Findings No.8 COA Annual Audit Report 2005

July 25, 2008

8. Changes as to the prices and quantities on the purchase of the farming tools worth P304,158.00 as approved under Bids and Awards Committee Resolution No. 1 dated January 14, 2005 were:

Not taken up as changes in the documents attached to disbursement voucher no. 248;

Made after the contract award’s approval;

Made without authority from the Head of Procuring Entity;

Made after payment of the transaction was executed; and

Changes were made without revision of the Purchase Order, Purchase Request and Program Design;

In violation of Section 37.1 of the Philippine Bidding Documents, Edition I, on the Procurement of Goods, issued by the Government of the Republic of the Philippines, August 2004.

Section 37.1 of the Philippine Bidding Documents, Edition 1, on the Procurement of Goods, issued by The Government of the Republic of the Philippines, August 2004, provides that the PROCURING ENTITY reserves the right at the time of contract award to increase or decrease, by the percentage indicated in the Bid Data Sheet, the quantity of goods and services originally specified in the Schedule of Requirements without any changes in unit prices or other terms and conditions. (Underscoring Supplied).

In the handbook of Frequently Asked Questions (FAQs) on Republic Act No. 9184 and its Implementing Rules and Regulations Part A, 1st Edition, February 20, 2004 of the Government Procurement Policy Board, Technical Support Office, stated among others the following and we quote:

“…Once the lowest calculated and responsive bidder is determined, no negotiation should be allowed to lower its bid price. If negotiation is allowed, a bidder will normally not submit its best offer to consider any possible downward adjustment in case he wins. Moreover, to allow this will defeat the concept of competitive bidding.”

“The responsibility of the Bids and Awards Committee in procurement ends when the contract is awarded and the notice to proceed is issued.”

Records showed that the contract signed by and between the Head of the Procuring Entity and Mr. Ernesto Guinitaran, under Purchase Order No. 10-04-12-431 dated January 17, 2005, for the delivery of the farming tools, within 60 Calendar Days, are as follows:

QuantityUnitsDescriptionUnit CostAmount489pcs.SanggotP 200.00P 97,800.00489pcs.PikoP 272.00133,008.00489pcs.PurokP 150.0073,350.00TOTALP 304,158.00

This transaction was paid under disbursement voucher no. 248 dated March 14, 2005 for P304,158.00 and LBP check no. 319146 dated March 29, 2005.

The Supplier’s Official Receipt No. 00101 was issued on March 15, 2005 showing the following data:

QuantityUnitsDescriptionUnit CostAmount489pcs.SanggotP 200.00P 97,80.00489pcs.PikoP 272.00133,008.00489pcs.PurokP 150.0073,350.00TOTALP 304,158.00

On this official receipt no. 00101 appeared the signatures dated March 15, 2025 of Engr. Danilo G. Gabia, Supply Officer III, GSO and Mr. Ancio D. Felisan, Project Development Officer IV, all of the Bids and Awards Committee – Technical Working Group (BAC – TWG).

The Acceptance and Inspection Report attached to disbursement voucher no. 248 indicated the actual delivery of 489 pcs. Sanggot, 489 pcs. Piko and 489 pcs. of Purok, accepted and certified as received in good order and condition as to quantity and quality and in accordance with specification by Mr. Renato C. Chavez, CPA, City General Services Officer and duly inspected, verified and found okay as to quantity and specifications by Engr. Danilo G. Gabia, Mr. Ancio D. Felisan and Ms. Lalaine A. Cezar, all of BAC-TWG, all dated on March 15, 2005.

