PHILIPPINES
A Joint Document of
The Government of the Philippines, The Asian Development Bank and The World Bank
October 3, 2008
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Acronyms and Abbreviations 3Preface 4Foreword 6Executive Summary 8 I. BACKGROUND �2 Country Economic Context Country Assistance Strategy WB Portfolio ADB Portfolio PublicSectorProcurement FurtherChallenges The CPAR Process Objectives Scope Methodology LinkswithOtherStudies II.FINDINGS,ASSESSMENTSANDRECOMMENDATIONS 20 PILLAR I: Legislative and Regulatory Framework ProcurementLegislativeFramework ImplementingRegulationsandDocumentation PILLAR II: Institutional Framework and Management Capacity LinkagesofPublicFinancialManagementSystems ManagementCapacity InstitutionalDevelopmentCapacity PILLAR III: Procurement Operations and Market Practices EfficiencyofProcurementOperationsandPractices FunctionalityofthePublicProcurementMarket ContractImplementationandCompletion PILLAR IV: Integrity and Transparency of Public Procurement System InternalControlandAudit EfficiencyofAppealsMechanism AccesstoInformation EthicsandAnti-corruptionMeasures
III.COUNTRYRISKASSESSMENT 46
IV.FOREIGN-ASSISTEDPROJECTS 50 Legal Basis Harmonization Regulations BiddingDocuments ProcurementManuals Acceptable Private and Commercial Practices NCB Procurement Annex to the Loan Agreement Procurement Method Threshold Anti-Corruption Measures in WB Projects Use of Philippines Country System
V.ACTIONPLAN 56 Action Plan for Philippine Public Procurement System
ANNEX �: Composition of the CPAR Working Group ANNEX 2: WB Loan Portfolio and Lending Program ANNEX 3: Summary of APPI Assessment Scores for �0 Agencies ANNEX 4: SWS Survey Results on the Effectiveness of the Public Procurement System ANNEX 5: Recommendations and Agreements on CSO Participation ANNEX 6: Unacceptable GOP Procurement Rules ANNEX 7: Review of WB’s NCB Procurement Annex ANNEX 8A: World Bank’s NCB Requirements ANNEX 8B: ADB’s NCB Annex to Procurement Plan ANNEX 9: Status of Actions Agreed in 2005 CPAR Update ANNEX �0: Key Source Documents
Cont
ents
ADB AsianDevelopmentBankAF AsiaFoundationAPP AnnualProcurementPlanAPPI AgencyProcurement PerformanceIndicatorAusAID AustralianAgencyfor InternationalDev’tBAC BidsandAwardsCommitteeBIR BureauofInternalRevenueBIS BaselineIndicatorsSystemBLI BaselineIndicatorsCAC CoalitionAgainstCorruptionCAS CountryAssistanceStrategyCBCP CatholicBishops’Conference ofthePhilippinesCIDA CanadianInternational DevelopmentAgencyCOA CommissiononAuditCOFILCO ConfederationofFilipino ConsultingOrganizationsCPAR CountryProcurementAssessment ReportCPI Compliance/Performance IndicatorsCSC CivilServiceCommissionCSO CivilSocietyOrganizationCWG CPARWorkingGroupDAC DevelopmentAssistance CommitteeDBM DepartmentofBudget& ManagementDENR DepartmentofEnvironment& NaturalResourcesDepEd DepartmentofEducationDPEM DevelopmentPlanningand EnvironmentalManagementDILG DepartmentofInterior&Local GovernmentDND DepartmentofNationalDefenseDO DistrictOfficesDOF DepartmentofFinance
CURRENCYCurrencyUnit=PhilippinePeso(Php)
US$1.00=Php46(June2007)
FISCAL YEARJuly1–June30
ACRONYMS AND ABBREVIATIONS
DOH DepartmentofHealthDPWH DepartmentofPublicWorks &HighwaysDTI DepartmentofTradeand IndustryEGP E-GovernmentProcurementGDP GrossDomesticProductGFIs GovernmentFinancialInstitutionsGOCC GovernmentOwnedand ControlledCorp’sGOP GovernmentofthePhilippinesGPMs GenericProcurementManualsGPPB GovernmentProcurement PolicyBoardGPRA GovernmentProcurement ReformActIAEB InvitationtoApplyforEligibility &toBidIAU InternalAuditUnitICM InitiatingConceptMemorandumIDF InstitutionalDevelopmentFundIOM InternationalOverseas ManagementIRRA ImplementingRulesand RegulationsPartAIRRB ImplementingRulesand RegulationsPartBISO InternationalOrganization forStandardizationJBIC JapanBankforInternational CooperationLAIKO CounciloftheLaity ofthePhilippinesLB LeagueofBarangaysLCP LeagueofCitiesofthePhilippinesLGA LocalGovernmentAcademyLGUs LocalGovernmentUnitsLMP LeagueofMunicipalities ofthePhilippinesLPP LeagueofProvinces ofthePhilippines
Regional Vice President : James Adams, EAPVP Country Director : Bert Hofman, EACPF Sector Director : Alfred Nickesen, EAPCO Regional Procurement Manager : Shaun Moss, EAPCO Task Team Leader : Cecilia Vales, EAPCO
MDB MultilateralDevelopmentBankNCB NationalCompetitiveBiddingNEDA NationalEconomic &DevelopmentAuthorityNGAs NationalGovernmentAgenciesNGAS NewGovernmentAccounting SystemOECD OrganisationforEconomic Cooperative&DevelopmentOMES OptimisedMicroturbine EnergySystemsPAGC PresidentialAntiGraftCommissionPBDs PhilippineBiddingDocumentsPCA PhilippineConstructors AssociationPDF PhilippineDevelopmentForumPER PublicExpenditureReviewPhilGEPS PhilippineElectronicProcurement SystemPICE PhilippineInstituteof CivilEngineersPPMP ProjectProcurement ManagementPlanSEC SecuritiesandExchange CommissionSGV Sycip,Gorres,Velayo&Co.SMEs SmallandMediumEnterprisesSUCs StateUniversitiesandCollegesSWS SocialWeatherStationsTAF TheAsiaFoundationTAN TransparencyAccountability NetworkTSO TechnicalSupportOffice oftheGPPBTWG TechnicalWorkingGroupUGB UniformGuidelinesfor BlacklistingUNDP UnitedNationDevelopmentProgramUSAID USAgencyforInternational DevelopmentWB WorldBank
3
Date and Basis of the ReportAttheMarch2006PhilippineDevelopmentForum(PDF),the
Government of the Philippines (GOP) and its development
partners, including the World Bank (WB), the Asian
Development Bank (ADB), the Japan Bank for International
Cooperation (JBIC), United Nation Development Program
(UNDP),theEuropeanCommission(EC),TheAsiaFoundation
(TAF), and bilateral donors (USA’s USAID, Australia’s AusAid,
Canada’s CIDA), discussed the importance of pursuing
procurementreform.Thepartnersagreedthatitwastimeto
assess thenewpublicprocurementsystemmandatedbythe
2003procurement law,andtosetplanstobuilduponwhat
hadbeenthusfarachieved.AnewCPAR,thedocumentthat
records theprogressofprocurement reform,wasneeded to
diagnosethehealthoftheexistingpublicprocurementsystem
and,intheprocess,renewthedialoguebetweentheGOPand
allstakeholderstodetermineandagreeontheactionstopush
theneededreformsfurther.ThisCPARprocesswouldbethe
secondfullexercise,thefirstCPARhavingbeencarriedoutin
2002,withupdatesin2003and2005.
InJune2006,theInitiatingConceptMemorandum(ICM)for
theconductoftheCPARprocesswasdiscussedandfinalized,
includingmeetingswith theGOPanddevelopmentpartners
tosecurecriticalsupportfor,participationin,andcommitment
to the CPAR process. On the basis of the objectives, scope,
andactivitiespresentedintheICMandagreedfollowingthe
guidance of the June 29, 2006, review meeting, a team of
WBstaffandconsultants,andrepresentativesofdevelopment
partners conducted the review and assessment from July
2006toFebruary2007.SWS,a localsurveyfirm,conducted
asurveyandfollow-upin2006-07onthepublic’sperception
of procurement and how it could contribute to combating
corruption. The survey was coordinated by TAF and funded
byUSAID.Theassessmentresultwasintegratedwiththatof
theGOP’sOECDBaselineIndicatorAssessmentinanintensive
three-day workshop in Canyon Woods Resort, Province of
Laguna, in late May 2007, where participants agreed on
an action plan to push procurement reform forward, with
particularfocusonenforcementandcombatingprocurement-
basedcorruption.Basedontheintegratedassessmentresult,
theCPARTeamdraftedandfinalizedtheCountryProcurement
AssessmentReport.
TheCPARTeamwasledbyMs.CeciliaVales(LeadProcurement
Specialist and Task Team Leader, EAPCO) and includedWB’s
Dominic Aumentado (Procurement Specialist, EAPCO), Rene
SD. Manuel (Procurement Specialist, EAPCO), Noel Sta.
Ines (Procurement Specialist, EAPCO), Leonora Gonzales
(Senior External Affairs Officer, EACPF), Cecilia Verzosa
(Communications Adviser, EXTCD), and ADB’s Candice
McDeigan(ProcurementSpecialist),aswellasconsultantsDavid
Howarth(internationalprocurementpractice),JoseLuisSyquia
(baseline indicators survey and performance assessment),
HeidiMendoza(localgovernmentandcivilsociety),DennisS.
Santiago and Shalini Bhagat (legal and policy reform), Alice
Tiongson(capacitybuildingandblacklistingmechanisms),and
SofronioUrsalandRobertDoller(anti-corruptionefforts).Mr.
Jose Dalisay laymanized the text of key areas of the report
including the Executive Summary. The CPAR was edited by
SuzanneSnell(EAPPRconsultant).
TheDecisionMeetingtookplaceonMay6,2008,andthefinal
reportwasissuedtoGovernmentbeforetheendofJune2008,
andacceptedbyGOPonOctober3,2008.Implementationof
theCPARAgreedActionPlanwillbehandledandcoordinated
bythenewlycreatedPDFSub-WorkingGrouponProcurement,
whichwillmeeteveryothermonth,undertheoversightofthe
PDFWorkingGrouponGovernanceandAnti-Corruption.
Ownership of Procurement ReformThe GOP and development partners have been working
closelyonprocurementreformformanyyearsasanessential
element of good governance and an integral part of their
jointcountryassistancestrategies.Thegoalsofprocurement
workhavebeentoanalyzeand improvepublicprocurement
policies,organization,andproceduresby increasingcapacity,
improving accountability and transparency, reducing the
scopeforcorruption,andbringingsystemsintoharmonywith
internationallyacceptedprinciplesandpractices.
TheCPARprocessisthelatestphaseofthiseffortandhasbeen
spearheaded by GOP. The Government’s Procurement Policy
Board’s Technical Support Office (GPPB-TSO) collaborated
closely with the WB at the ICM stage to define the CPAR’s
objectives,scopeandmethodology,themission’sactivitiesand
timelines,andthepriorityareasforassessment.
The GPPB then organized a CPAR Working Group (CWG)
toworkwiththeWBteammembers,formingtogetherthe
CPARteam.TheCWGmembers includedthechampionsof
procurementreformintheGovernment,therepresentatives
Preface
4
of the voting and non-voting members of the GPPB, and
the development partners that comprise the PDF Working
Group on Governance and Anti-corruption. The chair of
theCWGwastheDepartmentofBudgetandManagement
(DBM), and the co-chair was the National Economic and
DevelopmentAuthority(NEDA).Sinceenforcementisamajor
areaofcoverage,theworkinggroupincludedrepresentatives
from anti-corruption agencies such as the Office of the
Ombudsman and the Presidential Anti-Graft Commission
(PAGC).Representativesfromthecivilsocietyorganizations,
privatesectorandotherstakeholderswerealsorepresentedin
theCWG,includingtheleaguesofbarangays1,municipalities,
cities, and provinces. Development partners were also
representedintheCWG.ThefullcompositionoftheCWGis
presentedinAnnex 1.
AcknowledgementsThe CPAR Team wishes to acknowledge the extensive
cooperation and assistance received from all CWG and
GPPB team members, during and between the team’s visits
and throughout many meetings, and from ADB, JBIC, TAF,
USAID, AusAID, CIDA and WB staff who provided inputs.
The CPAR Team expresses its particular thanks for the
cooperation, assistanceand inputs to the report contributed
byDBMUndersecretaryLauraPascua,whowasoverallCWG
coordinator, and Executive Directors Estanislao Granados
(ProcurementService)andRubyAlvarez(GPPB-TSO),whowere
theworkinggroupcoordinators.
AttheJune2006ICMreviewmeeting,theformerWBCountry
Director for the Philippines, Mr. Joachim von Amsberg, and
RegionalProcurementManager,ShaunMoss,offeredguidance
on the scope and overall direction of the assessment. The
present Country Director, Mr. Bert Hofman, who co-chaired
thedecisionmeetinginMay2008,supportedthefinalization
and delivery of the CPAR to the Government. Mmes. Irina
Luca (WB-AFTPC)andVeraSongwe(WB-MDO),andMessrs.
NaseerRana(WB-SARPS),andRobertRothery(ADB)provided
constructiveandvaluablecommentsasPeerReviewers.
Mr. Christopher Hoban, former WB Portfolio Manager in
Manila,andthecurrentPortfolioManager,Ms.MaryseGautier,
providedtheCPARTeamadviceandguidanceintheconduct
of the assessment. Mr. Yasuhiko Matsuda provided initial
commentsonthedraftReport.Ms.EvelynQuiranteandSusan
CristobaloftheWBCountryOfficeinManila,andAtty.Sygrid
PromentiallaandMs.MilaManalastasofGPPB-TSO,helpedthe
teaminarrangingthelogisticsforthemissionsandworkshops.
MesdamesNorGonzales,EvelynQuiranteandMariaKrizette
Hermosofacilitatedthepublicationofthedocument.
� A barangay is the basic political unit in the Philippines that serves as the primary planning and implementing unit of government policies, plans, programs, projects and activities in the community, as a forum where the collective views of the people may be expressed and considered, and where disputes may be amicably settled.
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The Country Procurement Assessment Report (CPAR)processprovedtobeasuccessfulmechanisminassessingthecountry’spublicprocurementsystem,identifyingitsstrengthsandweaknesses,andprovidingaplatformforadialogueamongstkeystakeholders.ThepreviousCPARin2002anditstwoupdateshadbeenrecognized,notonlyasanassessmenttool,butmoreso,asthevehicleforrecordingtheprogressofthereformandthemeasurestopursuetomovethereformagendaforward.Moreover,ithasbecomean instrument for instituting innovativeand modern reform approaches and standards, andcementing the collaborative partnership between theGovernmentanditsdevelopmentpartners.Itisindeedcommendable to witness consistent Government’scooperation and commitment to the CPAR process,throughtheGovernmentProcurementPolicyBoardanditsTechnicalSupportOffice.
The CPAR focuses largely on assessing the country’spublic procurement system by comparing it againstinternational procurement standards, and followingthe OECD/DAC-WB Baseline Indicators for a goodperforming public procurement system. The CPARprovidesascorecardofachievementsandprogress,andidentifiesthechallengesaswellasmeasurestoaddressthesechallenges.Althoughmuchhasbeenachievedinreformingthelegislativeandregulatoryframework,muchremains to be done in strengthening the institutionalframework and management capacity, enhancing thecompetitivenessofthepublicprocurementmarket,andimprovingtheintegrityandtransparencyofthesystem.TheCPARrecordstheactionplanthattheGovernmentand its development partners have agreed, includingcommitment to financial resources, to mitigate thosechallenges.
Itisworthcitingthesignificantachievementmadeintheharmonizationandalignmenteffortstowardstheuseofcountysystems.Foremostofwhichistheharmonizationof bidding documents and procurement manuals forworks, goods and consulting services that broughtthe country’s system more aligned to the proceduresof multilateral banks where less than ten exceptionswerenoted.Verywell recognized in theReport is thecommitment to pursue a harmonized eGovernment
ProcurementSystem,throughthePhilGEPS,whichwouldresulttogreatertransparencyandaccountabilityasthesystemwouldbeopenforeasycivilsocietymonitoringandscrutiny.
We wish to commend the executive and legislativebranchesofgovernmentforcontinuingtosupportandpursueprocurementreformwhichwouldbeadeterrentagainst corruption in the long term. Much will nowdependonthecontinuousimplementation,monitoringand enforcement of this key institutional and policyreform to ensure its sustainability in achieving goodgovernance.
Bert Hofman CountryDirector,Philippines EastAsiaandthePacificRegion TheWorldBank
Claudia Buentjen Officer-in-Charge PhilippinesCountryOffice AsianDevelopmentBank
Foreword
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Foreword
WewelcometheCPARprocessasanobjectiveyardstickof the Philippine government’s accomplishment inpursuingprocurementreform.Itgivesusameasureofhowwellwehavedoneinthepast,butalsorevealstheamountofworktobedoneforthefuture.
Manychallengesremain.Forone,furtherharmonizationof our country system with that of our developmentpartners is necessary in order to fully govern theparticipation of international bidders. Thus, one ofthe recommendations of the CPAR is to finalize theimplementing rules for foreign funded procurement.Withthecooperationofourdevelopmentpartners,wehopetoaccomplishthisbeforeendof2009.
Theprofessionalizationofourprocurementpractionersis another. By pursuing the education and equippingthe front linersofprocurement reform—themembersof the various Bids and Awards Committees and itssupportunits—withthenecessaryskills,theywillsoonbe recognized as true champions andprofessionals inthefieldofpublicprocurement.
In ending, allowme tonote that only two things arecertain: Reforms do not happen overnight and thatits success depends on each of us working together.Towardsthisourdevelopmentpartnershavebeentrulyinstrumental in this process of change, providing thenecessary support when and where the governmentneedsit.
Rolando G. Andaya, Jr. Chairman GovernmentProcurementPolicyBoard
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Executive Summary
8
Public Procurement Cycle1. Every year, the Philippine government spends hundreds of
billionsofpesostobuythegoodsandservicesitneedstocarry
out projects and deliver services to its citizens. This money
comesfromthebudget that it fundsoutof itsownrevenues
andfromloansandgrantsextendedbyforeignsourcessuchas
multilateraldevelopmentbanksandbilateraldonors.
2. Deciding how to spend this money is a very important
responsibilityon thepartofgovernment leadersandofficials,
notonlybecauseofthelargeamountsbutalsothepublictrust
involved.Citizensandtaxpayershavearighttoexpectthattheir
governmentwillspendthesefundswiselyandhonestly,forthe
greatestpublicgood.
3.Procurementisakeystepintheprocessofgettingthebest
value for the people’s peso. The process involves announcing
or advertising what the government needs, inviting qualified
partiesorindividualstooffertheirbids,evaluatingthosebids,
awarding contracts to the chosen bidders, monitoring their
deliveryandperformance,payingthemandrecordingtheresults
ofthewholeprocessforotherstosee.Italsoinvolvesmaking
sure that the bidding is fair and transparent to all, and that
anyonewithalegitimatecomplaintcanbegivenspeedyjustice.
Forthepastfouryears,anaverageofPhp121billionworthof
infrastructure,equipment,materials, suppliesandserviceshas
passedthroughthisprocesseachyear,about15percentofthe
country’s total annual budget, equivalent to about 3 percent
of its Gross Domestic Project. Thus, procurement is a major
governmentactivity.
Procurement Reform4. While the procurement process is straightforward enough
onpaper,ithasmetmanydifficultiesandproblemsinpractice.
Corruption, inefficiency, ignorance, and disorganization have
resulted in theeffective lossofmanybillionsofpesos and in
the procurement of substandard materials and services. By
oneestimate,anaverageof20percentto30percentofevery
contractgoestoleakages,oraboutPhp30billionannually.
5. While many problems arise from dishonest officials and
bidders, procurement systemsalsoneed tobe improved, and
those involved in procurement need to become familiar with
the correct methods and practices. The private sector also
needsbetterinformationandtoolsinordertoparticipatemore
activelyandcompeteonalevelplayingfield.Thegeneralpublic
needstobemadeawareoftheimportanceoftheprocurement
processandoftheneedforvigilanceinitsimplementation,so
that it can play a greater role in effectively safeguarding the
publicinterest.
6. Before 2003, the Philippines had many laws and many
agenciesdealingwithprocurement.Butbecause theydidnot
functionasaunifiedsystem,itwasverydifficulttoimplement
real procurement reform. Some rules and regulations worked
unfairly against foreign bidders who could have offered
competitiveprices.
7.Whenitfirstreviewedthecountry’spublicprocurementsystem
in 2001, the Government of the Philippines (GOP), with the
assistanceofitsdevelopmentpartnerssuchastheWorldBank
(WB),theAsianDevelopmentBank(ADB),andtheJapanBank
forInternationalCooperation(JBIC),sawthatmuchneededto
bedone.The2001-02CountryProcurementAssessmentReport
(CPAR)notedthatthesystematthattimewasat“averagerisk”
butalsofragmented,cumbersome,andpronetocorruption.
The Government Procurement Reform Act8.Abreakthroughcamewiththepassageandpromulgationin
January2003oftheGovernmentProcurementReformAct(GPRA)
(Republic Act No. 9184), “providing for the modernization,
standardization and regulation of the procurement activities
of thegovernment and forotherpurposes.” Itwasdesigned
to streamline the Philippine procurement system, reduce
opportunities for graft and corruption, harmonize the system
with international standards and practices, and promote
transparency,competitiveness,andaccountability.
9.TheGPRAreplacedwhathadbeenmorethan100laws,rules,
andregulationswithasingleunifiedpublicprocurementsystem.
It created theGovernmentProcurementPolicyBoard (GPPB),a
policy and monitoring body with the mandate of handling all
procurementmattersaffectingthenational interest. Itprovided
for standard bidding documents and for generic procurement
manualsintendedtomakeiteasierforeveryonetounderstand
andtoparticipateintheprocurementprocess.
10.TheGPRAalsoincludedanti-corruptionprovisions,including
stiffpenaltiesandsanctions–administrative,civil,andcriminal
– against offenders who are found guilty, with a minimum
criminalpenaltyofsixyearsinprison.
What Has Been Achieved11. Since the passage of the GPRA, the public procurement
system has become more efficient, and many loopholes for
9
corruptionopportunities havebeen closed. Thepromotionof
e-procurement through the Philippine Government Electronic
Procurement System (PhilGEPS) has brought the system into
thedigitalageandvastlyimprovedtransparencyandefficiency.
In implementation, standardbiddingdocumentsandmanuals
arebeingusedbythekeyactorsinprocurement,theprocuring
agenciesandtheprivatesectorproviders.Inreviewingcompliance
andclosing the loop in implementation, theauditorsand the
GPPBarenowlookingatthesamerulesanddocumentsasthe
actors,whichshouldbemakingiteasiertoconductreviewand
audit.
12. In January 2003, the GOP and its development partners
agreed to align and harmonize the new public procurement
system with the requirements of foreign-assisted projects. As
ofDecember31,2007,fourareashavebeenharmonized:the
standardbiddingdocuments,thegenericprocurementmanuals,
thetrainingofprocurementstaffandtheuseofthePhilGEPS.
Efficiencyalsoincreasedfollowingtheimpositionofdeadlinesfor
eachprocurement step.Alignmentwith internationalpractice
improved,andthenationalprocurementsystembecamemore
widelyusedfollowingtheincreaseintheNationalCompetitive
Bidding (NCB) thresholds toUS$1million forgoodsandUS$5
millionforworks.From2004to2006,atotalofPhp400billion
in contracts, or about US$8.7 billion, went through the NCB
system, including government-funded and foreign-funded
contracts.
13. Many government agencies adopted e-procurement and
have benefited from the transparency and competitiveness
it fosters. The town of Lo-on in Bohol, for example, does all
its buying online. Using competitive bidding, the Department
of Education’s bulk purchases of textbooks for all schools
nationwidesaved50percentcomparedtopreviouspractice,a
substantial saving to theeducation sector.One textbook that
wasbeingpurchasedforanaverageofPhp100camedownto
Php45incompetitivebidding.Suchexampleshaveencouraged
otherstotrythesystem.
The Challenges That Remain�4. Allegations of procurement corruption. Most recent
corruption perception surveys indicate that perception of
corruption in the Philippines remains very high. However,
procurement is ranked as strong, an indication of good
procurement processes. Much progress has been made in
procurement reform in terms of rules and regulations but
implementation and enforcement are still weak, and the
objectives of the reform have not been fully achieved. This
scenario is consistent with perceptions of a high level of
corruptioninprocurementandwiththeSWSsurveyfindingsthat
only13percentofthepublicisawareofthenewprocurement
lawand its intendedbenefits, andonly29percentofpeople
interviewedagreedthatcorruptioningovernmentcontractsis
lesscommonnowthanfiveyearsago.
15.Howevergoodthenewpublicprocurementsystemunder
theGPRAis,likeanysystem,itcanfallpreytodeliberateabuse
throughinappropriateuseofpower.Bythemselves,thelawand
the new procurement system alone may not be sufficient to
controleitherthegrandcorruption—thetheftoflargesumsby
high-levelpoliticiansorofficials—orpoliticalcorruption—misuse
ofstatepowerbyofficialswhoshapetherulesofthegameto
benefitthemandthosewhopaythem—thatprevailedpriorto
procurementreform,andthatarereportedlycontinuing2.The
successofprocurementreformwillrequiremeasurestostimulate
strongpublicawarenessandsupportforprocurementreform.
�6.Public Awareness: Communication of the reform to the public.MostFilipinosareunawareoftheimpactofprocurement
ontheirdailylives,throughthedeliveryofpublicservices,and
of the importanceofprocurementreform.Arecentsurveyby
theSocialWeatherStations(SWS)foundthatonly13percent
ofthegeneralpublicand30percentofgovernmentemployees
knew about the 2003 procurement reform act. A better
communicationstrategyneedstobedevisedandimplemented
toraisethepublicprofileofprocurementsothatitsstakeholders
and beneficiaries can participate more actively and safeguard
itagainstwrongdoing.Itisthereforenecessarytodeepencivil
societyandprivatesectorinvolvementinvigilantmonitoringof
procurementoperation.
�7. Procurement law implementation and enforcement.ThesesevenoftheCPAR’ssome30recommendationsarecritical
toimprovingimplementationandenforcement.
•Review, revise,and issueanational trainingprogram in line
withthestrategiccommunicationplantoensurechange in
behavior of the current crop of procurement practitioners.
Private sector should also be included to improve
competitiveness;
• Hasten the implementation of the career program of
professionalizingprocurementpractitioners;
2 Source: Accelerating Inclusive Growth and Deepening Fiscal Stability Report for Philippine Development Forum 2008, World Bank.
�0
•Improveprocurementprocessesandproceduresthroughthe
developmentofsimplerbiddingdocumentsandprocurement
manuals for small users, especially local government units,
barangays,people’sorganizationandcommunities;
•Issue policies on record-keeping and public disclosure of
documents to provide the public with better access to
procurementdataandinformation;
•ProvidefundingfortheGPPBTechnicalSupportOffice(TSO)
at a level adequate to strengthen its capacity to perform
an expanded role to oversee the implementation and
enforcementofthelaw,andtoensureitsrelevance;
•PursuetheexpansionofPhilGEPSPhases2to5,asitisthe
solee-procurementportalforthecountry.Itsexpansionwill
providereadyandadequate informationthatwillmakethe
procurementprocesstrulytransparent;and
• Preparation and issuance of Implementing Rules and
Regulations–B to institutionalize the harmonization of
procurementbiddingdocumentsandmanualsthatwillspecify
the regulatory framework for procurement under foreign-
assisted projects. This will strengthen the implementation
andenforcementofthelawandclarifytheapplicationofthe
MDBs’ProcurementGuidelines in internationalorexecutive
agreements,includingatthelocalgovernmentlevel.
�8. Procurement Policies and Mechanisms. The GPRA is
considered a good procurement law as it has incorporated
mostinternationalprocurementpractices,includingcompetitive
public bidding as the default mode, the mandatory use of
standard bidding documents, forms, and manuals, the use
of an electronic government procurement system to enhance
transparencyandaccessto information,aneffectiveoversight
policybodytooversee implementationbyprocuringagencies,
sanctionmechanismsagainsterringparticipantsintheprocess,
andotherfeatures.However,somefeaturesofthelawarenot
inaccordancewithinternationalprocurementpractices.
•Approved Budget for the Contract (ABC). GPRAmandates
imposition of an Approved Budget for the Contract (ABC)
thatsetsapricebidceiling;anybidsthatareabovetheABC
are automatically rejected. The Government’s rationale for
thisruleisthatithelpscontaintheincidenceofcorruptand
collusiveactivitiesandsofar,theGPPBhasbeensatisfiedwith
theresultof themandatory impositionofABC inall locally
fundedcontracts.However,ABCisnotanacceptablerulefor
foreign-fundedcontractsbecauseitlimitscompetition;italso
imposesparticularlimitationsininternationalbiddingbecause
internationalfirmsfacehighercoststhanlocalonesandABC
doesnotalwaystakethisintoconsideration.Infact,ABCcan
encouragecollusionamongasmallnumberofbidders.
The development partners believe that ABC should be
abolishedonce theGovernment is satisfied that its current
purposeinlimitingcollusivebiddinghasbeenserved.Thus,
they recommend that empirical data be gathered and
presented to Government demonstrating that ABC-type
priceceilingsdonotprovidelong-termbenefits.Thisanalysis
shouldbeaccompaniedbytheresultsofthreeotherempirical
studies:(i)acomparisonofcostorengineer’sestimateswith
ABC to determine how reasonable the ABC limits have
beeninpractice,(ii)andananalysisofwhetherthecurrent
lowparticipationofbidders is the resultof imposingabid
ceiling, and (iii) a report on the effectiveness of the ABC
ruleinrelationtocontractadministrationandthequalityof
completedworks.
•Absence of an independent complaints review body.An
independentadministrativereviewbodyshouldbeestablished
to accord the appeal process credibility and efficiency.
Independence is paramount in ensuring a credibledecision
ofthemeritsoftheappealand,beingadministrative,itwill
avoid the lengthy process of a judicial proceeding, which
invariablycannotbecompletedintimetofixproblemsina
procurementprocedure.TheCPARactionplanincludesthe
conductofastudytoreviewtheexistingappealsmechanism
inlinewithinternationalprocurementpractice.
• Pre-qualification and Eligibility Screening. Under the
procurementlawanditsimplementingrulesandregulations,
pre-qualificationisreplacedbyaneligibilitycheckandastrict
post-qualificationprocess. To lessen subjectivity, apass/fail
evaluationisappliedduringeligibilitycheckbasedonadefined
setoflegal,technicalandfinancialcriteria.Onlybiddersthat
passtheeligibilitycheckareallowedtosecurebiddocuments
and submit a bid. Thereafter, the winning bid undergoes
verificationandvalidationduringpostqualificationtoensure
that it has passed all the requirements and conditions as
specifiedinthebiddingdocuments.However,development
partners believe that eligbility screening, like use of ABC,
resultsinrestrictingcompetitionandhascontributedtothe
lowobservednumberofcompetingbidders (anaverageof
threepercontract).Toimprovecompetition,thedevelopment
partners recommend that empirical data be gathered and
presented to Government demonstrating that eligibility
screening is less effective than pre-qualification, and that
an independent review be conducted on the effectiveness
of eligibility screening requirements in the Philippines, in
particularfordocumentsthatarenotrelatedtothetechnical
andfinancialcapacityofthebidder.
�9. Private and public sector partnership. Conditions of
weakcompetitionthatprevailedinthepre-GPRAeracontinueto
persist.Afewprivatecompaniestendtocornerthebiddingsfor
specifictypesofcivilworksandgoods.Manycompanieswhoare
notawareofthenewpublicprocurementsystemsaidtheyprefer
nottodealwithGovernmentduetoitscumbersomeanddifficult
procurementprocesses. Legitimate companies shouldbemade
��
awareofthechangesduetotheGPRAthathavestreamlinedthe
newprocurementprocessandcreatedalevelplayingfield.An
aggressive communication strategy, including targeted capacity
building for private sector participants would strengthen the
private-publicsectorpartnership.
The CPAR20. ThisCPARistheproductofthelatestefforttomonitorand
assesstheeffectivenessofprocurementreforminthePhilippines,
spearheadedbytheGOPinclosecollaborationwiththeWBand
other development partners such as ADB, JBIC, AusAID, EC,
USAID,CIDA,TAF,andtheUNDP.TheGPPBorganizedaCPAR
Working Group, comprising the champions of procurement
reformintheGovernmentandrepresentativesofthevotingand
non-votingmembersof theGPPB,andof thedonors,private
sector,andcivilsociety.
21. The CPAR found that the country’s public procurement
system has an assessed overall risk level of Medium or
Moderate.Theoverallrisklevelisarrivedbycombiningseparate
assessments for fourmajor aspectsorpillars, as represented
graphically in Figure 1. The Legislative and Regulatory
FrameworksubstantiallymetinternationalstandardsforaLow
assessed risk level.Twootherpillars, InstitutionalFramework
andManagementCapacity,andIntegrityandTransparencyof
thePublicProcurementSystem,partiallymetthestandardsand
wereassessedashavingaMediumorModerateRisk.However,
Procurement Operations and Public Procurement Market
Performancedidnotmeetstandardsandwereassessedata
Highrisklevel.Thedetailsofthespecificriskassessmentsare
discussedatlengthinChapter3oftheCPAR.
Looking Ahead22.AlmostallweaknessesidentifiedintheCPARareaddressed
in the agreed Action Plan for 2008-10 presented at the end
ofthisreport.TheGPPBhasalreadyinitiatedconcretestepsto
addressthethreecriticalchallengesmentionedabove:allegations
of corruption, public awareness, and implementation and
enforcement.AStrategicCommunicationPlanhasbeendrafted
to increase public awareness. A long-term and sustainable
professionalization program has been designed, including a
specifictrainingmoduleforprivatesectorparticipants,andthe
certificationofprocurementprofessionalshasbeenagreed to
withtheCivilServiceCommission.ToensurethatCPARaction
planisactedupon,fundedandfulfilled,aSub-WorkingGroup
onProcurementwasformedinAugust2007undertheauspices
of the Philippine Development Forum Working Group on
GovernanceandAnti-Corruption,andwasofficiallyconvened
inNovember2007.
