Concepcion LGU cites urgency, good faith in flagged deal

ILOILO CITY — The municipal government of Concepcion, Iloilo, has told state auditors that it acted in good faith and out of urgency when it fast-tracked a PHP 7.244 million procurement of farm machinery and organic fertilizers through the City Government of Passi.

The municipality also acknowledged several lapses cited by the Commission on Audit (COA) and committed to follow procurement rules in future transactions.

Its explanations are recorded in COA’s 2025 annual audit report, which found that the engagement of Passi City as procurement agent was carried out with procedural deficiencies.

The Department of Agrarian Reform Region 6 (DAR-6) transferred the funds for PHP 4,923,500 worth of farm machinery and equipment and PHP 2,320,472.70 worth of organic fertilizers.

The goods were intended for the Tirol Estate Farmers Association and the Belen Irrigators’ Services Association.

COA said the transaction ran contrary to the 2016 revised implementing rules and regulations (IRR) of Republic Act (RA) 9184, or the Government Procurement Reform Act, and Government Procurement Policy Board (GPPB) Resolution No. 07-2022.

Why Passi City was tapped

The municipality said it engaged Passi City to ensure the timely delivery of goods to agrarian reform beneficiaries, given the specialized nature of the agricultural interventions.

It argued that existing guidelines allow the engagement of procurement agents for efficiency, and not solely because of internal incapacity.

The decision was driven by the need to optimize capacity and protect project timelines rather than by any lack of institutional capability, it said.

The municipal government added that it did not intend to circumvent the law.

It described the absence of an explicit statement on lack of proficiency in its Bids and Awards Committee (BAC) resolution as “a formal deficiency and not a substantive one.”

COA rejected the argument, saying the rules allow a procurement agent only when a procuring entity lacks enough qualified personnel to form a BAC or when its BAC lacks the proficiency and expertise for a specific project.

Capacity optimization and timely implementation cannot substitute for or override those mandatory conditions, auditors said.

During the exit conference, the municipal government, through its municipal planning and development office, acknowledged that it had the capacity to undertake the procurement.

It said it opted to engage a procurement agent in view of the anticipated benefits to its constituents under the program.

The municipality told auditors it would comply with the requirements for engaging a procurement agent in future engagements.

Track record papers

COA also faulted the municipality for failing to document Passi City’s track record with copies of at least three similar contracts, each costing at least 50% of the approved budget for the contract (ABC).

The municipality said its determination was based on actual knowledge of Passi City’s prior government transactions.

It acknowledged that supporting documents, such as copies of similar contracts, should have been attached to the BAC resolution.

The BAC chairperson told auditors during the exit conference that the chairman of Passi City’s Special BAC (SBAC) had been directed to submit the documents.

As of August 2026, COA documents showed that the municipality had yet to submit them.

The municipality said it sent a formal request to Passi City’s SBAC on April 16, 2026, but the records remain under the jurisdiction of that committee.

Urgency behind faster bidding

COA found that the fertilizer bidding was completed in 21 calendar days and the machinery bidding in 17 calendar days, short of the 26 calendar days the IRR sets as the earliest possible period.

The municipal government said the acceleration was undertaken in good faith to address the urgent agricultural needs of the beneficiaries.

It asserted that competitive bidding procedures were still observed, all critical stages were undertaken, and no bidder was prejudiced or given undue advantage.

Auditors also flagged documents and procurement steps that were dated out of sequence and pre-bid conferences that were held earlier than the rules allow.

The municipality said those deviations were likewise driven by urgency, given the time-sensitive nature of agricultural interventions for farmer-beneficiaries.

It said the deviations did not result in favoritism, loss to the government, or compromise of competitive bidding principles.

COA had noted that the town’s Technical Working Group (TWG) representative was unable to attend the pre-bid conferences on Feb. 25 and March 17, 2025.

The municipal government said the TWG’s participation in the bidding was supported by photographs and certified copies of attendance sheets.

COA countered the urgency claim by noting that the fertilizers were delivered in April 2025 but distributed only in June 2025.

The municipality nonetheless recognized that procurement timelines are mandatory and committed to strict adherence.

Who signs off on awards

COA found that the mayor of Passi City approved the SBAC resolutions for the two contracts on March 6 and March 25, 2025, instead of the mayor of Concepcion.

The municipal government initially asserted that it was “procedurally incongruous” for the Concepcion mayor to approve a BAC resolution of Passi City because such resolutions are internal to the procurement agent.

The BAC chairperson explained that under the memorandum of agreement, the SBAC was responsible for conducting post-qualification and recommending the award.

Auditors said the Concepcion mayor remained the head of the procuring entity and kept the responsibility to approve or disapprove award recommendations.

The municipal government later acknowledged that position and committed that all award recommendations would be submitted to and approved by the municipal mayor.

Paperwork errors

On the BAC resolution that was first submitted unnumbered and on DAR letterhead, the municipality said the use of the letterhead was an administrative oversight.

It attributed the error to DAR’s close involvement as the funding agency, which it said was consistent with the agency’s oversight role under COA Circular No. 94-013.

On the performance bond that was first issued in favor of Passi City, the municipality said it coordinated with the winning bidder and the surety provider to correct the document.

COA noted that the amended bond, submitted on July 18, 2025, was dated March 10, 2025, while the official receipt for its payment was dated July 3, 2025.

The municipality called the missing disclosure in the suppliers’ omnibus sworn statements “a correctable formal defect” and said future procurements would use the prescribed format.

On the absence of the procurement agent from the annual procurement plan approved on Jan. 31, 2025, the municipal planning and development office said the omission was inadvertent.

The office said the municipality initially presumed that it would receive only the fertilizers and equipment for distribution and did not anticipate that the funds would be downloaded.

On the mismatched dates of the purchase orders and contracts, the municipal government said the inconsistencies were clerical or administrative.

It said these did not invalidate the contracts or affect the legality of the procurement, and that the contracts were executed, implemented, and supported by the actual delivery of goods.

When auditors raised that the technical specifications appeared restrictive and could be met by only one supplier, the BAC chairperson said DAR, as the source agency, provided the specifications.

The chairperson explained that the committee “could do nothing about it,” according to the audit report.

What happens next

COA recommended that the BAC submit documents on three similar contracts to establish Passi City’s track record and follow the proper procedure for engaging a procurement agent.

It also recommended consistent compliance with the IRR of RA 9184 or with RA 12009, the New Government Procurement Act, whichever applies, in all future transactions.

The municipal mayor agreed to the recommendations, the report said.

RA 12009, which President Ferdinand Marcos Jr. signed on July 20, 2024, revised RA 9184, the law that had governed government purchases since 2003.