COA flags state college in Marinduque for paying for unfinished buildings

MANILA, Philippines – A state college in Marinduque has come under scrutiny for releasing P162.11 million in full payments and refunding P41.63 million in retention fees to contractors for three unfinished multi-story building projects.

In a 2023 audit report on the Marinduque State College (MSC) on May 3, the Commission on Audit (COA) identified the three projects as the P73.42-million MSC administration building, the P49.22-million five-story engineering building, and the P39.46-million three-story skills laboratory building intended for nursing students. 

Despite their hefty price tags, none of these structures were finished, based on the COA’s findings.

“The projects were already fully paid and retention fees were refunded to the contractor in December 2023… it was found that the said infrastructure projects were not yet completed,” showed part of the COA audit report.

The report said state auditors, accompanied by officials from the Physical Plant Management Office (PPMO), conducted onsite inspections on March 7, and auditors noted disturbing progress levels of the projects. 

The administration building stood at a mere 84.63% completion, the skills laboratory building at 88.51%, and the engineering building lagging far behind at a mere 60.57%.

The COA also noted significant delays in the project construction timelines. Auditors said contractually mandated completion dates had been missed, with the administration and skills laboratory buildings supposed to be finished by September 2023 and the engineering building by December 28, that same year.

In the report, state auditors said MSC officials failed to take necessary corrective actions.

The COA said the head of the PPMO defended the full payments, citing concerns about fund reversion at the end of the fiscal year. 

The COA stated in the report, “The head of the PPMO admitted the full payment made for the project and justified that it was done to prevent reversion of funds for the projects at the end of the year due to late procurement activities of the College.”

State auditors cautioned MSC officials that under the Government Auditing Code, advance payments were “expressly prohibited” due to their potential to disadvantage the government in cases of incomplete construction and challenges in enforcing liquidated damages for contract breaches.

Based on the Revised Implementing Rules and Regulations of  the Government Procurement Reform Act and Government Procurement Policy Board Circular No. 03-2019, contracts should have been terminated for the administration building and the engineering building due to slippages exceeding permissible limits. 

The COA said the contractor should have been issued a final warning when the negative slippage on the projects reached 10%. Based on the same regulations, a negative slippage of 15% should have prompted MSC to either terminate the contract or assume control of the remaining work.

The release of the funds, according to the COA, ran counter to established government regulations and put the institution at considerable risk. – Rappler.com