The COA Reports: Doubts raised on Baras LGUs P2.

75-M fertilizer
contract
Baras, Catanduanes
posted 23-Jan-2016
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Auditors have described as questionable the validity and propriety of a P2.75 million contract covering
the supply of organic fertilizers by a local farmers group to the municipal government of Baras in 2014.

In its report on that years transactions of the LGU, the Commission on Audit stated that despite the failure
of the Bids and Awards Committee (BAC) and the inspectorate team to diligently discharge their duties
and functions, the LGU proceeded with the procurement and payment of the purchase of fertilizers
amounting to P2,754,000.00 despite the insufficiencies, irregularities and inconsistencies in the
documents presented.

The transaction, it added, was not in conformity with the Implementing Rules and Regulations of Republic
Act 9184 or the Government Procurement Reform Act, resulting to doubtful deliveries and unlawful
expenditure.

According to the report, the office of Mayor Rodel Abichuela prepared and approved a Purchase Request
for the purchase of fertilizers, specifying the quantity of the bags or packs needed as well as the unit cost
per bag/pack. However, the auditors noted, the PR did not specify the number of kilos that each bag
contained.

It should be noted that this information is important as it will be the basis for the BAC to determine
whether the prices given by the requesting office as well as those quoted by the supplier are reasonable,
the COA stressed.

It added that while the LGU posted an Invitation to Bid at the PhilGEPS website on March 28, 2014 and
April 23, 2014 for the fertilizer procurement, there was no evidence attached to prove that a pre-
procurement conference was held, with no invitation sent to observers for the conference and bid
opening.

The pre-procurement conference could have been the proper forum within which to clarify issues
especially regarding details and specifications about the items to be procured, the audit team noted. But
it turned out that even the BAC and the head of the requesting office failed to correct these deficiencies
before the issuance of the purchase order, it pointed out.
Apparently, the two bid invitations posted in the PhilGEPS website resulted in two failed biddings, with the
Baras LGU resorting to negotiated procurement. On May 27, 2014, or a month after the PhilGEPS
posting, the Abichuela administration issued a Notice of Award to Happy Farmers Producers Integrated
and Livelihood Association, Inc., followed by a Purchase Order dated the following day and containing the
same items as enumerated in the Purchase Request without specifying the number of kilos per bag.

This is contrary to the provisions of COA Circular 96-010 dated August 15, 1996 which specifies the
guidelines in the preparation and submission of Purchase Orders relative to the procurement of supplies
and equipment, the COA stated. Item B.1(k) of said circular requires that the unit of measure should
indicate number or weight, or linear measures.

Further scrutiny by the audit team showed that the fertilizer deliveries were received and inspected on
June 3, 2014, with the inspectorate team noting in its Acceptance and Inspection Report that deliveries
were inspected, verified and found ok as to quantity and specification.

How can the inspectorate team attest to the exact quantity of each bag of fertilizer when it was not even
specified in the Purchase Order? the COA report wondered.

Auditors said this placed the LGU at the losing end as the supplier, Happy Farmers, may have delivered
the fertilizers not in prescribed quantities but might differ in the measurement of contents per bag. The
delivered quantities, then, may not agree with the contents per bag presented for inspection.

In the absence of information as to the exact weight each bag should contain, the auditors also raised the
issue of whether or not the fertilizers delivered would be sufficient for the 400 hectares of farmland
covered by the memorandum of agreement entered into by the mayor with the Bureau of Soils and Water
Management (BSWM) and the Department of Agriculture Regional Field Unit V (DA-RFU).

Based on documents attached to the vouchers, the COA also uncovered the fact that Sangguniang Bayan
Resolution No. 088-2014 dated June 9, 2014, or two weeks after the fertilizer deal award, only authorized
the mayor to implement the Expanded Modified Rapid Composting (EMRC) in the municipality of Baras,
but not to enter into the MOA with BSWM and DA-RFU covering the EMRC implementation.

Thus, the Municipal Mayor entered into an agreement with the BSWM and DARFU V even without a
resolution authorizing him to do so, the report said.

Among other deficiencies and irregularities noted in the same transaction were: no minutes of BAC
meeting was attached to show the detailed activities during the negotiated procurement on May 26,
2014; no Program of Work was attached to show specific activities to be undertaken as well as persons
involved in the implementation; information as to the date of delivery, delivery terms and payment terms
were not specified in the Purcchase Order; and, absence of documents required in the special provisions
in the MOA such as an ordinance in support of the organic-based EMRC Program and the prohibition on
the burning of rice straw.

In its comments following the submission of the lacking documents, the local government officials said
they cannot provide the needed SB resolution authorizing the mayor to enter into MOA with BSWM for
the reason that the funds was already downloaded by the BSWM to the LGU when the local chief
executive was reminded of the need of said authority.

They said that as a remedy, the authority was granted by the SB for their knowledge and blessing and
sought consideration of the fact that Mayor Abichuela, a lawyer, was a neophyte who started his term in
2013.

On the fact that the bid price of Happy Farmers was the same as that in the Purchase Request, the LGU
officials claimed that it is not in control of the price quotation submitted by the supplier. It is not
impossible that the prices in this case be the same as in the PRS because the ABC is stated in the posted
invitation, and this was already second failure bidding before the request for quotation was sent and the
interested suppliers can quote at their rates within the ABC, they said.

It is claimed that the Happy Farmers group was established by Luzviminda Oropesa to empower local
farmers and promote organic farming shortly after developing her three-hectare lot into a demo farm in
2011. An awardee of the DAs 2015 Search for Outstanding Rural Women, she was elected as
chairperson of the Municipal Agriculture and Fishery Council (MAFC) in July 2015.

In another finding, the auditors recommended the refund of the excess amount of P352,545.70 in
Productivity Enhancement Incentive (PEI) granted to local officials and employees in 2014. The
administration granted a PEI of P15,000 each to all 57 officials and employees but this exceeded the
allowable limit of the Personal Services.

On the other hand, cash advances of officials and employees totaling P129,635.79 remained unliquidated
as of year-end, with some of them granted additional cash advances although their previous cash
advances were not liquidated or fully liquidated. Instead or reducing, the unliquidated cash advances
increased during the year due to the laxity or non-full compliance with the provisions of COA Circular No.
97-002 in the granting and utilization of cash advances.

- See more at: http://www.catanduanestribune.com/article/3XNF#sthash.rIJSO04a.dpuf