The P144-B DAP Express

Funds freed in a rush, projects yield slow results

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Second of Three Parts

THE GOOD, the bad, and the dead combine, in terms of projects and activities, under the Aquino administration’s Disbursement Acceleration Program (DAP), which is now wreaking havoc on relations between institutions, as well as between the government and the citizens.

Put aside the lack of transparency in details about which legislators and local officials pushed what projects, where, and for how much, under the “various priority local projects” funded by billions of DAP pesos. To date, the pace, quality, and impact of project implementation under DAP is a quizzical record.

In fact, the only thing clear is that in the administration’s rush to shore up public spending and boost the economy, the Department of Budget and Management (DBM) under Secretary Florencio ‘Butch’ Abad released billions of pesos in DAP monies to about 50 recipient agencies. But even the exact amount of money released so far and for what specific projects remain uncertain, although the supposed total amount of money released has been pegged at P144.3 billion, to fund a supposed total of 116 projects in 26 months, or from October 2011 to December 2013.

For sure, a number of DAP projects have been completed or are now in the final stages of completion. These reportedly include about 60 percent of the projects to dredge, restore, or construct creeks, seawalls, dikes, waterways, and slope protection in Metro Manila, Central Luzon, and the Laguna Lake, that altogether drew about P5 billion in DAP funds.

Yet some Cabinet officials have questioned the absorptive capacity or actual capability of DAP recipient agencies to roll out projects quickly and well. After all, DAP has meant not just more money to spend, but also more projects to implement.

The Department of Public Works and Highways (DPWH), for instance, has ended up with the biggest burden of implementing DAP-funded construction activities partly because it was asked to take on projects from agencies that had received DAP funds but could not undertake the activity needed.

Massive construction

Since 2011, there have been more and more construction-hinged DAP projects, including those that had not moved over the last two years, such as the P1.64 billion that was released to the Department of Agriculture (DA) for the construction of “irrigation, FMRs (farm-to-market roads) and Integrated Community-Based Multi-Species Hatchery and Aquasilvi Farming.”

Money for this project was released in October 2011 yet under the first tranche of DAP, but it has barely taken off ground.

The project seemed strategic and pro-poor, and its proponents proclaimed it to be a key step to the country achieving self-sufficiency in rice. Cabinet insiders say that on this basis, President Benigno S. Aquino III was thus convinced to support it with generous DAP funding in 2011.

Two years hence, the project had yet to move past its promises, prompting transfer of its implementation to the DPWH in 2013.

DPWH Secretary Rogelio ‘Babes’ Singson says that it was with great reluctance that he took on the project. Referring to it and other DAP projects passed on to his department, Singson says he could only tell the Cabinet, “Heto nga problema, gusto ninyo akong dagdagan nang dagdagan, may absorptive capacity problem na ako. Kulang na ako ng contractor, wala na akong makuhang semento (Here’s the problem, you keep on adding on to my plate, I already have an absorptive capacity problem. I’m running out of contractors, I can no longer get any cement.)

Nagkukuwentahan nga kami sa Cabinet (We were chatting in the Cabinet),” Singson says. “Ang sabi ko, kung ang desisyon dito pahabaan ng kulong, ako pinakamatagal ang kulong, kasi ako ang pinakamalaking implementor (I told them, if the decision here is who should be in jail the longest, that would be me because I was the biggest implementor).”

Last July 1, the Supreme Court in a 13-0-1 vote had declared certain actions that the Executive had taken under DAP to be unconstitutional.

So far, though, DPWH is plodding on with the DAP projects it has been obligated to accomplish. But the story elsewhere is more disheartening: agencies have little or no absorptive capacity or capability, projects mismatched with agency mandate and expertise, or even the sheer lack of concrete project proposals or program of work; some agencies that received DAP monies have failed to perform within its goal of rolling out high-impact, quick-disbursing, socially-responsive projects.

The results have been bad to tragic to irregular, or simply, a bundle of many delayed, cancelled, or suspended DAP projects. And because haste typically marked the release of DAP monies in the last days of 2011, 2012, and 2013, the funds released to certain agencies could not be obligated quickly enough, and the amounts had to be returned to the National Treasury.

This could well be because the distribution of DAP manna had been inordinately skewed in favor of no more than 50 agencies. This number excludes, of course, the unnamed mass of “legislators and local government officials” who had also secured significant DAP share for their still undisclosed projects.

Top DAP recipients

Government-owned and -controlled corporations or GOCCs, “legislators, local government officials, and national agencies,” and some line departments make up the top 25 agencies that cornered the bulk of the supposed P144.3-billion DAP.

