COA to DOH: Pay P9.5-M for brokerage services during Covid-19 pandemic in 2020
The Commission on Audit (COA) has directed the Department of Health (DOH) to pay P9.5 million to Nonpareil International Freight and Cargo Services, Inc. (NIFCSI) for brokerage services rendered during the Covid-19 pandemic in 2020.
NIFCSI was awarded the brokerage services contract by the DOH on Feb. 6, 2020 with a contract price of P18,603,200.
As of Aug. 11, 2020, 92 percent of the contract price or P17,041,586.55 had already been consumed for brokerage services.
Since it was the height of the Covid-19 pandemic and the DOH had a high volume of shipments from international donations, the contract with the NIFCSI was extended until a new service provider was procured.
The DOH and NIFCSI then executed a contract extension on Sept. 30, 2020 for P10 million, which extended the latter's services for a period of three months or until a new contract was awarded to a new service provider.
The DOH secured a loan facility from the World Bank (WB) under the Philippine Covid-19 Emergency Response Project (PCERP). The loan’s major component was the procurement of equipment, vehicles, and commodities which will be distributed to hospitals and sub-national laboratories to improve their capabilities in handling Covid-19 cases.
Since the WB had not yet contracted a third-party logistics firm for brokering in hauling portable X-ray machines, the PCERP requested that the DOH use its existing brokerage services.
The DOH contract with NIFCSI was then extended for a second time for P15 million for a period of two months, and it was also extended a third time from Jan. 1, 2021 to Feb. 28, 2021 for P11 million.
However, the WB informed DOH that the brokerage services cannot be charged against WB funds.
NIFCSI sent a final demand letter to DOH demanding payment for seven shipments totalling P9,557,567.12, which the DOH admitted it cannot pay as the funds allotted for the contract and its extensions had been consumed.
A petition for money claim was then filed before the COA. NIFCSI submitted a certificate of non-payment of claim issued by the accountant of the DOH, delivery monitoring shipment, statement of account, communications regarding unpaid invoices, and other invoices and billing statements.
The audit team leader (ATL) and supervising auditor (SA) verified the claim of NIFCSI in the amount of P9,557,567.12. The audit team found that the claim was reasonable, valid, and supported with complete documents pursuant to Section 4(6) of Presidential Decree No. 1445, the Government Auditing Code of the Philippines.
"In this case, the funds for the original contract and its extensions were already exhausted or consumed by DOH. When NIFCSI rendered brokerage services for the PCERP there were no more funds available to cover the services," the COA said in its decision.
"Nonetheless, there is no doubt that NIFCSI rendered actual services from which DOH and PCERP have benefitted. Accordingly, it is only just and equitable to allow NIFCSI to recover the reasonable value of the services rendered," the COA ruled.
The six-page decision was signed by COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Cafe Pondoc and Mario G. Lipana.