AFP store quizzed on costly deals

MANILA, Philippines – Why did a military store, which is supposed to sell goods at affordable prices to Armed Forces of the Philippines (AFP) personnel, enter into P149.63-M in transactions when it could have gotten cheaper deals?

The Commission on Audit (COA) wants to know, and is questioning the AFP Commissary and Exchange Service (AFPCES) for purchase orders with Puregold Junior Supermarket Inc in the first half of 2011. The transactions amounted to P149,626,306.50, based on COA's review of the agency's transactions.

COA said AFPCES could have bought goods, at cheaper amounts, directly from exclusive distributors or manufacturers.

This resulted in a double hit for the government because the latter had to pay value-added tax (VAT) for the grocery items on top of the middleman's add-on cost, according to COA.

“Since e-VAT is shifted or passed on to the buyer, the AFPCES gets the burden of paying the additional tax passed on to Puregold from the manufacturers, but recovers the full amount of e-VAT from the AFPCES through the issuance of a TSAC, which the latter can use as tax credit to the disadvantage of the government,” COA said.

The tax subsidy was supposed to allow AFPCES to provide “quality merchandise goods and services at reasonably low prices to authorized customers,” such as military and civilian personnel of the AFP, retirees, widows and widowers of deceased soldiers, war veterans, and their families.

Another problem is that AFPCES allowed even unauthorized customers, or those who did not present official AFPCES purchase cards, to make purchases. The merchandise on display in various AFPCES outlets, COA added, did not bear a signage that says, “Tax subsidized by the Philippine government. Not for resale.”

“In the absence of said markings, there is a probability that the merchandise/goods purchased at AFPCES may be resold to other parties thus, the objective for which the tax subsidy was granted may not be achieved,” COA said.

The supplies AFPCES bought from Puregold included cheese, laundry detergent powder, biscuits, cookies, noodles, junk food, vinegar, soy sauce, ketchup, and fruit juice powder.

The P149.64-M purchases is only an initial sum based on records from January to June 2011, COA said. The total could be higher, it noted. 

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Rappler.Com | July 28, 2012 | Article Link

COA reminds military of need to bid out projects

MANILA, Philippines—The Commission on Audit has advised the Philippine Army to strictly follow the public bidding requirement for its projects, after finding that it had resorted to negotiated procurement to implement a program to build roads, classrooms and water facilities in conflict-ridden areas.

The COA noted in its 2010 Philippine Army report that in undertaking the P258.5 million Kalayaan Barangay Program, the 51st Engineering Brigade resorted to negotiations in order to ensure the completion of all related projects by the end of 2009.

It also paid for bulk of construction materials through cash advances.

The COA said that in doing these, the military did not follow the procurement law and a COA circular.

The Army, however, explained its move and said it was allowed to take steps to ensure the quick delivery of materials.

It told the COA that under a department order, its engineering brigade could augment the processing capacity of the contracting offices for the speedy delivery of materials for Kalayaan Barangay projects. It could also use the special disbursing officers system as a stop-gap measure to prevent delays in implementing projects, it added.

The Kalayaan Barangay Program was aimed at building basic infrastructure in various areas in the country, with the goal of transforming conflict-affected communities into peace and development areas.

A total of P258.5 million was released for the implementation of the program in 2008 and 2009.

The funds were used to build 36 school buildings, 40 water systems, 20 electrification, 33 health centers and 55 farm to market roads, the COA noted.

“However, it was noted that the procurement of construction materials for the aforesaid projects was not made through public bidding but instead through negotiated procurement in violation of RA 9184 (thegovernment procurement law),” the COA said.

The law states that all procurement should be done through competitive bidding, except in certain instances enumerated under the law.

The audit agency also noted that payments for construction materials and labor totaling P177.956 million were made through cash advances. The remaining amount was paid for using the procurement service of the 51st engineering brigade.

It said this was contrary to a COA circular that states that all payments must be made by check, and that only payments in small amounts could be made through petty cash fund.

It recommended that the Philippine Army strictly implement the procurement law and stop the granting of cash advances for infrastructure projects in order not to violate COA rules.

It further said the use of the special disbursing officer system was only a stop-gap measure, and could not be invoked to pay for all Kalayaan Barangay projects through cash advances.

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By Leila B. Salaverria
Philippine Daily Inquirer

2:51 pm | Saturday, December 31st, 2011

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COA questions use of Balikatan funds by Army

The Commission on Audit (COA) has raised concerns about the Philippine Army’s use of funds for the Balikatan exercises, noting that they were spent on nonrelated activities.

But the Philippine Army defended its expenditures and insisted that the money was spent properly.

In its 2010 report, the COA found that the Army’s Balikatan exercise funds were used to build mess halls, buy rubber boats and repair water lines and training facilities.

The COA said the money was intended for the joint military and combat training exercises with the US, and combined planning and interoperability, which were meant to enhance security relations.

“Based on the purpose and intent of the fund, the nature of the expenses financed by the Balikatan exercise fund are deemed not in line with the purpose and intent of the fund,” the COA said.

As of Dec. 31, 2010, the Philippine Army had received P18.298 million from General Headquarters, and of the amount, P14.719 million had been spent.

The Army said its use of the Balikatan funds was in line with the program of expenditures issued by General Headquarters.

It also said its use of the funds would ultimately benefit the participants of the joint military exercises.

“Further, these repairs and procurement were undertaken with the ultimate objective of improving the facilities used in going through with the Balikatan exercise,” it told the COA.

The Army said it was important to provide adequate supplies and facilities for the joint activities.

The COA also found that UN peacekeeping funds totaling P3.353 million were used to buy medical supplies for the Fort Bonifacio General Hospital and the reimbursement of medical supplies and expenses incurred for the dental examination of applicants. Leila B. Salaverria

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Philippine Daily Inquirer

2:19 am | Friday, December 30th, 2011

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