The Legislative and Regulatory Framework
IRR-B Foreign Assisted ProjectsInternational CompetitivePi
llar
I
Institutional Frameworkand Management Capacity
Follow-thru in Compliance Monitoring-Improve Compliance-Generation and Analysis of Data Linkage
Pilla
r IIThe Integrity and
Transparency of the PublicProcurement System
Internal Audit Role of ObserversPhilGEPS as transparency tool
Pilla
r IV
Procurement Operations and Public Procurement Market Performance
ProfessionalizationRecord KeepingPrivate Sector OwnershipPi
llar
III
Figure 1. Graphical Representation of the BLI Pillars for the Philippine Public Procurement Systems in 2006
Maximum Score
2006 Country Score
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2006 Assessment of the Philippine Procurement System
Implementing Procurement ReformSupported by international development agencies, the Government’s core reforms in procurement are promoting competitiveness, economy, transparency and accountability. These reforms, amongst others,led to reducing the cost of textbooks from an average of P100 to P40, for a cumulative savings of about P3 billion for the Government in the 2005-2006 procurement.
�2
Country Economic Context
1.ThePhilippineshashighpotentialtoachieverapidsocialand
economicprogress.Itenjoysastrongsetofassets:world-class
talent,awell-educatedpopulationof83million,richnatural
resourcepotential(mineral,oil,gas,geothermal),andalocation
that offers excellent trade opportunities. The Philippines
also benefits from a very active civil society that can be an
important agent for change. However, overall development
outcomesinthePhilippinesoverthelastdecadeshavefallen
shortofpotential,accordingtotheWorldBank(WB)Country
AssistanceStrategy (CAS)ProgressReport for thePhilippines
(June2007).Percapitagrowthhaslaggedsignificantlybehind
otherEastAsiancountries.Relativelylowdomesticandforeign
investmentflowsreflectweaknessesintheinvestmentclimate.
Investors andenterprises considermacroeconomic instability,
corruption,andpoorinfrastructureassignificantconstraints.
2. Ever since the late 1990s, the Philippine economy has
shown consistent and steady growth culminating in a 7.2
percentexpansioninrealGDPfor2007.Largelysupported
by a favorable international environment, strong domestic
consumption,andhighremittanceinflows,lastyear’sgrowth
was thehighest inover threedecades. The last timeGDP
expanded close to this was in 1988 when it recorded a
6.8percentgrowth. Thepast threeyearshavealsoshown
marked improvementsespecially in thefiscal front. Painful
reforms introduced earlier have allowed the country to
improve revenue generation and reduce its debt burden.
Similarly, the political environment has stabilized to some
extent,particularly following the recentmid-termelections,
when pre-electoral tensions and violence abated. The
electionsresultedinthePresident’spartymaintainingcontrol
of theHouseof Representatives and local chief executives’
seats,whiletheoppositionsolidifieditscontroloftheSenate.
Thenextmajorpoliticalexercisewillbethe2010Presidential
election. The ceasefire in the conflict-affected region of
Mindanaoisholding,inanticipationofthesigningofapeace
agreement,thetimingofwhichhasnotyetbeenset.
I. Background
Country Assistance Strategy
3. Inresponsetotheinitiallyuncertainpolicyenvironmentin
which the 2006-2009 CAS was prepared, the WB adopted
a strategyof supporting“islandsofgoodgovernance”as a
way of supporting institutions and reform experiences that
demonstrate how progress can be made in an environment
wherepublicinstitutionsareoftenunabletoworkeffectively
for the common good. The strategy addressed four key
objectives: (a) achieving fiscal stability to generate resources
aimed at spurring growth; (b) generating economic growth
toacceleratejobcreationandpovertyalleviation;(c)ensuring
socialinclusionandimproveddeliveryofbasicservices;and(d)
improvinggovernance.
4.During2006-2007,thePhilippines’publicfinancialsituation
enteredadecisiveturnaround.Followinganear-crisissituation
in2004,theconsolidatedpublicsector(CPS)financialposition
The WB adopted a strategy of supporting “islands of good governance” as away of supporting institutions and reform experiences that demonstrate how progress can be made in an environment where public institutions are often unable to work effectively for the common good
�3
hasbeensteadilyimproving.Fromadeficitof1.9percentof
GDPin2005,theCPSturnedintoasurplusamountingto0.1
percent of GDP in 2006 and 0.5 percent in 2007. Together
with steady real growth and an appreciation of the peso in
realterms,thenon-financialpublicdebt/GDPratiorapidlyfell
fromover100percentin2003tojust75percentbythethird
quarterof2006.Withthepositivegrowthregisteredin2007,
thePhilippineshasextendeditsruntofourconsecutiveyears
ofregistering5percentorbetterrealeconomicgrowth.
WB Portfolio
5. The WB’s portfolio in the Philippines comprises 22 active
projects,withnetloancommitmentsof$1.1billion.Sevenof
theseareintheagriculturalsector;sixsupporturbanprojects
forwater,sanitation,transport,financeanddevelopment;three
supporthealthandeducation;andtwoeachsupportpower,
social development, and judicial and administrative reform.
Portfolio risk has been stable, with the number of problem
projects remaining steady at three since 2001. The lending
programforFYs08-10currentlyincludes30proposedprojects,
including a follow-on judicial reformproject, a development
policyloan,localgovernmentsupportforperformancegrants,
sector support for social welfare, and program support for
financialmanagement information systems, agrarian reform,
and disaster management; four transport projects; three
power projects; six water and sanitation projects; and eight
loans supporting environmental actions, including wetland
andcoastalmarineenvironments,climatechangeadaptation,
two for persistent organic pollutants, three for prototype
carbonfunds,andaprogramloanforenvironmentandnatural
resources.ThecompositionoftheWB’scurrentloanportfolio
andlendingprogramisprovidedin Annex 2.
6.Asaresultofthe2007PortfolioPerformanceReview,efforts
are being made to further improve portfolio performance
throughsystematicpreparationofsemiannualprojectportfolio
reviewswithimplementingagenciesandperiodicjointportfolio
reviewswiththeAsianDevelopmentBank(ADB),JapanBank
forInternationalCooperation(JBIC),andtheGovernment.For
itspart,theWBwillpursueeffortstoaccelerateandimprove
project preparation and start-up and to closely monitor
project implementation plans agreed with implementing
agencies.Otherelementsofportfoliomanagementincludea
strengthened governance agenda, support to Government’s
ongoing reformsofprocurement andfinancialmanagement
processesinlinewiththeCASgovernanceagenda,capacity-
building initiatives,andmeasures to improvequalityatentry
andmonitoringofloansandtrustfunds.
ADB Portfolio
7.ThecurrentADBportfolio in thePhilippinescomprises42
active projects (17 loans, 24 Technical Assistants, and one
grant). Total net loan commitment is US$1,529.36 million
plus US$21.2 for Technical Assistance and US$9 million
for the grant. Over the next three years the ADB’s Country
Partnership Strategy (CPS) concentrates on addressing two
principalconstraints:uncertaintyof thebudgetoutlook,and
the investmentclimate.Tighter focus inthesetwoareaswill
eventually help the Government reduce poverty as well as
support faster achievement of the Millennium Development
Goals.Toeffectivelyaddressbudgetandinvestmentconstraints,
ADB’sCPSwillintensifyitspolicyengagementinthreebroad
areas: the power sector, financial markets, and governance,
including local government and judicial reform. High policy
engagement in theseareaswouldmanifest itself inprogram
loans,whilesupportingtheGovernment’sfiscalresponsibility
program.TheADBCountryOperationsBusinessPlanmaybe
viewed on www.adb.org/Documents/CPSs/PHI/2007/COBP-
PHI-2007.pdf.
Public Sector Procurement8.Thevolumeofpublicexpenditurepassingthroughthepublic
procurementsystemhasincreasedrapidlyinthelastfewyears.
The volume of public expenditure passing through the public procurement system has increased rapidly in the last few years. Averaging around Php121 billion per year from 2003 to 2005, procurement expenditure jumped to Php168 billion when the Government’s infrastructure program kicked off in 2006, and increased further to Php229 billion by 2007
�4
AveragingaroundPhp121billionperyearfrom2003to2005,
procurement expenditure jumped to Php168 billion when
theGovernment’s infrastructureprogramkickedoff in2006,
andincreasedfurthertoPhp229billionby2007(seeTable1).
Theincreasingtrendofbudgetaryallocationforprocurement
expenditure is a direct consequence of the increasing focus
of the Government of the Philippines (GOP) on extending
infrastructure networks and providing more services to the
public.
Procurement Reform9. The 2002 CPAR. When the GOP, working closely with
the WB and other development partners, took a good look
at itsownpublicprocurement system in1999, it sawmuch
room for improvement. The 2001-02 CPAR noted that the
system at that time was fragmented, cumbersome, and
pronetocorruption.Thereweretoomanyprocurementlaws,
rules, and regulations, and many agencies with overlapping
functions.Giventhissetup,itwasimpossibletoimplementreal
procurementreform—includingenforcement,monitoring,and
performanceevaluation—acrossthebureaucracy.Competition
amongbidderswaslow,theprocesswassusceptibletocorrupt
practices,andforeignbiddersfounditdifficulttoparticipate.
Inforeign-assistedprojects,thethresholdsfortheuseofNCB
in the Philippines were very low (averaging US$200,000 for
goodsandUS$500,000forworks),andstrictfiduciarycontrols
appliedprior-reviewthresholdsatthesamelowlevels.TheWB
identifiedmorethan20rulesthatwereunacceptablebecause
theymadeitdifficultforbidders,especiallyforeignbidders,to
participateinanybiddingprocess.
10. Preparation of the first CPAR thus became a crucial
instrument in generating dialogue allowing Government, its
key development partners, and other stakeholders to focus
andagreeonkeyreformmeasures.Followingcompletionof
thisfirstCPAR,many reformmeasureswere institutionalized
throughthepassageofanomnibusprocurement lawthat is
alignedwithinternationalbestpractices,inthatitisstructured
aroundtheprinciplesoftransparency,competition,economy
and efficiency, fairness and accountability. The Government
ProcurementReformAct (RA9184)orGPRAwaspassedby
bothhousesofCongress,approvedbythePresidentonJanuary
Table �: Philippine Government Procurement Budget, 2003-07. (in thousand pesos)
EXPENSE CLASS 2003 2004 2005 2006 2007 Actual (in thousand pesos)
Maintenance and Operating Expenses
RepairandMaintenance 8,315,775 12,181,299 12,581,866 17,917,968 23,465,563
SuppliesandMaterials 17,359,408 20,078,844 19,917,216 25,742,846 39,637,080
UtilityExpenses 4,431,342 4,827,572 5,525,995 6,123,188 6,442,858
TrainingandScholarshipExpenses 2,840,775 3,493,190 4,145,486 4,481,290 6,209,303
ProfessionalServices 10,714,849 14,309,428 12,445,625 13,567,429 15,964,613
PrintingandBindingExpenses 622,646 701,908 523,469 621,855 1,871,709
AdvertisingExpenses 237,901 308,681 330,930 480,258 609,565
SubscriptionExpenses 1,381,716 171,633 125,237 134,848 171,309
Sub-Total 45,904,4�2 56,072,555 55,595,824 69,069,682 94,372,000Capital OutlayLandandLandImprovement 3,477,582 4,471,246 4,621,993 6,671,426 12,127,661
BuildingsandStructures 2,956,275 3,349,326 5,513,794 5,820,924 8,472,219
OfficeEquipment,FurnitureandFixtures 11,296,904 4,872,374 2,882,669 2,961,520 4,944,178
TransportationEquipment 1,515,993 1,679,816 1,815,319 1,038,869 1,380,911
MachineriesandEquipment 2,605,938 1,585,144 1,503,100 4,563,132 8,084,841
PublicInfrastructure 54,189,418 53,770,213 42,848,594 77,784,263 99,936,131
Sub-Total 76,042,��0 69,728,��9 59,�85,469 98,840,�34 �34,945,94�Total �2�,946,522 �25,800,674 ��4,78�,293 �67,909,8�6 229,3�7,94�Percent of National Government Budget (five-year average: �4.5%) �4.78% �4.5�% �2.��% �6.07% �9.84%Percent of Gross Domestic Productat current prices 2.82% 2.58% 2.��% 2.78% 3.45%
Source: Budget of Expenditures and Sources of Financing (2005-2009), Department of Budget and Management
�5
10,2003,andbecameeffectiveonJanuary26,2003(15days
afteritspublicationinanewspaperofnationwidecirculation).
Thenewlawhashadamajorimpactbyeliminatingmorethan
100 laws, rules, and regulations and replacing them with a
singlepublicprocurementsystemthatisattunedtothelocal
cultureandgovernanceenvironment.Thelawalsocreatedthe
Government Procurement Policy Board (GPPB), a policy and
monitoringbodywiththemandateofhandlingallprocurement
mattersaffectingthenationalinterest.
��. Legal and institutional reform. The GPRA was the
outcome of a widely participatory consultation process
that included the key development partners and resulted in
the inclusion of international procurement best practices:
streamlined and time-bound procedures, standardization of
procurement documents, manuals and forms, mandatory
use of e-procurement, protest and complaint mechanisms,
andpenalties for procurement offenders and those involved
in corrupt practices. Organizational reforms were also
mandatedthroughthecreationofanoversightprocurement
agency, increased accountability of bidding organizations,
staff professionalization, and the presence of civil society
organizationsasobserversofthebiddingprocess.TheGPRA
also created opportunities for foreign bidders to participate
when: (a) the items are not locally available; (b) there are
parity or reciprocity rights between countries, or applicable
internationalorexecutiveagreements;or (c)whenthere isa
needtopreventasituationthatdefeatscompetitionorrestrains
trade.Thisreformhasallowedanumberofforeigncompanies
to participate in both foreign-assisted and fully government
fundedprojects.
�2.Alignment and harmonization.Harmonizationactivities
were agreed upon in January 2003 and vigorously pursued
by the GOP and its development partners, leading to the
near-alignment of the new public procurement system with
the Multilateral Development Bank (MDB) Guidelines for
foreign-assisted projects. As of February 2007, three areas
havebeenfullyharmonized:(a)standardbiddingdocuments,
throughtheissuanceinAugust2004ofthePhilippineBidding
Documents(PBDs)forWorks,Goods,andConsultingServices
as harmonized with the ADB, JBIC, and WB; (b) Generic
ProcurementManuals(GPMs)infourvolumes,asharmonized
with the ADB, JBIC, and WB, approved under a June 2006
GPPBresolution,formandatorynationwideimplementationby
January2007;(c) jointtrainingofprocurementstaffthrough
thenationaltrainingprogramusingtheStateUniversitiesand
Colleges(SUCs),whereabout50percentoftheprocurement
staffhadbeenintroducedtothelaw,theimplementingrules,
and theharmonizedPBDsandGPMsasofDecember2006.
Furtherharmonizationof implementing rules, reporting,and
monitoring has since occurred and is discussed further in
Chapter4ofthisreport(Foreign-assistedProjects).
13. The outcome of alignment efforts has been that the
nationalprocurementsystemhasbecomemorewidelyusedin
foreign-assistedprojects.ThePhilippineGovernmentElectronic
ProcurementSystem(PhilGEPS)wasassessedtobeacceptable
forMDB-fundedprojects.TheNCBthresholdwasraisedfrom
US$200,000toUS$1millionforgoodsandfromUS$2million
toUS$5million forworks.Greater relianceon the country’s
publicprocurementsystemandtheuseofhigherpriorreview
thresholds have led to the need for carrying out joint WB
andGPPB-TSOprocurementcapacityassessments forproject
implementingagencies.
�4.The procurement law as an anti-corruption measure.
Reforming the procurement system is a vital part of the
Government’s anti-corruption agenda, and the GPRA did
much to push that agenda forward. The procurement law
consolidatedamultiplicityoflawsandotherissuances,making
allprocurementmatterssubjecttoitanditsimplementingrules
andregulations.Thelawprovidesforpenaltiesandsanctions
–administrative,civil,andcriminal–againstpublicoffenders
whoarefoundguilty,andbidders,contractors,suppliers,and
consultingfirmsfoundguiltyofcorruptpracticeswillalsobe
subject to prosecution. The minimum penalty for a criminal
offense is six years inprison. The anti-corruption agencies –
OfficeoftheOmbudsman,PresidentialAnti-GraftCommission
(PAGC),andtheCommissiononAudit(COA)–haveusedthe
GPRAasabasis for investigationsandprosecutionsofsome
high-profile casesdiscussed inChapter2of thisReport (see
sectiononIntegrityandTransparency).
The Government Procurement Reform Act (RA 9184) or GPRA was passed by both houses of Congress, approved by the President on January 10, 2003, and became effective on January 26, 2003 (15 days after its publication in a newspaper of nationwide circulation).
�6
Further Challenges15.While the legal frameworkhasbeensatisfactorily setup
andharmonizationwiththedevelopmentpartners ismoving
forward, big challenges remain in implementation and
monitoringofcompliancewiththeprocurementlaw,including
the enforcement of anti-corruption measures. This CPAR
identifiesthechallenges,presentsrecommendations,andhas
generatedacontinuingdialogueonanactionplan tomove
towardsmakingmost,ifnotall,oftheprocuringentitiesGPRA
compliant.
�6.Allegations of procurement corruption.Afterfiveyears
ofimplementation,29percentofpeopleinterviewedintheSWS
surveyagreedthatcorruptioningovernmentcontractsisless
common,while37percentdisagreedand30percentremain
undecided (see Annex 4, Para. 3.4). Most recent corruption
perception surveys indicate that perception of corruption
in the Philippines remains very high. The recently published
Global Integrity Index2007ranks thecountryasweak,with
nochangefromlastyear.However,procurementisrankedas
strong, an indication of good procurement processes. Much
progress has been made in procurement reform in terms of
rulesandregulationsbutimplementationandenforcementare
stillweak,andtheobjectivesofthereformhavenotbeenfully
achieved.Thisscenarioisconsistentwithperceptionsofahigh
levelofcorruption inprocurementandwith theSWSsurvey
findingsthatonly13percentofthepublicisawareofthenew
procurementlawanditsintendedbenefits.
17. The CPAR team found that this low level of awareness
isdue to the fact that the lawhasnotbeencommunicated
properly to civil servants, theprivate sector, civil society and
other stakeholders. In particular, the private sector has not
beeninformedoftheprovisionsinthelawthatleveltheplaying
field andencourage competition.Both citizens andbusiness
community are the intended beneficiaries of procurement
reform,and thereforeneed tobewell-informedandvigilant
watchdogsparticipatingintheenforcementoftheprocurement
law.Howevergoodthenewpublicprocurementsystemunder
theGPRAis,likeanysystem,itcanfallpreytodeliberateabuse
through inappropriateuseofpower.By themselves, the law
andthenewprocurementsystemalonemaynotbesufficient
tocontrolgrandcorruption—thetheftoflargesumsbyhigh-
levelpoliticiansorofficials—andpolitical corruption—misuse
ofstatepowerbyofficialswhoshapetherulesofthegameto
benefit themand thosewhopay them—thatprevailedprior
to procurement reform, and that are reportedly continuing.
The successof procurement reformwill requiremeasures to
stimulatestrongpublicawarenessandsupportforit.
The CPAR Process
Objectives18. ThisCPARwasdesignedmainlytoassessthecurrentpublic
procurementsystemandgenerateadialoguetoimprovepublic
procurement practices and help civil society and the private
sector better understand these processes and procedures.
Anadditionalobjectivewastomeasureaccountability in the
expenditure of public funds through procurement and link
thisassessmenttotheparallelWBassessmentsofthesystems
for Public Expenditure Management and Public Financial
Management.
Scope19. The assessment covers the implementation of the
procurement law at all levels, from the national agencies,
regional and district offices, sub-national agencies, and
government-owned and controlled corporations, down to
localgovernmentunits,includingthebarangay.Italsocovers
the marketplace for public procurement, comprising private
sector bidders, suppliers, contractors, and consultants. The
effectivenessofcivilsociety’sparticipationwasalsoassessed.
Procurement transactions and contracts were reviewed and
analyzedfortheperiod2004to2006.
20.ThescopeoftheworkforthisCPARincludes:(a)areview
oftheeffectivenessofthepolicyandproceduralreforms;(b)
thedevelopmentanddesignofastrategyforthenationwide
implementationof tools tomonitorandmeasurethe impact
of the reform; (c) the assessment of the implementation
and enforcement of anti-corruption measures and the
recommendation of measures to strengthen them; (d) the
assessmentofthesustainabilityofcivilsocietyandprivatesector
participationinpublicprocurementandrecommendationsof
waystoimproveit;and(e)theassessmentoftheeffectiveness
of the GOP communication strategy and the suggestion of
recommendations to improve the public and international
perceptionoftheprocurementsystem.
Reforming the procurement system is a vital part of the Government’santi-corruption agenda, and the GPRA did much to push that agenda forward.
�7
21.Inthecourseofthereview,specialattentionwaspaidto
assessing the implementationandenforcementof theGPRA
and its Implementing Rules and Regulations Part A (IRR-A),
focusinglargelyon(i)anationaltrainingandprofessionalization
program; (ii) e-procurement and its linkage with electronic
budgeting and the new electronic government accounting
system; (iii) recordkeeping, monitoring and evaluation;
(iv) anti-corruption measures; (v) civil society and private
sector observers; and (vi) a strategic communication plan to
strengthencoalitionandbuildpublicsupport.Inlinewiththe
WBCASapproach, theassessmentclassified the impactson
threegroupsofstakeholders:nationaland localgovernment
entitiesandtheprivatesector.
Methodology22. Three Stages. The CPAR process was conducted in
three stages. First, the kick-off mission had the whole team
discussingandagreeingontheobjectives,scope,coveredareas,
methodologies, and approaches. The second stage involved
consultations with concerned groups and stakeholders, the
privatesector,anddevelopmentpartners,after the technical
consultantshadrecordedtheinitialfindingsandanalysis.The
thirdstagewasthefinalmissionwhichgenerateddialogueon
thedraftCPAR,usingtheindicator-basedreports,andachieved
consensusonhowtoconcretelyaddresstheweaknessesofthe
currentpublicprocurementsystem.Participantsintheprocess
arelistedinAnnex1.
23.OECD/DAC-WB Baseline and Performance Indicators.
ThePhilippineswasselectedasapilotcountryforthetesting
oftheBaselineIndicatorSystemandCompliancePerformance
IndicatorSystem(version4,July2006)developedbytheOECD-
DevelopmentAssistanceCommittee(DAC)–WBJointVenture
onProcurement.Thesystemisdividedintofour(4)pillarswith
twelve(12)indicatorsandfiftyfour(54)baselinesub-indicators.
Thescoringsystemrangesfrom3to0foreachbaselinesub-
indicator.Ascoreof3indicatesfullachievementofthestated
standard.Ascoreof2isgivenwhenthesystemexhibitsless
than full achievementandneeds some improvements in the
area being assessed. A score of 1 is for those areas where
substantiveworkisneededforthesystemtomeetthestandard.
A ratingof0 is the residual indicatinga failure tomeet the
proposed standard. In aggregating the scores to determine
theoverallcountryscore,theusercountryisallowedtodecide
ontheweightsusedtoaggregateatindicatorandpillarlevels.
TheGOPdecidedtoaggregatethescoresbyallocatingequal
weights for each pillar at 25 points and provided certain
weights for each sub-indicator and indicators depending on
thenationalprocurementfocusorstrategies.ThefullGOPBLI
reportisdisclosedintheOECDwebsite:www.oecd.org.
24. For this CPAR, the indicator level score is arrived at by
addingthescoresofsub-indicatorsanddividingthesumbythe
totalmaximumscores. The resultingpercentagedetermines
the level of achievement per indicator, and the percentage
levelsaregiventhefollowinginterpretation:thelowestlevelis
noneachieved(NA)forcompliancewithbaselinesfrom0-20
percent,thehighestisfullyachieved(FA)forcomplianceof81-
100percent,withtwolevelsinbetween:partiallyachieved(PA)
for21-60percent,andsubstantiallyachieved (SA) for61-80
percent.ThisCPARdecidednottofurtheraggregatethescores
tothepillarorcountrylevel.
25. FromFebruarythroughMay2007,theBLI-CPIassessment
methodology was introduced in a series of workshops that
comparedandvalidatedthefindingscomingfromtheearlier
focus group discussions, workshops and field work. The
validation process took four workshops for the GOP self-
assessment, and three workshops with the development
partners, civil society, and the private sector to validate the
self-assessment.
26. Agency Procurement Performance Indicator. The BLI
ispredominantlybasedonmacroindicatorsintendedtolook
at key elementsof apublic procurement system, and is not
intended to measure performance. It must be coupled with
a performance measurement tool to determine where to
make changes and what changes need to be made, based
oncollectionandanalysisofactualperformancedata.GPPB
therefore developed 28 Agency Procurement Performance
Indicators (APPI) that are related to the four pillars of the
The Philippines was selected as a pilot country for the testing of the Baseline Indicator System and Compliance Performance Indicator System (version 4, July 2006) developed by the OECD-Development Assistance Committee (DAC)–WB Joint Ventureon Procurement.
�8
BLI October 2004 version, in order to monitor and evaluate
actual implementation at the agency or micro level, linking
performanceatthetransactionalleveltotheelementsofthe
procurementsystematthemacrolevel.
27. Starting in 2006, the joint procurement capacity
assessment of implementing agencies for WB-assisted
projects had adopted the APPI as its main assessment tool.
To assess actual performance of the public procurement
system,theCPARusedtheAPPIsoftenentities:eightnational
governmentagencies—theDepartmentofPublicWorksand
Highways(DPWH),DepartmentofHealth(DOH),Department
ofEducation(DepEd),DepartmentofNationalDefense(DND),
ArmedForcesofthePhilippines(AFP),DepartmentofInterior
and Local Government (DILG), Department of Environment
and Natural Resources (DENR), and the Bureau of Internal
Revenue (BIR)—one Government-owned corporation, the
NationalPowerCorporation;andoneLocalGovernmentUnit
(LGU),theCityofMarikina.TheconsolidatedAPPIbecamethe
basisforassessingtheperformanceoftheprocuringentitiesin
the implementationoftheGPRA.Theresultsofthisexercise
aresummarizedinAnnex 3.
28. Public Perception Survey. Social Weather Stations
(SWS), a local survey firm, conducted surveys in November
andDecember2006,with20questionsaimedatassessingthe
public’sperceptionoftheeffectivenessofthenewprocurement
systemandhowitcouldcontributetocombatingprocurement
corruption.Theresultsofthesurveyshapedrelevantportions
ofthisreport,particularlyonStrategicCommunicationofthe
Reform.TheSWSsurveywascoordinatedbyTAFwithUSAID
funding,andthesurveyresultswerereleasedinFebruary2007.
Follow-upsurveystomonitorprogressinthepublicperception
willbeconductedinthefutureupdateoftheCPAR.Theresults
ofthe2006surveyaresummarizedinAnnex 4.
29. Procurement transactions and experts’ reviews.
A review of the Philippines’ procurement legal framework
was carried out from July to November 2006. Reviews of
procurementtransactionswerealsoundertakentoassessthe
impactof the law in thefield. These reviewswere followed
byfocusgroupdiscussionswithrelevantsectors,suchascivil
society organizations, the private sector, and the leagues of
barangays, municipalities, cities, and provinces. A team of
consultants also conducted assessments on the status and
effectivenessofthecommunicationstrategyforprocurement
reforms, the sustainability of civil society and private sector
participation in public procurement, the effectiveness of
the capacity-building and professionalization programs, the
enforcement of blacklisting and disqualification procedures,
andthestateofrecord-keeping,monitoring,decision-making
and control systems within procuring entities. Auditing and
legal/prosecutorial experts reviewed the effectiveness of the
anti-corruptionmeasuresoftheprocurementlawbymonitoring
the investigation and prosecution process in selected high-
profile procurement cases. The assessment highlighted the
strengthsandweaknessesofthosecaseshandledbyanti-graft
bodiessuchastheOmbudsman,PAGCandCOA.
30. Planning sessions were conducted with the leagues of
barangays,municipalities,citiesandprovinces,todiscussthe
initialfindingsoftheconsultantsonprocurementpracticesand
thestateofrecordsmanagementintheLocalGovernmentUnits
(LGUs).Workshopswerealsoconductedamongrepresentatives
from theGOP, civil society, and theprivate sector todiscuss
the state of their participation in procurement reforms and
activities and the statusandeffectivenessof communicating
the procurement reforms to the various stakeholders, and
todevelopa communications strategy that effectivelybuilds
awareness of the general public and generates increased
supportforthereforms.
31.Topromotee-procurement,anE-GovernmentProcurement
(E-GP)Missionwasfielded inNovember2006, todetermine
PhilGEPS acceptability for foreign-funded procurement and
possible linkages with other public financial management
systems such as the electronic budget and the electronic
NationalGovernmentAccountingSystem.
Links with Other Studies32. In parallel with the CPAR, the WB carried out an
assessmentoftheGOP’spublicfinancialmanagementsystem
using the Public Expenditure and Financial Accountability
(PEFA) framework. The PEFA methodology includes one
indicator, out of the total of 28, on public procurement,
which measures the extent to which competitive bidding
is used for public procurement above a specified minimum
threshold and the adequacy of justification provided when
competitivebidding is notused. PEFA is not intended tobe
a comprehensive assessment of the public procurement
system,but ratheranapproach forperformanceassessment
inpublicfinancialmanagementingeneral.Assuch,itshould
beseenasacomplementtotheCPARforthoseinterestedin
gaininga senseof theoverallqualityof thecountry’spublic
financialmanagement system. The PEFA review is presented
inthePEFA,PublicFinancialManagementPerformanceReport
and Performance Indicators where procurement garnered a
satisfactorypassingscoreofB+.
�9
Bringing Justice to the Least PrivilegedThree large buses converted into mobile courts have been making the rounds of detention centers and jails in Luzon, Visayas and Mindanao, to hear simple cases, de-clog regular courts and decongest jails. Procurement of the buses were done efficiently and customized to the needs of justicial proceedings. Good procurement practices support the Judiciary’s mission.
20
Pillar I: Legislative and RegulatoryFramework
33.Thispillarlooksatthelawsgoverningpublicprocurement
andattheimplementingrulesandregulations.Graph1shows
the BLI assessment result for this procurement pillar, based
on two indicators: (1) legal framework, where international
standards are found to be substantially achieved; and, (2)
implementing regulations and documentation, where the
existingsystemisfoundtofullyachievethestandards.
Procurement Legislative Framework
Findings 34. Governance Structure. The Philippines is a democratic
and republican state that, under the 1987 Constitution,
adoptedthecentralizedpresidentialformofgovernment.The
powersofgovernmentareexercisedbythreeindependentand
co-equal branches: (a) the Executive Branch, which enforces
thelawsandisheadedbyanelectedPresidentforatermof
six years; (b) the Legislative Branch, which promulgates the
laws and is vested in a bicameral Congress consisting of a
Senate and a House of Representatives; and (c) the Judicial
Branch,whichsettlesdisputes involvingrightsofcontending
partiesunderthelaw,andisvestedintheSupremeCourt,an
appellatecourt,andotherlowerandspecialcourts.
35.Therearefourindependentconstitutionalbodiesthatare
directly accountable to the people and not beholden to the
threebranchesofgovernment:(a)theCivilServiceCommission,
which oversees the civilian bureaucracy; (b) the Commission
on Election, which administers the electoral process; (c) the
Commission on Audit, which audits government accounts;
and(d)theOfficeoftheOmbudsman,whichinvestigatesand
prosecutesgraftandcorruptioncasesinvolvingcivilservants.
36. Within this governance structure, the management and
operationofthepublicprocurementsystemisafunctionofthe
ExecutiveBranch,becauseitisamechanismfortheacquisition
ofgoods,works,andservicesthatenabletheGovernmentto
deliverpublicservices.
II. FINDINGS, ASSESSMENTS AND RECOMMENDATIONS
37. Legal System and Hierarchy of Issuances. The
Philippine legal system is primarily civil law, with a written
Constitutionandabodyoflegislatedstatutesastheprincipal
sourcesoflaw.However,commonlawinfluenceistraceablein
somecommercialandprocedural lawsderivedfromUSlegal
institutions.Also, theShari’ah legal system is recognized for
Muslimsandenforced intheAutonomousRegion inMuslim
Mindanao.
38. In terms of the hierarchy of legal issuances, the 1987
Constitution is the supreme lawof the land, andno lawor
issuancecanruncountertoit.Atthesecondlevelarethelaws
passedbyCongressorthoseissuedbythePresidentduringthe
fewoccasionsthatthePresidentexercisedlaw-makingpower,
followed by a third level of executive orders issued by the
President,whichhavetheforceoflawaslongastheydonot
violatethelawspassedbyCongressandtheConstitution.At
thefourthlevelareadministrativeordersissuedbygovernment
agenciesandordinancesissuedbyLGUs,whichhavelocalized
and limited coverage and effectiveness but may not violate
theConstitution,lawspassedbyCongress,ortosomeextent
ExecutiveOrdersissuedbythePresident.
SCOREMAX. SCORE
Graph 1 - Legal and Regulatory Framework
�0
0Pillar 1 Legislative and Regulatory Framework
Indicator 1 Legislative and Regulatory Provisions
Indicator 2 Existence of ImplementingRules
20
30
40
50
3642
18
24
18 18
2�
39. The Government Procurement Reform Act. The
GPRAcoversallprocurementofthenationalgovernment,its
departments,bureaus,officesandagencies, includingSUCs,
Government Owned and Controlled Corporations (GOCCs),
Government Financial Institutions (GFIs), and LGUs. The full
text of the law is posted on the GPPB website (www.gppb.
gov.ph).The lawmaynotberevised,amended,or repealed,
except through Congress. It has been cited and applied by
theSupremeCourtinanumberofcases.Figure2showsthe
hierarchyoflawsandissuancesintheGOPProcurementReform
Framework,theircoverage,andareasforharmonizationwith
donors.
40. Coverage and Principles of the GPRA.Thelawadopts
thefollowingprinciples:
•Transparency in the procurement process and in theimplementationofprocurementcontracts;
•Competitivenessbyextendingequalopportunitytoenableprivatecontractingpartieswhoareeligibleandqualifiedtoparticipateinpublicbidding;
•A streamlined procurement process applicable to allgovernmentprocurement,simpleandadaptabletoadvancesinmoderntechnology;
•System accountability, whereby both the public officialsdirectly or indirectly involved in procurement and in theimplementationofcontractsaswellastheprivatepartiesthatdealwithgovernmentare,whenwarrantedbycircumstances,investigatedandheldliablefortheiractions;and
•Public monitoring of the procurement process and theimplementation of awarded contracts to make sure thatthese contracts are awarded lawfully and are undertakenstrictlyaccordingtospecifications.
Figure 2. GOP Procurement Reform Framework
.
