Procurement! Observer’s! Guide! - World...

Procurement Observer’s Guide

2014

TABLE OF CONTENTS

Introduction................................................................................................................................. 1

Chapter 1 Who Can Observe Government Procurement Activities?...................................................................................................................................... 5

Chapter 2 What to Observe? .................................................................................................10

Chapter 3 Why Report? ..........................................................................................................33

Chapter 4 Code of Conduct for Observers ........................................................................36

Chapter 5 Tools and Instruments .......................................................................................40

Chapter 6 Other Suggested Activities ................................................................................45

Annex A Sample Form of Confidentiality Agreement...................................................50

INTRODUCTION

The Philippine Government spends hundreds of billions of pesos on the procurement of goods, infrastructure projects, and consulting services on a regular basis. This money comes from the budget that the Philippine Government appropriates out of its own revenues and from loans and grants extended by foreign sources such as multilateral development banks and bilateral donors. This amount of public expenditures alone underscores the need to ensure that public contracts are procured competitively with due consideration to economy and efficiency in a transparent and fair process free from any form of anomalies and irregularities attributed to the commission of graft and corruption. In 2001, the Office of the Ombudsman (Omb) estimated that USD48 billion had been lost to corruption in the last 20 years, an amount that could have paid for the total debt of the Philippines for the same period. The Commission on Audit (COA) conservatively estimates corruption loss at P2 billion per year. (World Bank, 2001; Thomton, 2006). In the area of public procurement, leakage is estimated by Procurement Watch, Inc. (as of 2001) at P95 billion or 68% of the budget deficit. Another study has said that 20% of the Philippine budget is lost to corruption each year. If translated to actual impact, in 2010, for instance when the country had 1.54 trillion budget, the 20% loss would be equivalent to P308.2 billion on an annual basis or P843 million on a daily basis. The amount could have been used to:

• Build an additional 598,446 classrooms; • Hire an additional 1.6 million teachers; or • Construct 127.78 kilometers of roads.

The table below shows that in a survey conducted by Social Weather Station, the respondents viewed that although public corruption was prevalent in revenue-‐raising functions of the government, a significant percentage viewed that the same is also true in government spending. Areas of Public Sector Corruption and Corresponding Percentage of Respondents: Number of people that think public sector corruption is: Due more to bad regulations 1 Due more to bad implementation 45 Equally due to bad regulations and bad implementation 47 Due neither to bad regulations nor bad implementation 7 Number of people that think public sector corruption is: More prevalent in government revenue-‐raising 3

2 | P a g e Number of people that think public sector corruption is: More prevalent in government spending 27 Equally prevalent in government revenue-‐raising and spending 67 Found neither in government revenue-‐raising nor spending 3 (Source: WB, 2001) SWS Enterprise Survey, August-‐ October 2000 The occurrence of corruption in public procurement remains prevalent despite the existence of public procurement related laws1 and the participation of the public for increased transparency. Although several statutes provide for citizens’ participation in public procurement exist, what was common in these laws was that Observers were made non-‐voting members of the Pre-‐qualification Bids and Awards Committee (PBAC), except in the PBAC of LGUs. Despite the space given to CSOs by these laws, the following were issues that had to be dealt with:

• Familiarity, closeness and regular interrelation of Observers with the members of the PBAC;

• Lack or absence of independent Observers; and • Non-‐mandatory nature of the submission of reports by Observers.

To address these concerns, Republic Act (R.A.) No. 9184, otherwise known as “Government Procurement Reform Act” (GPRA) was enacted into law in 2003. The new public procurement legal framework provides for an enhanced citizens’ participation to ensure that the procurement process is transparent, efficient and honest. Although observers are no longer part of the BAC, the law has emphasized and provided for increased accountability and wider CSO participation, alongside the principle of public monitoring. The GPRA is a remarkable legislative improvement from the plethora of laws that used to govern the Philippine Government procurement system. Consistent with the principles of transparency and public monitoring, the GPRA allowed third party observers to monitor how government units and agencies conduct their procurement activities. Thus, to enhance transparency, the BAC is required to invite at least two (2) observers -‐ one (1) from a duly recognized private group in a sector or discipline relevant to the procurement at hand, and the other from a non-‐government organization to sit in all stages of the procurement process -‐ in addition to the representative of the Commission on Audit. The law likewise requires that observers must not have any direct or indirect interest in the contract to be bid. The opportunity for citizens to participate in government procurement activities as observers has been considered a key development in the Philippine Government procurement system. It is a unique feature of the GPRA that the country takes pride in, as much as it takes pride in the vibrant community of civil society organizations 1 Presidential Decree No. 1594 and its IRR; Republic Act No. 7160 or the Local Government Code of the Philippines; Executive Order No. 262, S. 2000 and its IRR; and Executive Order No. 40, S. 2001 and its IRR.

(CSOs) and non-‐governmental organizations (NGOs). This development can be attributed to recognition by the government, its development partners and civil society that citizens and communities have important roles in enhancing accountability of public officials, reducing corruption and improving efficiency and effectiveness in the delivery of public service. The participation of independent CSO observers to enhance transparency and public monitoring of government procurement activities is a tool under the broader concept of “Social Accountability that has become an attractive approach to both the public sector and civil society for improving governance processes, service delivery outcomes, and improving resource allocation decisions. Over the last decade, numerous examples have emerged that demonstrate how citizens can make their voice heard and effectively engage in making the public sector more responsive and accountable.” (Social Accountability Sourcebook, World Bank). It was observed, however, that the presence of so many CSOs and NGOs is still insufficient to supply the demand for procurement observers. Aside from the high demand given the number of agencies, the lack of observers to cover the procurement of agencies is also due to the need for CSOs to fulfill the requirements of the law before becoming observers. Under the law, observers shall come from an organization duly registered with the Securities and Exchange Commission (SEC) or the Cooperative Development authority (CDA). The law further requires that the observers should meet the following criteria: a) knowledge, experience or expertise in procurement or in the subject matter of the contract to be bid; b) absence of actual or potential conflict of interest in the contract to be bid; and c) any other relevant criteria that may be determined by the BAC. (Section 13.2 of the revised Implementing Rules and Regulations (IRR) of R.A. 9184) As stated, the CSOs or NGOs need not only be registered with SEC or CDA but should also be knowledgeable in the procurement process or in the subject matter of the contract to be bid. To be knowledgeable in the procurement process, the CSOs or NGOs must necessarily undergo training in R.A. 9184 and its IRR. It is to this end that this Procurement Observers Guide (POG) seeks to contribute to that need for training of CSOs. Although the law can always be read and interpreted on its own, learning and having a clearer interpretation of each provision are better facilitated through translation into simpler terms in the form of a guide. Accordingly, this Guide seeks to simplify, in terms of presentation, the content of GPRA and its IRR with the aim that observers can understand the law easily. It is therefore to be used and read in conjunction with the GPRA IRR. This publication mainly addresses members of different CSOs and NGOs who intend to participate in the government procurement activities as observers. This POG likewise seeks to describe procurement principles and standards in a simple and clear manner, for those who are interested in getting involved in the government procurement activities but are not yet affiliated with any organization and for all those who intend to learn more about government procurement. Ultimately, this Guide presents an opportunity for responsible citizens and CSOs to put into practice the fundamental principle of democracy that citizens have the right to demand accountability and public officials have an obligation to be accountable.

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CHAPTER 1 WHO CAN OBSERVE GOVERNMENT PROCUREMENT

ACTIVITIES?

Section 16, Article XIII of the 1987 Philippine Constitution ensures that “the right of the people and their organizations to effective and reasonable participation at all levels of social, political, and economic decision-‐making shall not be abridged. The State shall, by law, facilitate the establishment of adequate consultation mechanisms.” This constitutional guarantee has been the basis for the creation of various development councils at the local level and the framework for the participation of third party observers in the government procurement system. This idea of citizen’s participation is consistent with the Government Procurement Reform Act’s (GPRA) general principle and policy of promoting transparency, accountability, efficiency, and public monitoring in government procurement. Accordingly, the presence of observers in the procurement process is a way to ensure adherence to the law and the prevention of graft and corruption. A. Who can be Procurement Observers?

Under R.A. 9184 and its IRR, there are three kinds of observers: (1) a representative of the Commission on Audit; (2) an observer from a duly recognized private group in a sector or discipline relevant to the procurement at hand (e.g., Philippine Contractors Association for infrastructure); and (3) an observer from a non-‐government organization (NGO). (Section 13 of R.A. 9184 and its IRR) This Guide shall use the term NGO in the same context as the term CSO, which is defined in National Budget Circular No. 5392 to include NGOs, people’s organizations, cooperatives, trade unions, professional associations, faith-‐based organizations, media groups, indigenous peoples movements, foundations and other citizen groups formed primarily for social and economic development, to monitor government programs and projects, engage in policy discussions, and actively participate in collaborative activities with Government.

2 Guidelines on Partnership With Civil Society Organizations and Other Stakeholders in the Execution of the National Budget issued on 21 March 2012.

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This Guide may be used by observers from recognized private groups insofar as it is applicable.

