Republic of the Philippines

COMMISSION ON AUDIT
Office of the Team Leader
Construction Industry Authority of the Philippines
5-F 369 Executive Bldg., Sen. Gil J. Puyat Avenue, Makati City

Ref. AOM No. 2017-06

Date: May 25, 2017

AUDITORS REJOINDER ON MANAGEMENTS RESPONSE

TO AUDIT OBSERVATION MEMORANDUM

ENGR. LEILANI DL DEL PRADO

Acting Executive Director
Construction Industry Authority of the Philippines

Attention : MR. RUFINO H. TIVIDAD

Chief, AFMD / Chairman, Bids and Awards Committee

MS. EDNA S. DOMINGO

OIC, Accounting Services

We acknowledge receipt of your response dated May 15, 2017 re: reply to the AOM No.
2017-06 dated May 2, 2017 (procurement of one (1) unit brand new car). However, please find
hereunder the audit team's rejoinder:

Management Comment /
Observations Auditors Rejoinder
Actions taken
Contract and its supporting We (management) were unable to It is understood that all of the
documents were not submitted obtain some of the documents documents pertaining to the
to the Audit Team within five from the other party, considering procurement process (e.g. from
working days after perfection the circumstances at that time. Invitation to Bid up to the
thereof which is not in accord Nonetheless for purpose of issuance Purchase Order) are
with COA Circular No. 2009-001 record, the Purchase Order and already in the possession of the
dated February 12, 2009. some supporting documents were management, particularly the
endorsed to COA for perusal on BAC Secretariat, hence, there
February 20, 2017. should have been no hindrance in
the submission of the required
documents to COA on time
which should be on or before
January 3, 2017, considering that
the PO was issued on December
29, 2017.

Failure to post Performance The bidders were informed that
Security in the particular procurement
process, the winning bidder shall
only be given one (1) day to
deliver the vehicle as the day
We consider the justification of
the management and acknow-
ledge the receipt of the
Performance Bond issued by
Western Guaranty Corporation

Observations
Absence of Warranty Security
Management Comment /
Actions taken
following the opening of the bids
is the last working day of 2016.
x x x. Nevertheless, the
Performance Security for the
subject vehicle is attached hereto
as annex A to form an integral
part hereof.
Upon the delivery of the subject
vehicle, it was already protected
under a New Vehicle Warranty
issued by Nissan Philippines Inc.
x x x.
Auditors Rejoinder
on May 10, 2017, which was
posted by the winning bidder,
Broadway Motor Sales
Corporation (BMSC), five (5)
months after the issuance of the
P.O.
It is the position of the Audit
Team, however, that in the
succeeding procurement, the
agency should strictly follow the
provisions stated in the Revised
IRR of RA 9184, particularly
Section 39.1, which requires the
posting of a performance security
prior to the signing of the
contract.
The Audit Team opined that the
New Vehicle Warranty issued by
the car manufacturer is not a
sufficient compliance with the
provision of the Revised IRR of
RA 9184.
Section 62.1 of the Revised IRR
of RA 9184 provides that:
x x x.
The obligation for the warranty
shall be covered by either
retention money in an amount
equivalent to at least one percent
(1%) of every progress payment,
or a special bank guarantee
equivalent to at least one percent
(1%) of the total contract price.
The said amounts shall only be
released after the lapse of the
warranty period x x x. (under-
scoring ours)
Hence, the Audit Team reiterates
the submission of warranty
security (either retention money
or special bank guarantee) as
provided by the aforesaid
provision of the procurement law.
It is informed that during the time

Observations
Failure to notify the COA of the
delivery of the motor vehicle
Delayed insurance of the vehicle
Management Comment /
Actions taken
Due to time constraints and the
need to utilize the budget
allocated for vehicles under the
re-aligned 2016 Budget, the
vehicle was delivered around
four olock in the afternoon of
December 29, 2016. At that time,
there was no COA personnel
available. Nonetheless, during
the bidding process, the
representative of COA and
Private Sector (Philexport) were
aware of the December 29, 2017
date of delivery.
The management admitted to the
delay in the submission of the
insurance policy by the seller, as
these were all processed during
Auditors Rejoinder
of the supposed delivery of the
procured sedan, COA personnel
were available to conduct such
inspection. However, the
management failed to inform the
Audit Team on the actual time
of the delivery of the said motor
vehicle. Moreover, per
clarification from the Supply
Officer, since the subject vehicle
was delivered at the time that
office hours was about to close,
he only assumed that the COA
personnel were no longer
available to witness/inspect the
delivery.
It should also be pointed out that
the management did not furnish
the Audit Team with the
documents relative to the said
delivery (e.g. sales invoice,
delivery receipt) even after the
days following the delivery.
It was noted that during the
opening of bids on December 28,
2016, BAC stated that the
supposed delivery of the sedan
shall be on the next day, only if
and when the lone bidder will
pass the post-qualification. The
Audit Team at that time was not
sure whether or not the lone
bidder will pass the post-
qualification and therefore,
deliver the vehicle on the next
day.
Thus, the Audit Team is firm in
its conclusion that the
management failed to notify the
COA of the delivery of the
procured sedan within 24 hours
from such acceptance as required
by Section 6.06 of COA Circular
No. 95-006 dated May 18, 1995.
The Audit Team acknowledge the
submission of the GSIS
Insurance Policy for the subject
vehicle. Henceforth, ensure that
newly procured vehicle shall be

Observations
Form used to issue the PPE not
the prescribed form
Notwithstanding this rejoinder, the audit team still recommends for the submission of the
Warranty Security in compliance with Section 62.1 of the Revised IRR of RA 9184.
Management Comment /
Auditors Rejoinder
Actions taken
the year end, as such, even GSIS properly insured with the GSIS
personnel have mostly been on prior to its acceptance.
leave. x x x. The GSIS Insurance
Policy for vehicle with Policy
No. MV-PC-GSISHO-0131880
was issued January 25, 2017.
Well taken.
The management shall abide with
the observation.
YOLANDA P. JUAN
State Auditor III
OIC, Audit Team Leader
MA. LOURDES C. CENTENO
State Auditor V
Supervising Auditor, DTI Audit Group