Implementing Rulesand Regulations
World Bank, ADB,JBIC Guidelines
World Bank, ADB,JBIC Guidelines
Generic ProcurementManuals
Harmonization
Bidding Documents
GovernmentProcurement PolicyBoard (GPPB)
Technical SupportOffice (TSO)
Oper
atio
nsOv
ersi
ght
Lega
l Fra
mew
orks
Commission on AuditOmbudsman / Presidential Anti-Graft Commission
22
External AuditInvestigationand Reports
Reports and Complaints
Reports and Complaints
Trainings and Info.Campaigns APPI and OMES
- Heads of ProcuringEntities
- Bids and AwardsCommittees (BAC)
- Technical WorkingGroups
- BAC Secretariat- Budget and
Supply Officers- End users
- Local ChiefExecutives
- Bids and AwardsCommittees (BAC)
- Technical WorkingGroups
- BAC Secretariat- Budget and
Supply Officers- End users
s
41. Procurement Reform Measures.Thelawisconsidered
a good procurement law because it incorporates almost
all attributes of a good public procurement system. These
include:
(a)linkingprocurementwithpublicfinancialmanagementby
incorporatingannualprocurementplansinthebudgeting
system;
(b) modernization through the adoption of electronic
government procurement (PhilGEPS) and mandating its
use;
(c) requiring competitive bidding as the primary mode of
procurement;
(d) prescribing a balanced procurement organization in all
procuringentitiesthroughtheBidandAwardsCommittee,
chairedbyatleastathird-rankingpermanentofficial;
(e)reducingopportunitiesforcorruptionby
(i) prohibitingtheheadoftheprocuringentityfrombeing
amemberofthecommittee,
(ii)prescribing rules on fraud and corruption in the
InstructiontoBiddersandStandardContractForms,
(iii)requiringdisclosureofrelationsbythebidderthrough
a sworn affidavit that no officer of the corporation
is related to the Head of the Procuring Entity by
consanguinityoraffinityuptothethirdcivildegree,
(iv) inclusion of penal clauses, civil liabilities, and
administrativesanctionsagainstviolatorsofthelaw,
(v)provisionoflegalassistancefor,andindemnificationof,
BidsandAwardsCommittee(BAC)memberswhoare
subjectedtoharassment;and
(vi)requiringcivilsocietyorganizationsorNGOstoobserve
thebiddingprocess;
(f) facilitatingtheprocessthroughtheissuanceandmandatory
useofstandardbiddingdocumentsandforms,andgeneric
procurementmanuals;
(g)providingavenuesfortransparencybymeansofaclearly
definedprotestmechanismandprocedures;
(h) streamlining contract implementation and settlement of
disputes;and
(i) creationofanoversightandnormativebodymandatedto
protectthenationalinterestinallmattersaffectingpublic
procurement, with due regard for the country’s regional
andinternationalobligations.
42. Procurement methods. The GPRA provides for public
bidding as the primary mode of procurement and defines
thecircumstancesandcriteriabywhichmethodsother than
publicbiddingmaybeusedbytheprocuringentity.However,
the GPRA does not specify the appropriate standards for
international competitive tendering. It simply acknowledges,
under its Section 4, that the procurement rules agreed in
treaties and in international or executive agreements (such
as donor loan and grant agreements) should be respected.
While the procurement principles governing the Philippine
procurement system and those of the multilaterals are the
same,thisisnotthecaseforotherdevelopmentpartners;the
Government is concerned that there are some development
partners, particularly bilateral ones, that are not following
opencompetitivebiddingprinciplesofprocurement. It is for
this reasonthat theGovernment ispursuingthepreparation
and issuance of an Implementing Rules and Regulations–B
(IRR-B)toprescribeappropriateimplementingrulesforforeign-
funded contracts.At theApril 2008PhilippineDevelopment
Forum,thedevelopmentpartnersagreedtoprepareIRR-Bto
institutionalizetheharmonizationofdocumentsandmanuals
andattaineffectiveimplementationofthenewprocurement
systematthenationalandLGUlevels.TheWBwillleadthiseffort
on behalf of the development partners. Recommendation:To provide guidance in the implementation of international competitive tendering, Implementing Rules and Regulations B (IRR-B) should be drafted and issued, as provided for in Section 1 of IRR-A: “[T]he IRR-B for foreign funded procurement activities shall be subject of a subsequent issuance.” The proposed CPAR Action Plan includes the drafting, finalization and issuance of IRR-B.
43. Advertising rules and time limits. TheGPRA requires
that public advertisement and posting of bid opportunities
for competitive bidding and for procurement done through
alternativemethods.Theleadtimesfortheadvertisementupto
thebidsubmissionareprovidedforintheimplementingrules.
For foreign-funded international competitive bidding (ICB),
theGPRArequiresthattheMDB’sProcurementGuidelinesbe
followed. However, the law does not provide for extension
of thetimeframeswhen internationalcompetition issought.
Recommendation: The proposed IRR-B should include a provision for appropriate timelines for international bidding to encourage the participation of foreign bidders.
44.Rules on Participation.TheGPRAprovides for fairness
and transparency in public bidding rules as indicated in the
Instruction to Bidders. However, it does not provide specific
rulesfortheparticipationofGOCCsorstate-ownedenterprises
in public bidding that would promote fair competition and
encourage legitimate private enterprises to bid. The entry
of a GOCC bidder would cast doubt on the fairness of the
process that would undermine competition. Consequently,
theprocuringentitywouldoftenresorttodirectpurchaseor
negotiationwiththeGOCC,whichisallowedundertheGPRA.
Recommendation:To promote fairness in public bidding, the implementing rules and regulations should include specific rules when a GOCC participates as a bidder.
45.Complaint and Protest Mechanisms.TheGPRAandits
IRR-Aclearlydefinetheprotestmechanism.Allcomplaintsbya
bidderarefiledwiththeprocuringentity’sBAC,whichistasked
toresolveitinthefirstinstance.Shouldbiddersnotbesatisfied,
theymaythenfileanappealwiththeheadoftheprocuring
entity,intheformofaverifiedprotestanduponpaymentof
23
anon-refundableprotestfee.However,noindependentthird-
party review body is designated to resolve the complaint or
protest. Furthermore, the IRR-A sets the protest fee as one
percent of the approved budget for the contract. Based on
theexperiencesofthenineAPPIpilotagenciesandonepilot
LGU,therearehardlyanyprotestsfromthebidders,because
of the restrictive provisions on protests and the lack of an
independentreviewbody.Whileanappealfromthedecision
oftheHeadoftheProcurementEntitymaybefiledwiththe
office of the President or the judicial courts, these are not
independentadministrative reviewbodiesas requiredby the
standards.Recommendation:A study should be conducted on how the appeals mechanism could be strengthened based on the requirements of the law and international standards.The Study should aim to find ways of making the protest mechanism a tool for upholding the integrity of the bidding process.
Results of BLI Assessment46. The above findings are reflected in the BLI assessment.
Indicator1garneredascoreof18percentoutofapossible
24 points for a 75 percent compliance level, indicating that
thelegislativeframeworksubstantiallyachievesthestandards
agreedupon.Thelegislativeframeworkisadequatelyrecorded
andorganized,thelawiscomprehensiveenoughtocoverall
typesofprocurementusingthenationalbudget,anditdefines
and provides for allowable procurement methods. The legal
framework also provides for public bidding as the default
procurementmethodandclearlysetsouttheproceduresand
timelimitsforthismethod.Table2providesasummaryofthe
ratingsfortheassessmentofthisindicator.
Implementing Regulationsand Documentation
Findings47. Implementing Rules and Regulations. The
Implementing Rules and Regulations Part A (IRR-A) of the
GPRA,whichprovides specificguidelinesandprocedures for
theprocurementofgoods,works,andconsultingservicesthat
arefullyfundedbytheGovernment,wasjointlyformulatedby
theGPPBandthe JointCongressionalOversightCommittee.
Both bodies then endorsed the IRR-A to the President, who
officiallysignedandissueditonSeptember18,2003,under
AdministrativeOrderNo.119.TheIRR-Aamplifiesandclearly
discusses each provision of the GPRA, from procurement
planning, procurement organizations and responsibilities,
bidding documents and forms, protests and appeals, to
procurementmethodsandalternativemethods,procurement
procedures, contract implementation, dispute resolution,
liabilities, and sanctions and penalties against violators.
AlthoughIRR-Adoesnotapplytoprocurementunderforeign-
assistedprojects,whichwillbecoveredinafutureIRR-B,itis
applied as a supplement to the procurement guidelines and
the loan or grant agreements of the development partners,
wheneverthesearesilentonspecificareasorprocedures.
48. The Philippine Bidding Documents. The PBDs are
standarddocumentsusedforprocurementthroughcompetitive
biddingthatsettherulesofthebiddingprocessandarebinding
onallparticipatingparties,thatis,theprocuremententityor
buyerand thebidders from theprivate sector. ThePBDs for
works,goods,andconsultingservices include instructions to
bidders, bid data sheets, qualification requirements, award
criteria, specifications, protest and complaint procedures,
general and special contract conditions, and bidding forms.
The standard forms, including conditions of contract, are
based on international standards. As part of procurement
harmonization,andexceptforaveryfewdifferencesmentioned
inthePBDs,thesamedocumentsareusedbyprocuringentities
Table 2: Summary of Scores for Indicator �, Pillar I
Sub-Indicators Score Max. Score1(a)–Scopeofapplicationandcoverageofthelegislativeandregulatoryframework 3 3
1(b)–Procurementmethods 2 3
1(c)–Advertisingrulesandtimelimits 1 3
1(d)–Rulesonparticipation 2 3
1(e)–Tenderdocumentationandtechnicalspecifications 3 3
1(f)–Tenderevaluationandawardcriteria 3 3
1(g)–Submission,receiptandopeningoftenders 3 3
1(h)–Complaint 1 3
Total Score �8 24Rating: 18/24 or 75%;Level of Achievement is Substantially Achieved (SA)
24
implementingNationalCompetitiveBidding(NCB)forforeign-
assistedprojects.However, since regional anddistrict offices
andLGUshavefoundthePBDstobetoocomprehensiveand
tediousforsmalllocalprocurements,simplifiedPBDsforsmall
procurementsuptocertainthresholdsarebeingdevelopedby
theGPPB.
49.The Generic Procurement Manuals.TheGPMsexplain
the steps of the procurement process within a procuring
entity and serve as user guides for practitioners. The GPMs
alsodefine the roles and responsibilitiesof theprocurement
organizations,thetechnicalworkinggroups,theprivatesector,
andcivilsocietyobservers.Therearefourvolumes,oneeach
onsystemsandorganization,goodsandservices,infrastructure
projects, and consulting services. Government agencies are
allowedtocustomizeandmodifytheGPMstosuittheirneeds,
subjecttotheapprovaloftheGPPB,andprovidingthechanges
remainconsistentwithexistingprocurement laws,rules,and
regulations. Like thePBDs, the fourGPMswereharmonized
in July2006with themanualsusedbyADB, JBIC, andWB.
While theGPMsprovideaholistic approach toprocurement
inallagencies,LGUsareunderstandablyconcernedthatthey
may not always be appropriate for small LGUs. The GPPB’s
challengeistoaddressthisconcern.Recommendation:GPPB should develop simpler bidding documents and procurement manuals for small users, especially LGUs, barangays, and people’s organizations and communities.
Results of BLI Assessment50. The above findings are reflected in the BLI assessment.
Indicator2garneredaperfectscoreof100percentduetothe
existenceof implementingregulationsanddocumentationin
the legalandregulatoryframeworkthathavebeenassessed
to have met all the baseline elements of a good public
procurementsystem.Theregulatoryframeworkisadequately
recorded and organized, it implements and complements
the law, and provides standard documentation and generic
manuals thatareaccessible to thepublic.Table3providesa
summaryoftheratingsforthisassessment.
Pillar II: Institutional Framework and Management Capacity
51.PillarII looksathowtheprocurementsystemoperatesin
practice through the institutions and management systems
thatarepartoftheoverallpublicsectorgovernance.Graph2
showstheBLIscoresforthethreeindicatorswhichconfirmthe
followingfindingsastotheirlevelsofachievement:
(3)linkagestoPFMsystems:Thepublicprocurementisfound
nottobefullymainstreamedorintegratedintothepublic
financialmanagementsystem.
(4)managementcapacity:Thecountry’sfunctionalnormative/
regulatory body, the GPPB, substantially achieves the
baselines.
(5)institutionaldevelopmentcapacity:Theexistingmonitoring
systemsarefoundtobeinadequatetomonitorperformance
andcollectanddisseminateprocurementinformation,and
thequalityoftrainingprogramsneedstobeimproved.
Table 3: Summary of Scores for Indicator 2, Pillar I
Sub-Indicators Score Max. Score2(a)–Implementingregulationthatprovidesdefinedprocessesandprocedures
notincludedinhigherlevellegislation 3 3
2(b)–Modeltenderdocumentsforgoods,works,andservices 3 3
2(c)–Proceduresforpre-qualification 3 3
2(d)–Proceduressuitableforcontractingforservicesorotherrequirements
wheretechnicalcapacityisakeycriterion 3 3
2(e)–User’sguideormanualforcontractingentities 3 3
2(f)–GeneralConditionsofContractsforpublicsectorcontractscoveringgoods,
works,andservicesconsistentwithnationalrequirementsandwhen
applicable,internationalrequirements(20%ofIndicator) 3 3
Total Score �8 �8Rating: 100%; Level of Achievement is Fully Achieved (FA).
SCOREMAX. SCORE
Graph 2 - Institutional Framework and Management Capacity
0Pillar IIInstitutionalFramework andManagementCapacity
Indicator 3Public SectorGovernance
Indicator 4FunctionalNormativeBody
20
30
40
25
36
912 11 12
5
12
Indicator 5Existence of Institutional
�0
25
Linkages of Public FinancialManagement Systems
Findings52. Linkage of Annual Procurement Plans to the Budgetary Process.Procurementplansaremandatedbylawtobeoneof
thebasesforthepreparationoftheproposedannualbudget
submittedtoCongress.Everyyear,procuringentitiesprepare
their annual operatingplans andbudget for the succeeding
calendar year.While theseproposals are supposed to reflect
the thrust of national government and agency policies and
programs,andidentifytheresourcesrequiredtodeliverpublic
services, in practice procuring entities prepare the APPs in
a spirit of compliance and do not take advantage of their
potential as a tool to improve theprocurementprocess and
monitoritsefficiency.Nordomostagenciespreparemulti-year
plansthatare linkedtotheannualbudgetprocessortothe
preparationofAPP, and someNGAs and LGUsdonot even
prepare or consolidate an APP. Recommendation: GPPB needs to monitor the required submission of the APP and the PPMP, which are important internal financial and expenditure control mechanisms mandated by law, in order to ensure full compliance. The provision to revise the APP should be evaluated in light of abuses by some agencies. Clear guidelines should be developed for multi-year contracts that will integrate budgeting, expenditure and procurement programming.
53. Budget Before Bidding.Since thebudgetcontains the
initial list of projects to be procured and the corresponding
budgetary requirement, as soon as the national budget is
approved by Congress, the procuring entities can refine
theirannualprocurementplans toconform to theapproved
allocations before expenses are committed. Before the
procurementprocessbegins,theinclusionoftherequirements
in thebudget is checkedby theprocuringentity. TheGPRA
requiresanapprovedbudgetforthecontractbeforestarting
theprocurementprocess.Moreover,acertificationofavailability
of funds is required to be appended to the contract, as an
internal control point to ensure that funds are appropriated
andavailable.Reviewsoftransactionsshowthattheprocuring
entitieshavebeencomplyingwiththis rule.However,delays
in the payment of suppliers and contractors is a perennial
concern. Therearenobusiness standards for theprocessing
of invoicesbyNGAsandLGUsthatmeettheobligationsfor
timely payment stated in the contract. Recommendation: Business standards for the processing of invoices for timely payment need to be developed in tandem with a generic financial management manual that covers procurement and logistics processes. The procurement system needs to be fully integrated with the budgetary and financial systems, in order to provide information on the completion of major contracts.
Results of the BLI Assessment54.The above findings are reflected in the assessment.Indicator 3 garnered a score of 9 percent out of a possible
12 points or 75 percent compliance, because the public
procurementsystemismainstreamedandintegratedintothe
public sector governance system. However, compliance with
therequirementtoprepareanAPPisuneven,andthelinkage
between the budget process and procurement planning is
weak(nomulti-yearplans).Table4providesasummaryofthe
BLIassessment.
Management Capacity
Findings55. Normative/Regulatory Body: The Government
ProcurementPolicyBoard.ThecreationoftheGPPBinJanuary
2003 was a major milestone in the implementation of the
GPRA.GPPBisapolicy-makingandmonitoringbodyforpublic
Table 4: Summary of Scores for Indicator 3, Pillar II
Sub-Indicators Score Max. Score3(a)–Procurementplanningandassociatedexpendituresarepartofthe
budgetformulationprocessandcontributetomulti-yearplanning 2 3
3(b)–Budgetlawandfinancialproceduressupporttimelyprocurement,
contractexecution,andpayment 2 3
3(c)–Noinitiationofprocurementactionswithoutexistingbudgetappropriations 3 3
3(d)–Systematiccompletionreportsarepreparedforcertificationforbudget
executionandforreconciliationofdeliverywithbudgetprogramming. 2 3
Total Score 9 �2Rating: 9/12 or 75%; Level of Achievement is Substantially Achieved.
The creation of the GPPB in January 2003 was a major milestone in the implementation of the GPRA.
26
procurementempoweredtoformulateandamendtheIRRand
relevant forms, toensure thatprocuremententities regularly
conductprocurementtrainingprograms,toprepareoperations
manuals,andtoconductannualreviewsoftheeffectivenessof
theGPRAandrecommendamendments. It isaninteragency
bodycomposedoftop-levelofficialsfrom12keylineagencies
tasked to formulate and issue policies and regulations on
procurement.TheBoardischairedbythecabinet’seconomic
managers—the Secretary of the Department of Budget and
Management, and the Director General of the National
Economic Development Authority as alternate chair—with
a representative fromtheprivate sectorasavotingmember
and observers from anticorruption bodies. The GPPB meets
regularlyat leastonceamonth, followingagendaset in the
monthly meetings of its Technical Working Group (TWG),
whichalsopreliminarilydeliberatesontheissuesandprepares
policyrecommendations.
56. In its short existence, the GPPB has quickly become
effective in performing its functions as mandated by law. It
hasissuedseveralcircularsandresolutionsinpursuanceofits
mandate,publishedontheGPPBwebsite(www.gppb.org.ph),
and has been recognized both locally and internationally as
awell-functioninginteragencypolicy-makingbody.Itssuccess
may be attributed to its multi-faceted structure that allows
feedbackdirectlyfromthestakeholders.
57. Organizational, Technical and Funding Support.The GPPB is ably assisted by its Technical Support Office
(TSO),arelativelysmallofficethathasquiteanotablelineof
accomplishments.Inparticular,theTSOHelpDeskhasgained
strongsupportfrommanyprocurementpractitioners,whorely
onitasoneofthemostpopularandeasilyaccessiblesources
of procurement information. Since its 2003 launch, it has
accommodatedmorethan4,821phonequeriesand404walk-
in queries frombothgovernment andprivate organizations,
andissued291writtennon-policyopinions,32writtenpolicy
opinions, and 72 resolutions. However, the GPPB-TSO lacks
sufficientfinancial support from thenationalgovernment. It
isdependent for fundingon theProcurementService (PS),a
separateentityfullyownedbytheGovernmentthatismandated
toprocurecommonlyusedofficesuppliesandequipment.The
demand for TSO to perform the full mandate of the GPRA
isan issue,becauseof theneedtoexpand itscoverageand
staffingsoitcanperformitsothermandatedfunctions,such
asmonitoring,enforcementandpublicrelationsandstrategic
communications.Recommendations:The GPPP-TSO should be provided with sufficient financial resources to perform the full range of its function under the GPRA. Its ability to monitor the implementation of procurement-related laws should be strengthened by creating a monitoring and enforcement group and a public relations and strategic communications unit.
Results of the BLI Assessment58.ThecreationandsuccessfuloperationoftheGPPBanditsTSOarereflectedinthepositivefindingsoftheBLIassessment.Indicator 4 scored 92 percent because there is a functionalnormativebodyforprocurementthatisempoweredbylawtoprotectnationalinterestinallmattersrelatedtoprocurement.Itisanindependentboardthathastheauthoritytopromulgaterulestoimplementthelaw.Table5providesasummaryofthefindingsforthisassessment.
Institutional Development Capacity
Findings59. Collection and dissemination of Procurement Information: PhilGEPS. The PhilGEPS is the country’s newelectronic system for government procurement, a single,centralized electronic portal to be used by all governmentagencies in the procurement of commonly-used goods. Italsoservesasacentralportalprovidingtheprimarysourceofinformationontheprocurementofothergoodsandgeneralsupportservices,civilworks,andconsultingservices,includingpolicies,regulations,issuances,andcontractawards.Launched
Table 5: Summary of Scores for Indicator 4, Pillar II
Sub-Indicators Score Max. Score4(a)–Thestatusandbasisforthenormative/regulatorybodyiscoveredin
thelegislativeandregulatoryframework 3 3
4(b)–Thebodyhasadefinedsetofresponsibilities 3 3
4(c)–Thebody’sorganization,funding,staffing,andlevelof
independenceandauthority(formalpower)toexerciseitsdutiesshouldbe
sufficientandconsistentwiththeresponsibilities 2 3
4(d)–Theresponsibilitiesshouldalsoprovideforseparationandclarityso
astoavoidconflictofinterestanddirectinvolvementintheexecutionof
procurementtransactions 3 3
TotalScore 11 12Rating: 11/12 or 92%; Level of Achievement is Fully Achieved.
27
in August 2006, it replaced a pilot electronic procurement
systemandoffersmore functionality forbetter transparency
andefficiency.Afive-year,US$5millioncontractwas signed
with a private service provider in charge of operating the
PhilGEPSanddevelopingadditionalfunctionalities.Adetailed
descriptionofPhilGEPSmaybefoundonthePhilGEPSwebsite
(www.philgeps.net).
60. Currently, PhilGEPS provides the following features and
functions:(a)ElectronicBulletinBoard:Postingofprocurement
opportunities, notices of awards, electronic distribution of
bid documents and automatic notification of bid notices
and amendments; (b) Supplier/Subscriber Registry: Registry
of government agencies and all government suppliers,
contractors and consultants; and (c) Electronic Catalogue:
A price list of common-use goods, supplies, materials and
equipment which are to be purchased from a centralized
procurement system being implemented by Procurement
Services. Phase2developmentplanswill introduce aVirtual
Storeforgovernmentagenciesnationwidetoobtaincommon-
useitems.Tofacilitatepayments,anelectronicpaymentfacility
willbedeveloped, includingprovisionsforelectronictransfer
of funds. The Government will introduce charges and fees
aimedatmakingthesystemfinanciallyself-sustaining.Lastly,
thesystem’sfunctionalitywillbeexpandedtosupportonline
procurement of both common and non-common use items,
andtoallowsupportofElectronicBidSubmissionandthefull
implementationofe-bidsubmissionprocesses.
61. Initial indications are that PhilGEPS provides significant
benefits to Government and suppliers. It is a major tool for
implementing government procurement policy, and has
established an open, transparent, efficient and competitive
marketplace for government procurement, allowing
Governmenttoobtainbetterpricesanddocumentaudittrails
(reports on government purchases and winning bidders).
It provides suppliers easy access to government tenders
24/7, electronicdocuments fordownloading, andautomatic
notification of bid notices and supplements. It reduces
suppliers’transportationandtimecostsandallowsthemtodo
marketresearchongovernmentprocurement.
62. As of July 31, 2007, PhilGEPS had achieved significant
compliance:85percentofNGAsand79percentofgovernment
entities overall had registered (excluding barangays, which
are allowed by law to procure through a municipal or city
government).Morethan6,000agenciesand22,000suppliers
had registered, and more than 380,000 notices and 58,000
awardshadbeenposted.Thelevelofcompliancebyprocuring
entitiesasofJuly31,2007isshowninTable6:
63.However,currently,thePhilGEPSprovidesonlyinformation
onsomeofthecontractawardsanditsacceptabilityislimited.
Moreover, its data has not been verified by audit and so
far, there has been no analysis of procurement information.
Recommendations: GPPB should monitor compliance by
procuring entities on the use of PhilGEPS. The Procurement
Service(PS)shoulddevelopPhilGEPS’Phases2to5.Moreover,
thePSshouldengagetheservicesoftheCommissiononAudit
to verify the system, and a periodic analysis of information
shouldbeincludedaspartoftheaudit.
64. PhilGEPS Acceptability to Donors. An assessment of
PhilGEPS’acceptabilityforprojectsbyMDBswasconductedin
November2006.TheassessmentfoundthattheWBandADB
arereadytoacceptthePhilGEPSforapplicationonADB-and
WB-fundedNCBandshoppingprocedures,subjectonlytofive
modifications:
• ForMDB-fundedprojects,waivethePhilGEPSrequirement
thattheentryoftheApprovedBudgetCeiling(ABC)field
bemandatory.
• Includearule-basedapproachtovalidatethedurationof
theprocurementnoticeperiod,sothatPhilGEPSwould
notallowthepublicationofthetendernoticesubmittedby
aprocuringentityattemptingtoadvertiseatenderfora
periodoftimeshorterthanthatrequiredbyGPRA.
• Includearule-basedapproachfortheMDBShopping
thresholdofUSD$100,000.
•Allowtheoptionsofdownloadingofbiddingdocuments
electronicallyandincludeamailingoptionuponthe
requestofthebidder.
•Allowthedownloadingbybuyingagenciesoftheorder
requestformthePhilGEPSwebsite.
Government Procuring Entities Total Number Total Registered Level of Compliance
NationalGovernmentAgencies(NGA’s) 1,702 1,456 85.55%GovernmentOwnandControlledCorporations(GOCCs) 1,041 575 55.24%StateUniversitiesandColleges(SUC’s) 190 180 94.74%LocalGovernmentUnits(LGU’s) City 117 113 96.58% Provincial 79 71 89.87% Municipal 1,501 818 54.50% Barangay 41,995 2,136 5.09%
Table 6: PhilGEPS Compliance
28
Thesystemdevelopmentworkrequiredtoaddresstheshort-
termacceptability requirementswascompleted inNovember
2007,andsixpilotagencies(DPWH,DOH,DepEd,DA,DENR,
andtheLocalWaterUtilitiesAdministration)havebegunusing
theenhancedsystemforthepostingofbidandawardsnotices
associatedwithWBandADBfunding.Long-termrequirements
will beaddressedwith the implementationofnewPhilGEPS
featuresforvirtualstore,chargesandfees,e-paymentande-
biddingbeginningin2009.
65. National Procurement Statistics:TheOnlineMonitoring
and Evaluation System. In November 2006, GPPB’s TSO
launchedthePhilippines’firstweb-basedpublicprocurement
monitoring tool, OMES. The OMES is designed to function
as a self-help tool for government agencies that wish to
identify their own strengths and weaknesses in the field of
procurement.ItalsoprovidesGPPBwithimmediatefeedback
on reform impactandwithsignalspointing tospecificareas
whereanagencymayrequiretechnicalassistanceandguidance
orwhereamendmentstothelawandtheIRRmaybeneeded.
Thesystemoffersthreeonlinesurveyforms:theAPPISurvey,
theGPPB-TSOSurvey,andtheSavingsMonitor,whichevaluate
different aspects of an agency’s compliance with GPRA and
IRR-A. Inthefirsteightmonths,185agenciesregisteredand
130 of these completed the Agency Performance Indicators
(API) and the GPPB-TSO surveys. Although enhancements
willbeneededtoperfecttheOMES,theGovernmentisvery
optimisticthatitisontherighttrack.
66. The Agency Procurement Performance Indicators.The APPI is a micro-level procurement system evaluation
tool designed to monitor the performance of an agency’s
procurement system based on the four key pillars using 28
indicators(seeCPARMethodologysectioninpreviouschapter).
GPPBselectedtenprocuringentitiestopilottheAPPIin2005-
2006,basedonthevolumeofprocurementtransactions,with
thesupportoftheWB,becausemostoftheagenciesselected
are implementing WB-financed projects. The performance
evaluationresultswerevalidatedandagreedwitheachagency,
togetherwith theoversightagencies,privatesectorandcivil
societyorganization(CSO)representatives.Sincethen,dueto
itseffectiveness,ithasbeenaddedasatoolforprocurement
capacity assessments of agencies implementing WB-assisted
projects,therebymakingtheAPPIajointWB-GOPassessment
tool. In summary, the keyAPPI findings for the ten selected
agenciesareasfollows:•The10pilotprocuringentitiesareadoptingtheGPRA anditsIRR-Ainternallythroughtheissuanceofcirculars ordepartmentorders.Theprocuringentitiesaretherefore familiarwiththelawandtheyaremakingsurethatitis implemented.•Mostentitiesarenotcomplyingwiththenationaltraining policy.Thetrainingprogramisthereforeweakandmustbe strengthened.
•Almostallprocuringentities(92percent)haveestablished theirorganizationalprocurementunitsandaretherefore compliantwiththeprocurementorganizational requirement.•Sixof10procuringentitiesusedpublicbiddinginmore than90percentofthetotalvalueofcontractsintheir APPs.GPPBshouldbestrictlyenforcingthecompetitive biddingrequirementforallnotincompliance.• Onlyoneoutof10procuringentitieshadatleastfive biddersineachbiddingprocess,signifyingthatcompetition isweak.•All10procuringentitiescomplywiththerequiredtimefor bidders’preparationofbids,whichgivesbiddersenough timetoprepareproperbids.•Sevenoutof10procuringentitiesdidnotcomplywiththe transparencyrequirementtoposttheawardofcontracts onthePhilGEPSwebsite.
67. The National Training Program.TheGPRArequiresthe
GPPBtoestablisharegulartrainingprogramtoprofessionalize
and improve the skills of government procurement officers
and employees, who are required to avail themselves of
this training. In line with this policy, and in response to the
increasing demand for training on GPRA, GPPB’s strategy is
designed to address the training needs of all government
agenciesnationwide.GPPB-TSOdevelopedaseriesoftraining
programs,whichinclude:(a)basictrainingontheGPRAand
thePBDsforLGUs,NGAs,GOCCs,andSUCs;(b)thetraining
oftrainers,andarefreshercourseontheGPRAandthePBDs
fortrainersandresourcepersons;and(c)specializedtraining
coursesonvalueengineeringandfrauddetectionforselected
participants.
68. InMarch2004,theGPPBconductedthefirstTrainingof
TrainerssessionforrepresentativesfromDBM,COA,DILG,and
thePhilippineLeagueofLocalBudgetOfficers.Subsequently,
regional composite teamsof trainerswere formed,with the
DBMasleadagency.TheLocalGovernmentAcademyisalso
involvedattheLGUlevel.InOctober2005,theGPPBformed
partnerships with selected state SUCs in order to augment
the number of trainers and conduct training for NGAs and
GOCCs.AsofMarch2007,19percentofthesenational-level
entities,andmorethan80percentofLGUs,hadatleastone
representativetrainedonthecontentoftheGPRAandinthe
useofPBDs;3percentofnationalentitiesand15percentof
LGUshadatleastonerepresentativetrainedintheuseofthe
GenericProcurementManuals(GPMs).
69.However,thetrainingprogramshavenotyetachievedtheir
intendedimpact,otherthanthatofinformationsharing,and
appeartobedesignedtoinformratherthantomeetspecific
competencyrequirements.Theselectedcomposite teamand
SUC trainers either lacked the appropriate training skills or
the technical expertise/experience to discuss procurement in
detail.AnassessmentoftheTrainingofTrainersandRefresher
29
Coursesrevealsthatthemodulesandmaterialsfocusonlyon
the technical provisions of the law, and thus lack substance
thatwouldfocusonbuildingthecapacitiesoftheseindividuals
astrainers,suchasskill-buildingsessionsonhowtomanage
the learning process. Only 64 percent of attendees believed
that the resource speakers chosen were proficient in the
subject matter. The GPPB is aware of the problem and has
conductedseveralvalidationworkshops,however,eventhese
workshopshavenotbeeneffectiveinaccuratelyidentifyingand
addressingissueswiththecapabilityofthelecturersastrainers
andpresenters.Anotherareaofweaknessidentifiedisthelack
ofqualityevaluationmechanismtomeasureimprovementsin
thecapabilityoftheprocurementstaffasaresultoftraining.
Recommendation: The national training program should be reviewed, revised, and reissued in line with the strategic communication plan in order to ensure a change in behavior of the current crop of procurement practitioners. The private sector should also be included in the training program in order to improve competitiveness.
70. Professionalization Program.In2006,GPPBlaunchedasignificantprofessionalizationinitiative,intendedtoprovideacareerpathforprocurementpractitionersintheGovernmentandcorrectweaknessesincapacitybuildingidentifiedinthe2004CPARexercise.SupportedbyaWBInstitutionalDevelopmentFund(IDF)TrustFund,theformaltraininginvolvesafour-stagecertificationprogramthatwillraisethelevelofefficiencyandeffectivenessofpublicsectorprocurement.Inthecurrentphaseoftheproject,15modularsyllabiandstudymaterialsarebeingdevelopedbyaconsultingfirm,whichwilltrainlecturersfromselectedSUCsandregionalcompositeteamsinthedeliveryofthemodules.UndertheGPRA,aBidsandAwardsCommittee(BAC), BAC Secretariat, BAC TWG and Procurement Unitare tobecreated ineachgovernmententity tofacilitate theprofessionalizationofprocurement.Headsofprocuringentitiesaretoconsiderprocurementproficiencyasoneofthefactorsin the designation of officials to the BAC, BAC Secretariat,
ProcurementUnitandTWGs.Recommendation: The GPPB’s professionalization program, a long-term capacity building program that will include procurement as a professional career stream, is being pursued albeit slowly. As this is an important reform initiative with sustainable impact, it is recommended that the program be pursued more vigorously.
Results of the BLI Assessment71. The above findings are reflected in the BLI assessment.TheAPPIassessmentof the10pilotagenciesandfieldvisitsrevealedthatseveralprocuringentitieseitherdonotfaithfullycomplywith the legal requirement topost tender invitationsand awards in the PhilGEPS, or only do so irregularly.Weaknessesinthedeliveryofthetrainingprogramswerealsodiscoveredandtheprofessionalizationprogramhasyettobeimplemented. Finally, although the procurement system hasqualitystandards,thereislimitedmonitoringanduseofthesestandardsforstaffperformanceevaluation.Table7providesasummaryofthefindingsforthisassessment.
