TAGBILARAN CITY – The Commission on Audit has found that “Bloated cost estimates in the Approved Budget of the Contract (ABC) resulted in an overprice amounting to P3,266,670.05 of the plumbing and electrical materials contrary to section 5.1 of COA circular No. 2012-003 to the disadvantage of the government.” COA said that after an examination of the ABC, it found that the Purchase Request (PR) “contained bloated estimates of the cost per item in the award contract.” The ABC prepared by Rosalina C. Ibarra, recommended for approval by Arsenio Fudotan and approved by Gov. Edgar Chatto amounted to PhP12.6 million. The check No. 001789973 amounting to PhP6.5 million was issued May 9, 2013 for plumbing materials, it said.
“By Authority of the Governor, Mr. Alfonso Damalerio (plumbing and electrical materials combined), PhP6.1M Check Nos. 001791315, June 14, 2013 and 001797253, Aug. 6, 2013).” COA based its findings on a price canvass it conducted in Herbert Malmis General Merchandise & Contractor, Inc, and it noted that the “store quoted lower price for almost all items compared to the price in the contracted with the PGBh. This caused the bloated price estimates in the ABC.”
The Provincial Procurement Management Unit (PPMU) “was remiss with their mandated function” to conduct verification for all procurement transactions, COA said. This has attracted the enterprising businessmen due to excessive approved budget and “they have to bid for the amount stipulated in the ABC.”
COA showed a comparison of price per PR Nos. 494 and 1835 and its own canvass at Herbert Malmis store. The comparison showed that in the PRs the unit cost of P.E. pipe #12 was Php25 with a 25,850 meters procured to the tune of Php646,250.
The COA’s canvass showed otherwise since its unit cost of the same material plus 10% “price variance” amounted to only Php21.56/unit. COA’s cost estimate of the said plumbing material is Php557,326. Hence, an overprice of PhP88,924, COA said.
The following are overpriced of materials: 11,875 meters of P.E. pipe # 1 — Php121,362.50; 640 meters of P.E. pipe #1 and ¼ —PhP9,444.40; 20 meters P.E. pipe 1 and ¼ — Php275.20; 11,390 meters P.E. pipe # 1 &1/2 — Php274,499; 14,541 meters P.E pipe # 2 — Php546,014.55; 550 pieces PVC pipe # 3 — Php864,578; and 555 pieces PVC pipes # 4 —- Php1,361,570, COA said.
COA has classified this transaction as “excessive expenditure per item 5.1 of its circular 2012-003. The circular defines the excessive expenditures “signifies unreasonable expense or expenses incurred at an immoderate quantity and exhorbitant price.”
The management of the provincial government has argued that the overprice of said materials would not be Php3.26 million based on COA’s computation. “Our price computation use 20% mark-up added to the prevailing market price of the goods procured. Management justifies that the 20% mark-up would pertain to the taxes on the goods on which the supplier passed to the PGBh.”
But COA issued a rejoinder on the management justification. It said that the 20% mark-up used by the province in price estmates of goods is over 10% price variance over the market price allowable by COA circular.
“BIR (Bureau of Internal Revenue) allowed price tags of all commodities to be inclusive of taxes, thus, the suppliers cannot demand for additional mark-up for the taxes.”
COA recommended that the provincial government require the PPMU to be prudent in making price estimates that may result in overprice. (rvo)