What overprice? DBM office says DOH saved P2B from COVID-19 supply deals with no bidding

The Department of Budget and Management’s Procurement Service (PS-DBM), which bought testing kits, personal protective equipment (PPEs) and other medical supplies through negotiated procurement at the height of the COVID-19 lockdown, on Tuesday (Sept. 15) claimed it saved for the government P2 billion through deals for goods that cost less than allotted budgets.

In a statement, PS-DBM said the savings were generated when it procured COVID-19 response items on behalf of the Department of Health (DOH) during the period March 26 to Aug. 5.

“The savings declared by the PS-DBM are the variance between the allocated budget as identified by the end-user for the item vis-à-vis the awarded contract amount,” the statement said.

“The allocated budget is determined by the requesting agency through their own preliminary market study, existing price data or latest buying price of the same item,” it said.

During the implementation of the Bayanihan to Heal as One Law from March to June, the government was allowed to directly negotiate with suppliers for the best deals instead of doing this through public bidding, which took longer to finish.

The government had wanted to fast-track purchases of medical supplies to quickly fight the COVID-19 disease amid a public health emergency.

PS-DBM said it got items upon request of national government agencies, like the DOH, which had indicated the technical specifications, the quantity needed, as well as the amount set aside to buy these goods.

“After receipt of such agency procurement request, the PS-DBM conducts another market scanning wherein interested suppliers submit their price offer relative to the item to be procured,” it said.

But PS-DBM said the pandemic had wrought procurement problems, especially amid the longest and most stringent COVID-19 lockdown in the region.

“With the declaration of the national health emergency in light of the ongoing health crisis, PS-DBM faced a number of challenges,” the PS-DBM statement said.

It said these challenges included:

• Health issues affecting the workforce
• Logistical issues concerning closures imposed by different local government units (LGUs)
• Absence of local manufacturers
• Disruption in the supply chain coming from overseas
• High global demand for medical supplies and equipment

“This resulted in a very limited pool of qualified suppliers in the Philippines capable of meeting the requirements specified in the various annual procurement requests that the DOH submitted,” it said.

Despite these limitations, PS-DBM nonetheless claimed it was able to get the best prices for its purchases.

It cited as an example the purchase of 4,167 Sansure novel coronavirus nucleic acid diagnostic kits, Sansure test kits, from “the lowest offeror” Pacific Field Hong Kong Ltd on April 20. Pacific Field quoted a price of P1,464.88 per kit which the PS-DBM said was “the most advantageous price for the government based on the conducted market scanning.” “This generated savings of about P4 million for the DOH,” the PS-DBM said.

It added that the DOH “accumulated an additional P78-million savings” from the purchase of “more medical supplies” from these local distributors:

• Pharmally Pharmaceuticals Corp. for the A*Star fortitude kit priced at P1,720 per kit
• Lifeline Diagnostic Supplies Inc. for the Macherey Nagel extraction kit priced at P625 per preparation or P31,250 per kit

“After the first procurement of these test kits, the PS-DBM under the supervision of Undersecretary Lloyd Christopher A. Lao explored the possibility of directly negotiating with the manufacturers in order for the agency to purchase medical supplies lower than what private companies in the Philippines could offer,” the PS-DBM said.

PS-DBM disclosed it had sought the help of Chinese Ambassador to the Philippines Huang Xilian to later on buy these items:

• Sansure and A*Star test kits for prices lower by 45.9 percent (P918 per test) and 60.1 percent (P925.27 per test)
• Macherey Nagel extraction kits for prices lower by 36.3 percent (P433.22 per preparation)

In doing so, PS-DBM claimed that the DOH had “roughly saved P258 million, giving them more budget to spend on additional COVID-19 response items.”

“In total, the DOH saved around P1.2 billion for the procurement of test kits, extraction machines, and other consumables. The remaining P800 million out of the P2-billion savings were from the purchase of PPE sets,” PS-DBM claimed.

TSB