On Monday, however, DBM issued a press release saying in part that, “no cash nor (sic) projects are given to legislators. Instead, what lawmakers only do is nominate projects from a list of priorities that will benefit their constituents or districts. The funds for these projects are then released to and implemented by national agencies."

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It also said that the Budget Department was “now preparing a more detailed list of projects funded through the DAP. The new list will distinguish legislator-backed projects from those housed under government departments and agencies, local government units, and government-owned or –controlled corporations.”
In any case, the top 12 recipient agencies of DAP funds were given at least P3 billion to at most P30 billion. Altogether, they cornered a total of P112.11 billion or 77.79 percent of the P144.3-billion total DAP releases.

This magic circle of 12 include, in order of DAP monies they received, the Bangko Sentral ng Pilipinas (BSP), “legislators, local government officials, and national agencies,” DPWH, National Housing Authority (NHA), Autonomous Region in Muslim Mindanao (ARMM), “local government units” or LGUs, Department of Tourism (DoT), “government-owned and -controlled corporations,” Commission on Higher Education (CHED), Department of Education (DepEd), Department of Agriculture (DA), and the Government Service Insurance System (GSIS).

These 12 and the others that make up the top 25 recipient agencies secured about P134.07 billion or 93.23 percent of total DAP funds.

The puny balance of P10.3 billion in DAP money was all that was passed around among the less blessed but bigger group of 23 other DAP recipient agencies.

Data from the Philippine Government Procurement System show that the Philippines is a mammoth bureaucracy of 1,829 national government agencies, 1,299 GOCCs, and 1,714 local government units. By these numbers, the less than 50 agencies that got DAP funding would seem like a drop in the bucket.

Double, triple

In a few rather absurd situations, some agencies were given DAP money that was more than double or triple their annual agency budgets.

CHED’s budget, for instance, was only P1.42 billion in 2012. Yet it was given P4.28 billion in DAP funds in October 2011. This was on top of big servings of pork funds that CHED manages largely for the scholarship programs of many legislators.

Under DAP, CHED received funds for the “Institutional Capacity Building of Leading State Universities/Colleges.” In particular, it was tasked to use the money “to support infrastructure and facilities upgrade for instruction, research and extension of SUCs” and “to address the challenge of providing access to quality higher education and to generate/adapt/transfer technologies for enhancing productivity, alleviating poverty and improving the country’s competitiveness.”

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CHED would eventually issue implementing guidelines on how SUCs may get sub-allotments from DAP, but had to enter into memoranda of agreement with the DPWH and the Department of Social Welfare and Development to assist in implementing the projects.

As of December 31, 2012, CHED’s approved plantilla is all of 609 positions, including 258 in the Central Office and 351 in its 15 regional offices. COA said CHED has filled up only 483 positions, while the balance of 126 remains unfilled.

NHA, meanwhile, received P11.05 billion worth of DAP projects in October 2011. Its budget for 2012 was less than half that: P5.63 billion. In all, NHA — an agency under the Office of the President and whose current general manager is Chito M. Cruz, known to be a close Aquino friend — has a total manpower complement of 1,359.

Stories good and bad

Had DAP success stories been outnumbering the failed projects, the Aquino government’s “good intentions” argument may have gained more traction — and sympathy. But the opposite seems to be happening.

For example, a DAP project that could have spelled relief to over a million commuters daily was the proposed purchase of additional rail cars for the Metro Rail Transit (MRT) for P4.5 billion.

The proposal was submitted for DAP funding by the Department of Transportation and Communication (DOTC).

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DBM’s official list of DAP-funded projects stated that, “the requested funds shall be used to purchase additional MRT Rail Cars (26 units of rolling stock) and the concomitant upgrading of power substations and enhancement of signaling system.”

“The purchase of additional MRT cars aims to address the frequent service interruptions that arise from overloaded and poorly maintained trains,” DBM said.

In time, however, DBM would say that the project was not implemented at all.

Another project called “rural electrification for barangays and sitios” has even been cited by President Aquino to be among the redeeming values of DAP. The National Electrification Administration (NEA) was supposed to receive P1 billion from the third tranche of DAP funding for, DBM reported, “the expansion of the sitio electrification program and barangay line enhancement project to cover an additional 100 sitios and 160 barangays.”

In its final list of DAP-funded projects, DBM said this proposal was not approved and thus not implemented.

But the DBM list also showed a second project entry for NEA. The agency supposedly received P1.26 billion of the fourth tranche of DAP supposedly to energize the remaining 1,513 sitios from the target 6,000 sitios in 2012.

Instructive cases

The annual audit reports on DAP recipient agencies that the Commission on Audit (COA) has published are most instructive about what else has gone wrong with project implementation under DAP. COA’s reports on a number of these agencies are replete with qualified and adverse observations.

