COA finds firetrucks bought from China defective
June 23, 2017
MANILA, June 23 -- The Commission on Audit(COA) found some firetrucks procured from China as defective, which could affect the capability of the country’s regions to efficiently respond to emergency cases and effectively carry out Bureau of Fire Protection's (BFP) mission to prevent and suppress destructive fires.
The COA Report ending in December 31,2016 also noted some irregularities in the PHP 2.577 billion procurement deal by the BFP entered with a Filipino-Chinese joint venture in 2015.
The COA Report stated that 37 percent, or 176 out of the 469 firetrucks delivered by the joint venture of Kolonwel Trading, the local partner, and Hubei Jiangnan Special Automobile Company Ltd. of China were defective.
The contract was for the supply of 244 firetruck units with 1,000-gallon capacity at PHP 6 million each and 225 units with 500-gallon capacity at PHP 5 million each with the objective of achieving a set of reliable, fast and efficient fire trucks.
The Report stated this objective did not materialize as viewed from the various defects noted in the 176 (or 37 per cent) out of the 469 fire trucks delivered in 2015.
According to the Report, a total of 39 defects in the 176 firetrucks ranging from simple faults such as damaged side mirrors, busted front and rear lights to the more serious ones such as “engine shuts-off even during operation,” “sudden unintended swerving specially at running state” and “sudden acceleration of engine.”
It was on Feb. 2, 2015 when the BFP executed with Kolonwel joint venture the purchase contract amounting PHP2,577,275,000.
This was after the BFP Bids and Awards Committee in October 2014 post-disqualified the two other bidders for supposedly being “unresponsive” or failing to meet some technical requirements and as of May 9, 2017, it showed 107 of the trucks still needed to be repaired by the supplier.
The Audit Team Leaders (ATLs) of the BFP Regional Offices 1, 6 and 11 issued AOMs (Audit Observation Memorandum) on reported noted defects in the fire trucks and observed that the defects would affect the capability of the end-user Regions to efficiently respond to emergency cases and effectively carry out BFP’s mission to prevent and suppress destructive fires, the Report stated.
The COA questioned BFP's choice of supplier, noting that Kolonwel Trading, the Filipino majority partner in the joint venture had “questionable 60 percent Filipino ownership/interest.”
The Report revealed that under their agreement, the parties should contribute PHP 100 million as initial funding requirement of the JV (joint venture) whereby Kolonwel should put up PHP 60 million, or 60 percent, COA noted.
The audit body noted that Kolonwel's declared assets only amounted to PHP 1.4 million in 2012 and PHP 1.6 million in 2013. Thus, it is highly unlikely that it can put up the PHP 60 million initial funding share agreed upon in its joint venture agreement with Chinese firm Hubei.
Considering Kolonwel Trading’s assets in CYs 2012 and 2013,the financial capability to contribute the PHP 60 million to the JV was highly questionable. This casted doubt the 60 percent Filipino interest in the JV, affecting its eligibility to participate in the public bidding.
In the report it was noted that the quality evaluation of the delivered firetrucks was done in haste with BFP failing to collect penalties from the joint venture for the delays in the delivery of the units and other violations in the contract.
The audit body noted that the the BFP's decision to buy cheaper models instead of units of higher price but of proven better quality.
The delivery of the defective firetrucks could have been prevented had there been “judicious and meticulous planning” on the part of the BFP, it said. (PR/PNA)
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