DBM generates P2 billion savings from COVID-19 procurement

MANILA, Philippines — The Procurement Service of the Department of Budget and Management (PS-DBM) said it generated around P2 billion in savings for the procurement of COVID-19 response items for the Department of Health (DOH) from March 26 to Aug. 5.

The savings is the difference between the allocated budget as identified by the end-user for the item vis-a-vis the awarded contract amount. The allocated budget is determined by the requesting agency through its own preliminary market study, existing price data or latest buying price of the same item.

The procurement of items starts when the PS-DBM receives an agency procurement request (APR) from government agencies. The APR indicates the technical specification of items to be procured as well as the quantity and budget earmarked for each item. After receipt of such APR, the PS-DBM conducts another market scanning wherein interested suppliers submit their price offer relative to the item to be procured.

However, with the declaration of a national health emergency, PS-DBM faced a number of challenges including: health issues affecting the workforce; logistical issues concerning closures imposed by different local government units; absence of local manufacturers; disruption in the supply chain coming from overseas; and high global demand of medical supplies and equipment.

This resulted in a very limited pool of qualified bidders in the Philippines capable of meeting the requirements specified in the various APRs that the DOH submitted.

PS-DBM said the procurement of 4,167 Sansure Nucleic Acid Diagnostic Kits priced at P1,464.88 per test—the most advantageous price for the government based on the conducted market scanning - generated  total savings of about P4 million for the DOH.

The DOH accumulated an additional P78 million savings upon the procurement of more medical supplies from local distributors for the A*Star Fortitude Kit priced at P1,720 per test and for the Macherey Nagel extraction kit priced at P625 per preparation or P31,250 per kit.

After the first procurement of these test kits, DBM Undersecretary Lloyd Christopher Lao said they explored the possibility of directly negotiating with the manufacturers in order to purchase medical supplies lower than what private companies in the Philippines could offer.

Thus, through the assistance of diplomatic channels, the PS-DBM was able to procure Sansure test kits at P918 per test – 45.9 percent lower than the first buying price. From this procurement, the government was able to generate approximately P178 million in savings.

In total, DOH saved around P1.2 billion for the procurement of test kits, extraction machines and other consumables. The remaining P800 million out of the P2-billion savings went to the purchase of personal protective equipment sets.

In an effort to support local manufacturers, the PS-DBM is coordinating closely with several agencies such as the Department of Trade and Industry and the Board of Investments to prioritize them in the next round of procurement.