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Ex-DBM exec in DOH procurement controversy denies overpricing

The former Budget official whose name was dragged into the controversy involving the Department of Health's (DOH) use of its COVID-19 funds surfaced on Friday and explained his side.

Appearing at the Laging Handa briefing, former Department of Budget and Management Undersecretary Lloyd Christopher Lao said the face mask and face shields it procured last year on behalf of the DOH were not overpriced.

Lao explained that when the Procurement Service of the DBM (PS-DBM procured face masks at P27 apiece and face shields at P120 each, “during that time that was one of the cheapest.”

"When you look at it, pag sinabi mong mahal yung P27, yes mahal yan. Pero during that time that was one of the cheapest," said Lao, who headed PS-DBM until his resignation two months ago.

He said prices of face masks at the time ranged from P30 to P40 apiece, while face shields were P250 to P400 per piece.

Lao said that when a bidder offered to sell the items at P27 and P120, it was the lowest bid at that time.

“Paunahan ang pagbili during that time. Kung hindi ka makabili, people will bash you and say, ‘Ano bang ginagawa mo?’ Kapag nakabili ka, ang sasabihin, ‘Bakit yan ang binili mo?’,” he said.

(Procuring was a race during that time. If you weren’t able to procure, people would bash you and say, 'What have you been doing?' If you already purchased, they will then say, 'Why did you buy that?')

COA report

The Commission on Audit (COA), in its 2020 audit report, said the PS-DBM ordered 113.95 million pieces of surgical masks and 1.32 million pieces of face shields in April and May 2020, a period when prices were “so high” because of high demand. 

The masks were purchased from various suppliers for P13.50 to P27.72 per piece, while the face shields were bought for P120 each.

PS-DBM’s market surveys for the procurement were based on a DOH circular dated March 2020 that stated the suggested retail price (SRP) was P28 for face masks and P120 for face shields.

COA, however, said Regional Depot (RD) 11 received its share of the procured masks and shields “when the selling prices in the local market already dropped.”

Scarce supply

Lao explained that during the peak of lockdowns last year, supplies of face masks and face shields were scarce since global trade was affected by the pandemic and most of suppliers are importer-distributors.

The former PS-DBM head said it requested a pool of suppliers from both the DOH and the Department of Trade and Industry and sent requests for the procurement of face masks and face shields.

Senator Richard Gordon, who is also the chairman of Philippine Red Cross, said in a Senate hearing that his organization was able to buy their face shields at P15 each and their masks at below P5.

Lao insisted that the PS-DBM’s procurement was all documented.

At a hearing on Wednesday, Senators questioned why the DOH transferred the P42.4 billion worth of procurement to the PS-DBM even though DOH officials are still capable of holding several procurement biddings. 

No need for MOA

With this, Lao explained that the DOH transferred some of its funds to PS-DBM because the items it was buying were considered common supplies.

He said since face masks and face shields are considered common supplies, the PS-DBM can procure it at an agency’s request without a memorandum of agreement (MOA).

“Face masks, face shields, since they are common supplies, it (transaction) does not need a memorandum of agreement,” he added.

The former DBM official said the DOH was “overwhelmed” due to the pandemic response and it opted to pass the procurement of face masks and face shields to PS-DBM to ease its burden and focus on its primary purpose.

“They passed on some of the budget to PS-DBM to procure said items,” Lao said.

“If it is considered a common use that the agency requesting the PS-DBM to procure, it does not need a memorandum of agreement,” he added.

Past issues

This is not the first time the DBM-PS was linked to allegations of overpricing.

In May 2020, Senator Panfilo Lacson quizzed the DOH and the DBM-PS over their procurement of an expensive laboratory equipment necessary for COVID-19 testing when there is a different brand used by the private sector which is available at a lower price.

In September 2020, Senator Risa Hontiveros also claimed that the DBM-PS bought overpriced China-made personal protective equipment (PPE).

Lao, during the Laging Handa briefing, said he is willing to attend the Senate investigation on the DOH deal.   —KBK, GMA News