PITC is DND’s procurement outsourcing agency because ‘it has proven that it can deliver’

We would like to share with your publication and its readers the defense department’s position on the recent news articles regarding the transfer of funds to the Philippine International Trading Corp. (PITC) for procurement.

We confirm the earlier reports that the Department of National Defense (DND) and its bureaus, particularly the Armed Forces of the Philippines (AFP), engaged the services of the PITC to conduct activities relating to the procurement process, including market research, bidding, and contract implementation, for several projects in its behalf.

The practice is not something new, as the PITC has been the DND’s procurement outsourcing agency since 2003. This is provided for by law, particularly, Section 6 (a) of Presidential Decree No. 1071 (PITC Charter), Sections 7.3.3 and 53.5 of the revised IRR of Republic Act No. 9184, or the Government Procurement Reform Act, and covered by several memoranda of agreement between the PITC and DND/AFP, which were crafted over the years.

The AFP has continuously tapped the services of PITC because the latter has proven that it can deliver what is required of them, even generating savings for the Philippine government from some of the acquisition transactions. Most of the procurement projects transferred to the PITC are for items classified as capital outlay, which are more complex than those under maintenance and other operating expenses.

In the procurement of goods and services, including infrastructure projects, the DND/AFP pays the corresponding service fees to the PITC, which are deducted from the funds that are transferred. These are paid in two tranches, with the first half paid upon the issuance of Notices of Award, while the remaining half is paid upon the completion of deliveries.

We must emphasize that while the procurement of defense equipment entails time for completion and delivery before payment if effected, the funds transferred to PITC are not idle. In fact, our data show that the money is being utilized as intended.

Since 2018, P10.17 billion have been transferred to PITC. Of these, P803.82 million worth of projects have been completed and delivered. From the remaining P9.36 billion, projects amounting to P1.89 billion are now in the process of contract implementation and delivery. These include the repair of ships, delivery of medical supplies and munitions, as well as communications requirements of Pag-asa island. The rest of the projects, amounting to P7.47 billion, are now in various stages of procurement.

We hope that we have adequately provided information on this matter and clarified certain points that may have caused any misperception among our public.

JESUS REY R. AVILLA
Assistant Secretary for Logistics, Acquisitions and Self-reliant Defense Posture
Department of National Defense