ESR REPUBLIC OF aH Pat PPANES COMMISSION ON AUDIT uz NATIONAL GOVERNMENT AUDIT SECTOR Department of Education 3 Audit Group Ss PANEER HOSED Office of the Auditor | NGAS-5-C-DepEd 3 Audit Group Audit Team No, NCR-05 - NMP | AOMNo.: — 2023-015 (2022/2023) Date: October 17, 2023 AUDIT OBSERVATION MEMORANDUM FOR JEREMY R. BARNS | Director-General | National Museum of the Philippines (NMP) Manila Attention: ATTY. MA. ROSENNE M. FLORES - AVILA Deputy Director-General for Administration Chairperson, Bids and Awards Committee (BAC) We have conducted auditorial review of the submitted contracts for seven (7) infrastructure projects of the NMP in CY 2023 and noted the following observations; | Non-compliance with the relevant provisions of the Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184, other GPPB and COA issuances such as: (a) inconsistency among the Approved Budget for the Contract (ABC), Annual Procurement Plan (APP) and Appropriation; (b) delayed execution of some procurement activities due to non-observance of the prescribed period of action; and (c) deficient bid/contract documents affected the efficiency of the agency's procurement process for various infrastructure projects totaling P519,121,756.54 for CYs 2022-2023. 1. The Revised IRR of RA No. 9184 provides for the list of documentary requirements and information to check/ensure the regularity/validity of the procurement activities on services, infrastructure and consulting projects. 2. COA Circular No. 2012-001 dated June 14, 2012, as amended by COA Circular No. 2023-004 dated June 14, 2023, preseribes the revised guidelines and documentary requirements for common government transactions. 3. In calendar years (CYs) 2022 and 2023, the NMP conducted public biddings and negotiated procurement for the procurement of infrastructure projects totaling P519,121,756.54 and entered into contract with the winning bidder, with details below: ‘Table 01 — List of Infrastructure Projects in CYs 2022-2023 ‘Source of | Mode of ‘Date of ‘Contract ‘Winning Name of Project | “rund | Procurement | Contract | Amount Bidder 1. Development of | GAA202i | Public | 1/10/2023 | 2,817,720.99) | 401 National Museum Bidding 7 | Development‘Name of Project Source of ‘Fund Mode of Procurement Date of | Contract Contract Amount ‘Winning Bidder Complex in Manila Phase 1 to implement Republic Act No. 11333 (Additional Dismantling Works) 2, Development of National Museum Complex in Rizal Park (Phase 11) GAA 203 Public Bidding Osa 7/2023 84,037, 888.25 3. Continued Restoration and Site Development of Our Lady of Caysasay Church and Associated Structures in Taal, ‘Batangas, Phase 3 GAA 2023 Negotiated Procurement ~ Adjacent or Contiguous 051972023, 29,914,888.29 4. Improvement of Rocha House in Sitio Ubos in Tagbilaran Ci Bohol, a declared Important Cultural Property (ICP) GAA 2023 Public Bidding 0971372023 5,952,888.63, and Construction Corporation 5. Rebubilitation of Former United States Air Force (USAF) Hospital in Clark Freeport, Pampanga and Conversion to National Museum of the Philippines Central Luzon, Phase 1 GRADS Public Bidding O4147a003 195,463,749 46 © Construction of National Museum of the Philippines ~ Baler in Baler, Aurora GAA 2023 Public Bidding oni t72023 197,269,107.00 TS. Lim struction a Trading, ‘orc 7 Repair & Maintenance at Batanes Arca Museum and Satellite Office, ‘Uyugan, Batanes GAA 2023 Public Bidding, O706/2023 3,665,513.92 (OR Construction Trading & eral services LTD. Co. Total 519,121,75654 4. Auditorial review of the subject contracts disclosed the following deficiencies: a. Inconsistency among the ABC, APP and Appropriation of contracts for regular and recurring services undertaken through early procurement 5. Section 7.5 of the Revised IRR states that except for procurement projects = renewal Page 2 of 7acti consistent with the appropriat and automatic