IN TWO reports involving the 2021 spending of two Cebu local governments, among the audits released this week, the Commission on Audit (COA) struck down the two local government units' (LGUs) argument that lower price of procured goods or services justifies the selection of a contractor or supplier even though it is not qualified.

[1] Cebu City, through the city accountant, said in its reply to COA’s finding -- that Docast Construction and JJ & J Construction and General Supply were not qualified for the P383.5 million contract as they were not a corporation and were engaged in construction – the two firms offered the lower bid of P1,800 per ton.

The accountant must think that the price factor outweighs the contractors’ disqualifications and violations of the rules set by law or regulation. No, says the COA report.

[2] In Carcar City, a total of P22.839 million was paid for private lands through negotiated purchase, which COA says violated two presidential decrees, a COA circular and “possibly even” the anti-corruption law. The Local Government Code provides that it is unlawful for a government official or employee to transact business with the LGU in which he is an official or employee.

Some P10.643 million was paid to then vice mayor Nicepura L. Apura, husband of the city mayor, with the couple as the top officials of the city when it was transacted. COA also noted that Carcar City bought a lot from Nicepura Apura for P7.822 million Unlawful, said COA of the purchase, citing the Local Government Code and the anti-corruption law.

The City used the claim that the bought lands were located within the premises of New City Center, the LGU’s project. And this argument: the price was “lower than the market value.” Never mind that the seller was the city’s vice mayor at the time.

ISSUE IN GARBAGE DEAL: QUALIFICATION. COA refuses in its report to be distracted from the main issue against Docast and JJ & J. From evidence, COA says in its rejoinder, the two firms, partners in a joint venture, are not qualified and have violated laws and regulations.

But apparently, the two firms snagged the contract because of their lower price, compared to that of competitor Jomara Konstruct Corporation.

But a low amount in the bid, COA instructs, “does not automatically mean or translate into a favorable contract for the government.” Based on literatures, COA says, “too much deflated prices” may lead to problems during the implementation of the project. Contractors are tempted to use substandard materials so as “to recover losses or foregone profits.”

The low bid could be a siren’s call to disaster, more graphically illustrated in the choice of the two firms now being reportedly investigated for plunder on Cebu City’s garbage deal.

PROBE ON DOCAST–JJ ASKED IN AUGUST 2021. The Cebu City Government must have realized that it erred in relying on the low bid of Docast and JJ &J when it selected the service providers.

As early as last August 19, 2021, or two months past the year of implementing the deal, the City Council asked Visayas Ombudsman and National Bureau of Investigation (NBI) and police, with COA, to investigate “suspected overcharging and bloating of figures in the payments of garbage hauled” by the two firms. On the same day, then vice mayor Mike Rama was among those who called out the “alleged plunder.” Minority Floorleader Nestor Archival Sr. questioned the payment of P250 million to Docast-JJ & J when “in fact for the months from January to May 2021, the City should have paid only P130 million based on the amount of garbage hauled to ARN Central Management,” the dumping site.

• Explainer: Suspected multimillion-peso loss prompts Cebu City Council to seek multi-agency probe on garbage payment. Plunder, says Rama. SunStar, August 20, 2021.
• Explainer: COA findings were long preceded by questions of Mayor Rama, Sanggunian on defects of P383.5M Cebu City garbage contract. Sunstar, July 22, 2022.