Pillar III: Procurement Operationsand Market Practices
72. This pillar looks at the operational effectiveness and
efficiencyoftheprocurementsystemswithintheimplementing
entityresponsiblefortheconductoftheprocurementactions.
It looks at the market response as one way of judging the
qualityandeffectivenessofthesystem.Graph3showstheBLI
assessmentscoresofthefollowingindicatorsthatconfirmthe
CPARfindingsregardingtheirlevelsofachievement:
(6)efficiencyofprocurementoperationsandpractices:
Lessthan50percentofthebaselineswerefound
tobemet.
(7)functionalityofthepublicprocurementmarket:Market
responsetopublicprocurementsolicitationisweak
andlessthan50percentofthebaselinesweremet.
Table 7: Summary of Scores for Indicator 5, Pillar II
Sub-Indicators Score Max. Score 5(a)–Thecountryhasasystemforcollectinganddisseminatingprocurement
information,includingtenderinvitations,requestsforproposals,andcontract
awardinformation 1 3
5(b)–Thecountryhassystemsandproceduresforcollectingandmonitoring
nationalprocurementstatistics 1 3
5(c)–Asustainablestrategyandtrainingcapacityexiststoprovidetraining,
adviceandassistancetodevelopthecapacityofgovernmentand
privatesectorparticipantstounderstandtherulesandregulationsand
howtheyshouldbeimplemented 2 3
5(d)–Qualitycontrolstandardsaredisseminatedandusedtoevaluatestaff
performanceandaddresscapacitydevelopmentissues 1 3
TotalScore 5 12Rating: 5/12 or 42%;Level of Achievement is Partially Achieved.
30
atextbook-to-studentratioofonetoone.Moreover,bidding
timehasbeencutinhalf,andtransparencyisattainedthrough
compliancewiththerequirementofpostingadvertisementin
thePhilGEPSbysomeagencies.
75. Performance at the Local Government Level. While
there are built-in provisions within the law that ensure fair
competitionandwidercoverageofparticipation,suchasthe
publicationandpostingofbidnoticesatthePhilGEPSwebsite,
publicbiddingattheLGUlevelstillfailstoattainasufficient
levelofcompetitiveness.Thereareanumberofcontributing
factors.• Contractorsarerequiredtoundergoaccreditationpriorto participating.• Somecitygovernmentsrequiresuppliersandcontractors tosecurealocalbusinessregistration,effectivelyexcluding thoselocatedoutsidethecity.• Competitionislimitedbecausesuppliersarenotinterested inthesmallamountsofLGUcontractsandtheproject locationsmaynotbeconvenient.• NotallLGUsvisitedwereawareofthePhilGEPSwebsite andnotallarepostingtheresultsofbidding.• PublicofficerswithintheLGUshavereportedcollusion amongbiddersandbetweenbiddersandofficials,aswell aspoliticalinterference.
• Publicofficershavealsoreportedmonopoliesestablished
bysomepharmaceuticalcompaniesforpublicpurchasing
ofmedicinesandmedicalequipment.
Good procurement performance at thenational government level is the result of effective training programs offered at the national level. Likewise, poor performance at the LGU levels reflects the inadequacy of training programs that do not meet local government demands. The private sector is excluded from training altogether.
SCOREMAX. SCORE
Graph 3 - Procurement Operations and Market Practices
0Pillar IIIProcurementOperationsand PublicProcurementMarket
Indicator 6EfficientProcurementOperations
Indicator 7Functionalityof PublicProcurementMarket
20
30
40
16
30
5
12
49
7
Indicator 8Existence of Contract Administration andDispute Resolution
�09
(8)existenceofcontractadministrationanddispute
resolutionprovisions:Adequateprovisionsexistfor
contractadministrationanddisputeresolutionand
qualityofcontractadministrationpracticessubstantially
metthebaselineelements.
Efficiency of ProcurementOperations and Practices
Findings73. Procurement Competence and Skills.Thefirstvolume
of the GPMs on Procurement Systems and Organizations
defines the qualification requirements for members of the
BAC,TWG,andtheBACSecretariattobeestablishedineach
government entity. It defines the duties and responsibilities
of these procurement officials and spells out their skills and
knowledge requirements. The DBM, as chair of the GPPB
and agency in charge of the rationalization program of the
government,issettoapprovetheguidelinesforthecreation
ofProcurementUnits,dependingonthenumberandamount
ofprocurementtransactionshandledbytheentity.However,
thereisnosystematicmatchingofskillsagainstrequirements
for competitive recruitment. Moreover, some staff required
toundertakeprocurementactivitiesonanadhocbasishave
insufficientknowledgeorhavenoaccesstoprofessionalstaff
thatcanprovidetheknowledge.
74. Performance at the National Level.Institutionalpolicies
andproceduresconsistentwiththenewprocurementlawexist
atNGAs,particularlyatthecentraloffices,indicatingsufficient
capability to implement the intended procurement reforms.
Competitive bidding since the GPRA’s implementation has
shown substantial savings. The DPWH reported an average
reductionof15to20percentofcontractcostwhencompared
withbudgetestimates.TheDOHreportedanaveragereduction
of27percentinthepricesofpharmaceuticalsduetoincreased
competition. As of 2006, the DepEd had realized a total of
Php2.6 billion in savings, with an average reduction of 50
percentinthepriceoftextbooksthatallowedachievementof
3�
76.Whilethelawrequiresthatprocurementshouldasarulebe
donebypublicbidding,inalmostallLGUs,alternativemodes
ofprocurementarestillpreferred,particularlyshopping,direct
contractingandcontracts“byadministration.”Onereasonfor
thismaybethatinseveralLGUs,especiallythesmallerones,
officialsagreed that transactions subjected topublicbidding
end up costing more, and they feel that contracts in small-
sizedLGUsarenotworththeextratimeanddocumentation.
For small contracts, like the construction of artesian wells
and some barangay maintenance works, seeking registered
contractorsmayattimesbecomemorecostly,especiallyinthe
caseofsmallLGUswheretherearelimitedchoices.Thelength
of time contractors must wait for payment also discourages
participation,sincesmallcontractorsdonothavethenecessaryresources.
77.Goodprocurementperformanceatthenationalgovernment
levelistheresultofeffectivetrainingprogramsofferedatthe
national level. Likewise,poorperformanceat the LGU levels
reflectstheinadequacyoftrainingprogramsthatdonotmeet
local government demands. The private sector is excluded
fromtrainingaltogether.Recommendations: (a) The national training program should be improved as a short-term solution and should include potential private sector bidders. (b) The Professionalization Program, which is the long-term solution, should be expedited.
78. Recordkeeping. The Commission on Audit has issued
guidelinesthatenumeratetheprocurementrecordsthatmust
bekeptforauditingpurposes.However,inthecaseofboth
NGAsandLGUs,recordkeepingpracticesvaryfromoneagency
to another, as there is no integrated policy on the creation,
identification,classification,retrieval,receiptandtransmission,
storage and protection, disposition and preservation, or
sharingofinformationandrecords.NeithertheGPRAnorthe
GPMs provide for systematic records management, and no
commonstandardshavebeensettomaximizeutilityandavoid
duplication and repetitive operations. None of the agencies
sampledhadsystematicallymanagedtheinformationrecorded
inprocurement transactiondocuments inorder tomaximize
its value. Recommendation: The GPPB should immediately establish norms for safekeeping of records and documents related to transactions and contract management. A disclosure policy should be issued.
Results of the BLI Assessment79.Theabovefindingsarebasedprimarilyonfieldvisitsand
the APPI assessment of the pilot agencies, and provide a
ground-levelviewofthedifficultiesandissuesthatarefaced
in actual procurement operations that hamper procurement
reform.Indicator6receivedascoreof5outofapossible12
points,or42percentcompliance,forapartialachievementof
baselinesandahighlevelofriskbecauseoftheprocurement
operations and practices that need further improvements to
correctsubstantialweaknessesandgapsatboththenational
andlocallevels.Table8providesasummaryoftheratingsfor
thisassessment.
Table 8: Summary of Scores for Indicator 6, Pillar III
Sub-Indicators Score Max. Score6(a)–Thelevelofprocurementcompetenceamonggovernmentofficials
withintheentityisconsistentwiththeirprocurementresponsibilities 1 3
6(b)–Theprocurementtrainingandinformationprogramsforgovernment
officialsandforprivatesectorparticipantsareconsistentwithdemand 2 3
6(c)–Thereareestablishednormsforthesafekeepingofrecordsanddocuments
relatedtotransactionsandcontractmanagement 0 3
6(d)–Thereareprovisionsfordelegatingauthoritytootherswhohavethe
capacitytoexerciseresponsibilities 2 3
TotalScore 5 12
Rating 5/12 or 42%; Level of Achievement is Partially Achieved.
In the case of both NGAs and LGUs, recordkeeping practices vary from one agency to another, as there is no integrated policy on the creation, identification, classification, retrieval, receipt and transmission, storage and protection, disposition and preservation, or sharing of informationand records.
32
Functionality of thePublic Procurement Market
Findings80. Effective mechanism for public-private sector partnership.Inaprocurementprocess,therearetwoactors,thebuyerand the seller. Theacquisitionofgoods,worksorserviceswillnotbecompleteifthesetwoactorsarenotabletocometoanagreement.Recognizingthis,theGPRAprescribesvarious rules that create a level playing field for prospectivebidders, based on two governing principles: transparency inthe procurement process and contract implementation, andcompetitiveness fostered by extending equal opportunity toprivate contracting parties who are eligible and qualified toparticipate.TransparencyandaccesstoinformationonpublicbiddingisassuredthroughpostingofnoticesinthePhilGEPS,nationalnewspapersand inotherconspicuouspublicplaces.Toenhance transparency, the lawmandates thepresenceoftwo observers, “one from a duly recognized private groupin a sector or discipline relevant to the procurement athand, and theother fromanon-governmentorganization.”Competitivenessisstronglyencouragedbytherequireduseofstandardbiddingdocuments,formsandcontracts,andgenericspecifications,reducingdiscretioninthebiddingprocess,andbyensuringfulldisclosureoftheawardandpost-qualificationcriteria. To further ensure a level playing field, a privatesectorrepresentativeisappointedasavotingmemberoftheGPPB,and theaccreditationofanumbrellaorganization forconsultantsisalsoprovidedintheGPRA.
81.However,statisticsshowedthatanaverageofonlythree
biddersparticipate inpublicbiddings, indicatingtheabsence
of a competitive market. One reason is lack of knowledge
byprivatecompaniesofhowthepublicprocurementsystem
operates, because Government has not included them in
its training program. Recommendation: The bidders and other interested private sector companies, particularly small businesses, should be encouraged to attend training programs on the procurement system.
82. Private Sector Organizations. Three major groups of
tradeorganizationshaveaninterestinthepublicprocurement
system:(i)twoprominentassociationsofcivilworkscontractors,
who number over 8,000: the Philippine Contractors’
Association(PCA)andtheNationalContractorsAssociationof
thePhilippines(NACAP);(ii)suppliersortraders,mostofwhom
aremembersofthePhilippineInstituteofSupplyManagement
(PISM);and(iii)registeredconsultants,whomaybemembers
oftheConfederationofFilipinoConsultantsoroftheCouncil
of Engineering Consultants of the Philippines (CECOPHIL).
Theseorganizationshaveanimportantroletoplayinkeeping
theplayingfieldlevel.
83. However, the private sector dealing with the public
procurement market appeared to be relatively weak and
competition is limited due to monopolistic or oligopolistic
features in important segments of the market. In works
contracts, the trend is that many bidders submit expression
of intent to bid, but few actually submit bids. There is a
perception that collusion or rigging of bids is common,
particularlyforbigticketcontracts.Anotherreasonforthelow
competitionrateistheperceptionthatgovernmentprocesses
ingeneral,andprocurementinparticular,arecumbersomeand
bureaucratic.Procuringentitieshavedifficulty inattractinga
larger number of legitimate bidders. Recommendation: A strategic communication plan that would change the behavior and attitude of the private sector should be implemented. Quality training programs for the private sector should be included as part of the national training and professionalization programs.
84. Constraints to Market Access.Manyconstraintsinhibitprivate sector access to the public procurement market andreduce competition even for small contracts. Among themultiple constraints identified by the assessment team are:tedious payment processes, the intervention of politiciansin the procurement process, cumbersome procurementrequirements, difficulties in securing licenses and permits,and lack of access to credit. In the 2006 survey conductedby SWS on the effectiveness of the procurement law, fivefactorswereidentifiedbyrespondentsasprobablereasonsfordelaysintheimplementationofgovernmentprojects:corruptgovernmentofficials(55percent);lackoffunds(55percent);corruptcontractors(43percent);lackofcoordinationbetweengovernment officials and contractors (29 percent); and redtape(16percent).
85.Constraints in the Procurement of Textbooks. In theprocurement of textbooks by the DepEd, the losing biddersprotested the award even though the winning bid metthe specifications and requirements for content, quality ofmaterials,andprinting.DespitetheWB’sthoroughreviewoftheprocessanddocuments,thelosingbiddersevidentlyusedtheinfluenceofsomepoliticianstoraisetheirproteststothelevel of a Congressional inquiry, making this procurement amuchpublicizedevent.Notcontentwith thepoliticalarena,thelosingbiddersbroughtthecasetothecourts,questioningthe propriety of the awards and the application of the WBProcurementGuidelines.Althoughthelowercourtsidedwiththelosingbidders,thehighestcourtoftheland,theSupremeCourt, reversed the lowercourt’sdecisionandruled in favoroftheproprietyoftheawardandtheapplicationoftheWBGuidelines, in effect clarifying that theWBLoanAgreementisan internationalorexecutiveagreementasprovidedfor intheGPRA.
86.Constraints in Civil Works Projects.Acaseofcollusion
in DPWH procurement contracts resulted in three failed
biddings. The recommendations of award for two contract
packageswererejectedbytheWBonthegroundsofexcessive
33
bidpriceandunbalancedbids,andDPWHwasrequestedto
investigate the matter but found no evidence of collusion
amongthebidders.Asubsequentrebiddingtookplaceafter
theprojectcostestimateswererevisedupwardsbyabout10
percent.Whenthebidscameinhighagain(about30percent
higherthantherevisedcostestimates),theWBagainrejected
theaward recommendations for the same reasons. The two
rejectedpackageswerethenredesignedintothreepackagesby
changingthepavementtypes,andathirdbiddingtookplace.
This time, the results for each package showed the lowest
bidderssubmittingbids15percentabovethecostestimates,
with the losers’ bids in each case quite closely bunched
together and significantly higher than the lowest bidders’
bid. The analysis of the bid data presented unmistakable
evidenceofcollusionineachofthethreepackages,andthe
recommendationsofawardwererejectedforthethirdtime.
87.Constraints to Contracting in LGUs.Thefixedandlimited
termofofficeofthelocalchiefexecutive(threeyears,witha
maximumofthreeterms),coupledwiththetimetakentobuild
localprocurementcapacity,areamongtheissuesconfronting
localgovernments.However, theroleoftheprivatesector is
alsoafactor.Misbehaviorofcertaincontractorscanresult in
rejection of bids and delays in completing bidding, slowing
project implementation to the detriment of rural residents.
TheLGUofPanaon,MisamisOccidental, responded to such
asituationbycreatingan“IslandofGoodGovernance.”This
LGUrejectedbidsthatclusteredabovethepre-bidestimates
andofferedidenticalunitpricesformostitems,submittedby
contractors who had obtained bid securities from the same
entity.Butprovingcasesofcollusionremainsdifficult,sodespite
theLGU’scommendableefforts,theseerringcontractorshave
been allowed to continue bidding in Panaon until collusion
is adequately proven and the appropriate sanctions areimposed.
88.Pre-qualification and Eligibility Screening.Under theprocurementlawanditsimplementingrulesandregulations,pre-qualification is replaced by an eligibility check and astrong post-qualification process. To lessen subjectivity, apass/fail evaluation is applied during eligibility check basedonadefinedsetoflegal,technicalandfinancialcriteria.Onlybiddersthatpasstheeligibilitycheckareallowedtosubmitabid3. Thereafter, thewinningbidundergoesverificationandvalidationduringpostqualificationtoensurethatithaspassedalltherequirementsandconditionsasspecifiedinthebiddingdocuments4. However, the development partners believethateligibilityscreening,likeuseofABC,resultsinrestrictingcompetitionandhascontributedtothelowobservednumberofcompetingbidders(anaverageofthreepercontract).Theeligibility check required,amongother things, submissionofdocuments that did not provide evidence of the technical,financialandlegalcapacityofthebidder,and,abiddermightbe disqualified for non-submission of a minor documentaryrequirement.Forthesereasons,eligibilityscreeningcannotbe
applied for foreign funded procurement. Recommendation. To improve competition, development partners recommend that empirical data be gathered and presented to Government demonstrating that eligibility screening, even though complemented by a strong postqualification process, is less effective than pre-qualification, and that an independent review be conducted on the effectiveness of eligibility screening requirements in the Philippines, in particular for documents that are not related to the technical and financial capacity of the bidder.
89. Approved Budget for the Contract or Bid Ceiling.GPRA mandates imposition of an Approved Budget for theContract (ABC) that sets a price ceiling; any bids that areabovetheABCareautomaticallyrejected5.TheGovernment’srationale for this rule is that it helps contain the incidenceofcorruptandcollusiveactivities.Sofar, theGPPBhasbeensatisfiedwiththeresultofthemandatoryimpositionofABCinalllocallyfundedcontracts.However,thesituationisdifferentforforeign-fundedcontracts,whereABCisnotanacceptablerulebecauseitlimitscompetition.InthePhilippines,theCPARfound that theaveragenumberofbids is three, too few toachieverealcompetitionforpubliccontracts.Forthisreason,TheWBdoesnotacceptABCfor ICB,andADBandJBICdonotacceptitfortheirlocalcompetitivebiddingmethodeither6
(theWBdoesallowABCasbidceilingundercertainconditionsforNCB).
90.TheABCruleimposesparticularlimitationsininternationalbiddingbecauseinternationalfirmsfacehighercoststhanlocalones andABCdoesnot always take this into consideration.TheCPARcarriedoutananalysisofbidprices in relation toengineers’ estimates and Approved Budget for the Contract(ABC),basedonaNovember2004studyreportoncontractors’qualificationandbidprices thatcoveredtheprocurementofDPWH from 2002 to 2004 of 164 contracts funded by theWB,ADBandJBIC.TheCPARanalysisfoundthatthelowestevaluated bids (LEB) for foreign-funded contracts were 1.3timestheABC(seeFigure3).Thereasonsforthevariancewereidentifiedasfollows:a.materials,equipmentandlaborcostsquotedbythewinningcontractorsarehigher;b.theindirectcostormark-upishigherthanthestandardsetbytheGOP.
91.Internationalpracticerejectssuchpricecontrolmechanismsbecausepricecontrolisinappropriateinamarketsystem,wherecontractpricesshouldbesetthroughopencompetition.Infact,ABCcanactuallyencouragecollusionamongasmallnumberof bidders. Thus, the development partners believe that thebidceilingshouldbeabolishedonceGovernment issatisfiedthat its currentpurpose in limiting the incidenceofcollusive
3 Section 23 of the Government Procurement Reform Act, Republic Act No. 91844 Section 34, Id.5 Section 5(a) of the Government Procurement Reform Act, Republic Act No. 91846 Procurement Guidelines of ADB, JBIC and WB
34
bidding environment has been served. Recommendation: Development partners recommend that empirical data be gathered and presented to Government demonstrating that ABC-type price ceilings do not provide long-term benefits. This analysis should be accompanied by the results of three other empirical studies (i) a comparison of cost or engineer’s estimates with ABC to determine how reasonable the ABC
Table 9: Summary of Scores, Rating for Indicator 7, Pillar III
International Standard/Sub-Indicators Score Max. Score7(a)–Thereareeffectivemechanismsforpartnershipsbetweenthepublic
andprivatesector 2 3
7(b)–Privatesectorinstitutionsarewellorganizedandabletofacilitate
accesstothemarket 1 3
7(c)–Therearenomajorsystemicconstraints(e.g.inadequateaccessto
credit,contractingpractices,etc.)inhibitingtheprivatesector’scapacity
toaccesstheprocurementmarket 1 3
TotalScore 4 9Rating: 4/9 or 44%;Level of achievement is Partially Achieved.
limits have been in practice, (ii) and an analysis of whether the current low participation of bidders is the result of imposing a bid ceiling, and (iii) a report on the effectiveness of the ABC rule in relation to contract administration and the quality of completed works. The Study will also cover variation orders resulting to substantial cost increases in the contracts awarded using ABC.
Results of the BLI Assessment 92.Indicator7wasgivenascoreof4pointsoutofmaximum
scoreof9points,or44percentlevelofcompliance,indicating
partial achievement as several areas in the functionality of
the public procurement system need further improvement.
Governmentneeds topromoteprograms thatbuildcapacity
among private companies, including small businesses, and
offer training to help firms enter the public procurement
marketplace.Theprivatesectorisrelativelyweak,competition
is limited because of monopolistic or oligopolistic features
in important segmentsof themarketandbecause thereare
constraintstoaccesstothepublicprocurementmarket.Table9
providesasummaryoftheratingsforthisassessment.
35
WB ADB JBIC KFAED
Figure 3: Analysis of Approved Budget Ceiling and Lowest Evaluated Bid
ApprovedBudgetCeiling(ABC)inMillionPesos
Low
est
Eval
uate
dBi
d(L
EB)i
nM
illio
nPe
sos
DPWH Foreign-Assisted Projects (200�-2004)
Contract Implementationand Completion
Findings93. Contract Administration. The General Conditionsof Contract of the PBDs and the Guidelines on ContractImplementation provide procedures for final acceptance,inspection, testing,qualitycontrol,andcontractamendmentfor each type of procurement. The standard clauses arebased on internationally accepted standards and largelyharmonized with those of the WB, ADB, and JBIC. Qualitycontrolproceduresforspecifictypesofgoods(books,drugs,computers)arenormallyspecifiedinthecontractdocuments.Quality control is carried out through the agencies’ owntestingfacilitiesorbycompetentoutsidefirms.IntheDPWH,construction supervision for foreign-assisted infrastructureprojects is normally done by independent engineering firmsin coordinationwithgovernment supervisorsand inspectors.For government-funded infrastructure projects, constructionsupervision isdonebyqualifiedgovernment supervisors andinspectors.However,whilepaymentschedulesarewritten incontracts, final payments for completed deliveries or worksgenerally take a long time to be released, often extendingbeyondthecontractprovisions.Thedelay isdue tocautioushandlingbytheprocuringentityoftheinspectionprocessanddocumentation review. Recommendation: Procedures for final payment should be streamlined and the changes should be reflected in the Generic Procurement Manual.
94. Dispute Resolution. The GPRA provides for disputes
arising from contract implementation to be submitted for
arbitration under the Arbitration Law (RA 876), replaced by
the Alternative Dispute Resolution Act (RA 9285), which is
consistent with generally accepted practices for neutrality
of arbitrators, due process, expediency, and enforceability.
AlternativeDisputeResolutionprovisionsmaybe resorted to
bypartiesuponmutualagreementanditisassumedthatboth
partieswillhonorthedecisionrenderedbythedulyappointed
authority.Forconstructiondisputes,ExecutiveOrderNo.1008
Table �0: Summary of Scores and Rating for Indicator 8, Pillar III
Sub-Indicators Score Max. Score8(a)–Proceduresareclearlydefinedforundertakingcontract
administrationresponsibilitiesthatincludeinspectionandacceptance
procedures,qualitycontrolprocedures,andmethodstoreviewandissue
contractamendmentsinatimelymanner 2 3
8(b)–Contractsincludedisputeresolutionproceduresthatprovidefor
anefficientandfairprocesstoresolvedisputesarisingduringthe
performanceofthecontract 3 3
8(c)–Proceduresexisttoenforcetheoutcomeofthedisputeresolutionprocess 2 3
TotalScore 7 9
Rating: 7/9 or 78%; Level of achievement is Subtantially Achieved.
creates an Arbitration Machinery for Construction Disputes.
The GPRA further provides that the parties may agree in
writingtootheralternativemodesofdisputeresolution.The
settlementofdisputes througharbitration is incorporated in
theFormofContracts inthePBDs.TheGovernmentaccepts
internationalarbitrationforinternationalcompetitivebidding,
so longas thisprovision is included in theconditionsof the
loanagreementandcontractdocuments.However,thereisno
systemtomonitorthefinalresolutionandoutcomeofdispute
resolutions.
95. Enforcement of Dispute Resolution Process. The
Philippines is a member of the New York Convention on
EnforcementofArbitralAwards,whichtreatsanarbitralaward
as final, unless an appeal is filed on pure questions of law
before an appellate court within a given period. The GPRA
providesthatarbitralawardsareappealablebywayofPetition
for Review to the Court of Appeals on questions of law. A
partymayalsogotocourtforenforcementoftheaward.
Result of the BLI Assessment96.The above findings support the BLI assessment results. A good assessment score was achieved for this indicator at
7pointsoutofpossible9,or78percentcompliance.Except
fortheelementof“finalpaymentbeingprocessedpromptly
asstipulatedinthecontract”,thepublicprocurementsystem
meetsallotherelementsofgoodcontractadministrationand
implementation. While all the elements of a good dispute
resolutionprocessaremet, includingenforcing theoutcome
thereisnomechanismformonitoringtheoutcomeofdispute
resolutioncases.Table10providesasummaryoftheratings
forthisassessment.
Pillar IV: Integrity and Transparency of Public Procurement System
97.Pillar IV looksatwhetherthepublicprocurementsystem
operates with integrity, has adequate internal controls,
36
ofCOA,aside fromauditing thebooksofaccounts, includepromulgation of accounting systems, which it carried outin 2001 through the issuance of the National GovernmentAccountingSystem(NGAS).TheNGASisnowbeingusedbyallNGAsandLGUs7. WhiletheCOAconductspost-auditoftransactions, italsocarriesout special fraudaudit.TheCOAdoesnothaveprosecutorialfunctions,althoughitmayinitiatecriminal, civil or administrative action by filing a complaintbeforetheappropriatebody,suchastheDepartmentofJusticeor theOfficeof theOmbudsman.Criminal prosecutions areinitiated by the Ombudsman as a complainant, with COAproviding the evidence or witnesses for the prosecution.ComplaintsbroughtbyprivatepartiesgenerallyattachaCOAreportasavitalcomponentofthecomplaint.
99. Enforcement and Follow-up on Audit Findings and Recommendations. Records of the COA National CapitalRegion office from 2004 to 2006 show that an average of56 percent of all notices of disallowance were procurementrelated.However, disallowanceswithfinality are few, as thecases tend to linger on at various stages of appeal, furtheraggravated by the length of time between the discovery ofanomaliesbyCOAandthefilingofacase(upto12months).AcomparisonofrecordsatCOAandtheOmbudsmanfoundthat COA’s mandated task of monitoring the cases referredto the Ombudsman for prosecution is not being effectivelyundertaken,andthatthere isnocomprehensivedatabaseofprocurementandotherrelatedcases.Muchweighthasbeenplaced on interagency cooperation among the Civil ServiceCommission (CSC), COA and the Ombudsman that wassupposedtodeliverresultswithrespecttotheprosecutionofcases.Internally,however,theCOAregionalofficesthatweresupposedtosubmitcomprehensivereportstotheHeadOfficeoncasesfiledandpendinghavenotgenerallybeenperformingthis task.Recordsat theOmbudsman show that therewereonlyafewinstanceswhencasesorcomplaintswerebroughttotheOmbudsmanbyCOA,butthisdoesnegatethefactthatCOAplaysasignificantroleintheprosecutionofcases.
100.FinancialauditsarecarriedoutannuallybyCOAaspartofitsmandatetoreporttoCongressandthePresidentontheaccountsofallagenciesandinstrumentalitiesofgovernment.Procurementaudit isnotyetgivenenough focus inmostofthe audit programs because most auditors have inadequateknowledgeofthelaw,itsimplementingrules,theharmonizedbiddingdocumentsandcontractforms,andtheprocurementmanuals; and there isnoprocurementauditguide toactasthebasisforincludingprocurementauditintheannualauditprogram.Mostauditorsarenottrainedtocarryoutrisk-basedaudit tailored for risk management. Recommendation: A procurement audit guide should be developed and implemented by COA, with particular focus on the audit of the implementation of the GPRA. A training program on procurement should be developed and implemented for auditors, with the procurement audit guide as a primary
sufficientappealsmechanisms,andhasappropriatemeasures
inplacetoaddressthepotentialforcorruption.Graph4shows
theBLIassessmentlevelsbasedonfourindicators.
(9) Internal control and audit: The elements of quality,
reliabilityandtimelinessoftheinternalandexternalcontrols
arepartiallyachieved.InternalAuditUnitsneedtobecreated
inallentitiesorstrengthened,andenforcementoftheGPRA
usingtheauditingsystemneedstobeimproved.
(10) Appeals mechanism: Efficiency and integrity of the
existing appeals mechanism partially achieves the baseline
elementsofawell-functioningpublicprocurementsystem,
exceptthat the independenceof theadministrativereview
bodyisnotassured.
(11)Accesstoinformation:Althoughthequality,relevance,
easeofaccessandcomprehensivenessofinformationonthe
publicprocurementsystemsubstantiallymetthebaselines,
makingtheinformationavailablehasnotbeeneffective in
changingbehavior.Thereisanurgentneedtoimplementa
strategiccommunicationstrategyto increaseawarenessof
theprocurementlaw.
(12)Ethicsandanti-corruption:Thenatureandscopeofthe
anticorruptionprovisions inthepublicprocurementsystem
substantiallymetthebaselines,assufficientethicsandanti-
corruptionmeasuresareinplace.
Internal Control and Audit
Findings98. Legal Framework. The 1987 Constitution provides foran independent Commission on Audit (COA) that has thepower toauditall accountspertaining togovernment fundsnationwide,includingprocurement-relatedtransactions.COAisrequiredtosubmitanannualreportofeachentity’sfinancialstatementstotheLegislativeBranchintimeforreviewpriortodeliberationoftheproposedannualbudgetappropriation.TheGovernmentAuditingCode (RA1445)and theGovernmentAccountingandAuditingManualdiscuss theprocedures forinternalcontrolandmanagementofallfinancialtransactionsand define the system of checks and balances. The powers
SCOREMAX. SCORE
Graph 4 - Integrity and Transparency of the Public Procurement System
0Pillar IVThe Integrityand Transparencyof ProcurementSystem
Indicator 9 EffectiveControland Audit System
Indicator 10Efficiency ofAppealsMechanism
20
30
4036
Indicator 11Degree ofInformationAccess
�0
Indicator 12Ethics andAnti-CorruptionMeasures
50
6054
8
159
15
2 3
17
21
37
training material, and both the guide and the training should include a risk-based approach to audit. The professionalization program of GPPB is expected to include COA auditors as participants.
�0�. Internal Audit Units in National Agencies. Undera 2003 Administrative Order, each agency is mandated tostrengthen internal control through the creation of InternalAudit Units (IAUs) with adequate personnel and budgetaryprovision.AsofJanuary2007,56percentofNGAs,52percentofSUCsand73percentofGOCCshadcreatedIAUs8.However,onlyanaverageof28percentoftheseunitsarefunctioninginaccordancewithinternationalstandards.IntheAPPIreviewof 10 pilot agencies, seven had established internal controlunitsforannualauditofprocurementactivities,buttheywerefound to be mostly performing pre-audit and checking ofcompletenessofsupportingdocuments,whichdoesnotmeetinternational internalauditingstandards.Recommendation: Where they are lacking, IAUs should be created. Where they have been set up but are not performing in accordance with standards, they should be strengthened. It would be timely to factor this requirement into the ongoing rationalization of public administration. An Internal Audit Manual that incorporates international standards and the local internal
control rules and regulations should be finalized and approved for roll-out nationwide. DBM and PAGC should collaborate to ensure satisfactory performance of internal control systems in government, particularly in implementing and enforcing the procurement law.
102.AWBIDFGrantissupportinganefforttostrengthenIAUs
foreffectiveprocurementmonitoringandenforcementthatis
beingimplementedbythePresidentialAnti-GraftCommission
(PAGC).Underthisproject,theGovernmenthasmappedthe
creationof IAUsnationwide, including inLGUs,assessedthe
qualityoftheinternalauditfunction,andwilldevelopaquality
assessmentguide forperiodic internal agencyoversight. The
projectwillalsodevelopaninternalauditmanualfornational
agenciesthatwillbeinaccordancewithinternationalstandards
and also incorporate national internal control rules and
regulations.Completionoftheprojectwill,attheagencylevel,
closethelooponprocurementimplementation,asitisexpected
that the IAUswill regularlyadvise theheadof theprocuring
entityofanyinadequacyinprocurementcontrolsandpromptly
submitreportsofdeviationfrompoliciesandstandards.Thiswill
significantlycontributetotheimplementationofprocurement
reformsattheagencylevel.
�03. Internal Audit Units in LGUs.Morethan65percentofLGUs(citiesandmunicipalities)donothaveIAUs.Wheretheyhavebeencreated,thequalityofperformanceisnotonaparwithinternationalinternalauditingstandards.Someoftheseunitsarecommonlyreferredtoaspre-auditunitsandareactuallythedivisionsundertheOfficeoftheAccountantinchargeoftheconductofpre-audit.AllLGUsthathadestablishedanIAUadmitted that they have not yet conducted a procurementsystem audit. Most of the findings of internal auditors arenotformallycommunicated,buttreatedinformallyas“insideinformation.”Governmentprocurement, as it ispracticed intheLGUs,isstillfarfromfulfillingtheprovisionsandintentofthelaw,howeverneithertheinternalnortheexternalauditorshave come up with a comprehensive audit of procurementsystemsinordertoidentifyareasofsignificantdeviationandthecausesandconsequencesofnon-compliance.
�04.Auditors’ Procurement Training.Auditorsplayamajorrole in ensuring that the appropriate controls support theimplementationofthepublicprocurementsysteminaccordancewiththelegalandregulatoryframeworkandthatappropriatemeasuresareinplacetoaddressthepotentialforcorruptioninthesystem.However,itwasreportedthatmostfieldauditorsofCOAarenotproperlytrainedintheGPRA,itsimplementingrulesandregulations,biddingdocuments,formsandstandardcontracts, the generic procurement manuals, and internalcontrolfeaturesthattheyaresupposedtoassessduringaudit.Todate, there isnoprocurementauditguide to standardizeinput to the annual audit program. Recommendation: A Procurement Audit Guide should be developed to guide the conduct of auditors, and training in its implementation should be conducted for all auditors on a regular basis.
