NON-TECHNICAL OPERATIONS AUDIT

SCOPE OF PRESENTATION
Auditable Key Areas/Process Frequency of Findings CY 2011 Common Findings Adverse Findings

AUDITABLE AREAS
A - Planning, Programming & Requisitioning B Bidding Stage

C Contract Award
D Delivery, Inspection & Acceptance E - Asset Management & Custodianship F - Personnel Management

FREQUENCY OF FINDINGS
Areas/Process

No. of Findings
- 75 - 72 - 50 - 41

Planning, Programming & Requisitioning Bidding Stage Contract Award Delivery, Inspection & Acceptance Asset Management & Custodianship Personnel Management

- 123 - 24 --------Total - 385 =====

Non Technical Operations Auditable Areas

Personnel Mangement 6% Asset Management 32% Planning, Programming 19%

Bidding Stage 19%

Contract Award 13% Delivery, Insp. & Acceptance 11%

PLANNING, PROGRAMMING & REQUISITIONING

Non coordination to MIS for IT specifications/ requirements Inclusion of Brand Name in PR/Quotation Form Pre-Repair Inspection Report 0% Stock Position Sheet (SPS) 19% Purchase Request (PR) 15% Supplemental Procurement Plan (SPP) 0% Program of Work (POW) 0% 4% Annual Procurement Plan (APP) 12% Project Procurement Mgt. Plan (PPMP) 27%

23%

 Non-preparation of Annual Procurement Plan (APP) for Goods

Provisions: Section 7.1-2, Revised IRR of RA 9184, provides that... The APP shall include provisions for unforeseeable emergencies based on historical records.

No Procurement shall be undertaken unless it is in accordance with the approved APP.

APP must be approved by the HOPE or 2nd in Rank designated by the HOPE to act on his behalf. APP shall include specific Project Procurement Management Plan (PPMP)

Non-preparation of (APP) continued...

Implications:
Procurement not meticulously and judiciously planned.
Procurement not within the Approved Budget

ANNUAL PROCUREMENT PLAN FOR FY 2012

Ref. No. Contract Package Procurement Method (Description)

TENTATIVE PROCUREMENT SCHEDULE

ABC PreProcurement Conference Advertise ment Submission Pre-Bid and Conference Receipt of Bids Bid Evaluation
PostQualification

Award of Contract

FUND 101 COMMON OFFICE SUPPLIES 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter COMMON OFFICE DEVICES 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter COMMON COMPUTER SUPPLIES 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter COMMON JANITORIAL/HAR DWARE/CONSTR UCTION SUPPLIES/PEST CONTROL SERVICES 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter PUBLIC BIDDING 6,393,548.92 3,722,773.20 938,002.84 1,151,167.78 581,605.10 106,011.82 97,949.36 383.10 7,679.36 56,908.00 9,413,881.91 4,513,021.23 1,393,237.10 2,817,030.70 690,592.28 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

SHOPPING

PUBLIC BIDDING

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

PUBLIC BIDDING

86,880,746.88 21,714,414.72 21,726,423.72 21,717,563.72 21,722,367.65

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

SUB-TOTAL 102,794,189.53
Page 1 of 13 Pages

Ref. No.

Contract Package (Description)

Procurement Method

ABC

PreProcurement Conference

Advertisement

TENTATIVE PROCUREMENT SCHEDULE Submission Pre-Bid and Receipt Bid Conference of Bids Evaluation

PostQualification

Award of Contract

REPAIR & PUBLIC MAINTENANCE OF BIDDING OFFICE 1st Quarter UNFORESEEN SHOPPING EXPENDITURES 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter SUB-TOTAL (this page) SUB-TOTAL (Page 1) SUB-TOTAL (Page 2) SUB-TOTAL (Page 3) SUB-TOTAL (Page 4) SUB-TOTAL (Page 5) SUB-TOTAL (Page 6) SUB-TOTAL (Page 7) SUB-TOTAL (Page 8) SUB-TOTAL (Page 9) SUB-TOTAL (Page 10) SUB-TOTAL (Page 11) SUB-TOTAL (Page 12)

1,436,960.00 1,436,960.00 1st Quarter

267,252.00 78,688.00 50,188.00 69,188.00 69,188.00

1,704,212.00 102,794,189.53 14,848,900.40 28,575,864.50 18,831,349.81 18,970,893.89 6,687,966.01 23,317,026.00 20,858,877.48 20,767,559.95 6,561,297.63 22,812,780.00 4,713,833.56

