DBM Secretary Abad: Rabusa revelations present opportunity to escalate reforms

A February 1, 2011 press release by the Department of Budget Management

Aquino government to intensify reform in defense disbursements, procurement

Budget and Management Secretary Florencio B. Abad today said the Aquino administration will take advantage of the opportunity to escalate reforms in the utilization of national defense funds; in light of anomalies revealed recently before a Senate probe.

“The revelations of former Lt. Col. George Rabusa on the supposed diversion and misuse of national defense funds compels us to go deeper into the disbursement and procurement practices of the defense establishment,” he said.

“Even as we have already established reforms and safeguards, we cannot afford to be complacent. We will shine daylight into how the defense establishment spends the people’s money and eliminate all possible openings for these rackets,” he said.

He reported that these particular areas are being addressed:

  • In the past, “savings” from unfilled or vacated uniformed and non-uniformed positions have been diverted to other uses because the full personnel services (PS) allotments had been released in full.

Now, the national government will release PS allotments only for filled positions, or an estimated 80% of all positions. For 2011, some P8.602 billion has been withheld “and shielded from possible diversion,” Abad said.

An updated report of the roster of uniformed and non-uniformed personnel of the AFP should now be submitted by the Department of National Defense (DND) to the DBM for a precise picture of real funding requirements. The 2011 Staffing Summary indicates that there are 135,699 uniformed and non-uniformed positions of the AFP, and the total PS allotment amounts to 68.850 billion.

  • In the past, the “conversion” of maintenance and other operating expenses (MOOE) and capital outlay (CO) allotments of the AFP and the “certification” of expenditures without supporting documents were made possible with poor internal control.

Steps are being considered, in consultation with DND Sec. Voltaire Gazmin, to counter these opaque practices of the past. One of which is to standardize MOOE and CO requirements of military camps and make this information available to them.

He said this is similar to what has been done in the case of the Philippine National Police, where the MOOE has been allocated on a police-per-capita basis of P1,000 per month. Already, the MOOE of agencies attached to the AFP General Headquarters—such as the Philippine Military Academy, Presidential Security Group and AFP Medical Center—are being released directly to them.

  • “Conversion” and “certification” practices had also thrived because, in the past, DND enjoyed the release of allotments even without submitting accountability reports. One example of which is the recently-terminated Kalayaan Barangay Program, where only the names and amounts of projects—without supporting documents—are submitted.

To address this, technical visits have been made by DBM to verify budgetary accounts, validate the status of programs, projects and activities and instruct the agency’s finance group on how to comply with DBM reportorial requirements.

“This has already been emphasized to them: no report, no release,” Abad said, stressing that the DND and the Armed Forces will undergo agency performance review.

Furthermore, he said additional notice of cash allocation (NCA) releases will only be made based on the DND’s cash program and bank report of NCA balances. In the past, additional NCAs had been released even without reports on the utilization and disbursement of funds. He added that accountability reports of all agencies, including the DND and AFP, will be published on the DBM website.

  • To further ensure that procurement will not be disadvantageous to the public coffers, DND and AFP—like all other agencies—are being encouraged to procure all their common supplies and equipment from the Procurement Service. “In fact, we are considering the issuance of a directive requiring the purchase of these common supplies and equipment from the Procurement Service,” he said.

Purchasing these common supplies and equipment from the Procurement Service, he said, will be advantageous because 1) the agencies will not need to go through bidding and 2) the supplies and equipment can be purchased at much lower cost, given the Procurement Service’s market power.

Abad emphasized that “national security” could not be used as a generalized reason to sidestep the Aquino government’s transparency and accountability thrust.

“Even the military has to follow standards of daylight. Unless there are valid national security concerns, there will be no special treatment when it comes to the prudent and judicious management of the people’s funds,” he stressed.

dbm.gov.ph