7 e-NGAS, the computerized version of NGAS developed by COA, was rolled-out beginning 2003. As of 30 September 2008, 196 NGAs and 141 LGUs have completed its installation.8 DBM and PAGC continue to collaborate to ensure the systematic issuances of internal control guidelines and internal audit manuals. Also, DBM issued a circular last 14 April 2008 advising all agencies that they could create and activate IAUs pending approval of their Rationalization Plans.
Procurement audit is not yet given enough focus in most of the audit programs because most auditors have inadequate knowledge of the law, its implementing rules, the harmonized bidding documents and contract forms, and the procurement manuals; and there is no procurement audit guide to act as the basis for including procurement audit in the annual audit program.
38
Result of BLI Assessment�05.The above findings support the BLI assessment results. The score is 8out of 15points, for 53percent compliance,
or partial achievement of the baselines. An adequate legal
framework, organization, policy and procedures for internal
andexternalcontrolexist,butthereisnospecificperiodicrisk
assessment or controls tailored to risk management. Audits
are carried out annually, but response to or implementation
of theauditors’ recommendationcantakeuptoayear.The
creationofanInternalAuditUnitineachagencyismandated,
butmostagencieshavenotcompliedwiththis requirement,
and those that have are not performing in accordance with
international standards. There is no internal audit manual
to guide internal auditors. While auditors have general
knowledgeoftheGPRA,theyarenotsupportedbyspecialists
onprocurement,becausethereisnotrainingforauditorson
procurement. Table 11 provides a summary of the ratings.
Efficiency of Appeals Mechanism
Findings�06.Due process. TheGPRAprovidesthatprotestsintheform
of “motions for reconsideration” with respect to decisions
involving contractor eligibility and qualification may be filed
with the procuring agency’s BAC. The motions are decided,
basedonthefacts,withinsevendays;ifthemotionisdenied,
thebiddermayfileaprotest inwritingwiththeheadofthe
procuring entity. Protests are resolved strictly on the basis
of BAC records. Procuring entity heads have the authority
to resolve the protest and render a final decision up to the
limit of their approving authority. The decision of the head
of theprocuring entity is normally consideredfinal, and the
procurementprocessproceedstothenextsteps.
�07.Administrative Review.Reviewofdecisionsiscurrently
lodgedwiththeOfficeofthePresidentwhich,byvirtueofthe
President’sbroadadministrativesupervisoryandreviewpowers
undertheAdministrativeCodeof1987,hasauthoritytogrant
remediesforprocurement-relateddecisionsmadebyheadsof
procuringentities.TheGPRAfurtherstatesthatdecisionsofthe
headsof theprocuringentitiesaresubject to judicial review,
anddesignatestheRegionalTrialCourtashavingjurisdiction.
However,thereisnoindependentadministrativereviewbody
toconductareviewofappealedcomplaintsasrequiredbythe
standards.Theprotestmechanismisalsoviewedasineffective
and is not utilized in view of the high and non-refundable
protestfees.Recommendation:A study should be conducted to review existing policies and procedures related to complaints and appeals in light of best practice in other countries, and to consider the designation of an independent administrative body, tapping an existing administrative review body with the appropriate mandate, and setting reasonable protest fees.
More than 65 percent of LGUs (cities and municipalities) do not have IAUs. Where they have been created, the quality of performance is not on a par with international internal auditing standards.
Table ��: Summary of Scores for Indicator 9, Pillar IV
Sub-Indicators Score Max. Score9(a)–Alegalframework,organization,policy,andproceduresforinternal
andexternalcontrolandauditofpublicprocurementoperationsare
inplacetoprovideafunctioningcontrolframework 2 3
9(b)–Enforcementandfollow-uponfindingsandrecommendations
ofthecontrolframeworkprovideanenvironmentthatfosterscompliance 2 3
9(c)–Theinternalcontrolsystemprovidestimelyinformationoncompliance
toenablemanagementaction 1 3
9(d)–Theinternalcontrolsystemsaresufficientlydefinedtoallow
performanceauditstobeconducted 2 3
9(e)–Auditorsaresufficientlyinformedaboutprocurementrequirements
andcontrolsystemstoconductqualityauditsthatcontributetocompliance 1 3
TotalScore 8 15Rating: 8/15 or 53%; Level of achievement is Partically Achieved.
39
�08.Publication of decisions:Thepublicationofdecisions
ondisputesresolvedbytheprocuringentityisnotmandatory
andislefttothediscretionofthereviewbodies,makingaccess
difficult. Recommendation: A mechanism, which could be the subject of an executive issuance, should be developed to publish the decisions of the BACs and entity heads on procurement-related disputes and protests.
109.Complaintreviewbody.TheGPRAprescribesthatappeals
fromthedecisionoftheHeadofProcurementEntitybefiled
eitherwith theOfficeof thePresidentor the judicial courts.
OECDhasclarified that thebody shouldbean independent
administrativereviewbody.TheOfficeofthePresidentisnot
an independent administrative review body, neither are the
judicialcourts. In this regard, thepublicprocurementsystem
is not meeting the standards. Recommendation: A study should be conducted to determine whether there is a need to create an independent complaint review body in accordance with international standards.
Result of BLI Assessment��0. The above findings support the BLI assessment results. This indicator scored9out of a possible 15points,for 60 percent achievement level. The GPRA prescribes thatthedecisionsofentityheadsandtheOfficeofthePresident,asappealbodies,shouldbebasedonfactsandrenderedwithauthority and enforceability under the law. The complaintsreviewsystemisefficient,butthecomplaintreviewbodyisnotindependentandautonomous.Whilethesystemoperatesinafairmanner,itdoesnotresultincorrectiveremediesbutonlyin sanctions and penalties. Decisions are not required to bepublishedandaccessisdifficult.Table12providesasummaryofthesefindings.
Access to Information
Findings���.Publishing Procurement Information. Several readilyandwidelyaccessiblesystemsarenowprovidingprocurementinformation. PhilGEPS, the primary and definitive source ofinformation on government e-procurement, now offers anelectronicbulletinboard,e-catalogue,andsuppliers’ registry.Exceptforbarangays,70percentofallpublicprocuringentitiesareregisteredasPhilGEPSusers.Whilenotallagenciessubmittheirprocurement informationto thePhilGEPSoravailof itsservices, and the required Internet technology is accessiblein only about 30 percent of the whole country, cyberspacemodernization is spreading so fast that the new technologyshouldovertakeotherchannelsofcommunication inashorttime. Investing in modernization has proven to be a gooddecisionbyGOP.
112. The GPPB website (www.gppb.gov.ph) providesinformationonpolicies,guidelines,issuancesonprocurement,andbidopportunitiesthatgovernmentagenciesarerequiredtopost. Itpublishes thenamesofcompaniesandfirms thatare blacklisted URB and suspended. The Uniform GuidelinesonBlacklisting(UGB)requiresallagenciestopublishblacklistedcompanynamesontheGPPBwebsite.
��3. Public Perception Survey on the Effectiveness of the GPRA. The2006 survey conductedby local surveyfirmSWSonthepublicperceptionoftheeffectivenessoftheGPRArevealed thatonly13percentof thegeneralpublic isawareof the procurement law after four years of implementation.TheresultisalarmingtoGOPbecausetheGPRAwasprimarilydesigned to be an anti-corruption measure, with stiffpenalties for simple procurement graft and misbehavior, theshortest of which is imprisonment of at least six years. Thelesspeopleknowabout it, the less valuewill theGPRAadd
Table �2: Summary of Scores for Indicator �0, Pillar IV
Sub-Indicators Score Max. Score10(a)–Decisionsarerenderedonthebasisofavailableinformation,and
thefinaldecisioncanbereviewedandruleduponbyabodyorauthority
withenforcementcapacityunderthelaw 3 3
10(b)–Thecomplaintreviewsystemhasthecapacitytohandlecomplaints
efficientlyandameanstoenforcetheremedyimposed 3 3
10(c)–Thesystemoperatesinafairmanner,withoutcomesofdecisions
balancedandjustifiedonthebasisofavailableinformation 2 3
10(d)–Decisionsarepublishedandmadeavailabletoallinterestedparties
andtothepublic 1 3
10(e)–Thesystemensuresthatthecomplaintreviewbodyhasfullauthority
andindependenceforresolutionofcomplaints 0 3
Totalscore 9 15
Rating: 9/15 or 60%; Level of achievement is Partially Achieved.
40
Table �3: Summary of Scores for Indicator ��, Pillar IV
Sub-Indicators Score Max. Score11–Informationispublishedanddistributedthroughavailablemedia
withsupportfrominformationtechnologywhenfeasible 2 3
Rating is 67%; Level of achievement is Substantially Achieved.
to the fight against corruption. A dire need therefore existsforGPPBtoquicklydisseminateprocurementinformationviacommunication channels that will reach a broad majority ofcitizens.GPPBhasaddressedthisimportantissuebydevelopingaStrategicCommunicationPlan,withWBsupport.Theplanisdiscussedfurtherinthenextsection.Recommendation:The proposed Strategic Communication Plan should be approved and implemented, with the support of development partners. Adequate resources should be allotted to ensure its success.
��4.Public disclosure.Civilsocietyhasbeenclamoringforasystematicandrationalizeddisclosurepolicyforprocurementinformation and how specific bids relate to budgetedpublic expenditures. However, there is no disclosure policyon procurement-related information. Recommendation: Adisclosurepolicyonprocurement-relatedinformationshouldbeformulated,approvedbyGPPB,andimplementednationwidebyallprocuringentities.
Results of BLI Assessment115. The indicator scored 2 out of 3 points, or 67 percent.Although there is an electronic government procurementsystemandprocurementinformationispublished,accessibilityislimiteddueto:(a)technologylimitationsinfar-flungareas;(b)lackofcoordinatedandconsistentlyimplementedstrategiccommunications;(c)lackofcompliancebysomeagencieswiththerulesonpublication;(d)absenceofadisclosurepolicy.
Table13providesasummaryoftheratings.
Ethics and Anti-corruption Measures
Findings1�6. Ample Legal and Regulatory Provisions Addressing Corruption.The lawsand regulationsaddressingcorruptioninclude the Anti-Graft and Corrupt Practices Act, RA 3019,issued as early as 1955, the Code of Conduct and EthicalStandards forPublicOfficialsandEmployees issued in1989,and the most recent GPRA to address public procurementcorruption, issued in 2003. These are adequate laws toimplementgoodgovernanceandpreventcorruption.Theissuesarise in the implementationandenforcementof these laws,andtheDepartmentofFinance,theOfficeoftheOmbudsmanand the Presidential Anti-Graft Commission have recentlybegunconcertedeffortstoaddresstheseissuesthroughseveralprograms,suchasRunAfterTaxEvaders,RunAfterSmugglers,LifestyleChecks,IntegrityDevelopmentReviews,andIntegrityDevelopmentActionPlansofcorruption-ladenagencies.
117.Ininstitutingmeasurestoreduceprocurementcorruption,theGPRArequiresbidderstodiscloseinwritingwhethertheyarerelativesoftheheadoftheprocuringentityuptothethirdcivildegree.TheGPRAprovidesfortheissuanceofblacklistingguidelines,aswellassanctionsandpenaltiesforcivil,criminalandadministrativecases.ThePBDscontainadequateprovisionsonfraudandcorruptionintheInstructiontoBiddersandtheGeneralConditionsofContract.
��8. Defined responsibilities, accountabilities and penalties. TheGPRAclearlydefinesthecoverageoffraudandcorruption,andhasveryspecificprovisionsontheresponsibilitiesofpublicofficialsandprivateentities. Italsocoversoffenses,penalties,civilliabilities,andadministrativesanctionsthatmay
beimposedonerringpublicofficialsorsuppliers,contractors,
and consultants. The GPMs discuss the conditions when
conflictof interest, interventionofactivepublicofficials and
otherrelatedoffensesmayarise,alongwiththecorresponding
penalties.TheAnti-GraftandCorruptPracticesActprohibits
the intervention of former public officials in procurement
mattersinwaysthatbenefitthem,theirrelatives,andbusiness
orpoliticalassociates,financiallyorotherwise,forareasonable
periodoftimeafterleavingoffice.
��9. Evidence of enforcement. Records from the anti-
corruption agencies provide evidence of a few cases where
laws on corrupt practices have been enforced and of many
morethathavenotbeenactedon.(i) The Office of the Ombudsman investigated 38procurement-related cases from2004 to2006 for variousviolationsof theAnti-Graft andCorrupt PracticesAct (RA3019 issued in June 1955), Code of Conduct and EthicalStandardsforPublicOfficialsandEmployees(RA6713issuedinNovember1989)andGPRAissuedinJanuary2003.Someof these investigationshave resulted in thedismissal fromserviceor suspensionofpubliccareerofficialsandelectedofficials.However,a largenumberofcomplaintshavenotbeen acted upon, and some cases take a very long time:someofthecasespendingbeforetheSandiganbayan(thePhilippines’anti-graftcourt)werefiledmorethantenyearsago. The low enforcement capacity of the Ombudsman’sspecialprosecutionofficeandthatofthecourtsisamajorconcern.(ii) The PAGC investigated 37 procurement-related casesfrom2001to2006,resultinginthedismissalfromserviceofsomehigh-rankingpoliticalappointees.(iii)Inlinewithitslegalmandate,from2004to2006,COA–
4�
NationalCapitalRegionhad43noticesofdisallowance:6cases for theyear2004,27cases for2005,and10casesfor2006.Morethanhalfofthesewereprocurementrelated(24cases),withvalues involvedrangingfromPhp100,000toPhp279,144,701.Of the tennoticesofdisallowance in2006,onehadbeenlifted,onehadbecomefinal,andtherestareinvariousstagesofappeal.Noticesofdisallowancearebeingusedasbasis for the initiationofadministrativeorcriminalactionsagainsterringgovernmentofficialsandemployees.(iv) The Senate Blue Ribbon Committee investigated suchhigh-profile procurement cases as the Commission onElectionpollcomputerizationcontract,whichtheSupremeCourtnullifiedforrunningcontrarytotheGPRArequirementofpublicbidding;theBatangasPortlandacquisitionproject;
andtheInternationalAirportPassengerTerminalIIIProject.
Unsuccessfulprosecutionanddelaysinthetrialofprocurement-relatedcasesareduetoinadequatecapacityandtrainingandto failure todetect fraud inprocurementandgatherproperevidence. Recommendation: A special training program should be developed on procurement contract fraud detection, evidence gathering, and prosecution techniques. The target participants should be investigators, prosecutors and auditors.
�20. Special measures: Blacklisting and suspension of erring bidders, suppliers, and contractors.Asrequiredbythe IRR-A, theGPPB issuedGuidelines for theBlacklistingofErring Bidders, Suppliers, and Contractors in August 2004.Complianceisgoodforinfrastructureprojects,largelybecausetheDPWHistheonlyagencywithspecificinternalproceduresforblacklistinginfrastructureconstructors.Atpresent,thelistofblacklistedcontractorsisavailableandupdatedregularlyattheGPPBwebsite,whereGPPBhaspublishedmorethan250blacklistedorsuspendedfirms,andthis list issubmittedandactivelymonitoredbythePhilippineConstructorsAccreditationBoard(PCAB).TheprocessofblacklistingiscoordinatedwiththeConstructionIndustryAuthorityofthePhilippines(CIAP),which is mandated by the Contractors’ Licensing Law toconducttheblacklistingofcontractorsandthecancellationoftheirlicensesbasedonspecifiedoffenses.
121. However, the UGB has very limited application, and
lacks the coordinated enforcement tools to be effective.
The UGB can effectively strengthen the provisions of the
GPRA for administrative penalties, only if mechanisms for
its implementation are in place and functioning. Without
a concerted effort by all government agencies, the mere
existenceoftheguidelinesisnodeterrenttoerringsuppliers,
contractors or consultants. Unfortunately, there is a clear
indication of limited compliance by most agencies with
blacklistingproceduresandinthesubmissionoftheirblacklists
totheGPPB.Itislikewiseclearthatpenaltieslinkedwiththe
blacklisting process, such as contract termination, forfeiture
of securities, and imposition of liquidated damages, are not
imposedbytheagenciesonerringsuppliersofgoods,services
andconsultingservices.Someofthereasonscitedarestaffand
timeshortagesandtediousnessoftheprocedures.
122. The situation is evenmore critical in the LGUs,where
blacklisting is rarely undertaken. Field visits found no LGUs
with internal systems or procedures for blacklisting bidders,
suppliers,contractorsorconsultants.NotallLGUsareawareof
GPPBblacklistingguidelines,andthosethatareaware,seldom
comply. While some LGUs admitted that there are some
suppliersandcontractorswhofailtoperformafteranaward
hasbeenmade,theyaresimplyreprimanded.
�23. GOP Performance on Blacklisting. As of March 31,
2006,therewere182blacklistedconstructorsforinfrastructure
projects on the GPPB list, with 78 blacklisted by 8 different
agenciesand104byPCAB.Ofthoseblacklistedbygovernment
agencies,63werefromDPWH,4fromMetropolitanWaterworks
andSewerageSystem,3fromNationalPowerCorporation,3
from National Housing Authority, 2 from National Irrigation
Administration, and one each from Philippine Food Drugs
Authority, DOH, and PPA. The most common grounds for
blacklistingconstructorsbygovernmentagencieswere:
•rescissionofcontractduetofailuretocompleteproject(33
percent),
•abandonmentofproject(16.7percent),
•failuretocomplywithcontractualobligationsoranylawful
instructions(14.1percent),
•intolerablenegativeslippageofmorethan15percent(12.8
percent),
•falsificationofpublicdocuments(11.5percent),and
•qualityofmaterialsnotcomplyingwithspecifications,poor
performance,orunsatisfactoryqualityofwork(9.0percent
combined)
OfthoseblacklistedbyPCAB,56licenseswererevoked,20
suspended,and28deniedlicenses.Themostcommontypes
ofoffensesofPCABblacklistedconstructorswere:
•misrepresentationoftechnicalemployees(58.6percent),
•misrepresentationoffinancialqualifications(21.1percent),
•misrepresentationoftrackrecord(9.6percent),
•submissionofspuriousorfalsifieddocuments(5.8percent),
and
•abandonmentofproject(1.9percent).
�24. Application of national blacklisting to MDB-funded projects. Thenationallyblacklistedfirmsarenotautomatically
blacklisted in MDB-funded projects. Since the imposition of
such sanction against a firm triggers an inquiry and review
of the process leading to the blacklist, due process is being
observed; use of blacklisting in MDB-funded projects would
furtherrequirethatthegroundsforblacklistingareacceptable
to the MDBs and that the rules are disclosed to the public.
42
Recommendation: A study should be conducted to review the UGB with the objective of strengthening its enforcement mechanism and align it with international good practice.
�25. Special Anti-Corruption Program. Different agencies
have their own anti-corruption programs. The Ombudsman
(OMB) is theprimarygraftbusterundertheConstitutionand
hasembarkedonanumberofanticorruptioninitiatives.
•LifestyleCheckofpublicservants,wheretheactualassets
ofofficialsholdingsensitivepositionsarecomparedwith
theirincomefromgovernmentservice.TheStatement
ofAssetsandLiabilitiesmandatedbylawtobe
annuallyfiledwiththeOmbudsmanisabasicdocument
forinvestigationsincasetherearelargedisparitiesbetween
assetsandsalaryincome.
•AmorestructuredandelaborateapproachistheIntegrity
DevelopmentReview(IDR),whichlooksathow
governmentagenciesareaddressingcorruptionand
governanceissuesinternally.TheIDRhasbeenpilotedin17
agenciesanditisexpectedtobecomearegularprogramto
addresssystemicissuesofcorruption.
•AMulti-SectoralAnti-CorruptionCouncilwaslaunchedin
March2007involvingtheExecutiveDepartment,the
SenateandHouseofRepresentatives,Judiciaryand
ConstitutionalBodies,LGUs,andCSOs.TheCouncilserves
astheconsultativeandcoordinatingbodyfortheNational
Anti-CorruptionProgramofAction.
126.Asthearmof thePresident for implementingtheanti-corruptionprogramoftheExecutiveBranch,PAGClaunchedin2005theIntegrityDevelopmentActionPlan,whichaimstoidentifyspecificmeasuresneededtoavoidgraftandcorruption,includingdetectionandpreventionactivitieswithinanagency.Sofar,morethan50agenciesareparticipatinginthisplan.TheDepartmentofFinance(DOF)implements,throughtheBureauofInternalRevenue,theRunAfterTaxEvadersprogramaimingtodiscover,investigateandpenalizetaxevaders,andthroughthe Bureau of Customs (BOC), the Run After Smugglersprogram aiming to catch smugglers of goods through theportsandensurethatdutiesarecollected.
127. While Government has a number of anti-corruptionprograms in place implemented by several anticorruptionagencies,thesemeasuresarenotcoordinatedandsynchronizedto achieve results. Recommendation: A covenant among the oversight agencies (GPPB, COA, PAGC, DBM and the Ombudsman) should be agreed upon to strengthen the coordinative linkages, monitoring and enforcement of audit findings, and compliance with the procurement law. The covenant could be supported by the creation of a procurement sub-working group under the PDF Working Group on Governance and Anti-corruption. Special training programs on fraud detection for purposes of prosecution should be developed and conducted, targeting investigators, prosecutors and auditors.
�28.CSO and Private Sector Participation in Procurement Biddings. The landscapeof public servicedeliveryhasbeenchanging.Wheregovernmentwasoncethesoleactorinthearena of public service delivery, nowadays, citizens are bothbeneficiariesandactiveparticipants.Non-stateorcivilsocietyorganizations(CSOs)aretakingtheinitiativewheregovernmentisabsentorwheretheprivatesectordoesnotfinditprofitableto participate. The GPRA recognizes the significance of theCSOsandhasgiventhemacriticalroleinpublicprocurement,providing for their participation as observers at all stages ofpublicbidding.
129. A private sector representative sits in the GPPB and inits TWG, to provide private sector inputs in discussions onprocurementpolicies,procedures,andconcerns.Representativesfrom professional organizations and non-governmentorganizations serveasobservers in theBACsofgovernmentagenciestoensuretransparency intheprocurementprocess.These include, among others: PCA, Philippine Chamber ofCommerceandIndustry,PhilippineInstituteofCivilEngineers,NACAP, Philippine Institute of Certified Public Accountants,andtheConfederationofFilipinoConsultingOrganizationsofthePhilippines.TheTransparencyandAccountabilityNetwork,theCatholicBishops’ConferenceofthePhilippines,theMakatiBusinessClub,andtheNationalCitizens’MovementforFreeElections are some of the more active CSOs that send theirrepresentativesasobservers.
130. AlthoughtheGPRA’sobjectiveofensuringtransparencyinprocurementbymeansofmandatingCSOobserversinthebiddingprocessislaudable,itsimplementationisnotproducingthedesiredimpactontheground.Moreover,itssustainabilityisatriskunlessseriousremedialmeasuresareintroducedbytheGPPBandtheCSOsthemselves.Recommendation:A list of activities to increase CSO participation was agreed on at the August 8, 2007 CPAR consultation workshop (see Annex 5). This list should become the basis for a study to be undertaken on sustaining the involvement of CSO observers in the bidding process, including contract implementation.
While Government has a number of anti-corruption programs in place implemented by several anticorruption agencies, these measures are not coordinated and synchronized to achieve results.
43
�3�. Mechanism for Reporting Fraudulent, Corrupt or Unethical Behavior. The anticorruption agencies haveestablishedchannelsforreceivinginformationfromthepubliconfraudulent,corruptorunethicalbehavior.TheOmbudsmanhasembarkedonacommunicationcampaignusingtheradioandprintmediatoinformandencouragethepublictoreportsuchbehavior.Thereportmaybemadeinwriting,anonymouslyor otherwise, addressed to a given Ombudsman Office, orthroughthepublicassistancehotlinesusingsecuredtelephonelines. PAGC also encourages written complaints containinginformation on corrupt behavior of particular governmentofficials, which it then investigates. DPWH has a policy ofplacingprojectbillboards to informthepublicaboutspecificconstruction projects in conspicuous places at constructionsites,providingaphonenumberor locationwhereconcernsabouttheprojectmaybereported.
�32. Code of Conduct. The Code of Conduct and Ethical
Standards for Public Officials and Employees issued in
November1989providesfornormsofconductandspecifies
prohibitedactsandtransactionsonthepartofpublicofficials,
includingthose involvedinpublicfinancialmanagementand
procurement.TheCodedefinesaccountabilitiesandfinancial
disclosure. Compliance with this Code is obligatory, with
administrativeorcriminalconsequencesfornon-compliance.
�33. Public Perception Survey on Procurement Corruption. Despite the adequacy of the anti-corruption laws and
regulationsandthepresenceofanti-corruptionagencies,the
publicperceptionofcorruptionishigh.The2006SWSsurvey
on the GOP’s procurement system revealed that the public
perceives the levelof corruption ingovernment contracts to
bethesameasitwasfiveyearsago,aboutthesametimethat
theGPRAwaspassed.TheSWSsurveyalsofoundthatonly13
percentoftherespondentswereawareoftheGPRA.About35
percentofmorethan700Filipinofirmssurveyedinthe2004
WB/ADBInvestmentClimateSurveyreportedcorruptionasa
majorconstraint indoingbusiness in thePhilippines, second
only to macroeconomic instability. The recently published
October 2007 World Governance Indicator reported that
the control of corruption is lower in the Philippines than in
comparableEastAsianeconomies.
�34. Optimism for the GPRA. Despite the low awarenessratings and continuing negative public perception ofgovernmentbiddings,tworesultsfromthe2006SWSsurveyprovide encouraging signs that the public is willing to help.A large majority (76 percent) believe that the GPRA canhelp reduce corruption in government contracts. Amongthe 13 percent who are aware of the GPRA, 87 percent ofthembelievethat itcanhelpreducegovernmentcorruption.Significantly, the survey indicated that 73 to 77 percent ofFilipinosagreewiththereformmeasures incorporated intheGPRA, with 42 to 49 percent saying that these reforms aredefinitelyneeded.Further,42percentofthosewhowereaware
of theGPRAthought it isnoweasier topunishgovernmentofficialsresponsiblefor irregularities ingovernmentcontractscompared to aboutfive years ago.A largeproportionof allrespondents(55percent)saidthattheywouldreportincidentsofcorruptiontothemedia,andnearlyasmany(46percent)said it was important for people to know the procurementreformlawsandregulations.Morethan40percentarewillingto join a citizens’ group or a CSO to monitor governmentbidding procedures. And 23 percent said they will refuse tovoteforcorruptpoliticians.Annex 4providesasummaryoftheSWSsurveyresults.
�35. Desired Impact for the Strategic Communication Plan. ThechallengeistodevelopaninformedbeliefthattheGPRAisnotonlyintendedtoworkagainstcorruption,butthatit trulydoes so. Theobjective is to changebehavior so thatcitizensbecomemorevigilantandlesstolerantofcorruption,private sector bidders come to respect the integrity of theprocurementsystem,andpublicprocurementofficials followthe lawand regulations for the sakeofgoodpublic service.Regular publication of the results of audit and monitoringwould document that procurement reform is indeed beingimplementedsuccessfully.ThisisthedesiredimpactofGPPB’sproposedStrategicCommunicationPlan.However,whiletheGovernment has allotted some funds from its own budget,it isnotenoughfornationwide roll-out.Recommendation: Adequate resources should be provided for the Strategic Communication Plan in MDB projects as part of technical assistance for capacity building. One way of implementing the Plan to the subnational levels would be to support activities sponsored by the powerful university network, Knowledge for Development Centers, who have a high level of interest in procurement reform and have already requested information with the objective of organizing procurement training at local level Public Information Centers.
Result of the BLI Assessment 136. The above findings support the BLI assessment results.TheGPRA’slegalandregulatoryframeworkonanticorruptionfullyachievesbestpracticestandards.Thelegalandregulatory
The 2006 SWS survey on the GOP’s procurement system revealed that the public perceives the level of corruption in government contracts to be the same as it was five years ago, about the same time that the GPRA was passed.
44
Adequate resources should be provided for the Stretegic Communication Plan in MDB projects as part of technical assistance for capacity building. One way of implementing the Plan to the subnational levels would beto support activities sponsored by the powerful university network,Knowledge for Development Centers.
systems define the responsibilities, accountabilities andpenalties for individuals and firms found to have engagedin fraudulent or corruption practices. However, evidence ofenforcementisfewandfarbetween.Thefullimpactofexistingmeasuresisnotyetachievedbecausethesemeasuresarenotyet fully integratedacrossanti-corruptionagencies toensurecoordinated action and prevent overlapping and conflictingactions. There are several CSOs working as observers anddialoguewiththeGOPisfrequent,buteffortssofarhavehadlimited impact. There are mechanisms in place for reportingfraudulent,corrupt,orunethicalbehavior,buttheiraccessibilityandreliabilityundermineandlimittheirusebythepublic.Thereisacodeofethicsforpublicservantswithadministrative,civilandcriminalpenaltiesfornon-compliance.Table14providesasummaryofthesefindings.
137.TheCPARWorkingGroupandtheWBCPARTeamhavethoroughly analyzed the obvious inconsistency between theBLI Ratings and the prevailing public perception of a highlevelofcorruption inprocurementandwith theSWSsurveyfindingsthatonly13percentofthepublicisawareofthenewprocurementlawanditsintendedbenefits.Theinconsistencymakesbettersensewhenviewedalongsidetheparadoxfromwhichitstems:muchprogresshasbeenmadeinprocurement
reform in termsof rulesandregulationsbut implementation
andenforcementarestillweak,andtheobjectivesofthereform
have not been fully achieved. Mindful of the contradictions
Table �4: Summary of Scores for Indicator �2, Pillar IV
Sub-Indicators Score Max. Score12(a)–Thelegalandregulatoryframeworkforprocurement,including tenderandcontractdocuments,includesprovisionsaddressingcorruption, fraud,conflictofinterest,andunethicalbehaviorandsetsout (eitherdirectlyorbyreferencetootherlaws)theactionsthatcanbe takenwithregardtosuchbehavior 3 312(b)–Thelegalsystemdefinesresponsibilities,accountabilities,and penaltiesforindividualsandfirmsfoundtohaveengagedin fraudulentorcorruptpractices 3 312(c)–Evidenceofenforcementofrulingsandpenaltiesexists 2 312(d)–Specialmeasuresexisttopreventanddetectfraudandcorruption inpublicprocurement 2 312(e)–Stakeholders(privatesector,civilsociety,andultimatebeneficiaries ofprocurement/end-users)supportthecreationofaprocurement marketknownforitsintegrityandethicalbehaviors 2 312(f)–Thecountryshouldhaveinplaceasecuremechanismforreporting fraudulent,corrupt,orunethicalbehavior 2 312(g)–ExistenceofCodesofConduct/CodesofEthicsforparticipants thatareinvolvedinaspectsofthepublicfinancialmanagement systemsthatalsoprovidefordisclosureforthoseindecisionmakingpositions 3 3Totalscore 17 21
Rating: 17/21 or 80%; Level of achievement is Substantially Achieved.
inherentinthecurrentsituation,theWorkingGroupandCPAR
Teamcarefullyreviewedtheratingsofthesub-indicatorsand
ratedthemconservatively.Onereasonforthehighratingisthat
theindicatorfocusedonprocessandnotonresults.Itwould
havebeendifferentifsomesub-indicatorsonenforcementand
resultingoutcomeshadbeenincluded.
45
Building Roads to ProsperityAn efficient system of roads and bridges linking the country’s 72 provinces is necessary for economic growth. External monitoring initiatives have also been put in place, includingRoad Watch, a civil society undertaking that monitors the performance of the road sector and the impact of road projects with a strong focus on anti-corruption and good governance. Moreover, the Government Procurement Reform Act requires the involvment of civil society organization inthe bidding process, a demonstration of transparency in the public procurement system.
46
138. Combining the levels of achievement against BLIinternationalstandardfor thefourkey resultareasorPillars,thePhilippinepublicprocurementsystemisratedasmediumormoderaterisk,basedonthefollowing:
Pillar I: Legislative and Regulatory Framework scored 86percentofbaseline(fullachievement),Lowrisk;Pillar II:InstitutionalFrameworkandManagementCapacityscored 69 percent of baseline (substantial achievement),MediumorModeraterisk;Pillar III:ProcurementOperationsandPublicProcurementMarketPerformancescored53percentofbaseline(partialachievement),Highrisk;andPillar IV: Integrity and Transparency of the PublicProcurement System, scored 68 percent of baseline(substantialachievement),MediumorModeraterisk.
InFigure1,comparingthecountryscore(whiteinnerdiamond)
toaperfectscore(blackouterdiamond),indicatesataglance
III. COUNTRY RISK ASSESMENT
the status of the country’s public procurement systems as
comparedwithinternationalstandards.
�39. Risk Analysis. While the GPRA appeared to have
substantiallymetthebaselinesforagoodprocurementlegaland
regulatoryframework,anumberofrisksintheimplementation
andenforcementofthelawremain.Theprivatesectorisnot
yet confidentofa levelplayingfield,althoughmeasuresare
nowinplacetoaddresstheissuefromthenationaltothesub-
nationalgovernmentlevel.Thereareindicationsthatsomeof
the bidders are cornering markets or colluding to win bids.
Procurement monitoring and collection of data to evaluate
performancearenotyetfullyinplaceasthePhilGEPSisnotyet
fullyimplementedandcomplianceisnotyetatasatisfactory
level. The law is being enforced and violators punished by
several anti-corruption bodies that are not fully coordinated
inorder toensure successful enforcement.The sustainability
The Legislative and Regulatory Framework
IRR-B Foreign Assisted ProjectsInternational CompetitivePi
llar
I
Institutional Frameworkand Management Capacity
Follow-thru in Compliance Monitoring-Improve Compliance-Generation and Analysis of Data Linkage
Pilla
r IIThe Integrity and
Transparency of the PublicProcurement System
Internal Audit Role of ObserversPhilGEPS as transparency tool
Pilla
r IV
Procurement Operations and Public Procurement Market Performance
ProfessionalizationRecord KeepingPrivate Sector OwnershipPi
llar
III
Figure 1. Graphical Representation of the BLI Pillars for the Philippine Public Procurement Systems in 2006
Maximum Score
2006 Country Score
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
2006 Assessment of the Philippine Procurement System
47
oftheCSOinvolvementasobserversinthebiddingprocessis
anissue.Overall,thepublicawarenessonthelawisverylow
at13%,andthiswasanalyzedasduetopoorcommunication
of the reformdownto thegrassroots level. While the legal
framework has been strengthened, implementation and
enforcementareweak.Againstthisbackdrop,theCPARusing
Sustainability of the CSO involvement as observersin the bidding process isan issue. Overall, the public awareness on the law is very low at 13%, and this was analyzed as due to poor communication of the reform down to the grassroots level.
theOECD-DAC12BLIindicatorscameupwithanaggregate
BLI score of 67 percent at the country level. This would
translatetoaMediumriskforthenationalagenciesandHigh
riskforLGUs’procurementasshowninTable15.
