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NIA takes immediate action to address COA Observations

NIA Central Office -- The National Irrigation Administration (NIA) has immediately conducted management actions in response to the Audit Observations and Recommendations made by the Commission on Audit (COA) in the Agency’s CY 2020 Audit Report, which consisted of the Independent Auditor’s report, the Audited Financial Statements, the Observations and Recommendations, and the Status of Implementation of Prior Years’ Recommendation with Annexes.

COA’s Audit Opinion was stated as “We rendered a qualified opinion of the presentation of the financial statements in all material aspects.” This issuance of a qualified opinion meant that there are only some items for clarification, specifically, the documentary requirements of the projects. COA also issued a “qualified opinion” on its CY 2019 Audit Report for NIA.

Last July 21, 2021, a Virtual Exit Conference was conducted to discuss the findings under the 2020 COA Annual Audit Report that was attended by NIA representatives headed by the Deputy Administrator for Engineering and Operations Sector Czar M. Sulaik, Central Office-based Department Managers, Regional Managers, Engineering and Operations Division (EOD) Managers, and Irrigation Management Office (IMO) Managers. This was an avenue for NIA to clarify and address the said COA findings wherein NIA was allowed to submit documents to comply with the noted observations discussed during the Exit Conference. On July 27, 2021, NIA was able to comply with the initial submission, and further submitted the supplemental Consolidated Management’s Updated Actions and Comments covering the submission from the Central Office and Regional Offices on July 29, 2021. NIA was given 60 days by COA from the receipt of the 2020 COA Annual Audit Report to implement their recommendations contained in the report on the COA letter dated July 30, 2021. After an article about the COA Report was published in national newspaper, the Agency wrote a letter to COA on August 16, 2021 clarifying the published COA Report where some of the reported findings were not discussed during the Exit Conference. However, no response from COA was received until now.

The Audit Observations indicated that several documentary requirements for 841 awarded contracts aggregating P6.578 billion in nine (9) Regional Offices (ROs) and two (2) Project Management Offices (PMOs), namely Magat River Integrated Irrigation System (MARIIS) and Chico River Pump Irrigation Project (CRPIP), were lacking while other required documents submitted to their respective COA Audit Teams at year-end were deficient. In addition, the issuance of bid and performance security before contract signing, procurement timelines, and certain procedures in the post-qualification evaluation of the winning bidders were not thoroughly compliant with the Revised Implementing Rules and Regulations (IRR) of the Government Procurement Reform Act (Republic Act No. 9184) and Government Procurement Policy Board (GPPB) Manual of Procedures for the Procurement of Infrastructure Projects.

NIA Top Management Officials, headed by Administrator Ricardo R. Visaya, Central Office, and Field Offices nationwide are committed in conducting procurement activities in accordance with the Delegated Authorities approved by the NIA Board of Directors, chaired by Cabinet Secretary Karlo Alexei B. Nograles. The Agency strictly followed the roles and responsibilities as procuring entity and complied with the provisions required in the Revised IRR of RA 9184 as per Memorandum Circular No. 11, series of 2017 providing Strict Adherence to the Revised IRR of RA 9184 and Existing Memoranda on the Procurement of Infrastructure Projects, Goods, and Consultancy Services.

In the CY 2020 Audit Report of COA, 841 NIA contracts were reported to have either incomplete documentary/eligibility requirements (699 contracts), not thoroughly followed procedures in the conduct of post-qualification evaluation (72 contracts), Performance Security not posted for the awarded contractors within the prescribed period prior to the signing of the contract (37 contracts), non-compliance with procurement timelines (30 contracts), and non-compliance with the issuance of bid and performance security (3 contracts).

At present, all 699 contracts in 10 regions with incomplete documentary/eligibility requirements were already complied and submitted to the Office of the Resident Auditor of the concerned regional offices.  On the other hand, in response to the 72 contracts which did not thoroughly follow procedures in the conduct of post-qualification evaluation, the one (1) concerned regional office already devised a Matrix to identify same pledged equipment and personnel of each winning bidder in the conduct of post-qualification as recommended by the Resident Auditor.

In response to the Performance Security not posted for the awarded contractors within the prescribed period prior to the signing of the contract, the Performance Securities were already complied by the two (2) concerned regions. An Ad Hoc Committee was also created to investigate the alleged infractions committed to the Performance Security to prevent the recurrence of the same infractions.

