Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS Pn ay
First Regular Session FINDERS

3270

HOUSE BILL No.

Introduced by
ACT Teachers Party-List Rep. FRANCE L. CASTRO,
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL

AN ACT
ABOLISHING THE PROCUREMENT SERVICE-DEPARTMENT OF
BUDGET AND MANAGEMENT, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The Procurement Service-Department of Budget and Management (PS-DBM)
acts as a procurement arm of other government agencies for common-use supplies.
equipment, and infrastructure projects. It was created through Letter of Instruction
(LOI) 755 dated October 18, 1978. which directed the establishment of an integrated
procurement system for the national government and its instrumentalit On July 28,
1987 the President issued Executive Order 285 reiterating the mandate of LOI 755 by
abolishing the General Services Administration and transferring the procurement and
price monitoring functions of the Supply Coordination Office to the PS-DBM
Subsequently, on June 02, 1989, the President issued Executive Order 359 which
prescribed the systematic expansion of the PS-DBM through a network of regional
depots under a governing Procurement Policy Board.

Amid the coronavirus disease 2019 (COVID-19) pandemic, the representatives
of the Bayan Muna Party-List along with the rest of the Makabayan, as well as other
lawmakers, questioned the Department of Health’s transfer to the PS-DBM of COVID-
19 funds amounting to P42 billion for the procurement of face shields, face masks.
personal protective equipment (PPE). medicines, and other health and medical supplies.

According to its 2020 annual audit reports, the Commission on Audit (COA)
revealed that there are slow-moving COVID-19 items totaling P95.455 million. With
the onset of COVID-19 pandemic, there is a high demand and limited supply of surgical



face masks and face shields the prices of which have risen. Such scarcity prompted the
PS-DBM to procure surgical face masks and face shields in bulk orders. However, due
to failure to deliver to concerned government instrumentalities when the prices are still
high, the PS-DBM could not resell such items at the same price level, ‘These unsold 2.7
million surgical face masks could have been used to address the shortage of personal
protective equipment especially among health workers if procured not for profit.

The COA in 2021 also reported that the PS-DBM granted unmeritorious requests
for extension of the delivery of PPE and mechanical ventilators, and issued purchasing
orders late. This resulted in non-incurrence of delivery delays and non-imposition of
liquidated damages amounting to P52.359 million, which defeated the purpose of
Negotiated Procurement-Emergency Cases under Republic Act 11469. The PS-DBM.
and the suppliers are well aware that the items procured by the government are for its
urgent COVID-19 response but the PS-DBM still granted extensions up to 74 days.
During the exit conference, the PS-DBM asserted that the reasons of the suppliers are
meritorious and did not warrant the imposition of liquidated damages

Moreover, in 2021, the DOH also requested to include COVID-19 vaceines in
the list of common-use supplies and equipment to be procured by the PS-DBM. Despite
the request being denied due to lack of on the part limitations PS-DBM of personnel,
storage equipment, and technical expertise, the mere fact that the DOH attempted to
pass its responsibilities to the PS-DBM instead of utilizing its own Bids and Awards
Committee, especially amid a health crisis, reeks negligence and inefficiency.

The PS-DBM was repeatedly flagged by state auditors for COVID-related and
non-COVID-related transactions in other agencies such as the Department of
Education—to which it owed PS5.5 billion per the 2020 audit report, Bureau of Fire
Protection, and Armed Forces of the Philippines, to name a few. Throughout its
existence, the PS-DBM has been made into a personal shopper, grocery. reseller, or
sometimes travel agency of sorts (like when the Department of Energy and Energy
Regulatory Board admitted to buying plane tickets from the PS-DBM).

The directive of the 1987 Constitution to maintain honesty, integrity, and
transparency in public service and the Republic Act 9184, or the “Government
Procurement Reform Act,” which mandates all procurement entities to establish a single
Bids and Awards Committee, have made the PS-DBM archaic and irrelevant. Worse,
it became a breeding ground for graft, corruption, inefficiency, and negligence of the
duties of other government agencies. Thus, this Bill seeks to abolish the Procurement
Service-Department of Budget and Management.