GRAND TOTAL
Prepared by: TERESITA C. PACULAN Asst. Head, BAC for Goods Secretariat

291,444,750.76
Recommending Approval: ROY L. MANAO, CESO VI Chairman, BAC for Goods Approved by: JAIME A. PACANAN, Ph.D, CESO I Undersecretary for Support Services

Submitted by: ARDELIZA R. MEDENILLA, MNSA, CESO IV Head, Central Procurement Office

NOTE: This APP for Goods FY 2012 is still subject for updating in linkage to the budgetary allocation to be provided by the Budget Division, CFMS, pursuant to GAA for FY 2012. This APP also includes the ten percent (10%) contingency expenditures for supplies, materials, equipment and services (goods) for FY 2012. This APP is a partial consolidation of submitted PPMPs from various offices/end-users as of December 31, 2011. This APP contained common office supplies not available from PS-DBM as per PS Virtual Store List of Goods posted in the Phil-GEPS. Specific date of procurement schedule cannot be determined yet due to the APP finalization subject to budgetary allocation. Alternative Method of Procurement is subject to the Annex H of the Revised IRR of R.A. 9184.

Page 13 of 13 Pages

 Non-preparation of Project Procurement Management Plan (PPMP) for Goods

Provisions:
Section 7.3.2, Revised IRR of RA 9184, provides that... End-user units of Procuring Entity to prepare their respective PPMP for their different PAPs, which shall include the following: a. Info on whether PAPs will be contracted out, implemented by Admin, or consigned b. Type and objective of Contract to be employed

c. Extent/size of contract scopes/packages

Non-preparation of (PPMP) continued.....

Provisions:
d. The procurement methods to be adopted (indicating if the procurement task is to be Outsourced as provided in Sec. 53.6 of this IRR.

e. Time schedule for each procurement activity f. Estimated budget for each procurement

g. The proposed APP shall be consistent with the PE budget proposal

Non-preparation of (PPMP) continued.....

Implication:
Funds may not be available for procurement of items covered by PPMP and APP.

DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS Name of the Office: Office Location Internal Audit Service __________________

PROJECT PROCUREMENT MANAGEMENT PLAN

PROCUREMENT SCHEDULE Contract Package (Description) CP 6 ABC (Fund Source) Pre-Procurement Conference (1 c.d.) 1. Vehicle Repair & Maintenance

P.R. No. 1

Procurement Method

Advertisement (7 c.d.)

Pre-Bid Conference ( 1 c.d.) 12 cd before submission of bid

Submission and Receipts of Bids (1 c.d.)

Bid Evaluation (1 c.d.)

PostQualification (1 c.d.)

Award of Contract (2 c.d.)

1st Quarter 2nd to 3rd Quarter

Direct Contracting Shopping

52,500.00 147,500.00

Total Budget Amount PREPARED:

Php 200,000.00 RECOMMENDED: EVALUATED BY: (To be included in the DPWH Budget Proposal) APPROVED:

EVANGELINE B. VELANO Internal Auditor III (Supply Officer)

PR No. = Purchase Request No. ABC = Approved Budget for the Contract

FAUSTINO N. STA. MARIA, JR., CESO IV OIC-Director, Internal Audit Service (Head, Implementing Office)

MARCIANA G. HERRERA OIC, Chief Budget Division

ROY L. MANAO Assistant Secretary for Support Services

The

BAC Secretariat shall consolidate all the Project Procurement Management Plans (PPMP) prepared by the Project Management Offices (PMOs) into an Annual Procurement Plan (APP). The APP shall bear the approval of the head of the procuring entity. Updating the PPMP and the consolidated APP shall be undertaken every six (6) months or as often as required by the head of the procuring entity.

ITEMIZED LIST OF GOODS Annex to Contract Package No. 6 PPMP, FY 2012 SERVICE/RO/PMO DIVISION/DISTRICT/CITY COMMODITY (NATURE AND DESCRIPTION) UNIT CENTRAL OFFICE INTERNAL AUDIT SERVICE UNIT PRICE QTY. Maintenance vehicles & Repair of service TOTAL CALENDAR AMOUNT 1ST QUARTER QTY. AMOUNT DISTRIBUTION BY QUARTERS 2ND QUARTER QTY. AMOUNT 3RD QUARTER QTY. AMOUNT 4TH QUARTER QTY. AMOUNT

1.