appropriations, the corporate budget, and the appropriations or as the case may be, | | ities (EPA), the ABC as reflected in the approved APP shall be at i times mns for the project authorized in the GAA, continuing, jinance, 6. The amount of the ABC in the actual bidding of the project Development of National Museum Complex in Manila Phase I to implement Republic Act No, 11333 (Adina Dismantling Works) was not the same with the approved APP and the rem: 2021 shown below. ining CY appropriation, contrary to Section 7.5 of the Revised IRR of RA No. 9184, as ‘Table 02 ~ Contract amount per ABC, APP and Appropriation | ‘ABC APP/Appropriation Difference 2,818,897.20 2,819,480.19* 582.99 "The amount per APP was net of PS 378,630.95 budget for variation order ao b. Delays in the conduct of procurement activities 7. The Updated 2016 Revised IRR of RA No. 9184 prescribes the period of action on procurement activities, some of which, are stated below: ‘Table 03 ~RA 9184 Requirements on Post-qu: ication, NOA Posting and Contract Signing Provision of IRR of RA 9184 | Section 348 ‘The post-qualification process shall be completed in not more than twelve (12) calendar days from the determination of the Lowest Calculated Bid/Highest Rated Bid. In exceptional cases, the post-qualification period may be extended by the HoPE, but in no case shall the aggregate period exceed forty-five (45) calc dar days for Goods and Infrastructure Projects, or thirty (30) calendar days in Consulting Services. | Section 37.1.6 ‘The BAC, through the Secretariat, shall post, within three (3) calendar days from its issuance, the Notice of Award in the PhilGEPS, the website of the Procuring Entity, if'any, and any conspicuous place in the premises of the Procuring Entity. | Section 37.21 The winning bidder shall post the required Performance Security and enter into contract with the Procuring Entity within ten (10) calendar days from receipt by the winning bidder of the Notice of Award. & The ] recommended earliest possible time and maximum period allowed for action on specific procurement activity for the procurement of infrastructure projects are provided for in Annex “C” of the said IRR. 9. In th e evaluation of the agency’s compliance with the prescribed period of action on procurement activities, delays ranging from one (1) to 22 calendar days were noted in the conduct of the following procurement activities: ‘Table 04 — Delays noted in the Procurement Process of Infrastructure Projects nameaal No. ot | naonst No.of | the Revised Name of Procurement | Calendar ae Actual | 0 oF | the Revised Project | Activity | Days (CDs) [Duration | Days | IRRof Ra Allowed y followed [Development Posting in| 3eds | Date of Receipt] Publish Dae in | S eds | Dads | ~ Section of National | PhilGEPS of of NOA: ‘PhilGEPS: 37.1.6 Museum NOA weiosinox | 12/4/2022 ESN Page 3 of 7—— No.of | theRevied Name of Calendar Actuat | N9- of |) the Revi Project Days (CDs) eee [Duration | pave || RR rRA Allowed tll somowe Complex — in | Contract 10 eds Date of Receipt) Contract Date: | 32 cds Poe) [Section 37.2.1 Manila Phase I | Signing of NOA: to implement 12/09/2022 01/10/2023, | Republic Development of National ‘Museum | Complex in Rizal Park (Phase I) Act No. 11333 (Additional Dismantling Works) Development | Posting in] 3eds | Dave of Receipi| Publish Daren | S eds | Deds |Section 7.1.85 of National | PhilGEPS of efNOA: | PhilGEPS: Museum NOA 03/09/2023 | 03/14/2023 Complex — in | Contract 10 eds Date of Receipt| Contract Date: 18 eds Beds | [Section 37.2.1 Rizal Park | signing of NOA: | (Phase 11) 03/09/2023 | _os2712023 Tmprovement | Contract 10 eds | Date of Receipi| Contract Date: | 22.eds | Ideas |Secion 7721 of Rocha | Signing of NOA. House in Sitio os22/2023 | 09/13/2023 Ubos in Tagbilaran City, Bohol, @ declared ICP | Rehabilitation | Posting in | 3.eds | Date of Receipi| Publish