REMINDERS

It should be noted that the IRR of R.A. 9184 recognizes two (2) modes of NGO “participation” in public procurement, as shown in the following pertinent provisions:

1. Section 13 requires the presence of third-‐party NGO observers in all stages of the

procurement process to enhance transparency and thereby promote accountability and public monitoring.

2. Section 53.11 allows procuring entities to contract with NGOs through public bidding or negotiated procurement when an appropriation law or ordinance earmarks amounts to be specifically used for such purpose.

Awareness of this dual role of NGOs as independent third party observers of the procurement process and as bidders or providers of goods and services for government projects will allow better focus for the POG and prevent potential conflicts of interest among NGOs who are engaged to participate in public procurement.

In order to promote greater awareness and a more empowering participation of citizen stakeholders, qualified NGOs based in communities of project beneficiaries are encouraged to volunteer as observers in procurement activities in their localities. 1. Qualifications of an Observer

a. Member of an organization duly registered with the Securities and

Exchange Commission (SEC) or the Cooperative Development Authority (CDA);

REMINDERS

To encourage the participation of community-‐based procurement observers, they may affiliate themselves with registered NGOs.

b. Should have knowledge, experience and/or expertise in procurement or

in the subject matter of the contract to be bid;

c. Should have no actual or potential conflict of interest in the contract to be bid; and

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d. Should possess other relevant criteria that may be determined by the

Bids and Awards Committee (BAC) of the procuring entity concerned. (Section 13.2 of the IRR of R.A. 9184)

2. Observer’s Responsibilities

a. To familiarize himself/herself or to have sufficient knowledge of R.A.

9184 and its IRR;

b. To observe all stages of the procurement process; and

c. Under Sec. 13.4 of the IRR of the GPRA, observers should:

a. Prepare a report either jointly or separately indicating their observations made on the procurement activities conducted by the BAC for submission to the Head of the Procuring Entity (HOPE), copy furnished the BAC Chairman;

b. Submit their report to the procuring entity and furnish a copy of

to the GPPB and the Office of the Ombudsman/Resident Ombudsman; and

REMINDERS

The primary responsibility of the NGO observer is to prepare a report of his or her observations assessing the extent of the BAC’s compliance with the provisions of the IRR of R.A. 9184 and areas of improvement in the BAC proceedings, in line with the principles and intent of RA 9184 to promote public monitoring of the procurement process.

The report shall assess the extent of the BAC’s compliance with the provisions of the IRR and areas of improvement in the BAC’s proceedings. See Section 13.4(a)

If no report is submitted by the observer, then it is understood that the bidding activity conducted by the BAC followed the correct procedure. See Section 13.4(c)

Refer to Section D. Procurement Observer’s Report (POR) on page 42.

c. Immediately inhibit and notify in writing the procuring entity

concerned of any actual or potential conflict of interest in the contract to be bid.

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REMINDERS

Section 13 of R.A. 9184 prohibits observers of the procurement process from having direct or indirect financial or material interest in the contract to be bid out to prevent “conflict of interest” on the part of the observer. When the NGO observer is “involved in multiple interests which prevents an unbiased and impartial attitude toward the work to be done”, conflict of interest occurs. (Conflict of Interest, Definition of Terms, NBC No. 539).

The actual or potential conflict of interest is personal to the representative of the organization. It may not necessarily prohibit the same organization from sending a different but disinterested representative.

3. Observer’s Rights

Upon invitation by the concerned procuring entity’s BAC:

a. Attend any or all stages of the procurement process; b. Record what they have observed during any of the procurement

proceedings; c. Access the following procurement related documents upon

request and subject to signing of a Confidentiality Agreement3 (See Annex A. Sample Form of Confidentiality Agreement):

• Annual Procurement Plan (APP) and Project Procurement

Management Plan (PPMP);

• Minutes of the BAC Meetings; • Abstract of Bids;

• Opened Proposals. (Section 13.5 of the IRR of R.A. 9184);

and 3Confidentiality Agreement also known as a nondisclosure agreement (NDA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a legal contract between a government procuring entity and a volunteer or team of volunteer procurement observers that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to by third parties. It is a contract through which the parties agree not to disclose procurement information covered by the agreement. Section 13.5 of the IRR of RA 9184 requires that Observers sign a confidentiality agreement before they are allowed access to certain documents.

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• Post Qualification Summary Report.

4. Observer’s Accountability

While R.A. 9184 and its IRR are silent on observers’ accountability in case of failure to perform their duties and responsibilities or in case of inappropriate behavior during the bidding process, observers, and the organizations they represent, remain accountable and liable for any or all actions in violation of the procurement law, its associated rules, and other procurement-‐related statutes, rules, and regulations during the procurement process. Observers are accountable to the organizations they represent. Being authorized agents and/or members, they are bound by the internal rules and procedures of the organizations to which they belong. Hence, they are subject to such disciplinary actions and sanctions their respective organizations may mete out, when circumstances so warrant. In as much as the law requires that observers must have knowledge, experience and expertise in procurement or in the subject matter of the contract to be bid, NGOs are encouraged to provide the necessary training and orientation to their members before deploying them as observers. It is strongly recommended that a thorough and rigid screening be performed to ensure the integrity of the NGO observer. One possible consequence against errant observers is being disqualified from participating in the procurement process. Procuring Entities (PEs) may disqualify observers, or the NGO they represent under Section 13.2(c) of the IRR wherein the BAC of the PE concerned may impose any other relevant criteria applying R.A. 9184, which the observers shall meet before being able to participate as an observer. Moreover, errant observers are not precluded from being charged with a civil or criminal case, when the circumstances so warrant and all the requisites are present, under existing civil and criminal laws. In spite of the challenges that accountability poses on Observers, they should be fortified by the empowering thought that they are fulfilling an important and noble role as mature responsible citizens to bring about a strong, vibrant and functioning democracy that we all aspire for as a people.

CHAPTER 2 WHAT TO OBSERVE?

R.A. 9184 and its IRR states that Observers should be invited by the BAC in all stages of the procurement process. It mandates the presence of Observers in monitoring procurement and contract implementation as a means of improving transparency, accountability, public monitoring, and governance. Observers are now invited to monitor all stages of the procurement process. A. Competitive bidding process

In accordance with Section 10 of RA 9184 and its IRR, Procuring Entities shall adopt competitive bidding as the primary mode of procurement.

1. Procurement of Goods and Infrastructure Projects (showing the

latest allowable time) o

7 cd for goods and 4 cd for infra with an ABC amounting to P 50M 3 cd for goods and 2 cd for infra with

an ABC amounting to P 50M 10 cd

Issuance of a Notice to Proceed

Contract Signing

Issuance of

Notice of Award

7 cd (goods) and infra w/ an ABC above P50M from deadline for receipt of proposals (5 cd for infra w/ an ABC amounting to P 50M and below) 7 cd to 30 cd

12 cd to 30 cd 1 cd

1 cd 7 cd From 1st day of posting to bid submission

Detailed Bid Evaluation

Post-‐Qualification

Bid Submission

Opening of Technical Proposal (incl. eligibility docs)

Opening of

Financial Proposal

Advertisement/ Posting

Pre-‐Bid

Conference

Distribution/Sale of Bidding Documents

1

1

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2. Procurement of Consulting Services

Quality-‐Based Evaluation Procedure (showing the latest allowable time)

b.

Quality-‐Cost Based Evaluation Procedure (showing the latest allowable time)

Opening of Financial Proposal Negotiation Post-‐qualification Proposal Evaluation

and Ranking

Award of Contract

Submission of Proposals

Opening of Technical Proposal & Preliminary Examination

Pre-‐Bid Conference

Advertisement /Posting

Submission of LOI together with the application for eligibility

Submission of Eligibility

Requirements

Opening of Eligibility Envelope,

Eligibility Check

7 cd

not later than 7 cd not to exceed 20 cd

1 cd

Shortlisting HOPE Approval

1 cd

at least 12 cd

1 cd 10 cd 7 cd not more than 21 cd + 2 cd for HOPE approval

Negotiation Post-‐qualification Proposal Evaluation and Ranking

Award of Contract

Submission of Proposals

Opening of Technical Proposal & Preliminary Examination


Advertisement /Posting

Submission of LOI together with the application for eligibility

Submission of Eligibility

Requirements

Opening of Eligibility Envelope,

Eligibility Check

7 cd

not later than 7 cd not to exceed 20 cd

1 cd

Shortlisting HOPE Approval

1 cd

at least 12 cd

10 cd 7 cd not more than 21 cd + 2 cd for HOPE approval

Opening of Financial Proposal

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Observers are invited to participate in all stages of the procurement process starting from Pre-‐Bid Conference until the award of the contract and contract implementation.

