COA flags anomalies in PCOO procurement for ASEAN events

Pia Ranada
COA flags anomalies in PCOO procurement for ASEAN events

LeAnne Jazul

The PCOO awards ASEAN contracts to suppliers that went beyond the allocated budget and wastes P2.5 million by not awarding contracts to the lowest bidders, says the COA in its audit report

MANILA, Philippines –  The Presidential Communications Operations Office (PCOO) awarded contracts to ASEAN suppliers with over-the-budget quotations and split purchases for vans and giveaways, in violation of procurement laws.

These were among the findings of the Commission on Audit (COA) in its 2017 annual audit report. The report scrutinized the P1.67 billion allocated to PCOO purely for Association of Southeast Asian Nations (ASEAN) events hosted by the country in 2017.

The COA flagged PCOO’s awarding of contracts to handmade soap suppliers which gave quotations that exceeded the approved budgets for the contract. The hand soaps were used as giveaways for participants of the ASEAN events.

Three suppliers, Genesis Transunited, Millet Arzaga, and MC Charme were still awarded the contracts even if their quotations were higher than the approved budget of P758,000. The suppliers all gave quotations of P804,249.60. 

The Government Procurement Code’s implementing rules and regulations state that the approved budget for the contract (ABC) “shall be the upper limit or ceiling for acceptable bid prices.”

“If a bid price, as evaluated and calculated in accordance with this IRR, is higher than the ABC, the bidder submitting the same shall be automatically disqualified.  There shall be no lower limit or floor on the amount of the award,” reads the IRR.

Also questionable was how the PCOO posted on the Philippine Government Electronic Procurement System (PhilGEPS) website the request for submission of price quotations and proposals for less than two days (from 12 am of October 26 to 5 pm of October 27), in violation of the Government Procurement Act which states that it should have been up for 3 calendar days.

COA said that PCOO officials or personnel responsible for these violations could also be held liable for violating the Anti-Graft and Corruption Practices Act which prohibits a public officer from entering into any contract or transaction manifestly and grossly disadvantageous to the government, whether or not the public officer profited or will profit from it.

It recommended that PCOO management file charges against any of its personnel who took any action in favor of particular suppliers.

Not awarded to lowest bidder

The PCOO awarded contracts for the purchase of power banks and the production of printed ASEAN materials to suppliers which did not have the lowest calculated bid, thus wasting P2.5 million.

The winning printed materials supplier, JORAND Marketing, was awarded 5 contracts worth P4.7 million when other suppliers gave lower quotations.

For the production of the ASEAN Chairmanship Primer, for instance, JORAND’s winning quote was P933,750. A rival supplier, Art PrintHause Inc, said it could deliver on the contract only for P279,000. If PCOO went with the latter supplier, it would have saved P654,750.

In total, JORAND’s quotations for all 5 contracts cost the government P2.07 million more than if the PCOO had awarded the same contracts to the lowest calculated bidders.

Contracts were also awarded to power bank supplier ECHO Graphica despite another interested company sending a lower quotation.

ECHO Graphica was awarded two contracts to supply Aukey Pocket power banks worth a total of P1.12 million. Another supplier, however, Epartners Solutions Inc, said it could deliver on the contract at a cost of P705,900. This could have saved P417,100, said COA.

Anomalies in van rental

COA also flagged PCOO’s awarding of contracts to a van rental company based on an inaccurate reporting of the price quotations of rival suppliers.

DLCL Transport won 8 contracts, worth a total of P7.3 million, to provide vans for ASEAN events on the basis of supposedly over-the-budget quotations of 3 other suppliers, MNM Transport, GODSPEED Transport, and 2A-2M Transport. 

But MNM Transport and GODSPEED Transport told COA that they did not send any quotation through PhilGEPS. Thus, it appears that the awarding of contracts to DLCL Transport was based on inaccurate information about its rival suppliers. 

Splitting of purchase orders

The audit agency also questioned how PCOO split the purchase of various goods and services into several purchase orders.

P14.6-million worth of procurement of delicacy bags, handmade soaps, medical medical kits, umbrellas, shirts and ASEAN jackets was split into 19 purchase orders (POs) that were distributed among 4 suppliers.

The P8.5-million worth of procurement of printed materials was split into 12 POs awarded between two suppliers.

P4.4-million worth of procurement for WiFi access was split into 7 POs given to two suppliers.

These split purchases involved similar items purchased on the same date or at about the same time, from the same and/or different suppliers, which the COA flagged as a violation of one of its circulars.

The Government Procurement Act also also prohibits “splitting of contracts which exceed procedural purchase limits to avoid competitive bidding or to circumvent the limits of approving or procurement authority.”

Public officers and private individuals can be held liable for breaching this provision, said COA.

So concerned is COA with the prohibition on the “splitting of contracts” that it has issued special instructions for auditors about it.

“All Auditors are hereby exhorted to be alert and vigilant at all times with a view to detecting acts of splitting and possibly nipping in the bud any attempt at splitting in any form,” reads the procurement law’s rules.

PCOO’s response

PCOO Secretary Martin Andanar, through two memoranda issued in March and April, ordered the conduct of an investigation into whether or not the procurement law and Revised Penal Code were violated in the purchase of IT equipment and van rentals.

But PCOO management asserted that there was “no splitting of contracts.”

They explained to COA that the separate purchase requests were made “to address separate transaction needs” and for “specific and independent ASEAN-related events” held in different locations and dates.

PCOO also said that limited time and the urgency of preparing for the various ASEAN events led to a scenario wherein “it was already impractical to conduct public bidding.” Thus they resorted to emergency procurement through the alternative procurement method of shopping.

The PCOO said it also had to adapt to the changing schedules of ASEAN activities which it had no control over.

“Notification to PCOO for the execution of activities was only one to two weeks prior to the event. Management cannot afford not to produce multimedia or public relations output; hence, they had to devise creative means within the bounds of law and its regulations to accomplished such task,” said the PCOO, as reported by COA. – Rappler.com

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Pia Ranada

Pia Ranada is a senior reporter for Rappler covering Philippine politics and environmental issues. For tips and story suggestions, email her at pia.ranada@rappler.com.