Introduction
The Commission on Audit (COA) has mandated the Department of Health (DOH) to pay a total of P9.5 million to Nonpareil International Freight and Cargo Services, Inc. (NIFCSI) for crucial brokerage services rendered during the unprecedented Covid-19 pandemic in 2020. This development underscores the complexities surrounding emergency procurement in times of crisis, as well as the accountability required from public health agencies.
Contract Details and Expenditures
NIFCSI was awarded the brokerage services contract by the DOH on February 6, 2020, with an initial contract price set at P18,603,200. By August 11, 2020, 92 percent of the contract price, amounting to P17,041,586.55, had already been consumed to facilitate the logistics needed to handle a high volume of shipments resulting from international donations aimed at bolstering the country’s response to the pandemic.
Given the urgent needs amid the crisis, the contract with NIFCSI was extended to accommodate the continuous influx of supplies until a new service provider could be sourced. Specifically, a contract extension executed on September 30, 2020, amounted to P10 million, prolonging their services for an additional three months.
Further Extensions and Funding Challenges
The DOH had secured a loan facility from the World Bank (WB) under the Philippine Covid-19 Emergency Response Project (PCERP). This funding was principally intended for procuring essential equipment and commodities to support hospitals and laboratories amid the ongoing health crisis. With the WB yet to finalize a contract with a third-party logistics firm for brokering the transportation of portable X-ray machines, the DOH was compelled to extend their contract with NIFCSI further.
The contract was extended again for P15 million over two months and once more for an additional P11 million from January 1, 2021, to February 28, 2021. During this time, it became apparent that the WB informed the DOH that the brokerage services could not be offset against WB funds, leading to an impasse.
NIFCSI’s Claim and COA’s Ruling
In light of these circumstances, NIFCSI sent a final demand letter to the DOH, requesting payment for seven shipments totaling P9,557,567.12. The DOH, however, admitted an inability to settle the payment, citing that the funds allocated for the original contract and its extensions had been entirely consumed.
Subsequently, NIFCSI filed a petition for a money claim with the COA, supplying comprehensive documentation, including a non-payment certificate, delivery monitoring reports, and invoices. Upon review, the audit team verified NIFCSI’s claim, deeming the amount reasonable, valid, and well-supported, as outlined in Section 4(6) of Presidential Decree No. 1445, which governs government auditing procedures.
The COA concluded that while the funds for the original contract had been exhausted, there was undeniable evidence that NIFCSI rendered invaluable services that significantly benefited the DOH and the overall Covid-19 response. The Commission ruled that it was equitable to allow NIFCSI to reclaim the reasonable value of the services provided.
Conclusion
This ruling serves as a crucial reminder of the importance of financial accountability in public service, especially during emergencies. The decision emphasizes the necessity for government agencies to ensure the availability of funds when contracting essential services during crises, thereby ensuring that service providers are compensated fairly for their contributions to public health efforts. The COA’s decision was formalized in a six-page ruling, signed by COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Cafe Pondoc and Mario G. Lipana.