Dateim | eds | 3 eds | Section 37.16 of Former | PhilGEPS of of NOA: ‘PhiIGEPS: USAF NOA 4/05/2023 | 04/11/2023, Hospital in Clark Freeport, Pampanga and Conversion to National Muscum ofthe Philippines Central Luzon, | Phase | Construction | Posting in | Sede | Date of Receipi| Publish Daren | 4 eds | Ted] — Seaton of National | PhiIGEPS of of NOA: | PhilGEPS: a6 Museum of the | NOA osi29r2023_| _o7/0s/2023 Philippines ~ | Contract Teds | Date of Receipi| Contract Dare: | Deis | Teds || Sexton Baler in Baler, | Signing of NOA. a2 Aurora osi29r2023_| _o7/1/2023 | Repair & | Post Teds [Abstract of Post-Qualification 24 eds | I2eds | Secon 345 Maintenance at | qualification Bids: Report: Batanes Area 05/26/2023 06/19/2023 Museum and Satellite Office, Uyugan, Batanes. ESRB Page 4 of 710. Although the post-qualification process for the procurement of contract for the Repair & Maintenance at Batanes Area Museum and Satellite Office, Uyugan, Batanes did not exceed the maximum allowable period of 45 calendar days, there was no explanation/information found in any of the submitted contract documents as to the necessity of extending the post-qualification period for said contract. ¢. Deficient bid/contract documents 11, We have noted that the following documents were lacking which are essential to complete the auditorial review of the contracts: ‘Table 05 — List of Lacking Documents in the Au rial Review of Contracts for Infrastructure Projects Name of Project Contractor | Contract Lacking Documents Amount Continued Restoration and | 401 29,914,888.29 |1. Proof of posting of contract in Site Development of Our | Development agency website and cejtspicnons Lady of Caysasay Church | and place in agency premises; and Associated Structures in | Construction 2, Proof of posting of Request for Taal, Batangas, Phase 3 | Corporation Quotation (RFQ)Request for Proposal (RFP) in PhilGEPS and conspicuous plac in agency premises: 3. Proof of posting of Notice of Award (NOA) in agency ‘website; and 4, Omnibus Sworn Statement Relubiliation of Former | IS. Lim | 195 463,7@946 |. CTC of the Official Receipt on United States Air Foree | Constuction the sale of Bidding Documents (USAF) Hospital in Clark | and Trading, Freeport, Pampanga and | OPC Conversion 10 National Museum of the Philippines Central Luzon, Phase I Construction of National 197,269,107.00 | I. Affidavit of Site Inspection; and Muscum of the Philippines — 2, Performance security, which is Baler in Baler, Aurora ‘valid until the issuance by the procuring entity. of the Certificate of Final Acceptance. Repair & Maintenance at | MOIR 3,665,513.92 |. CTC of the Official Receipt on Batanes Area Museum and | Construction the sale of Bidding Documents; Satellite Office, Uyogan, | Trading & 2. Affidavit of Site Inspection; and Batanes General 3. Construction Safety and Health Services Program (CSHP) duly approved LTD. Co bytheDOLE. Total F633 258.67 12, Section 37.2.3 of the 2016 Revised IRR of RA No. 9184 enumerates the documents that should form part of the contract, among others, is the construction safety and health program (CSHP) approved by the Department of Labor and Employment (DOLE). 13, As stated in Section 5 of the DOLE Department Order (DO) No. 13-98 dated July 23, 1998, “every construetion project shall have a suitable CSHP, which must be in accordance with these rules, and other orders and issuances issued by the DOLE”. (Emphasis supplied) | Page S of 7SSeS 14, Tt was noted that the CSHP submitted by MOJR Construction Trading & General Services LTD. Co. for the project Repair & Maintenance at Batanes Area Museum and Satellite Office, Uyugan, Batanes was not duly approved by the DOLE in compliance to Section 37.2.3(f) of the 2016 Revised IRR of RA No, 9184, 15, The CSHP should not be taken for granted because this safeguards the protection and welfare of all employed construction