COA flags Navy’s supply service deals, chides PITC for failure to deliver P2.2 B Navy supplies

By Ben Rosario

The Commission on Audit (COA) has flagged supply and services transactions the Philippine Navy (PN) conducted with private and government firms, assailing, among others, the delay or non-implementation of procurement deals worth over P2.2 billion with the state-run Philippine International Trading Corporation (PITC).

Commission on Audit (MANILA BULLETIN)
Commission on Audit (MANILA BULLETIN)

COA noted in the 2018 annual audit report released recently that PN’s procurement outsourcing decision has been deemed “ineffective’ due to “non-implementation or delayed procurement procedures” that resulted in the accumulation of fund transfers with the PITC totaling P2,267,040,511.09.

The same report noted that the PN failed to get a refund of P2,399,822 from contractors that failed to deliver goods and services “after a considerable length of time.”

In its audit findings, COA also lamented the slow completion of a National Disaster Reduction Project in Zamboanga City that requires an allocation of P2,008,153.80.

Auditors asked PN officials to demand from the PITC the immediate delivery of all goods and equipment it has ordered, saying that a refund should be made immediately for non-compliance.

Audit examiners said the PN should stop transferring funds and avoid contracting the services of the PITC “unless in extreme circumstances,” particularly in cases where the Philippine Navy Bids and Awards Committee lacked proficiency to undertake the procurement.

COA disclosed that in 2014, the Armed Forces of the Philippines tapped the PITC to procure for goods, services, and infrastructure projects of the major military services under it.

“Review of the MOA (memorandum of agreement) revealed that it did not provide a timeline of delivery or completion of procurement procedures, which is disadvantageous to the AFP,” the state audit agency noted.

As a result, delivery of PN’s supply and equipment has been considerably delayed although it had already transferred to the PITC some P2.2 billion.

As of December 31, 2018, only equipment and supplies worth P81.84 million, representing a meager 3.5 percent of the total fund transfer, have been delivered to the PN.

“The inability of the PITC to deliver the goods and services is contrary to the very purpose of procurement outsourcing which is to hasten project implementation and had resulted in accumulated huge idle funds,” COA said.

COA also noted the delay in the construction of the Pencairan detachment in Rio Hondo, Zamboanga City, site of the 21-day siege staged by Moro National Liberation Front terrorists in 2013.

PN officials blamed the presence of informal settlers in the project site for causing the delay.

In the 2018 audit report, COA also urged the PN to take legal action in order to recover some P2.39 million in mobilization fund that contractors received despite the “non delivery of goods and services after a considerable length of time.”

The audit findings revealed that three contractors, the RC Tagal Construction, DCCD Engineering, and Solar Surveying Corporation, availed of the 15 percent mobilization fund to start the projects assigned to them.

“To date, after more than three years of inaction, still no collection suit was filed in court against the above defaulting contractors and no action was commenced to enforce the performance guarantee,” auditors stressed.

Responding to the audit report, the PN management said the projects assigned to DCCDE and SSC were suspended due to issues on the ownership of project site.

Still, COA said the management must “terminate the contracts and demand for the refund of advances” it gave the contractors.