Below is a more detailed discussion of each procurement stage/activity and the corresponding responsibilities and reminders that Observers should take into consideration:

STAGE/ACTIVITY DESCRIPTION

ADVERTISEMENT OF THE

INVITATION TO BID (IB) OR REQUEST FOR EXPRESSION OF INTEREST (REI)

(Section 21, RA 9184 and its IRR)

As mandated by law, the IB/REI should be advertised and posted. Except otherwise provided in Sections 21.2.2 and 54.2 of the IRR of R.A. 9184 and for the procurement of common-‐use goods and supplies, the IB/REI shall be advertised or posted in the following manner:

Medium

ABC

Newspaper of general nationwide circulation

PhilGEPS Website of PE

Conspicuous Place

Goods ≤ 2M

Infra ≤ 5M

Consulting ≤ 1M and/or ≤ 4 months

Goods > 2M

Infra > 5M

Consulting > 1M and/or > 4 months


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Receipt of Invitation from the Procuring Entity for Any Stage of the Bidding Process

(Section 13, R.A. 9184 and its IRR)

To enhance the transparency of the process, the BAC shall, in all stages of the procurement process, invite, in addition to the COA representative, at least two (2) observers, who have no right to vote, one from a duly recognized private group in a sector or discipline relevant to the procurement at hand, and the other from a non-‐government organization.

REMINDERS

• Implementing Agencies (IA) or Procuring Entities (PE) are required by law to invite Observers in writing at least three (3) calendar days before the date of the procurement activity.

• The absence of Observers will not nullify the BAC proceedings, provided that

they have been duly invited in writing. • The BAC observer should:

Upon receipt of the invitation personally or through mail, acknowledge receipt by indicating the name of the recipient; date of receipt; and by affixing her signature on the receiving copy; or

If the invitation is received through fax, the BAC observer should

acknowledge receipt in the same manner by sending the facsimile copy to the procuring entity with the abovementioned details; or

Call the procuring entity upon receipt of invitation to inform them that the same was already received. ,

• Inform the procuring entity if a representative will be sent, stating the name and her position in the organization. Observer should inquire about what transpired during the previous stage(s), and request for documents and list of Observer invitees (attended/unable to attend) in the stage(s) to be guided accordingly.

• Secure a copy of the bidding documents from the the Procuring Entity (PE).

• Whether invited or not, the Observer may get hold of a copy of the Annual

Procurement Plan (APP) to check if the procurement activity is indicated therein. The APP should be available on the website of the government agency. There are now transparency provisions under the General Appropriations Acts (GAA). In the case of local government units, the APP is also required to be posted in at least 3 publicly accessible and conspicuous places or newspaper of general circulation in their locality, as required by laws, rules and regulations on

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transparency and disclosure such as: − DILG Memorandum Circular 2011-‐95 Seal of Good Housekeeping for Local

Governments CY 2011 Implementation, − MC 2011-‐134 Amending DILG MC 2011-‐08, Series 2010 Titled Full

Disclosure of Budget and Finances and Bids and Public Offerings, As Amended.

• Write your comments/remarks/observations in the Observer’s Report.

Inquire for the PhilGEPS reference number and check for posting in the PhilGEPS Website (www.philgeps.net) and the number of calendar days required for its posting/advertisement [seven (7) calendar days or longer].

Verify whether the IB/REI is posted in the Procuring Entity’s Bulletin Boards (conspicuous place) reserved for this purpose.

In order to validate whether the bid notice was published and/or posted, the Observer can request for the date when the opportunity was advertised or posted. In case the bid notice is required to be advertised in a newspaper, the Observer, whenever applicable, may request for a copy of the newspaper advertisement.

Upon seeing a copy of the advertised or posted bid notice, the Observer should also determine the completeness of the information indicated therein. (Rule VII, Section 21, IRR of RA 9184) provided in the IB/REI.

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What is PhilGEPS? The Philippine Government Electronic Procurement System serves as the primary and definitive source of information on government procurement. All procuring entities are required to utilize the system for the procurement of common use supplies and to post all procurement opportunities and results therein. Some of its features include:

• Electronic Bulletin Board • Registry of Suppliers, Contractors and Consultants • Electronic Catalogue • Virtual Store • Electronic Payment • Electronic Bid Submission

What information should be included in the Invitation to Bid (IB)? For the procurement of:

• Goods, the name of the contract to be bid and a brief description of the goods to be procured;

• Infrastructure projects, the name and location of the contract to be bid, the

project background and other relevant information regarding the proposed contract works, including a brief description of the type, size, major items, and other important or relevant features of the works; and

• Consulting services, the name of the contract to be bid, a general description

of the project and other important or relevant information. For all types of procurement:

• A general statement on the criteria to be used by the procuring entity for the eligibility check, short listing of prospective bidders, in the case of the procurement of consulting services, the examination and evaluation of bids, post qualification, and award;

• The date, time and place of the deadline for the submission and receipt of eligibility requirements, the pre-‐bid conference, if any, the submission and receipt of bids, and the opening of bids;

• Approved Budget for the Contract (ABC) or the Estimated Project Cost (EPC) as the case may be, for the items, infrastructure projects or consulting service to be bid;

• The source of funding; • The period of availability of Bidding Documents, the place where it may be

secured, the website where it may be downloaded, and where applicable, its price;

• The contract duration or delivery schedule;

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• The names, address, telephone number, facsimile number, e-‐mail and website addresses of the concerned procuring entity, as well as its designated contact person; and

• Such other necessary information deemed relevant by the procuring entity.


PRE-BID CONFERENCE


The pre-‐bid conference is an opportunity for the potential bidders to seek clarification and for the BAC to explain the eligibility requirements and the technical and financial components of the contract to be bid.

MANDATORY DISCRETIONARY

For contracts with an ABC of One Million Pesos (P1,000,000.00) or more, the BAC shall convene at least one pre-‐bid conference.

For contracts with an ABC of less than One Million Pesos (P1,000,000.00), pre-‐bid conferences may be conducted at the discretion of the BAC.

Subject to the approval of the BAC, additional pre-‐bid conference may also be conducted upon written request of any prospective bidder.

Attendance of bidders is NOT mandatory. At the option of the Procuring Entity, only those who have purchased the Bidding Documents shall be allowed to participate in the pre-‐bid conference and raise or submit written queries or clarifications. Statements made during the conference shall not modify the terms of the Bidding Documents, unless it is specifically identified in writing as an amendment and issued as a Supplemental/Bid Bulletin. Supplemental/Bid Bulletins may be issued upon the procuring entity’s initiative for purposes of clarifying or modifying any provision of the Bidding Documents at least 7 calendar days before the deadline for the submission and receipt of bids.

REMINDERS

• Conduct research on the procurement project involved and identify the items to watch out for, such as reasonableness of the Approved Budget for the Contract

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(ABC) or Estimated Project Cost (EPC) as the case may be, generality of technical specifications/scope of work/terms of reference, and conformity of the Bidding Documents with RA 9184 and its IRR, its associated rules and procedures, the standardized Philippine Bidding Documents, and the Generic Procurement Manuals.

• Pre-‐bid conference (PBC) must be held at least twelve (12) calendar days before

the deadline for the submission and receipt of bids, or at least thirty (30) calendar days before the deadline for the submission and receipt of bids if a longer period is determined by the Procuring Entity as necessary by reason of the method, nature, or complexity of the contract to be bid or when international participation will be more advantageous to the government.

• Check if:

Pre-‐bid conference is mandatory based on the ABC or EPC, as the case may be.

All the bidders who have expressed their interest to participate (either by downloading the bidding documents from the PhilGEPS website or those who purchased the bid documents) were invited in cases where a PBC is not mandatory but the BAC decides to hold one. Take note that the presence of bidders is not required.

The eligibility, technical, and financial requirements of the procurement at hand were thoroughly discussed.

Clarifications and questions were encouraged and entertained.

Clarifications and questions not immediately addressed during the conference were answered through the issuance of a supplemental/bid bulletin.

• If there is any Supplemental/Bid Bulletin, check if:

It was posted on the PhilGEPS and the PE’s website.

It was issued not later than seven (7) calendar days before the deadline of the submission of bids.

It was provided to all prospective bidders who had bought bidding documents.

• The Pre-‐bid Conference proceedings should be recorded and minutes must be made available to all participants not later than three (3) calendar days after the conference.

• Bidders who have submitted their bids prior to the issuance of the supplemental/bid bulletin should be informed and allowed to modify or withdraw their bids.

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RECEIPT AND OPENING OF BIDS (Section 25, RA 9184 and

its IRR)

Bidders shall simultaneously submit their bids in two (2) separate sealed envelopes, on the date, time and place specified in the IB. The BAC shall immediately open the bids after the deadline for submission. Two-Envelope System 1st Envelope

Eligibility requirements: Class “A” Documents − Legal (Registration certificate ,

Mayor’s permit, Tax Clearance) − Technical (Statement of all on-‐going

and completed contracts, PCAB license and registration for infrastructure projects, statement of consultant’s nationality, professional registration, curriculum vitae for consulting services)

− Financial (audited financial statement, NFCC).

Class “B” Document − Valid joint venture agreement (JVA) − For foreign bidders, Class “A”

Documents may be substituted by the appropriate equivalent documents, if any, issued by the country of the foreign bidder concerned.

Bid security Technical

specifications/Project Requirements

Omnibus sworn statement

2nd Envelope

Financial Bid Form

REMINDERS

Review the Bidding Documents.

Review Rule VIII (Receipt and Opening of Bids) of the IRR of R.A. 9184.

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Make sure to be present before the scheduled opening of bids.

• Check if:

All the bids were submitted on/before the published deadline.

The BAC did not accept late bids.