The Requisition Issue Slip received by Engr. Danilo G. Gabia, Supply Officer III, GSO, stated that all items were issued as follows:

REQUISITIONISSUANCEUnitDescriptionQuantityQuantitypcs.Sanggot at P220.00489489pcs.Piko at P272.00489489pcs.Purok at P220.00489489

The Acknowledgment Receipt for Equipment was signed as received from by Mr. Renato C. Chavez, CPA, General Services Officer on March 16, 2005 and signed and received by Engr. Danilo G. Gabia, Supply Officer I, GS, as follows:

QuantityUnitDescription489pcs.Sanggot at P200.00489pcs.Piko at P272.00289pcs.Purok at P150.00

All the records as stated herein from the Purchase Order No. 10-04-12-431, Disbursement Voucher No. 248, Official Receipt No. 00101, Acceptance and Inspection Report, Requisition Issue Slip and Acknowledgment Receipt for Equipment indicated an exact delivery of pieces and prices of only 489 pcs. of Sanggot at P200.00, 489 pcs. of Piko at 272.00 and 489 pcs. of Purok at P150.00, duly approved by proper authorities.

In January 12, 2005, Ms. Rosemarie M. Abutan, Clerk I, casual employee of the City Mayor’s Office, sent a letter addressed to Hon. Ruth L. Guingona, City Mayor, thru Atty. Cromwell G. Generalao, Former City Administrator, BAC Chairman, requesting for a favorable consideration to increase the number of Purok to 937 pieces and retain the 489 pcs. for both Sanggot and Piko, including the adjustment of prices to sustain the Higaonon Tribal Minorities gardening activities, as follows.

Items

P.O.

Price

P.R./P.O.

Qty.

P.O.

AmountFinal Price (Actual)

Final Qty.

Final

AmountSanggotP 200.00489P 97,800.00P 155.00489P 75,795.00PurokP 150.0048973,350.00P 155.00937145,235.00PikoP 272.00489133,008.00P 170.0048983,130.00TOTALP304,158.00TOTALP 304,160.00

This letter was verified and recommended for approval by Engr. Danilo G. Gabia and Mr. Edgar Sabucdalao, BAC-TWG Members and was approved by Atty. Cromwell G. Generalao, Former City Administrator.

Relative to this request, the Bids and Awards Committee, unanimously adopted and resolved under Bids and Awards Resolution No. 01, Series 2005, dated January 14, 2005, to reduce/increase the reflected actual prices in order to increase the quantity of the items reflected in the Purchase Request No. 10-04-12-431, as follows:

NO. OF PIECESPRICE

As paid in the Disbursement Voucher

As resolved

by BAC

Resolution

As paid in the Disbursement VoucherAs reduced/ increased per

BAC Resolution No. 1*Price

Difference

Increase (Decrease)

Per-

centageSanggot489 pcs.489 pcs.P 200.00P 155.00P (45.00)22.5%Piko489 pcs.489 pcs.P 272.00P 170.00(102.00)37.5%Purok489 pcs.937 pcs.P 150.00P 155.005.003.3%

* Please note that the price quoted by the winning bidder on Purok was increased from P150.00 to P155.00 while the price on Sanggot and Piko were decreased from P200.00 to P155.00 and P272.00 to P175.00, respectively.

As noted, the changes of prices and the number of pieces of the farming tools as resolved on BAC Resolution No. 1 was never reflected and taken up in the transaction as paid under Disbursement Voucher No. 248.

Interview with one of the staff of the Accounting Office, In-charge of Pre-audit, revealed that BAC Resolution No. 1 was never presented nor was it included as document attached during the pre-audit for payment of the farming tools amounting to P304,158.00 under Disbursement Voucher No. 248, paid per LBP check no. 319146 dated March 29 2005. Had this been attached, the changes on the reduction and increase in prices and the increase of number of pieces of purok from 489 to 937 would have been reflected and taken up in the Acceptance and Inspection Report and all other documents related to this transaction.

As presented above the changes as to the prices and quantities on the purchase of the farming tools worth P304,158.00 were not taken up as changes in the Disbursement Voucher No. 248, were made after the contract award’s approval, without the authority from the Head of Procuring Entity and after the payment of the transaction was executed as evidenced by the attached Purchase Order, Official Receipt, Acceptance and Inspection Report, Requisition and Issue Slip and Acknowledgment Receipt for Equipment, in violation of Section 37.1 of the Philippine Bidding Documents.

