El Salvador City 2008 COA Audit 2
July 1, 2010
Detailed Findings and Recommendations
2. The LGU failed to prepare a Project Procurement Management Plan to be consolidated into an Annual Procurement Plan in violation of the provision of Section 7 of the implementing Rules and Regulation –A of Republic Act No. 9184.
Section 7 of the Implementing Rules and Regulation – A of Republic Act No. 9184 prescribe the procurement planning and budgeting linkage emphasizes that procurement entails meticulous and judicious preparation of plan that are linked to budgets and preparation of Project Procurement Management Plan (PPMP) for each individual project by the end-users of the procuring entities and consolidating all PPMP’s into an Annual Procurement Plan (APP) by the BAC Secretariat. It further provides that no government procurement shall be undertaken unless it is in accordance with an approved APP and that the implementation of any government project not included in the procuring entities APP shall not be allowed.
The PPMP includes:
a. The type of contact to be employed;
b. The extent/size of contact scopes/packages;
c. The procurement method to be adopted and indicating if procurement tasks are to be outsource as provided in Section 53 (e) of the IRR-A;
d. The time and schedule for each procurement activity; and
e. The estimated budget for general components of the contract.
Page 40, Item 3 of the Guidelines on the Establishment of Procurement System and Organization (Vol. I) provides that the BAC may prepare three (3) APP’s one (1) each for Goods, Infrastructure Projects, and Consulting Service or a Consolidated APP for all procurement activities. The APP shall contain the following information;
a. Name of the project/procurement;
b. PMO Of end-user unit;
c. General description of the project/procurement (general
description of requirement and quantities, where applicable);
d. The procurement method to be adopted, and indicating if procurement tasks are to be outsource as provided in Section 53 (e) of the IRR-A;
e. The time schedule for each procurement activity and;,
f. The Approved Budget Cost
The APP shall be submitted by the BAC to the City Mayor for approval and should recommend the use of alternative methods of procurement in case when public bidding is not feasible and this will be indicated in the APP.
Verification of the purchase of goods of the Agency disclosed that each department/end user did not prepare the required PPMP. They only have a consolidated APP for office supplies requirement of agency.
Interview conducted with the head of the BAC Secretariat confirmed that no PPMPs were submitted by the end-user. They did not prepare the PPMP because the form was not introduced and enforce by them.
The above- cited practice is a clear violation of the provision of the IRR-A of Republic Act No. 9184.
The management promised to prepare a project procurement management plan starting this year.
RECOMMENDATION for El Salvador City Government:
Require the department heads to submit Project Procurement Management Plan (PPMP) for each individual project, duly linked in each department budget and the BAC Secretariat shall consolidate all PPMP’s into an Annual Procurement Plan and monitor its proper implementation. BAC members should ensure that the procurement entity abides by the standards set forth by Republic Act No. 9184.
El Salvador City 2008 COA Audit 1
July 1, 2010
Detailed Findings and Recommendations
In the audit of the accounts and operations of the City for CY 2008 we noted several deficiencies in the following areas:
I. Financial and Compliance Audit
1. The LGU did not withhold 10% nor requires the supplier of the goods and equipment purchased to put up a special bank guarantee equivalent to 10% of the total cost of the products delivered as warranty of the manufacturing defects of the products delivered in violation of provision of Section 5, Volume 2 of the Procurement Manual for Local Government and pertinent provisions of RA 9184 and its IRR.
Section 5, Volume 2 of the Procurement Manual for Local Government Provision Units for Goods and Services states a warranty is required in the procurement of goods to ensure that the supplier, manufacturer or distributor, as the case may be, will correct any manufacturing defect.
For the procurement of goods, a warranty shall be required from the contract awardee for a minimum period of three (3) months, in the case of supplies, and one (1) year, in the case of equipment, after the acceptance by the LGU of the goods and/or equipment.
Warranty shall be covered by either of the following:
1. Retention money – the retention money shall be in an amount equivalent to at least ten percent (10%) of every progress payment, or
2 Special bank guarantee – the special bank guarantee shall be equivalent to at least ten percent (10%) of the total contract price. The special bank guarantee must be contract specific, that is, it shall be executed for the special purpose of covering the warranty for the subject procurement contract.
If the warranty period is longer than the minimum period of three (3) months for supplies and one (1) year for equipment, the period beyond the minimum period need not be covered by retention money or special bank guarantee. After the lapse of the minimum period, the LGU must release the retention money or special bank guarantee.
It was observed that the LGU did not require warranty in the delivery of goods .
Product warranty is different from the money warranty required under RA 9184. It will only answer the service repair of the products, it will not answer its manufacturing defect, where the money warranty is necessary
The City Accountant reasoned that equipments procured have products warranty for one (1) year hence there is no need to withhold another 10% as retention money or require a special bank guarantee equivalent to 10% of the cost.
Recommendation to El Salvador City Government:
Instruct the City Accountant to withhold the 10% retention money or require a special bank guarantee equivalent to 10% of the total cost of the product for the purchase of goods and equipment.
