Makati carpark overpriced by P124M—COA report

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MANILA, Philippines – An initial evaluation by a special team of the Commission on Audit (COA) on the controversial Makati City Hall 2 parking building showed a “very significant” discrepancy of P124 million between the contract cost and COA’s “evaluated cost.”

The five-phase parking building project has been the subject of an investigation by the Senate body amid allegations that it was overpriced.

Alexander Juliano, director of COA’s fraud office audit, read before the blue ribbon sub-committee, an eight-page preliminary report by the team, which was later furnished to reporters.

The report showed that COA’s evaluated cost for the first four phases of the project was P2.126 billion while the actual contract cost was P2.011 billion for a difference of about P124.6 million.

It made no mention of its comparison for Phase V of the project.

“From the tables above, it can be gleaned that for Phases 1 to IV alone, there was a total variance between the ABC and the COA Evaluated Cost amounting to P126, 098, 558 while the Contract Cost vis-a-vis the COA Evaluated Cost had a total variance of P124, 676, 158. These amounts are very significant,” it said.

“Further, the percentages of variances for Phases III and IV are within the borderline of the10 percent allowable variance.  The materiality of the variance (contract price is above COA evaluated cost) deserves a deeper analyses and evaluation,” it added.

For all five phases of the project, the report showed that the city government had disbursed an aggregated amount of P2, 367, 679.633.95 as of Dec. 31, 2013, including the preliminary services amounting to P11, 974, 900 and P75,614, 953.01 for the Building Management System.

The following were the amounts spent by the city government for every phase of the project:

Phase 1                P386, 998, 154.20

Phase 2                P499 , 357, 003.73

Phase 3                P599,994, 021.05

Phase 4                P649, 934, 440.96

Phase 5                P443, 806, 161.0

Among the findings of the special team was that the project was “implemented with undue haste as there were no construction plans yet when it was bidded out and awarded to Hilmarc’s Construction Corp.”

“A perusal of the records wills show that Phase 1 was implemented with undue haste,” it said.

“Firstly, there was only a gap of one month from the passage of the appropriation ordinance on Nov. 8, 2007 when the IAEB for the project was advertised on Dec. 6, 2007.” IAEB stands for Invitation to Apply and Submit Eligibility to Bid.

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

It also appears, it said, that the negotiated procurement adopted by the BAC on the contract of architectural and engineering services “was improper because none of the conditions laid down under Section 53 of the Implementing Rules and Regulations of R.A No. 9184 was present such as failed biddings, emergency cases, takeover of contracts, adjacent or contiguous projects, agency-to agency, highly technical consultants and defines co-operation agreement.”

BAC is bids and awards committee.

The report further noted that that the city started the procurement process for Phase III on Nov. 27, 2009 even if there was no appropriation yet at that time.

“The covering appropriation ordinance was only enacted on September 14, 2010,” it pointed out.

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