Some of the more interesting examples include:

  • The Credit Information Corporation (CIC) received P75 million of DAP funds on October 12, 2011, the first tranche of DAP releases. DBM said, “The requested amount shall cover the operational requirements and capital expenditures of the CIC for the establishment of a comprehensive and centralized credit information system, including the establishment of a data center.”

    Two years after, the project had yet to get going. In October 2013, the Securities and Exchange Commission (SEC), which supervises CIC, published through its Bid and Awards Committee Secretariat a “Request for Expression of Interest for Rebidding for the Credit Information System Project, P126 million.” The deadline for submission of bids was set on November 20, 2013.

    It is yet unclear if the contract had been awarded. But this much is crystal, according to a Cabinet insider: at the time it received DAP funding, CIC had not prepared a full and cogent project proposal. Then again, it was only two months after the release of its DAP money that CIC’s staff plantilla of three persons led by President Jaime Garchitorena started operations. The CIC website states this fact: “Start of CIC Operations, Dec. 16, 2011.”

    The bid notice for CIC said that the information system project would cover “credit and credit-related activities of all entities participating in the financial system such as but not limited to banks, credit card companies, microfinance lending institutions, and other private and government financial lending institutions.”

    “Data from retailers, utilities, insurance companies, telecommunications companies will be included in the future,” the notice of rebidding also said.

  • The Technical Education and Skills Development Authority or TESDA had proposed and received on October 12, 2011 under DAP’s first tranche a total of P1.1 billion for a project called “Training Program in Partnership with BPO Industry and Other Sectors.”

    DBM’s report on DAP-funded projects said “the funds shall cover the training of 65,000 near-hires for the industry of which, 70% or 45,000 will be hired. Training cost for 5,000 persons from other clientele groups and 2,000 faculty trainers who will in turn train 70,000 trainees shall also be covered. TWSP (Training for Work Scholarship Program) for Other Priority Sectors: the funds shall cover the training of 60,000 workers in priority sectors: construction, semi-conductor and electronics, agri-business and tourism.”

    TESDA would receive more money as sub-allotments from several more DAP-funded projects. Together with five other departments and agencies, TESDA got portions of the funds from the P8.592-billion DAP funds released for the “Comprehensive Peace and Development Intervention” in ARMM.

    This second project, DBM records said, would “cover the improvement of service delivery performance, the creation of an enabling environment for PPP (Pantawid Pamilyang Pilipino) toward equitable growth, improvement of public safety and security. The funds shall likewise be used to reform and strengthen governance capacities, reform the electoral system, and improvement of the legal framework for governance, peace and economic growth. These reforms will be implemented by various agencies.”

    TESDA got more funds on September 5, 2012, under Tranche 4 of DAP releases, courtesy of a project called “Additional Funding for the Expanded TWSP.

    The project fetched a P500-million DAP share for the Department of Labor and Employment and TESDA. DBM said this TWSP is “a TESDA program that aims to boost supply of skilled workers to meet industry needs.”

    “Under the TWSP, workers are provided proper training on skills directly connected to existing jobs for immediate employment. The additional funding seeks to reach 13,000 scholars-beneficiaries,” DBM added.

    A note in the DBM report also said that “P1.1B was released to fund TWSP under the FY 2011 DAP, which has been fully utilized by June 30, 2012.”

    But TESDA Director General Joel Villanueva and COA seem to have problems with DBM’s assertion that TESDA had fully spent the P1.1 billion, among other things.

    According to COA’s audit report for 2012 on TESDA, the agency had not used at least 10 percent of the fund by the end of 2012. Said the report: “An unutilized balance of 109,382,957.78… thus, realization of expected benefits for gainful employment in order to reduce poverty and building competitiveness was not met.”

    COA also found a number of irregularities in the use of the fund, notably the possible attendance of "ghost scholars" in its training program.

    COA had conducted interviews with some of the supposed TESDA graduates and found that at least 61 such scholars were recorded by TESDA to have attended multiple training courses, which were held simultaneously or on overlapping dates. COA also said that another 46 “scholars” had denied that they had attended TESDA training courses. Yet another 218 scholars who COA personnel tried to locate for validating interviews could not be reached through their submitted contact numbers.

    Villanueva, commenting on the COA audit findings in the news media last month, blamed TESDA’s accredited schools for the “ghost scholars,” said that those who denied that they had attended TESDA seminars were probably not aware that TESDA had funded their training, and that the “scholars” who could not be contacted may have started to work abroad or changed contact numbers.

    But while he indicated that not all of TESDA’s DAP-1 funds had been used, Villanueva said that at most only P30 million had been left unspent.

