Trade and Industry Secretary Ramon M. Lopez is amenable to a proposal to review the mandate of the Philippine International Trading Corp. (PITC), which is alleged to have P33 billion in “parked” funds for the procurement projects of various government agencies.
Senator Panfilo Lacson has called for a review of the PITC charter as he joined other senators in calling for an investigation of the alleged “unused” funds at PITC, which Senator Franklin Drilon insinuated as a way for government agencies to avoid reverting back the unused funds to the National Treasury.
Lacson has called for the review of the PITC mandate because its function is redundant because government agencies have their own procurement services with awards and bids committees while the Department of Budget has its own procurement services department as well.
“We are open to that (review). We are willing to undergo the process of the review but what we are just saying is that PITC has a mandate and is performing its mandate,” said Lopez adding the review of the PITC will depend on the Senate being part of its legislative function.
Nevertheless, Lopez also acknowledged that government procurement for the projects of various government agencies can be done by the DBM, the biggest procurement agency of the government, but stressed that PITC has its own expertise in terms of procurement. Dave Almarinez was appointed by President Duterte as PITC president and CEO.
Lopez further clarified that PITC, a self-sustaining government agency does not get any budgetary allocation from the General Appropriations Act, has a “very clear” mandate and is allowed to charge service and management fees for their procurement.
For approved projects of less than P50 million, the service and management fee is 4 percent and 3.75 percent for above P50 million to P100 million. For bigger projects P900 million to less than P1 billion the service fee is 1.5 percent and above P1 billion is 1 percent.
With the income generated from the service and management fees, Lopez said, PITC was able to remit to the National Treasury P8 million in 201 and P38.1 million in 2016. The PITC dividends to the national government improved to P64.5 million in 2017, P281.6 million in 2018 and P324.1 million in 2019.
Based on the P32.5 billion PITC summary of projects, Lopez said that about P10 billion to P11 billion have been awarded for deliveries and the rest of the P21 billion are ongoing procurement projects. The P32.5 billion procurement projects involved about 48 agencies including 11 agencies in the military.
In a group chat with DTI reporters, Lopez also showed a report from PITC that stated, “Contrary to reports, PITC has not been keeping idle funds of its client-agencies for over a period of 10 years.”
Of the P9 billion fund transfers from various client-agencies, the PITC has reverted, as of October 30, 2020, to the National Treasury P1.23 billion unutilized funds of projects without or incomplete/deficient TOR.
The remaining balance of P7.9 billion have complete TORs and other necessary documents and are now undergoing procurement or project implementation. A total of P7.43 billion is undergoing project procurement while P467.628 million is undergoing project implementation.
All these projects are ongoing concerns at different procurement stages. PITC has also a 2-year self-imposed deadline for the delivery of the project from TOR to bidding.
As such, Lopez explained that the P32.5 billion procurement funds are not technically parked at PITC. He said it takes time for the procurement process and to complete each project because government agencies have to come up with the TOR (terms of reference) for their projects, which at times could not be completed in just one year.
Once the TOR is completed, only then that the PITC can proceed with the bidding. The procurement funds, which are actually with the government banks Lank Bank of the Philippines and the Development Bank of the Philippines can only be withdrawn once the project is awarded.
PITC has also started to clean up its project deliverables to fast track project implementation. Since 2019, he said, there had been no “parked” funds at the agency but just all ongoing procurement projects.