‘Nalugi kami:’ Senators lament local mask maker was ‘cheated’ amid contracts for ’favored’ firm

Sen. Richard Gordon, chairman of the Blue Ribbon Committee (Screen grab/Senate PRIB)

MANILA, Philippines — Several senators on Tuesday lamented how a Filipino manufacturer suffered losses in supplying face masks to the government when a “favored” firm bagged the bulk of contracts with a higher unit price.

“Sinusuba kayo ng gobyerno. Mabigat na yung salita ko, sinusuba kayo,” Senate blue ribbon committee chairman Senator Richard Gordon said during his panel’s hearing.

(You are being cheated by the government. I’m saying here, you’ve been cheated.)

“So nalugi ang Filipino corporation na nakipagsapalaran…[habang] tiba-tiba ika nga [yung isang company]. Matira ang masiba. I have to make that comment because nakakasuklam ang ginawa,” he added.

(The Filipino corporation incurred losses, took risks to retool its factory…when another company scored big. Survival of the greedy. I have to make that comment because what was done to you was disgusting.)

Before this, Gordon presented a chart showing the face mask purchase of the Department of Budget and Management-Procurement Service (DBM-PS) at the height of the pandemic in 2020.

The chart showed that the DBM-PS awarded a 100-million piece contract to local manufacturer EMS Components Assembly on April 27 last year at P13.50 per unit.

In contrast, Pharmally Pharmaceutical Corp. bagged three separate contracts to supply a total of 12.9 million units of face masks with a price tag ranging from P22.50 to P27.72.

According to EMS Components Assembly chief executive Perry Ferrer, they were able to deliver 25 percent or 25.8 million pieces of face masks at P13.50.

But the delivery of the rest of the 100 million units was delayed, Ferrer said.

“Our deliveries were pushed back every day…The reason was inventory, not enough space in the warehouse,” he added.

Ferrer said EMS was forced to lower its unit price from P13.50 to P2.35 to be able to deliver the remaining 75 percent—or 74.1 million pieces—of its 100-million contracted quantity.

“It is P1.3 billion [for the] total original contract but at the end after shipping 100 million units of face masks, the total sales only was P523 million. It was far from the P1.3 billion,” Ferrer said.

“Nalugi kami (We were bankrupt.),” he added.

“I want to always fulfill my contract, in the past 17 years that we have been in business…we always fulfill our contract and this time is no exception that we will fulfill our contract at 100 million units. We delivered, it wasn’t the original contract but we completed our contract,” he further said.

According to Ferrer, EMS was among the local companies tapped by the government to retool their factories to manufacture medical-grade surgical face masks in the first months of the pandemic.

EMS is an electronics manufacturing service company.

“I believe it was our duty as a Filipino company because it is the government who requested. The employees, our employees here, we didn’t know how far this COVID was gonna go but we knew we were entering into a war,” Ferrer said.

“It is our duty as a Filipino company to contribute even just a little bit, and our management team and our supportive board of directors agreed to repurpose, retool a section of our factory close to 18,000 square meters to produce medical-grade face masks,” he added.

The EMS’ April 2020 contract with the DBM-PS was its first and last one with the agency.

Lao explains

Former DBM-PS head Christopher Lao explained that the reason EMS had to lower its price to P2.35 was due to the government’s price-freeze on face masks.

“EMS was a big help…We had a problem when it started in October, kasi biglang nagpalabas si DOH (Department of Health) ng [when the DOH released a] prize freeze at P9,” Lao told senators.

He said that if the DBM-PS procure the face masks manufactured by EMS at P13.50 apiece, the cost would be above the P9 price ceiling.

“The problem is mababa na kasi ang price during that time, mataas ang contract namin [with EMS]…Ang sabi namin ‘If you are willing, ‘pag biglang bumagsak yan, dapat pwede tayong mag-drop para ‘di tayo ma-accuse.’ Pumayag naman ang EMS,” he added.

(The problem is during that time, the price ceiling is low, our contract with EMS was high for that…We asked them ‘If you’re willing, if the price drops, we should also drop the cost otherwise we will be accused [of overpricing]. EMS agreed.)

Still, Gordon pointed out that the DBM-PS still purchased P22 to P27 worth of face masks from Pharmally.

“The fact is clearly shown that EMS was not able to deliver everything, but Pharmally at P27 was able to deliver everything, along with other things,” the senator said.

Meanwhile, Senator Francis Pangilinan said Pharmally is still bagging contracts more than a year after the pandemic.

“Meron pang P2.3 billion na babayaran pa sa Pharmally for 2021, so wag natin nililihis naman yung usapin…Kung umpisa, yung unang tatlo, apat buwan, siguro maintindihan ko pa,” Pangilinan said.

(There is still P2.3 billion to be paid to Pharmally for contracts for 2021, so we should not divert the discussion…If it’s still in the first three to four months of the pandemic, I may still understand.)

“Pero meron pang gastos na P2.3 billion for 2021,” he added.

(But we will still spend P2.31 billion for 2021.)