A. Spare Parts Inn Ball Joint End Assy Tie Rod RH End Assy Tie Rod LH Ball Joint Lower Link Assy FR Stabilizer Link Assy RR Stabilizer Link Assy Control LH Sub-total B. Labor C. Wheel Alignment D. Complete Wash SUB - TOTAL 9,000.00 2,500.00 1,000.00 P pc. pc. pc. pc. set set pc. 1,000.00 1,700.00 1,500.00 1,400.00 1,350.00 1,400.00 1,200.00 2 1 1 2 1 1 1 P 2,000.00 1,700.00 1,500.00 2,800.00 1,350.00 1,400.00 1,200.00 11,950.00 9,000.00 2,500.00 1,000.00 24,450.00

2.

Maintenance Vehicles

& Repair

of Service

147,500.00

PROGRAM AMOUNT

171,950.00

PREPARED BY: EVANGELINE B. VELANO Internal Auditor III

APPROVED BY: FAUSTINO N. STA. MARIA JR., CESO IV OIC-Director, Internal Audit Service

 Supplemental APP was prepared instead of Updated APP

Section 7.4, Revised IRR RA 9184, states that Updating of individual PPMPs and the consolidated APP for each procuring entity shall be undertaken every six (6) months or as often as may required by the HOPE.

 The updating of PPMPs shall be the responsibility of the respective end-user units of the PE, while the consolidation of these PPMPs into an APP shall be logged with the BAC-Secretariat, subject to the approval of the HOPE.

Implications:
Procurement may not be meticulously judiciously planned by the procuring entity. and

Funds may not be available for procurement of items covered by PPMP and APP.

Provision:
Section 36, GAAM, Volume III - Responsibilities of agency management for internal control.

It shall be the primary responsibility of the head of the agency to install, implement and monitor an adequate system of internal control under such guidelines prescribed by the Commission on Audit.
In line with the primary responsibility, the head of the agency has the following responsibilities, among others:

 To develop and install the internal control structure of the agency, to include the control environment, accounting system and control procedures. To maintain an internal control environment in order to safeguard assets, produce reliable accounting data and promote operational efficiency and effectiveness.

Implication:
No check and balance to safeguard assets.
( Pls. refer to the next slide for an example)

 Estimated unit and total costs not indicated in the PRs

Provision:
Appendix 51 (Instructions) of NGAS, Vol. II. Manner of accomplishing the PR is shown in 1-8........... 9. Unit Cost the estimated cost per unit the goods/property being requested of

10. Total Cost estimated total cost of the goods/property being requested

Estimated Unit and Total Cost continued...

Implication:
Reasonableness goods/supplies determined. of estimated cost of requisitioned could hardly be

 Reference to Brand Names

Provision:
Section 18, Revised IRR of RA 9184, states that: Specifications for the procurement of goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed.

Implication:
Bias to a particular brand Depleted competition among items of similar nature

 Not supported by Stock Position Sheet (SPS) Provision:

Section 428(2) of GAAM Vol. 1 Each requisition for any single commodity in excess of P1,000 in value shall be accompanied by a stock position sheet of the article being requisitioned.

Implication:
Possibility of overstocking
(Pls. refer to the next slides for illustration)

 Procurement of IT equipment not coordinated with the MIS Provision:

Section 4(a.2) of D.O. 49, series of 2007 states that: All procurement of IT equipment and services, other than PC Workstations and Network Printers, whether directly by the DPWH or indirectly through Consultants/ Contractors, shall be coursed through the MIS for review and evaluation.
Visit-http://dpwhweb/bureau-service/mis specifications/ index.htm

Implication: IT equipment incompatibility with the Departments network system.

 Intranet

 MIS

 specs

BIDDING STAGE

BIDDING
Procurement thru Procurement Service (PS) Procurement thru Reimbursement 7%

0%
Purchase Order BAC Resolution approving use of Alternative Methods 30% Contract Signing Notice to Proceed Performance Security 11% 23% 0% Approval of Contract 0% 29%

Provisions:
Section 12.1(j), IRR of RA 9184, states that... The BAC shall have the following functions:..xxx.. recommend to the Head of the Procuring Entity the use of Alternative Methods of Procurement as provided for in Rule XVI hereof...xxx

 Sec. 48.3 of IRR of RA 9184, states that The method of procurement to be used shall be as indicated in the approved APP. If the original mode of procurement recommended in the APP was public bidding but cannot be ultimately pursued, the BAC, through a resolution, shall justify and recommend the change in the procurement to be approved by the Head of the procuring entity.

Implications:
Procurement may not be government. advantageous to the

The most economical cost of procurement would not be obtained.

