City told to explain P25M paid to firm

CEBU, Philippines- The Commission on Audit has ordered Cebu City to explain the P25.5 million it paid a private company as tipping fee for the city’s garbage.

Under a “direct contracting” arrangement, the city paid Asian Energy System Corporation P25,479,3000 for 36,399 tons of solid waste at 700 per ton covering October 1, 2013 to May 16, 2014 as approved by the Bids and Awards Committee.

The garbage was delivered to the Consolacion Sanitary Landfill, Methane Recovery and Power Generation Facility in Polog, Consolacion.

 The disbursement was charged against the General Fund-Other Maintenance and other Operating Expenses.

The move, COA said, is reportedly contrary to Republic Act 9184 or the Government Procurement Reform Act because there are other landfill operators available.

State Auditor Ma. Daisy Bercede said the city disbursed the amount allegedly contrary to Sections 50 and 3 of Republic Act 9184.

 The sections define direct contracting or single source procurement as a “method of procurement of goods that does not require elaborate bidding documents.”

 “ We recommend that the city explain the basis of awarding the solid waste disposal services thru direct contracting when conditions required under Section 50 of RA 9184 did not apply the existing conditions,” read the January 29, 2015 three-page post-audit report.

 It was found out that the city government awarded twice the delivery and supply of one solid waste disposal services to Bio Nutrient Waste Management Inc. through negotiated mode of procurement on April 25, 2014 and direct contracting on December 15, 2014 at the same price of P700 per ton or in an aggregate amount of P5,040,000 and P2,135,000, respectively.

 This was reportedly contrary to the justification made by Department of Public Services chief Dionisio Gualiza.

The justification states that “Asian Energy Systems Corporation is the sole supplier and has performed satisfactorily in the delivery of the service and there is no other landfill located within Metro Cebu other than the Asian Energy Systems Corporation.”

 Bercede pointed out, however, that “Based on the foregoing circumstance, Asian Energey Systems Corporation is not the sole supplier of solid waste disposal services and the Certificate of Sole supplier issued by the city government is not reliable, since separate certificates of sole supplier have been issued to both, Asian Energy Systems Corporation and Bio Nutrient Waste Management, to justify the approval of the direct contracting by the BAC committee.”

She said the undertaking failed to attain the principles of “transparency and competitiveness.”

 “With the awarding of direct contracting to Asian Energy Systems Corporation, other qualified and licensed landfill operators were deprived from participating in the bidding process, thus the governing principle of transparency and competitiveness have not been achieved contrary to Section 3 of the said provision,” she added.

 The two suppliers offered the service on the disposal of solid waste regardless of the method.

 BioNutrient Waste Management Inc. employed the Takura Method of composting and has been issued a Certificate of Non-coverage on January 25, 2013 for their composting and organic fertilizer production facility in Barangay Inayawan by DENR-EMB Bureau.

 Also, COA demanded DPS head to explain why certificates of being sole suppliers were issued to different entities with the same business.

 Section 3 of RA 9184 provides that government procurement shall be governed by the principle of transparency in the procurement process and in the implementation of procurement contracts through wide dissemination of bid opportunities and participation of pertinent non-government organization.

 It further states that competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding.

 The commission recommends strict observance of the provisions in the use of direct contracting in the procurement of goods “to ensure that government resources are used economically and efficiently.”

 According to RA 9184, direct contracting may be resorted to by concerned procuring entities with these conditions: procurement of items of propriety nature which can be obtained only from the proprietary source when patents, trade secrets and copyrights prohibit others from manufacturing the same item; when the procurement of critical plant components from a specific manufacturer, supplier or distributor is a condition precedent to hold a contractor to guarantee its project performance, in accordance with the provision of its contract; or those sold by an exclusive dealer or manufacturer which does not have sub dealers at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the government. — /JMO (FREEMAN)