140. Mitigating the Risk. At the country level, the CPAR
Working Group included risk-mitigating activities in a
comprehensiveActionPlantoImprovethePublicProcurement
System,presentedinthelastchapterofthisreport.Measures
intendedtomitigatethecountryprocurementriskinforeign-
assistedprojectsfinancedby loansandgrantsareaddressed
in theprocurementarrangements for theseprojectsandare
presentedinthenextchapter.TheyincludetheuseofPhilippine
countrysystemsthroughtheadoptionofharmonizedbidding
documents,formsandmanuals,andtheuseofGOP’sPhilGEPS.
Foreign technical assistance to support these measures in
the area of strengthening implementation and enforcement
of the system is reflected in the funding resources pledged
by development partners indicated in the Proposed Action
Plan. Specific project procurement risk will be based on the
projectcapacityassessmentnormallyconductedduringproject
preparation.Moreover,ananti-corruptionplanonprocurement
isnormallydiscussedandagreedwiththeimplementingagency
andincorporatedintheLoanAgreement.
48
INDICATOR
1.Presenceanduseoflegaland regulatoryinstrumentfromhighest leveldowntodetailedregulationand biddingdocuments
2.Existence,availability andqualityofimplementing regulationsanddocumentation3.Procurementmainstreamedintothe publicsectorgovernancesystem
4.Presenceofafunctionaland normative/regulatorybody
5.Existenceofinstitutionaldevelopment capacity
6.Operationaleffectivenessand efficiencyofthesystematthe entitylevel
7.Positivemarketresponseto procurementsolicitations
8.Existenceofcontractadministration anddisputeresolution
9.Existenceofeffectivecontroland auditsystem
10.Efficientappealmechanism
11.Accesstoinformation
12.Presenceofethicsandanti- corruptionmeasures
CountryAverage
L
L
M
L
H
H
H
M
H
H
M
M
M
L
M
M
L
H
H
H
H
H
H
H
M
H
MITIGATING MEASURES
FormulateIRR-Btocoverforeignassisted
procurement.
SimplifiedBarangayandLGUbiddingdocumentsandmanualswillbedevelopedandimplemented.
Developmentandissuanceofclearguidelinesonmulti-yearplanlinkedtoannualbudget,andPFMmanual.
ProvidemoreresourcestoGPPB-TSOforanexpandedrole.
Strengthenmonitoringandevaluationperformance;developPhilGEPSPhases2to5;acceleratetheprofessionalizationprogram;upgradethequalityoftrainingforprocurementandprocurementaudit
Establishandimplementarecordsmanagementsystem;deepenCSOsandprivatesectorawarenessandinvolvementinthesystem.
Conductregularprivatesectortrainingonprocurement;strengthentrain-the-trainersprogram;upgradethecostestimatingprocess;reduceeligibilityrequirementstocompriseonlytechnicalandfinancialcapacity.
Monitorprogressofdisputeresolutioncases;strengthencontractimplementationmonitoringbyCSOs.
Establishacovenantofcoordinationamongoversightagencies;mainstreaminternalcontrolandinternalauditsysteminentities.
Studythecreationofanindependentadministrativereviewbody;publishresolutionofcomplaintsdecidedbyheadsofentities.
Implementthestrategiccommunicationplan.
Establishacovenantofcoordinationamonganti-corruptionbodies;developadatabaseonfraudcases;conductspecialtrainingprogramsonfrauddetection;developamechanismtofollow-upreportedirregularitiesbyCSOobservers.
Table �5: Level of Risk Per Indicator
Level of Risk
Nat’l LGUACHIEVEMENTLEVEL
SA–75%
FA–100%
SA–75%
FA–92%
PA–42%
PA–42%
PA–44%
SA–78%
PA–53%
PA–60%
SA–67%
SA–80%
67%
49
Empowering Young People through KnowledgeCollege students are trained to monitor government procurement by accessing on-line thePhilippine Government Electronic Procurement System (PhilGEPS) and reporting perceived anomalies to partner government agencies and civil society groups.
50
Legal Basis141.Section3(ScopeandApplication)oftheGPRAprovides
that“[T]hisActshallapplytotheprocurementofinfrastructure
projects, goods and consulting services, regardlessof source
of funds, whether local or foreign by all branches and
instrumentalitiesofgovernment….Anytreatyorinternational
or executive agreement affecting the subject matter of this
Act to which the Philippine government is a signatory shall
be observed.” Therefore procurement based on a treaty
or international or executive agreement will follow the
procurementproceduresspecifiedinthetreatyoragreement.
ThequestionofwhetherJBIC,ADB,andWBloanagreements
shouldbeconsideredastreatiesorinternationalorexecutive
agreementswasbroughtbeforetheSupremeCourt,andon
June8,2007,theCourtruledthatsuchloanagreementsdo
indeed partake the nature of an executive or international
IV. Foreign-Assisted Projects
agreementwithinthepurviewofSection4oftheGPRA.Onthis
basis,theSupremeCourtstatedthattheMDB’sprocurement
guidelinesagreeduponintheloanorgrantagreementhave
primacyontheconductand implementationof thebidding/
procurementprocessforforeign-assistedprojects.
Harmonization142.InJanuary2003,theGOPanditsdevelopmentpartners,
particularly ADB, JBIC and the WB, agreed to harmonize
six procurement areas in order to reduce transaction costs,
simplify procedures, facilitate decision-making and reduce
capacity-buildingcostsforforeign-assistedcontracts.TheWB’s
move towards further relianceonPhilippinecountry systems
will depend largely on completion of these harmonization
activities.Sincethen,fourofthesixareashavebeencompleted
orareunderway,asshowninTable16.
AREA
1.ImplementingRulesandRegulations
2.Biddingdocumentsforworks,goods
andconsultingservices.
3.Trainingandcertificationprogram
4.Procurementmanual
5.Procurementreportingformat
6.Registrationandlicensingprocedures
witheligibilityscreening.
Table �6: Update on Harmonization Activities for GOP
Expected Completion Date
December2009
Done
December2008
Done
Done
Nottobedone
UPDATE AS OF JUNE 30, 2007
IRR-Aissuedfordomesticfundedcontractsin
September2003.Foreign-assistedprojectsare
coveredbySection4oftheGPRAandSection6of
theHarmonizedGPMs.IRR-Bagreedtobedrafted
andissued.
PBDsissuedinAugust2004.WorksandGoods
DocumentsharmonizedwithADB,JBICandWorld
Bank.ConsultingServiceharmonizedwithWB.
Includedintheprofessionalizationstudy
GPMissuedinJuly2006.Mandatoryadoptionin
January2007.
IncludedaspartoftheGPM.
ItwasagreedtopursuethisbetweenDPWHand
CIAP/PCAB,withoutMDBinvolvement.
Funding Support
USAIDand
WB-IDF
WB
WB-IDF
USAIDand
ASEM2Grant
ASEM2Grant
5�
Regulations�43.Implementing Rules and Regulations B.Whileforthe
pastfouryearsMDB-fundedprojectshavebeensatisfactorily
implementedonthebasisofSection4oftheGPRAandSection
5of theGPMs, therearealsoprojects thatare fundedfrom
bilateral and other sources. In view of recent controversies,
therearenowrequestsfromvarioussectorstoincludeinthe
harmonization activities, the drafting of the IRR-B to cover
exclusivelyprocurementunderforeign-assistedprojects,which
willincludenotonlytheODAfromtheMDBs,butalsothose
frombilateral sources,asprovidedfor inSection1of IRR-A:
“[T]heIRR-Bforforeignfundedprocurementactivitiesshallbe
the subject of a subsequent issuance.” The proposed CPAR
ActionPlanincludesthedrafting,finalizationandissuanceof
IRR-B.
Bidding Documents�44. Philippine Bidding Documents as Harmonized with ADB, JBIC and WB.Thecountry’sProcurementHarmonization
Programtookabig leap forwardwith the issuanceofGPPB
Resolutions in August 2004 and January 2005, requiring
mandatoryuseofthePBDsforWorksandGoodsasharmonized
withADB,JBICandWBforNCBmethod,andforConsulting
Servicesasharmonizedwith theWB.Themandatoryuseof
thedocumentsnationwidebyallprocuringentitiesstartingin
June2005isenforceablebylawbasedonSection6andArticle
VIoftheGPRA.Fromthefirstidentificationofconflictingrules
for each document, to workshops and discussion meetings,
and then to final compromises to harmonize the conflicting
rules,ittook19monthstofinishtheFirstEditionofthePBDs,
whichthenbecamethefirstharmonizedbiddingdocuments
issuedwithintheEastAsiaandPacificRegion.Themagnitude
ofthisachievementisdocumentedinTable17.
�45. Assessment of the Effectiveness of the Harmonized Philippine Bidding Documents. The August 2004 FirstEdition of the Harmonized PBDs was updated in a SecondEdition in May 2005. The MDBs prescribed the use of theharmonizedPBDs forNCB in all projects, effectiveupon theissuanceoftheJointLetterfromtheMDBsadvisingtheGPPBof its acceptability in May 2004. Since then, procurementarrangements with NCB method automatically prescribe the
useofHarmonizedPBDsand theSUCsuse theHarmonizedPBDsasthematerialsfortrainingonbiddocumentpreparation.The use of the same document by the GOP for its publicbiddingandbytheMDBsfortheirNCBshasfacilitatedtrainingand reduced, if not eliminated, confusion in the applicationoftheprocurementrules.However,challengeshaveariseninimplementingPBDuseintheregions,districtsandtheLGUs,where thedocumentswere found tobe too comprehensiveandtheprocedurestootediousforsmalllocalprocurements.SimplifiedPBDsforsmallprocurementsuptocertainthresholdsarebeingdevelopedandwillbeharmonizedwithMDBspriortonationwideroll-out.
Procurement Manuals�46.Harmonization of the GPM.ThedevelopmentoftheGPMsprovidedtheopportunitytoharmonizepreviousmultipleprocurementguidelinesandmandatethisonestandardseriesof manuals to be used by all agencies and entities. Prior tothe issuance of the GPMs, a number of large procuringentities had their own internal procurement guidelines andprocedures, others used a compendium or compilation ofprocurement-related issuances, and every WB project had aseparateprocurementmanualthatwasannexedtotheProjectOperations Manual. Procurement practitioners in agencieslike DENR, DepEd, DOH and DPWH were referring to twoor more procurement manuals, which could be inconsistentand confusing. The process of manual harmonization lastedayear—fromMay2004toMay2005—includingpilottestingtheGPMsinsixnationalagencies,oneGOCC,andoneLGU.The harmonized GPMs were declared acceptable for use inMDB-financedprojectsthroughajointletterdatedSeptember14,2006,signedbythecountrydirectorsandrepresentativesofADB,JBICandWB.ItbecameeffectiveformandatoryusestartingJanuary2007.
147.Whileitwouldbeprematuretomeasuretheeffectivenessof the Harmonized GPMs, the following outcomes areexpected:
•HavingasinglesetofGPMsfacilitatesoperationalactions
fortherulesmandatedintheGPRAanditsIRR-A,which
includestheMDB-fundedprojects.
•TheGPMsprovideaveryinformativereferenceandguide
topublicprocurementpractitionersandadministrative
Number of Conflicting Paragraphs
BIDDING DOCUMENTS WORKS GOODS CONSULTING SERVICE
Originalnumberofconflictingparagraphs 128 145 171
Harmonizedparagraphs 101 117 162
Remainingun-harmonizedparagraphs 27 28 9
Percentharmonized 79% 81% 95%
Table �7: Number of Conflicting Paragraphs in the PBDs
52
staff,includingtheheadoftheprocuringentity.
•Theyprovideacleardefinitionofroles,responsibilities,and
accountabilitiesintheprocurementprocess.
•Theyserveasthesoleprocurementdocumentspecifying
controlmeasurestobeusedasauthoritativereference
intheirregularorspecialauditsbyinternalandexternal
auditors.
AnassessmentontheeffectivenessoftheharmonizedGPMs
shouldbeconductedafterayearofmandatoryadoption.
Acceptable Private and Commercial Practices148.Procurementpracticesintheprivatesectorgenerallyadopt
competitivemethods, usually via the Internet since the June
2000passageoftheE-CommerceLaw(RA8792).Commercial
firmsmakeuseofBayantrade, aprivately runenterprise for
onlinee-procurementofgoodsandservicesthatcompetitively
selects the lowest complying offers, and of the suki or
accreditation/registration system, where companies list their
preferredsuppliers,contractorsandserviceprovidersingood
standing,andsolicitcompetitionfromthoselisted.Company
policymayalso require them tobuydirectly from theirown
affiliatedorsubsidiarycompanies,whichisnotcompetitivebut
keepsprofitswithinthecompany.Inthelattercase,theBank
willnotacceptthepracticeasitconnotesconflictofinterest,
exceptwhenthesubsidiarycompanyactsasprocurementarm
andtheprocessundertakeniseconomicandefficient.
NCB Procurement Annex to the Loan Agreement�49. Remaining Differences from WB Rules. Prior to the
issuance of the Harmonized PBDs and GPMs, the WB Loan
Agreement Annex to the Procurement Schedule for WB-
financed projects in the Philippines identified 27 national
procurementrulesforWorksandGoodsandsixforConsulting
Servicesasunacceptabledue tonon-conformancewithbest
practices.Whileharmonizationhasnotyetresolved100percent
ofthesedifferences,ithasdrasticallyreducedthenumberof
non-conformingrulesfrom27forWorksandGoodsto8or
by70percent.Thisreductionwasachievedbycomparingthe
nationalrulesagainsttheChecklistofAcceptableRuleswhich
wasissuedasAnnexAoftheMay2002WBCPARGuidelines,
taking into consideration implementation experience during
2000-02. Following this comparison, the revised NCB
Procurement Annex to the loan agreement is proposed to
be changed to reflect an updated list of unacceptable rules
as shown Annex 8A. As the CPAR was carried out in close
collaboration with the ADB, ADB’s National Competitive
Bbiddingannextotheirprocurementplanisalsoprovidedas
Annex8.Harmonizationwillcontinue,andexperienceduring
thefirstyear’suseofthedocumentswillopenfurtheravenues
forgreaterharmonization.
Procurement Method Threshold�50. Thresholds per Contract for Procurement Methods. Progress in harmonization between the GOP and its
development partners is considered to have been successful
because it has resulted in closer alignment of country and
MDBsystems.The reduction in thenumberofunacceptable
ruleshasresultedinagreaterrelianceoncountrysystems.The
first step towards this outcome was the passage of a good
legislativeandregulatoryframeworkthatpromotedtheuseof
acceptable tools and procedures: the procurement manuals,
thebiddingdocumentsandforms,thee-procurementsystem,
and the national training program for NCB. However, this
CPARhaspointedtohighriskintheareaoftheinstitutional
capacityandoperations in themarketplace, inparticular: (a)
implementation, monitoring and enforcement; (b) capacity
building;and(c)linkagetopublicfinancialmanagement.The
adoptionofharmonizedrulesandthegreateruseofcountry
systemsistoorecentfortheirfullimpacttobecomprehensively
assessed.Inthisregard,theWB’sandADB’sfiduciarythresholds
areshowninTable18.
Anti-Corruption Measures in WB Projects151. It is often said that the issue of governance in the
Philippinespresentsaparadox.There isastrongpresenceof
civilsocietyinthecountry,anopenmedia,andhighlycapable
Table �8: Amount of Threshold per Contract
ITEM CATEGORY CURRENT AMOUNT
ICB Works OverUS$5million Goods OverUS$1million NCB Works OverUS$100,000to$5million Goods(a) OverUS$100,000to$1million Shopping WorksandGoods NotmorethanUS$100,000 NationalConsulting Shortlisting ConsultingServices NotmorethanUS$200,000
(a) ADB NCB threshold for Goods is set between US$500,000 and US$1 million depending on the project
53
individuals working in public administration. Nonetheless,
corruption remains a critical barrier to the achievement
of good governance. Governance indicators from a cross-
countrydatabaseindicatethat,despitedemocraticprocesses,
indicatorsfortheruleoflaw,politicalstability,andcontrolof
corruptionarelowerinthePhilippinesthanincomparableEast
Asian economies. Additionally, about 35 percent of Filipino
firmssurveyedinthe2004ADB/WBInvestmentClimateSurvey
reported corruption as a major constraint to doing business
in the Philippines, secondonly tomacroeconomic instability.
Corruption and collusion, particularly in procurement, also
pose significant challenges for government expenditures,
includingthosefinancedbytheWB.It isthereforenecessary
for the WB to know how the Government is responding to
procurement corruption and what specific strategies the
programhasemployedtohelpmitigatetheriskofcorruption
inprocurement.
152. Project Appraisal Documents for projects in the WB
portfolioforthePhilippinesthatwereapprovedstartinginFY
2007havethereforeincludedananti-corruptionactionplanas
partof theWB’sfiduciaryresponsibility.Oncediscussedwith
theimplementingagency,themeasuresareincorporatedinto
the agency’s customized procurement manual or operation
manual and are referenced in the loan or grant agreement.
While each project will have its own implementation set-up
andanti-corruptionplan,itwouldbehelpfultohaveaguide
for theassessmentandpreparationofanti-corruptionaction
plans for procurement. Recommendation: A procurement anti-corruption guide or manual specific to the Philippines’ public procurement system should be developed by the WB Procurement Team to assist project procurement specialists and task team members during project preparation. Once cleared by the Regional Procurement Manager, the anti-corruption guide or manual would be issued as a country directive for the preparation of procurement arrangements for new WB projects in the Philippines.
153. The anti-corruption plan would consolidate the anti-
corruption initiativesmentioned intheCPARandwouldalso
incorporatetheWB’sGACstrategy,including:
(a) mandatory adoption of PhilGEPS and its user guide under NCB once these have been successfully piloted and assessed by the WB and ADB;(b) customization of the Generic Procurement Manual for implementing agencies and for LGUs;(c) the strict use of bidding documents and contract forms; (d) the application of fraud and corruption policies of the Government and WB; (e) the involvement of civil society organizations as observers in the bidding process, as mandated by law, and as observers in contract implementation.
A country-specific action plan for mitigating risks identified in the capacity assessment of the implementing agencies would become the basis for discussion with the agency and borrower in finalizing the project-specific procurement anti-corruption plan.
Use of Philippines Country System154. The2003ParisDeclarationemphasizes the importance
of strong procurement and financial management systems
in enabling more and better support from development
partners. As a signatory of the Declaration, the GOP has
stronglycommittedtoimprovingdevelopmenteffectivenessin
several areas, including the alignment andharmonizationof
procurementsystems.TheframeworkofthePhilippinespublic
procurementsystemisnowcloselyalignedwithinternational
bestpractices, resultingfromtheharmonizationof thebasic
tools forprocurement: (a) a lawand its implementing rules,
which contain most of the best features of international
procurement principles and standards, as suggested by
internationalexperts;(b)PBDsharmonizedwithADB,JBICand
theWB; (c)GPMsharmonizedwithADB, JBIC and theWB;
(d)acceptabilityoftheelectronicprocurementsystemforuse
inMDB-fundedprocurement;and(e)jointdeliveryoftrainingprograms.
155. The results and impacts of these aligned activities in
MDBprojectsare:(a)increasedthresholdsforlocalornational
competitivebiddingmethods;(b)reduceddifferencesinrules
for public bidding that are indicated in the NCB Annex to
the loan agreement, making it easier to attain procurement
proficiencyregardlessoffundingsource;(c)useofharmonized
bidding documents that facilitate the work of bidders,
procurement staff, members of the BAC, and auditors; (d)
streamlined processes as a result of the adoption of GPMs
thatapplytoallprojectsregardlessoffundingsource;and(e)
Governance in the Philippines presents a paradox. While there is a strong presence of civil society, an open media and highly capable individuals in public administration, corruption remains a critical barrier to achieving goodgovernance.
54
strengthenedmonitoringofcompliancethroughtheuseofe-
procurement resulting from theacceptabilityof PhilGEPS for
MDBprojects.Theharmonizationshortensthelearningcurve
for new procurement practitioners and enables auditors to
pinpointthoseaccountableateachprocurementstep.
156. Given these advances, all procurement arrangements
in WB-assisted projects as recorded in the Project Appraisal
Documentwillprovidefor:
•theloanagreementtocontaintherevisedNCBProcurement
AnnexasshowninAnnex7tothisCPAR;
•jointprocurementcapacityassessmentusingprimarilythe
As a signatory of theParis Declaration, the GOP has strongly committed to improving development effectiveness in several areas, includingthe alignment and harmonization of procurement systems.
GPPB’sagencyprocurementperformanceindicator(APPI)
systemtoarriveatajointriskratingandintegratedmeasures
toimprovethecapacityoftheprocuringentity;
•theuseoftheHarmonizedPBDsforGoodsandWorks;
•theuseoftheHarmonizedGPMsaspartoftheproject
operationmanual.TheGPMmaybecustomizedtobe
specifictotheorganizationalandoperationalneedsofthe
procuringentity,subjecttotheapprovaloftheGPPB;
•theuseofPhilGEPSastheprimarysourceofprocurement
information,particularlyinadvertisingforinvitationtobid
andpostingofawards;
•jointprocurementtrainingprogramsforNCB,the
procurementdocuments,formsandmanuals,and
alternativemethods;and
•theadoptionofanti-corruptionmeasuresinprocurement
basedonaprocurementcapacityassessmentofthe
implementingagencyandtheresultingprocurement
fiduciaryarrangements.Theanti-corruptionmeasures
willincorporateestablishedanti-corruptionmeasuresof
theGovernment,includingtheparticipationofCSO
andprivatesectorobserversduringthebiddingand
contractimplementationstages.
55
Empowering Poor CommunitiesThe KALAHI-CIDDS program of the Department of Social Welfare and Development aims to empower 4,000 communities in 183 of the country’s poorest municipalities by strengthening popular participation in grassroots governance. Over 10,000 villagers, local government staff and project shaff have been trained in project planning, technical design, financial management, procurement and fiduciary ovesight. It has the highest rate of community cost-sharing among all OfficialDevelopment Assistance projects in the country.
56
157. The Proposed Action Plan to Improve the Public
Procurement System shown on the following pages was
developedbytheCPARWorkingGroupfromtheBLIexercise
at the Canyon Woods Workshop in Batangas, Philippines,
held in May 2007. The matrix of the proposed action plan
incorporates the agreed recommendations of the CWG,
indicates the responsibleagencies andentities, andprovides
for timelines to accomplish the action. The plan takes into
accountachievementsandongoingactionsthatwereagreed
during the secondupdateof the2002CPARand that have
been monitored since that update, carried out in 2005 (see
Annex 9.)
158. Inviewofscarceresourcesandlimitedcapacity,theCWG
prioritized the key result areas as follows: (a) implementing
the strategic communication plan; (b) strengthening of
monitoringandenforcementinstitutionsandmechanisms;(c)
strengtheningofcapacityonprocurement; (d) improvements
in procurement processes and procedures; (e) enhancing
linkages between financial management and procurement;
and(f)developmentofcomplaintandreviewmechanismsfor
procurementrelateddisputes.Thespecificactionsincludedin
theActionPlanwerepresentedtothePDFWorkingGroupon
GovernanceandAnti-Corruptionin itsmeetingofAugust2,
2007.ThePDFSub-WorkingGrouponProcurementaccepted
the handling of the implementation of the activities in the
ActionPlaninitsmeetingofSeptember12,2007.
V. Action Plan
In view of scarce resources and limited capacity, the CWG prioritized the key result areas as follows: (a) implementing the strategic communication plan; (b) strengthening of monitoring and enforcement institutions and mechanisms; (c) strengthening of capacity on procurement; (d) improvements in procurement processes and procedures; (e) enhancing linkages between financial management and procurement; and (f) development of complaint and review mechanisms for procurement related disputes.
57
KEY RESULT AREA
I. Communications Strategy
II. Strengthening of Monitoring
and Enforcement Institutions
and Mechanisms
Action Plan for Philippine Public Procurement System
RECOMMENDED ACTION/MEASURE
a.DevelopandImplementStrategicCommunicationPlan forProcurementReform
b.Formulateadisclosurepolicyonprocurementrelated information
a.Establishacovenantamongoversightagencies(GPPB, COA,PAGC,DBM,OMB)tostrengthencoordinative linkagesonmonitoringandenforcementofaudit findings,andcompliancewiththeprocurementlaws, andsupportedbythecreationofaprocurement sub-workinggroupunderthePDFgovernanceand anti- corruptionprogram
b.Establishandoperationalizearecordsmanagement systemforprocurementandcontractmanagement transactions.Replicatecurrentgoodpracticessystems (costestimationprocess,documenttracking)
c.Completeandmainstreaminternalcontrolsystems forallgovernmentagencies
d.Implementphases2to5ofPhilGEPS
e.DevelopDatabaseonProcurement-RelatedFraudCases
f.Developandstrengthenfeedbackorprocurement
monitoringsystemattheagencyandnationallevels
g.Developsystemsfortheanalysisofprocurement-related
informationandlinkagewithothergovernment-related
databasesforpolicy-makinganddecision-making
purposes
BLI INDICATOR
11a)
11(a)
8(c),9(b),12(d)
6(c)
9(c)
4(c),5(b)
8(c),12(c)
5(b)
5(b)
58
SPECIFIC WEAKNESSES
Lackofacommunicationplanfordisseminationofinformationonprocurementreform
Absenceofpolicyontheprotectionand/ordisclosureofproprietary,commercial,personalorfinancialinformationofacommercialandsensitivenaturerelatedtoprocurement.
Weakmonitoringofoutcomesofdisputeresolutioncases.Complianceofonlyfewagencieswiththeinternalcontrolprocedures.Theanticorruptionprogramrequiresbettercoordinationatahigherlevelandtherearenospecialmeasurestopreventanddetectfraudandcorruptioninpublicprocurement.
Lackofestablishednormsforthesafekeepingofrecordsanddocumentsrelatedtoprocurementtransactionsandcontractmanagementthatmustbekeptattheoperationallevel.
Althoughtherearewrittenstandardsfortheinternalcontrols,thereisnoperiodicreportingtomanagementtoensurecompliancewiththestandards.
Lackofcompliancewithrequirementtosubmitprocurementinformation.Feedbackmechanismhasnotbeenestablishedtomonitorprocurementactivities.
Lackofprocedurestomonitoroutcomesofdisputeresolutioncases.Thereisnoorganizedinformationonthenumberofgraft-relatedcasesfiled,prosecutedandresolved.
Lackofcompliancewithrequirementtosubmit
procurementinformation.Feedbackmechanism
hasnotbeenestablishedtomonitorprocurement
activities.
Lackofanalysisofprocurementinformation
carriedoutonanationalscale.
RESPONSIBLEENTITY
GPPB
GPPB,TAN
GPPB,COA,PAGC,DBM,OMB
GPPB,COA
PAGC,DBM
PhilGEPS,PS,GPPB
GPPB,COA,PAGC,DBM,OMB
GPPB,InternalAudit
Units,Procurement
Units,CSO
GPPB,InternalAudit
units,Procurement
units,CSO
FUNDING SOURCE
PossiblefundingtoberaisedbeforethePDFWorkingGrouponGovernanceandAnti-Corruption(GAC)
GOP,raisetoPDFWGonGAC
PossiblefundingtoberaisedbeforethePDFWorkingGrouponGAC
GOP,WB(IDFforInternalAudit-August2007)
WB,AusAID
WBIDFGrantapproved.ADB’sTechnicalAssistanceGrantbeingprocessed.
GOPpossiblefundingtoberaisedbeforethePDFWGGAC
WB(IDFforInternalAudit-
August2007
WB(IDFforInternalAudit-
August2007)
SCHEDULE
June2007-MediumTermDraftPlan
December2010
December2007
December2007
December2007-CompletionofGovernmentInternalAuditManualsJune2008-PilotTestingandCustomizationofManualsStrengthenInternalAuditUnits.
April2008-2011
December2008
December2009
December2009
59
KEY RESULT AREA
III. Strengthening of Capacity
on Procurement
Action Plan for Philippine Public Procurement System
RECOMMENDED ACTION/MEASURE
h.StrengthenorganizationalcapacityofGPPB-TSOtomonitorand
enforceprocurement-relatedlaws
i.Developmechanismforutilization/optimizationofobserver’sreports
a.Pilottheadoptionofvalueengineeringasapolicyforselected
infrastructureprojectscostingoverP50M
b.ImplementtheProfessionalizationProgramonProcurement
includingcostestimationandvalueengineering
c.Conductofregulartrainingprogramsonpublicprocurement
forprivatesectorbidders
d.Developprocurementauditguideandconductofregular
trainingprogramsforexternalauditorsonprocurement
lawsandprocedures
e.Developmanualandtrainingprogramsforthirdparty
observers(CSO)intheprocurementprocess
f.Developandconductspecialtrainingprogramsonfrauddetection
forpurposesofprosecution(target:investigators,prosecutors,
auditors)
g.Developperformancemanagementsystemsforprocurementunit
andstaff
BLI INDICATOR
4(c)
12(f)
1(b),
6(a)
5(c),
6(a)
6(b),7(a),12(d)
5(d),9(e)
6(b)
12(d)
5(d)
SPECIFIC WEAKNESSES
AlthoughtheGPPBdoesnothavetojustifyits
activitiesbeforeCongress,itsfinancialstabilityis
notsecuredbythelegalframework.
Weakcompliancewiththerequirementto
submitobservers’reports;lackofmonitoringof
enforcementoffollow-upactiontaken.
TheMedium-TermPhilippineDevelopmentPlan
providesfortheapplicationofvalueengineering
ininfrastructureprojectstoensurethemostcost-
efficientdesignsandavoidoverpricingofprojects
andthereisaneedtojumpstartsuchapplication
Thereisaneedtodevelopasustainablestrategy
todevelopthecapacityofgovernmentofficialsto
understandandimplementtheprocurementrules
andregulations.
Absenceoforganizedeffortstoaddressthe
capacityofsmallandmediumenterprisesto
encouragetheirparticipationinprocurement
andtohelpnewentriesintoprocurement
marketplace.
Needtostrengthenknowledgeofauditorson
procurement.
Needtoexpandthenetworkofthird-party
observersandstrengthentheircapacityto
participateintheprocurementprocess.
Needtotraininvestigators,prosecutorsand
auditorsonfrauddetection
Needtodefinetheskillsandknowledge
competencyrequirementsforspecialized
procurementjobsandtomonitoragency
compliancewithstandards..
RESPONSIBLEENTITY
DBM
GPPB,OMB,COA
DPWH,DOTC,GPPB
andNEDAInfracom
GPPB
DTI,Phil-GEPS
COA
GPPB,CSO
GPPB,OMB,COA
GPPB,CSC,DBM,
CESB
FUNDING SOURCE
GOP
EU(existing),Possiblefunding
fromTAF
GOP(DPWHandDOTC
budget)
WB(IDFGranton
Professionalization)
GOP,ADB
WB
Possiblefundingtoberaised
beforethePDFWorking
GrouponGAC
Possiblefundingtoberaised
beforethePDFWorking
GrouponGAC
RaisetoPDFWGonGAC
SCHEDULE
December2009
December2007-
Startofpilot-testing
ofselectedGOP
fundedinfrastructure
projects
(DPWH,DOTC,PPA)
December2008-
IssuanceofGuidelines
byNEDA
December2008
January2008-start
training
December
2008–2010
December2008
December2010
60
KEY RESULT AREA
III. Strengthening of Capacity
on Procurement
Action Plan for Philippine Public Procurement System
RECOMMENDED ACTION/MEASURE
h.StrengthenorganizationalcapacityofGPPB-TSOtomonitorand
enforceprocurement-relatedlaws
i.Developmechanismforutilization/optimizationofobserver’sreports
a.Pilottheadoptionofvalueengineeringasapolicyforselected
infrastructureprojectscostingoverP50M
b.ImplementtheProfessionalizationProgramonProcurement
includingcostestimationandvalueengineering
c.Conductofregulartrainingprogramsonpublicprocurement
forprivatesectorbidders
d.Developprocurementauditguideandconductofregular
trainingprogramsforexternalauditorsonprocurement
lawsandprocedures
e.Developmanualandtrainingprogramsforthirdparty
observers(CSO)intheprocurementprocess
f.Developandconductspecialtrainingprogramsonfrauddetection
forpurposesofprosecution(target:investigators,prosecutors,
auditors)
g.Developperformancemanagementsystemsforprocurementunit
andstaff
BLI INDICATOR
4(c)
12(f)
1(b),
6(a)
5(c),
6(a)
6(b),7(a),12(d)
5(d),9(e)
6(b)
12(d)
5(d)
SPECIFIC WEAKNESSES
AlthoughtheGPPBdoesnothavetojustifyits
activitiesbeforeCongress,itsfinancialstabilityis
notsecuredbythelegalframework.
Weakcompliancewiththerequirementto
submitobservers’reports;lackofmonitoringof
enforcementoffollow-upactiontaken.
TheMedium-TermPhilippineDevelopmentPlan
providesfortheapplicationofvalueengineering
ininfrastructureprojectstoensurethemostcost-
efficientdesignsandavoidoverpricingofprojects
andthereisaneedtojumpstartsuchapplication
Thereisaneedtodevelopasustainablestrategy
todevelopthecapacityofgovernmentofficialsto
understandandimplementtheprocurementrules
andregulations.
Absenceoforganizedeffortstoaddressthe
capacityofsmallandmediumenterprisesto
encouragetheirparticipationinprocurement
andtohelpnewentriesintoprocurement
marketplace.
Needtostrengthenknowledgeofauditorson
procurement.
Needtoexpandthenetworkofthird-party
observersandstrengthentheircapacityto
participateintheprocurementprocess.
Needtotraininvestigators,prosecutorsand
auditorsonfrauddetection
Needtodefinetheskillsandknowledge
competencyrequirementsforspecialized
procurementjobsandtomonitoragency
compliancewithstandards..
