NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE 
s. no.1302
mil actuate
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23 JAN 30 P3 :38
Introduced by Senator Francis "Tol" N. Tolentino
AN ACT ABOLISHING THE PROCUREMENT SERVICE OF THE DEPARTMENT 
OF BUDGET AND MANAGEMENT (PS-DBM) AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Pursuant to Letter of Instruction (LOI) No. 755, dated 18 October 1978, the 
Procurement Service (PS) was placed under the administrative supervision of the 
Department of Budget and Management (DBM) and mandated to implement a central 
procurement system for the purpose of procuring supplies and materials for use of the 
national government (NG) and its agencies and instrumentalities.
On 28 July 2011, Administrative Order (AO) No. 17 reiterated to all government 
agencies that their procurement of common use supplies shall be done through the 
PS-DBM and that PhilGEPS shall be used in all their procurement activities, including 
publication of their bid opportunities and posting of all their awards and contracts, in 
accordance with Republic Act (RA) No. 9184.
However, though PS-DBM operates on its own income and does not receive 
any allotment from the national government, the agency has, for several years 
already, been tainted with controversies in the performance of its mandate.
In its audit report for the period January to December 2017, the COA found 
that balances of inter-agency transferred funds for the procurement of Common Use 
Supplies and Equipment and Non-Common Use Supplies and Equipment totaling 
P15.705 Billion remained idle for more than four (4) years and have not been


returned/refunded to the respective client-agencies for eventual remittance to the 
BTr.1
The COA also observed in the same audit report that the PS-DBM did not 
institutionalize good practices in procurement to meet global standards in government 
efficiency as practiced in many developing countries when the re-bidding of several of 
its projects with an aggregate amount of P11.038 Billion were not conducted in due 
time contrary to the declared policy of efficiency in the procurement process espoused 
under RA. 9184.2
In 2020, the COA found that inter-agency fund transfers and other payables 
totaling P10.870 Billion, which pertains to advances for common-use supplies and 
equipment (CSE) that remained undelivered/unutilized and dormant for years, still 
have not been remitted to the BTr, thus depriving the government of the use of funds 
in the implementation of its projects/programs.3
The same audit report found that only 62 out of the 105 contracts/POs awarded 
under the Bayanihan Acts (RA Nos. 11469 and 11494) were posted in the GPPB Online 
Portal, which defeated the government's purpose of transparency and accountability.4
In its audit of the PS-DBM for the period January to December 2021, the 
Commission on Audit (COA) discovered that the PS-DBM is keeping a high-yielding 
savings account at the Development Bank of the Philippines (DBP) in the amount of 
P3.001 Billion. The said account was created more than five (5) years ago with the 
PS-DBM officials not being able to specify its source of funds. As the PS-DBM is not 
mandated to make investments and invest in high-yield savings accounts, the COA 
recommended the immediate return of the P3.001 Billion to the Bureau of Treasury 
(BTr).5
Also in the 2021 Management Letter, the COA found that the PS-DBM made 
payments to foreign suppliers amounting to PI 1.806 Billion for the procurement of 
COVID-19 supplies without withholding the final income tax applicable to the non­
resident foreign corporations (NRFCs) in the amount of P3.268 Billion and non­
remittance of the VAT on importation in the amount of PI.265 Million, thus depriving 
the national government of potential revenue.6
1 2018 Executive Summary -
2 2018 Executive Summary -
3 2020 Executive Summary -
4 2020 Executive Summary -
5 2021 Management Letter -
6 2021 Management Letter -
COA Audit Report for Procurement Service, page ii 
COA Audit Report for Procurement Service, page iii 
COA Audit Report for Procurement Service, page iv 
COA Audit Report for Procurement Service, page vii 
COA Audit Report for Procurement Service, page 78 
COA Audit Report for Procurement Service, page 71


It was likewise discovered that unexpended/unutilized fund transfers totaling 
PI.976 Billion from the DOH intended for COVID-19 supplies and equipment remained 
unremitted to the National Treasury despite the lapse of the validity periods for the 
use of funds.
All these significant observations, among others, were found in 2021, on top of 
the procurement of overpriced laptops also conducted by the PS-DBM for the Laptops 
for Public School Teachers Project of the Department of Education (DepEd).
These are just some of the significant observations found by the COA in recent 
years against the PS-DBM which showed how the national government has been 
grossly disadvantaged and deprived of the necessary funds for its efficient operation 
and support the resounding call for its abolition.
In view of the foregoing, the approval of this bill is earnestly sought.
TOL" N. TOLENTINO


NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE 
S. No.i 302
w/ of ii)c jfei'tmafj)
23 JAN 30 P3 38
n:)
RLTEIVEO BV:
Introduced by Senator Francis "Tol" N. Tolentino
AN ACT ABOLISHING THE PROCUREMENT SERVICE OF THE DEPARTMENT 
OF BUDGET AND MANAGEMENT (PS-DBM) AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines 
in Congress assembled:
1 
Section 1. Abolition of Procurement Service of the Department of Budget and
2 
Management (PS - DBM). - The Procurement Service of the Department of Budget
3 
and Management (PS-DBM) is hereby abolished. All procurement of goods, including
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common-use supplies, materials and equipment, and infrastructure projects shall
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henceforth be undertaken by the respective departments, bureaus, offices, agencies,
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state universities and colleges, government-owned and / or -controlled corporations,
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and local government units.
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Section 2. Winding Up of the Operation and Disposition of the Functions,
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Positions, Personnel, Assets and Liabilities of PS-DBM. - Within ninety (90) working
11 
days from the effectivity of this Act, the Secretary of Budget and Management shall
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fully implement the abolition, including the disposition or transfer of the personnel and
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assets, as necessary. The Secretary shall be assisted by a skeletal force, composed
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of PS-DBM personnel, for the sole purpose of winding-up the PS-DBM operations and
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safekeeping of the resources of PS-DBM.
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All assets and liabilities of PS-DBM shall be transferred to the Department of
18 
Budget and Management. All funds held by PS-DBM, other cash on hand and in bank
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accounts of PS-DBM shall be directly remitted to the National Treasury, In accordance
20 
with pertinent auditing laws, rules and regulations.
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Section 3. Absorption of Personnel, Separation and Retirement Benefits. -The 
DBM shall, as needed, absorb the PS-DBM personnel, without diminution of their rank, 
salaries and other benefits. Positions of the PS-DBM personnel, which will be absorbed 
by the DBM, shall be treated as coterminous with the incumbent.
The PS-DBM personnel who are not absorbed shall be separated from service 
and shall be allowed to receive the corresponding separation and retirement benefits 
under applicable laws and regulations.
The separation pay authorized herein shall be charged against the available 
funds of the PS-DBM, and such other funding sources that the Department of Budget 
and Management may identify, subject to existing budgeting, accounting and auditing 
laws, rules and regulations.
Section 4. Separability Clause - If any provision of this Act shall be declared 
unconstitutional or invalid, the other provisions not otherwise affected shall remain in 
full force and effect.
Section 5. Repealing Clause - Letter of Instruction No. 755(18 October 1978), 
Executive Order No. 359, series of 1989 and all other laws, orders, rules and 
regulations, other issuances, or parts thereof, inconsistent with any provision of this 
Act, are hereby repealed, amended or modified accordingly.
Section 6. Effectivity. - This Act shall take effect after fifteen (15) days 
following its publication in the Official Gazette or in two (2) newspapers of general 
circulation.
Approved,
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