MANILA, Philippines - The Commission on Audit (COA) has questioned the Philippine Information Agency’s (PIA) use of P104.4 million in public funds for television, radio and newspaper advertisements last year without conducting public biddings in violation of the procurement law.

The PIA is under the Presidential Communications Office, previously the Presidential Communications Operations Office headed by then secretary Herminio Coloma Jr.

In a statement, Coloma said he had been informed by the PIA management before that the matter was brought up as an “audit observation” by COA’s resident auditor and that they explained why an alternative mode of procurement was implemented.

“Moreover, PIA management affirmed adherence to government policies and rules on procurement as specified by the GPPB (Government Procurement Policy Board) and that the COA resident auditor has taken cognizance of PIA’s manifestation,” Coloma said.

In a 2015 report released Wednesday, state auditors frowned at how the media contracts did not comply with the requirements of Republic Act 9184 or the Government Procurement Reform Act because direct contracting was used for the P104,272,673.43 ad placements.

The audit team, citing an April 2015 Supreme Court ruling, emphasized that the alternative modes of procurement, such as direct contracting, were mere exceptions to the general requirement that all government procurement should be done through competitive bidding.

State auditors said the bids and awards committee (BAC) of the PIA issued resolutions supporting each procurement made by the agency through direct contracting but did not show a clear and verified basis as to why a limited number of suppliers were considered to deliver a particular ad placement and also why no other suppliers could provide the requirements of the agency for the same services.

In defense, the PIA’s BAC claimed there were media entities that were willing to deliver the ads but were not inclined to undergo the tedious public bidding process.

PIA officials also claimed they could not procure the ads with other media entities because of smaller number of viewers and/or market share compared with other networks or entities. This made the situation unique, according to them.

State auditors, however, emphasized that there were no verified and competent data to support the veracity of such claim and there was no showing of any immediate and compelling justification for dispensing with the requirement of public bidding.

“Jurisprudence declares that the law on public bidding is not an empty formality. It is based on the principle that under ordinary circumstances, fair competition in the market tends to lower prices and eliminate favoritism,” the audit team said.

The COA report said the PIA should follow the law or “provide clearer, verified and competent justification for availing alternative mode of procurement such as direct contracting.”

But the PIA officials said knowing fully well that “PIA is the advertising arm of the government, it is but prudent to engage with media entities directly so that the government” need not pay retainer fees or any commissions to third party firms.

“As such, the networks and publications provide PIA more than 50 percent discount from the rate card and other added media values,” the agency said.

But the state auditors “still maintain our recommendation that (PIA) management strictly comply with the requirement of RA 9184 for all government procurement that requires public bidding,” the COA report said.