Findings No.2 COA Annual Audit Report 2006

July 25, 2008

2. The Provincial Government entered into Memoranda of Agreement with the Bukidnon Filipino-Chinese Chamber of Commerce and Industry, Inc. (BFCCCII) for the construction of the school building projects and housing units of the former, inconsistent with the RA 4566, otherwise known as the “Contractor’s License Law”; thereby, resulting to delayed implementation of the projects and, therefore, affecting public interest.

Republic Act 4566, otherwise known as the “Contractor’s License Law” requires that all persons/entities engaged in the construction contracting business in the Philippines be licensed to do so.

Construction is a business that requires high technical skills and considerable resources and ingenuity. And contracting is not merely selling of services, but is selling of the contractor’s capability which is measured by his financial and technical resources and his track record.

The Provincial Government of Bukidnon had been partnering with the Bukidnon Filipino-Chinese Chamber of Commerce and Industry, Inc. (BFCCCII) thru Memorandum of Agreement (MOA) for the construction of its school projects and housing units. In 2006, the Agency entered into MOA with the BFCCCII for its FY 2006 School Building Projects totaling P17.5 Million, plus a supplemental MOA in the total amount of P3.150 Million for four (4) additional construction of school building projects, and another MOA for the Construction of 64 Housing Units of Bukidnon Housing Project (Phase IV) for P8.8 Million.

In the MOA, BFCCCII accepts the responsibility for the Construction of School Buildings at the area in accord with the approved Program of Work (POW) and MOA, and obliges to undertake the Construction of the subject projects in accordance with the schedule of works, standards and specifications mandated by the POW. Payments to BFCCCCII shall be made through periodic billings based on statement of works accomplished duly certified by the Provincial Inspectorate and Monitoring Team recommended by the Provincial Engineer and approved by the Provincial Governor. Upon billing, ten (10) percent retention money shall be deducted. And the construction of the school buildings shall be done simultaneously and be completed on the time frame specified by the respective POW.

For its part, the provincial government thru the Provincial Engineer shall exercise technical supervision over the Construction of School Buildings being implemented, and shall assign an engineer/supervisor to oversee and monitor the operations through periodic inspection, verification and measurement of completed works to ensure that work programs, standards and specifications are being followed by BFCCCII.

By analogy, the terms and conditions of the MOA of DOLE, DFA, DepED, and the Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII), the umbrella organization of BFCCCII, vis-a-vis the MOA of BFCCCII with the Provincial Government of Bukidnon (PGB) provide, among others, that:

MOA DOLE, et.al.with FFCCCIIMOA BFCCCII with PGB

FFCCCII will initiate/arrange/facilitate the engagement of qualified and competent contractors to undertake the actual construction of classrooms according to the standards/specifications agreed by all parties. (Emphasis supplied)

BFCCCII x x x hereby accepts the responsibility for the construction x x x at the area in accord with the POW and MOA.

BFCCCII x x x obliges to undertake the construction of the above-mentioned projects in accordance with the schedule of works, standards and specifications mandated by the program of works. (Emphasis ours)

Comparatively speaking, the responsibilities of the “contractors” are not analogous. Thus, we opined that the direct engagement of the services of BFCCCII by the provincial government for the construction of its school building projects and housing projects is not in accord with the provisions of RA 4566.

The lawmakers in enacting the afore-cited law took note of the pitfalls of an unregulated construction industry that resulted to varying problems, such as:

Abandonment of projects thereby increasing construction costs and delaying project completion;

Below-standard quality of work; and,

Influx of “fly-by-night” contractors.

The environment which the construction industry operates is one imbued with a tremendous amount of public interest. Thus, public reliance on the capacity, integrity and resourcefulness of contractor dictates that safeguards be instituted to protect public interest.

The PGB resorted to this type of arrangement with BFCCCII because of failures of the bidding process for the projects either due to bid offers above the approved budgets for the contracts (ABC) or non participation by the qualified contractors in the bidding due to unrealistic budgets for the projects.

In the instant case, the school building projects could not be implemented simultaneously and BFCCCII experienced the unavailability of skilled and unskilled laborers in the project areas as pointed out in the management’s reply letter to our follow up communication relative to the status of implementation of the audit recommendation/s on the government-wide sectoral performance audit on School Building Programs for Elementary Education of the Provincial Government of Bukidnon for CYs 2002-2003 (Management Services Report No. 2003-03C, Performance Audit), delaying the enjoyment by the targeted beneficiary-students of the comforts and convenience provided by good classroom facilities. And conformance as to the quality of the projects could not be validated due to the non-submission of the materials testing results.

Recommendation

Revisit the approved budget of the contracts (ABCs) in the event of failure of public bidding due to bid offers above the ABCs, and update the standard costings for the projects to be able to come up with a realistic project cost estimates. Refrain from directly engaging the services of BFCCCII in the construction projects of the province.

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Written by admin · Filed Under Bukidnon, Commission on Audit