COA: X-ray trucks bought from China overpriced by P4.2-B

Carolyn Bonquin, ABS-CBN News

Posted at Aug 02 2016 01:08 PM | Updated as of Aug 02 2016 04:51 PM

Customs chief says x-rays can't detect illegal drugs

COA: X-ray trucks bought from China overpriced by P4.2-B 1
One of the mobile X-rays purchases by the Bureau of Customs in 2006 from a Chinese firm. Carolyn Bonquin, ABS-CBN News

MANILA - The Commission on Audit has asked the Bureau of Customs to review the contract and loan agreement for mobile X-ray machines purchased in 2006 after it was found to be ''exorbitantly overpriced'' by P4.215 billion.

The Philippine government paid P7.953 billion to Chinese firm Nuctech Co. Ltd. for 30 units of mobile X-ray equipment, through a loan agreement with the Chinese government.

But when COA asked for a quotation from another international supplier of non-intrusive container inspection scanners, it found that the government could have bought the X-ray machines for a cheaper price and an even better performance.

COA's quotation from the said supplier showed that an X-ray machine "with vastly superior performance" only costs P124.6 million each, for a total of P3.738 billion for thirty units.

The cheaper machines are said to have "a product designed to be utilized at sea ports that can scan trucks and containers five times the speed of the mobile X-rays that BOC have," COA's special audit read.

COA added, the excessive expenditures on the machines "added to the (National Government) in terms of foreign loans contracted and future repayments."

State auditors, however, clarified that the price inquiry was made despite difficulty in providing the accurate unit price and full specifications of the machines bought by the BOC upon quotations.


Aside from overpriced units, COA also found that the maintenance cost of the X-ray machines from Nuctech was also more expensive by P3.264 million compared to other suppliers.

Based on the records, Nuctech charged the government P1.119 billion for the repair and maintenance of 29 X-ray machine units from January 2009 to June 2015, averaging to P9.564 million per year while other international service providers only charge P6.3 million.

"Nuctech's maintenance cost is P3,264,628.17 or 1.51 times higher than the other international service provider/supplier," COA said.

"This annual difference in the cost of repairs and maintenance for each X-ray machine could have been saved and used to pay the loan incurred by the [National Government]."

COA also noted that the BOC failed to submit evaluation reports on the performance of Nuctech since the procurement of the scanners, which could have addressed deficiencies.

COA said the BOC should evaluate the purchase contracts with Nuctech, as well as the supply contract and loan agreement with China for possible reduction in the amount of the loaned, and price paid for the X-ray machines. The auditing body also asked BOC to bid out the contract for maintenance services.


Customs Commissioner Nicanor Faeldon said BOC will evaluate the efficiency and effectiveness of the machines before asking for a lower price.

Faeldon said the purchase was made under a Government-to-Government Agreement between the Philippines and China, which means a repricing would need a re-negotiation between the two countries.

The BOC has also refused to pay the annual maintenance fee until Nuctech can prove that the mobile X-ray machines has the capability to detect illegal items, such as prohibited drugs.

"The very alarming data is, in the past 10 years since 2006 to today, it has zero detection of...shabu and other drugs," Faeldon said.

"I cannot just arbitrarily recommend. I really need to evaluate. Kasi sa akin, kung wala talagang capability ito, it's not just P4 billion over pricing. How can I protect the border if our X-ray machines are inutil?"

The BOC cannot determine the complete performance of the machines because the supplier failed to submit the original copy of contract.

Faeldon said the Department of Budget and Management, not the BOC, initiated the purchase.

"It was not BOC who initiated this project, it was delivered to us. It's a DBM initiated procurement so we don't have any knowledge," he said.

Faeldon said reliable and capable X-ray scanners are needed to ensure proper collection of tariffs, and confiscate illegal shipments while the bureau is working on cleansing its ranks and imposing honesty from shippers.