MANILA - The Commission on Audit (COA) has flagged the Philippine Navy over the delayed completion of 3 projects worth P154.64 million.
In its 2018 report, COA said the projects payable through deposit on letters of credit "were not implemented; thus, resulting in accumulated idle funds and depriving the Government of the benefit that could be derived therefrom."
The unimplemented projects include contracts from Talon Security Consulting, as well as the joint ventures of Propmech Corporation and SAAB, and Krusik Ad Valjevo and Stone of David Tactical.
Talon delivered the goods but tested only 6 of 8 items, said COA.
The contract of Propmech and SAAB was suspended while that of Krusik Ad Valjevo and Stone of David is undergoing deliberation at the Navy's contract termination review committee, state auditors added.
The delayed or non-delivery goods and services "is a breach of contract and can affect the operational tempo of the PN (Philippine Navy), which may hinder the accomplishment of its mission," the report noted.
State auditors urged the Navy to "demand the deliveries of goods and services and/or ensure that contracts with suppliers who failed to comply with their obligations are terminated to prevent the accumulation of idle funds which can be used for other beneficial purposes."
COA also raised concern over the Navy's "ineffective" procurement outsourcing with the Philippine International Trading Corporation (PITC).
A total of P2,267,040,511.09 fund transfers had accumulated due to the non-implementation or delayed completion of procurement procedures with the PITC, said COA.
The PITC, it added, did not provide a timeline of delivery or completion of procurement procedures, which it said is disadvantageous to the AFP.
"The inability of the PITC to deliver the goods and services is contrary to the very purpose of procurement outsourcing which is to hasten project implementation and had resulted in accumulated huge idle funds," it said.
State auditors recommended the Navy to demand from PITC the immediate delivery of all requisitioned goods or request a refund and remit it to the Bureau of the Treasury.
The Philippine Navy, meantime, said liaison officers were assigned to "constantly coordinate with the PITC for the timely determination of status and immediate conduct of procurement procedure."
COA, however, said the Navy must be reminded of the validity of appropriations and failure to complete the projects within the statutory timeframe will result in the mandatory reversal of the funds to the treasury bureau.
COA also noted that the "slow completion" of the Paniran naval detachment in Zamboanga province.
The project only started in the first week of March after the local government provided a new location due to the presence of informal settlers in the original detachment site, said auditors.
"The delayed completion of project may affect the readiness of the PN in case of disasters. We recommended and Management agreed to fast track the completion of the Paniran Detachment this year," they said.