COA gives nod for CHED to junk P300-M call center deal

MANILA, Philippines – The Commission on Audit has allowed the Commission on Higher Education to scrap a deal signed by former CHED chairman Carlito Puno with the contractor of a P300-million call center project, which the COA has found to be grossly disadvantageous to the government.

In a final report on its audit of CHED’s 2007 operations, the COA said CHED could opt to end the contract signed with the eServices Global Solutions Inc. (eSGS) consortium for the operation of call centers in six state universities last year, especially if renegotiations of the onerous contract fail.

In its interim report on the preliminary audit released last January, COA recommended the renegotiation of the contract after it was found to be “most grossly disadvantageous to the government.”

COA affirmed its findings in its final audit report released last June.

“When necessary, contract termination may also be considered another option,” COA said. “Resort, if necessary, to contract renegotiation to protect the interest of CHED and the government in general, assuming that the contract was awarded in accordance with the applicable provisions of (Republic Act) 9184 or the Government Procurement Reform Act.” Lawyer Carmelita Yadao-Sison, CHED Legal Service Division head, earlier told The STAR that the commission was considering the termination of the contract as a result of the failure of their recent renegotiation efforts.

Sison said that the consortium had rejected their offer to inject provisions in the contract to give CHED a share of the profits in the call centers that would be operated.

“There is a big possibility that we are going to that (contract termination) already,” Yadao told The STAR last Thursday.

Sison is the head of the private management office formed by former CHED acting chairman Secretary Romulo Neri to pursue the renegotiation of contract after suspending the project last September upon discovery of anomalies in the project.

Auditors noted that according to the contract between CHED and the eSGS consortium, CHED stood to earn only P126 million in lease payments during the five-year duration of the “build-lease-operate” contract from the P298 million it committed to pay the contractor.

COA also pointed out that CHED had not included a profit-sharing provision in the contract that would ensure that it would get a share from any profits from the project undertaken by the agency as an income-generating project.

Also causing concern for the auditors was an “escape clause” in the contract that allowed the eSGS to abandon the operation of the call centers for any reason with a mere P5-million penalty.

“On the other hand, should the project fail to attain its projected recovery of investment of around P126 million, or 42 percent as return of investment of P298.6 million, then the government may get nothing from the project and lose the opportunity to benefit from the transfer of technology to their intended beneficiary schools and students, as envisioned in CHED’s project objectives,” COA said.