PNP canceled contracts cost P1 billion in damages

MANILA, Philippines — The Philippine National Police’s commando Special Action Force (SAF) caused taxpayers more than P1 billion in damages because it did not rescind 29 contracts for equipment that remained undelivered for as long as three years.

The Commission on Audit (COA) said this amount is “clearly over and above” the maximum allowed liquidated damage of 10 percent of the contracts, which totals P1.684 billion.

Aside from causing damages to the government, state auditors said the SAF’s failure also caused undue delay in the PNP’s Capability Enhancement Program (CEP).

“It is worthy to note that all 29 procurement contracts for the delivery of various equipment under the CEP, totaling P1,693,669,525.55, remained undelivered as of Dec. 31, 2020, thus, incurring delays for a period ranging from 290 to 1,163 days, or 29 percent to 116.30 percent of the contract amounts, with cumulative liquidated damages amounting to P1,011,087,957.50,” a 2020 audit report on the PNP stated.

Likely illegal

The COA said the failure to terminate the contracts violates the implementing rules and regulations (IRR) of Republic Act No. 9184, or the Government Procurement Reform Act.

The law provides that once the cumulative damages reaches 10 percent of the amount of the contract, the procuring entity may rescind or terminate the contract without prejudice to other courses of action and remedies.

The 29 contracts in question were for the procurement of equipment, such as multipurpose armored vehicles, mobile assault ramps, grenade launchers, heavy machine guns, remote weapon stations, .50-caliber sniper rifles with thermal scope and rocket launchers, among others.

The procurement contracts had varying delivery dates, some as early as October 2017 and as late as March 2020. Delays in delivery ranged from 290 days to as long as 1,163 days, or over three years late

In the case of two contracts, which have delayed deliveries of 1,084 days and 1,163 days, the liquidated damages incurred were already more than 100 percent of the contract amount.

Questionable contracts

One contract is for the purchase of 20 units of 60-millimeter ultralight commando mortar with a contract price of P49.974 million. It was supposed to be delivered by Jan. 12, 2018, but has incurred 1,084 days of delay and liquidated damages worth P54,172,249.60, or 108.4 percent of the contract price.

The other contract is for the purchase of 36 units of night vision rifles with a contract price of P20.512 million. It was supposed to be delivered by Oct. 25, 2017, but has been delayed for 1,163 days. The liquidated damages have reached P23,856,386.40, or 116.3 percent of the contract price.

The COA advised the PNP to direct the SAF to terminate the contracts as provided for in the IRR of the Government Procurement Reform Act “without further delay to protect the interest of the government.”

State auditors also told the PNP to “ban or blacklist delinquent suppliers from participating in future procurement projects of the agency to avoid recurrence of similar problems,” and to forfeit the entire performance security bond of the suppliers in question.