10 percent allowable variance. The materiality of the variance deserves a deeper analysis and evaluation,” the report stated.

The sixth red flag was for what the COA found to be unnecessary expenditures for the mobilization and demobilization of the construction personnel and equipment.

“Moreover, considering that only one contractor made all the five phases of the project, the city government may have incurred unnecessary expenditures for mobilization and demobilization for phases two to five amounting to P14,490,856.24,” according to the report.

Just like the previous hearing held last week, Makati Mayor Jejomar Erwin Binay Jr. and other city officials did not appear before yesterday’s hearing in spite of subpoenas issued against them.

In the case of Binay, two subpoenas have been issued by the Senate to compel him to attend the hearings.

However, his lawyer Claro Certeza argued that he has a pending jurisdictional challenge before the Blue Ribbon committee and until it is resolved, the mayor is not required to attend the hearings.

The camp of Binay has asked the Blue Ribbon committee to suspend the hearings of the subcommittee until the jurisdiction challenge is resolved.

Blue Ribbon chairman Sen. Teofisto Guingona III, in a statement, yesterday said that the matter is still being studied and that he would come out with a decision next Tuesday.

The members of the Senate minority bloc also made a written manifestation of the same appeal of Binay but according to Sen. Aquilino Pimentel III, chairman of the subcommittee, no ruling was necessary for this since it was just a manifestation. – With Jose Rodel Clapano, Mike Frialde