DBM hit for P422 million overpriced medical supplies

MANILA, Philippines — The Department of Budget and Management’s Procurement Service (DBM-PS) apparently has made purchases of overpriced medical supplies to be used for fighting the coronavirus disease 2019 a move that should trigger reforms in the agency.

During deliberations on the proposed budget of the DBM at the Senate finance committee, Senate Minority Leader Franklin Drilon said that based on research of his office, various medical supplies procured by the agency were higher compared to prices in the private sector.

“From the three awards that we have studied alone, we could estimate that the total price was jacked up by almost half a billion. We could have saved around P422 million in taxpayers’ money if we exercised due diligence,” Drilon said.

He cited the procurement by the DBM-PS from Pharmally Pharmaceutical Corp. of 2,000 units of COVID-19 test kits for P688 million or P344,000 per kit.

He said the purchase is overpriced by P208 million since the test kit could be bought for P240,000 or for a total of P480 million for 2,000 units.

The senator said the price is also bloated in the purchase of macherey nagel/nucleospin RNA virus preps kit from Lifeline Diagnostics Supplies Inc. The government bought the kits at P108,304 each or a total of P73.1 million for 675 units.

However, the private sector could buy it for only P47,199 each. For 675 units, the contract could have just amounted to P31.9 million as opposed to the procurement price which is P41.245 million higher.

In a separate statement, he also cited as overpriced the procurement of Universal Transport Medium and the naso-pharyngeal swab, which the Department of Health bought from Biosite Medical Instruments for P415,638,000 for a total of 1,611,000 sets, or at P258 per set.

Drilon said the purchase could be overpriced by P173 million citing the price of the product in the market at roughly P150 per set.

He warned the government that overpricing is a ground to cancel the contracts. The company may also be held liable to refund the excess.

It has also been pointed out during the hearing that procuring these kinds of supplies for a department or agency is not the usual practice as only common use supplies normally go through the DBM-PS – bond paper, ballpens, tissue paper.

Drilon also called out the DBM-PS for not exercising due diligence in awarding contracts to backlisted companies, citing the case of Ferjan Health Link Enterprises, a sole proprietorship which was awarded a contract worth P727.5 million.

The DBM reasoned that the blacklisted company is in fact a corporation – Ferjan Healthlink Philippines, an entity different from the sole proprietorship.

But Drilon said these companies should not be allowed to hide behind the corporate structure to skirt their disqualification.

DBM-PS chief Undersecretary Lloyd Lao told the committee that upon checking, his office saw that one of the directors/incorporators of the blacklisted firm, is the owner of the sole proprietorship and that the contract has been cancelled based on other grounds such as overpricing and delay in delivery.

“While it is good that the contract was cancelled, this begs the question: why is the proper due diligence not conducted prior to the award of such a huge contract? Despite this being a negotiated/emergency procurement, blacklisted entities should not have been allowed to participate. Considering the lapses in screening Ferjan, it is highly possible that similarly situated suppliers may have also secured contracts with the DBM Procurement Service,” Drilon said.