Contractors who were late in finishing their projects were not charged penalties as required by law. This means the government lost money that it should have collected.

Why It Matters

Recommended Actions

• Management: a. Closely monitor the timelines on the completion of the projects by the contractors
• B. Strictly adhere to Paragraph 9, Annex "E" of the RIRR of RA No. 9184 by: (i) Imposing the corresponding liquidated damages on the contractors for each day of delay by collecting/deducting the same from the progress billings/claims or retention money
• And (ii) Initiating termination/rescission of contracts for infrastructure projects when liquidated damages reaches 10 percent of the total contract price and forfeiting the contractor’s performance security. c. Impose sanctions on erring NHA personnel who may be remiss in their obligations
• And d. Pursue legal actions against the contractors to address the breaches of contract.

Original Audit Finding Excerpt

"Liquidated damages were not imposed, collected, or deducted from payments made to contractors that incurred delays ranging from 16 to 1,897 days as at December 31, 2022, from the revised target schedule with a total contract amount of P7.754 billion, contrary to Item 9, Annex “E” of the Revised Implementing Rules and Regulations (IRR) of RA No. 9184."

Source Document