Government lost P1 billion in overpriced PPE deals – Hontiveros

MANILA, Philippines — The government may have lost at least P1 billion in taxpayer money after the Department of Budget and Management (DBM) purchased allegedly overpriced personal protective equipment (PPE) from five Chinese companies, Sen. Risa Hontiveros said on Wednesday.

Hontiveros made the claim two days after Senate Minority Leader Franklin Drilon flagged the Procurement Service of the DBM (PS-DBM) for supposedly buying COVID-19 test kits and other medical equipment that were more expensive by more than P400 million than those procured by private groups.

Worse, she said, the PS-DBM awarded the multibillion-peso supply contracts for PPE within a two-month period to the Chinese companies instead of giving these to local manufacturers, which had already been complaining about the government’s preference for imported face masks and medical coveralls.

Budget Undersecretary Lloyd Christopher Lao, who heads the PS-DBM, denied Hontiveros’ allegation.

“That’s not true. It’s unfair to say that,” he said in a telephone interview.

Lao said his office had already requested the senator to provide them with the specific documents specifying lower PPE prices compared with what the PS-DBM bought at the height of the COVID-19 lockdown.

“Public funds have been wasted. While our resources are already dwindling, [it seems] somebody still made profits (from these contracts),” Hontiveros told the Inquirer.

“This needs to be looked into because if we plan to continue signing agreements with companies that may have been profiteering from the pandemic, then this must be stopped,” she said.

“All the same, if we find that there are entities within the government that are in cahoots with these companies, then they also must be held accountable,” she added.

Citing records from the PS-DBM, Hontiveros said the agency bought 5 million pieces of Chinese-made PPE that cost P1,700 to P2,000 each from April to May when COVID-19 cases in the

Philippines started to spike, resulting in the shortage of the safety garments for health-care workers.

P200 more expensive

She said the items were at least P200 more expensive than the average estimated cost of PPE by the Philippine General Hospital, which pegged the price at P1,200 to P1,500.

The senator noted that the lowest-priced PPE were supplied by a local company, Hafid N’ Erasmus Corp. But she said the PS-DBM bought only 30,000 PPE from the company.

Hontiveros said the government could have saved money and used it to provide salary increase for state doctors and nurses treating patients with the new coronavirus, which now number more than 270,000.

“If our estimates are correct, imagine how many more PPEs we could have purchased for our health-care workers, whose chief complaint at the height of the pandemic was the lack of protection,” she said.

“It does imply that there may be questionable transactions between our agencies and the contractors,” she stressed. “[The] DBM should explain these suspicious transactions.”

Quick response

Lao pointed out that the PS-DBM bought the PPE to quickly respond to the pandemic as early as March to April—at a time when most global trade borders were closed and there were difficulties in shipping items from overseas, hence affecting costs.

There were no planes or vessels then, he said. “How can we source PPEs? It’s a miracle we sourced them.”

Lao was referring to the millions of PPE sets obtained through the Bayanihan to Heal as One Act, which had allowed negotiated procurement with suppliers under emergency procurement to boost the supply of medical equipment and devices needed to fight COVID-19.

Citing the PS-DBM documents, Hontiveros said seven of the 11 supply contracts for PPE were given to the five Chinese companies, the biggest of which was awarded to Xuzhou Construction Machinery Group Import and Export Co. Ltd. Xuzhou supplied 1.25 million sets of PPE worth more than P2.3 billion.

Also bagging deals were Wen Hua Development Industrial Co., Ltd., Chushen Co. Ltd., Pacific Field (Hong Kong) Ltd. and Shanghai Puheng Medical Equipment Co. Ltd.

Hontiveros said Xuzhou and Hua had supplied PPE twice to the PS-DBM.

Foreign contractors

“Why are foreign contractors being favored over Filipino-owned companies?” Hontiveros said in a separate statement.

“Our government agencies should only answer one simple question: Why is China being prioritized over the Philippines? If they have a good answer to that, and I doubt they do, only then can they be absolved of this,” she said.

According to Hontiveros, the Commission on Audit should include the scrutiny of all the procurement contracts of the PS-DBM in the audit of public funds disbursed for the implementation of the Bayanihan to Heal as One Act.

Senate President Pro Tempore Ralph Recto also questioned the government’s penchant for purchasing face masks and medical gowns from China, saying manufacturing such protective apparel was “not rocket science.”

“We really need to import [medical equipment] that are complicated. But if it is just protective gowns, why does it need to be ‘Made in China’ if ‘Made in Cavite’ has the same quality and competitive price?” Recto said.

‘Buy Filipino’ policy

“Not all of the things we need today should be sourced from China, even if it is the world’s factory,” he said.

The Senate leader said the government must adopt a “buy Filipino” policy in the procurement of PPE and face masks as he pushed for the creation of “Mask Assembly sa Kalunsuran” as part of the government’s efforts to respond to the health crisis.

Recto noted that local garment manufacturers had promised to make available “an army of 10,000 sewers” to produce face masks and protective apparel.

“What we can manufacture locally, let’s go for it, because doing so will ramp up manufacturing that creates jobs for our people,” he said.

“Tapping them is a win-win proposition. Sewers protect our people and we put food on the table of the sewers,” Recto said.

—With a report from Ben O. de Vera