An investigation done by the Commission on Audit (COA) has revealed that the Php 3.8 billion license plate deal is in violation of procurement law and has told officials of the Department of Transport and Communications (DOTC) to settle Php 477.9 million initial payment made to the plate supplier, the Dutch-Filipino consortium PPI-JKG Philippines Inc.
According to COA, the license plate deal is not in comlpiance with Republic Act 9184, or the Government Procurement Reform Act and its revised implementing rules and regulations. COA says the deal did not follow the procedures prescribed under the said law. The agency holds Land Transportation Office (LTO) chief Alfonso Tan Jr. and DOTC Secretary Joseph Emilio Aguinaldo Abaya liable for the transaction.
The 10-page Notice of Disallowance clarifies, "The management cannot claim the 2014 appropriation because the 2014 national budget had not been approved when the bidding was conducted or awarded and the 2014 appropriation amounting to P4,483,753,000 was specifically for the motor vehicle registration and driver's licensing regulatory services. Moreover, the appropriated fund for the motor vehicle plate making project in 2013 was only P187,293,000, hence in violation of Section 46 of EO No. 292 and Section 85 of PD 1445,"
According to COA, the LTO did not comply with the Auditing Code of the Philippines when the LTO said the funds for the license plates project were allotted for the 2014 General Appropriations Act (GAA). However, bidding for the Motor Vehicle License Plates Standardization Program (MVLPSP) started in May 2013 and was issued on July 22, 2013, meaning the LTO cannot claim the budget allocation for the license plate contract under the 2014 GAA.
COA cites Section 46 of the Auditing Code for the violations of the agencies in question. It states: "No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure."
The DOTC also failed to secure a multi-year obligational authority (MYOA) from the Department of Budget and Management (DBM) before awarding the bid to JKG-PPI for the five-year license plate deal. The DOTC also failed to secure a Special Allotment Release Order (SARO) before issuing a notice of award.
COA added that the winning bidder, PPI-JKG, should have been disqualified from the start for failing to submit the necessary documents for government contracts. PPI-JKG failed to submit their tax clearance, the company's latest income and business tax returns and a certificate of Philippine Government Electronic Procurement System registration to name a few. PPI-JGK failed to give the requirements in the perscribed period of three days after receiving the notice that they have the lowest or highest bid. The company only submitted their requirements almost a year after bids were opened.