COA to DPWH: Inadequate post-qualification scrutiny for P12B worth of infra projects

At least P12 billion worth of infrastructure projects were subjected to inadequate post-qualification of equipment and key personnel in violation of the procurement process, the Commission on Audit (COA) said.

According to the COA's annual audit report on the Department of Public Works and Highways (DPWH), the projects involved Lowest Calculated Bidders (LCB) in Regions 5 and 10 which did not include verification and validation by the Bids and Awards Committee and Technical Working Group (BAC-TWG)—a verification that should have ascertained the validity of all statements made and documents submitted by the bidders with LCB.

As a result, state auditors said that contracts were awarded to contractors with same key personnel and equipment pledged to other ongoing projects in violation of the implementing rules and regulations of the Procurement law which states that "[t]he LCB should undergo post-qualification in order to determine whether the bidder concerned complies with and is responsive to all the requirements and conditions as specified in the Bidding Documents.”

Overlapping contracts

State auditors noted that the DPWH Region 5 awarded 1,019 contracts to 84 contractors, with the highest number of contracts awarded to and implemented by or to belonging to the top two to seven contractors.

“Review of the period of implementation of these projects disclosed that there were projects simultaneously implemented by the same contractors. The overlapping implementation period raises curiosity on the availability of equipment pledged to the contracts considering that this was committed as required under the Implementing Rules and Regulations of the Procurement law,” COA said.

COA further observed that some of these contracts were lagging behind the original contract schedules and were granted time extensions, ranging from 11 to 240 days, either due to right of way problems, obstructions or unfavorable weather conditions, among others, as of December 31, 2018.

“Initial query confirmed that the post-qualification of equipment pledged to these contracts were limited only to the verification of the veracity of the list and its existence at the place specified,” COA said.

COA said that this action was in defiance of an established practice of conducting ocular inspection to check the ownership, existence and serial number or chassis number of the equipment declared in the list, as well as testing the operating condition of the unit to ensure that it is satisfactorily compliant with the requirement and available for the contract.

Likewise, COA said that the verification of key personnel assigned to the project by the contractors was limited to their competence and experience as required by law.

“The TWG only checks the cost of the largest project previously handled and years of experience to ensure compliance with the minimum competency requirement set in the Bid Data Sheet. No further verification was conducted whether these personnel were also assigned to other projects simultaneously implemented,” COA pointed out.

DPWH response

The DPWH told state auditors that the key personnel and equipment were not really validated against key personnel already assigned and equipment already pledged in ongoing projects or other contracts simultaneously bid out because such was not explicitly required under the post-qualification procedure and were not interpreted to limit the number of contracts committed to or required exclusive use.

In addition, the DPWH told COA that the onset of new technologies such as Viber, Skype and others “enables the key personnel to monitor and supervise a project as if he was physically present on the jobsite all the time.”

DPWH also said that minor pieces of equipment may be simultaneously pledged since these are usually small movable items that are easily replaced and purchased off the shelf.

“Depending on the nature of the work, major [pieces of equipment] that are movable may be used on rotation around projects strategically located within the same province, since they usually follow an equipment utilization schedule,” the DPWH said.

COA, however, countered that the verification being conducted by the TWG as to availability and commitment of equipment to be used and key personnel assigned to the project was not sufficient.

“Although not explicitly required, the post qualification procedure may be taken one step further by comparing and evaluating the reasonableness of the number of projects committed to and handled, if only to maintain the effective, efficient and timely implementation of projects,” COA said.

“The failure to ensure non-duplication and availability of key personnel assigned and equipment pledged in the evaluation of bid by the same contractor for simultaneous or overlapping implementation period may affect the quality of work and expose the government to the risk of delay in project completion,” COA added.

As for Region 10, 55 out of the 225 infrastructure projects implemented by Misamis Oriental Second District Engineering Office were awarded to a single contractor in 2017.

“Audit disclosed that the same equipment/vehicles were pledged for use in all of these contracts, from construction of school buildings to repair and maintenances of flood control, such as:

a. Dump Truck with Plate No. YHG-201;

b. Transit Mixer with Plate No. 122602;

c. Grader with Body No. MG3H-8462;

d. Backhoe with Body No. H06C-TB28815;

e. Bulldozer with Body No. NH-220-1170N35144; and

f. Road roller with Body No. TW500- l,” COA said.

“Awarding of contracts to contractors with the same key personnel and equipment pledged to their other on-going projects exposes the government to the risks of substandard quality of work and delay in project completion,” COA added.

COA then recommended that the DPWH direct the Heads of the concerned DPWH offices to:

• instruct the BAC-TWG to include in their post-qualification a comparative evaluation showing the number of projects with the same equipment and key personnel pledged and assigned by the same lowest calculated bidder for different projects with simultaneous or overlapping implementation period within the Region/Office; and
• mandate BAC to consider the sufficiency and availability of equipment pledged by the contractors with regard to projects simultaneously awarded to the same contractors; set the limit for the number of contracts handled by key personnel and extend the comparison with other implementing office within the region and other regions before declaring the bids as responsive.

In response, the DPWH Region 10 told state auditors that it already submitted a written explanation to its Audit Team on April 1, 2019 regarding the audit observations.

GMA News Online has reached out to DPWH Secretary Mark Villar for further comment. — BM, GMA News