PAO had P10.8-M in lease deals sans paperwork, says COA

The Public Attorney’s Office (PAO) in 2019 entered into 44 lease contracts worth P10.8 million while lacking the necessary documentation, a Commission on Audit (COA) report said.

In its annual audit report on PAO, the state auditors said that the 44 lease contracts that PAO entered into with various lessors in relation to rental of office space lacked the papers required by the procurement law and Department of Budget and Management circular on multi-year contracting authority.

These include but not limited to:

• invitation to at least three prospective lessors
• abstract of bids/quotations
• bid proposals/quotation
• basis for the evaluation of the submitted proposals/quotations
• result of the evaluation on the reasonableness of price
• Bids and Awards Committee Resolution recommending award to the head of the procuring entity
• notice of award
• cost-benefit analysis to assess the quality of service under the lease contract
• multi-year contract agreement (MYCA), among others.

The COA said that such contracts were represented by the Regional Public Attorneys as lessee and the private individuals or corporations as lessors.

“Our review of the 44 contracts of lease totaling ?10,847,260.01 revealed that pertinent documents were not attached to the contracts which should form an integral part thereof,” COA said.

The COA said that the procurement law provided that by comparing the rental rates charged by its lessors against the prevailing rates in the area, the agency could analyze whether entering into a new contract will be more expensive considering the cost of transfer and accessibility to the public.

“In renewing its contracts, the agency (PAO) simply entered into a new contract with the private lessor without conducting the cost-benefit/market analysis required in the existing regulation,” COA said.

Further, state auditors argued that while the DBM allowed government agencies to enter into multi-year contracts, this only applied in cases where the project was recurring such as janitorial and security services, supply of drinking water, telecommunications requirements, rental of office and equipment and lease-purchase agreements.

“While it is not prohibited for agencies to enter into multi-year contracts, it must first seek authority from the DBM and be subject to the rules that govern multi-year contracts,” COA said.

As a result, COA recommended the following actions to PAO:

• direct the Chief Accountant to correct the erroneous recording of prepaid rent, guaranty deposits and accumulated surplus/deficits and to submit the lacking documents for the auditor’s evaluation before final disposition in audit;
• that the Chief PAO and the Regional Public Attorneys comply with the
• provisions of RA 9184 on the Guidelines of Lease of Real Property and Venue for the renewal and new contracts of lease; and
• that the Chief PAO secure MYCA from DBM before entering into a multi-year contracts otherwise, rescind the contracts of lease where the terms exceed one year.
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PAO, which is headed by Persida Acosta, has agreed to COA recommendations per the state auditors. -NB, GMA News