The following periods from the last day of posting of IB/REI up to the submission and receipt of bids have been observed by the BAC:

Type of Procurement Maximum Period Goods Forty five (45) calendar days Infrastructure Projects: Fifty (50) million and below ABC Above fifty (50) million ABC

Fifty (50) calendar days Sixty Five (65) calendar days

Consulting Services Seventy five (75) calendar days

In the case of projects funded by the ADB and the WB, a minimum (instead of a maximum) period for the preparation of bids is required. In the case of ADB funded projects bidders shall be given a minimum period to prepare and submit bids of 4 weeks, counted from the date of invitation to bid or the date of availability of bidding documents, whichever is later. For WB assisted projects, a period of at least thirty (30) days for bid preparation shall be required from the date of invitation to bid or the date of availability of of bidding documents, whichever is later. As a general rule, the earliest possible time for bid preparation is less than 30 days. However, if the procuring entity determines that by reason of the method, nature, or complexity of the contract to be bid or when international participation will be more advantageous to the GOP, the time for bid preparation may be more than 30 days.

The bid box was properly sealed/locked so that no one can easily open or

have access to it.

The BAC members comprising a quorum were present before the start of the bidding.

The checklist on the required documents for the eligibility check is reflected

on the board and/or in a document prepared and distributed to members of the BAC, BAC Secretariat, the TWG, and Observers.

Prospective bidders submitted their eligibility envelopes along with their

technical and financial envelopes properly sealed and duly marked.

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All bids are still properly sealed before opening.

The BAC used non-‐discretionary “pass or fail” criterion in determining the

completeness of each bidder’s eligibility requirements or statements.

Remaining bid envelopes of bidder/s declared ineligible by the BAC, when one or more of the required documents was found to be missing, incomplete or patently insufficient, shall have been immediately returned to the bidders unopened.

For ADB assisted projects the following rule applies: ITB Clause 24.2 - During Bid opening, if the first bid envelope lacks any of the documents listed in the ADB BDS 12.1(a), the bid shall be declared non-responsive but the documents shall be kept by the Procuring Entity. Only the unopened Price Proposal shall be returned to the Bidder. For WB assisted projects the following rule applies: ITB Clause 24.2 - During Bid opening, if the first envelope lacks any of the documents listed in World Bank BDS 12.1(a), the bid shall be declared non-responsive but the documents shall be kept by the Procuring Entity. The financial proposals in the second envelope of all the bidders shall be read for record purposes. The first and second envelopes shall not be returned to the bidders.

If a bidder modifies its bid, it must be done before the deadline for submission and receipt of bids. Modification shall be done through sending of another bid equally sealed, properly identified, linked to the original bid and marked as “modification”, and stamped “received” by the BAC.

A bidder may be through through a letter, withdraw its bid, before the

deadline for the receipt of bids. The bidder shall not be permitted to submit another bid, directly or indirectly, for the same contract.

In case the BAC declares a failure of bidding in this stage of the procurement

process, the BAC’s declaration of failure should be based on the following grounds:

− No prospective bidder submits a Letter of Intent (in the case of consulting services) or no bids are received; or

− All prospective bidders are declared ineligible.


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BID EVALUATION (Section 30, RA 9184 and

its IRR)

To determine the Lowest Calculated Bid (LCB) or Highest Rated Bid (HRB), the BAC shall conduct a detailed evaluation using non-‐discretionary criteria in considering the completeness of bids and arithmetical corrections. Bids shall be evaluated on an equal footing to ensure fair and competitive bid comparison. A NO CONTACT RULE shall be observed (Refer to Rule IX, Sections 32 & 33 of the IRR of R.A. 9184). Generally, members of the BAC, including its staff and personnel, as well as its Secretariat and TWG, are prohibited from making or accepting any communication with any bidder regarding the evaluation of their bids until the issuance of the Notice of Award (NOA). However, the BAC, through its Secretariat, may ask the bidder in writing for the clarification of its bid. All responses to requests for clarification shall be likewise in writing.4 The BAC shall prepare an Abstract of Bids for procurement of goods and infrastructure, or a ranking of short-‐listed bidders in the case of procurement for consulting services, as calculated, which shall be signed by all the members of the BAC who are present.

REMINDERS

• Invitation to attend the Bid Evaluation process should have been received at least three (3) calendar days prior to the activity.

• Documents pertinent to the evaluation should have been received together with the invitation.

• All bids must be accompanied by a bid security in the form and amount prescribed in Section 27.2 of the revised IRR of R.A. 9184. Otherwise, the BAC must automatically disqualify the bid.

• Observe the processes and procedures employed by the BAC and follow closely

the manner by which each bidder is assessed. • The evaluation of bids was completed no later than seven (7) calendar days

from the deadline of the receipt of the proposals. • Review the accuracy of the computations.

4 Section 32.1 of the IRR of R.A. 9184

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• In case of discrepancies, the following shall prevail: -‐ Words over figures; -‐ Unit prices over total prices; -‐ Actual Sum of prices of component items over stated total price; and -‐ Bill of quantities over detailed estimate.

• Indicating no price is considered as non-‐responsive.

• Specifying a “0” or “-‐” means it is offered for free. • Unless the Instruction to Bidders (ITB) specifically allows partial bids, those not

providing all required items shall be considered non-‐responsive.

• In case the BAC declares a failure of bidding at this stage of the procurement process, it shall be by reason of failure by all the bids to comply with all the bid requirements, or in the case of consulting services, there is no successful negotiation.

• Observers should also follow the NO CONTACT RULE.

Bid Security Form of Bid Security Amount of Bid Security

(Equal to Percentage of the ABC) a) Cash or cashier’s/manager’s check

issued by a Universal or Commercial Bank

b) Bank draft/guarantee or irrevocable letter of credit issued by a Universal or Commercial Bank5

Two percent (2%)

c) Surety bond callable upon demand issued by a surety or insurance company duly certified by the Insurance Commission as authorized to issue such security

Five percent (5%)

d) Any combination of the foregoing Proportionate to share of form with respect to total amount of security.

For biddings conducted by local government units (LGUs), the prospective bidder may also submit bid securities in the form of casher’s/manager’s check, bank draft/guarantee, or irrevocable letter of credit from other banks certified by the BSP as authorized to issue such financial instrument. A bidder may submit a Bid Securing Declaration in lieu of a bid security if allowed in the Bidding Documents. A Bid Securing Declaration is an undertaking which states, among others, that the bidder shall enter into contract with the procuring entity and furnish the required performance security within ten (10) calendar days, or less, as indicated in the Bidding Documents, from receipt of the Notice of Award (NOA). The bidder commits to pay the corresponding fine and be suspended for a period of time from being qualified to participate in any government procurement activity in the event it violates any of the conditions stated therein as required by the Guidelines issued by the

5 If issued by a foreign bank, that it shall be confirmed or authenticated by a Universal or Commercial Bank. 6 Section 27.5 of the revised IRR of RA 9184

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GPPB.6


POST-QUALIFICATION


Three (3) days after receiving the notice from the BAC that the bidder has the LCB/HRB, the bidder shall submit the following: a) Latest income and business tax returns; b) Certificate of PhilGEPS registration; and c) Other appropriate licenses and permits required by law

and stated in the Bidding Documents. Note that failure to submit the above requirements on time or a finding against the veracity of such shall be a ground for the forfeiture of the bid security and disqualification of the bidder for award. The BAC shall validate and ascertain all the statements and documents submitted by the LCB.7 The BAC shall declare the LCB as the LCRB or the HRB as the HRRB if it passes post qualification.

REMINDERS

Be prepared to join members of the BAC, TWG, and BAC Secretariat in going to the appropriate place where they need to verify, validate, or ascertain the veracity of statements and documents submitted by the bidder; this includes the sworn affidavit or Omnibus Sworn Statement required under Section 47, Rule XV, of the IRR with regard to the disclosure of relations by bidders.

• If the situation warrants, conduct additional research to ascertain questionable statements and documents submitted by the bidder.

• The BAC should verify, validate and ascertain the following:

That the bidder with the LCB was not included in any government

Blacklist.

The BAC should undertake verification and validation on the sufficiency of the bid security as to type, form, amount, wording and validity period.

The BAC should verify, validate and ascertain the legality of the licenses

and agreements, among others, submitted by the bidder with the LCB.

• The Procuring Entity as well as the bidders, suppliers and consultants shall

7 Refer to the Public Bidding Checklist for a detailed manner on conducting post-qualification.

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observe the highest standard of ethics during the procurement and execution of the contract. Clause 3, Instruction to Bidders (ITB), Philippine Bidding Documents (PBD) for Goods, Infrastructure Projects and for Consulting Services 4th Edition, defines “corrupt practice”, “fraudulent practice”, “collusive practices”, “coercive practices”, and “obstructive practice”. The PE will reject a proposal for award if it determines that the Bidder recommended for award has engaged in any of the practices mentioned in Clause 3 of the PBDs for purposes of competing for the contract.

• If the bidder with the LCB/HRB fails the criteria for post-‐qualification, the BAC

should immediately notify the bidder in writing of its post-‐disqualification and the grounds therefor.

