COA Res 91-52

September 17, 1991
COA RESOLUTION NO. 1991-052
SUBJECT : Policy Guidelines Governing Auditorial Review and

Evaluation of Bidded Infrastructure Contracts
WHEREAS, the Commission on Audit has exclusive authority "to define

the scope of its audit and examination, establish the techniques and methods
required therefore, and promulgate accounting and auditing rules and
regulations, including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant or unconscionable expenditures, or
uses of government funds and properties"; (Sec. 2 /2/, Art. IX-D, 1987
Constitution)
WHEREAS, in line with said constitutional mandate, this Commission
issued COA Circular No. 85-55A dated September 8, 1985, prescribing the
rules and regulations on the Prevention of Irregular, Unnecessary, Excessive
or Extravagant Expenditures or Uses of Funds and Property;
WHEREAS, this Commission, thru its Technical Services Office, is
charged with the responsibility to "review and evaluate contracts with
emphasis on the engineering and other technical aspects"; (Sec. 7 /6/, Ch. 3,
Title I-B, Bk. V, Adm. Code of 1987)
WHEREAS, such preliminary processes, consultation and
acquiescence are deemed as constituting substantial compliance with the
legal requirement of Commission Proper action with respect to appointments
and administrative cases;
WHEREAS, among the said contracts subject to COA review and
evaluation are infrastructure contracts awarded after public bidding;
WHEREAS, the purpose of public bidding being to obtain the best and
most advantageous terms for the government, it is expected to yield a price
that is fair and reasonable if conducted properly and regularly;
WHEREAS, COA, in the exercise of its review prerogative, should be
able to assure the adequacy and efficiency of its audit procedures in order to
determine regularity of the prequalification, bidding and awarding processes
as well as the reasonableness of the contract price of bidded infrastructure
contracts;
NOW, THEREFORE, the Commission Proper has RESOLVED, as it
does hereby RESOLVE, to prescribe the following policy guidelines to govern
the auditorial review and evaluation of infrastructure contracts awarded as a
result of public bidding in order to determine regularity of the prequalification,
bidding and awarding processes as well as the reasonableness of the
contract price:
1. The Auditor concerned should exert all possible efforts to ascertain
strict compliance by the management of the auditee agency with
the pertinent requirements provided under PD 1594, its
Implementing Rules and Regulations, as amended, and other
relevant issuances.
2. The Auditor or his representative may attend meetings of the
Prequalification, Bidding and Award Committee (PBAC) during
the prequalification stage as observer.
3. The Auditor or his representative shall witness the opening of bids to
be conducted by the PBAC.
4. The Auditor's observations and comments as such observer or
witness shall be communicated in writing within a reasonable
time to the management of the auditee agency and shall form
part of the basis of the audit action to be taken thereafter.
5. For purposes of determining the reasonableness of the contract price
as a technical aspect of the review and evaluation process, the
Approved Agency Estimate (AAE) shall serve as a reference
value for the formulation of the COA cost estimate.
6. Should defects or errors in the AAE be discovered in the course of
the review, the same together with the pertinent reasons,
especially those that would adversely affect the contract price,
shall be communicated to the auditee in writing by the Auditor.
7. The total contract price should be equal to or less than the total COA
estimate plus ten percent (10%) in order to sustain a finding of
reasonableness, otherwise, the contract price will be deemed
excessive.
8. The contract price, however, should not only be reasonable as
hereinabove determined but should also be within the ceiling
provided for by law, rules and regulations.
Adopted this 17th day of September, 1991 at Quezon City, Philippines.

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September 17, 1991

COA RESOLUTION NO. 1991-052

SUBJECT : Policy Guidelines Governing Auditorial Review and

WHEREAS, the Commission on Audit has exclusive authority "to define

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