Senators question PS-DBM's increased debt, 'parked' funds

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Senators raised concerns on Tuesday over the rising debt of the Procurement Service of the Department of Budget and Management (PS-DBM). (FILE PHOTO)

Metro Manila (CNN Philippines, September 21) — Senators raised concerns on Tuesday over the rising debt of the Procurement Service of the Department of Budget and Management (PS-DBM).

In a Senate finance subcommittee hearing, Senator Imee Marcos questioned why the PS-DBM's liabilities increased when it supposedly had more procurement services.

Based on the Commission on Audit's annual report, the PS-DBM's debt amounted to nearly ₱36 billion in 2020, a huge jump from ₱19.2 billion in 2019.

PS-DBM Administrative and Finance Group OIC-Director IV Josh Laure said the debt is due to advances received from different agencies.

"Ang payment po ng mga agencies sa PS-DBM ay treated initially as liabilities po. Kapag po merong corresponding deliveries sa mga agencies, doon po nababawasan advance payment nila," he told senators.

[Translation: The payment of agencies to PS-DBM is treated initially as liabilities. When there are corresponding deliveries to agencies, that's when we deduct from the advance payment.]

Payables to national government agencies (NGAs) amounting to ₱30.8 billion consisted most of the Inter-Agency Payables.

The amount due to NGAs are composed of unutilized deposits from advance payments. These have to be refunded to the concerned agencies unless there is approval to utilize these funds based on the rules and regulations on savings.

The COA report said the management has initiated remedy on reconciling these issues.

Status of 'parked' funds with PS-DBM

Senators also followed up on the status of the ₱10.87 billion unused funds with the PS-DBM.

The COA report showed ₱8.946 billion were unutilized for four years and above while ₱1.918 billion have been idle for two to three years. There is also a balance of ₱5.957 million in deposits from unidentified client agencies that were untouched since 2011.

COA recommended the money be reverted to the Bureau of Treasury (BTr). In 2020, agencies with unspent funds were instructed by the DBM to return funds to support the Bayanihan to Heal as One Act, or RA No. 11469

Laure said they are completing the documentation needed in the process. Their target is to return the amount to the BTr by year-end or first quarter of 2022.

Budget Undersecretary and officer-in-charge Tina Canda said these dormant funds were money not intended for CSEs (common-use supplies and equipment) but were still transferred to the PS-DBM. There were some transactions that could not be completed because agencies did not comply with the PS-DBM, she added.

Canda also said parked funds with the PS-DBM still earn interest, but she did not provide further details on the matter.

RELATED: Finance chief: Proposed abolition of PS-DBM, PITC ‘worth looking at’

Renewed calls to abolish extra fees

Senators revived calls to abolish the extra charges, even questioning its legal basis.

The procuring entity charges agencies between 1 to 4% for its services, apart from the standard mark-up of 4% on CSEs.

Senate Finance Committee chairperson Sonny Angara described it as a little anomalous, saying the government is making money on government funds. Senator Marcos said the extra fees are unnecessary and contradicts procurement laws.

RELATED: Senator to push for restrictions on fund transfers to PS-DBM, PITC in 2022 budget

Canda said there is an existing provision allowing PS-DBM to charge such fees.

"The reason for that is the procurement service is not charging against the general appropriations act. They buy in bulk so ang [the] rationale is they get it for a much lower price. So even if agencies will pay the 4% it is still lower than the market... The reason why it is varying is because if the transaction is rather substantial then 1% is enough," she told senators.

Canda added that the PS-DBM gets its operating expenses and salaries from revenues, which includes the service fees.