PS-DBM’s liabilities increased by 88% despite more procurement

MANILA, Philippines — The liabilities of the Procurement Service of the Department of Budget and Management (PS-DBM) rose by 88 percent even if its procurements have increased, Senator Imee Marcos pointed out on Tuesday.

During the hearing of the Senate committee on finance on the proposed 2022 budget of the DBM, Marcos said that the assets of the PS-DBM jumped from P25 billion in 2019 to P42.3 billion in 2020.

“So malaki talaga ang dinagdag. Kaya lang pinagtatakahan ko kung bakit nagkaroon kayo ng malaking utang, 88 percent increase, from P19 billion, naging P36 billion. Can you explain this? Mas maraming kinikita pero sumobrang dami naman ‘yung utang. Are these resulting from the billions of advances made by DOH (Department of Health) and other agencies?” Marcos asked the DBM’s purchasing arm.

(So there was a huge increase. But I am puzzled why your liabilities increased by 88 percent, from P19 billion to P36 billion. Can you explain this? You are earning more but your liabilities have increased. Are these resulting from the billions of advances made by the DOH and other agencies?)

“I don’t understand why PS-DBM also becomes the banker, loaning very large sums to DOH and other departments requiring their procurement services. Nagpapautang kayo sa DOH at iba pang ahensya? Kasi ‘yung liabilities ninyo increased by 88 percent when in fact your procurements increased by a very large number. Baligtad,” the senator added.

(You provide loans to the DOH and other agencies? Your liabilities increased by 88 percent when in fact your procurements increased by a very large number.)

In response, Joshua Laure, OIC-Director of the Administrative and Finance Group of the PS-DBM, agreed with Marcos that the liabilities were caused by the cash advances received from different agencies.

He explained that payments of different agencies to the PS-DBM are initially treated as liabilities, and that the liabilities decrease when deliveries are made to the concerned agencies.

“Umabot na ‘yung yearend. Noong nagsara kayo ng libro, mas marami pa ring utang, so abono na nga ‘yun, hindi na utang,” Marcos then stressed.

(It already reached the yearend. When you closed the books, there are still a lot of liabilities so that is already treated as extra pay.)

Meanwhile, Marcos also pointed out that the revenues of the PS-DBM should have gone up considering its many transactions in 2020. Instead, she said that revenues dropped from P2.3 billion in 2019 to only P1 billion in 2020.

Laure explained that the service fees it received in 2019 bought higher revenues for that year.

“Noong (Back in) 2019, let me just point out that ang sources ng revenue of PS-DBM are from the sale of common use supplies and equipment, as well as the sale of non-common use supplies and equipment and the service fee it received from agencies paid to PS-DBM as a recommending awardee,” he said.

“Sa mga procurement activities na ginagawa ng PS-DBM, nagbabayad ang agency ng four-percent service fee pero sila ang implementing agencies. ‘Yung mga service fee na nareceive namin noong 2019, ‘yun po ang naging cause kaya malaki ang revenue namin noong 2019 compared to 2020,” he added.

(In the procurement activities made by the PS-DBM, the agency pays a four-percent service fee but they are the implementing agency. The service fee we received in 2019 is the cause for higher revenues that year.)

Marcos then asked the PS-DBM to assure that there is no accrued revenues “hidden” somewhere and to explain in writing the reason for the increased liabilities of the purchasing body.

The senator earlier filed a bill seeking to abolish the PS-DBM and the Philippine International Trading Corporation (PITC). She stressed that the mandate of PS-DBM became “archaic and irrelevant” while PITC has weakened with the passage of Republic Act  No. 9184 or the “Government Procurement Reform Act, which already strengthens the procurement service of national government agencies.

JPV