‘This Bill was first filed in the 18" Congress by Bayan Muna Reps. Carlos Zarate,
Ferdinand Gaite, and Eufemia Cullamat, ACT Teachers Rep. France Castro, Gabriela
Women’s Party Rep. Arlene Brosas, and Kabataan Party-List Rep. Sarah Elago as
House Bill 10264.

Thus, approval of this Bill is earnestly sought.


GABRIELA Women’s Party KABATAAN Party-List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

i|ETEENTH CONGRESS
First Regular Session

* 3270

HOUSE BILL No.

Introduced by
ACT Teachers Party-List Rep. FRANCE L. CASTRO,
GABRIELA Women’s Party Rep. ARLENE D. BROSAS,
and KABATAAN Party-List Rep. RAOUL DANNIEL A. MANUEL

AN ACT
ABOLISHING THE PROCUREMENT SERVICE-DEPARTMENT OF
BUDGET AND MANAGEMENT, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Republic of the
Philippines in Congress assembled:

SECTION 1. Declaration of Policy — 11 is the policy of the State to maintain honesty
and integrity in the public service and take positive and effective measures against graft
and corruption.

SEC. 2. Abolition of the Procurement Service — Budget and Management. ~ The
Department of Budget and Management-Procurement Service (PS-DBM) created under
Letter of Instruction No. 755 shall be abolished.

In lieu of the abolition of the PS-DBM, the respective Departments, Agencies,
Government-Owned and/or -Controlled Corporations (GOCCs). State Universities and
Colleges (SUCs), and Local Government Units (LGUs) shall, thereafter, undertake the
procurement of common-use supplies, materials and equipment.

SEC. 3. Separation and Retirement from Service. — Employees affected by the
abolition of the PS-DBM shall receive separation benefits under the Government
Reorganization Law and other existing laws, rules, and regulations: Provided, That
those who are qualified to retire and receive retirement benefits shall be allowed to retire
under existing laws, rules, and regulations.

SEC. 4. Reversion of Funds. — In coordination with the concerned Departments,



Agencies. GOCCs, SUCs, and LGUs. all prior years’ and current year’s advances for
the purchase of supplies. materials. and equipment not available in the PS-DBM
inventory shall be reverted to the National Treasury.

SEC. 5. Transition Period. — Onc (1) year upon the effectivity of this Act, the PS-DBM,
in coordination and under direct supervision of the Department of Budget and
Management (DBM), shall undertake an inventory of all supplies, materials, and
equipment under their custody for use of the different Departments, Agencies, GOC'
SUCs, and LGUs. The PS-DBM shall continue to service the requirements for common-
use supplies. materials, and equipment until the inventories of such are fully consumed:
Provided, That no additional procurement shall be undertaken by the PS-DBM.

SEC. 6. Special Audit. - The Commission on Audit shall conduct an updated special
audit on the transactions of PS-DBM and submit to the House Committee on Good
Government and Public Accountability and the Senate Accountability of Public
Officers and Investigations (Blue Ribbon) their findings, observations, and
recommendations within thirty days from the completion thereof. Based on the special
audit, the COA shall likewise recommend to the Ombudsman the filing of
administrative and criminal cases against all responsible public officers and employees
as well as private individuals and businesses.

SEC. 7. Repealing Clause. — All laws, decrees, executive orders, rules or regulations
and other issuances, or parts thereof, which are inconsistent with the provisions of this
Act, are hereby repealed or amended accordingly.

SEC. 8. Separability Clause. - If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provision not affected thereby shall
remain in force and effect.

SEC. 9. Effectivity. — This law shall take effect fifteen (15) days after its publication in
the Official Gazette or in two (2) national newspapers of general circulation.

Approved,