• The same post-‐qualification process should be done by the BAC to the bidder with the next LCB/HRB until the LCRB/HRRB is determined for the award.

• At this stage, the failure of bidding may only occur if no bidder passed the post

qualification stage. Other than that, there should be no other reason for the declaration of a failure of bidding.


AWARD OF CONTRACT


The BAC recommends to the Head of the Procuring Entity (HOPE) that the contract be awarded to the bidder with the Lowest Calculated and Responsive Bid (LCRB) or Highest Rated and Responsive Bid (HRRB). In case of approval, the HOPE issues the Notice of Award (NOA). The NOA should be posted in the PhilGEPS’ website, PE’s website, and in conspicuous places within the PE’s premises within three (3) calendar days from its issuance. Within ten (10) calendar days from receipt of the NOA, the winning bidder shall submit the Joint Venture Agreement, if applicable; post the required Performance Security and both parties shall enter into contract provided that all the documentary requirements are complied with. Refer to Sec. 39 of the IRR of R.A. 9184 for a more detailed description of the requirements for a Performance Security. The Notice to Proceed (NTP), together with a copy of the approved contract, shall be issued to the successful bidder within three (3) calendar days from the date of approval of the contract by the appropriate government approving

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authority. The contract’s effectivity date shall be provided in the NTP by the PE. The effectivity date should not be later than seven (7) calendar days from its issuance. Through the BAC Secretariat, the PE shall post a copy of the NTP and the approved contract in the PhilGEPS website or PE’s website within 15 calendar days from the issuance of the NTP.

REMINDERS

• Check if the NOA and NTP were posted in the PhilGEPS website, PE’s website, and in conspicuous places within the PE’s premises within the required calendar days after its issuance.

• The decision of the HOPE or his/her duly authorized representative whether or

not to award the contract was made within seven (7) calendar days from the determination and declaration by the BAC of the LCRB.

• The BAC should notify all losing bidders of their decision in writing within the

same period.

• Failure of bidding at this stage of the procurement process may be declared by the BAC in case the bidder with the LCRB or HRRB refuses, without justifiable cause, to accept the award of contract, and no award is made in accordance with Section 40 of R.A. 9184 and its revised IRR.

• If the organization’s monitoring work extends to project implementation,

compile all documentation/reports on procurement observation work and transfer these to the person/s in charge of monitoring project implementation.

Performance Security Forms of Performance Security Amount of Performance Security

(Equal to percentage of the total contract price) a) Cash, cashier’s/ manager’s check, bank draft/ guarantee confirmed by a universal or commercial bank b) Irrevocable letter of credit issued by a Universal or Commercial Bank8

Goods and Consulting Services-‐ five percent (5%) Infrastructure Projects-‐ Ten percent (10%)

c) Surety bond upon demand issued by a surety or insurance company duly certified by the Insurance Commission

Thirty percent (30%)

d) Any combination of the foregoing. Proportionate to share or form with respect to total

8 If issued by a foreign bank, that it shall be confirmed or authenticated by a Universal or Commercial Bank.

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amount of security. For biddings conducted by local government units (LGUs), the prospective bidder may also submit performance securities in the form of cashier’s/manager’s check, bank draft/guarantee, or irrevocable letter of credit from other banks certified by the BSP as authorized to issue such financial instrument. B. Procurement Timelines

Timelines for the Procurement of Goods and Infrastructure Projects and Consulting Services (Annex C of the IRR)

• Earliest Allowable Time- Goods

• Latest Allowable Time-Goods

Procurement of Infrastructure Projects with an ABC of PhP 50 Million and below- Latest Allowable Time

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Procurement of Infrastructure Projects with an ABC of above PhP 50 Million- Latest Allowable Time

• Earliest Allowable Time-Consulting Services

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• Latest Allowable Time – Consulting Services

C. Alternative Methods of Procurement

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Observers are required to be invited in the conduct of alternative procurement methods of Limited Source Bidding and Negotiated Procurement (in the case of two failed biddings).

Below is a more detailed discussion of each alternative method of procurement and the corresponding responsibilities and reminders that Observers should take into consideration:

ALTERNATIVE MODE DESCRIPTION

LIMITED SOURCE BIDDING

As defined under Section 49 of the IRR of RA 9184, Limited Source Bidding, otherwise known as selective bidding, is a method of procurement of goods and consulting services that involves direct invitation to bid by the procuring entity from the list of pre-‐selected suppliers or consultants with known experience and proven capability on the requirements of the particular contract. This alternative method of procurement may be employed under any of the following conditions: a) Procurement of highly specialized types of goods (e.g., sophisticated defense equipment, complex air navigation systems, coal) and consulting services where only a few suppliers or consultants are known to be available, such that resorting to the public bidding method will not likely result in any additional suppliers or consultants participating in the bidding; or

b) Procurement of major plant components where it is deemed advantageous to limit the bidding to known qualified bidders in order to maintain uniform quality and performance of the plant as a whole.

The pre-‐selected suppliers or consultants shall be those appearing in a list maintained by the relevant government authority that has expertise in the type of procurement concerned. The list of pre-‐selected suppliers or consultants shall be updated periodically. A copy of the list shall be submitted to, and maintained updated with, the GPPB. According to Section 49.4 of the IRR of RA 9184, “all other procedures for competitive bidding shall be undertaken, except for the advertisement of Invitation to Bid/Request for Expression of Interest under Section 21.2.1 of this IRR.)”. This means that the requirement to invite independent observers from COA, and two (2) others from a duly recognized private group in a sector or discipline

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relevant to the procurement at hand and a non-‐government organization (NGO) shall apply to all the other stages/procedures. Note: For a complete understandin of the requirements for the conduct of Limited Source Bidding, please refer to the “Guidelines Amending the Pre-‐Selection Procedure in the Conduct of Limited Source Bidding”, GPPB Resolution No. 06-‐2012 dated 30 March 2012.

REMINDERS

• The Procuring Entity through the BAC shall request the presence of the Observers by sending them invitation letters at least three (3) calendar days before the date of the procurement stage/activity. In the case of limited source bidding this should be at least three (3) days before the direct invitation to bid is issued by the procuring entity to prospective bidders drawn from the list of pre-‐selected suppliers or consultants.

• Observers should be vigilant and verify whether the conditions for limited source bidding as established in the IRR of R.A. 9184 were met and that the resort to such method was justifiable.

• Observers should also determine whether the pre-‐selection of suppliers and consultants are in accordance with the procedures provided for in the IRR and the Guidelines.

• Observers should be guided by procedures applicable to procurement stages for competitive bidding from the conduct of a pre-‐bid conference to award of the contract.

• The Procuring Entity as well as the bidders, suppliers and consultants shall observe the highest standard of ethics during the procurement and execution of the contract.

• The BAC should ascertain that all Bidders found to have conflicting interests are disqualified to participate in the procurement at hand. (Paragraph 4, Instruction to Bidders, PBDs for Goods, and Paragraph 2, Instruction to Bidders, PBDs for Consulting Services).

• It should be verified by the BAC that the requirements of Section 47 of the IRR with regard to the disclosure of relations by bidders are complied with. The Observer should satisfy himself that any bidders related within the third civil degree of consanguinity or affinity to the HOPE, members of the BAC, the TWG, and the BAC Secretariat, the head of the PMO or the end-‐user unit, and the project consultants, are automatically disqualified.

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Clause 3, Instruction to Bidders (ITB), Philippine Bidding Documents (PBD) for Goods, Infrastructure Projects and for Consulting Services 4th Edition, defines “corrupt practice”, “fraudulent practice”, “collusive practices”, “coercive practices”, and “obstructive practice”. The PE will reject a proposal for award if it determines that the Bidder recommended for award has engaged in any of the practices mentioned in Clause 3 of the PBDs for purposes of competing for the contract.

ALTERNATIVE MODE

DESCRIPTION

NEGOTIATED PROCUREMENT – TWO FAILED BIDDINGS

Negotiated Procurement is a method of procurement that may be resorted to under the extraordinary circumstances provided in Section 53 of RA 9184 and its IRR, whereby the PE directly negotiates a contract with a technically, legally, and financially capable supplier, contractor, or consultant. The alternative method of negotiated procurement is allowed in a case of two failed biddings. This occurs when there has been failure of public bidding for the second time as provided in Section 35 of the Act and the IRR. In the conduct of a negotiated procurement in case of two (2) failed biddings, Section 53, Para 53.1.6 requires that observers shall be invited in all stages of the negotiations.

REMINDERS

• The Procuring Entity through the BAC shall request the presence of the Observers by sending them invitation letters at least three (3) calendar days before the date of the procurement stage/activity. In the case of negotiated procurement after two (2) failed biddings this should be at least three (3) days before the direct invitation to engage in negotiations is issued by the procuring entity to a short list of selected suppliers, contractors or consultants potential bidders who shall be of sufficient number to ensure effective competition.

• Observers should be vigilant and ascertain whether the BAC’s declaration of two (2) failed biddings are in accordance with Section 35 -‐ Failure of Bidding of the IRR of RA 9184.

• Observers should also review and verify from the Minutes of the Meeting and/or Bid Evaluation Reports of the previous two (2) failed biddings whether these were conducted in accordance with the bidding procedures specified in the IRR of RA 9184, especially if no independent CSO Observers were previously invited.

