The Commission on Audit (COA) has flagged the Philippine Navy over some P2.26 billion in delayed and unimplemented deals that it coursed through the state-run Philippine International Trading Corp. (PITC).
In its annual audit report, the COA said procurement outsourcing through the PITC was “ineffective” and deprived the Navy of the immediate use of the planned projects.
“The inability of the PITC to deliver the goods and services is contrary to the very purpose of procurement outsourcing which is to hasten project implementation and had resulted in accumulated huge idle funds,” the COA report, released on June 3, said.
According to the report, the Armed Forces of the Philippines tapped the PITC in 2014 to procure major goods, services and infrastructure projects for the military.
However, the COA found that the memorandum of agreement between PITC and the AFP did not specify timeliness for completion of projects outsourced to them.
‘Disadvantageous to AFP’
Due to the inefficient system, the Philippine Navy had transferred some P2.26 billion to the PITC, but as of the end of 2018, only a measly 3.5 percent or P81.84 million worth of equipment and supplies had actually been procured.
“The lack of timeline of delivery or completion of procurement procedures … is disadvantageous to the AFP,” the COA said.
The audit body then urged the Philippine Navy to demand the immediate delivery of all requisitioned goods and equipment from the PITC.
If the PITC would be unable to meet their demands, the COA said the Philippine Navy should then request the refund of unspent balances and remit them to the Bureau of the Treasury.
In the meantime, the Navy was ordered to stop transferring funds and to refrain from availing of the services of the PITC “unless in extreme circumstances” when the Philippine Navy bids and awards committee lacks capability to undertake the particular procurement.
For its part, the Navy told the audit body that it has already designated liaison officers to coordinate with the PITC “for the timely determination of the status and immediate conduct of procurement procedures.”
The Navy also assured the COA that no additional funds were transferred to the PITC in 2018.
In the same report, the audit body said that projects worth P154.6 million which were payable through deposit on letters of credit were also not implemented.
“Delayed or nondelivery of goods and services is a breach of contract and can affect the operational tempo of the [Philippine Navy], which may hinder the accomplishment of its mission,” the COA report said.
The audit body then asked the Navy to demand the delivery of said goods and services, otherwise they should terminate the contracts “to prevent the accumulation of idle funds which can be used for other beneficial purposes.”