EXPLAINER: COA findings were long preceded by questions of Mayor Rama, Sanggunian on defects of P383.5M Cebu City garbage contract. Rama gave 'ultimatum' in June 2021 to Docast and JJ.

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COA’S REPORT ON GARBAGE DEAL. The Commission on Audit (COA) report on Cebu City’s spending in 2021 -- first news-broken by media specialist Max T. Limpag -- includes the finding that there were “several indications of irregularities” in the procurement and project implementation of the P383.531 million purchase order for the services of two companies operating under a joint venture, Docast Construction and JJ & J Construction and General Supply.

COA was less explicit in describing the irregularities: “exposing the city to the risk of not fully attaining the program’s objective and outcome.” City officials, including Mayor Michael Rama and some councilors, were blunt (in statements made earlier, in 2021): The City was “paying 100 percent for 30 percent of the service.” Docast and JJ allegedly collected full fees for garbage solid wastes most of which were hauled by the City’s Department of Public Service and the barangays’ collection units.

LAPSES FLAGGED. COA’s report noted, after verifying documents and investigating the claims of Docast and JJ, these mistakes and omissions, among others:

(1) The two companies’ ownership and structure didn’t meet the requirement of the City. The City requires a corporation; neither Docast or JJ is.

(2) The primary business of Docast and JJ is construction, not logistics or hauling services, which also isn’t “in accordance with” the city’s requirements.

(3) The two firms didn’t qualify on requirements of motor pool and location. A DPS inspection report said the motor pool is not within the territory of Cebu City; it is located in Calawisan, Lapu-City.

(4) The contractors started hauling garbage even though post qualification was not yet started, no BAC (bids and awards committee) declaration that they qualified, and no notice to proceed.

(5) “Unusual changing” of Tare weight, no certificate of calibration of the weighing equipment from its manufacturer and no Department of Science and Technology validation. Which could’ve answered questions raised last year by Minority Floorleader Nestor Archival Sr. and other councilors on the number of tons hauled.

CITY OFFICIALS’ ACCUSATIONS, SUSPICIONS were raised, interestingly, last year yet, a year before the COA report’s release – and by the city mayor and city councilors no less.

The City Council in July 2021 looked into the transaction when it saw the badges of possible fraud and smelled the stink that possible dishonesty emits.

Mayor Rama -- the same mayor who was then subbing for and later serving the remainder of the late mayor Edgardo Labella’s term -- acted on the suspected anomaly, issuing an “ultimatum” to the contractors because of the alleged violations.

WHAT CITY COUNCIL EXPOSED IN 2021. Three charges of anomaly in the 2021 purchase order (PO) for garbage disposal services were raised in the Cebu City Council early last year. The suspicions were reinforced during the July 23, 2021 budget hearing after DPS (Department of Public Services) asked for P100 million on top of P402 million that was already appropriated.

The charges then: (1) Accusation of bloating the numbers in the heavy volume of garbage claimed to have been hauled by Docast and JJ: more than a thousand tons daily from an earlier average of only 300 tons a day in most of the first half of the year.

(2) Payment to Docast/JJ for garbage hauled by DPS and the barangay collection units at P1,800 per ton, in effect with the two firms being paid for services rendered by the city’s resources.

(3) The deal being covered only by a purchase order and not a contract reviewed by the City Council.

Some councilors suspected that Docast and JJ made more money through the provision of the PO that payment was “integrated” -- “bale tanan sa Docast,” said a DPS official, suggesting it must have received pay even for garbage hauled by the City’s DPS and barangay units.

WHAT RAMA COMPLAINED ABOUT. Mayor Rama issued on June 28, 2021 the “ultimatum” for Docast and JJ to explain alleged multiple violations of PO’s terms of reference: from shortage of trucks (only 13 of 50) to not having a transfer site in the north and having a substandard site in the south, to lack of a motor pool, among others.

Rama called it a “serious memo,” giving the two companies a 48-hour deadline to explain “in writing, under oath and with documentary proof” their lapses and violations. Failure would be a waiver of their right to due process and the issue resolved on its merits, the mayor said then. The contract could be terminated, he said in a news report.

CONTRACT WASN’T TERMINATED. It was not known if the defects were corrected and the violations sanctioned but the services of Docast and JJ apparently continued until the end of 2021. It’s not known or ascertained as to who’s providing the service from January this year up to now.

Reporters covering City Hall apparently didn’t follow up the result of Rama's ultimatum and whether the City Council took it up again, especially on the executive-legislative finding that the City was allegedly getting only a third of the paid services to Docast and JJ.

“Trash hauler given ultimatum: City pays 100% for 33% service,” says a headline of a July 16, 2021 news story by Freeman’s Caecent Magsumbol. SunStar Explainer reported on July 15, 2021: “Twin blasts at garbage hauler Docast from Cebu City Council, VM Rama. They push inquiry on contract, practices that ‘hurt’ the City.”

CITY ACCOUNTANT DEFENDS DEAL. COA’s report on Cebu City contains not just its findings of lapses or violations but also the accounting office’s reply, then COA’s rejoinder and recommendation.

On garbage disposal services, the accountant’s comments may look like a dissent to the findings and thus a defense of Docast and JJ. It’s an odd situation as well for the city mayor and the City Council, which both castigated the deal, but would have to defend it now, through its accountant, against COA’s adverse ruling.

They have to, because in the midst of implementing the purchase order – a PO, not a contract reviewed by the Sanggunian – the mayor and the councilors saw the flaws and yet continued the service.

COA is recommending corrections and requiring documents. It could mean the defects that mattered were not yet corrected. The "100%-payment-for-30%-service" irregularity could have gone on until the end of 2021 or, the public is not yet told, might still be going on.

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