In response to the non-compliance with procurement timelines, the one (1) concerned regional office reported that some participating bidders in the listed 18 irrigation projects were situated in distant provinces. Due to limited service vehicle available during those times, the conduct of post qualification is affected.

Meanwhile, in response to the non-compliance with the issuance of bid and performance security, for two contracts with contract variations reported more than 10% of the original contract prices, verification shows that contracts had increased in the contract amounts up to 1% only and not 10%. Additional performance security is required only in the 2016 RIRR of RA 9184 to be posted by the contractor to cover any cumulative increase of more than 10% of the original value of the contract as a result of variation order (Section 39.6 of the 2016 Revised IRR of RA 9184). For the procurement of goods in regional office with no warranty security, the supplier issued a bank check to the Agency amounting to 1% of the total contract price equivalent as a guarantee within the warranty period. It is evidenced by the Proof of Warranty Security of the supplier.

In addition, the corresponding Bids and Awards Committee (BAC), Technical Working Group (TWG), and BAC Secretariats are directed to diligently oblige the submission of necessary requirements to the procurement process of civil work contracts, consultancy, and goods. A regular conduct of internal audits shall be imposed to review the current procurement activities of those concerned offices and their compliance level to COA Findings and prescribed timeline as stated under RA 9184 to avoid recurrence of Audit Observations.

The Top Management received the reports relative to failure or non-compliance of Posting Performance Security involving certain regions and immediately submitted the status of compliance and justification of the concerned offices. The Management will ensure the monitoring and validation of NIA’s field office compliance and/or causes of failure which are being referred to in RA 9184, Sections 39 and 40, respectively. Appropriate actions will be taken for improvement, as well as the corrective measures on the imposition of performance securities to protect the interest of the government in project implementation.

NIA has foreseen and recognized the delays of project implementation due to COVID-19 Pandemic. In fact, President Rodrigo Roa Duterte approved Republic Act No. 11520 which extended the availability of the FY 2020 Appropriations (RA 520) to December 31, 2021. The Department of Budget and Management’s (DBM) National Budget Circular No. 585 embodies the IRR, policies, and procedures of RA 11520 with RA 11519.

In the pandemic period starting in 2020, various procurements undertaken by the Agency were also hampered or delayed due to limited access and mobility of personnel and prospective bidders, thus, recently, virtual attendance to procurement meetings and bidding are already allowed. However, the post-qualifications of the lowest calculated bidder had to be conducted for ocular site inspection and validation. NIA Management ensured that service vehicles of field offices are augmented to provide support in the conduct of post-qualification of the lowest calculated bidders.

Regarding the suspended project and/or Contract Time Extensions (CTEs), the identified causes of contract time extension were attributed to conditions that are beyond the control of the implementing offices. The Agency attributes cause of delays by several factors, such as typhoons, severe weather conditions, peace and order situation, high water level on the construction sites, and water delivery. Nevertheless, duly approved suspension orders and time extensions were issued by the office after conducting field validation.

The change of development scheme and revisions of plans, design, program of work, and variation orders are all relative to the Agency’s functions and processes which are also subject to change during the actual course of project implementation. The project formulation/study and design will incur considerable time just like the needed geological and rock formation studies to ensure the integrity of dam structures for construction. Actual project construction will also depend on site conditions. Construction drawings/designs are checked, reviewed, and may be revised which causes certain variation/change orders from the original contract items of work. These may be an increase or decrease on quantities of items needed with detailed computation and approval of authorities. The Management ensures that any changes on project costs due to variations are justified and checked accordingly, as well as the relative extension of contract duration due to change in work quantities and unpreventable conditions. Requirements are also properly evaluated and justified with supporting reports and documentations. Thus, the management of NIA ensures that all COA Findings were properly addressed acted upon.

