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Drilon sees overload on government-purchased COVID-19 test equipment




Photo by Senator Franklin Drilon Photo by EDWIN BACASMAS

MANILA, Philippine Senate Minority Leader Franklin Drilon on Monday questioned governments procuring allegedly overpriced test kits and medical equipment for COVID-19, saying the items were more than P400 million more expensive than those purchased by the private sector.

Drilon raised the issue at the 2021 budget hearing and asked the Department of Budget and Management (DBM) to look closely at three contracts awarded by its Procurement Service (SP) and the Department of Health (DOH).

There are a number of procurements made by DBM-PS and based on our research, prices were higher compared to prices in the private sector, he said in a separate statement.

Taxpayer money

From the three prices we have studied alone, we can estimate that the total price increased by almost half a billion. We could have saved about P422 million in taxpayer money if we exercised due diligence, he added.

One of the transactions discussed was the procurement of test kits worth P688 million by Pharmally Pharmaceutical Corp. which were allegedly overvalued by P208 million.

DBM-PS purchased 2,000 kits from Pharmally with P344,000 each, with each kit capable of performing approximately 200 tests. But Drilon said the bags can be purchased for P240,000 each.

Another purchase he asked DBM to look at was the set of macherey nagel / nucleospin RNA virus precursors from Lifeline Diagnostics Supplies Inc., valued at P73.1 million, which could be valued at more than P41.25 million .

The items were bought at P108,304 each, but the private sector could buy it for P47,199 each, he said.

The third transaction was the purchase of Universal Transport Medium DOHs and nasopharyngeal swabs from Biosite Medical Instruments for P415.64 million, which was allegedly overvalued by P173 million.

Drilon said DOH bought the items at P258 per set, but the same item was priced in the market at around P150 per set.

Offer prices

Undersecretary of Budget Lloyd Christopher Lao, who is in charge of the Procurement Service of departments, said there had been instances where the department purchased items at a high price because it was tied to the prices quoted by bidders.

Lao said DBM was able to get cheaper prices when it was able to negotiate with foreign manufacturers.

In the case of Pharmaceuticals, Lao said the P688-million contract awarded in April was for tests worth P1,720 each.

But while Pharmally was delivering the items, the government, through the Philippine Embassy in Singapore, was negotiating directly with the test manufacturer and was able to obtain the P925 tests each.

The $ P1.19 billion contract for the cheapest test equipment was awarded on June 23rd.

That was the way we were able to get a cheaper price with the second offer because we no longer offer it open only to domestic suppliers but also to foreign suppliers, he said.

If bidders all offered high prices, DBM had no choice but to buy items at a high price, Lao said. But when allowed to negotiate with suppliers, including foreign ones, it was able to get lower prices, he added.

Lao also cited the April purchase of DBMs of test kits by Sansure for P1,464 per test, with the total contract price at P146 million.

During this time, the department followed regular procurement procedures, including negotiations with local suppliers, he said.

When we found out it was too expensive, we tried to contact through our embassies, to contact the manufacturer directly, he said.

When it came in contact with the Chinese manufacturer, DBM-PS was able to buy evidence with P918 each, for a P3.6 billion contract, he said.

The company is blacklisted

Drilon also questioned the award of DBM-PS contracts to blacklisted companies, including Ferjan Healthlink Philippines Inc., which received a P727.5 million deal for 500,000 sets of personal protective equipment (PPE).

Lloyd Christopher A. Lao (Photo from DBM website)

Lao said that Ferjan Healthlink Philippines Inc. was the winning bidder, while the company on the blacklist was named Ferjan Healthlink Enterprise. The two appear to have been different companies during the initial audit, as one is a single enterprise and the other is a corporation, he said.

Publicly available documents at the Securities and Exchange Commission (SEC) showed that Ferjan Healthlink Philippines was only included in November last year and one inclusive was blacklisted by Ferjan Healthlink Enterprises, a sole proprietorship.

DBM canceled the contract last Friday in part due to late delivery and prices that were significantly [higher] compared to current levels, Lao said.

No advance payment was made for the firm, he added.

The Government Procurement Policy Board (GPPB) will also change the rules so that the blacklist of a single enterprise is transferred to the corporation where one of the owners of the blacklist unit is a shareholder, he said.

The GPPB list of blacklisted firms included Muntinlupa City-based Ferjan Healthlink Enterprises, which were barred from participating in government bids for a two-year period effective September 25, 2018, until September 26, 2020, due to of non-delivery of supplies of medicines and medicines to the local government of Zamboanga City.

Since Ferjan Healthlink Philippines only registered at the end of last year, experts say they could not have submitted a financial statement covering a pre-qualification requirement for a one-year period during the bid when it participated in the negotiated procurement at the height of the block. Covida-19.

Proper care

Drilon said the Procurement Service should have exercised due diligence in awarding contracts. Entities listed in black, he said, should not be allowed to hide behind the corporate structure to disqualify their disqualification.

While it is good that the contract was canceled, this begs the question: Why is not proper care taken due to the award of such a large contract? Although this is a negotiated / emergency procurement, entities listed in black should not be allowed to participate. Given the errors in Ferjan’s review, it is very possible that similarly placed suppliers may have secured contracts with the DBM Procurement Service, Drilon said.


Lao said contracts with suppliers listed in black could be canceled, but that would not stop potential cases against procurement units failing to ensure they receive goods and services from qualified firms.

On September 3, GPPB Executive Director Rowena Candice Ruiz told the Inquirer that public officials and offices could face charges if found to have had blacklisted suppliers.

Act of the Republic no. 11469 or Bayanihan to Heal as a Law, which went into effect from March to June, allowed negotiated procurement to expedite the supply of essential goods with clear and simple liquidation rules, a liberal pricing procedure favorable to the government given the urgency of the current situation and measures to prevent abuses and corruption in a reasonable but not too restrictive manner to delay the process, the GPPB said in a resolution in April.

Under the law and regulations, procurement units are responsible for blacklisting the wrong suppliers. Procuring entities are required to submit a copy of the report in question to the GPPB for posting, to inform other procurement units. Once blacklisted, suppliers are prohibited from joining any government bids during the blacklist period. Therefore, the need for procurement units to become aware of the blacklist made by other agencies so that they do not award contracts to blacklisted suppliers. As part of the post-qualification process, procurement units are required to check the qualification of bidders, among whom is whether they are currently on the blacklist, Ruiz said.

Protective measures

The rules of the blacklist were applied even before the adoption of the Bayanihan Act. In addition to blacklisting suppliers, one of the safeguards under the rules is to cancel / deny Philgeps registration of blacklisted suppliers, she added, referring to the Philippine Government Electronic Procurement System, a one-stop online store. at source for the provision of public goods and services.

When Inquirer checked earlier this month whether any of the blacklisted entities on the GPPB list had contracts performed during the emergency procurement period, it found at least three Ferjan Healthlink Enterprises, Cebu Business Materials Trading Co. Inc. and Jozeth Trading.

Ruiz said the procurement units that awarded contracts to suppliers listed in black have a solution according to the rules for concluding contracts.

Also, any interested person can file a case before the Ombudsman Office against the responsible officials as the GPPB has almost no judicial function under the law, Ruiz said.

The Audit Committee also has the authority to audit an agency’s financial transactions, and awarding contracts to a blacklisted supplier is one of the points the COA monitors in its audit of the agency’s transactions, Ruiz added.

With a report by Ben O. de Vera

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