COA scolds NIA for P20 billion delayed projects

MANILA, Philippines — The Commission on Audit (COA) has scolded the National Irrigation Authority (NIA) over the delays in its implementation of irrigation projects totaling P20.704 billion, a majority of which should have been completed years ago.

Based on the COA’s annual audit report on NIA, the agency, as of Dec. 31, 2018, still has 299 uncompleted irrigation projects with a total contract cost of P20,704,244,492.

The audit body said the completion of the projects has been delayed for up to 2,287 calendar days (6.2 years) “owing to the unsatisfactory performance of contractors.”

“Hence, the delay in the completion of the contract works unduly deprived the farmer-beneficiaries of the immediate use of the said irrigation facilities, and could further result in wastage of government resources when the unfinished/uncompleted contracts would eventually be terminated,” the audit report read.

The COA’s breakdown showed that the NIA’s Central Office was responsible for 55 of the delayed projects with a total contract cost of P17.633 billion; while Regional Office 11 in Davao was responsible for 30 projects amounting to P818.464 million; RO 5 in Bicol for 45 projects amounting to P366.332 million; RO 2 in Cagayan Valley for 16 projects amounting to P241.599 million; RO 1 in the Ilocos for 27 projects amounting to P133.985 million; and RO 3 in Central Luzon for 12 projects amounting to P102.764 million.

Likewise found responsible were RO 9 in the Zamboanga peninsula for five projects amounting to P60.889 million; RO 13 in Caraga for seven projects amounting P44.365 million; RO 6 in Western Visayas for 11 projects amounting P32.433 million; and the Cordillera Administrative Region for eight projects amounting to P7.318 million.

Also incomplete were 75 more contracts amounting to P870.025 million in connection with the Agno River Irrigation System Extension Project in Pangasinan, and eight contracts amounting to P392.937 million as part of the Balog-Balog Multi-Purpose Project in Tarlac.

Among the reasons cited by the audit body for the delayed completion of the projects were unworkable sites brought about by “bad weather condition, flooding and water delivery; unsatisfactory performance of contractors or insufficient manpower and equipment of contractors; unresolved right of way (ROW); peace and order situation; existence of standing crops; and poor project planning, supervision, monitoring, and control.”

The audit body pointed out that under Republic Act 9184 or the Government Procurement Reform Act and its Revised Implementing Rules and Regulations (RIRR), “no bidding and award of contract for infrastructure projects shall be made unless the detailed engineering investigations, surveys and designs, including the acquisition of the ROW, for the project have been sufficiently carried out and duly approved in accordance with the standards and specifications prescribed by the Head of the Procuring Entity.”

The audit body said that despite the failure of the contractors to perform their obligations on time, the NIA did not impose any monetary sanctions against them such as payment of liquidated damages (LDs) or forfeiture of their security bonds.

The COA pointed out that under the RIRR of RA 9184, contractors who fail to satisfactorily complete the work within the specified time in the contract despite the extension granted, shall pay the procuring entity for liquidated damages “equal to at least one tenth of one percent of the cost of the unperformed portion of the works for every day of delay.”

The COA said the 44 contracts totaling P12.245 billion have incurred significant period of delays in completion and yet no LDs were imposed against the erring contractors. 

The audit body noted that while 43 more contracts with total cost of P2.207 billion were already terminated by NIA, “appropriate actions against the contractors were, however, not undertaken.” 

It added that in accordance with the procurement law, NIA should have forfeited the performance security bonds or deposits of the erring contractors totaling P472.067 million, equivalent to 10 percent of the total cost of the terminated contracts of P2.207 billion. 

“The damages suffered by the agency due to delayed/non-completion of the contracts/projects within the timelines may not be recovered due to non-imposition of LDs and non-forfeiture of performance securities against the contractors, an indication of agency’s laxity in enforcing the stipulations specified in the contract agreements to the disadvantage of the government,” COA said.

Furthemore, the COA said that 20 of the delayed projects amounting P9.038 billion have incurred huge negative slippages ranging from 15 percent to 87.84 percent, and yet NIA still failed to terminate or rescind the contracts. 

The COA said the delayed implementation of the contracts, particularly those in connection with the foreign-funded National Irrigation Sector Rehabilitation and Improvement Project, has cost the government P356.167 million in loan commitment fees.

The COA recommended to the NIA to direct its Legal Department and Internal Audit Services to conduct investigations to determine persons responsible for the non-imposition of liquidated damages to erring contractors and non-termination of contracts with huge negative slippage.

In the same audit report the COA also flagged NIA for 106 contracts amounting to P4.345 billion awarded to bidders with questionable qualifications to carry out the projects. 

The COA said the contracts were awarded despite the winning contractors’ “incomplete documentary/eligibility requirements; questionable availability of project personnel and equipment; and deficient legal, technical, and financial eligibility documents.”