The Commission on Audit (COA) urged the state-run Philippine Children’s Medical Center to collect P147.5 million in liquidated damages from contractors over delays in four PCMC infrastructure projects.
In its annual audit report on the PCMC, COA said the medical center had repeatedly granted four contractors extensions beyond the maximum allowable extension period.
According to the Procurement law, extension periods should not exceed the original project duration.
The contractors were involved in the following infrastructure projects:
- Two-wing, eight-story hospital building with basement (supposed to be completed in November 2021 after PCMC granted extensions eight times but terminated on the said month,
- Cancer Center Building with LINAC/medical linear accelerator Bunker (supposed to be completed in July 2022 after PCMC granted extension four times),
- Pediatric Brain Center (supposed to be completed in March 2023 after PCMC granted extension four times), and
- Steel Parking Building (supposed to be completed in August 2022 after PCMC granted extension 10 times).
COA said the two-wing, eight-story hospital building with basement project duration was 25 months. The extension given the contractor exceeded the limit by 152 days.
Meanwhile, the extension granted to the contractor of the Cancer Center Building with LINAC Bunker was 735 days, more than what the Procurement Law allows since the project duration was 12 months.
The extension granted to the contractor in the Pediatric Brain Center and Steel Parking Building was 734 and 1,094 days beyond what the Procurement Law provides since these were supposed to be finished within 12 and six months, respectively.
“The granting of time extension by PCMC to the contractors of four infrastructure projects beyond the maximum allowable extension period and the non-imposition of liquidated damages thereof totaling P147.496 million as of December 31, 2022 were contrary to Section 68 and Item 9 of Annex E of the 2016 Revised Implementing Rules and Regulations of Republic Act No. 9184 and the Government Procurement Policy Board Generic Procurement Manual, Volume 4 – Procurement of Infrastructure Projects,” the COA said.
“As a result of the delays incurred in the completion of these infrastructure projects, the intended beneficiaries have been deprived of the immediate use thereof. Also, it somehow affected PCMC’s delivery of more efficient and quality healthcare services to the public due to the unavailability of medical equipment and infrastructure projects. We [thus] recommended that [the PCMC] management demand and collect the liquidated damages totaling P147.496 million either from any money due or which may become due the contractors or from the retention money or other securities posted by them, or a combination thereof,” it added.
Factors
State auditors said that based on the evaluation of the requests for extension submitted by the contractors, the following factors caused the delay in the completion of the four infrastructure projects within the stipulated contract time:
- shortage of raw materials and supplies;
- issues on the design phase;
- pending completion of pre-design plans/structural design/floor plan;
- issues on the location of the project site;
- severe weather conditions; and
- declaration of quarantine due to the COVID-19 pandemic.
COA, however, said such reasoning is not enough given that the original target completion date of all the projects ranged from May to December 2019 or way before quarantine restrictions were implemented due to the COVID-19 pandemic in March 2020.
“Except for the severe weather conditions and COVID-19 pandemic, all factors are issues that should have been considered and resolved during the conduct of detailed engineering and in the preparation of the contract documents as agreed upon by the parties before contract perfection,” said the COA.
“The contract period already includes a number of unworkable days to cover days when unfavorable weather conditions and special circumstances not within the contractor’s control prevent any work from being done.”
The commission added the infrastructure projects should have been completed in 2019 – before the declaration of the state of calamity throughout the Philippines due to the COVID-19 pandemic, thus giving them a time extension equal to the original contract duration.
“[A]nd even though several time extensions were granted and approved, such should not be deemed a waiver of PCMC’s right to collect liquidated damages,” the COA argued.
Having said that, COA noted that requests for extensions made by the contractors to complete the project beyond the maximum allowable extension should not have been granted.
Under the law for procurement of goods, infrastructure projects, and consulting services, the amount of the liquidated damages should be at least equal to one-tenth of one percent (0.001) of the cost of the unperformed portion for every day of delay.
Once the cumulative amount of liquidated damages reaches 10% of the amount of the contract, the procuring entity, in this case, the PCMC, may rescind or terminate the contract, “without prejudice to other courses of action and remedies available under the circumstances.”
“The cumulative amount of liquidated damages of the projects… reached more than 10 percent of the contract prices, except for the construction of a new hospital building which was terminated on November 10, 2021. Among other things, the cumulative amount of liquidated damages is relevant in determining whether the contractors could still complete the work or whether there is already a need for PCMC to take over the projects or engage the services of competent contractors,” COA said.
In response, the PCMC said the two-wing, eight-story hospital building with a basement was terminated due to the contractor’s poor performance, while the three other projects were procured using the design and build scheme to fast-track the completion of said projects and because the PCMC could not design it.
The PCMC also said during the design phase, there were time extensions due to justifiable reasons that heavily affected the project schedule.
“The time allotted for the design phase of the projects was not sufficient to have everything finalized. Due to this, the timeline of the projects heavily shifted. Not to mention, the construction phase of the projects was affected by the shift in the schedule brought by the delays of the design phase,” PCMC said in the same report.
“The emergence of the COVID-19 global pandemic crisis magnified these factors. Rest assured, the recent time extensions are carefully reviewed and approved. Should the contractors lack sufficient justifications and/or exceed the approved time extensions, the PCMC shall impose the equivalent liquidated damages,” PCMC added.
COA, however, maintained that the PCMC should not have approved time extension in situations when the imposition of liquidated damages was necessary such as:
- ordinary unfavorable weather conditions
- inexcusable failure or negligence of the contractor to provide the required equipment, supplies, or materials; and
- the reason given to support the request for an extension was already considered in the determination of the original contract time during the conduct of detailed engineering and in the preparation of the contract documents as agreed upon by the parties before contract perfection.
— DVM, GMA Integrated News
COA: PCMC should collect P147 million from contractors over delayed projects
Source: Balita News
0 Comments