COA to review gov’t lease contracts on buildings, lands

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    THE Commission on Audit will review all contracts involving government structures and lands leased to private firms, organizations, or persons.

    In its Circular No. 2019-005 dated August 7, 2019, the COA said the inquiry was prompted by numerous findings that some government agencies have entered into lease contracts that are favorable to the tenant or occupant.

    “Results of the audit disclosed that some agencies did not adhere to the guidelines as there are contracts which were found to be disadvantageous of the interest of the government.

    Thus, to check the reasonableness or the terms and rates of government properties leased …it is imperative to review such contracts,” the Commission said.

    Anticipating that there will be technical issues pertaining to the computation of fair rates given the location, zonal values, area improvements, and existing facilities involved, the evaluation has been entrusted to the Technical Services Office (TSO) under the COA’s Systems and Technical Services Sector (STSS).

    “All government agencies which have an existing contract involving lease of government building and/or lands with private entities/individuals are required to submit …a certified true copy of contracts within 15 days of publication of this circular or upon the execution of the contract,” the COA said.

    The directive was signed by COA Chairman Michael G. Aguinaldo and Commissioners Jose A. Fabia and Roland C. Pondoc.

    They said the circular covers “all departments, bureaus, offices, agencies, and instrumentalities of the National Government” as well as local government units, and government-owned or controlled corporations (GOCCs).

    For government offices located in the Metro Manila, copies of the contracts will have to be submitted to the Audit Team Leader assigned to the agency while for those outside the

    National Capital Region, the documents will be received by the Regional TSOs.
    he COA noted that under Section 7, Executive Order No. 301, series of 1987, heads of any agency were given the authority to determine the reasonableness of the terms of the lease and rental rates and to enter into lease contracts without the need for prior approval by higher authorities.

    However, the same EO stated that the contract shall be subject to compliance with uniform standards established by the Department of Public Works and Highways and the audit jurisdiction of COA.

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