FIVE catering contracts for inmates of the New Bilibid Prisons (NBP) worth P282.6 million went to an unqualified contractor, the Commission on Audit said in a 2019 audit of the Bureau of Corrections (BuCor).
The report released last September 18 noted red flags in transactions, including splitting of food subsistence contracts, non-compliant bid by the winning contractor, and lowered financial and technical requirements.
Countering the COA’s findings, agency officials claimed there was no splitting of contract and therefore there is no ground to disallow the transaction in audit.
While the audit team and the BuCor took opposing views on the validity of the contracts, they agreed the problem started with Memorandum Circular No. ODG 03-01 issued on March 7, 2019 by former BuCor director general Nicanor Faeldon, which ordered a “restructuring” of the NBP.
Specifically, it divided the Maximum Security Compound (MaxSeCom) into four quadrants: NBP North, NBP South, NBP East, and NBP West.
The BuCor said the move was based on Section of BuCor Act of 2013 which authorizes management to “propose additional penal farms…aside from its existing seven prison and panel farms to decongest… and accommodate the increasing number of inmates…”
Before the restructuring, there were only four security compounds in NBP – maximum, medium, minimum, and the Correctional Institute for Women (CIW) all with their own catering contracts until August 2019.
In June 2019, however, the BuCor Bids and Awards Committee invited prospective bidders for food subsistence of persons deprived of liberty (PDLs) for a total of six contracts — four for the Maximum Security Compound and one each for Medium Security, Minimum Security, Reception and Diagnostic Center (RDC), and the CIW.
The NBP North contract was for P32.13 million; NBP West for P39.627 million; NBP East P53.55 million; NBP South for P74.97 million; Medium/Minimum/RDC P89.021 million; and CIW for P34.272 million.
Sealed bid documents were submitted on July 8, 2019 wherein AFS Eatery was deemed to be the only one compliant.
The winning bidder was awarded all five food subsistence contracts worth P282.6 million covering Aug. 1 to Dec. 31, 2019.
Auditors noted that the contractor submitted only one “single largest completed contract (SLCC)” worth P45.27 million. They noted that under Section 126.96.36.199 of the Revised Implementing Rules and Regulations of RA 9184 or the Government Procurement Reform Law, the SLCC should be at least 50 percent of the approved budget for the contract.
“The restructuring of the MaxSeCom reduced the required SLCC. Had the MaxSeCom not restructured, the BAC shall require proponents to submit SLCCs in the amount of P100.13 million; thus, AFS Eatery should have been declared as non-compliant,” the COA said.
Likewise, it noted that the same restructuring lowered the requirements on financial and technical capabilities of the supplier.
Auditors said total payment released to AFS Eatery for Aug. 1 to Dec. 31, 2019 amounted to P153.87 million.
The BuCor Management invoked Faeldon’s memorandum circular as the basis for the sub-dividing the MaxSeCom contracts.