COA scolds DOST for poor project implementation

MANILA, Philippines — The Commission on Audit (COA) has scolded the Department of Science and Techonology (DOST) over several lapses in the implementation of its flagship project for micro, small and medium enterprises (MSMEs), resulting in millions of pesos in government funds wasted.

Based on COA’s 2018 annual audit report on DOST, the agency owes the government P461.150 million in uncollected refunds due from the MSMEs who were beneficiaries of its Small Enterprise Technology Upgrading Program (SETUP).

The SETUP is one of DOST’s flagship programs intended to provide technical and financial assistance to qualified MSMEs in terms of adopting technological innovations to improve their operations and boost productivity and competitiveness.

Science Secretary Fortunato dela Peña downplayed the red flag raised by COA on the bad “grants” issued to MSMEs.

Dela Peña said that while the SETUP has posted cases of MSME-beneficiaries failing to pay for the cost of the equipment issued them under the program, the success stories in the program significantly outnumber the sad ones.

“Easily, I would say, about 90 percent are success stories,” Dela Peña told The STAR.

Under the DOST’s revised SETUP guidelines contained in its Administrative Order No. 002 dated Jan. 12, 2016, “the refund shall be for a period of three to five years depending on the nature of the project and financial capacity of the cooperator (MSMEs).”

The audit body said a total of P1.182 billion in financial assistance has yet to be refunded by the MSMEs, of which P461.15 million was already past the payment due dates for over one year to 10 years.

The COA said that of the P461.15 million in uncollected refunds, P251.04 million was mainly due to the termination of the contracts of agreement by various beneficiaries due to several reasons such as weak market demand, health problems of the (business) owners, internal conflicts within the organization and low sales among others, “which ultimately led to non-payment of their obligation to the government.”

Furthermore, the audit body said P48.62 million worth of equipment purchased for the implementation of the program remain “unutilized and not properly secured/stored for several years, thus exposing the equipment to wear and tear and risk of loss.”

The COA said most of the purchased equipment, amounting P26.7 million, remain in the custody of delinquent beneficiaries, “not pulled-out due to difficulties in moving the equipment and the lack of proper storage facilities.” 

The COA said this is on top of P76.23 million worth of equipment which “cannot be located/identified during the site inspections.” 

The audit body also said P5.71 million worth of SETUP funds for the procurement of equipment were utilized other than for the intended purpose.

The COA said DOST-Provincial Science and Technology Center (PSTC)’s inadequate monitoring of project implementation defeats the SETUP’s primary objective to promote countryside development through science and technology innovations. – With Rainier Allan Ronda