COA flags P10.6-B irregularities in AFP, PNP housing program

MANILA, Philippines – State auditors found anomalies in 28 housing projects worth some P10.62 billion under the Armed Forces of the Philippines (AFP) and Philippine National Police (PNP) housing program. The projects were implemented by the National Housing Authority (NHA).

In its recently-released 2017 annual audit report, the Commission on Audit (COA) questioned the NHA for failing to properly evaluate contractors, thus awarding contracts to companies with limited capacity to handle big-ticket projects.

“Verification of the documents…showed that the developers are not technically and financially capable to undertake the housing projects. These are manifested by the deficiencies in the documents submitted and non-compliance to some requirements by the developers on the evaluation of financial capacity,” COA said.

While the COA did not name the contractors involved in the projects, located in the municipalities of Bocuae and Pandi in Bulacan, it found the following:

• “Developer A” failed to disclose the cost of the contract and the owners of ongoing projects
• Documents for 5 AFP and PNP housing projects given to “Developer B” were not evaluated 
• “Developer C” was awarded a project in Bocuae worth P726.4 million and 3 shelter projects worth P2.141 billion – despite having a license that limits it to projects worth P100 million. This violated provisions of Philippine Contractors Accreditation Board’s allowable ranges of contract costs.

State auditors also noted the absence of manpower and equipment lists as well as the lack of net financial contracting capacity in the terms of reference of contracts. This means there is no way to tell if contractors had the capacity to finish the projects within the specified time frame.

Responding to COA, NHA said it did not consider the licenses of contractors since these were “secondary references.” It also said its main consideration was developers would be real owners of the sites offered for the project.

To add, the NHA also said equipment and personnel lists and net financial contracting capacity were not necessary.

The COA, though, disputed the NHA’s claim and said licenses as well as lists are in accordance with the law and necessary.

State auditors recommend the NHA review and strengthen its terms of references and other rules concerning not only the AFP and PNP housing projects but also its other shelter programs. It also said the NHA should ensure there are guidelines in place to evaluate project proposals and control implementation.

Floating loans: COA also said the NHA’s loans for the project reached about P4.612 billion as of December 2017 but at least half of this was not supported by complete documentation. The loans were payments to developers for 20 AFP and PNP housing projects and one informal settler housing project.

State auditors said about 51% or P2.358 billion did not have individual loan agreements. According to COA, this means the NHA does not know who owns the loans and who will pay back the money owed.

Loan agreements are supposed to be included in documentary requirements reviewed by the NHA’s project office or area management office.

Responding to this, the NHA said it informed the AFP and PNP’ project’s housing board to submit the complete list of its beneficiaries for all project sites. However, this has not been completed as of February 2018. – Rappler.com