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Lao explains procurement of imported face masks

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The government ceased procurement from suppliers outside the country after a local supplier offered to meet the monthly requirement of face masks for personnel of government agencies, including the Department of Health (DOH), during the early stages of the Covid-19 pandemic last year, according to a report by Philippine News Agency.

Lloyd Christopher Lao, former head of the Department of Budget and Management - Procurement Service (DBM - PS), told senators on Monday the government had difficulty finding bulk suppliers of masks at first.

“Once we entered into a contract with a local supplier, we ceased acquiring from other suppliers. That is a fact,” he told the continuing Senate Blue Ribbon Committee inquiry on government expenditures related to pandemic response.

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“We bought everything that they (suppliers) had,” Lao said, answering a query from Senator Grace Poe. “Maraming agencies po ang bumili niyan (A lot of agencies bought supplies).”

He said they requested for quotations in lieu of formal bidding due to the urgency of the situation.

“At the time dapat direct negotiation but we still opened it to the public. Under Bayanihan 1, we can do it expeditiously but we sent notices (to suppliers),” Lao said.

Lao said the demand last year was between five and 10 million pieces of masks.

He said the first offer was PHP16 per piece but only 50,000 masks were available.

“So that’s what we bought kase kulang na kulang (the shortage was severe),” Lao said.

Some suppliers priced the masks from PHP27 to PHP40 apiece but demand outpaced the supply.

Ubos po kaagad 'yung 27 pesos (The ones costing PHP27 a piece ran out fast),” he recalled.

By the time the DBM - PS entered into a supply deal with Pharmally Pharmaceutical Corporation, Lao said a local manufacturer, EMS Component Assembly, inquired about the possibility to supply masks as the Department of Trade Industry (DTI) encouraged bidders.

EMS offered to meet the required government volume at PHP13.50 per piece and started the delivery of one million masks around June 2020.

DOH Secretary Francisco Duque III said an acute demand for face masks created a higher price at the start of the pandemic.

“The timing of the availability is a big factor I believe in the determination of the correct price vis-a-vis the suggested retail price that the DTI set on March 13, 2020,” Duque said.

Former economic adviser Michael Yang was not able to attend the hearing because of hypertension, according to his counsel, Raymond Fortun.

The lawyer offered to produce a medical certificate to substantiate the condition but Senator Richard Gordon refused, saying Yang did not appear sickly.

Pharmally chair Huang Tzu Yen said that at the start of the pandemic, global demand for medical supplies was high.

“I want to highlight that we have been compliant,” Huang said, adding that they had the intent to “make good of our obligations to deliver”.

He also brushed aside allegations of preferential treatment as they also lost in government bidding.

“Sometimes we win [a bidding] but we don’t always win,” Huang said, citing at least 12 instances.

“We don’t always win but we kept trying,” he said.

He told Senator Manny Pacquiao, who asked if there was corruption in their contracts, that he doesn’t know of irregularities.

Wala po (There is none). We do our best to do what is best for our country,” Lao said. “If people think there are inconsistencies, wala po kami magagawa (we can’t do anything about it).”


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