  • The National Statistics Office (NSO) was supposed to have received the bulk of the P605 million that DBM said had been released in October 2011 under DAP’s Tranche 1. This was for a project that actually listed the DBM as head agency and recipient of the DAP pesos. The money was to finance “the national survey of farmers, fisherfolks (sic) and IPS (indigenous peoples) shall be conducted nationwide.”

    The project was supposed to be “an inter-agency activity that involves the DBM, DA, DAR, NSCB (National Statistical Coordination Board) and NSO to gather census data on farmers, fisher folks (sic) and other agricultural sector constituents and shall be conducted through LGU units to acquire the relevant farmer’s registry data.”

    NSCB pulled out of the project reportedly because of concerns that the registry may involve breaching the confidentiality of the identity of survey/census respondents, thus breaching the code of ethics of statisticians.

    DBM wound up as lead agency for the project supposedly because, a DBM official says, DA and DAR could not agree which of them should be the project leader

    COA’s 2012 audit report noted that NSO had signed a memo of agreement with DBM to cover the Registry System for Basic Sectors in Agriculture (RSBSA), and for which NSO received fund transfers from DBM in December 2012.

    The first such fund transfer was for P83.98 million and the second was for P200.28 million. DBM released the NCAs for both amounts on December 21, 2012, for Batch 2 of the RSBSA project.

    NSO, however, received the same five days later on Dec. 26, 2012. “Considering the time constraint in the processing of payments toward the end of the year, the said NCAs were reverted,” COA said.

    The sad results of DAP’s rushed processes: The reverted NCAs portfolio of NSO ballooned significantly to P270.4 million by end-2012, and Batch 2 of the RSBSA went without funding.

  • The Department of Science and Technology received P1.6 billion in DAP funds for the Nationwide Disaster Risk, Exposure, Assessment and Mitigation (DREAM) program.

    DREAM consisted of five projects that were implemented from December 20, 2011 to December 19, 2013 by the University of the Philippines-Diliman (UPD), Advanced Science and Technology (ASTI), the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), and the Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD).

    The funds were prepared payable to the agencies on December 28, 2011 and released in January 2012. The total P1.6 billion was divided into two: “Year 1 budget cost P983,781,862 (for project implementation from Dec. 20, 2011 to Dec. 19, 2012) and Year 2 budget was P616,218,138 (Dec. 20, 2012 to Dec. 19, 2013).”

    But COA’s 2011 audit findings noted that the release of funds was improper. For one, it said, the project funds were released even before the agencies submitted the required documents. For another, it added, some amounts remained “idle in PCIEERD” because allotments for projects that would be completed and disbursed until December 2013 were already allotted in 2011. COA’s third quibble was that some amounts “constituted circuitous transfer of project funds” (P438 million were released through PCIEERD, the monitoring agency, instead of directly releasing the amount to UPD, the implementing agency).

    In its 2011 audit report, COA also questioned the P1,043,323,000 in DAP funds coursed through the Departments of Budget and Management and Interior and Local Government for three projects: Autonomous Region in Muslim Mindanao Transition and Investment Plan (P750 million), CSO Anti-Poverty Strategy and Localization and Empowerment Program (P250 million), and Special Capacity Building Project for POs and NGOs (P43.23 million).

    COA said that the P1.043 billion had been released to “unprogrammed project/activities which were not supported by Physical and Financial Work Plan” on the specific activities to be undertaken, targeted outputs, and corresponding budget allocation. This was the reason why no obligation/disbursement was incurred during the year –contrary to DAP’s supposedly being a fast-disbursing mechanism.

Denied DAP pesos

Meantime, dozens of projects have been denied DAP funding. According to DBM data, these include:

  • Registry System for Basic Sectors in Agriculture Phase 2;
  • Pilot-Testing of Enhanced Provincial LGU Engagement for National Community Driven Development Project;
  • Construction and Rehabilitation of Rural Health Units;
  • Tulay ng Pangulo sa Kaunlaran Pang-Agraryo (French Bridge);
  • Financial Support for the Gat. Bonifacio Shrine and Eco-Tourism Park;
  • Detailed Engineering of Goldenberg Mansion and Teus House, Malacañang;
  • Rehabilitation of the Watson Building near Malacañang;
  • Re-Acquisition of Air Rights Sold by Philippine National Railways (PNR) to the Home Guaranty Corporation (HGC) through the Department of Finance;
  • Incentives of Personnel Affected by the Rationalization Program in the DPWH; and
  • Re-acquisition of Air Rights Sold by PNR to HGC through DPWH.

— With additional research and reporting by Fernando Cabigao, Jr., PCIJ, July 2014