COA said these flaws have compromised the interests of the City Government and the general public.
COA questioned the contract that the City Government awarded through a bidding process to a Manila City-based contractor for the design and construction of the drainage mains located in several streets across the city on April 19, 2021, as part of the City’s flood control program.
As per the Department of Engineering and Public Works (DEPW) report, the project was slated to start on April 27, 2021 and finished on November 17, 2022. But COA said the contractor failed to transition from the design phase to the construction phase even at the end of 2022.
The P1.3 billion project involved the construction of flood-mitigating interventions along Cabreros St. – N. Bacalso Ave. – V.H. Garces St.; A. Gabuya St; and Leon Kilat St.- Escano St., Cebu City.
The contractor delivered only seven of 27 documents and design plans to the City Engineering, which COA said may be from the contractor’s apparent lack of technical personnel as some deliverables had no signatures from various professionals and were made only by a single engineer.
The City Government made an advance payment of P199.323 million for the design phase on June 15, 2021 on the contractor’s request, as it was already equivalent to 15 percent of the total contract cost.
COA also questioned the “unreasonable and unjustifiable suspension” of the project that was done three times with ease, giving the impression that the contractor was given unwarranted favors.
From the start of official work, the first suspension was given on May 4, 2021; the second on August 3, 2021; and the third on September 3, 2021.
COA called “flimsy” the reasons that the contractor gave for the delays, which were travel restrictions, rigorous testing for cross-border travel, and unstable quarantine status in relation to the Covid-19 pandemic.
The contractor also said it was having difficulty securing various data on existing drainage and utility infrastructure crucial for the work of the designers.
The state auditor said due to the importance of the project, the City Government should have exerted efforts to expedite its completion.
Not authorized
Furthermore, COA questioned why then city administrator Floro Casas Jr., acting behind the authority of the late mayor Edgardo Labella, entered into a contract for this project in 2021 without the authorization of the Sangguniang Panlungsod (SP).
The project was funded though the 2015 General Fund Lump Sum appropriation, specifically under the Repair/Construction of Drainage System label, but the state auditor stressed that the city administrator has no authority to bind the City Government into a contract using the Lump Sum without the authority of the SP.
Hence, COA made the recommendation to terminate or revoke the contract due to project delays of 247 days as of December 31, 2022.
The City Government must also recover the advance payment of P199.323 million and submit a detailed explanation on the excessive advance payment and leniency in the giving of time suspension.
Reply and rejoinder
In its reply, DEPW explained that due to rigorous travel restrictions during that period, people feared to travel across different regions in the country in case they got stranded, which he believed to be meritorious and justifiable due to the pandemic.
However, COA replied that despite the pandemic, the contractor should have made significant progress on the project, particularly since it took risks and accepted the contract at the height of the health emergency.
COA added that the contractor was given an advance payment at its request, showing that it saw the project to be feasible at that time.
Uncollected advance payment
As for the separate P28.8 million in uncollected advance payments for other projects, COA asked the DEPW, and the latter agreed, to retrieve these uncollected amounts from 13 infrastructure projects of the City Government from 2014 to 2016 that were already canceled or terminated and abandoned.
According to the subsidiary ledgers of Advances to Contractors account, an amount of P28.8 million of P46.3 million of the 15 percent Mobilization Fee remains uncollected.
These projects were terminated due to various issues such as lot ownership, presence of occupants, permits and clearances.
The state auditor first flagged the transactions in a 2017 audit report, which grew to 14 projects with uncollected advance payment in 2018; however, in 2019 the mobilization fee for only one project was fully settled.
COA said the City Government has made slow progress in retrieving the advance payment.
To prevent this from happening again, COA suggested, and DEPW agreed, to form a new Contract Review and Termination Committee (CTRM).
This CRTM will demand or initiate legal action against contractors with unsettled advance payments, forfeit the letters of credit or guarantee performance bond of the contractors, and blacklist contractors who refuse to settle their balances.
The committee also has the authority to impose sanctions against the erring City Hall employees that caused the termination of the projects due to fault or negligence.