OFFICIAL STATEMENT: ON THE ISSUE OF IT PROJECTS/PROCUREMENT

PhilHealth wishes to clarify the following issues over alleged overpriced IT equipment during the Senate Committee of the Whole hearing and reported by media outlets such as Rappler.

1. COA citing in its January 2020 report that 24 units of network switches units “were not utilized (yet) and found inside (their boxes) at the time of inspection at various selected PROs and LHIOs.”

The COA report that 24 units of the network switches are still in their boxes and unused per Audit Query Memorandum No. 2020-002 (HO) has been properly responded to by PhilHealth on April 24, 2020, viz:

• The said 24 switches are assigned to PhilHealth offices in Regions 4A, 4B and 5 are previously used units that were packed and re-sealed for transfer to new locations.
• As reported by our regional offices, these units have been installed and are being utilized.

2. On the overpriced PhilHealth’s Proposed ICT Projects

The Internal Audit Report does not mention any “overpriced” ICT Project but indicated “discrepancies”. The discrepancy found was the difference in the actual prices against the budget estimates provided. Prior to bidding, the proposed budget has to be updated again based on the current market canvasses and computed in average, median, and lowest with allowances for inflation. The lowest of the computed amount is the Approved Budget for the Contract. The ‘estimates’ never actually became the budget because they were updated after the canvass to reflect the Approved Budget, which is a much lower rate.

The alleged Php115 million pertains to regular desktops with 3-year warranty composed of 1,341 units at Php86,000 per unit, as validated by internal audit.

The Php4.1 million laptops was budgeted in 2019 but was not purchased due to lack of material time. That is why it was included in the proposed 2020 Corporate Operating Budget. The proposal remains at 6 units with high-end specifications at Php56,000 per unit, 21 units laptops with regular specifications at Php50,562 per unit, and 53 units laptops with small form factor specifications at Php51,200 per unit.

–          Mr. Cabading’s allegation that the ICT budget proposal of P2.1 billion in December 2019 was rejected by the Board because it lacked “specific details” is not true. On December 15, 2019 Regular Board Meeting, the Board agreed to DEFER the approval of CY 2020 IT budget pending provision of further details and presentation to the Audit Committee. As directed, the IT Sector’s budget with specific details was presented during the Risk Management Committee and Audit Committee meetings.

–          Mr. Cabading is confused with his statement that the ICT sector reduced their proposal to Php1.9 billion due to typographical errors. The reduction from 2.1B to 1.5B was based on the deferment of some projects pending completion of the IT Roadmap with external consultants.

–          SVP for Information Management Sector Jovita Aragona did not propose a supplemental ICT budget of Php302 million. The request was to extend to December 2020 the 2019 projects that were not procured and implemented. The Board decided to have the 2019 approved projects as the 2020 Supplemental Budget.

–          On the allegation that PhilHealth PCEO Ricardo Morales “supported” the revised ICT budget of Php750 million: The proposed budget was actually the result of Mr. Cabading’s instruction to review the IT budget with an IT external expert. When the IT Department presented anew, the Board deferred the proposal pending results of the inventory and appraisal of ICT purchases.

3. Procurement of 15 units of allegedly overpriced Network Switches in 2019.

The comparison presented was made without due consideration to the technical specifications and time period when it was proposed. A judicious comparison based on the technical specifications will show that:

The nearest specifications we can compare with Mr. Laborte’s version of Cisco 9200 with the Cisco 2960XR has a list price of USD 4,215 or PHP 210,000 per unit.

If we include 3-year warranty, VAT, cost of money at 5%, delivery, services, etc., the approximate price will reach PHP 324,555. Both amounts are lower than the pegged price in 2016 but are reasonably close to said amount.

Sources:

https://itprice.com/cisco-gpl/2960xr-

https://itprice.com/cisco-gpl/catalyst%209200

https://www.theknowledgeacademy.com/ph/courses/cisco-training/cisco-certified-network-professional-boot-camp-week-1/#online

4. As to projects purchased in 2018 and/or 2019 with proposals in 2020:

There are no double entries as alleged. The projects seen in the 2018-2020 budget proposals that are alleged as double entries may carry the same project titles but refer to entirely different projects and scope of work.

For example, in 2018, PhilHealth embarked on a Network Security Enhancement and Support project – a hardware security appliance with server load balancer, application firewall and security access features. In 2020, PhilHealth proposed for Network Security Enhancement and Support project for Security Information and Event Management (SIEM) Solutions – a central security management software.

As stated by PCEO Morales, after approval of the budget, we intend for our ICT projects to be procured by the Procurement Service – Department of Budget and Management (PS-DBM).

We invite Mr. Cabading to sit down with the IT team to be clarified with these technical terms to remove any cloud of doubt