THE Commission on Audit (COA) has pointed out a breach in government procedures in the construction of the Cebu City Quarantine Center (CCQC), which was built on exigency in 2020 to address the growing cases of Covid-19.
In its 2020 audit findings, COA said Leda Construction Inc. proceeded with building the CCQC without notice and that the Cebu City Government and Leda had not entered into a construction agreement prior to building the facility.
But Cebu City Administrator Floro Casas Jr. said the construction of CCQC was considered urgent at that time because Cebu City had no facility to accommodate the growing number of Covid-19 patients.
Due to the urgency of the situation, the CCQC was built under negotiated procurement, which is allowed under Republic Act 9184, the law on government procurement.
The CCQC was built in March 2020 for P59 million and became operational on April 25, 2020.
To date, it has accommodated a total of 1,179 asymptomatic to severe cases of the coronavirus disease 2019 (Covid-19).
Urgent need
In a press conference Thursday, July 15, 2021, Casas Jr. said the construction of a quarantine facility in early 2020 was deemed urgent because Cebu City was registering a high number of Covid cases.
In its explanation to COA, the City had said the emergent need to build the CCQC was based on the recommendation of the City Health Department (CHD), Cebu City Disaster Risk Reduction and Management Office, and Cebu City Medical Center (CCMC), to reduce the risk of Covid transmission.
COA said the construction agreement between the City and Leda, as well as the notice to proceed, was only entered into and received by Leda on September 30, 2020.
It said that this was contrary to the guidelines set under the Government Procurement Policy Board (GPPB) Circular 01-2020 which mandates that “upon award, the supplier shall enter into contract with the procuring entity and that the head of the procuring entity or his duly authorized representative shall immediately sign the contract or purchase order (PO), provided that all the documents required to be submitted prior to award of contract are complied with and that the Omnibus Sworn Statement has been submitted.”
The Cebu City Disaster Risk Reduction and Management Office (CDRRMO) had recommended to Mayor Edgardo Labella to put up a quarantine building worth P100 million.
Timeline
Based on the COA report, then Assistant City Engineer Lowell Corminal sent a letter of invitation to Leda on March 26, 2020 to submit a sealed quotation or proposal for the project with an approved budget of P59,352,404.
On March 27, Leda submitted its proposal with a contract price of P58,850,993.
On March 28, then CDRRMO officer-in-charge Harold Alcontin and Corminal recommended to the mayor’s office to award the contract to Leda.
Leda got the approval of the City administrator by the authority of the mayor, COA said.
COA noted that two obligations amounting to P55.9 million were recorded in the electronic budget system for the construction of CCQC: 15 percent payment for mobilization fee worth P8.8 million, and first partial payment for the 94.9147 percent accomplishment worth P47 million.
As of December 31, 2020, only the obligation for the advance cash payment was recorded as paid dated October 20, 2020.
Contract review
In its explanation to COA, the City said the construction agreement was subjected to contract review by the City Legal Office prior to the signing of the two parties, the City and Leda.
The City also said the procurement was made through negotiated procurement, which can be done for emergency cases, as stipulated under Section 53(b) of Republic Act 9184.
The provision says that, “in case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.”
“With the expedient need in mind, upon the issuance of the Notice to Award, and the unqualified acceptance by the contractor, the construction was immediately started. It needs no stressing that time is of the essence in the completion of this project,” the City explained to COA.
As a rejoinder, COA understood that while time was of the essence of the project, it believed the City should still have followed the procurement process to legally bind both the City and the contractor of its respective obligations “so as not to prejudice the interest of the city.”