IN TWO reports involving the 2021 spending of two Cebu local governments, among the audits released this week, the Commission on Audit (COA) struck down the two local government units’ (LGUs) argument that lower price of procured goods or services justifies the selection of a contractor or supplier even though it is not qualified.[1] Cebu City, through the city accountant, said in its reply to COA’s finding — that Docast Construction and JJ & J Construction and General Supply were not qualified for the P383.5 million contract as they were not a corporation and were engaged in construction – the two firms offered the lower bid of P1,800 per ton.The accountant must think that the price factor outweighs the contractors’ disqualifications and violations of the rules set by law or regulation. No, says the COA report.[2] In Carcar City, a total of P22.839 million was paid for private lands through negotiated purchase, which COA says violated two presidential decrees, a COA circular and “possibly even” the anti-corruption law. The Local Government Code provides that it is unlawful for a government official or employee to transact business with the LGU in which he is an official or employee.Some P10.643 million was paid to then vice mayor Nicepura L. Apura, husband of the city mayor, with the couple as the top officials of the city when it was transacted. COA also noted that Carcar City bought a lot from Nicepura Apura for P7.822 million Unlawful, said COA of the purchase, citing the Local Government Code and the anti-corruption law.The City used the claim that the bought lands were located within the premises of New City Center, the LGU’s project. And this argument: the price was “lower than the market value.” Never mind that the seller was the city’s vice mayor at the time.ISSUE IN GARBAGE DEAL: QUALIFICATION. COA refuses in its report to be distracted from the main issue against Docast and JJ & J. From evidence, COA says in its rejoinder, the two firms, partners in a joint venture, are not qualified and have violated laws and regulations.But apparently, the two firms snagged the contract because of their lower price, compared to that of competitor Jomara Konstruct Corporation.But a low amount in the bid, COA instructs, “does not automatically mean or translate into a favorable contract for the government.” Based on literatures, COA says, “too much deflated prices” may lead to problems during the implementation of the project. Contractors are tempted to use substandard materials so as “to recover losses or foregone profits.”The low bid could be a siren’s call to disaster, more graphically illustrated in the choice of the two firms now being reportedly investigated for plunder on Cebu City’s garbage deal.PROBE ON DOCAST–JJ ASKED IN AUGUST 2021. The Cebu City Government must have realized that it erred in relying on the low bid of Docast and JJ &J when it selected the service providers.As early as last August 19, 2021, or two months past the year of implementing the deal, the City Council asked Visayas Ombudsman and National Bureau of Investigation (NBI) and police, with COA, to investigate “suspected overcharging and bloating of figures in the payments of garbage hauled” by the two firms. On the same day, then vice mayor Mike Rama was among those who called out the “alleged plunder.” Minority Floorleader Nestor Archival Sr. questioned the payment of P250 million to Docast-JJ & J when “in fact for the months from January to May 2021, the City should have paid only P130 million based on the amount of garbage hauled to ARN Central Management,” the dumping site.
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Explainer: Suspected multimillion-peso loss prompts Cebu City Council to seek multi-agency probe on garbage payment. Plunder, says Rama. SunStar, August 20, 2021.
Explainer: COA findings were long preceded by questions of Mayor Rama, Sanggunian on defects of P383.5M Cebu City garbage contract. Sunstar, July 22, 2022.
All that on top of COA finding “irregularities” in the weighing and receipting of garbage and the Sanggunian’s own finding that resources of the City, namely Department of Public Services and the barangays’ collection units.HOW’S THAT FOR SCRIMPING ON COST? Favoring Docast and JJ & J — purportedly to save money because they offered a lower price for each ton of garbage collected — seems to have turned out as a serious, and expensive mistake. It was devastating enough for the City Council, led by then vice mayor Rama, to suspect plunder even long before COA reported the violations and omissions.To COA, the low bid could’ve been a flaming-red flag, telling the LGU to be careful with its money.WHO’RE COLLECTING NOW. Councilor Joel C. Garganera told Explainer Saturday, July 23 he “believes” it’s the City that’s collecting the garbage and dumping it “direcly in Binaliw.” Which provides an interesting study for the City Council: if the City can do it fairly well, why spend more than P400 million a year on contracted service? Even if it does engage outside labor, it must see to it that it won’t repeat the apparent error with Docast and JJ & J: when the City did much of the work for which the contractors were paid.Asked about the garbage collection, Minority Floorleader Nestor Archival told Explainer (also on Saturday, July 23) that the minority can’t give immediate answers because under the new Sanggunian House rules, they have “to make a resolution” and wait for the department head’s answer in writing. The new procedure says a City Hall official or employee can be required to appear in person only before an executive session or a public hearing. In all other cases, the resource person’s information shall be given in writing upon request of majority of the councilors.WHAT’S NEXT. The COA audit on Carcar City requires officials to submit a “valid written justification” on its violations and “immediately desist from engaging in any business transaction with its officials.” (In effect: COA says Don’t do business with them, even if they’re vice mayor and mayor of the City.) Plus COA’s warning of “sanctions and penalties” under the law.On Cebu City’s deal with Docast and JJ & J, still unresolved, besides the “dubious” qualification of the two firms, is the question of undue fees charged and paid. If that will be proved by COA and the supposed multiple-agency criminal investigation, it would be a pie thrown at the face of auditors who justified the choice of the contractors with the low bid, never mind qualifications imposed by laws and regulations.