COA finds ‘shortcomings’ in DOH, PS-DBM in Pharmally deals

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Metro Manila (CNN Philippines, November 21) — The Department of Health (DOH) and the Procurement Service of the Department of Budget and Management (PS-DBM) committed various “shortcomings” in the questionable procurement of medical supplies at the peak of the COVID-19 pandemic, state auditors found.

Sen. Sonny Angara bared the finding during the plenary deliberations of the proposed 2024 budget of the Commission on Audit (COA) on Monday, as Sen. Risa Hontiveros asked for updates regarding the agency’s special audit over the scandal.

Angara said the COA addressed to Senate President Juan Miguel Zubiri on Aug. 31 nine volumes worth of reports on the pandemic-related supply deals with Pharmally Pharmaceutical Corp. It was received on Sept. 19, he added.

“It’s quite long because they’ve really tackled each individual officer,” Angara said of the reports. There were findings regarding the former secretary of Health, and a former undersecretary, “as they have various participations,” according to the reports.

Angara, as the budget sponsor of the COA, speaks on behalf of the agency on the Senate floor. He was handed a note on the COA findings on the controversial deals.

“Kasama sa finding was [Included in the finding was that], ‘The DOH did not appropriately exercise administrative control in ensuring the availability of PPEs and medical supplies,’” he said.

He also said that the DOH “failed to effectively coordinate” with PS-DBM on the timeliness of the procurements, schedule of deliveries, and periodical consumption of supplies.

According to state auditors, the DOH “did not exert effort in monitoring the liquidation of fund transfer to PS-DBM.”

“The PS-DBM, on their part, had failed or had been inconsistent in observing the conduct of preliminary price scanning or preliminary market survey,” Angara said, adding that it must have determined reasonable unit prices and the period of availability and capability of the supplier to provide the required quantity.

Other “shortcomings” included the exclusion of unit prices from other legitimate businesses in the price analysis, and having “no request for further negotiation from the two entities who offered to supply the contracts.”

Angara said the committee will furnish Hontiveros with a copy of the COA findings.

The COA flagged the DOH in August 2021 for “deficiencies” in its management of pandemic funds worth over ₱67 billion in 2020, noting that these contributed to the challenges faced by the agency in responding to the ongoing health crisis. This triggered an investigation in the Senate and the House of Representatives.

READ: From COA to Congress: A look into govt's questionable pandemic deals

In February 2022, the Senate Blue Ribbon Committee recommended graft, corruption, and plunder charges against Pharmally executives and several public officials, including PS-DBM Undersecretary Lloyd Christopher Lao and former Health Secretary Francisco Duque III. 

This was for transferring more than ₱41 billion from the DOH’s COVID-19 fund to the PS-DBM, a portion of which was used to purchase medical goods from Pharmally.

In August, the Office of the Ombudsman found probable cause to file graft charges against Lao, former PS-DBM procurement group director and now Overall Deputy Ombudsman Warren Rex Liong, and other officials for their involvement in the irregular procurement of COVID-19 test kits from Pharmally.