RESPONSIBLEENTITY
DBM
GPPB,OMB,COA
DPWH,DOTC,GPPB
andNEDAInfracom
GPPB
DTI,Phil-GEPS
COA
GPPB,CSO
GPPB,OMB,COA
GPPB,CSC,DBM,
CESB
FUNDING SOURCE
GOP
EU(existing),Possiblefunding
fromTAF
GOP(DPWHandDOTC
budget)
WB(IDFGranton
Professionalization)
GOP,ADB
WB
Possiblefundingtoberaised
beforethePDFWorking
GrouponGAC
Possiblefundingtoberaised
beforethePDFWorking
GrouponGAC
RaisetoPDFWGonGAC
SCHEDULE
December2009
December2007-
Startofpilot-testing
ofselectedGOP
fundedinfrastructure
projects
(DPWH,DOTC,PPA)
December2008-
IssuanceofGuidelines
byNEDA
December2008
January2008-start
training
December
2008–2010
December2008
December2010
6�
KEY RESULT AREA
IV. Improvements in Procurement
Processes and Procedures
V. Enhancing Linkages Between
Financial Management and
Procurement
VI. Development of Complaint
and Review Mechanisms for
Procurement Related Disputes
Action Plan for Philippine Public Procurement System
RECOMMENDED ACTION/MEASURE
a.Reviewandformulateimplementingrulesandregulations
forforeign-fundedprocurementactivities(IRR-B),including
harmonizationofblacklistingguidelineswithIFIs
b.Reviewandformulateimplementingrulesandregulations
forlocallyfundedspecializedprocurementsforICBincluding
harmonizedbiddingdocuments(IRR-A)(armsandammunition,
pharmaceuticals,informationtechnology)
c.Reviewdetailedengineeringguidelineswithregardtostandards
anddetermineaccountabilityfornon-complianceamong
governmentagenciesandconsultants
d.Streamlineandharmonizelicensingandregistration
proceduresforcivilworks
e.Developprocurementmanuals,standardbiddingdocuments
forLGUsconsistentwithbudgeting,accountingandauditing
procedures
f.Developsimplifiedprocurementguidesforbarangaysconsistent
withfinancialmanagementguidelines
a.Developclearguidelinesformulti-yearcontractsthat
willintegratebudgeting,expenditure,and
procurementprogram
b.Developagenericfinancialmanagementmanualthatincludes
procurementandlogisticsprocesseswithfinancialmanagement
a.Reviewpoliciesandproceduresforprocurement-relatedcomplaints
andappealscovering:
1.Bestpracticesofothercountries
2.Creationofanindependentadministrativereviewbody
3.Tappingofanexistingadministrativebody
withtheappropriatemandate
4.Reasonablenessofamountofprotestfees
b.Developmechanismstopublishdecisionsonprocurementrelated
disputes(ofHOPEonprocurementrelatedprotest)
BLI INDICATOR
1(b)(c)
1(c)
7(a)(b)(c)
1(b)
1(b)
3(a)
3(b),8(a)
1(h),10(e)
10(d)
62
SPECIFIC WEAKNESSES
Lackofimplementingrulesandregulations
governingprocurementofforeign-funded
projects
Thelegalframeworkdoesnotprovideforthe
extensionoftimeframesevenifforeignbidders
areexpectedtocompete.
Lackofimplementingrulesandregulations
andharmonizedbiddocumentsforspecialized
procurements
Someagenciesdonotcomplywithguidelineson
detailedengineeringguidelines
Manyconstraintsinhibitprivatesectoraccessto
theprocurementmarket,suchasdifficultiesin
gettinglicensesandpermits.
Differencesinprocurementpracticesand
operationsoflocalgovernmentunitswerenot
reflectedintheprovisionsoftheexistinglaw.
Barangayofficialssaytheprocurementlaw
maynotbeapplicabletothenatureoftheir
procurements.
Agenciesdonotpreparemulti-yearplansthat
arelinkedtotheannualbudgetprocessortothe
preparationofannualprocurementplans.
Thereisnolinkbetweenfinancialmanagement
systemandtheprocurementsystemtoensure
enforcementoflaw.
Lackofindependentadministrativebodyor
specialcourttoreviewprocurementrelated
complaintsandappeals
Existenceofpoliciesthatdiscouragefilingof
protest(protestfeerequirement)
Decisionsarenotmandatedtobepublishednor
postedinthewebsite.
RESPONSIBLEENTITY
TWG,PDF
GPPB
COA
DTI
GPPB,LGULeagues,
COA,DBM
GPPB,LGULeagues,
COA,DBM
GPPB,DBM
DBM,COA
GPPB
GPPB
FUNDING SOURCE
WB
GOP
WBIDFgrantsupportingCOA
onvariousauditactivities
approved.
ADBHarmonizationTA
ECgrant
WBandADB
GOP
ECGrant
Possiblehiringof
internationalconsultant
tobefundedbytheWorld
Bank
RaisetoPDFWGonGAC
Schedule
Oneyear
June2008-July2009
Baseguidelines
One(1)year
HarmonizationOne(1)year
December2007–
DPWHprojects
Includetheothersin
thelonglistofCOA
December2007
PCABlicensing
December2007
HarmonizationMarch2008
December2008
December2007
December2008
December2008
December2010
63
PeterGianan,DepartmentofScienceandTechnology MariaLourdesBaua,DepartmentofTradeandIndustry IreneoVizmonte,DepartmentofTrade VenancioSantidad,DepartmentofTransportation andCommunication MarkJalandoni,OfficeoftheOmbudsman AdorPaulino,OfficeoftheOmbudsman CyrilRamos,OfficeoftheOmbudsman ConstanciadeGuzman,PresidentialAnti-GraftCommission CharitoAlvarado,PresidentialAnti-GraftCommission ArcadioCuencoJr.,CommissiononAudit RosaClemente,JoeleEayte,PhilGEPS Dr.FiorelloEstuar,PrivateSectorRepresentative Government Procurement Policy Board –Technical Support Office PiaZ.Ruiz SygridPromentilla MariaAgathaSindico CheloAnneCruz MilaManalastas BryanBigalbal DennisLorneNacario LizaVega WarrenPaulNicdao
PARTICIPANTS TO VARIOUS MEETINGS:
Civil Society/Professional Organizations BelSalonga,BarangayForbesPark JoseConcepcion,BarangayForbesPark ErnestoBurdeos,CBCP-LAIKO JoseLugay,CBCP-LAIKO MiaZafra,CBCP-LAIKO EliseoEvangelista,COFILCO AnthonySeptimo,FOCIG DondonParafina,G-Watch NestorMalapajo,Jr.,NAMFREL ManolitoMadrasto,PCA EduardoRamirez,PICE KristineTapiz,RFMFoundation JunioRagragio,DPEM VincentLazatin,TAN KathySantos,CAC
Local Government Organizations HazelBeniza,LCP EdTiongson,LB HonorioAlumno,LMP AlexVillano,LPP JaydeQuiroz,PDF
Private Sector Professional Organizations AlexDacanay,SGV GilGarcia,Sycip,SGV RebeccaSarmenta,SGV OlyAnastasio,Sycip,SGV
Country Champions and Other In-Country Stakeholders UndersecretaryLauraPascua,DBM,Chairperson AssistantDirectorGeneralRubenReinoso(representedby Engr.ElmerDorado),NEDA,Co-Chairperson DirectorEstanislaoGranadosDBM,Vice-Chairperson DepartmentagenciesandobserversoftheGPPBandtheir representatives TheGPPB-TSO,ledbyitsExecutiveDirectorRubyAlvarez Representativesfromtheleaguesofbarangays, municipalities,citiesandprovinces Representativesfromtheprivatesectorprofessional organizations Representativesfromcivilsocietyorganizations
Development Partners: TheWorldBank: CeciliaVales(TaskTeamLeader),DominicAumentado, ReneSd.Manuel,NoelSta.Ines,CeciliaVerzosa, EvelynQuirante Consultants:JoseSyquia,Jr.,SofronioUrsal,Alice Tiongson,CiprianoRavanes,HeidiMendoza, MaricelLopez,RosarioLarracas,DennisSantiago, RobertoDollar
Collaborating Development Partners: ADB:MichielVanderAuwera,RobertRothery, CandiceMcDeigan,GaliaIsmakova,JovenBalbosa JBIC:TakashiBaba,FleridaChan USAID:GilDy-Liacco AusAID:AngusBarnes,JohnAlikpala,RoselaAgcaoili EC:PieterRobben,EmilyMercado,RogerdeBacker UN:EthelCapunoandMyleneCaraig CIDA:LynetteCorcino IOM:MyleneCaraig TAF:StevenRood,MaribelBuenaobra,KyJohnson
Government Procurement Policy Board Membersand Resource Persons ArcadioCuencoJr.,CommissiononAudit RamonBacani,DepartmentofEducation AidaCarpentero,DepartmentofEducation FranciscoDelfin,DepartmentofEnergy Atty.CriseldaFunelas,DepartmentofEnergy LorraineSanchez,DepartmentofFinance AlexanderA.Padilla,DepartmentofHealth CrispinitaValdez,DepartmentofHealth ConnieLiberan,DepartmentofHealth ReynaldoBungubung,DepartmentofInteriorand LocalGovernment MarichelleLim,DepartmentofInteriorandLocalGovernment ErnestoMatibag,DepartmentofNationalDefense AntonioMolano,Jr.,DepartmentofPublicWorksand Highways MarioBravo,DepartmentofScienceandTechnology CarmelitaLlames,DepartmentofScienceandTechnology
Annex �: Composition of the CPAR Working Group
64
Annex 2: WB Loan Portfolio and Lending Program
A. World Bank Loan Portfolio
SECTOR PROJECT NAME EFFECTIVENESS CLOSING NET LOAN DATE DATE Amount (US$M)
�. ACTIVE LOANS
EASHD 2ndWomen’sHealth&SafeMotherhood 12/28/2005 06/30/2012 16.00
Nat.Prog.Supp.forHealthReform 03/27/2007 06/30/2011 110.00
NationalBasicEducation 01/01/2007 12/31/2011 200.00
EC-TrustFundsforHealthSector 06/04/2007 12/31/2010 8.6
Subtotal - EASHD 334.6 EASRE AgrarianReformCommunitiesDevelopment2 06/04/2003 12/31/2008 50.00
DiversifiedFarmIncome&MarketDevelopment 10/29/2004 06/30/2009 60.00
LandAdministrationandManagementII 10/11/2005 03/31/2011 19.00
OzoneDepletionSubstance(MontrealProtocol) 10/06/1994 06/30/2010 30.00
LagunadeBayInstitutionalStrengthening 04/02/2004 01/31/2009 5.00
MindanaoRuralDevelopmentProgram2 07/03/2007 12/31/2012 83.80
NPS-Environment&NaturalResourcesManagement 11/27/2007 12/31/2012 50.00
Subtotal - EASRE 297.80 EASTE MetroManilaUrbanTransport 12/06/2001 03/31/2009 60.00
BicolPowerRestorationProject 5/21/2008 07/30/2008 12.9
NationalRoadsImprovementProject 12/31/2012 232.0
RuralPowerProject 05/06/2004 12/31/2009 10.00
ElectricCooperativeSystemLossReduction(GEF) 05/05/2004 12/31/2011 12.00
Subtotal - EASTE 326.90 EASUR LGUFinance&Development 02/28/2000 06/30/2008 60.00
LGUUrbanWater&SanitationProjectAPL2 05/16/2002 11/30/2008 15.0
StrategicSupp.Loc.Dev&Inv.Proj. 02/28/2007 06/30/2012 100.00
ManilaThirdSewerageProject 03/06/2006 06/30/2010 64.00
Subtotal - EASUR 239.0 EASSD Kalahi-CIDSS 12/16/2002 06/30/2009 100.00
ARMMSocialFund 05/19/2003 06/30/2008 33.60
MindanaoTrustFund 3/30/2006 12/31/2010 3.0
Subtotal - EASSO �36.60 EASPR JudicialReformSupport 12/04/2003 12/31/2009 21.90
LEGES NPSTaxAdmin.Reform 06/25/2007 12/31/2011 11.00
Subtotal - EASPR 32.90 SUBTOTAL - ACTIVE LOANS �,367.8
2. GEF-supplements to projects (not counted separately in the system)
RuralPowerProject(GEF) 05/06/2004 12/31/2009 9.00
GEF-ENRMP 11/27/2007 12/31/2012 7.00
ManilaThirdSewerage(GEF) 02/06/2008 11/30/2012 5.00
SUBTOTAL - GEFs 2�.0
TOTAL- FY07 ACTIVE PORTFOLIO �,388.8
CLOSED in FY07
RuralFinance3 05/06/1999 09/30/2007 147.50
WaterDistrictsDevelopment 09/10/1999 12/31/2006 17.80
NationalRoadImprovements&Management 07/07/2000 03/31/2007 150.00
SocialExpenditureManagement2 12/11/2002 06/30/2007 100.00
CommunityBasedResourcesDevelopment 10/06/1998 06/30/2007 38.00
MMURTRIP(GEF) 12/06/2001 12/31/2007 1.3
SUBTOTAL - CLOSED 454.6
65
B. World Bank Lending Program
PROJECT NAME
2ndNationalRoadImprovementandManagementProgram
BicolPowerRestorationProject
PrivateSectorDevelopmentSupportfortheCalambaLaguna
NorthSouthHighway
NationalSectorSupportforSocialWelfare
LocalGovernmentSupportforPerformanceGrants
LocalGovernmentSupportforRegionalWaterSupply
LightRailTransitLine1SouthExtension
SecondJudicialReformSupportProject
NationalProgramSupportforGovernmentFinancialIntegrated
ManagementInformationSystem
LocalGovernmentSupportforWater(DevelopmentBankofthe
Philippines3)
NationalProgramSupport-ParticipatoryIrrigationDevelopment
Project
ManilaWestWaterNetwork
PartialRiskGuaranteetoPower
DevelopmentPolicyLoan2
NationalProgramSupport-DisasterManagement
PasigRiverUrbanRehabilitation
NationalProgramSupport-AgrarianReform
COST/LOAN (US$M)
232
12.9
140
50
70
50
260
40
10
50
50
125
250
250
30
50
60
BANK BUDGET FUNDED
FY08
P079935
P106262
FY09
P101581
P082144
P097445
P096822
P096821
P105325
P107630
P108904
P088926
P071119
P095375
P101763
FY�0
P108836
P108835
P078252
66
B. World Bank Lending Program
PROJECT NAME
GlobalEnvironmentalFacility-MindanaoRuralDevelopment
Program2-CoastalMarine
EthanolPlantWaste
PrototypeCarbonFund-BurgosWindProject
ManilaBusDispatch
PersistentOrganicPollutantsContaminated
UnintentionalPersistentOrganicPollutantsRelease
ClimateChangeAdaptation
COST/LOAN (US$M)
7
-
-
-
2
10
5
NON-BANK BUDGET FUNDED
FY09
P096836
P106732
P090966
P106260
FY�0
P106890
P106885
P101076
67
Proposed Action Plan for Philippine Public Procurement System
BIS INDICATOR NAME
BLI INDICATOR
DPWH
DEPED
Annex 3: Summary of APPI Assessment Scores for �0 Agencies (as of June 22, 2007)
PILLAR I – The Legislative and Regulatory Framework
BLI
MAJOR CRITERIA BIS INDICATOR NAME INDICATOR
�. Strategy (6%) 1.AgencyProcurement
ReformStrategy(40%) Indicator1 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40%
2.Strategicpolicyinitiativesoutlined
bytheagency(30%) None 1.80% 0.00% 1.80% 0.00% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80% 1.44%
3.Key/Strategicprocurement
issues(30%) None 0.00% 0.00% 1.80% 0.00% 1.80% 1.80% 0.00% 1.80% 1.80% 1.80% 1.08%
TotalforStrategy 4.20% 2.40% 6.00% 2.40% 6.00% 6.00% 4.20% 6.00% 6.00% 6.00% 4.92%
PILLAR II – The Central Institutional Framework and Management Capacity
Agency 4.HumanCapital(60%) 5(c) 9.60% 9.60% 0.00% 0.00% 0.00% 0.00% 9.60% 0.00% 0.00% 0.00% 2.88%
Professionalization 5.UseoftheGovernment
Measures (�6%) ProcurementSystem(G-EPS)(20%) 5(b) 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20%
6.Legalincentivestoprocurement
officersandemployees(20%) None 1.40% 0.00% 0.00% 3.20% 0.00% 0.00% 1.40% 0.00% 0.00% 3.20% .92%
TotalforAgencyProfessionalization 14.20% 12.80% 3.20% 6.40% 3.20% 3.20% 14.20% 3.20% 3.20% 6.40% 7.00%
PILLAR III – The Procurement Operations and Market Practices
OrganizationalStructure (�6%) 7.BACandBACSecretariat(40%) None 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40%
8.Hierarchicalstructureof
agency(30%) 6(d) 1.60% 4.80% 4.80% 4.80% 4.80% 4.80% 1.60% 4.80% 4.80% 4.80% 4.16%
9.Standarddocumentation
andprocedures(30%) 2(e),2(b), 4.80% 4.80% 4.80% 3.20% 4.80% 4.80% 4.80% 4.80% 2.40% 3.20% 4.24%
6(c)
TotalforOrganizationalStructure 12.80% 16.00% 16.00% 14.40% 16.00% 16.00% 12.80% 16.00% 13.60% 14.40% 14.80%
Agency Procurement On Competition (�0%)
Process (30%) 10.Methodofprocurement
used:Shopping(30%of10%) None 3.00% 0.00% 3.00% 0.00% 0.00% 3.00% 3.00% 0.00% 3.00% 3.00% 1.80%
11.LimitedSourceCompetition/ None 2.00% 0.00% 2.00% 0.00% 0.00% 2.00% 2.00% 0.00% 0.00% 2.00% 1.00%
Shopping(20%of10%)
12.Directcontracting(20%of10%) None 2.00% 0.00% 2.00% 0.00% 0.00% 2.00% 2.00% 0.00% 0.00% 2.00% 1.00%
13.Biddersparticipation(15%of10%) 7(b) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.50% 0.00% .15%
14.Timeforpreparationof
bids(15%of10%) None 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
TotalforCompetition 8.50% 1.50% 8.50% 1.50% 1.50% 8.50% 8.50% 1.50% 6.00% 8.50% 5.45%
68
DOH
AFP
DND
NPC
CITY OF MARIKINA
DILG
DENR
BIR
AVERAGESTORES
BLI
MAJOR CRITERIA BIS INDICATOR NAME INDICATOR
�. Strategy (6%) 1.AgencyProcurement
ReformStrategy(40%) Indicator1 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40%
2.Strategicpolicyinitiativesoutlined
bytheagency(30%) None 1.80% 0.00% 1.80% 0.00% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80% 1.44%
3.Key/Strategicprocurement
issues(30%) None 0.00% 0.00% 1.80% 0.00% 1.80% 1.80% 0.00% 1.80% 1.80% 1.80% 1.08%
TotalforStrategy 4.20% 2.40% 6.00% 2.40% 6.00% 6.00% 4.20% 6.00% 6.00% 6.00% 4.92%
PILLAR II – The Central Institutional Framework and Management Capacity
Agency 4.HumanCapital(60%) 5(c) 9.60% 9.60% 0.00% 0.00% 0.00% 0.00% 9.60% 0.00% 0.00% 0.00% 2.88%
Professionalization 5.UseoftheGovernment
Measures (�6%) ProcurementSystem(G-EPS)(20%) 5(b) 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20% 3.20%
6.Legalincentivestoprocurement
officersandemployees(20%) None 1.40% 0.00% 0.00% 3.20% 0.00% 0.00% 1.40% 0.00% 0.00% 3.20% .92%
TotalforAgencyProfessionalization 14.20% 12.80% 3.20% 6.40% 3.20% 3.20% 14.20% 3.20% 3.20% 6.40% 7.00%
PILLAR III – The Procurement Operations and Market Practices
OrganizationalStructure (�6%) 7.BACandBACSecretariat(40%) None 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40%
8.Hierarchicalstructureof
agency(30%) 6(d) 1.60% 4.80% 4.80% 4.80% 4.80% 4.80% 1.60% 4.80% 4.80% 4.80% 4.16%
9.Standarddocumentation
andprocedures(30%) 2(e),2(b), 4.80% 4.80% 4.80% 3.20% 4.80% 4.80% 4.80% 4.80% 2.40% 3.20% 4.24%
6(c)
TotalforOrganizationalStructure 12.80% 16.00% 16.00% 14.40% 16.00% 16.00% 12.80% 16.00% 13.60% 14.40% 14.80%
Agency Procurement On Competition (�0%)
Process (30%) 10.Methodofprocurement
used:Shopping(30%of10%) None 3.00% 0.00% 3.00% 0.00% 0.00% 3.00% 3.00% 0.00% 3.00% 3.00% 1.80%
11.LimitedSourceCompetition/ None 2.00% 0.00% 2.00% 0.00% 0.00% 2.00% 2.00% 0.00% 0.00% 2.00% 1.00%
Shopping(20%of10%)
12.Directcontracting(20%of10%) None 2.00% 0.00% 2.00% 0.00% 0.00% 2.00% 2.00% 0.00% 0.00% 2.00% 1.00%
13.Biddersparticipation(15%of10%) 7(b) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.50% 0.00% .15%
14.Timeforpreparationof
bids(15%of10%) None 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
TotalforCompetition 8.50% 1.50% 8.50% 1.50% 1.50% 8.50% 8.50% 1.50% 6.00% 8.50% 5.45%
69
Proposed Action Plan for Philippine Public Procurement System
BIS INDICATOR NAME
BLI INDICATOR
DPWH
DEPED
Annex 3: Summary of APPI Assessment Scores for �0 Agencies (as of June 22, 2007)
MAJOR CRITERIA BIS INDICATOR NAME BLI INDICATOR
On Transparency (�0%)
15.Advertisementofbidnoticesand
publicationofawards(70%of10%) 1(c) 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
16.Postingofallprocurement
opportunities,activities,awardsin
G-EPS(30%of10%) 5(a) 1.50% 0.00% 3.00% 0.00% 0.00% 3.00% 1.50% 0.00% 0.00% 3.00% 1.20%
TotalforTransparency 8.50% 7.00% 10.00% 7.00% 7.00% 10.00% 8.50% 7.00% 7.00% 10.00% 8.20%
On Efficiency (�0%)
17.ProcurementsinAP
(30%of10%) 3(a) 0.00% 3.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.00% 3.00% .9%
18.Timeforpublicbidding
(25%of10%) 6 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
19.Timeforbidevaluation
(15%of10%) None 1.50% 0.00% 0.00% 1.50% 2.50% 0.00% 1.50% 1.50% 1.50% 1.50% 1.15%
20.Biddingprocesscancelled None 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
(15%of10%)
21.Latepayments(15%of10%) 3(b) 0.00% 0.00% 0.00% 1.50% 0.00% 0.00% 0.00% 1.00% 1.50% 1.50% .55%
TotalforEfficiency 5.50% 7.00% 4.00% 7.00% 6.50% 4.00% 5.50% 6.50% 10.00% 10.00% 6.60%
Total for Agency Procurement Process 22.50% �5.50% 22.50% �5.50% �5.00% 22.50% 22.50% �4.00% 23.00% 28.50% 20.25%
Effectiveness (�6%)
22.AwardpriceslowerthanABC None 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40%
23.Contractamountincrease(30%) None 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80%
24.NumberofProtests(10%) 1(h) 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
25.Timetoresolveprotests(10%)(10)b 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
26.Actiontakenonprotest(10%) 10(c) 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
Total for Effectiveness �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00%
PILLAR IV – The Integrity of the Public Procurement System
Accountability 27.Internalauditunits(60%) 9(a) 9.60% 9.60% 9.60% 9.60% 0.00% 9.60% 9.60% 0.00% 0.00% 9.60% 6.72%
Measures (�6%) 28.Systemsandprocedurestohearand 10(b) 6.40% 6.40% 6.40% 6.40% 0.00% 6.40% 6.40% 0.00% 0.00% 6.40% 4.48%
documentadministrativecases(40%)
TotalforAccountabilityMeasures 16.00% 16.00% 16.00% 16.00% 0.00% 16.00% 16.00% 0.00% 0.00% 16.00% 11.20%
TOTALAGENCYRATING 85.70% 78.70% 79.70% 70.70% 56.20% 79.70% 85.70% 56.20% 61.80% 87.30% 74.17%
70
DOH
AFP
DND
NPC
City of Marikina
DILG
DENR
BIR
AverageStores
MAJOR CRITERIA BIS INDICATOR NAME BLI INDICATOR
On Transparency (�0%)
15.Advertisementofbidnoticesand
publicationofawards(70%of10%) 1(c) 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
16.Postingofallprocurement
opportunities,activities,awardsin
G-EPS(30%of10%) 5(a) 1.50% 0.00% 3.00% 0.00% 0.00% 3.00% 1.50% 0.00% 0.00% 3.00% 1.20%
TotalforTransparency 8.50% 7.00% 10.00% 7.00% 7.00% 10.00% 8.50% 7.00% 7.00% 10.00% 8.20%
On Efficiency (�0%)
17.ProcurementsinAP
(30%of10%) 3(a) 0.00% 3.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.00% 3.00% .9%
18.Timeforpublicbidding
(25%of10%) 6 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
19.Timeforbidevaluation
(15%of10%) None 1.50% 0.00% 0.00% 1.50% 2.50% 0.00% 1.50% 1.50% 1.50% 1.50% 1.15%
20.Biddingprocesscancelled None 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
(15%of10%)
21.Latepayments(15%of10%) 3(b) 0.00% 0.00% 0.00% 1.50% 0.00% 0.00% 0.00% 1.00% 1.50% 1.50% .55%
TotalforEfficiency 5.50% 7.00% 4.00% 7.00% 6.50% 4.00% 5.50% 6.50% 10.00% 10.00% 6.60%
Total for Agency Procurement Process 22.50% �5.50% 22.50% �5.50% �5.00% 22.50% 22.50% �4.00% 23.00% 28.50% 20.25%
Effectiveness (�6%)
22.AwardpriceslowerthanABC None 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40% 6.40%
23.Contractamountincrease(30%) None 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80%
24.NumberofProtests(10%) 1(h) 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
25.Timetoresolveprotests(10%)(10)b 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
26.Actiontakenonprotest(10%) 10(c) 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60% 1.60%
Total for Effectiveness �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00% �6.00%
PILLAR IV – The Integrity of the Public Procurement System
Accountability 27.Internalauditunits(60%) 9(a) 9.60% 9.60% 9.60% 9.60% 0.00% 9.60% 9.60% 0.00% 0.00% 9.60% 6.72%
Measures (�6%) 28.Systemsandprocedurestohearand 10(b) 6.40% 6.40% 6.40% 6.40% 0.00% 6.40% 6.40% 0.00% 0.00% 6.40% 4.48%
documentadministrativecases(40%)
TotalforAccountabilityMeasures 16.00% 16.00% 16.00% 16.00% 0.00% 16.00% 16.00% 0.00% 0.00% 16.00% 11.20%
TOTALAGENCYRATING 85.70% 78.70% 79.70% 70.70% 56.20% 79.70% 85.70% 56.20% 61.80% 87.30% 74.17%
7�
Interestingly,outofthoseawareoftheGPRA,morerespondents
belonging to class E are optimistic about the anti-corruption
featuresof theGPRA,with97%whobelieve that the lawcan
lessencorruption.OmbudsmanMarcelo,therefore,recommends
that the communication strategy should not take for granted
Filipinos belonging to the class E. He believes that Filipinos
belongingtoclassEmaybetappedtobeobservers.Hecites,as
examples,thenon-governmentalorganizationsinlloilowhich,in
partnershipwiththeOmbudsman,havefiledcasesagainsttheir
localgovernmentofficialsforprocurementrelatedcases.
Further, more government employees are optimistic about the
impactofGPRA in lesseningcorruption.Fouroutoffive (83%)
of government employees, whether aware of the GPRA or
not, believe that the GPRA can help reduce corruption. More
importantly,almostall(96%)ofthegovernmentemployeeswho
areawareoftheGPRAbelievethatitcanhelpreducecorruption
ingovernment.
73% to 77% Agree with Reform Measures in the GPRAToensureanopen,competitive,andtransparentpublicprocurement
system,theGPRAprescribespublicbiddingasageneralmodeof
procurement.Further,theGPRAmandatesthatall invitationsto
bidmustbepublishedinanewspaperofgeneralcirculationandin
governmentWebsites.Namesofwinningbiddersandtheamount
of contracts awarded to them must likewise be posted in the
PhilippineGovernmentElectronicProcurementSystem(PhilGEPS).
Governmentagenciesarealsomandatedtoinviteobserversfrom
non-governmentorganizationsandprofessionalassociations.
ThesearesomeofthereformmeasuresincorporatedintheGPRA
inordertoenhancetransparencyandlessencorruptioninpublic
procurement.Surveyresultsindicatethataboutthree-fourths
(73-77%)ofFilipinosagreewiththesemeasures,withpluralities
(42-49%)ofthemwhosaytheyaredefinitely needed.
Annex 4: SWS Survey Results on the Effectiveness of the Public Procurement System
[Excerpt from February 2007 report, “Public Opinion on Procurement Reform”
�3% Aware of the Government Procurement Reform Act (GPRA)Based on survey results, only one in ten (13%) of Filipinos are
aware of the Republic Act No. 9184, or the Government
Procurement Reform Act. Most of the respondents who are
awareoftheGPRAbelongtoclassesABC(26%)andarecollege
graduates (30%). WHAT DOES ABC, D, E MEAN? WHERE ARE
COLLEGEGRADUATES?
Further, compared to other sectors of employment, more
respondentsemployedbythegovernmentareawareoftheGPRA
constituting29%;whilethoseemployedintheprivatesectoror
areself-employedcomprise18%and11%,respectively.However,
the29%awarenessratingforgovernmentemployeesisstilllow
considering that the GPRA is being implemented by the public
sectorandthatthetrainingprogramoftheGPPB-TSOisprimarily
aimedateducatinggovernmentemployees.
76% Optimistic that GPRA Can Reduce CorruptionNevertheless, 76% of total respondents believe that the GPRA
can help reduce corruption in government contracts. Further,
87%ofthe13%respondentswhoareawareoftheGPRAbelieve
that implementation of the law can help reduce corruption in
government.Allstakeholdersseethesefiguresasveryencouraging
signs.
AWARENESS OF GPRA, BY AREA, CLASS AND AGE
Q105. We have a law that provides for the standard rules in public bidding for government projects to guarantee that all contractors are given equal opportunity to join and win a government contract.This is called the Government Procurement Reform Act or RA 9184. Have you heard or read something about it?
13% Total Philippines
19% NCR10% Balance Luzon
17% Visayas
14% Mindanao
26% ABC
10% D
16% E
11% 18-24
11% 25-34
16% 35-44
16% 45-54
13% 55+
0% 5% 10% 15% 20% 25% 30%
0%
20%
40%
60%
80%
100%TOTAL RP
TotalInter-views
AwareofGPRA
Total Interviews Aware of GPRA
ABC D EClass
PRIV SELFEMPL.
GOV’T.Sector of Employment
% WHO SAY GPRA WILL HELP REDUCE CORRUPTIONIN GOV’T, BY CLASS AND SECTOR OF EMPLOYMENT
87
76
83
7674
8184
97
76 75
83 84 85
Total Interviews Aware of GPRA
November 24-29 2006, National Survey
November 24-29, 2006 National Survey
96
Gov’t. employees are more
sanguine about GPRA
Q106. Do you think this law will help reduce corruption in government contracts?
72
Whenfurtherdissectedaccordingtoarea,surveyresultsindicate
thatmorerespondentsfromNCRandBalanceLuzonfeelstrongly
about theneed to adopt these reformmeasures.On theother
hand, the least number of respondents who believe in these
reformmeasuresarefromMindanao.
Moreover,mostoftherespondentswhobelievethatthesereform
measures are definitely needed belong to classes ABC and are
college graduates. Also, it appears that older people (aged 55
andabove)feelmorestronglyabouttheneedtoimplementthese
measures.
3.4. Public Perception on Effectivity of GPRAToexaminethepublicperceptionontheeffectivityoftheGPRA
withrespecttoreducingcorruptioningovernmentcontracts,and
accountability and transparency, SWS asked the respondents’
opinion on a battery of trend questions. On the whole, trends
arepositivewithoneexception.Pluralitiesof thegeneralpublic
agreethatcomparedtoaboutfiveyearsago,whenGPRAwasnot
yet implemented, it isnoweasier tomakegovernmentofficials
accountable for irregularities in government contracts, to get
information about government biddings, contractors are now
more on time in completing government contracts, and public
officersarenowmorecarefulintheuseofgovernmentfunds.bU
moreofthosewhosaythatcorruptioningovernmentcontractsis
moreprevalentnowthanaboutfiveyearsago.
BATTERY OF TREND QUESTIONS:COMPARED TO ABOUT FIVE YEARS AGO...
-8
+2
+7
+8
+1642 28 26
33 25
34 26
35 33
29 37
35
35
29
30
AGREE UNDECIDED DISAGREE NET
It is now easier topunish gov’t officials
responsible forirregularities in gov’t
contracts
It is now easier for anyonewho wants to bid
on a gov’t contractto get info. about
the bidding
People who havecontracts with the gov’t
are now more ontime in completing
their contracted work
Public officers are nowcareful in the use ofpublic funds in gov’t
contracts
Corruption in gov’tcontracts is now
less common
0%
20%
40%
60%
80%
100%
Usepublicbidding
EVALUATION OF EFFECTIVENESS OF SPECIFIC WAYSTO REDUCE CORRUPTION IN GOV’T CONTRACTS
Publish in newspapersopportunitiesto bid thegov’t contracts
Havebiddingsobservedby NGOS
Buy fromlowestbiddergiven thequalityit needs
Put on itsWebsitesthe winningbidders &how much they bid
Put on itsWebsitesopportunitiesto bid ingov’tcontracts
It is too much trouble
It might justhelp
Somewhatimportant
Definitelyneeded
5 4 5 5 6 5
15 16 18
28 28 28 30
49 48 46 45
2930
42
201817
43
0%
20%
40%
60%
80% BAL LUZ VIS MIN
Usepublicbidding
% WHO SAY SPECIFIC WAYS TO REDUCE CORRUPTIONIN GOV’T CONTRACTS ARE DEFINITELY NEEDED, BY AREA
NCR
Publish in newspapersopportunitiesto bid in gov’tcontracts
Havebiddingsobservedby NGOs
Buy fromlowestbiddergiven thequality itneeds
Put on itswebsites thewinningbidders& how muchthey bid
Put inwebsitesopportunitiesto bid in anygov’t contracts
47
38
53 5248
37
54
48
36
4846
4339
4239 41
34
4946
49
5557
4946
November 24-29, 2006 National Survey
November 24-29, 2006 National Survey
November 24-29, 2006 National Survey
The gov’t should always...
