SENATORS and Executive officials have agreed to push early passage of a law exempting local government units (LGUs) from certain provisions of the Procurement Act to shield them from legal liability as they fast-track moves to obtain vaccines for constituents.
Majority Leader Juan Miguel Zubiri on Friday clarified the scope of Senate Bill 2042, which he filed earlier this week, granting the exemption for a limited period, or until September 2021.
Zubiri noted that at Thursday’s Finance committee hearing led by Sen. Sonny Angara to tackle his bill—a similar one was filed by Sen. Imee Marcos—representatives of the government procurement board said the Executive is working on increasing the level of advance payments that will be allowed, from 15 percent to 50 percent, for emergency purchases, partly to help the LGUs hasten their rollouts without breaking the law.
“Senate Bill 2042 is not going to give LGUs precedence over the national government in terms of vaccine procurement. It’s still the national government that will lead—LGUs still need to follow the national guidelines for vaccine deployment set by the Department of Health and the National Task Force against Covid-19,” Zubiri said, partly in Filipino.
“So no one should fear inequitable distribution. Whether through the national government or the LGUs, our frontliners will still be prioritized for vaccination. The vaccines purchased by LGUs will augment the supply of the national government. LGUs who will not be able to purchase vaccines on their own will still be covered by the national government vaccine roll out,” he said.
“This bill was requested by all our LGUs. Around 70 local government units are in negotiations with vaccine suppliers and they need to deposit advance payments to secure them. Otherwise, we will lose the allocation. They are requesting that they also be exempted from the requirement of purchasing goods and services from suppliers with the lowest bid. This is not possible with the Covid-19 vaccine as it is supply-driven. It is impossible because the lowest price is not always available.
“In fact, in the hearing yesterday [February 11], the Government Procurement Policy Board [GPPB] disclosed that the Office of the President is also drafting a memorandum order that will authorize an increase in the advance payment for coronavirus vaccines. Under the Auditing Code and Memorandum Circular 172, Series of 2005, only a 15-percent advance payment is permitted. Under bill, the advance payment, particularly on Covid-19 vaccines, will be increased to 50 percent,” Zubiri said.
He noted that Section 338 of the Local Government Code prohibits advance payments: “No money shall be paid on account of any contract under which no services have been rendered or goods delivered.” The bill exempts the LGUs from such provision for vaccine procurement during the state of national calamity or the pandemic.
No formal deals signed
Also in Thursday’s hearing, senators learned the Duterte administration still has no formal “supply agreement” covering delivery of the awaited Covid-19 vaccine supply, but vaccine czar Carlito Galvez Jr. assured them they have term sheets that embody an initial “locked-in” arrangement of supply, and are looking at 108 million doses in all from these.
Health Secretary Francisco Duque and Galvez admitted under questioning by senators that the Duterte administration has yet to sign a final supply deal with manufacturers of the vaccines.
Galvez, however, assured senators that negotiations are still ongoing to forge a final supply agreement for Sinovac, Covovax, Moderna and AstraZeneca.
The absence of any supply agreement means, according to Minority Leader Franklin M. Drilon, there is no firm commitment as yet of any vaccine coming to the country soon and the awaited supplies are all based on Galvez’s good relations with suppliers.
Senators were told the only sure supply involved the 600,000 doses of Sinovac vaccines expected to arrive on February 23. Such does not require any supply agreement because it is a donation of the China government.
Galvez told senators that upon the Sinovac’s scheduled arrival on February 23, there will still be at least two to three days of technical inspection. This will be followed by the vaccination, assuming Sinovac gets its emergency use authorization (EUA) by that time.
Lowest-bid rule
The Zubiri bill also exempts LGUs from sticking to the “lowest-bid” provision of the law, given the unique circumstance of the pandemic, when “the cheapest may not be available” owing to the mad rush for vaccines globally. The bill, however, makes the exemption possible only until September 2020, and most senators are inclined to extend this by a few months more.
Quirino Gov. Dax Cua, president of the League of Provinces, said “our LGUs are willing to take risks” just to protect their people, “but huwag naman sanang makasuhan [but we hope they won’t end up with lawsuits].”
A similar sentiment was earlier aired by San Juan Mayor Francis Zamora when the CODE team (Coordinated Operations to Defeat Epidemic) of Galvez and other officials visited his city on Wednesday.
Later in the Senate Finance committee hearing, panel chair Angara asked Atty. Fortunata Rubico of the Commission on Audit (COA) for the agency’s view on SB 2042. Rubico said the “COA has no comment” on the bill, but, as with the Bayanihan law, “will issue guidance for our auditors” once a law is enacted so they can properly implement it.
‘Beauty’ of tripartite
In his presentation, Galvez reiterated the “beauty of the tripartite setup,” especially now that all vaccines being secured for early rollout are covered only by emergency use authorization (EUA) from the Food and Drug Administration (FDA), not a full commercial license yet.
First, Galvez said, the national government has better leverage in negotiating and, when the LGU orders are negotiated for as one, the NG can demand the lowest prices possible—a hard feat, given it is a sellers’ market worldwide as countries scramble to quickly roll out immunization drives to push back the spread of Covid-19.
Second, Galvez explained that pharmaceutical firms do not want to deal bilaterally with LGUs because they are looking for indemnification shields in case of adverse reactions, considering that their products are not yet completely ready for full commercial licensing and are just covered by EUAs.
“The EUA is not yet a full marketing approval,” Dr. Jaime Montoya of the Philippine Council for Health Research Development (PCHRD) weighed in. In effect, he said, the national government, in being party to the tripartite agreements, assumes the liability for adverse reaction for using vaccines covered only by EUA and not fully licensed.
Galvez said indemnification provisions are crucial for pharmaceutical firms still scarred by the “Sanofi episode” in the anti-dengue vaccine Dengvaxia. The French pharma giant is facing lawsuits over allegations it rushed the rollout in 2016 of Dengvaxia on 700,000 Filipinos without final conclusion of the last-stage clinical trials.
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