The Commission on Audit (COA) disallowed in audit the procurement of a motor vehicle by a former governor and other officials concerned.

Why was it disallowed?

The said disallowance was due to the decision of the province to procure through direct contracting the subject motor vehicle thereby dispensing the required public bidding.

The province likewise did not provide justification that “the vehicle may only be procured through direct contracting and that there are no suitable substitutes in the market for the same that may be obtained at more advantageous terms”, COA said.

The Commission Proper affirmed with modification the disallowance issued to the said officials and directed its technical service office to determine the replacement cost/value of the vehicle.

Appeal

In his defense, the former governor concerned said that he acted in utmost good faith when he approved the Resolution of the Bids and Awards Committee recommending the mode of procurement for the subject motor vehicle.

However, the Commission Proper was not convinced; instead, it said: “Good faith does not apply where there are blatant disregard of laws, rules and regulations, as in this case.”

Source: ABS-CBN News

What can we learn from this case?

• As a general rule, the procuring entities shall adopt competitive bidding as the general method of procurement.

• Alternative methods of procurement shall be resorted to only in highly exceptional cases provided in the Procurement Law and its implementing rules and regulations.

• In all instances, the procuring entity shall ensure that the most advantageous price for the government is obtained.

When is Direct Contracting allowed?

• Direct Contracting may be resorted to by concerned procuring entities under the following conditions:

— Procurement of Goods of proprietary nature which can be obtained only from the proprietary source, i.e. when patents, trade secrets, and copyrights prohibit others from manufacturing the same item;

— When the procurement of critical components from a specific supplier is a condition precedent to hold a contractor to guarantee its project performance, in accordance with the provisions of its contract; or

— Those sold by an exclusive dealer or manufacturer which does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the government of the Philippines.

Source: 2016 Revised IRR, RA 9184