'Sue, blacklist erring contractors'

MANILA, Philippines - The Commission on Audit (COA) is urging the Department of Public Works and Highways (DPWH) to file charges against erring contractors for shortchanging the government in their substandard projects.

State auditors said private firms and contractors who have been remiss in their duty to comply with their contracts should also be blacklisted and barred from doing business with the government.

In a 2010 report, COA said the failure of DPWH District Offices in Regions II and XI to enforce and collect liquidated damages from contractors found to have incurred tremendous delay in the completion of bridge projects has resulted in the loss of government funds of at least P8.806 million.

Records showed that in Region XI, project completion for the Pangian Bridge, Meybio Bridge, Kinangan Bridge, and the Tubalan Bridge in Davao del Sur was delayed by as much as 833 days, thus causing injury to the government.

“Audit disclosed that the contractors of four infrastructure projects of the Davao del Sur 2nd Engineering District, Region XI incurred tremendous delay in the completion of their projects,” COA said.

“For the unperformed portion of the work, the contractors of the projects are liable for liquidated damages amounting to more or less P8,806,965.82,” the audit bared.

In Region II, six projects in Quirino and 22 projects in Cagayan valued at P195.9 million have also incurred tremendous delay and slippages that are expected to eventually result in cost overruns.

“In Region II, the projects implemented by DPWH District Offices totaling P195,951,317.01 also showed negative slippages ranging from -20 percent to -80 percent,” COA pointed out.

The audit, however, did not identify the contractors but as early as 2007, the DPWH Planning Service has identified private firms who had been performing badly as well as those performing well when it comes to completing projects in time and without incurring additional costs.

Those in the “good job” list for having no cost overruns include projects under the President’s Bridge Program - the Urgent Bridges Development Project for Rural Development (UBDPRD), the Philippine-Japan Highway Loan (PJHL), the Kuwait Fund for Arab Economic Development (KFAED), the Korean-funded Mount Pinatubo Emergency (PME) project, and the Metro Cebu Development Project (MCDP).

Firms or projects in the “bad job” list are led by a United Kingdom-assisted special bridges projects implemented by Balfour which incurred cost overruns reaching 86.6 percent followed by the West Manggahan Flood Control Project with 63 percent in cost overruns.

State auditors noted that under the Implementing Rules and Regulations (IRR) of the Government Procurement Reform Act, a contractor who “refuses or fails to satisfactorily complete the work within the specified contract time” should be held responsible.

The law states that “the contractor shall pay the procuring entity for liquidated damages and not by way of penalty an amount, as provided in the conditions of contract, equal to at least one tenth (1/10) of one (1) percent of the cost of the unperformed portion of the works for every day of delay.”

COA said the non-collection of liquidated damages from concerned contractors resulted in the non-indemnification of the government for the loss, inconvenience, and damage it sustained due to non-completion of the projects on time.

State auditors said the DPWH should pursue “appropriate sanction such as filing of cases in court, blacklisting the contractors from participating in any government contract or deduct the liquidated damages from any amount due them to indemnify the agencies for any loss suffered from non-compliance with the provisions of the contracts.”