 Alternative Methods of Procurement

General Rule: Competitive Public Bidding

Provisions:
Resolution No. 09-2009, dated 17 December 2009 General Guidelines: Decision to resort to shopping/small value procurement done in context of APP

Splitting of contracts is strictly prohibited

 Alternative Methods of Procurement

General Rule: Competitive Public Bidding

Provisions:
Resolution No. 09-2009, dated 17 December 2009 General Guidelines: Decision to resort to shopping/small value procurement done in context of APP

Splitting of contracts is strictly prohibited

 After approval, BAC may delegate execution to the appropriate bureau, committee or support unit Section 48, Revised IRR-RA 9184 Resort to Alternative Methods Allowed

Highly exceptional cases To promote economy and efficiency

Justified by conditions specified in the IRR

Provisions:
Shopping (a) Section 52.1(a), states that.. a) When there is an unforeseen contingency requiring the immediate purchase, and Amount not to exceed the threshold prescribed in Annex H of this IRR.

Requisites:
Goods readily available off-the shelf items

Suppliers from whom the goods are procured are of known qualifications
Amount to be procured shall not exceed P100,000.00 May be undertaken directly with a supplier

There is Unforeseen Contingency when there is an immediate need to purchase goods due to the event or a series of events which could not have been reasonably foreseen by the procuring entity.

Provisions:
Shopping (b)

Section 52.1(b), states that..

b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding the thresholds prescribed in Annex H of this IRR.
Def: Ordinary or regular office supplies are supplies, commodities or materials which depending on the PEs mandate and nature of operations are necessary in the transactions of its official businesses, and consumed in its day-to-day operations. It does not include services such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security and related services.

Requisites:
Must not be available in the PS-DBM (LOI No. 755 and EO No. 359 s. 1989) Amount shall not exceed P500,000.00 There is no Splitting of Contracts At least 3 price quotations shall be obtained from bonafide supplier.
To justify Shopping under Section 52(b) the end-user must ensure that the Reply/Action Document (RAD) from the PSDBM or it Depot is obtained stating that the regular office supplies or equipment are not available.

Small Value Procurement

Provisions:
Section 53.9, states that..Where the procurement does not fall under Shopping in Section 52 of this IRR and the amount involved does not exceeds the thresholds prescribed in Annex H of this IRR.
Applicability: All (Infra, Goods & Consulting Services)

Requisites:
Procurement does not fall under Shopping (a) and (b)

Amount does not exceed the threshold (P500T)

Quotation from at least 3 supplier, contractors, or consultants of known qualification

Provision:
Negotiated Procurement (Emergency Cases) Section 53.2 states that.. In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities

Applicability: All (Infra, Goods & Consulting Services) PEs directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.

Implications:
It may not promote economy and efficiency Prices may government not be advantageous to the

Provision:
Item 3 (a) of Appendix 18, Revised IRR of RA 9184, states that... The Request for Quotation (RFQ), indicating the specifications, quantity, Approved Budget for the Contract (ABC), and other terms and conditions of items to be procured, shall be prepared, and;

Terms and Conditions (Excerpt from RFQ Forms)

1. All entries must be typewritten or legibly written.
2. Delivery period within _____ upon receipt of the approved funded Purchase Order (PO). Administrative penalties pursuant to Sec. 69 of the Revised IRRRA 9184 shall be imposed for non-delivery without valid reasons. 3. Warranty shall be for a minimum of three (3) months for supplies & materials; one (1) year for Equipment from date of acceptance by the enduser. 4 Price validity shall be for a period of sixty (60) calendar days 5. G-EPS Registration Certificate/Mayors Permit/DTI shall be attached upon submission of the quotation 6. Bidders shall submit original brochures showing certifications of the product. 7. Please indicate brand for each items being offered. 8. The approved budget ceiling for this procurement is _____________.

Canvass form continued.

Provision:
Item 3 (b) of Appendix, Revised IRR of RA 9184, further states that... The RFQ must also prescribe the manner by which price quotations shall be submitted i.e., by sealed or open quotation, and the deadline for their submission. In all instances, however, information relating to the examination, evaluation, and comparison of price quotations shall be kept confidential and should not be disclosed to any other party except to those officially concerned until award of contract.

