COA-7 flags Tuburan town’s P87 million projects

CEBU, Philippines — The Tuburan, Cebu municipal government has awarded 12 contracts worth over P86 million to an "ineligible" bidder because post-qualifications were not properly undertaken, the Commission on Audit-7 stated in its 2022 Audit on Financial Reports.

State auditors said post audit of the selected transactions showed that the municipality awarded 12 infrastructure projects totaling ?86.637 million to the lone bidder  in 2021 and 2022.

They cited several instances where in-depth post-qualifications were not conducted.

COA-7 said verification of one of the legal requirements of the awarded bidder revealed that in 2022, its business permit was only for "retail sale of construction materials, storage and warehousing, not elsewhere classified (NEC)."

In 2021, its permit is for "construction supply and bodega" and that it did not pay for a business permit as contractor for its construction business.

Also, the bidder's “Statement of all Ongoing Projects” technical requirement did not actually disclose all of its ongoing projects with the municipality.

COA-7 said the  Bids and Awards Committee (BAC) did not consider the data wherein the schedule showed that the agency conducted simultaneously the bidding process of four infrastructure projects, with opening of bids scheduled on February 23, 2022 and cost totaling ?45.926 million.

However,  in the computation of the Net Financial Contracting Capacity (NFCC), the value of the unperformed portion of six projects with costs totaling ?26.749 million were not included in the "Statement of All Ongoing Projects".

It said that the bidder's non-inclusion of all ongoing projects as well as those yet to be started in the "statement" would overstate the NFCC.

COA-7 advised the local government unit (LGU) that it should not focus only on the contracts awarded to the bidder within the municipality but also those outside, as they may affect its capacity to sustain the projects, leaving the LGU with no assurance that the bidder can sustain the operating cash flow of the transaction.

It further said that based on the deficiencies it noted, the BAC BAC could have reasonable grounds to believe that a misrepresentation had been made by the awarded bidder from the time it submitted its eligibility requirements.

“The BAC could have declared the said bidder as ineligible and disqualify it from obtaining the award of the contract,” COA-7 said.

In line with these findings, COA-7 recommended that the LGU, through the BAC and its Technical Working Group, do the following measures:

*Submit a written justification for the noted lapses/ deficiencies, especially on non-conduct of in-depth post-qualification, to avoid recommending an award to an ineligible bidder;

*Include in the post-qualification a comparative evaluation showing the number of projects with simultaneous or overlapping implementation period that are using the same equipment and key personnel being pledged and assigned by the bidder of lowest calculated bid;

*Extend the comparison with other government agencies with ongoing projects being implemented before declaring the bids as responsive.

“We would like to emphasize that our audit observation was that the awarded bidder had no business permit as a contractor, only as a retail sale of construction materials, storage and warehousing, NEC. There was no evidence that the contractor was paying a business permit to enter into contract as a contractor,” state auditors said.

In its reply to the COA-7 observations, the Tuburan BAC's chairperson argued that the winning bidder has long been awarded with projects not only with their town but also with agencies like Department of Public Works and Highways and even the Cebu Provincial Government. All this time, he said, the contractor presented the same business permit.

He added that the contractor has been paying taxes for its engagements and that its declared gross sales for 2021 and 2022 were for its contracting services and as a supplier of construction materials.

The BAC chairperson also stated that the contractor has long been the LGU’s infrastructure project contractor and it has a good record with the LGU.

He added that the deficiencies are just due to the need to update records, which might have been inadvertently overlooked.

Tuburan has already directed its Office of the Treasury and the Business Permit and Licensing Officer to reclassify the contractor's business permit to address the audit observation.

As to the incomplete “Statement of All  Ongoing Projects,” it already directed the contractor to submit an updated list.

The LGU likewise assured that the  BAC would diligently take note and heed the audit observations for future transactions. — (FREEMAN)