In reply to our Audit Observation Memorandum, the former Chairman of the Bids and Awards Committee/former City Administrator commented and we partly quote:

“Contrary to the AOM, the BAC did not only base their approval of the BAC Resolution No. 01 series of 2005 on the letter of Ms. Rosemarie M. Abutan but more accurately based on the offer of the winning bidder as indicated by the conformity of Ernesto Guinitaran in the said letter. Certainly, the increase of the number of tools and the changes of the prices could not have been requested by Ms. Rosemarie M. Abutan and could not have been approved by the BAC without the offer and prior conformity of Ernesto Guinitaran.

The changes in the quantity and prices of the farming tools were approved and made after the award of the contract because the said changes were proposed by the winning bidder only after the bidding and after the award. Moreover, the BAC did not change the bid prices quoted by the bidders during the bidding and before the award because the BAC had no control over the bid prices quoted by the bidders, otherwise, the BAC will be accused of interfering or manipulating the bidding process. It was only after the bidding was completed and after the award was conducted when the winning bidder offered to increase the number of purok from 489 to 937 at P155.00 per piece, while the sanggot will remain at 489 pieces but at a reduced price of P155.00 per piece and piko likewise will remain at 489 pieces with a reduced price of only P172.00 per piece.

The undersigned recalls that the required documentation for the changes of the prices and the increase of the number of farm tools to be delivered by the winning bidder were actually prepared. However, the same could have been inadvertently overlooked by the officers in charge due to their pre-occupation with the preparations for the biggest gathering of all the Higaonon Datus and Leaders of Gingoog City with the participation of all the Higaonon Leaders from the neighboring municipalities and provinces, dubbed as the “KAAMULAN KO DAHUPON” to be held on March 15-18, 2005 at the hinterlands of SitioBagasbas, Sangalan, Gingoog City.

Moreover, while the changes of the required documentation were inadvertently overlooked, but the total amount paid to Ernesto Guinitaran at P304,158.00 is the same total amount of the original bid, and the City Government was not at a disadvantage of the said changes. In fact, the City Government benefited from the increased number of purok from the original requirement of 489 o 937 pieces, with the same number of sanggot at 489 and piko at 489 for the same total amount of the original winning bid.

Justifications/comments made can not be reconciled with the official records submitted because all of these indicated an exact delivery of pieces and prices of only 489 pieces of sanggot at P200.00, 489 pieces of piko at P272.00 and 489 pieces of purok at P150.00. No amendments or supporting documents were attached to correct the justifications made on these official documents, such as:

1. Purchase Order;

2. Disbursement Voucher No. 248;

3. Supplier’s Official Receipt No. 00101 dated March 15, 2005;

4. Acceptance and Inspection Report dated March 15, 2005;

5. Requisition and Issue Slip; and

6. Acknowledgement Receipt for Equipment dated March 16, 2005.

As alleged, the changes of the quantity and prices of the farming tools were approved and made after the award of the contract because the said changes were proposed by the winning bidder only after the bidding and after the award but the supplier’s official receipt no. 00101 dated March 15, 2005 reflect otherwise because no changes were made therein.

If ever changes were made after the award, the corrections and amendments would have been done on the official documents stated above from items 2 to 6, because these were all dated and processed in March 2005, as compared to the date of January 2005 where changes occurred.

Recommendations:

Explanation is required on the following:

Why the Bids and Awards Committee failed to properly deliberate the prices of the farming tools before awarding to the lowest responsive bid. Instead, it took a casual employee from the Mayor’s Office to request for the reduction and the increase of prices of these farming tools.

Why changes as to quantity and prices of the farming tools were not taken up as changes in the documents attached to the Disbursement Voucher No. 248, were made after the contract award’s approval, without the authority from the head of office and after the payment were executed. Determine the person responsible for the changes made after payment and contract execution.

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Written by admin · Filed Under Commission on Audit, Gingoog City