A local manufacturer of medical-grade face masks on Tuesday, September 7, admitted incurring financial losses from its contract with Department of Budget and Management's Procurement Service (DBM-PS), after it was told to trim their prices from what was agreed in their award.
At the resumption of the Senate Blue Ribbon Committee's inquiry on the Department of Health's (DOH) procurement of COVID-19 supplies thru the DBM-PS, Ferdinand Ferrer of the EMS Components Assembly Inc. said their firm was awarded a P1.3-billion contract by the government in April, 2020 to supply 100 million of surgical face masks worth P13.50 each.
EMS was among the local companies that heeded the government's plea to repurpose portions of their factories for manufacturing personal protective equipment (PPEs), as well as to preserve jobs in the country during the pandemic.
The cost of face masks offered by the local firm was the lowest among seven companies chosen by the DBM-PS to supply face masks and face shields from April to May last year, the highest being that of Pharmally Pharmaceutical Corporation at P27.72 per piece.
But Ferrer said that of the 100 million, only about 25.8 million was actually delivered at P13.50 while their balance of 74.1 million was shipped at a meager amount of P2.35 per piece.
"After shipping 100 million units of face masks, the total sales only was P523 million. It was far from the P1.3 billion ," Ferrer told the Senate panel.
Ferrer said they were told by the DBM-PS to lower their prices, citing a provision in their contract that suppliers have "to match lower prices".
The DBM-PS also cited the lack of space in the warehouse since its supposedly had enough in its inventory, he added.
While recognizing the aid extended by the government agencies to be able to produce face masks, Ferrer said the adjustments in the cost had affected their income.
"Yes...nalugi kami (we suffered losses)," Ferrer admitted when asked by Senator Francis Pangilinan if they suffered losses.
Senator Richard Gordon also raised his eyebrow on the disclosure, questioning the change in the pricing after contract was awarded.
"Parang panakip butas lang kayo kunyari para lang masabi na nakabili sila nang mababa (It's like you were used as a front just so the DBM-PS can say that it was able to purchase at low prices)," Gordon told the EMS.
Senators have suspected irregularities in the DBM-PS's award of over P8 billion worth of contracts to the Pharmallly for the procurement of PPEs and test kits, despite it being only a few months old and having only P625,000 in paid up capital.
A report from the Commission on Audit (COA) showed that between April to May, Pharmally was tapped by the DBM-PS to supply a total of 12.9 million face masks at a unit price ranging from P22 to P27.72.
Besides these, Gordon noted that Pharmally was also contracted for the provision of 3 million KN95 masks worth P100 each; and in May, 10,000 surgical gowns at a unit price of P288; as well as 2 million PPEs costing P1,910 each.
"Hindi naman tayo nagaakusa dito...Natapat lang na 'pag sinundan mo 'yong papel, lumalabas na mukhang napagbibigyan 'yong ilan doon sa bidding...Pagkatapos itong mga Filipino company like EMS (We are not accusing here. It just so happens that if you follow the paper trail, it appears that some are being favored over the others in biddings. While Filipino companies like EMS are put in a disadvantage)," Gordon said.
Senators Panfilo Lacson and Imee Marcos, meanwhile, noted the use of government air and sea assets to ferry products from foreign suppliers. This is contrast with local manufacturers, who import raw materials and deliver products to their customers on their own initiative.
"Bakit 'pag accomodation sa foreign firm, higit pa sa accommodation sa sarili nating kababayan (Why are we accommodating foreign firms more than our countrymen)?" Lacson asked.
Senator Risa Hontiveros also maintained that Filipino manufacturers can very well provide the government its PPE needs at a much lower cost.
Sen. Joel Villanueva, for his part, said prioritizing local suppliers would have generated jobs for Filipinos who were displaced by the pandemic.
"Ilan 'yong mga dapat na trabaho na nalikha, nagawa kung talagang nagkaroon ng puso ang ating at ating pamahalaan na tulungan 'yong ating local manufacturers (How many jobs would have been created if the DBM-PS and our government had the heart to help our local manufacturers)?" said the chairman of the Senate labor committee.
"Parang klaro rito an ang kontrabida sa mga manggawang Filipino at para makagawa tayo ng trabaho eh mismong (It's clear here that the nemesis of Filipino workers and the effort to generate jobs is the DBM-PS)," he lamented.
National Task Force (NTF) against COVID-19 chief implementer Carlito Galvez Jr., in the hearing, defended anew the government's procurements.
He said they were not playing favorites.
EMS, he explained, is only manufacturing face masks, while they were looking for full PPE sets.
"We never favored anybody but we ask whose company can produce that nine set immediately," said Galvez, who was also designated by President Duterte to be in charge of procurements related to the pandemic.
He also denied accusations of "premeditated plunder" in their procurements.
"We don't have any intention to plunder," Galvez told the senators.
Local PPE manufacturers have previously lamented the lack of demand from the government and its supposed preference for foreign-made products.