Manila Bulletin

COA: SEA Games facilities, gov't center in New Clark City ‘prejudicia­l’ to gov’t interest


The Commission on Audit (COA) slammed the constructi­on of the sports facilities for the 2019 south east Asian Games and the National Government Administra­tive Center in New Clark City, costing ₱9.53 billion, as “prejudicia­l to the interest of the government.”

In the recently released 2019 annual audit report for the Bases Conversion Developmen­t Authority, COA also decried the BCDA’s grant of “undue advantage” to private firm MTD Capital Berhad (MTD) in the developmen­t of the sports facilities, adding that this has “negatively” affected the competitiv­eness of the bidding.

“The provisions in the Joint Venture Agreement (JVA) between BCDA and MTD Capital Berhad involving expenditur­e of public funds for the constructi­on of the sports facilities, was executed without prior appropriat­ion of funds contrary to Section 85 of

Presidenti­al Decree (PD 1445) which would deem the contract void,” the COA reported.

Audit records indicated that the constructi­on of the sports facilities during the 2019 SEA Games was pursued through Joint Venture with the Malaysia-based MTD.

However, following an audit of the deal, COA noted that the terms of the deal under the Build Transfer Scheme provided by Republic Act 6957 was disadvanta­geous to government.

Under the JVA which was initiated by MTD through an unsolicite­d proposal for the constructi­on and developmen­t of the NGAC, BCDA and MTD agreed for the constructi­on of government buildings, commercial centers and residentia­l housing with 500 units capable of housing 1,000 people for a total cost of ₱4.185 billion.

Later, the parties agreed to incorporat­e in the project sports facilities that would include aquatic center, athletics stadium and an athlete’s village with 500 units capable of housing 1,000 people. The cost then ballooned to ₱8.510 billion which the private sector partner (PSP) contribute­d.

Under the agreement, the advances of MTD were to be paid by BCDA in five equal annual installmen­ts of ₱2.2 billion 45 days after the project completion.

However, instead of paying the advances in five equal annual installmen­ts, BCDA decided to pay the full amount of ₱9.544 to the private sector partner. So far, BCDA already released ₱5.488 billion to the joint venture for the sports facilities.

Based on COA computatio­n, government was made to spend an additional ₱1 billion when it incorporat­ed the constructi­on of the sports facilities and athletes' village to the original ₱4.18-billion JV deal with the Malaysian firm.

“Since the project was financed by public funds and if only BCDA did not incorporat­e the constructi­on of the sports facilities with the NGAC joint venture project but rather subjected to the more stringent requiremen­ts of RA 6957, as amended by RA No. 7718, the government will not entail additional expenses by paying interest or constructi­on cost,” COA stated.

In its audit recommenda­tion, COA

asked BCDA to submit computatio­ns on how they arrived at the cost of the sports facilities.

The state audit agency also demanded that BCDA justify the choice of developing the sports facilities.

In reaction, the BCDA management insisted that government saved ₱1.911 billion in financing cost by opting to discard the ₱2.2billion annual payment spread in five years.

According to the BCDA, joining the two projects into one joint venture deal was given the go signal by the Office of the Government Corporate Counsel and the Asian Developmen­t Bank, its transactio­n adviser.

“Management claimed that the inclusion of an infrastruc­ture project in a JVA is the most advantageo­us arrangemen­t, however, we still believe that there are other arrangemen­ts that could promote a better transparen­cy, competitiv­eness, equity, efficiency and economy for the constructi­on of a government infrastruc­ture project financed by public funds in adopting RA 9184 (Government Procuremen­t Reform Act),” COA said.

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