DBM rebuts Risa claim: Gov’t saved P 800M in PPE deals

MANILA, Philippines — The government even saved P800 million in emergency purchases of personal protective equipment (PPE) from most Chinese companies at the height of the new coronavirus disease (COVID-19) lockdown, the Procurement Service of the Department of Budget and Management (PS-DBM) said on Thursday in disputing a senator’s allegation of overpriced supply deals.

In a statement, Budget Undersecretary Lloyd Christopher Lao, head of the PS-DBM, said the savings were raised “by dealing directly with manufacturers and accredited distributors.”

The money, he said, “can now be used for additional PPE and other COVID-19 response items that the Department of Health (DOH) needs to bolster the government’s fight against the pandemic,” Lao said.

On Wednesday, Sen. Risa Hontiveros claimed that the PPE purchases facilitated by the Bayanihan to Heal as One Act, which allowed negotiated procurement with suppliers to fast-track medical equipment and items needed to fight COVID-19, were overpriced by P1 billion.

She said the PS-DBM awarded the multibillion-peso supply contracts for a two-month period to Chinese manufacturers, instead of giving it to Filipino firms.

The five Chinese suppliers that bagged the contracts were: Xuzhou Construction Machinery Group Import and Export Co. Ltd., Wen Hua Development Industrial Co. Ltd., Chushen Co. Ltd., Pacific Field (Hong Kong) Ltd. and Shanghai Puheng Medical Equipment Co. Ltd.

Hontiveros, citing DBM records, said the agency bought 5 million PPE sets that cost P1,700 to P 2,000 each from April to May this year. The price, she said, was P200 more expensive than the average estimated cost of PPE made by Philippine General Hospital (PGH), which pegged the cost at P1,200 to P1,500.

The PS-DBM bought testing kits and PPE on behalf of the DOH as the national government centralized procurement across departments and agencies so they could focus on their key functions instead of also dabbling in procurement activities.

Lone PH company

“Seven of the contracts for PPE sets were awarded to China-based companies from April to May because there was no local supplier that could comply with the DOH-required eight-piece PPE set budgeted at P2,000 per set,” the PS-DBM said. The set included head cover, goggles, N95 face mask, surgical mask, gloves, surgical gown, medical grade coverall and shoe cover.

PhilPharma was the sole local company which offered the eight-piece PPE set during the initial procurement, but its bid was declared noncompliant with the DOH requirements at P2,873 per set, or almost a third more expensive than the budget, the PS-DBM said. Moreover, it said, the company’s available stocks were “inadequate, therefore unable to deliver on time.”

“On the other hand, price offers received from the China-based suppliers averaged at P1,773.51, 38.27-percent lower than the offer of PhilPharma, and 11.32-percent lower than the allowable budget. It is for this reason that the PS-DBM deemed it only proper and beneficial for the Philippine government to award the urgently needed PPE to foreign suppliers,” the DBM unit said.

The PS-DBM challenged Hontiveros and PGH to provide documents showing that the eight-piece PPE set could be purchased at prices lower than P1,772.58 a set from April 1 to May 15—the lower price of PPE bought by the agency during the period.

Lao noted during a telephone interview that even retail prices of face masks jumped at the height of the enhanced community quarantine (ECQ) from mid-March to May before plunging these days.

“Because during that time, very few were selling and manufacturing,” he said.

Overpriced testing kits?

As manufacturers kept up with global demand, Lao said governments already had enough stocks of health and medical supplies. Lao earlier denied the claim of Sen. Franklin Drilon that the China-assisted purchases of testing kits by the government were overpriced. In fact, the budget official said, the government saved P2 billion from the deals.

He said the test kit and PPE purchases made under Bayanihan 1 allowed supplies lasting until October or November this year, while Bayanihan 2, once it takes effect, will provide for stocking until May or June of next year.

“We cannot stockpile until December next year because we don’t know if COVID-19 is gone by that time—we’re buying enough for our protection,” Lao said, citing that the DOH had given word that the pandemic may last until mid-2021.

As for domestic PPE manufacturers’ complaint that the government never tapped them even after they repurposed factories to churn out these items, Lao said: “Ask the local manufacturers: who helped them get their licenses and guided them with the quality standards? It’s PS-DBM!”

“The problem is it took them at least 70 to 90 days to react—to buy equipment from China, and to buy raw materials also from China. There were no vessels and airlines during that time so they cannot set up [PPE] manufacturing,” he said.

“If they were existing in February, March, April and May, and the PS-DBM did not buy from them, I am at fault. But if they were only able to establish in August and they complained that same month that we were not buying from them, that’s unfair,” Lao said.

So far, the Food and Drug Administration (FDA) had given licenses to local companies churning out surgical face masks and coveralls—the other items for PPE sets don’t have licenses yet from both the FDA and the Department of Trade and Industry, Lao said.

A looming problem, Lao said, was that domestic manufacturers were supposedly demanding that the government buy 24 months’ worth of PPE from them as the companies wanted to make up for the expensive new equipment they had imported.

Lao said the PS-DBM could not enter into a two-year contract with local suppliers since it could take less than that time before the coronavirus disappears. At present, it gets surgical face masks from local manufacturer EMS, while N95 masks will come from another domestic firm that had committed to produce until December at only P100 a piece.

In Malacañang, presidential spokesperson Harry Roque on Thursday dared Senator Hontiveros to file charges if she could prove that the importation of 5 million sets of PPE earlier this year was overpriced.

Roque explained that the government purchased millions of PPE sets at the height of the ECQ earlier this year, when supplies here and abroad were scant.

“That was the time when our local companies were just beginning to produce PPE by importing imported materials and producing it here. That was the time when we had no choice but to buy imported PPE,” he said. —Ben O. De Vera and Julie M. Aurelio