workers and the general public that is within or around the site of construction. It also assures safety and harmony among workers and contractors involved in construction or renovation projects. With approval from DOLE, it helps in preventing worksite accidents and injuries through the project's implementation of suitable programs, activites, systems and procedures that passed in the Occupational Safety and Health (OSH) standards, 16, It was also noted that the performance security posted by J.S. Lim Construction and Trading, OPC for the contract Construction of National Museum of the Philippines — Baler in Baler, Aurora is valid only from July 06, 2023 to July 05, 2024. The contract duration was 450 calendar days; hence the validity of the posted performance security does not cover the whole duration of the contract or until issuance of the NMP of the Certificate of Final Acceptance which doss not conform to the requirement set forth under Section 39.3 of the 2016 Revised IRR of RA No. 9184, | 17. Section 39.3 of the 2016 Revised IRR of RA No. 9184 provides that “The performance security shall remain valid until issuance by the Procuring Entity of the Certificate of Final Acceptance. 18. Moreover, Section 22.4 states that “The minutes of the pre-bid conference shall be recorded and prepared not later than five (5) calendar days after the pre-bid conference, and shall be made available to prospective bidders not later than five (9) days upon written request, xxx.” 19. It was observed that the minutes of the meetings for the Pre-Bid Conference for four (4) infrastructure projects were undated. Thus, it eould not be determined whether these proceedings were undertaken within the prescribed period of action. | Table 06 — List of Contracts for Infrastructure Projects with Undated Minutes of Meeting for Pre- Bid Conference 1 Name of Project Contractor Date of Pre-Bid Conference Development of National Museum Complex in Manila | 401 Development and | Nov. 10, 2023 Phase Ito implement Republic Act No. 11333 (Additional | Construction | Dismantling Works) Corporation | Development of National Museum Complex in Rizal Park Feb. 15,2023 (Phase M1) i ‘Rehabilitation of Former United States Air Force (USAF) | 5S. Lim Construction | Feb. 15, 2023 Hospital in Clark Freeport, Pampanga and Conversion to | and Trading, OPC | National Museum of the Philippines Central Luzon, Phase I | Repair & Maintenance at Batanes Area Museum and | MOJR Construction | May 05, 2023 Satellite Office, Uyugan, Batancs Trading & General Services LTD. Co. Page 6 of 720. The inconsistency among the ABC, APP and appropriation, observed delays in the procurement activities, and deficiencies in the contract documents afifaed the regularity and integrity of the procurement process for said services and infrastructure projects. | | 21, We recommend that the Management require the BAC to: | a. explain the inconsistency noted on the amounts in the ABC, APP and appropriation; submit justification for the delays noted in the conduct of procurement activities identified above and extension of the post-qualification period; c. submit immediately the noted lacking documents in order for the Audit Team to complete the auditorial review of the contracts; and d. prepare and submit the minutes of pre-bid conference that shows the date of preparation for the Audit Team to assess the compliance of the NMP to the requirements set forth under Section 22.4 of the 2016 Revised IRR of RA No. 9184, May we have your comments on the foregoing audit observations within fifteen (15) days from receipt hereof. ] sent. 9A.1co | State Auditor IT OIC-Audit Team Leader Pe L. VENUS State Auditor TV OIC-Supervising Auditor Proof of receipt: Name/Designation Received by Date Bee = | 1,_Jeremy R. Bams, Director-General | I 2. Atty. Ma. Rosenne M, Flores-Avila, Chairperson ~ BAC sae Page 7 of 7 |