At the height of the COVID-19 pandemic, companies that have been blacklisted by the government have found a way to circumvent their disqualification from government procurement dealings.
This was discussed by the senators and officials of the Department of Budget and Management (DBM) on Monday during the Senate Committee on Finance’s deliberation of the agency’s proposed 2021 budget.
(Senate of the Philippines / FILE PHOTO / MANILA BULLETIN)
Senate Minority Leader Franklin Drilon flagged the contracts supposedly awarded by the DBM to at least three blacklisted companies for the purchase of various medical supplies, such as personal protective equipment (PPEs), medicines, thermal scanner and face masks.
He identified the Ferjan Healthlink Enterprises as one of blacklisted firms tapped by the DBM for a P727-million procurement deal.
In response, Undersecretary Lloyd Christopher Lao of the DBM’s Procurement Services (PS) explained that the contract was awarded to Ferjan Healthlink Philippines, Inc. a corporation different from the sole proprietorship, after winning the bid.
Lao said the agency eventually decided to terminate the contract due to delays in its delivery and the firm’s demand for a higher cost of the purchase.
The DBM official said they also found out that one of the incorporators and stockholders is the owner of Ferjan Enterprises.
“Once we got the data, we contacted GPPB (Government Procurement Policy Board) for this matter for guidance and afterwards, last Friday, we cancelled the contract,” Lao told senators.
Lao, however, told the lawmakers that there is no legal basis to cancel a contract with firms whose stockholders include blacklisted companies.
Apart from having a different license, he said current GPPB rules on blacklisting do not cover such instances.
“So we just found a different ground for the cancellation because there was a delay on their part to deliver,” Lao said.
GPPB Executive Director Rowena Ruiz echoed Lao: “We have already blacklisting rules on controlling interest between two corporations. What happened in the case of procurement services is that the blacklisted sole proprietor created a new corporation and that was not covered in existing rules.”
Lao, on the other hand, said that no funds nor advanced payments were released to Ferjan.
Drilon urged the government agencies to amend their policies to cover stockholders of corporations.
“We all know that they will be able to hide behind the corporate structure to skirt their disqualification…We all know that a corporation can only act through its stockholders, and in this case, with what appears to be a common stock holder, they should be covered by the rule,” Drilon said.
“So that immediately these anomalous contracts are flagged, instead of leaving it to chance,” he pointed out.
He also called on the DBM to exercise due diligence in awarding contracts to suppliers.
“While it is good that the contract was cancelled, this begs the question: Why is the proper due diligence not conducted prior to the award of such a huge contract. Despite this being a negotiated/emergency procurement, blacklisted entities should not have been allowed to participate,” he added.
“Considering the lapses in screening Ferjan, it is highly possible that similarly situated suppliers may have also secured contracts with the DBM Procurement Service,” Drilon raised.
Officials of the DBM assured the senators they would take needed actions to address their concern.
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