COA reminds military of need to bid out projects

MANILA, Philippines—The Commission on Audit has advised the Philippine Army to strictly follow the public bidding requirement for its projects, after finding that it had resorted to negotiated procurement to implement a program to build roads, classrooms and water facilities in conflict-ridden areas.

The COA noted in its 2010 Philippine Army report that in undertaking the P258.5 million Kalayaan Barangay Program, the 51st Engineering Brigade resorted to negotiations in order to ensure the completion of all related projects by the end of 2009.

It also paid for bulk of construction materials through cash advances.

The COA said that in doing these, the military did not follow the procurement law and a COA circular.

The Army, however, explained its move and said it was allowed to take steps to ensure the quick delivery of materials.

It told the COA that under a department order, its engineering brigade could augment the processing capacity of the contracting offices for the speedy delivery of materials for Kalayaan Barangay projects. It could also use the special disbursing officers system as a stop-gap measure to prevent delays in implementing projects, it added.

The Kalayaan Barangay Program was aimed at building basic infrastructure in various areas in the country, with the goal of transforming conflict-affected communities into peace and development areas.

A total of P258.5 million was released for the implementation of the program in 2008 and 2009.

The funds were used to build 36 school buildings, 40 water systems, 20 electrification, 33 health centers and 55 farm to market roads, the COA noted.

“However, it was noted that the procurement of construction materials for the aforesaid projects was not made through public bidding but instead through negotiated procurement in violation of RA 9184 (the government procurement law),” the COA said.

The law states that all procurement should be done through competitive bidding, except in certain instances enumerated under the law.

The audit agency also noted that payments for construction materials and labor totaling P177.956 million were made through cash advances. The remaining amount was paid for using the procurement service of the 51st engineering brigade.

It said this was contrary to a COA circular that states that all payments must be made by check, and that only payments in small amounts could be made through petty cash fund.

It recommended that the Philippine Army strictly implement the procurement law and stop the granting of cash advances for infrastructure projects in order not to violate COA rules.

It further said the use of the special disbursing officer system was only a stop-gap measure, and could not be invoked to pay for all Kalayaan Barangay projects through cash advances.