PhilMech withholds ₧1.7-B payment for tractors on ‘overpricing’ issue

PhilMech Executive Director Dionisio G. Alvindia
PhilMech Executive Director Dionisio G. Alvindia

THE Philippine Center for Postharvest Development and Mechanization (PhilMech) on Monday said it will withhold the payment of over P1.7 billion to tractor suppliers amid concerns of “overpricing,” despite warnings such “arbitrary” move would delay implementation of the vital program to ramp up mechanization of farms.

PhilMech Executive Director Dionisio Alvindia claimed that his leadership “uncovered” various “irregularities” concerning the procurement of some 1,346 units of four-wheel tractors under the 2021 Rice Competitiveness Enhancement Fund (RCEF).

Alvindia, who took over the PhilMech leadership in March, alleged that the procured farm machinery was overpriced by nearly P100,000 per unit. Alvindia claimed that the Approved Budget for the Contract (ABC) or the maximum price set by PhilMech for every unit of four-wheel tractors should have been just P1.2 million.

The ABC set by the PhilMech for the procurement of the four-wheel tractors under the 2021 RCEF fund was P1.3 million, based on publicly available government documents.

“The irregularities involved the purchase of 1,346 units of four-wheel farm tractors at P1.298 million each for a total of P1.737 billion,” he said in a statement.

“Because of the agency’s findings, PHilMech will not pay the contractors as we uncovered an overpriced for each four-wheel farm tractor,” he added.

Alvindia said he has informed the Department of Budget and Management (DBM) regarding the matter and has sought the legal opinion of both the Commission on Audit (COA) and the Department of Agriculture’s (DA) legal service.

“Despite the uncovering of the irregularities involving the acquisition of 1,346 farm machines, the agency is sustaining the distribution of farm machines under the RCEF-Mechanization program and pushing other programs like support for the  Coconut Farmers and Industry Development Plan (CFIDP) where PhilMech will have a major role in setting up common shared facilities for coconut farmers,” he said.

Jallorina refutes

However, former PhilMech Director Baldwin G. Jallorina refuted Alvindia’s allegations of “overpricing” in the procurement of the tractors under the 2021 RCEF fund.

PhilMech started implementing the mechanization component of the annual RCEF program under the leadership of Jallorina. Alvindia succeeded Jallorina as PhilMech Executive Director.

Jallorina explained that the ABC for the procurement of the four-wheel tractors were based on a market research conducted by a technical working group (TWG) composed of experts within PhilMech.

The TWG, Jallorina pointed out, conducts a market study prior to the bidding and decides the appropriate ABC in consideration of the “technical specifications” of the to-be procured tractors.

Jallorina argued that the “there is no substantial variance in the ABC of the tractors and the actual market price.”

“There is no overprice in the the setting of the Authorized Budget for the Contract (ABC) for four-wheeled tractors as alleged by current PhilMech Director Alvindia without offering a single proof,” he told the BusinessMirror.

PhilMech bidding documents showed that the ABC set by the agency for the supply, delivery and testing of four-wheel tractors for Regions I, CAR, II, III, IV-A, IV-B, V, VI, VII, VIII, IX, X, XI, XII and BARMM funded under 2021 RCEF was P1.3 million.

Jallorina cautioned that withholding the payment to the winning suppliers for the tractors may cause delays in the implementation of the RCEF mechanization program.

“It should be noted that all these tractors were already delivered and distributed to farmer beneficiaries and Dr. Alvindia is currently arbitrarily withholding the payment of P1.737 billion to various suppliers, effectively curtailing the further implementation of the RCEF program to the detriment of our farmers,” he said.

Republic Act 11203 or the rice trade liberalization (RTL) law created the six-year (2019 to 2024) annual P10-billion RCEF that seeks to modernize the country’s rice industry.

Half of the RCEF or P5 billion is allocated for the procurement and distribution of farm machinery to rice farmers that shall be directly handled and implemented by PhilMech, an attached agency of the DA.


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