In line with Administrator Visaya’s Four-Point Agenda, particularly in eradicating graft and corruption, NIA has always been transparent in the implementation of its irrigation projects nationwide. It will be recalled that the Agency adhered to the directive of President Rodrigo Roa Duterte to publish list of infrastructure and irrigation projects in national broadsheet. NIA tied up with the Philippine Daily Inquirer (PDI) for the publication of the List of Irrigation Projects Bidded at Central Office, and Ongoing and Completed Operations and Engineering-Monitored Projects with more than P10-million budget allocation each from CY 2019 to CY 2020 in six issues on October 04-26, 2020. All published data and information are based on August 2020 Status Reports of the Agency. The Administrator viewed the President’s directive as instrumental in detecting collusion among agencies and contractors, allowing the public to identify possible conspiracy among bidders and officials, and ensuring that public funds will not go into corruption.

Pursuant to Section 69 (Imposition of Administrative Penalties) of RA 9184 and upon the findings and recommendations of the Contract Termination Review Committee (CTRC) in its Resolution of Termination, NIA also issued blacklisting orders to several project contractors under NIA Memorandum Circular (MC) No. 86, series of 2018. The blacklisting was made in penalty to their failure to fully and faithfully comply with contractual obligations without valid cause or non-compliance to any written lawful instruction of the procuring entity or its representative/s pursuant to the implementation of the contract. Other violations of the contractors under Annex I of Revised IRR of RA 9184 include the absence of minimum essential equipment listed on the Bid. The said equipment is necessary to prosecute the contract works in accordance with the approved work plan and equipment deployment schedule as required for the project. As a result, the performance securities of the contractors were all forfeited.

Other mechanisms used by NIA to promote transparency and accountability in irrigation service include the regular conduct of Stakeholders Fora, Irrigators Association (IA) Congress/Conferences, NIA Leadership Map, Project DIME (Digital Imaging for Monitoring and Evaluation of Irrigation Projects), Management Reviews, and Quarterly Managers’ Conference, among others.  In addition, NIA regularly submits report to the Presidential Management Staff (PMS) on the status of project implementation for fast-tracking.

Ultimately, the COA should rectify their report stressing that NIA has been given two (2) months to comply with their observations. NIA Management requests COA to follow their own policy of issuing Certificate of Concurrence after complying with their requirements.

For the status of irrigation development, as of December 31, 2020, the total service area developed was 2,006,054.90 hectares, equivalent to 64.12% of irrigable area of 3,128,631 hectares. Of this area, 933,008.39 hectares were under National Irrigations Systems (NISs) and 725,793.60 hectares in Communal Irrigation Systems (CISs). The remaining area for development is 1,143,649.16 hectares.

Noteworthy to discuss is that for yearly approved budget for irrigation, 75% goes to infrastructure while the 25% is further distributed for other non-infrastructure projects, operation subsidy, and payment of NIA’s obligations. Of the infrastructure share, only 64% is allotted for irrigation systems development program which will generate new service areas for irrigation.

Computing the irrigation development for the period 2010-2015, the average increment was recorded at 0.84% compared to the average increment for the period 2016-2020 which is 1.36%. These figures translate to an actual performance of 4.2% and 6.79% respectively. A 2.59% difference points to about 110,000 hectares increase on irrigated land in the last five (5) years. Decrease in the area of irrigated lands are mainly due to permanently non-restorable irrigated lands and converted land use.

Within the period of June to August this year, there are 173 completed irrigations systems nationwide, with a total project cost of P13,789,462,209.18 that were completed and inaugurated. These projects will provide timely and reliable irrigation water supply to 66,359.51 hectares of agricultural land nationwide, benefitting 42,894 farmers and their families.

Debunking the article on the Exim Bank Funded CRPIP, those irregular contracts mentioned covered the period 2018-2019 when the project was under the preparation of irrigation facilities and access road and compliance to its documentary requirements were long been submitted. As of June 2021, the physical accomplishment of the commercial contract was recorded to be 9% advance. However, due to the lockdown, the project suffered a (-3) slippage. A request for the project time extension was already approved by the NIA Board and is currently being evaluated by NEDA. It is targeted that by 1st Quarter of 2022, the project will be in partial operations to irrigate about 1,000 hectares of agricultural land out of the 8,700 hectares after its full completion.

Administrator Visaya assured that despite the prevalence of COVID-19 Pandemic, NIA is doing its best to finish irrigation projects on time or even ahead of the target completion because delays in project implementation mean injustice to the Filipino farmers. # # #

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Jerome Carlo Paunan



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