Budget Watch

P95 million worth of face masks, face shields sitting in government depots

Aika Rey

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P95 million worth of face masks, face shields sitting in government depots

PRICIER FACE COVERINGS. Former budget undersecretary Lloyd Christopher Lao speaks at Laging Handa on August 20, 2021.

RTVM screenshot

Resigned budget undersecretary Lloyd Christopher Lao insists the pricier face masks and face shields were ‘cheap’ at the time of purchase: ‘’Pag hindi ka nakabili, people will bash you’

P95.46 million worth of surgical masks and face shields are lying idle at the Procurement Service and various regional depots, as the attached agency of the Department of Budget and Management (DBM) failed to sell it when the demand was high in 2020.

Speaking at Malacañang’s virtual Laging Handa briefing, resigned DBM undersecretary Lloyd Christopher Lao on Friday, August 20, said the Procurement Service explained during the exit conference with the Commission on Audit (COA) some face masks were still being sold at P27 each, much higher than going rates.

“Because that is our old stock. We did not sell everything at P27. There were P2 or P1.75 each. Those were the prices as time goes by. But the old stock, we couldn’t sell them. We dispose of the cheaper one first,” Lao said in a mix of English and Filipino.

Lao headed the Procurement Service, an attached agency of the DBM that functions as the “grocery” of common-use items for the government – in this case, the Department of Health (DOH).

According to COA’s annual audit report for 2020, Procurement Service bought face masks ranging from P13.50 to P27.72 apiece from April 8 to May 20.

The most expensive one was bought from Pharmally Pharmaceutical Corporation for a total of P13.8 million for 500,000 pieces. About 1.32 million face shields, meanwhile, were bought from Philippine Blue Cross Biotech Corporation for P120 apiece.

According to the COA report, some P3.12 million worth of surgical masks and some P188,000 worth of face shields are sitting at regional depots.

The majority of the face coverings, worth P92 million, sit idle at the Procurement Service Central Office in Manila.

If Procurement Service was able to sell these items when the demand was high, revenue should have been at close to P100 million, according to COA.

“Most of our slow-moving stocks of face shields and masks that couldn’t be sold were in the regions. If we have to bring it to the Central Office just to sell it, it is more expensive because we have to pay for shipping or freight costs. Logically, financially, it’s irregular to act on,” Lao said.

“We decided to leave it there and make some changes to have it sold at a discount, but we had to get authorization from COA to justify how everything goes,” he added.

Costly face masks, shields were ‘cheap’

According to Lao, the supposedly overpriced face masks and shields flagged by state auditors were considered “cheap” at P27 and P120 apiece, respectively, during the earlier days of the lockdown in 2020.

Lao said the government had limited options at the time, and suppliers were bidding at a higher price, given market conditions.

A day before, at a Senate hearing on how the Department of Health (DOH) used pandemic response funds, Senator Richard Gordon said the Philippine Red Cross was able to purchase masks and shields at P5 and P15 each, respectively.

“During that time, at the height of the lockdown, everybody was scampering. The problem [in] the Philippines, there was a very limited pool of who [were] using these items. So it was difficult,” Lao said in a mix of English and Filipino.

“When you look at it now, yes, that is expensive. But, during that time, that was one of the cheapest,” he added.

Lao said that PS sent requests to “everybody,” including suppliers from the lists of the health and trade departments. His office also asked for referrals from the Department of Foreign Affairs’ consulates overseas.

“Sometimes, we get lucky [and] buy it cheap…. Sometimes, we get lucky and buy it cheap. It depends on the situation because you really have to be fast and bid first during that time. If you cannot buy fast enough, people will bash you. “What are you doing? Why are you not working?” Then if you are able to buy, they will say, “Why did you buy that?” That’s the situation. The reality,” said Lao.

Lao also said a memorandum of agreement was not necessary if Procurement Service was to buy common-use items needed by another agency.

On March 9, 2020, the Government Procurement Policy Board approved medical items, including masks and personal protective equipment (PPE), as part of the common-use supplies due to the pandemic. The list was submitted by the DOH.

Must Read

Audits flag DBM’s procurement service over COVID-19 supplies

Lao is at the center of alleged procurement irregularities involving medical supplies as flagged by state auditors. He went on a leave of absence until June 30 before he was officially out of the DBM roster of undersecretaries.

In 2020, Lao was questioned by lawmakers over the issue of overpriced PPEs and his preference for Chinese suppliers.

Lao said Friday he was willing to attend further congressional inquiries to “shed light on the matter.” – Rappler.com

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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.