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Republic of the Philippines

Office of the Audit Team Leader
Bicol State College of Applied Sciences and
Naga City

AOM No. 2017-000

Date: December 19, 2017


FOR : Dr. Richard Cordial



Director-PPDMS Physical Planning Officer

We have audited the Infrastructure Projects and other Projects of the College and
observed the following deficiencies/errors:

1. Material variances between the Approved Budget of Contract (ABC) and the Contact
Amount were noted on some contracts which indicate bloated amounts in the Program
of Work.

Section 3 (g), Annex A, Implementing Rules and Regulations (IRR), Republic Act (R.A.
9184) provides that the ABC shall be prepared by official(s) duly designated by the Head of the
Procuring Entity (HOPE) concerned or by his duly authorized official and approved by the latter.
Section 3 (i) of the same law further provides that before prosecuting any project, the necessary
Program of Work (POW) shall be prepared and submitted for approval. In no case shall
construction work be started before the POW is approved and no POW shall be approved
without detailed engineering. More specifically, Sections 3 (b) and (d) of the same law, on
detailed engineering, provides that all construction quantities shall be computed to a reasonable
accuracy of not more than plus or minus ten percent of the final quantities of the completed/as-
built structures. Section (g) of the same law also requires that the ABC should also provide for
price fluctuations in construction costs.

Following these guidelines, the resulting ABC and its supporting POW and Detailed
Engineering, computed with a reasonable accuracy of not more than plus or minus ten percent as
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to quantities and with due consideration for price fluctuations, should reflect a realistic cost
estimate of the project which, under Section 31.1 of the Revised IRR, R.A. 9184, will serve as
the “upper limit or ceiling for acceptable bids” although there is “no lower limit or floor on the
amount of the award.”

Our review of various infrastructure contracts another contract of the College for CY
2017 disclosed significant variances between the ABC and the awarded amounts as follows:

Approved Budget %
Name of Project of the Contract Contract Amount Difference of
Construction of Students 15%
Centers 957,035.76 813,499.96 143,535.80

Completion of Multi-Purpose 15%

Building of Student Centers 3,613,335.52 3,071,380.43 541,955.09

Laser Cutter and Engraver 52%

with Blower and Air Assist 3,715,000.00 1,788,000.00 1,927,000.00

*Construction of 4-Storey 17%

Academic Building 32,802,806.22 27,272,146.44 5,530,659.78

*Rehabilitation/Improvement 15%
of TEI Building 2,817,912.15 2,381,276.88 436,635.27

Total P43,906,089.65 P35,326,303.71 P8,579,785.94

Note: * PPA Projects started in CY 2016 but not yet completed in CY 2017

Although, the above data shows that the SUC may have saved P8,579,785.94 from the
above five projects, on the other hand, the same data indicate that the SUC’s ABC or cost
estimates are very much bloated. The noted excess of the ABC over the actual contract amounts
range from 15 to 52 percent, beyond the allowable ten percent and it is unlikely that such
significant variances are due to decreased prices. The excess amounts could have been
programmed for other projects. These situations could have been avoided if the POWs were
prepared with “reasonable accuracy of not more than plus or minus ten percent of the final
quantities” as required under Sections 3 (b) and (d), above-mentioned. Had the awarded contract
amounts closely approximated the ABC, the SUC would have lost as much as P8,579,785.94.

We recommended that the Head of the Construction Section, Physical Plant

Development and Management Office (PPDMO) prepare realistic POWs in accordance
with Section 3 (b), (d) and (g), Annex A, IRR, R.A. 9184.

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2. Management did not notify the public of its on-going infrastructure projects in CY
2017 totaling ₱55,759,313.85 million by not posting the relevant information at the
BISCAST premises, hence, the right of the people to information on matter of
public concern was denied.

The 1987 Philippine Constitution under Article II, Section 28 states that the State adopts
and implements a policy of full disclosure of all transactions involving public interest. Further,
under Article II, Section 7 provides that the State recognizes the right of the people to
information on matter of public concern.

Relative thereto, COA Circular No.2013-004 dated January 30, 2013, Item 2.2.1
provides, among others, that all government agencies, or the implementing unit, office or
divisions as the case may be, shall notify the public of their PPA by posting relevant information
such as: project name; implementing unit or office or division if it not the agency as a whole;
brief description of the PPA, contractors or supplier, mode of procurement; funding source; cost
or approved budget; project duration including start and completions dates; and location on
signboards, whiteboards, posters, tarpulins, streamers, electronics boards or similar materials
(collectively, “ signboards”) not exceeding 3 feet by 2 feet, in conspicuous places within the
agency premises, and in the venue where the PPA is located or carried out. Specifically it
requires for infrastructure projects, a tarpaulin signboard that must be suitably framed for
outdoor display at the project location, and shall be posted as soon as the award has been made.
The design and format of the tarpaulin shall have the following specifications:

Tarpaulin, white, 8ft x 8ft

Resolution: 70 dpi
Font: Helvetica
Font size: Main Information – 3”
Font Color: Black

Likewise, Section 98 of the GAA of CY 2017 provides that all agencies of the
government shall post the following information on their respective websites, within the period

(a) The project title, location and detailed description; detailed estimates in arriving at the
Approved Budget for the Contract, and winning contractor and detailed estimates of
the bid as awarded, within thirty calendar days from entering into contract; and
(b) The detailed actual cost of the project, and variation orders issued, if any, within
thirty (30) calendar days from the issuance of a certificate of completion

In CY 2017, the BISCAST had five projects with an aggregate amount of ₱55,759,313.85, viz:

Contract Date
Agency/Address Project/Program/Activity Name
Amount Started

Construction of Students
Centers ₱813,499.96 Dec.11,2017
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Contract Date
Agency/Address Project/Program/Activity Name
Amount Started

Completion of Multi-Purpose
Building of Student Centers 3,071,380.43 Dec.11,2017
Construction of Four Storey Nov.30,201
BISCAST,Naga City Academic Building 6
Design and Build of Learning
Innovation and Entrepreneurship 23,312,517.66
BISCAST,Naga City Building
Construction of Three-Storey
Gender Sensitive Centralized Toilet 1,289,769.36 Oct.4,2017
and Bath Facility-Phase II

TOTAL ₱55,759,313.85

Non-compliance by the BISCAST to the required posting of relevant information detailed

above to notify the public of its infrastructure projects is a disregard of the government’s policy
transparency. Likewise, the right of the people to information on matter of public concern was

We recommended that Management require the PPDMS to install signboards for

the project in accordance with the guidelines set forth in the Circular. Ensure that strict
adherence to the said regulations be observed.


May we have your comments on the foregoing audit observations within five (5) calendar
days from receipt hereof.

State Auditor III

Supervising Auditor
Audit Group - SUCs and Other NGS
Stand Alone Agencies

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