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• The BAC shall conduct a mandatory review of the terms, conditions,

specifications and cost estimates as prescribed in Section 35 of the IRR of RA 9184 and agree on minimum technical specifications, and if necessary, adjust the ABC, subject to the required approvals.. However, the ABC cannot be increased by more than twenty percent (20%) of the ABC for the last failed bidding.

• In the case of infrastructure projects, bona fide contractors licensed with the

CIAP whose eligibility documents are on file with the procuring entity concerned or the Department of Public Works and Highways (DPWH) Contractors’ Registry, as the case may be, and who have been classified under the type of contract/project where the subject contract falls are eligible to be invited for negotiation. Other contractors not previously deemed eligible may also apply for eligibility.

• Observers should ascertain that the Procuring Entity maintains a registry of

suppliers, contractors, and consultants which shall be the basis for drawing up the short list and/or selecting the suppliers, contractors, and consultants for negotiations.

• The procuring entity should see to it that any and all information relative to the negotiations that are communicated on an equal basis to all other suppliers, contractors, or consultants engaging in negotiations with the procuring entity relative to the procurement.

• The procuring entity shall select the successful offer on the basis of the best and

final offers of the suppliers, contractors or consultants remaining after negotiation proceedings which meets the PE’s minimum technical requirements without exceeding the ABC.

• The Procuring Entity as well the suppliers, contractors and consultants selected

for negotiations observe the highest standard of ethics during the procurement and execution of the contract, and that the principles of transparency, accountability, economy and efficiency are followed.

CHAPTER 3 WHY REPORT?

As mentioned in the introduction to this Guide, the provision allowing Observers in government procurement activities has been considered a noble and exceptional feature of the GPRA that other countries admire. It was intended to enhance and promote transparency, accountability and efficiency in procurement. The presence of CSOs and other stakeholders in the procurement activities ensures public oversight and monitoring of the procurement process. A. Significance of an Observer’s Report

Preparing and filing an Observer’s Report is significant in so many ways.

1. Feedback to the Procuring Entity

Aside from serving as documentation of the conduct of the procurement process, including any irregularities committed therein, the filing of the Observer’s Report is a means for the government agencies concerned to improve their processes with regard to gaps and deficiencies observed. Reports and feedbacks from observers, whether positive or negative, would give procuring entities an opportunity to address identified challenges and sustain observed strength.

2. Ensuring Integrity

The filing of an Observer’s Report can result to the filing of the corresponding administrative or criminal complaint against BAC Members, the BAC Secretariat or TWG, or anyone involved in the procurement process found violating any provision of R.A. 9184 and its revised IRR, R.A. 3019 (“Anti-‐Graft and Corrupt Practices Act”), or R.A. 6713 (“Code of Conduct and Ethical Standards for Public Officials and Employees”). A bidder who commits a violation of RA 9184 and its revised IRR may be held criminally liable and may also be blacklisted from participating in all government procurement activities. Accordingly, those who do not deserve to be involved in government procurement are effectively weeded out from the process. Since the Office of the Ombudsman is furnished a copy of the Observer’s Report, administrative or criminal complaints against erring procurement officials and private entities colluding with them can be acted upon by

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the authorities concerned. With the presence of Observers in the procurement activities, officials may capitalize on this opportunity to improve their procurement processes and strengthen their capacity towards a more efficient, transparent, competitive and accountable procurement regime.

3. Policy Changes and Improvements

Since a copy of the Observer’s Report is likewise given to the GPPB, it can also serve as an effective tool for procurement policy change, enhancement and development. R.A. 9184, including its revised IRR and other associated rules and procedures, like any other law, needs constant study and review to ensure that the policies the law seeks to enforce are still attuned with the times and the needs of the government. Through the accurate documentation made by independent Observers, policy changes and improvements can be effected to make R.A. 9184 and its revised IRR more reflective of the needs in the government and its citizens.

B. Challenges in Filing Observer’s Report

As early as 2006, the Office of the Ombudsman crafted Department Order No. 66, which institutionalized a feedback and complaints mechanism designed to specifically address procurement-‐related cases. Notwithstanding such mechanism, available reports have it that Observers failed to effectively utilize such feedback mechanism due to the apparent comfort to provide only verbal feedback to agencies. The Bureau of Resident Ombudsman (BRO) has since been the keeper of the procurement reports filed by Observers or CSOs. However, exact figures on the number of reports filed in the Ombudsman are not available. It was even reported that only two (2) reports have been received by the Ombudsman in 2008, and the reports are not even substantial. On the other hand, the GPPB receives a very small number of Observer’s Reports every year. The GPPB received only four (4) reports in 2010, eight (8) in 2011, and one (1) to date. The figures above glaringly shows that if we truly want to achieve transparency, accountability, and efficiency in government procurement, gathering of information and filing of Observer’s Reports is one area that the CSOs or NGOs must develop and improve. While preparation and submission of reports may be tedious and cumbersome, continuous training and capacity building would address these weaknesses. Another challenge faced by Observers in filing Observer’s Reports is the power and authority given to them by law. It has been cited that the ability to disclose or hide irregularities immediately bestows Observers with significant responsibility and this potentially opens up new avenues for corruption or threats. This threat however, is mitigated by safeguards such as the Observer’s execution of a Conflict of Interest Form and by the fact that in addition to the

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two (2) independent observers a duly recognized private group in a sector or discipline relevant to the procurement at hand, a representative from the COA shall likewise be invited.

CHAPTER 4 CODE OF CONDUCT FOR OBSERVERS

A. Code of Conduct

Aside from being keen on the procurement process and taking note of how consistent the procuring entity relative to compliance with the procurement law, rules, and regulations, it is also important for an Observer to follow a Code of Conduct:

1. Respect for the Rule of Law.

In the performance of their duties, and at all times, Observers must respect the laws and the authority of the agencies charged with administering the procurement process. Observers must likewise maintain a respectful and cordial attitude toward procurement officials and other government officials.

2. Professionalism.

Observers should conduct themselves with a high degree of professionalism at all times. Observers must undergo training so as to acquire the degree of procurement expertise and knowledge required by the law. They must, at all times, uphold their ethical and moral obligations as Procurement Observers.

3. Competence.

Observers must exercise utmost efficiency and effectiveness in the performance of their duties and responsibilities. Observers must ensure that all of their observations are true, accurate and well-‐documented for the effective monitoring of the procurement process.

4. Dedication.

Observers must show the highest degree of commitment and dedication in the performance of their duties and responsibilities. They should uphold the guiding principles of R.A. 9184 in the performance of their duties, i.e. accountability, transparency, efficiency, etc., and encourage adherence by others as well.

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5. Honesty and Integrity.

Observers should conduct themselves with utmost integrity. They must have the trust and confidence of the BAC. In so doing, they should help maintain and enhance public confidence in the integrity of the procurement process and advance the good of the community by being objective and acting in accordance with the spirit and letter of the law.

6. Diligence.

Observers should exercise proper diligence and attention in the performance of their duties and obligations.

7. Accountability.

Observers should be answerable or responsible to the public, as well as to the organization they represent, for their actions and decisions, and the consequences thereof, in the performance of their duties and obligations as Observers.

8. Punctuality.

Observers must be punctual in their attendance in the bidding activities. They must fulfill their reportorial obligations on time so as not to delay any action on the part of the agencies in charge of monitoring compliance and/or investigating irregularities and violations of the law. Non submission of report by the observer shall mean that the bidding activity conducted by the BAC followed the correct procedure.

9. Impartiality.

Observers’ judgments must be based on the highest standards for accuracy of information and impartiality of decision-‐making. CSOs and NGOs to which the Observers belong must ensure their neutrality and independence at all times. Observers must always be objective in the appreciation of facts, letting go of personal beliefs and biases. Potential and actual conflicts of interest must always be disclosed by the Observer’s to the Procuring Entity concerned.

10. Proper Personal Behavior.

Observers must maintain proper personal behavior at all times. Observers must always exercise sound judgment in their personal interactions with BAC Members, Secretariat, TWG and other officials of the Procuring Entity concerned. Proper attire and decorum must be followed while performing their duties.

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B. Prohibited Acts

1. Prohibition on Conflict of Interest

The Observer has the duty to be honest about his/her qualifications, and about any circumstance that may lead to a conflict of interest. Protocols must be laid down within the CSOs or NGOs on preserving their neutrality and independence.

2. Prohibition on Kickbacks and Acceptance of Gratuities

Observers are prohibited to solicit or assist in securing a contract for a commission, brokerage or contingent fee or the promise of such payments, or non-‐monetary benefits or the promise of such benefits. Observers are likewise prohibited to solicit and accept gratuities, favors or anything of monetary and non-‐monetary value, including meals and rides, from contractors, potential contractors, or parties to sub-‐agreements. Taking bribes is not only strictly prohibited, but it is evil in itself, and Observers must always be firm in refusing bribes and steadfast in not accepting them.

3. Prohibition on Discussing Detailed Information

Observers are prohibited to formally or informally discuss with the bidders, detailed information related to the procurement once the bids are opened until the issuance of the Notice of Award, in support of the “no contact rule” under R.A. 9184 and its revised IRR. The Observers shall not allow themselves to be used to circumvent the law.

