COA Flags Kawit LGU Over Uncollected Retention Money in Infrastructure Projects

The Commission on Audit (COA) has flagged the municipal government of Kawit, Cavite, for failing to deduct the required 10 percent retention money amounting to ₱254,836.80 from payments made to contractors for three infrastructure projects completed in 2022 and 2023.

According to the COA report, the municipal government, under the administration of Mayor Angelo Aguinaldo, did not retain the amount nor require the contractors to submit valid financial instruments as a substitute for the retention money.

This practice contravenes Section 6, Annex E of the Revised Implementing Rules and Regulations (RIRR) of Republic Act No. 9184, which mandates the withholding of retention money to safeguard the municipality against uncorrected defects and third-party liabilities.

The projects under scrutiny include:

Upgrading of Road at Kaligtasan Street, Barangay Poblacion (₱1,265,910.42)

Upgrading of Road and Drainage Canal with Floodgate and Concreting of Pavement at Barangay Kanluran-Binakayan (₱2,669,976.27)

Construction of Asphalt Overlay and Concreting of Road Ramp Approach at Barangay San Sebastian (₱1,160,849.45)

All three projects were completed and fully paid by December 31, 2023, but the COA noted that the municipality failed to ensure financial safeguards by either withholding the retention money or securing financial guarantees such as standby letters of credit or surety bonds.

The municipal accountant justified the practice, stating that the projects were completed on schedule and contractors issued warranty securities before receiving full payment.

The accountant also cited the lack of progress payments, explaining that contractors were only billed upon project completion, making it difficult to apply retention deductions.

However, COA stressed that the retention money requirement is a financial safeguard intended to cover potential defects and third-party liabilities after project completion.

The agency warned that the municipality’s non-compliance could expose it to financial risks should any defects arise.

COA urged LGU Kawit to strictly enforce retention money deductions or ensure contractors provide valid financial instruments, in compliance with procurement regulations, to protect the interests of the local government and its constituents.

The municipal government has yet to issue a formal response to the COA’s findings.