Budget Watch

Senators want review of procurement firm with billions in idle gov’t funds

JC Gotinga

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Senators want review of procurement firm with billions in idle gov’t funds

SENATE HALL. The Senate session hall during a hybrid plenary session in August 2020

Photo by Joseph Vidal/Senate PRIB

Having P33 billion 'sleeping' in the Philippine International Trade Corporation is a disservice to the economy, says Senator Franklin Drilon

Several senators are calling for a review of the Philippine International Trading Corporation (PITC) after finding out billions of pesos in government agencies’ funds were “sleeping” in the procurement firm attached to the Department of Trade and Industry (DTI).

Citing a 2019 report by the Commission on Audit (COA), Senate Minority Leader Franklin Drilon said some P33 billion in government funds were parked with the PITC.

“What is happening is that government agencies, which are supposed to purchase products, would engage the services of this little-known trading agency and pass on the budget there so that they will say that these are already obligated, when, in fact, they are just deposited,” Drilon told ANC’s Headstart on Monday, November 23.

Deposits held by the PITC grew from just P4.8 billion in 2015 to P33.4 billion in 2019. Most of it, “to the tune of P33 billion,” are government funds, Drilon said.

Issues with the PITC surfaced during budget deliberations at the Senate, where it was revealed that P9.6 billion in funds belonging to the Armed Forces of the Philippines lay idle with the firm for no apparent reason.

The PITC charges government agencies a commission of 1% to 5% for its services. Drilon disagreed with this, saying the firm should instead take the commission from the supplier of the procured item or service.

The senator said the fact that government agencies park their funds with the PITC highlights a perennial problem in their absorptive capacity – or lack thereof.

“Because of the [problem in] capacity to absorb, PITC becomes a very profitable operation. When I say profitable, I don’t mean corrupt or corruption opportunities, but you can make your own conclusions. The point is, when you make it appear that you have spent P10 billion but the truth and the fact is, you only obligate P10 billion and deliver it to PITC, that does not help the economy,” said Drilon.

Adding to senators’ concerns is the fact that the PITC has been tasked to procure COVID-19 vaccines for the government’s plan to inoculate at least 60% of the population to achieve herd immunity.

If the PITC’s mandate is to facilitate procurements for different agencies, then having P33 billion in idle funds makes for a poor track record – worrisome in light of the plan to source COVID-19 vaccines, Drilon said.

“The Philippine National Police in 2016 deposited P1.347 billion [with the PITC] for firearms. Only P311 million worth of firearms have been delivered. The PITC is a can of worms. We will investigate this,” he added.

“Here you are, government agencies depositing their budgets in PITC so it is made to appear that they are obligated, where, in truth and in fact, it is sleeping in the coffers of PITC, and interest is being earned but we do not know if it is remitted to the coffers of national government,” Drilon said.

PITC may have ‘outlived its purpose’

Senator Panfilo Lacson said using the PITC for government procurements “may have to be revisited and stopped, not only to save on unnecessary expenses amounting to billions of pesos in delays and commissions or service fees.” 

Noting that the Department of Budget and Management already runs the Government Procurement Service, Lacson said the 40-year-old PITC “may have outlived its purpose.”

“Initially, it was only used to circumvent the procurement of medicines, especially for emergency needs. But later, it has expanded into the procurement of other items like rice. That said, it is only prudent that the government at least take a long hard look at the involvement of the PITC in the procurement of COVID-19 vaccines,” Lacson said in a statement on Monday.

“There is a valid reason to check on the inefficiency of PITC, and maybe it is also high time to review the government procurement process,” Senator Joel Villanueva said in a separate statement.

“PITC has become the procuring agent for many government agencies that want to avoid the challenges of doing their own procurement,” Villanueva added.

Senate President Vicente Sotto III said he would welcome a resolution from his colleagues to launch a legislative investigation of the PITC.

Sotto told reporters in a web interview, “Basta’t anything that is questionable, dapat iniimbestigahan. Simple as that, ‘di ba?” (Anything questionable needs to be investigated. Simple as that, right?)

As to whether the PITC can be trusted with procuring COVID-19 vaccines for at least 60 million Filipinos, Sotto said he would defer giving an opinion until a review of the firm’s capability to do so is completed.

Earlier on Monday, Trade Secretary Ramon Lopez, who oversees the PITC, said he would welcome a Senate resolution to investigate the firm, the Inquirer reported. Lopez has directed the PITC to give the Senate a “full accounting” of its transactions, the report added.

The Senate is expected to pass its version of the 2021 General Appropriations Bill on Thursday, November 26. Until then, the senators will be realigning parts of the national budget bill in order to shore up more funds for COVID-19 vaccines, among several things. – Rappler.com

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JC Gotinga

JC Gotinga often reports about the West Philippine Sea, the communist insurgency, and terrorism as he covers national defense and security for Rappler. He enjoys telling stories about his hometown, Pasig City. JC has worked with Al Jazeera, CNN Philippines, News5, and CBN Asia.