REMINDERS

Detailed information includes, but is not limited to, the following: a. Advance Information ; b. Confidential or proprietary information about other bidders; c. Technical information; and d. Updates on decisions made by the BAC.

C. Observer’s Dos and Don’ts

Below is a simple checklist following the Code of Conduct for Observers:

DO’s: DON’Ts:

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• Acknowledge receipt of invitation. Be on time.

• Don’t come unprepared.

• Know your role and rights as observer.

• Don’t engage in a debate with the BAC.

• Bring references that you may need. • Don’t express your own opinion.

• Disclose conflict of interest. • Don’t be combative.

• Politely call the attention of BAC. Cite the applicable laws and rules.

• Don’t be complacent.

• Be assertive and persuasive. • Don’t engage in fishing expedition.

• Strictly observe and comply with the confidentiality agreement.

• Don’t accept favors/gifts from the BAC or supplier or from anyone involved in the bidding.

• Refuse to accept monetary consideration or any form of favor or gift or token.

• Prepare reports. Take note of critical observations.

• Inhibit oneself in case of a possible conflict of interest in the event that one is related to any of the bidder or one has a personal interest in the item to be bid out or if in case there is a personal relationship with the BAC members.

CHAPTER 5 TOOLS AND INSTRUMENTS

Chapter 5 features some tools and instruments related to procurement that can further assist Observers in their work that contributes to the larger goal of maintaining integrity and improving efficiency, transparency, competition and accountability in government procurement. A. Copy of Republic Act No. 9184 and its Implementing Rules and

Regulations

Bring a copy of the RA 9184 and its IRR. Observers are not expected to be legal nor procurement experts. Hence, it is imperative that Observers have a copy of the law that is handy. This way, the Observer can always refer to it in cases of doubt in his own judgment.

B. Checklist of Basic Documents

Use a checklist. It will serve as a guide to make sure the Observer does not miss anything. The checklist determines the presence or absence of important documents as shown in the table below. This may be expanded depending on what can help you best. Sample Checklist: Presence or Absence of Documents (put a check if available; cross if unavailable)

Annual Procurement Plan and Project Procurement Management Plan

Minutes of BAC Meetings

Abstract of Bids as Read and Abstract of Bids as Evaluated

Opened Proposals

Post-qualification Summary Report

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C. Conflict of Interest Form

The Observer must complete a Conflict of Interest Form, indicating, among others, the areas of conflict, if any. The BAC should prepare the Conflict of Interest Form. If the BAC does not prepare a Conflict of Interest Form, the CSO Observer may prepare one following the Sample Form provided below. An observer may indicate in one Conflict of Interest Form several contracts or projects for procurement for which an Invitation has been extended. Below is a Sample Conflict of Interest Form that the Observer may use.

Name:

Date:

Civil Society Organization/Non-‐governmental organization: Procuring Entity: Project Name: 1. Do you have any relationship with the Head of the Procuring Entity, BAC Member,

Secretariat, TWG, Head of the PMO or end-‐user unit, or project consultants within the 3rd degree of consanguinity or affinity?

2. Do you have any significant financial or business interests that would reasonably appear to be affected by the activities you would undertake as an Observer? If yes, provide additional information.

3. Explain the nature of any potential conflict of interest that you may have in relation to the activities you would undertake as an Observer. Use additional sheets, if necessary.

Signature:

Date:

REMINDERS

• The Conflict of Interest Form must be filled up accurately, and must be updated when any change in the circumstances of the Observer occurs.

• The BAC must review the statements declared in the Conflict of Interest

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Form prior to the Observer’s participation in the procurement process to ensure that any actual or potential conflict of interest has been properly identified and addressed.

• The Observer shall be prohibited from participating in the procurement

process in the particular project to be procured, in the event that there exists an actual or potential conflict of interest on the Observer’s part as properly identified by the BAC. The CSO/NGO invited shall send another Observer, with no conflict of interest, as temporary replacement for the procurement of the item concerned.

• The Procuring Entity may provide additional prohibitions and sanctions

relative to actual, apparent, or potential conflict of interest.

D. Procurement Observer’s Report (POR)

Fill out the Observer’s Report. The Observer may use this to determine compliance by the Procuring Entity with procurement processes and procedures and to analyze data gathered during each bidding stage. You may also expand the POR depending on what can help best evaluate the effectiveness of procurement practices of various government agencies. Observers, in cooperation with an agency, may assist in validating the results of this self-‐assessment tool.

Sample POR template

OBSERVER’S REPORT “[Observer’s] report shall assess the extent of the BACs compliance with the provisions of this IRR and areas for improvement in the BAC’s proceedings.” (Sec. 13.4) Procuring Entity

Head of Procuring Entity

BAC Chairman

Project Name (ID No.)

PhilGEPS Reference No.

Approved Budget

I. Bidding Procedures

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Procurement Type (Goods, Infra, Services)

Procurement Process Method (Public Bidding or Alternative Mode)

II. Details of Procurement Stage Attended and Observations Made Date Time Place Procurement Stage Where there

any deviations observed? (Yes or No)

GPRA/IRR Provisions Violated (if any)

Advertisement Pre-‐Bid Conference Bid Submission & Opening Post-‐Qualification Awarding of Contract III. Highlights of Each Stage of Procurement

Stages of Procurement

Notes

Advertisement


Bid Submission & Opening

Post-‐Qualification

Awarding of Contract

IV. Other Details of the Procurement Process Average Number of Bidders Acquiring Bidding Documents (Those that have bought bidding documents)

Average Number of Bidders submitting bids

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Average Number of days from posting to Contract award

(Average) Number of days to resolve request for reconsideration/protest (If applicable)

Respectfully submitted by: Observer Date: Cc.: BAC Chairman Head of Procuring Entity E. Agency Procurement Compliance and Performance Indicators (APCPI)

The GPPB approved the use of a tool called APCPI to assess a government agency’s performance in its procurement activities and compliance with national procurement systems and international best procurement practices. The APCPI is derived from the Baseline Indicator System (BLI) and Compliance and Performance Indicator (CPI) System prescribed under OECD-‐DAC Methodology for the Assessment of National Procurement Systems where the Philippines served as a pilot country. It is also a modification of the Agency Procurement Performance Indicators (APPI) and the Online Monitoring and Evaluation System (OMES) previously used by the GPPB to evaluate the effectiveness of procurement practices of various government agencies. The APCPI System was adopted by the GPPB for use by government agencies, as set forth in GPPB Resolution No. 10-‐2012, dated June 1, 2012

The confirmation process is an important feature of the APCPI Assessment which highlights procurement transparency, public monitoring and accountability. Observers may join the Confirmation Team which shall take the role of an independent entity that will carry on the task of confirming the assessment results of the PE. This Team shall be responsible to check the APCPI results of the procuring entity in terms of completeness, correctness, consistency and responsiveness.

CHAPTER 6 OTHER SUGGESTED ACTIVITIES

Although the most important and primary task of an Observer is to record his/her accounts of the manner by which a procuring entity conducted its procurement, there are other efforts that the organization may want to do to be more effective in its effort to contribute to procurement reform. This Chapter enumerates some of these activities which are mostly organizational or administrative. A. Tracking System

Organizations must validate the accuracy and completeness of the observation reports before submitting a copy to the head of the procuring entity and the agency’s resident Ombudsman or the Ombudsman for Luzon, Visayas, Mindanao depending on its location. Tracking is important to record all correspondences/ communications with government and the actions taken. It is also useful for purposes of recording the organization’s activities and progress in its procurement monitoring work.

You can use the sample template below in tracking the reports. Sample Tracking List:

Reference/ Report No.

Agency Summary Status/Date

0001 Procurement City

alleged overpriced lamp posts

7 March 2009 – letter of inquiry sent to the Mayor’s office

Keep the tracking simple. Include a reference number, name of agency, a brief summary of the issue or concern, and important dates, particularly, the report submission and reply of the PE.

If the organization is satisfied with the PE’s reply, it may send a thank you letter. Otherwise continue to follow-‐up until the issue is resolved.

It will also help if tracking lists are copy-‐furnished to the GPPB for appropriate guidance and/or action.

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B. Record Keeping

The organization will collect and generate various types of information in the process of participating in the different stages of procurement and establishing networks. It must be kept to provide quick and easy reference for reviews, studies, performance benchmarking, and decision-‐making. The system of recording and managing of information may be done as follows:

Type of information

Description of

information Origin Receiver Custody Storage Retention

Period

C. Disclosure Policy

Some information may be sensitive, confidential, or sourced through unconventional means. The organization must exercise prudence in releasing the information to the public. As a matter of policy, it should be released only after a thorough verification and deliberation by the organization of the possible impact of releasing the same.

D. Reporting to the Public

CSOs have to regularly engage the public at large to share relevant information obtained in the course of procurement observation. In addition, reporting to the public may encourage more volunteers to step up and participate. The following methods may be utilized by CSOs to disseminate relevant information to the general public aside from means they are already familiar with:

1. Communicating messages via press statements is a good strategy. An

organization who would like to do this should first consult its partners, validate information that will be released and cite provisions of law if necessary.

