By Michael Punongbayan | The Philippine Star | August 1, 2013

MANILA, Philippines - The Department of Transportation and Communications (DOTC) released P4.5 billion in government funds to the Light Rail Transit Authority (LRTA) for the controversial Metro Rail Transit (MRT) 3 expansion project in 2011 – a move that the Commission on Audit (COA) finds questionable.

The money was eventually returned to the agency in October 2012 after a memorandum of agreement (MOA) between the two, the basis for the fund transfer, was cancelled, according to a COA report.

The 2011 report, released only last month, said the DOTC also released more than P5.6 billion to the LRTA and the Manila International Airport Authority (MIAA) to finance the MRT 3 System Capacity Expansion Project and the rehabilitation of the Ninoy Aquino International Airport (NAIA) Terminal 1.

State auditors said the funds were given to the two government-owned and controlled corporations despite the absence of Programs of Work (POW) and Cost Benefit Analysis.

The POW “is an indispensable requirement that indicates the scope of work to be done, equipment/materials/items to be procured, the total project cost and the basis of the Approved Budget for the Contract,” the COA report explained.

State auditors also said that a Cost Benefit Analysis was supposed to have been conducted by the DOTC management in order to ascertain that the project will be beneficial not only to the government but also to the passengers of MRT 3.

The audit team noted that the project cost should have been determined first by the DOTC, LRTA and MIAA as the procuring agencies prior to the transfer of funds as required under the rules.

The DOTC management told COA that as far as the MIAA is concerned, the scope of work to be done for NAIA Terminal 1 is contained in a memorandum to President Aquino.

Moreover, the preparation of the actual POW is currently being undertaken by both DOTC and MIAA technical personnel, after which it will be presented to the DOTC secretary for approval and provided to COA after completion.

As for the P4.5 billion that went to the LRTA for the MRT 3 expansion project, the audit report mentioned no explanation issued by the DOTC.

In addition to the lack of POW and Cost Benefit Analysis, state auditors said the release of government funds to LRTA for the MRT 3 expansion project lacked Government Procurement Policy Board (GPPB) guidelines to implement the implementing rules and regulations (IRR) of Republic Act 9184 – the Procurement Law – for a negotiated procurement, which is the mode to be carried out under the MOA.

“Pursuant to the aforesaid provision of RA 9184, a procuring agency may resort to a Procurement Agent, following the guidelines issued by the GPPB to implement the above provision. The guidelines stated above have not been issued, per inquiry with the Technical Support Office of the GPPB and research made on the GPPB website, by the Audit Team,” the COA report explained.

“In the absence of the guidelines to implement the provision of Section 53.6 of the IRR of RA 9184, it may be inferred that the procuring entity cannot resort to the procurement through a Procurement Agent,” the audit report pointed out.

The COA report also noted that non-compliance with procurement procedures affected the validity of the MOA between the DOTC, LRTA and MIAA.

It called on the DOTC to “observe the required procedures... and enforce strict compliance with applicable laws, rules and regulations prior to the transfer of funds.”

The DOTC later told the audit team that the P4.5 billion transferred to LRTA was returned due to the cancellation of the MOA between DOTC and LRTA and the revocation of the designation of the LRTA as procurement agent for the MRT 3 Capacity Expansion Project, without explaining in detail.

Meanwhile, Malacañang reiterated yesterday that Czech Ambassador Josef Rychtar should cooperate in the probe on an alleged $30-million shakedown in connection with a train supply contract for the MRT 3.

Presidential spokesman Edwin Lacierda also said Ballsy Cruz, eldest sister of President Aquino, is prepared to face those accusing her and her husband Eldon Cruz of demanding $30 million from Czech railway firm Inekon.

Rychtar had earlier cleared the Cruz couple and said DOTC officials were the ones involved in the alleged shakedown in July 2012. He said the demand was later lowered to $2.5 million.– With Delon Porcalla