COA questions Cebu City Hall on Consolacion landfill deal

by Jose Santino S. Bunachita
Reporter

The Commission on Audit (COA) questioned the Cebu City government’s dumping of garbage in a private landfill in Consolacion town, saying its deal with the firm didn’t comply with requirements under the Government Procurement Reform Act.
“The Cebu City government disbursed the aggregate amount of P25,479,300 for the payment of 36,399 tons of solid waste to Asian Energy Systems Corp. through direct contracting despite the availability of other landfill operators or its equivalent,” state auditor Ma. Daisy Bercede said in an audit observation memorandum.
The amount refers to the city’s payment for dumping from October 1, 2013 to May 16, 2014.
The COA memorandum was addressed to Cebu City Mayor Michael Rama through City Accountant Mark Salomon.
The city pays P700 for every ton of garbage dumped in the private landfill in Consolacion town.
Waste disposal
COA pointed out that the Bids and Awards Committee (BAC) approved a direct contracting or single source procurement through a resolution last December 26, 2013.
Former Department of Public Services (DPS) chief Engr. Dionisio Gualiza said Asian Energy Systems Corp. “is the sole supplier and has performed satisfactorily.”
He said there is no other landfill located within Metro Cebu.
But state auditors found out that the city actually awarded twice the delivery of solid waste disposal to another company– the Bio Nutrient Waste Management Inc. through negotiated mode of procurement on April 25, 2014 and direct contracting on December 15, 2014.
During these respective contracts the city paid the same amount of P700 per ton to the facility located in barangay Inayawan, Cebu City or about P5.04 million and P2.135 million respectively.
The COA is asking the city to explain this discrepancy.
They also want the DPS to explain why certificates of sole suppliers were issued to different entities engaged in the same business.
Procurement
COA also recommended that the Cebu City government “strictly observe” the provisions in the use of direct contracting or single source in the procurement of goods pursuant to section 50 of Republic Act 9184 or the Government Procurement Reform Act to ensure that government resources are used “economically and efficiently.”
Under section 50 of RA 9184, direct contracting or single source procurement can only be made under three conditions.
One, that procurement of items is proprietary in nature and it can only be obtained from the proprietary source like patents, trade secrets and copyrighted items.
Direct contracting is also allowed when the procurement of critical plant components from a specific manufacturer, supplier or distributor is a condition to hold a contractor to guarantee its project performance, in accordance with the provisions of its contract.
Goods and services can likewise be contracted directly when there is no suitable substitute that can be obtained at more advantageous terms to the government.
Direct contracting that complies with these provisions will not have to go through elaborate bidding documents and processes, the COA said.