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PS-DBM's lapses cause government to lose P280 million in compensation.

By Ben Rosario

Over P280 million damage compensation for the government went down the drain due to serious lapses committed by the Procurement Service in implementing supply contracts on behalf of other government agencies.

The Commission on Audit (COA) also blamed the PS, an agency under the Department of Budget and Management, for failing to immediately re-bid some P11.03 billion worth of procurement contracts, saying that this is contrary to the policy of efficiency in the procurement process provided under Republic Act 9184 or the Government Procurement Law.

"Several contracts with an aggregate amount of P684.42 million were not terminated in due time resulting in the accumulation of uncollected liquidated damages of P74.304 million and non-forfeiture of P208.899 million performance security, depriving the government of the compensation it suffered from the suppliers' default," COA said in the 2018 annual audit report for PS-DBM.

The PS-DBM acts as the central procurement system for the national government and its agencies.

Audit records indicated that 10 contracts with a total cost of P344.707 million and awarded to ten suppliers were entered into by the PS-DBM.

The contracts were not terminated "in due time" notwithstanding the incurrence of significant delays that already exceeded ten percent of the contract price.

COA said it computed the liquidated damages for the ten contracts to P74.304 million as of December 31, 2018, adding that suppliers failed to deliver the purchased items for a period ranging from 71 to 557 days of delays.

"Moreover we noted that performance securities amounting to P186.123 million had expired but not forfeited in favor of the government due to the lack of monitoring and feedback mechanisms on contract implementation," state auditors said.

"The failure of the PS-DBM to collect accumulated liquidated damages of P74.304 million and non-forfeiture of P208.899 million performance bonds as a result of non-compliance with contract agreements deprived the government of the opportunity to be compensated on losses from breach of contracts," they added.

COA said PS-DBM is required to file appropriate sanctions against personnel who failed to forfeit the performance bonds of delinquent suppliers.

Auditors demanded that the liquidated damages from defaulting suppliers be enforced.

In the same audit report, COA chided the PS-DBM for failing to "institutionalize the good practice in procurement" that will meet global standards in government efficiency.

The audit agency noted that over P11 billion worth of projects that had failed public biddings have not been re-bidded in time thus resulting in violation of the declared policy of efficiency provided under RA 9184.

"A careful study of the operations of the PS-DBM revealed that BACs (bids and awards committees) issued Notices of Failure of Bidding for 227 projects in CY 2018, of which only a meager 13 percent or 30 projects were re-bidded in due time and have complied with the provision in the said circular," COA said, referring to Government Procurement Policy Board Circular No. 05-2016.

Audit specialists also noted that re-bidding for 26 percent or 60 of the projects were not yet started at the end of December, 2018.

"Some of the projects have been re-bidded , however, it took an undesirably long time for the conduct of rebidding of which some took as long as over a year contrary to the rule that period of rebidding should not exceed 15 days or up to 30 days upon approved extension of the Head of the Procuring Entity," the COA said.

The delays, according to COA, may be attributed to the simultaneous procurements being conducted by PS-DBM.

The state audit agency said the issue should be addressed with the creation of a committee or division to monitor all procurement activities and "ensure that appropriate actions are undertaken for each agency risk identified."


Commission on Audit (MANILA BULLETIN)
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Title Annotation:National
Publication:Manila Bulletin
Date:Aug 3, 2019
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