PS-DBM denies Chinese PPEs were overpriced, says they were cheapest choice in April–May

The personal protective equipment (PPE) sets made in China were the cheapest and best options for the Philippines during the first months of the COVID-19 pandemic response, Budget Undersecretary Lloyd Christopher Lao said Wednesday.

The Department of Budget and Management's clarification came after Senator Risa Hontiveros alleged that the Philippine government lost about P1 billion due to "overpriced" PPE sets purchased by the DBM's Procurement Service in April and May.

The senator said the PS-DBM bought PPE sets from China that cost around P1,700 to P2,000 while the price estimates of the Philippine General Hospital ranges only from P1,200 to P1,500.

"During that time when the pandemic erupted, lahat tayo nag-close ng borders. When we closed our borders there are no planes, no vessels. Commerce has stopped. Tumawag po tayo ng local suppliers, ang dami nating tinawagan. Ang problema doon, no local suppliers is capable," Lao, who supervises PS-DBM, told GMA News Online in a phone interview.

He added that the government initially bid with local suppliers. However, he said, the prices they offered were too high.

"We opted to go directly where the products are being manufactured and where can you go cheapest? Sa China," Lao said.

Diplomatic channels were used to ensure that the Filipino frontliners are protected with sufficient PPEs during the said months, according to the DBM official.

"China was the first one who responded... in fact nahirapan tayo i-transport it here in the Philippines so we used our government vessels... We sent our C-130s everyday," Lao said.

He added that each PPE set they procured were complete with cover-alls, N95 and surgical face masks, face shields, lab gown, apron, head cover, shoe cover, gloves, and goggles, among others.

Lao said the price of each PPE set nowadays has actually gone down to the range of P1,200 to P1,500—similar to the amount being mentioned by Hontiveros in the comparison she made.

Limited capital of local suppliers

Lao also explained why only 30,000 units were procured from Philippine-based company Hafid N’ Erasmus Corporation during April and May when it had in fact the lowest price offer at P1,700 per set.

"Binase natin iyon sa initial capacity kasi tinatanong din namin ilan ba ang kaya mo i-supply, pag nag-bid kami. Puwede tayong mag-award kahit milyon-milyon sa local eh, the question is can they perform? Kasi based din iyan sa capital nila, they have to invest capital," he said.

"Di lang ho ganoong kadali ito. Even if you want to supply, if you don't have capital, paano ka makaka-supply sa amin? Magka-capital ka niyan," he added.

Lao said the government actually awarded a contract to Hafid N’ Erasmus Corporation again for another 250,000 sets of PPEs which it just delivered this month.

He explained that there are two types of local suppliers of PPEs—the manufacturers and the importers or distributors.

In previous months, Lao said the government was encouraging the local manufacturers to realign their production to the demands of the country but it was no easy feat.

Currently the PS-DBM is engaged with only a few licensed local companies that produce PPEs.

"For now, dalawa lang kasi ang licensed companies that have been certified to have passed international standards when it comes to masks, when it comes to cover-all isa pa lang," Lao said.

"Based on that data and in comparison with the demand that we have, mukhang mahihirapan pa rin ang local to fully address the demand of our needs so we'll have to rely on importation," he said.

China remains the cheapest source of PPEs, according to Lao, since it is the only country Asia that has a surplus on production.

Lao assured that the PS-DBM is also helping local manufacturers secure the necessary certifications.

"For now, nahihirapan tayo maghanap ng local manufacturer din na makakapasa sa specifications na the items that they are manufacturring is capable of filtering coronavirus. Iyon 'yung biggest challenge natin. Marami tayong sastre pero yung finding the right material," he said.

'Damned if you do, damned if you don't'

Lao also explained that the government cannot just enter into contracts with local suppliers as the COVID-19 pandemic situation remains volatile.

"Mahal kasi ang mga equipment sa mga factory just to establish these manufacturing companies. So, pag nag-invest sila their question is, 'Can you assure us that you will buy from us?... Sasabihin nila sige mag-invest ako pero bibili ka sa akin ng five million sets or 10 million sets for the next two years," he said.

PS-DBM cannot enter such deals and give "false hopes" to local manufacturers who would be investing big-time in PPE production, according to Lao.

"What if mawala si COVID by next month or December? What will I do with two million sets of PPEs? Alangan naman gawin nating government uniform, hindi pwede 'yan... Damned if you do, damned if you don't," he said.

The Philippines currently has enough stockpiles of PPEs until November. They were procured through the first Bayanihan law.

Under the Bayanihan to Recover as One Act or the Bayanihan 2, Lao said PS-DBM will buy enough stocks that will last until June 2021.

Lao said he would appreciate it if Hontiveros could copy-furnish his office with the list of local suppliers which the latter claims offered cheaper PPEs during April and May so that they can compare and validate the data.

"We have to compare it. Hindi lang 'yung general allegation kasi unfair naman," he added. — BM, GMA News