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DBM cancels P727M PPE contract for overpricing




DBM Usec. Lloyd Christopher Lao in a May press conference explaining why PPE can be expensive. TV grab from PTV footage

Budget Undersecretary Lloyd Christopher Lao told the Senate finance committee on Monday that the P727-million contract bagged by Ferjan Health Link Philippines, Inc. for the provision of personal protective equipment was canceled on Friday.

The Department of Budget and Management (DBM) junked the contract due to alleged overpricing and delayed delivery of the PPE to the Armed Forces of the Philippines, Lao said.

Likewise, the firm was found to have a stockholder who is the same owner of the sole proprietorship Ferjan Enterprise blacklisted from participating in government procurement of goods and services.

“We checked with the Securities and Exchange Commission, and one stockholder of Ferjan, Inc. is the same owner of Ferjan Enterprise which is a sole proprietorship,” Lao told senators.

“Once we got the data, we reached out to GPPB (Government Procurement Policy Board) for guidance, and we canceled the contract last Friday,” Lao said.

But Lao clarified that the trigger for the cancellation was Ferjan’s delayed delivery and the pricing of the PPE that was significantly higher than those available in the market.

“We considered the delay of delivery and the fact that we can purchase it with a new supplier given the new market prices. We can buy the same number of PPE at a cheaper price,” the DBM official said.

The company’s contract approved on 19 June was for the delivery of 500,000 sets of PPE within 45 days upon the issuance of the purchase order. Each set of PPE would have cost P1,455 for head cover and gown, clean gloves, sterile gloves, apron, coverall and shoe cover.

Lao said no advance payment was made to Ferjan Health Link Philippines, Inc.

In May, Lao, the officer-in-charge of the Procurement Service of the Department of Budget and Management, fielded questions on the reported overpriced procurement by PS-DBM of one million PPE sets for P1.8 billion or P1,800 per PPE set.

He said at the time that the most expensive part of the PPE was the coverall at P1,100 per unit, purportedly because it can even stop the transmission of the dreaded Ebola virus.

“This is what we call as, Ebola-level. Ang Ebola-level, it can actually stop even air transmissible viruses. Ano s’ya, it’s lightweight, and it’s non-woven, may heat-sealed, even the sewn portion is covered to make sure na pag nagkaroon tayo ng spill — air or liquid — hindi papasok sa balat or sa clothing ng mga doctor,” Lao said at the time.

“When you go international, lahat sila ito ang sinusuot. There’s only one country that is not wearing this, it’s Korea. Korea has the same item, but not heat-sealed,” Lao added.

He said then that the PS does not procure coveralls from any supplier in South Korea even if they are P200 to P300 cheaper because they are non-heat-sealed coveralls.

Senator Panfilo Lacson chided the planned acquisition of the PPE for allegedly being overpriced. The brouhaha led to the PS-DBM announcing that it will be procuring locally produced heat-sealed coveralls for P850 each from the Confederation of Wearables Exporters of the Philippines.

At the height of the controversy over the alleged overpricing, President Rodrigo Duterte practically exculpated the PS-DBM by saying it did right in purchasing heat-sealed coveralls.

“Do not buy that kind of coverall suit that would place the health workers (at risk), even if there is just an iota of chance na… eh, buhay ‘yan,” Duterte said. “‘Yan ang binili mo? Tama ‘yan, tama ‘yan. Walang problema.”

The President on 25 May said he gave the order to Health Secretary Francisco Duque III to expedite the procurement and to do “what needs to be done.”

“Gusto ko lang malaman ng sambayanang Pilipino na I take full responsibility na utos ko na, ‘dalian mo, wala akong pakialam kung saan ka magkuha, magnakaw ka’ — and I remember saying it — ‘I do not care whether you go on…steal, borrow, or kill a person to get..what needs to be done’,” the President said then.