COA says AFP overpaid for 2011 ammo; former chief of staff, officials held liable

MANILA, Philippines – The Commission on Audit (COA) on Monday, January 5, reinstated a ruling holding former senior military officials and a supplier liable for the price difference of a P15-million ammunition purchase made by the Armed Forces of the Philippines (AFP) in 2011 that it found overpriced.

The COA said the AFP failed to follow proper procurement rules in buying 418,410 rounds of 5.56mm ammunition at P35.85 per round, a price it said was significantly higher than prevailing rates.

Those held responsible for the price difference of over P3.2 million include former AFP chief of staff Ricardo David, former members of the AFP’s General Headquarters Bids and Awards Committee (GHQ-BAC 1), including its chairman at the time, then major general Nestor Sadiarin.

Also held liable were its vice chairman, then brigadier general Eldon Nemenzo, and other ranking military officials Arnolfo Palmea, Rustico Banawa, George Cabreros, Josefa Berbigal, and Antonio Mendoza; the former head of the Philippine Army Procurement Center, Jessie Dosado; and supplier Alliant Techsystems Incorporated (ATI), through its local representative, Intrade Asia Pacific Corporation.

State auditors said the 2011 purchase was about 75% more expensive than a 2014 procurement from South Korea’s Poongsan Corporation, which cost P20.48 per round. They also noted that just months earlier, the AFP had bought nearly two million rounds at P17.74 per round from ATI.

The COA confirmed the 2013 Notice of Disallowance covering P3.205 million, representing the price variance between the P35.85 per round paid in 2011 and the P20.48 per round cost of a comparable 2014 purchase. The officials and supplier were not held liable for the full P15 million cost of the transaction, the agency said.

In 2017, COA lifted the disallowance, but the commission en banc later reversed that decision, ruling that the AFP could have avoided the overpayment by using a repeat order, since it had bought the same ammunition from the same supplier just four months earlier.

A repeat order, the COA said, would have allowed the AFP to buy the ammunition at P17.74 per round without violating procurement rules.

“Neither would this have resulted in splitting of requisitions or purchase orders, considering that the first contract was awarded through public bidding,” COA said.

The COA also said there was insufficient evidence that the GHQ-BAC had complied with the rules for limited source bidding. While the committee invited four prospective suppliers – Poongsan, Compania Brasiliera de Cartuchos, ATI, and PRVI Partizan – it said there was no showing that these firms were among the required pre-selected suppliers. – Rappler.com