COA calls out Coast Guard for P2.6 billion in unliquidated funds, undelivered items

The Philippine Coast Guard (PCG) has released P2.6 billion worth of funding for the purchase of boats, pistols, coastal surveillance system, among others to agencies which have failed to liquidate the funds and deliver the goods, the Commission on Audit (COA) said Thursday.

Based on an annual audit report on PCG, its disbursements of P784 million and P1.9 billion to the Procurement Services of the Department of Budget and Management (PS-DBM) and the Philippine International Trading Corporation (PITC), respectively, for the delivery of infrastructure, goods and common used supplies have remained unliquidated, if not undelivered as of December 31, 2018.

The P784 million is broken down to P6.5 million worth of payment for procurement of common supplies and equipment while the P777.6 million was supposed to be for the procurement of two light to medium weight multi-purpose Twin Engine Helicopters.

“The procured items, however, are still undelivered as of date and the Agreement [between PCG and PS-DBM] does not have a clause for delivery period. Thus, the timely completion of the intended projects/programs was not assured and the government is deprived to use unspent funds for other projects,” state auditors said.

As for PCG’s P1.9 billion disbursement to PITC for the supply and delivery of 41 projects which have also remained unliquidated, 19 out of the 41 projects/requests for procurement were done in 2017 but delivery has not been done.

But despite non-delivery of outputs, additional fund totaling P1.4 billion was disbursed by PCG to PITC in 2018 for the procurement of 22 more projects.

Still, there were no deliveries of outputs made by PITC for fund transfers received by the agency in the first half of 2018.

These projects include the following:

• spare parts and fast moving supplies
• communication equipment
• procurement of navigational buoys
• delivery of 9mm pistols
• 252 K9 dogs
• proposed generator set pad and installation
• cloud computing to PCG
• six units of high speed response boat
• three units of cabin patrol
• safety, security and environmental numbering system for PCG vessels
• tactical boots for PCG officers
• coastal surveillance system
• rigid hull inflatable boat w/ outboard motor
• subscription to Satellite Communications
• shipboard armaments/weapons and office equipment (Tier 1)
• supply and delivery of Watercraft Delivery Jetski
• supply and delivery of watercraft delivery rubber boat with outboard motor
• 50 units of 6x6 military truck, among others

“Due to the failure of PITC to deliver to PCG the various infrastructure, goods and services requested by the latter, funds were stuck and remained in the possession of PITC,” COA said.

State auditors observed that most of the funds transferred to PITC were only obligated at the end of 2017 and 2018 due to the failure of the Bids and Awards Committees of PCG to undergo procurement/bidding processes and/or failure to award the contracts for their programmed projects and likewise, to avoid reversion/lapse of the funds.

“Thus, the PCG resorted to outsourcing by commissioning PITC to conduct procurement activities on its behalf for a fee, and accordingly, transfer the funds to the latter. Management was not able to monitor the status of implementation of the intended projects, nor demand the return of any unspent funds,” COA said.

“The Memorandum of Agreement (MOA) entered into by and between the PCG and PITC for each project [also] did not indicate the delivery period in the Terms of Reference or is open-ended or with an indefinite period of delivery which is detrimental to the mandates of PCG considering that it requires providing security to the vast waters of the country and safety of its citizens during disasters,” state auditors said.

And, while the PCG had Technical Working Groups (TWGs), Procurement Service Office and PCG Infrastructure Development Service Office (IDS) all highly capable enough in handling procurement activities for its programs and projects, COA lamented that the PCG could not cope with the demand to conduct public bidding for its various projects to fully utilize its allotments/ appropriations for the year.

“We believe that with effective and proper planning, the procurement activities for PCG programs/projects could be completed and achieved within the required time frame as programmed,” COA added.

COA recommended that the PCG undertake the following steps to address the unliquidated amounts and undelivered projects:

• demand from PS-DBM the immediate delivery of undelivered items which were already due in 2017;
• issue demand letters to the PITC to enforce the delivery of goods and services and immediate liquidation of fund transfers received and require the immediate remittance of any excess funds;
• maintain and regularly update Subsidiary Ledgers and schedules describing the source and nature of the fund transfer for proper identification and reconciliation;
• stop issuing additional fund transfers unless the outputs for the previous projects are delivered or completed and liquidation thereof are made;
• submit the lacking supporting documents; and,
• complete the procurement activities within the time frame to avoid lapsing of allotment/budget for the project intended for. —LDF, GMA News