Background on the Contract with NIFCSI
The Commission on Audit (COA) has recently mandated the Department of Health (DOH) to pay Nonpareil International Freight and Cargo Services, Inc. (NIFCSI) a total of P9.5 million for brokerage services rendered during the height of the Covid-19 pandemic in 2020. This decision arises from a contract originally signed on February 6, 2020, valued at P18,603,200, aimed at facilitating high volumes of essential shipments from international donors during a critical time.
The Need for Extended Services
As the Covid-19 pandemic escalated, the DOH found itself in urgent need of continued brokerage services due to a significant influx of medical supplies and equipment. Given this unprecedented demand, the DOH extended its contract with NIFCSI on September 30, 2020, allotting an additional P10 million for a further three months to ensure a seamless supply chain until a new service provider could be secured.
World Bank Involvement
The DOH, under the Philippine Covid-19 Emergency Response Project (PCERP), received a loan from the World Bank (WB) for procuring critical medical equipment and enhancing the capabilities of hospitals and laboratories in addressing Covid-19 cases. However, complications arose when it became clear that the WB could not cover the costs of the brokerage services, as no third-party logistics firm was contracted at the time.
Multiple Extensions and Financial Complications
Subsequent extensions to the contract with NIFCSI included a P15 million addition for two more months, followed by another P11 million extension valid from January 1, 2021, to February 28, 2021. Despite these extensions, the available funds for the contracts were quickly exhausted, leaving the DOH unable to fulfill its financial obligations to NIFCSI for the services rendered.
NIFCSI’s Claim and COA’s Decision
Faced with non-payment, NIFCSI submitted a final demand letter to the DOH, outlining a total of seven shipments amounting to P9,557,567.12. The DOH acknowledged its inability to pay due to the depletion of allotted funds. Following this, NIFCSI filed a petition for money claim with the COA, presenting ample documentation, including a certificate of non-payment and a detailed statement of accounts, to substantiate its claim.
Verification and Ruling by COA
The COA audit team verified NIFCSI’s claims and determined that the services were not only legitimate but also essential for the DOH and PCERP’s operations. In their six-page decision, COA Chairperson Gamaliel A. Cordoba, along with Commissioners Roland Cafe Pondoc and Mario G. Lipana, concluded that the DOH must honor its financial commitment to NIFCSI. The ruling emphasized that while the funds for prior contracts were expended, the valuable services provided by NIFCSI warranted reimbursement.
Conclusion
This situation underscores the financial complexities faced by government agencies during emergencies. As they navigated the unprecedented challenges of the Covid-19 pandemic, it became crucial for the DOH to ensure that all stakeholders involved in crucial service provision, such as NIFCSI, were compensated fairly and promptly. The COA’s ruling serves as both a reminder and an assertion of accountability within government spending, particularly in times of crisis.
