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PCIJ's Journalists Went to the Grocery and Uncovered Massive Overpricing of Marawi Relief Goods

That may be hundreds of millions of pesos lost.
IMAGE Angelo Dologmandin for Philippine Information Agency - Wikimedia Commons
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Earlier this week, the Philippine Center for Investigative Journalism (PCIJ) released a report showing that the top three suppliers of relief goods for residents of war-torn Marawi had overpriced their items, potentially costing the government hundreds of millions of pesos.

Here's how it's supposed to work: Every government agency is mandated by law to open up their contracts to a highly regulated bidding process, so that they could find the "Lowest Calculated Responsive Bid or Highest Rated Responsive Bid"—in other words, the most reasonably priced quotation delivering the best goods or services.

In this case, the Department of Social Welfare and Development (DSWD) Field Office in Region XII was tasked with finding suppliers to put together relief goods for residents of Marawi who were displaced by the conflict in their city. These kits contain food, hygiene supplies, and other necessities, and were to be provided by suppliers who had passed the stringent bidding process.

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However, the PCIJ report showed that the DSWD field office had accepted, "apparently without diligent review, the suppliers' quotations for the bulk purchases in 13 supply contracts altogether worth P1.01 billion."

The investigative journalists with the PCIJ did a simple price check with three grocery chains and with the government's own suggested retail price advisories, and found that the DSWD's top three suppliers—Tacurong Fitmart, Ororama Superstore, and Ace Counterpoint—had significantly overpriced the products they sold to the DSWD. In some cases, purchase orders did not reflect a detailed breakdown for the prices of the items.

A further anomaly showed that the purchase orders showed "much lower prices for items with volume or size specified in the documents but not available in retail stores, or apparently non-existent at all."

Purchase order submitted by the DSWD Field Office to Ororama. Note the absence of a detailed breakdown of costs for this P72-million peso purchase order. IMAGE: PCIJ
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The PCIJ's findings included Century Tuna Flakes 155g cans overpriced by P1.50; Argentina corned beef 150g cans overpriced by P5.01; Safeguard 90g soap bars overpriced by P4.09; and Sisters 8-packs of sanitary napkins, overpriced by P13.40. "The overpricing may not seem much per unit of product but multiplied by the tens of thousands that DSWD-FO XII purchased, the amount translates to hundreds of millions of pesos," notes the report written by PCIJ executive director Malou Mangahas and senior content producer Karol Ilagan.

Ororama Supercenter won two of the bids, accounting for the bulk of the purchase for the hygiene kits. There were no breakdown for the items contained in the kits, which were priced at P1,800 each. PCIJ's price check shows that, at prevailing SRPs, the kits should only cost between P357.75 to P657.25, "suggesting a possible overprice of as much as 300 to 500 percent of retail prices."

In the case of the Ororama's PO pictured below, the PCIJ's detailed price check of the kit’s components show a possible overprice of P1,142.75 per kit, though they note that "if certain items were multiplied by the quantity set in the PO, the total cost per hygiene kit would add up to at most P1,699, for an apparent overprice of P101 at least per kit."

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This PO reflects the purchase of 40,000 hygiene kits at a cost of P1,800 each. According to the price check, the kit should only cost up to P677.25. IMAGE: PCIJ

 

The PCIJ report also recalled that early social media posts from Marawi residents had already complained about the same apparent overpricing. A November 4, 2017 blog entry from Ranao Star showed a receipt that evacuees had been asked to sign, reflecting the cost of hygiene kits as P1,800, "but they said the actual contents of the kit is estimated to be more than P200 only." 

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PCIJ published the full report on its website, and included an overview of the government's other expenditures for Marawi relief efforts.

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