Implications: Failure to utilize the prescribe format terms and conditions not known by the prospective bidders Assertive of compliance to the Terms and Conditions could not be determined.
(Pls. refer to the next slide for Illustrations)

Provisions:
Sec. 21.2.(b) of IRR of RA 9184, states that ...Invitation to Bid..shall be posted continuously in the Phil-GEPS website, the website of the procuring entity, if applicable, for seven (7) c.d. starting on the date of advertisement.
Appendix 18.3.d Guidelines for Shopping and Small Value Procurement, Revised IRR-RA 9184, states that...RFQs SHALL also be posted for a period of seven (7) c.d. in the Phil-GEPS website, website of the PE, if available, and at any conspicuous reserved for the purpose in the premises of the Procuring Entity...xxx..., this posting requirement SHALL NOT be applicable:

I. When there is an unforeseen contingency requiring immediate purchase under Sec. 52.1 (a) of the IRR; or II. RFQs with ABCs equal to Fifty Thousand Pesos (Php50,000.00) and below Implications: Non-transparency and competitiveness of procurement activities.

hyperlink
Medium 2 M (goods) 5 M (infra) 2 M (goods) > 5 M (infra) Frequency

Newspaper

Once in 1 newspaper
Continuously for 7 cd Continuously for 7 cd Continuously for 7 cd

PhilGEPS

Website of Procuring Entity

Conspicuous place

Provisions :
Section 13.1, Revised IRR of RA 9184, states thatto enhance the transparency of the process, the BAC shall, in all stages of the procurement process, invite, in addition to the representatives of the COA, at least two observers, who shall not have the right to vote, to sit in its proceedings; and;
Section 13.3, Revised IRR of RA 9184, further provides that..Observers shall be invited at least three (3) calendar days before the date of the procurement stage/activity. The absence of observers will not nullify the BAC proceedings, provided that they have been duly invited in writing.

Provisions:
Section

14.1.c. BAC Secretariat

The HOPE of the Procuring entity shall create

a. Secretariat which will serve as the main support unit of the BAC.xxxxThe Secretariat shall have the following functions and responsibilities a----j. . : c) Prepares minutes of resolutions of the BAC; the meetings and

 Section 29 of IRR of RA 9184, states that ...The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee to recover cost of materials. Implication:

Interested or concerned public may question the credibility of the bidding process

Provision: Sec. 38.2, IRR of RA 9184, states that ....The maximum periods and earliest possible time for action on specific procurement activities are provided for in Annex C of this IRR. In case the deadline for each activity falls on a non-working day (i.e Saturday and Sunday), legal holiday, or special non-working holiday, the deadline shall be the next working day.

Implication: Rushing or shortcutting of process/activities may result documentation. procurement to defective

(Please refer to the next slide for Illustration)

Table 8 - List of Sample Transactions on Procurement Timelines Kalinga District Engineering Office Period of Action on Procurement Activities As per DEO Name of Project (Total number of days From publication of ITB to issuance of NTP) (Total number of days From publication of ITB to issuance of NTP) As per Annex "C" Earliest Possible Time Variance

(1) Supply and delivery of various maintenance materials for use in the rehabilitation of road damages along Ableg Creek

(2) 12 days

(3) 28 days

(4) = (2-3) (16 days)

Supply and delivery of maintenance materials for use in the rehab. Of Luplupa Footbridge

15 days

28 days

(13 days)

Supply and delivery of various maintenance materials for use in the rehabilitation of road damages along Ableg Creek

17 days

28 days

(11 days)

Provisions:
Sec. 37.1.1, Revised IRR of RA 9184, states thatThe BAC shall recommend to the HOPE the award of contract to the bidder with LCRB/HRRB or Single Calculated Bid/Rated Responsive Bid after the post qualification process has been completed.
Sec. 37.1.3, Revised IRR of RA 9184, states thatin case of approval, the HOPE shall immediately issue the Notice of Award. . . x.x.x

 Sec. 37.1.5, Revised IRR of RA 9184, states that. .. Contract Award shall be made within the bid validity period provided in Section 28 of this IRR. Implication: Lack of transparency on procurement process

Provisions:
Sec. 37.1.6, IRR-A of RA 9184, states that....The BAC, through the Secretariat, SHALL post, within three (3) calendar days from its issuance, the Notice of Award in the PhilGEPS, the website of the procuring entity, if any, and any conspicuous place in the premises of the procuring entity, while

 Sec. 37.4.2, IRR-A of RA 9184, states that The procuring entity, through the BAC Secretariat, SHALL post a copy of the Notice to Proceed and the Approved Contract in the PhilGEPS or the website of the procuring entity, if any, within fifteen (15) calendar days from the issuance of the Notice to Proceed.
Implication: Lack of transparency in the procurement process