The Commission on Audit (COA) has raised serious questions over the regularity of over P442.23 million in negotiated procurement of supplies, goods and services made by the Office of Civil Defense as part of the agency’s emergency response to the 2019 coronavirus disease (COVID-19) pandemic situation in the country.

COA, in its 2020 annual audit report for the OCD, flagged 61 procurement contracts made by the agency through emergency procurement that is authorized under Republic Act No. 11469 or the Bayanihan to Heal as One Act (Bayanihan I) and RA 11494 or the Bayanihan to Recover as One Act (Bayanihan II).

A review of the contracts worth P347,682,981.17 showed that the procurement “were not supported with market research as basis for the price negotiations.” State auditors stressed that this fact raises serious issues on the “reasonableness of the contract cost”.

In six procurement contracts entered into by OCD last year, it was noted that while three suppliers acknowledged the request for quotations, only one actually submitted the price list.

“The contracts were awarded to lone suppliers without performing alternative procedures to determine reasonableness of the price quoted, thus, the objective of a market research was not achieved,” the audit report stated.

COA explained that while procurements under Bayanihan I and II may be conducted through faster emergency purchases, Government Procurement Policy Board (GPPB) Circular 01-2020 still provided guidelines in the conduct of such procurement procedure.

Upon review, it was learned that the OCD did not observe market research as basis for price negotiations. Neither were the documentary requirements provided under the GPPB circular submitted.

“Paid claims for the procurement of goods and services totaling P94,551,422.13 in favor of various suppliers were not supported with contracts contrary to Section 4.6 of PD (Presidential Decree) 45 and Section 3 of GPPB Circular 01-2020.” the audit report also stated.

Among the services paid for were hotel accommodation for quarantine and swabbing facilities.

Audit examiners stressed that while the nature of the emergency procurement have been considered, this does not preclude the agency from considering the “most advantageous price” the government could get in purchasing goods and services.

Valid contracts are also required for all types of procurement and basis for payment of expenditures incurred during the state of calamity.

The OCD has reportedly used the principle of quantum meruit in making payments as it noted that payment should be made for work and services done and supplies delivered and used.

“We recommended that Management stop the practice of paying claims based on quantum meruit principle and strictly adhere to Section 4.6 of PD No. 4, GPPB Circular No. 01-2020 and COA Resolution No. 86-58,” COA stressed.

The OCD assured the audit agency that it will comply with the recommendations but pointed out that absence of valid contract due to unavailability of funds will not “preclude the office from providing continous support to COVID 19 operations with the engagement of various service providers, suppliers and hotel accommodation for Quarantine and Swabbing facilities.”