DOTC ‘advanced’ P58 million Payment not allowed by COA but radar firm still got funds

By Joel M. Sy Egco, Assignments Editor
Tuesday, June 07, 2011

GOVERNMENT auditors have disallowed a P58-million “advance payment” made by the Department of Transportation and Communications (DOTC) to the winning bidder for the controversial Communications, Navigation and Surveillance/Air Traffic Management (CNS/ATM) Systems Development Project, which was reportedly among the main reasons for the “sacking” of top agency officials.

In his “Valentine’s Day” letter to Transportation Secretary Jose “Ping” de Jesus, a copy of which was obtained by The Manila Times, DOTC resident auditor and lawyer Aristoteles Ilarde disallowed the release of the amount representing “15-percent advance payment” because of the failure of agency officials to clarify certain issues raised previously by the Commission on Audit (COA) regarding the project.

“We are returning the Request of Disbursement and Disbursement Voucher No. 102-201101-0083 dated January 19, 2011, and the related supporting documents for the 15 percent advance payment [to] Sumitomo Corporation/Thales Australia Ltd. Joint venture of the New CNS/ATM Systems Development Project Package I in the amounts of Y1,036,221,982.00 and P58,923,269.03 due to failure by management to clarify the issues and concerns raised in COA Audit Observations Memorandum No. 09-033 dated July 2, 2010 and the related series of communications thereafter,” Ilarde said in his letter coursed through DOTC chief accountant Edna Tapar.

Questions on the propriety of the CNS/ATM project came after the Transportation department awarded Package 1 of the project to Sumitomo/Thales Joint Venture on December 23, 2010. This phase costs P4.2 billion.

Since July last year, COA has been seeking clarifications from the proponents of the CNS/ATM project on some vague provisions in the contract.
Despite this, the DOTC released the 15-percent advance payment to the contractor.
State auditors decided to “disallow” the payment after they found out that only a consultant had ordered commencement of the project.

“We also noted that the Notice to Proceed/Notice of Commencement of Work to Sumitomo Corporation was not issued by the Head of the Procuring Entity but instead by the consultant, which is not in accordance with the provisions of RA [Republic Act] 9184,” Ilarde further said in the letter.

“In view thereof, compliance is hereby requested before appropriate action could be taken on the herein claim,” he added.

RA 9184 is the act providing for the modernization, standardization and regulation of the procurement activities of the government and for other purposes.
When sought for comment, de Jesus maintained that there was nothing wrong in their actions and that the issues raised by the Audit commission were all being addressed.
“We have responded to all the issues raised by the auditor and have appealed the auditor’s disallowance,” he said through a text message he sent to The Manila Times.

A source of The Times claimed that the Commission on Audit advised the Transportation department against awarding the CNS/ATM contract to Thales Australia Ltd. because it was blacklisted for abandoning a previous deal with the Philippine government.

Formerly known as Thompson-CSF Group, Thales was blacklisted during the time of President Fidel Ramos after failing to deliver on its contract package for the Globe Maritime Distress Safety System (GMDSS), which resulted in the Philippine Coast Guard resorting to the use of its antiquated system in its maritime operations.

“[COA] stated they [DOTC] cannot award [the project] to Thales considering that they have abandoned the project called the global maritime distress signal system. At [the] time, their name was Thompson CSF. The disqualification of other bidders was also spurious,” The Times source said.

A highly-reliable government source earlier claimed that de Jesus and his subordinates were actually “asked to resign” after they drew the ire of President Benigno Aquino 3rd for ignoring his instructions to have certain contracts further scrutinized on suspicion that these may be riddled with anomalies.

Apart from the CNS/ATM System Project, the other “dubious” deals are the Metro Rail Transit (MRT) 7 Project and the inter-connectivity contract between the Land Transportation Office (LTO) and information technology provider Stradcom Corp.
The source claimed that the President has come across the questionable decisions by agency officials on the controversial deals.

Besides being expensive, the Japanese-funded air traffic management project was criticized for allegedly being “flawed,” “futile” and “redundant” since existing air traffic facilities can very well handle anticipated increase in international and domestic flights in the future.

Critics said that the CNS/ATM System Project worth P13 billion should be quashed because the existing Manila Air Control Center (MACC) can still effectively manage air traffic.

At the most, the sources added, an upgrade of the MACC should be undertaken.

Source: http://www.manilatimes.net/news/topstories/dotc-%E2%80%98advanced%E2%80%99-p58-million/

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