In its 2022 Audit Report, COA identified ALS and HMME Inc. as the two contractors involved in the procurement, and said various documents and permits to determine the technical eligibility of these contractors were also not submitted or attached to the disbursement voucher.
The state auditors also questioned the computed number of tons of waste done through a manual preparation of the Material Recovery Facility (MRF) Weighing Scale Trip Ticket as well as the lack of the weigh bridge calibration certificate of the manufacturer and the Department of Science and Technology (DOST) validation certificate.
The City Government entered into a contract with ALS and HMME Inc., on September 3, 2021 to November 30, 2022 for its solid waste disposal and management system worth P86,985,133.08.
The agreement covered 64,462 tons of the city’s residual waste with a unit price of P1,348 per ton, COA reported.
However, COA found out that the primary line of business of ALS was freight forwarding while that of HMME Inc. was the manufacture and repair of furniture and fixtures of metal based on their Certificate of Registration certified by the Bureau of Internal Revenue (BIR).
The audit team also questioned the non-submission or -attachment of seven documents to the disbursement voucher: the memorandum of agreement (MOA) between the Lapu-Lapu City Government and the joint venture contractor, ALS’s Securities and Exchange Commission (SEC) Certificate of Registration, a copy of the Certificate of Non-Coverage (CNC) or Environmental Compliance Certificate (ECC), and clearance or permits from the other local government units (LGUs) that may be affected in the transport of solid waste to the sanitary landfill.
Also missing were environment-related permits such as the Permit to Operate pursuant to the Philippine Clean Air Act of 1999, Discharge Permit pursuant to the Philippine Clean Water Act of 2004, Hazardous Waste Generator ID pursuant to the Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990; and Solid Waste Management pursuant to the Ecological Solid Waste Management Act of 2000.
COA also flagged the absence of the proof of ownership or purchase of five to 10 dump trucks and proof of ownership or rent of one backhoe with ready standby unit.
With the non-attachment of these permits and documents, COA said it could not validate the qualifications of the awarded bidder.
The state auditors flagged the absence of machine-generated receipts that determine the actual weight of the garbage or hauling equipment, as the Trip Summary Report was manually prepared by the City’s MRF personnel.
Without these machine-generated receipts, COA said the information and resulting billed amount in the reports was “uncertain.”
The tonnage was computed through the deduction of gross weight (before loading) of the garbage truck from its Tare weight or the weight when it was empty.
“Since the payment is based on the number of tonnages, the credibility of the cargo weights figure — in terms of sources and calculation should be based on the most reliable and evidenced-based information; otherwise, the resulting sum shall be highly questionable,” COA reported.
The audit team recommended to the City Government the submission through the Bids and Awards Committee (BAC) of the lacking documentation and also to explain why the project was awarded to the joint venture of ALS and HMME Inc. despite the absence of the required documents “that would have entailed disqualification of the contractors to the project.”
In its reply to COA, the Lapu-Lapu City Government assured that the mentioned contractors were eligible and they they abide by the guidelines of the procurement law.
It added that it had already submitted the documentary requirements such as the MOA, Department of Trade and Industry Certificate of Registration of ALS, the Disposal Waste Agreement between ALS-hauler and AEC-owner and operator of a sanitary landfill, the ECC of AEC, and other permits.
The City Government was also not capable of generating machine-generated receipts for the weigh bridge, hence only trip tickets were issued as proof and used as bases for payment.
It vowed to submit the weigh bridge calibration certification from the manufacturer and the DOST validation certificate.
COA reminded the Lapu-Lapu LGU that under Government Procurement Policy Board Non-Policy Matter Opinion 126-2016, it is the BAC’s duty to determine the eligibility of the supplier or bidder in government projects, particularly by scrutinizing the supplier’s Mayor’s Permit and BIR Certificate of Registration to see if these authorize it to engage in the business required by the procurement “such that a finding to the contrary would amount to non-compliance by the bidder and will result to its disqualification.”
“Ideally, it is the BAC that plays a crucial role in determining whether a certain supplier can participate in the procurement through the eligibility check. However, in this aspect, the BAC failed to undertake this responsibility,” COA said.
COA will subject the submitted documents to further verification, it added. (EHP)
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