Contractor demands P28M more for SRP work

CEBU, Philippines - The contractor that worked on the initial infrastructure at the South Road Properties is demanding a price escalation of over P28 million, about five years since the project was completed.

TOA Corporation which was awarded the P399-million contract for the Cebu South Reclamation Infrastructure (Stage1-1) Project in 2004, claims the P28 million as the additional cost because during the implementation of the contract, there was a drastic change in the prices of materials.

TOA’s work at the SRP included the installation of main electrical facilities, water supply, sewage treatment plant and the construction of the administration building.

But while the Ad Hoc Price Escalation and Evaluation Committee says the claim has legal bases, City Administrator Jose Marie Poblete said the city will not pay unless they obtain clearance from the Commission on Audit (COA).

Poblete said that legally, TOA Corporation is entitled to a price escalation but they have to check with COA first if such will be allowed considering that the project was finished a long time ago.

“From what I’ve heard, they did not process the claim before, because they understood that SRP was not earning yet. But they have actually made a follow-up in 2009, pero wala sila natagad (They were taken for granted),” Poblete said.

Poblete said that it is better to seek clearance from COA before they prepare the voucher because the same will still undergo an audit.

The City Council last week deferred approval of the payment and referred the matter to the committee on laws for further study.

The Council is also studying the possibility of its inclusion in the Supplemental Budget No. 2 if the committee on laws finds no legal impediment in approving the payment.

Poblete said that if all goes well, the P28 million-payment might be included in the SB 2 as a statutory obligation.

In January 2006, TOA Corporation sent their first price escalation billing amounting to P36,201,930.90 but they were not paid.

In 2009, they sent another price escalation billing with an adjusted amount of P28,514,800.31.

In the findings of the Ad Hoc Committee created by Mayor Michael Rama in 2010 to study TOA Corp.’s claim, it was stated that TOA’s first computation of more than P30-million price escalation was correct.

But since the company is claiming a lower amount, the city will pay only the P28 million once everything is set.

 The Ad Hoc Committee ruled that TOA’s claim is valid since in Section 6 of the Contract of Agreement executed on December of 2002, it was indicated that adjustment of contract price can be applied.

Price adjustment is also allowed under the procurement law and provided in Presidential Decree No. 1594.

PD 1594 says that projects where the Notice to Proceed is issued after 120 days from the bidding date may request for price escalation.

The Notice to Proceed was issued to TOA on February 6, 2003, which was more than 120 days from the July 2002-bidding date. — (FREEMAN)