Government-Wide Performance Audit Report
Procurement is an activity undertaken by any government agency involving acquisition of goods, consulting services, contracting for infrastructure projects and lease of goods and real estate.
Government procurement is, at present, governed by Republic Act No. 9184, "An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for Other Purposes", enacted on December 18, 2002 and its Implementing Rules and Regulations. The passage of this law highlighted the governmentís efforts in pursuing procurement reforms and upholding the following principles:
Even before the passage of RA 9184, the government was already addressing the issue on transparency in government procurement and inefficiency due to manual and paper-driven procurement processes. Thus, in November 2000, the internet-based Electronic Procurement System (EPS) was established. This is at present required to be used by all government agencies.
Government procurement is highly decentralized. Each agency advertises its procurement activities, pre-qualifies all interested entities and awards contract following the procedures prescribed under appropriate implementing rules and regulations.
The central procurement system of the government for common-use supplies, materials and equipment is, however, being handled by the Procurement Service (PS), one of the offices under the Department of Budget and Management (DBM).
The procurement activities and reforms are being supervised by the Government Procurement Policy Board (GPPB) as the sole regulatory and oversight entity for government procurement. The Board is headed by the Secretary of the DBM as Chairman, with the Director-General of NEDA, as Alternate Chairman. The members are composed of the Secretaries of the Departments of Public Works and Highways, Finance, Trade and Industry, Health, National Defense, Education, Interior and Local Government, Science and Technology, Transportation and Communications, and Energy, or their duly authorized representatives and representative from the private sector appointed by the President upon the recommendation of the GPPB.
The audit of the procurement system of the Kapit-Bisig Laban sa Kahirapan (KALAHI) - Comprehensive and Integrated Delivery of Social Services (CIDSS): Kapangyarihan at Kaunlaran sa Barangay (KKB) of the Department of Social Welfare and Development (DSWD) was undertaken as there is a felt need to assess its effectiveness.
The CIDSS was launched in 1994 to alleviate poverty and empower disadvantaged individuals, families and communities for an improved quality of life. This is one of the ten flagship programs under the Social Reform and Poverty Alleviation Act (RA 8425) intensified under Memorandum Circular No. 33 issued on November 28, 2002. Procurement under the KALAHI-CIDSS: KKB projects are governed by the World Bank (WB) Procurement Guidelines, the National and Regional Procurement Sub-Manual, the Community Based Procurement Manual and relevant provisions of RA 9184.
The audit was conducted to assess whether the procurement system of the DSWD KALAHI-CIDSS Project was effectively undertaken to ensure quality projects at reasonable costs through provision of adequate capability building assistance to community beneficiaries.
AUDIT SCOPE AND METHODOLOGY
The audit covered the procurement of goods by the community beneficiaries during CYs 2004 and 2005 for the implementation of the KALAHI-CIDSS: KKB Projects. The team assessed the adequacy of the capability building assistance and technical support provided by the DSWD to community beneficiaries to ensure quality projects.
To achieve the audit objective, the team adopted the following audit techniques, among others:
The audit was conducted from August 15, 2005 to June 30, 2006, in compliance with MS/TS Office Order No. 2005-034 and 034C dated July 1, 2005 and January 10, 2006.
The audit concluded that the procurement system for the KALAHI-CIDSS: KKB Project was not effectively undertaken due to inadequate capability building assistance and technical support provided by the DSWD to the community beneficiaries.
This is clearly manifested in the following cases:
As the KALAHI-CIDSS:KKB Project is an on-going concern, the team recommended certain measures to address the deficiencies noted which are discussed under Part IV of the report.
The results of the audit were discussed with concerned DSWD KALAHI-CIDSS officials in an exit conference conducted on November 7, 2006. Overall, they acknowledged the existence of deficiencies with some reservations and are taking measures to address the concerns raised in the report. In particular, they claimed that the DACs continuously review plans and cost estimates, LGUsí participation is intensified, and that standards of other government agencies for commonly implemented projects were adopted as the standards. Their comments were incorporated in the report, where appropriate.
As discussed in the report, a number of plans and estimates did not pass through the required review, apparently due to multiple assignments of DACs. Likewise, despite the alleged LGUs intensified participation, results of audit would show that the reviews and assistance of DACs are still necessary.
It is also apparent that the DSWDís policy of adopting the standards of other government agencies for commonly implemented projects were not strictly observed in Region IV-A. The audit disclosed that similar projects implemented even within the same municipality were of different designs and costs.