It should also take note of the following when drafting a PR and may look at the sample PR below, thus the PR must contain:

a. Factual and objective information b. Constructive feedbacks c. Identifiable contact information d. Simple language

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e. Exact quotes

SAMPLE PRESS RELEASE Philippine Procurement Network- BISDAK Group September 1, 2010 Anti-corruption advocates cry foul over medicine scam, vows to file charges to LGU Execs/Contractors Anti-‐corruption advocates in Mindanao recently vows to file corruption charges to LGU execs in General Santos City and business contractors following accusations of anomalous public bidding involving hundreds of thousands of pesos worth of medicines for the General Santos City Hospital. According to Mr. Geroncio Ohayas, Coordinator of the P2N BISDAK Group, the anomaly includes the procurement of gentamicin sulfate and cloxacillin sodium drugs amounting to 150,000 pesos which the General Santos Medical Society President Dr. Cristita Epal considers as fake. BAC Observer and P2N affiliate Ms. Lota Agbulos claims that there are violations committed both by the Supplier-‐ DMI Medical Supplies and the LGU BAC on the provisions of the RA 9184 particularly on the specifications of goods as per reflected in the original bid/contract documents. The P2N Bisdak Group is a network of citizen volunteers observing the compliance of government agencies to procurement laws in Mindanao. Contact: Ms. Ann Patricia Felicio Media Officer, P2N Bisdak Group Contact Number: 0900-000-00-00

2. Broadcasting messages through radio and television may also be used

by CSOs making sure that their messages are :

a. Short and concise so as not to confuse audience with too much information.

b. Using simple and straightforward language. c. Offers specific and practical suggestions or options. d. Organized clearly and logically.

3. Conducting symposiums, forums, conferences, and similar activities

may also be done to increase local awareness and attract people to become actively involved as procurement Observers.

4. Messages may also be disseminated using the Internet through social

networking sites and other websites to promote information on public procurement reforms.

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5. Other mechanisms can also be put in place such as designating a

spokesperson or forming a public relations committee to facilitate better media relations in the future. All in all, public reporting becomes a critical if not an integral part of an organizations’ involvement in public procurement activities as it helps strengthen efforts to maintain transparency and accountability of all those involved.

The Baba’s Foundation Experience Information CSO: Baba’s Foundation Inc. (BFI) is currently heading the Secretariat for the Davao Procurement Transparency Core Group (DPTCG) Years: 2009-‐2010 Country: Mindanao, Philippines Amount: Sector: Civil Society Monitoring of Public Procurement and Auctions Corruption Problem: Widespread corruption in government procurement throughout the Philippines Tools employed: Capacity Building, Third Party Monitoring, Constructive Engagement, Coalition Building, Community Mobilization, Structured Consultation Process To help curb – if not stop this type of corruption – DPTCG is organizing and enhancing the capacity of civil society organizations (CSOs) in the Davao Region of Mindanao, by mobilizing them as observers during bidding and procurement processes carried out by government agencies. As mandated under the Philippine’s Government Procurement Reform Act, CSOs may designate observers to monitor all phases of the bidding procurement process, including contract implementation by winning bidders. Actions Taken by BFI The engagement of CSOs as observers during all stages of government procurement processes is DPTCG’s principal approach toward addressing corrupt practices. In the initial phase of the program, there was resistance on the part of government entities to invite civil society organizations as observers, even if the Government Procurement Reform Act required them to do so. To soften any resistance, several dialogues, fora and other interface activities were initiated by DPTCG, inviting server heads and key personnel of different government agencies. Through these activities, the efforts of the CSOs were appreciated by the attending government agencies, and both CSOs and government agency representatives came up with their ideal concepts of “good government”, which included the goal of a corruption-‐free nation. The participation of academia and the private sector proved to be an effective strategy to facilitate dynamic and progressive thinking and the development of action steps to combat corruption in the procurement system. In order to elicit government agencies to commit to the path of good governance chosen, DPTCG initiated the crafting and signing of a Memorandum of Agreement, an ethical code to be adopted by participating entities. When, as a result of volunteer monitoring, a case of corruption had been discovered, DPTCG submitted its report to the Office of the Ombudsman. Impact and Results Achieved As a result of the participation of CSOs and pressure exerted to assert due diligence in government procurement, procurement has become more transparent and most of the agencies are now following proper procedures. In some agencies, CSO observers reported that there is a considerable decrease in the complaints about “syndicated” bidding procedures, reducing the prevalence of bidders who have

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already been awarded with a procurement contract long before the bidding processes has actually finished. Several CSOs reported that as a result of their vigilance in the monitoring of the construction of a government building, the budget had been utilized as laid out in the original project plan, resulting in better quality of construction and – in other instances – in better services for the population. Another observed impact, has been the growing number of government procuring agencies that are open to the presence and participation of CSOs as observers of the Bids and Awards Committees (BAC). In the initial phase of the project, only 7 government agencies were receptive, most of them from Davao City. Currently, some 18 government agencies are inviting DPTCG to send BAC observers during all phases of the bidding process, and several invitations have been received from provinces around the Davao Region. DPTCG currently prioritized third party monitoring of the five top procuring entities and local government units in each city or province within the Davao Region to guarantee focus, results and in-‐depth participation. Another achievement of the project is the creation of city and provincial integrity boards, initiatives for collaboration amongst CSOs, local government units and other stakeholders in each locality to maintain and sustain the mechanisms of combating corruption.

ANNEX A SAMPLE FORM OF CONFIDENTIALITY AGREEMENT

CONFIDENTIALITY AGREEMENT

This CONFIDENTIALITY AGREEMENT (hereinafter “Agreement”) is made and entered into this [date] day of [month], [year], by and between:

[First party’s details]

and

[Second party’s details].

DEFINITION OF CONFIDENTIAL INFORMATION 1. As used in this Agreement, “confidential information” shall mean all information and

materials including, without limitation, market analyses, cost estimates, technical specifications, evaluation criteria and results, and any documentation, analyses, compilations, forecasts, studies or other procurement-‐related documents prepared based on any of the foregoing that is provided by the party disclosing (“Disclosing Party”) to the party receiving (“Receiving Party”) information under this Agreement, whether oral, written, or in any other medium.

HANDLING OF CONFIDENTIAL INFORMATION 2. The Receiving Party shall maintain the secrecy of the Disclosing Party’s Confidential

Information and shall exert all reasonable efforts to preserve the confidentiality of such information, including, but not limited to, the implementation of reasonable physical security measures and operating procedures.

3. The Receiving Party agrees that at all times and notwithstanding any termination or

expiration of this Agreement, it will hold in strict confidence and not disclose to any third party all Confidential Information received from the Disclosing party, except as approved in writing by the latter. The receiving party shall be prohibited from using the Confidential Information for purposes other than compliance with its obligations as an Observer under Republic Act 9184 and its Implementing Rules and Regulations.

4. Access to Confidential Information of the Disclosing Party shall only be granted by the Receiving Party to its employees or authorized representatives, when their knowledge of such information becomes necessary, provided that such persons have signed confidentiality agreements or are otherwise bound by confidentiality obligations which contain the minimum terms, restrictions and limitations provided herein.

PERIOD AND TERMINATION

5. This Agreement shall be effective for a period of ____, and shall automatically terminate thereafter. Notwithstanding the termination or expiration of this agreement, all obligations contained herein shall remain valid, effective and binding upon the Receiving Party, his successors and assigns.

6. Upon termination or expiration of this Agreement, or otherwise upon the Disclosing Party’s request, all Confidential Information furnished to the Receiving Party shall be promptly returned to the Disclosing Party, or at the Disclosing Party’s express request, shall be destroyed. In case of destruction as requested by the Disclosing Party, the same shall be confirmed in writing by the Receiving Party.

EQUITABLE REMEDIES

7. The Receiving Party acknowledges that any breach of this Agreement may cause

irreparable harm to the Disclosing Party for which the latter is entitled to seek, among others, indemnification for damages, as well as injunctive or other equitable remedies as may be allowed by law.

MISCELLANEOUS

8. The Receiving Party shall not transfer or assign this Agreement to any other person or

entity, whether by operation of law or otherwise, without the prior written consent of the Disclosing Party. Any such attempted assignment shall be void and of no effect.

9. In case any provision of this Agreement is declared by a competent authority to be unenforceable or invalid, such declaration shall not render this Agreement unenforceable or invalid as a whole. The unenforceable or invalid provision shall be changed and interpreted so as to best accomplish the objectives of such provision, subject to existing laws, rules and regulations.

10. This Agreement is the complete and exclusive agreement regarding the disclosure of Confidential Information between the parties, and replaces or supersedes any and all prior oral or written communications and agreements between the parties regarding Confidential Information without prejudice to the rules and regulations concerning restrictions on disclosure of information such as on matters involving national security, diplomatic or foreign relations, intelligence and other classified information.

IN WITNESS WHEREOF, the parties hereto have executed this Confidentiality Agreement as of the date and year first above written.

_______________________ ________________________

SIGNED IN THE PRESENCE OF:

_______________________ ________________________

[ACKNOWLEDGMENT]

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