% It is DEFINITELY NEEDED that the gov’t should always...to reduce corruption in gov’t contracts
Trends are positive, with one exception
73
Annex 5: Recommendations and Agreements on CSO Participation
ISSUES
�. Sustaining participation
2. Absence of clear procedures in the
selection of observers (especially in
the LGUs)
3. Absence of a guide in observing
public biddings
4. Trained observers not being invited
5. Observers in the LGUs are not
trained on the law
RECOMMENDATIONS
Financialsupport.
EnsurethecommitmentoftrainedCSOs
toparticipateinactualmonitoring,by
establishingoperatingnetworksoutside
MetroManila.
Qualitymonitoringoftrainingsandtrained
observers,andthepossibilityofcoming
upwitharegistrationsystemtoensure
thatonlyappropriatelytrainedobservers
areinvited.
Considerthepossibilityofenteringinto
anagreementbetweenchurch-based
organizationsactingasobserversinLGUs.
Explorethepossibilityoftappingthe
servicesofgraduatingstudentsandthe
othersinacademe.
Reiteratetheprovisionofthelaw
regardingtheselectionofobservers,and
improvetheexistingguidelinesinorderto
increasetheparticipationofappropriate
observers.
Developaguideontheconductofthird
partyobservation,definingtherole
ofobserversinrelationtopromoting
transparencyandaccountability.
Issuestandardcheckliststhatare
user-friendlytoobservers,butprovide
substantialinformationformonitoringand
policyagencies.
See#2above.
Developtrainingprogramsforobservers
outsideMetroManila.
InformingtheLGUsoftheneedtotrain
theirobservers.
AnLGUsshouldbemotivatedtointoa
MOAwithaCSOthathasadeepnetwork
nationwide.See#3above.
COMMENTS/AGREEMENTS
Financialsupportshouldcomeoutside
ofthegovernment.Theorganization
shouldtakecareoftheexpensesofthe
deploymentoftheirownmembersin
observingpublicbidding.
ThegovernmentshouldinformtheCSOs
ofalternativesourcesoffunding.
Onepercentofearningsfromsaleofbid
documentsshouldbespentontraining
CSOs,ratherthanasfinancialincentives.
Observersshouldbearmedwithuser-
friendlychecklistsduringbiddings,sothat
lesseffortisspentinhavingtodevelop
DiagnosticReports.Thiswillalsoprovide
asingleformatthatreadilyprovides
thenecessarydatatorelevantoversight
agencies.
Networkswouldhavetobeestablished
toprocessthedatafromtheobservers’
checkliststogenerateinformation.
Theretireescanalsobetapped.
ApledgeofcommitmentfromCSOsand
theGOPisneeded.
Reportsshouldnotonlycoverthe
procedures,butalsotheactualconditions/
problems,e.g.,fundingproblems,
attendanceofBACsmembers.
Astandardchecklistandanarrative
observation.
Observersshouldnotbeconsideredas
votingmembers,becausethemomentthey
becomevotingmembers,theyimmediately
gainaninterestinthebiddingandlose
theirthirdpartyobjectivity.
See#2above.
74
Annex 5: Recommendations and Agreements on CSO Participation
ISSUES
6. Quality of training
7. Absence of mechanism for
maximizing observers’ report
8. Improving feedback handling
mechanism
RECOMMENDATIONS
Agovernmentagencyshouldbeincharge
ofaccreditingCSOtrainingprograms,
withemphasisnotonlyoncompliance
withprocurementrulesandprocedures,
butmoreonidentifyingRED FLAGS
andprevalentmodesofcircumventing
controls.
Institutionalizeamechanismforgathering,
summarizingandestablishingtrends
basedonexistingreports.
PublicationofsuccessstoriesofCSOs.
CreationofnetworksoftrainedCSO
observersarmedwitheasy-to-use
checklistsandstandardreportingformats
GPPBandotheroversightagencies
toenterintoanagreementto
institutionalizingfeedbackhandling
mechanisms.Thismaybeconductedafter
consultationwithCSOs.
Utilizationofthechecklistsandstandard
reportingformatsforinformation
generationbyacentralizedagency,such
astheGPPBandtheOmbudsman.
COMMENTS/AGREEMENTS
Centralmanagementisneededinorder
tosetthefocus,andmanagethewhole
program.Provideforanavenueto
consolidatefindings.Trainingsusingthe
vernacularinthecaseofthebarangays.
Customizedtrainingsforbarangays.
Thereportwillbeself-servingifonlythe
BACandthelocalchiefexecutivewouldbe
furnishedwithcopiesofthese.
Analliance/coalitionofCSOsshouldbea
forcetoreckonwith,astheysynthesizethe
reports,andrateagenciesbasedonthese.
EmpoweringtheCSOsthrutheuseoftheir
reports.
Thealliance/coalitionofNGOsshouldbe
nationwidesothatanoversightagencycan
easilytouchbasewithanobserverinthe
region.
See#7above.
75
ANNEX 6: UNACCEPTABLE GOP PROCUREMENT RULES
ISSUES
1.Arethereeligibilityrestrictions
basedonnationalityofbidder
and/ ororiginofgoods(otherthan
primaryboycotts)?
2.Arethereprimaryboycottswhich
areestablishedbylaw?
3.Arebiddingopportunities
advertisedinthelocalpress?
4.Areprospectivebiddersallowed
atleast30daysforbidpreparation
(exceptforcommodities/small
goodscontracts)?
5.Arecontractors/suppliers
prequalifiedforlarge/specialized
contracts?
6.Areminimumexperience,technical
andfinancialrequirements(for
pre-orpost-qualification)explicitly
statedinthedocuments?
Registrationshouldnotbeused
asasubstituteforadvertisement
whenopencompetitionisrequired.
However,whenadvertisingfor
civilworks,borrowerscould
indicatetherequiredminimum
categoryofcontractorspecifiedin
theregistrationsystem.
7.Isaninvitationtoprequalify
advertisedforeachprocurement
involvinglargeorcomplexpotential
contracts?
A. CHECKLIST COMPARING NCB PROCEDURES AND WB AND ADB POLICIES
YES
/
/
/
/
/
NO
/
/
WB AND ADB POLICY
Notallowed
Onlyprimaryboycottsare
acceptable
ADB:Noboycottsareallowed
WB:Requiredforallpublic
bidding.
ADB:Requiresadvertising
above$500,000forgoodsand
$1millionforworks.
Required
Required
Required
Required
Required
REMARKS
Therearepreferencesonnationality
ofbiddersinthelaw.Tobe
retainedintheNCBAnnexasan
unacceptablerule
Thelawhasnopolicyonboycott.
Acceptable
Thelawmandatesadvertisementof
allpublicbiddingsandpostingin
PhilGEPSforallprocurement.
Acceptable
LatestGPPBdirectiveshortened
thebidpreparationtimeless
than30daysforpublicbidding.
Unacceptable.
Thelawmandatesforeligibility
screening(ES)process,buttheES
requireslonglistofdocuments
thatcoulddisqualifiybiddersfor
non-submissionofoneunnecessary
document.
Unacceptable
Yes,theminimumrequirements
areexplicitlystatedinthebidding
documents.Acceptable
Thereisaregistrationofcontractors
thatcapturesbasicqualification
data.
Acceptable
Advertisementforpublicbidding
isrequired.
Acceptable
76
Annex 6: Unacceptable GOP Procurement Rules
NO
/
/
/
WB AND ADB POLICY
Notallowed
Required.
Notallowed
Acceptableonlyifthey(i)are
financiallyautonomous,(ii)
operateundercommerciallaw,
and(iii)areindependentfrom
borroweranditspurchasing/
contractingauthority.
Shouldbediscouraged.
Acceptableonlyifregistration
criteria,processandcost
reasonable/efficientandqualified
foreignfirmsarenotprecluded
fromcompeting.
Acceptableonlyifjustifiedby
exceptionalcircumstances
Notallowed,exceptwhenbidders
havetosubmitphysicalsamples.
Thentheycanberequiredto
deliverbidsbymail,bycourier,by
hand,etc.
Notallowed.
Notallowed,exceptforunskilled
labor,ifavailablelocally.
REMARKS
Foreignfirmsareencourage,
butnotrequiredtojointventure
withlocalfirms.Acceptable.
Yes.Acceptable
Thelawdoesnotsetlimitation.
Acceptable
Parastatalsfollowcommerciallaw,
areautonomousandindependent
asprovidedintheirCharter.
Acceptable
Thereisaseparatelawonlicensing
andregistrationforcontractors
anditrequireslicensingpriorto
submissionofbids.Unacceptable.
ToberetainedintheNCBAnnex
Yes,theyareallowedtoextend
onlyforvalidreasons.
Acceptable.
Therearenorestrictionsonthe
meansofdeliveryofbids,hence
acceptable.
Flaglawandprovincialpreferences
areprovidedinthelaw.
Unacceptableandtoberetainedin
theNCBAnnex.
Therearenorestrictionson
sourcesoflaborandmaterialsin
thelaw.Acceptable.Theprovision
inthecurrentNCBAnnexshould
bedeleted.
ISSUES
8.Arejointventureswithlocalfirms
requiredforforeignfirms’
eligibility?
9.Arejointventurepartnersjointly
andseverallyliable?
10.Aretheresetlimitationstothe
numberoffirmswhocanbidfo
acontract?
11.Areparastatalsallowedtobid?
12.Arebiddersrequiredtoregister
withalocalorfederalauthorityas
apriorconditionforbidding?
13.Areextensionstobidvalidity
allowed?
14.Arethererestrictionsonthe
meansofdeliveryofbids?
15.Ispreferencegiventosuppliers
orcontractorsbasedonregion
orlocalityofregistration,small
size,ethnicownership,etc.?
16.Arethererestrictionsonsourcesof
laborandmaterial?
YES
/
/
/
/
/
/
A. CHECKLIST COMPARING NCB PROCEDURES AND WB AND ADB POLICIES
77
Annex 6: Unacceptable GOP Procurement Rules
YES
/
/
/
/
NO
/
/
WB AND ADB POLICY
Required
Shouldbediscouraged.Allowed
onlyif(i)domesticlawprecludes
useofoneenvelopeand(ii)
providedadequatesafeguards
againstretainingsecondenvelope
unopenedareincorporatedin
thetwoenvelopeproceduresand
effectivebidprotestmechanisms
arealreadyinplaceforthedue
processingofbidcomplaints.
Acceptable,providedall
responsivebiddersareallowedto
bid,theprocessisefficientandno
seriousdelaysresult.
Notallowed.
Onlyifquantifiedinmonetary
terms
Required
Notallowed,exceptwherethebidpriceissubstantiallyabovemarketorbudgetlevelsandthenonlyifnegotiationsarecarriedouttotrytoreachasatisfactorycontractthroughreductioninscopeand/orreallocationofriskandresponsibilitywhichcanbereflectedinareductioninContractPrice.(SeeGuidelinespara2.60)
REMARKS
Yes,openpublicbiddingisthe
primarymodeofprocurement.
Acceptable
Whilethelawrequirestwoor
threeenvelopes,theenvelopesare
requiredtobeopenedonthesame
dayonthesamebidopeningevent.
Transparencyisachieved.This
practiceisacceptable.
Thelawallowsawardtoonlyone
bidprovideditisresponsive.Thisis
acceptable.
ABCisusedasceiling.Itisallowed
byWBundercertainconditionsas
indicatedinAnnex8.3.Therefore
acceptableprovidedtheconditions
aremet.ADBdoesnotallowit.
Yes,theyareallowedprovided
quantifiable.Acceptable.
Thelawmandatesthatawardbe
madetothelowestcalculatedand
responsivebid.Acceptable.
Thelawprohibitsnegotiationwithlowestcalculatedandresponsivebidder.Acceptable.
17.Ispublicbidopeningrequired?
Doesitoccurimmediatelyor
closelyfollowingthebidsubmission
deadline?
18.Isa“twoenvelope”bid
openingprocedurepermittedfor
procurementofgoodsorworks?9
NOTE:ADBallowstwoenvelope
bidding.
19.Isautomaticrebiddingrequiredif
toofewbidsarereceived?
20.Is“bracketing”usedinbid
evaluations?10
Arebidevaluationcriteriaotherthan
priceallowed?
21.Isawardmadetolowestevaluated
qualifiedandresponsivebidder?
22.Arepricenegotiationsconducted with“winning”bidderspriorto
contractsignature?
ISSUES
A. CHECKLIST COMPARING NCB PROCEDURES AND WB AND ADB POLICIES
78
9 All technical envelopes are opened first and, after review, price envelopes of all or only qualified/responsive bids are opened in the second round.�0 Rejection of bids outside a range or “bracket” of bid values.
Annex 6: Unacceptable GOP Procurement Rules
YES
/
/
NO
/
WB AND ADB POLICY
Notrequired,butrecommended
forworkscontractsofoneyearor
moreindurationwhendomestic
inflationrateishigh.
Required(tobeacceptablethey
shouldbebalanced,reasonable,
andclearlyaddressthemost
importantissuesthatleadto
problemsduringperformance,
e.g.riskallocation,payment,
inspection,completion/
acceptance,insurance,
warrantees,changes,contract
remedies,forcemajeure,
governinglaw,termination,etc.)
Acceptable,buttheBank’s
approvalisrequiredforchanges
inthosecontractsthatwere
subjecttopriorreviewunderthe
LoanAgreement.
REMARKS
Priceadjustmentisallowed
forextraordinaryinflation,
fortuitouseventorextraordinary
circumstancesperGPPBRes.
07-2004datedJuly22,2004.
Acceptable
Thesizeandnatureofthecontract
arethebasesforthetermsand
conditionsspecifiedinthebidding
documents.Acceptable.
Acceptable.RetaintheruleinNCB
Annexthatforcontractssubject
topriorreview,15%ormore
modificationshouldbesubjectto
priorreview.
23.Arepriceadjustmentprovisions
generallyused?
24.Arethetermsandconditionsused
ingoodsandworksprocurement
generallyappropriateforthesizeand
natureofcontractintended?
25.Arecontractscope/conditions
modifiedduringimplementation?
ISSUES
A. CHECKLIST COMPARING NCB PROCEDURES AND WB AND ADB POLICIES
79
Annex 7: Review of WB’s NCB Procurement Annex
CURRENT VERSION
1.Eligibilityscreeningshallnot
beapplied.However,bidsthat
donotcontainanyofthefollowing
documentswillnotpassthe
documentarycompliancecheck:
(a)evidenceoftherequired
financial,technicalorproduction
capability;(b)auditedfinancial
statements;(c)creditlineorcash
depositcertificate;(d)bidsecurity;
and(e)authorityofthebid
signatory
2.Incaseofprequalification,ifany
bidderisdeniedaccessto
thebiddingprocessforreasons
unrelatedtoitsfinancialand
technicalqualificationstoperform
thecontract,priorconcurrenceof
theBankshallbesought.
3.Aceilingmaybeapplied
tobidprices,withprior
concurrenceoftheBankinadvance
ofbidding.However,theApproved
BudgetEstimatemaybedisclosed
intheadvertisementorinthe
biddingdocuments.
4.Domesticorregionalpreferences
willnotbeappliedintheevaluation
ofbids,andotherpreferencein
effectinthePhilippineswillnotbe
usedexceptwithpriorconcurrence
oftheWB.
5.Suppliersandcontractorswillnot
berequiredtopurchaseonlylocal
goodsorsuppliesormaterials.
RESULT OF REVIEW USING CHECKLIST
Eligibilityscreeningisnotacceptable.
Retainthesamewording.
Thereisnoprequalificationprocessunder
theProcurementLaw.EligibilityScreening
processperSection23ofthelawis
similartoaprequalificationprocesswhere
thedocumentarysubmissionsrelevant
tothequalificationofthebiddersare
screenedusingpassorfailcriteria.Since
prequalificationisnon-existentinthelaw,
thissuperfluous.
Followingharmonizationprocess,ceiling
isnowallowedprovidedfourconditions
aremet,whichshouldbeindicatedinthe
Annex.
Provincialpreferencesandgeneral
preferencesarestillineffect.Retainthisin
theNCBAnnex.
Thereisnorequirementinthelawor
theIRRtopurchaseonlylocalgoodsor
suppliesormaterials.Hencethisshouldbe
Acceptable.Theprovisioninthecurrent
NCBAnnexshouldbedeleted.
PROPOSED CHANGES
Nochange.
Fordeletion.
Aceilingmaybeappliedtobidpricesprovidedthefollowingconditionsaremet:(a)Biddingdocumentsareobtainablefreeofchargeonafreelyaccessiblewebsite.(b)TheagencyhasproceduresinplacetoensurethattheABCisbasedonEngineer’sEstimate;(c)Theagencyhastrainedcostestimatorsonestimatingpricesandanalyzingbidvariance;(d)theagencyhasestablishedasystemtomonitorandreportbidpricesrelativetoABCandEngineer’sestimate.
Nochange.
Fordeletion.
80
CURRENT VERSION
6.Incaseofcontractsforprior review,modificationexceeding 15%ofcontractamountand materialschangesintheconditions duringimplementationrequireprior Bankconcurrence.
7.Foreignsuppliersandcontractors shallbeallowedtoparticipate,if interested,withoutfirstbeing requiredtoassociatewith,or enterintojointventure,withlocal firms.Moreover,foreignbidders shallbeallowedtobid,even withoutregistration,licensing,and othergovernmentauthorizations, leavingtheserequirementsfor afterawardandbeforesigningof contract
8.Forworkscontract,theexperience qualificationrequirementshallbe: (a)atleastonepreviouscontract at80%oftheestimatedcostof thecontractbeingprocured;and (b)anannualturnoverfromall worksaveragedoverthelastthree yearsequalto100%ofthe estimatedcostofthecontract beingprocured.
RESULT OF REVIEW USING CHECKLIST
Acceptable.RetaintheruleinNCBAnnex
thatforcontractssubjecttopriorreview,
15%ormoremodificationshouldbe
subjecttopriorreview.
Unacceptable.
Basedonexperience,thisrequirementis
usefultoensurecontractorcapability.
PROPOSED CHANGES
Nochange.
Nochange.
Nochange.
Annex 7: Review of WB’s NCB Procurement Annex
8�
1.Eligibilityscreeningshallnotbeapplied.However,bidsthatdonotcontainanyofthefollowingdocumentswillnot
passthedocumentarycompliancecheck:(a)evidenceoftherequiredfinancial,technicalorproductioncapability;
(b)auditedfinancialstatements;(c)creditlineorcashdepositcertificate;(d)bidsecurity;and(e)authorityofthe
bidsignatory.
2.Aceilingmaybeappliedtobidpricesprovidedthefollowingconditionsaremet:(a)Biddingdocumentsare
obtainablefreeofchargeonafreelyaccessiblewebsite.(b)Theagencyhasproceduresinplacetoensurethat
theABCisbasedonEngineer’sEstimate;(c)Theagencyhastrainedcostestimatorsonestimatingpricesand
analyzingbidvariance;(d)theagencyhasestablishedasystemtomonitorandreportbidpricesrelativetoABC
andEngineer’sestimate.
3.Domesticorregionalpreferenceswillnotbeappliedintheevaluationofbids,andotherpreferenceineffectinthe
PhilippineswillnotbeusedexceptwithpriorconcurrenceoftheBank.
4.Incaseofcontractsforpriorreview,modificationexceeding15%ofcontractamountandmaterialschangesinthe
conditionsduringimplementationrequirepriorBankconcurrence.
5.Foreignsuppliersandcontractorsshallbeallowedtoparticipate,ifinterested,withoutfirstbeingrequiredto
associatewith,orenterintojointventure,withlocalfirms.Moreover,foreignbiddersshallbeallowedtobid,even
withoutregistration,licensing,andothergovernmentauthorizations,leavingtheserequirementsafteraward
andbeforesigningofcontract.
6.Forworkscontract,theexperiencequalificationrequirementshallbe:(a)atleastonepreviouscontractat80%
oftheestimatedcostofthecontractbeingprocured;and(b)anannualturnoverfromallworksaveragedoverthe
lastthreeyearsequalto100%oftheestimatedcostofthecontractbeingprocured.
7.AlternativeprocurementmethodsdefinedintheimplementingrulesandregulationssuchasLimitedSource
Bidding,DirectContractingandShoppingareacceptable.Theuseoftheotheralternativemethodswillrequire
priorBankconcurrence.
8.Aperiodofatleast30daysforbidpreparationshallberequired.
Annex 8A: World Bank’s NCB Requirements
82
1.General Theprocedurestobefollowedfornationalcompetitive
biddingshallbethosesetforthinRepublicAct9184of
theRepublicofthePhilippines,effective26January2003,
andImplementingRulesandRegulations,effective
8October2003,withtheclarificationsandmodifications
describedinthefollowingparagraphsrequiredfor
compliancewiththeprovisionsoftheProcurement
Guidelines.
2.Eligibility (a)Eligibilityscreeningshallnotbeapplied.However,bids
thatdonotcontainthefollowingdocumentswillnot
passthedocumentarycompliancecheckifaspecific
requirementofthebiddingdocuments:(i)evidenceof
therequiredfinancial,technicalorproductioncapability;
(ii)auditedfinancialstatements;(iii)creditlineor
cashdepositcertificate;(iv)bidsecurity;and(v)authority
ofthebidsignatory.
(b)Nationalsanctionlistsmaybeappliedonlywithprior
approvalofADB
3.Advertising BiddingofNCBcontractsestimatedat$500,000ormore
forgoodsandrelatedservicesor$1,000,000ormorefor
civilworksshallbeadvertisedconcurrentlywiththegeneral
procurementnoticesonADB’swebsite.
4.Price Ceiling Theapprovedbudgetforthecontract(ABC)maybe
published,butitshallnotbestatedorimpliedthatbid
pricesshallnotexceedtheABC,orthatbidevaluationwill
inanywaytakeintoaccounttheABC.TheABC,budgetary
allocation,ceilingprice,orsimilarestimatesofcontract
valueshallnotbeusedtorejectbidswithoutprior
concurrenceofADB.
5.Preferences (a)Nopreferenceofanykindshallbegiventodomestic
biddersorfordomesticallymanufacturedgoods.
(b)Suppliersandcontractorsshallnotberequired
topurchaselocalgoodsorsuppliesormaterials.
(c)ForeignsuppliersandcontractorsfromADBmember
countriesshallbeallowedtoparticipate,ifinterested,
withoutfirstbeingrequiredtoassociatewith,orenter
intojointventurewith,localfirms.
(d)ForeignsuppliersandcontractorsfromADBmember
countriesshallbeallowedtobid,withoutregistration,
licensing,andothergovernmentauthorizations,leaving
compliancewiththeserequirementsuntilafteraward
andbeforesigningofacontract.
6.Experience Qualification Foraworkscontract,theexperiencequalification
requirementshallbe:(i)atleastonepreviouscontractat
80%oftheestimatedcostofthecontractbeingprocured;
and(ii)anannualturnoverfromallworksaveragedoverthe
lastthreeyearsequalto100%oftheestimatedcostofthe
contractbeingprocured.
7.Bid Security Whererequired,bidsecurityshallbeintheformofabank
guaranteefromareputablebank.
8.Contract Amendment ADB’sconcurrenceshallbeobtainedbeforeapproving
modificationstocontractsunderimplementationwhere
(i)thevalueofthemodificationexceeds15%ofcontract
amount,or(ii)itresultsinmaterialchangestothe
conditionsofcontract.
9.Member Country Restrictions BiddersmustbenationalsofmembercountriesofADB,
and offeredgoodsmustbeproducedinmembercountries ofADB.
Annex 8B: ADB’s NCB Annex to Procurement Plan
83
INDICATOR
Existence of institutional development
capacity.
Efficient procurement operation and
practice
Annex 9: Status of Actions Agreed in 2005 CPAR Update (as of November 2007)
SPECIFIC WEAKNESS
1.Contractawardinformationnotavailableandaccessibleintheexistingsystem
2.Sustainablestrategyisnotyetdevelopedtoprovidetrainingadviceandassistancetodevelopthe
capacityofgovernmentandprivatesectorparticipantstounderstandtherulesandregulations
andhowtheyshouldbeimplemented.
3.Lackofsystemsandproceduresforcollectionandmonitoringofnationalprocurementstatistics
4.Lackofqualitycontrolstandardstoevaluateperformanceofstaffandaddresscapacity
developmentissues
5.Atthecontractingentitylevel,thelevelofprocurementcompetenceamonggovernment
officialswithintheentityisnotyetconsistentwiththeirprocurementresponsibilities
6.Atthecontractingentitylevel,theprocurementtrainingandinformationprogramsimplemented
forgovernmentofficials,aswellasforprivatesectorparticipantsisnotyetconsistentwith
demand.
7.Whileadministrativesystemsexistatthecontractingentitylevel,theydonotadequatelysupport
monitoringprocurementperformanceinmostagencies.
CURRENT ACTIVITIES/ACTIONS TO BE UNDERTAKEN
BeingdoneandmonitoredbyGPPBTSO-GPPBissuedletterstonon-complyingentities
remindingallheadsofprocuremententitiesandBACstopostinPhilGEPSawardsof
contract.
a)Ongoing,implementationofnationaltrainingthetrainersprogramforagenciesand
LGUs.
b)Ongoingasmedium-termapproachtocapacitybuildingistoaccreditStateUniversities
andColleges,includingtheNationalDefenseCollege;
c)Ongoing,asthedevelopmentoflong-termplantoprofessionalizeprocurementasa
careerforpractitioners.
d)To be done -privatesectortrainingtobeincludedinthetrainingand
professionalizationprogram.
To be done-
a)Developactualperformanceindicatorsandimplementasystemfordatacollectionand
informationanalysisfromcontractingentitiesuptoGPPB;
b)ReplicateappropriateBIStoassessnationalagenciesandLGUs,asmanagementtool.
To be done-Includesettingupofqualitycontrolstandardstoevaluatestaffperformance
andaddresscapacitydevelopmentissuesintheprofessionalizationprogrammentionedin
No.2(c).
a)LinktoNo.2.
b)To be done–conductoftrainingprogramtoimproveofskillsinestimatingpricesand
analyzingbidvariances.
c) To be doneasfollow-uptoValueEngineering(VE)Briefingsare:(i)toenhancecapacity
forvalueengineeringfocusingmoreonupstreamreviews;(ii)issuanceofguidelinesto
agenciesfortheuseofVE.
a)Ongoing,shouldbelinkedtoNo.2.Expansionofthetrainingshouldbedonetomeet
demand.
b)To be done-Thetrainingprogramshouldincludetheprivatesectorandthecivil
societyobservers.
a)LinktoNo.3.
b)OngoingdevelopmentofG-EPSwillprovideonlineinformationoncommonlyused
suppliesprocurementsuchasprices,contractsperformance.
c)To be done-Collectionoftechnicalspecificationsonnon-commonlyusedsupplies
suchasdrugs,catalogueanddisseminateonline.
d)To be done-–Stand-alonestudyoncomparisonofbidpricesforcommon
procurement
items,suchasclassrooms,medicalsupplies,watersupplyandbooksprocuredbys
electedagencies.
e)Ongoing.ImplementationofE-Procurementasatransactionaltool.
f)To be doneasfollow-uptorecommendationsintheSecurityReport:(i)discuss
procurementsecurityrelevancewithBSPandOfficeofInsuranceCommission,and(ii)
issueguidelinesonselectivereputablesuretycompanies.
RESPONSIBLE AGENCIES, FUNDING AND TIMETABLE
GPPB–TSO;PhilGEPSwithfunding
assistancefromADB-WB
GPPB,SUCs,PCAcarriedinthisCPAR.
GPPB,carriedinthisCPAR
GPPB-TSO,carriedinthisCPAR.
GPPB,carriedinthisCPAR
GPPB,carriedinthisCPAR
GPPB,ProcurementService–PhilGEPS
Office–ongoingimplementation.The
agreedactioniscarriedinthisCPAR,
withfundingassistanceADBandWB.
84
INDICATOR
Existence of institutional development
capacity.
Efficient procurement operation and
practice
Annex 9: Status of Actions Agreed in 2005 CPAR Update (as of November 2007)
SPECIFIC WEAKNESS
1.Contractawardinformationnotavailableandaccessibleintheexistingsystem
2.Sustainablestrategyisnotyetdevelopedtoprovidetrainingadviceandassistancetodevelopthe
capacityofgovernmentandprivatesectorparticipantstounderstandtherulesandregulations
andhowtheyshouldbeimplemented.
3.Lackofsystemsandproceduresforcollectionandmonitoringofnationalprocurementstatistics
4.Lackofqualitycontrolstandardstoevaluateperformanceofstaffandaddresscapacity
developmentissues
5.Atthecontractingentitylevel,thelevelofprocurementcompetenceamonggovernment
officialswithintheentityisnotyetconsistentwiththeirprocurementresponsibilities
6.Atthecontractingentitylevel,theprocurementtrainingandinformationprogramsimplemented
forgovernmentofficials,aswellasforprivatesectorparticipantsisnotyetconsistentwith
demand.
7.Whileadministrativesystemsexistatthecontractingentitylevel,theydonotadequatelysupport
monitoringprocurementperformanceinmostagencies.
CURRENT ACTIVITIES/ACTIONS TO BE UNDERTAKEN
BeingdoneandmonitoredbyGPPBTSO-GPPBissuedletterstonon-complyingentities
remindingallheadsofprocuremententitiesandBACstopostinPhilGEPSawardsof
contract.
a)Ongoing,implementationofnationaltrainingthetrainersprogramforagenciesand
LGUs.
b)Ongoingasmedium-termapproachtocapacitybuildingistoaccreditStateUniversities
andColleges,includingtheNationalDefenseCollege;
c)Ongoing,asthedevelopmentoflong-termplantoprofessionalizeprocurementasa
careerforpractitioners.
d)To be done -privatesectortrainingtobeincludedinthetrainingand
professionalizationprogram.
To be done-
a)Developactualperformanceindicatorsandimplementasystemfordatacollectionand
informationanalysisfromcontractingentitiesuptoGPPB;
b)ReplicateappropriateBIStoassessnationalagenciesandLGUs,asmanagementtool.
To be done-Includesettingupofqualitycontrolstandardstoevaluatestaffperformance
andaddresscapacitydevelopmentissuesintheprofessionalizationprogrammentionedin
No.2(c).
a)LinktoNo.2.
b)To be done–conductoftrainingprogramtoimproveofskillsinestimatingpricesand
analyzingbidvariances.
c) To be doneasfollow-uptoValueEngineering(VE)Briefingsare:(i)toenhancecapacity
forvalueengineeringfocusingmoreonupstreamreviews;(ii)issuanceofguidelinesto
agenciesfortheuseofVE.
a)Ongoing,shouldbelinkedtoNo.2.Expansionofthetrainingshouldbedonetomeet
demand.
b)To be done-Thetrainingprogramshouldincludetheprivatesectorandthecivil
societyobservers.
a)LinktoNo.3.
b)OngoingdevelopmentofG-EPSwillprovideonlineinformationoncommonlyused
suppliesprocurementsuchasprices,contractsperformance.
c)To be done-Collectionoftechnicalspecificationsonnon-commonlyusedsupplies
suchasdrugs,catalogueanddisseminateonline.
d)To be done-–Stand-alonestudyoncomparisonofbidpricesforcommon
procurement
items,suchasclassrooms,medicalsupplies,watersupplyandbooksprocuredbys
electedagencies.
e)Ongoing.ImplementationofE-Procurementasatransactionaltool.
f)To be doneasfollow-uptorecommendationsintheSecurityReport:(i)discuss
procurementsecurityrelevancewithBSPandOfficeofInsuranceCommission,and(ii)
issueguidelinesonselectivereputablesuretycompanies.
RESPONSIBLE AGENCIES, FUNDING AND TIMETABLE
GPPB–TSO;PhilGEPSwithfunding
assistancefromADB-WB
GPPB,SUCs,PCAcarriedinthisCPAR.
GPPB,carriedinthisCPAR
GPPB-TSO,carriedinthisCPAR.
GPPB,carriedinthisCPAR
GPPB,carriedinthisCPAR
GPPB,ProcurementService–PhilGEPS
Office–ongoingimplementation.The
agreedactioniscarriedinthisCPAR,
withfundingassistanceADBandWB.
85
INDICATOR
Functionality of the Public Procurement
Market
Effective control and Audit System
Degree of Access to Information
Annex 9: Status of Actions Agreed in 2005 CPAR Update (as of November 2007)
SPECIFIC WEAKNESS
8..Inadequateinternalcontrolmechanismsforundertakingprocurementoperationsatthe
contractinglevel.
9.Theparticipationrateofbiddersinresponsetocompetitivetenderinvitationsisnotconsistent
withthecapacityofthemarketplace.Lessuseofcomplaintandprotestmechanisms.
10.Lackofenforcementandfollow-uponfindingsandrecommendationsfromthe
controlframework.
11.Theinternalcontrolsystemdoesnotprovidetimelyinformationoncompliancetoenable
managementaction.
12.WhilethelawrequirespublicationintheG-EPS,websitesandnewspapers,thefullaccessto
informationbythecivilsocietyisnotyetfullyinstitutionalized.
13.Systemdoesnotexistyettocollectkeydatarelatedtoperformanceoftheprocurementsystem
andtoreportregularly.
14.SomeagenciesandLGUsarenotmaintainingrecordstovalidatedata.
CURRENT ACTIVITIES/ACTIONS TO BE UNDERTAKEN
a)Done -implementationofProcurementManualinallagenciesandharmonizationwith
donors.
b)To be done–(i)strengthentheinternalcontrolmechanismatagencylevelby:
enforcingthelawthatmandatescreationofinternalauditunits;(ii)prepareinternal
auditmanualonprocurement;and(iii)implementationofatrainingprogramfor
internalauditors.
a)To be done-intensiveinformationdisseminationandfamiliarizationonthenew
lawtotheprivatesectorandcivilsocietytobringtrustandconfidenceinthenewsystem.
b)To be done-supporttoprivatesectorinitiativesontrainingsonthenewsystem.
c) To be done-includeprivatelearninginstitutionsinaccreditationofprocurement
traininginstitutestocatertoprivatedemand.
d)To be done-issuanceofapolicythatadvertisementsshouldincludekeyevaluation
criteria.
a)Ongoing.ImplementtheGuidelinesforSuspensionandBlacklistingofBidders,
SuppliersandConstructors.DonorswillreviewforpossibleadoptioninFAPs.
b)To be done-StrengthentheroleofPresidentialAnti-GraftCommissioninensuringthat
procurementauditisinstitutionalizedthroughtheinternalauditunitsofeachagency.
Trainingonfraudexaminationandaudit.
c)To be done–(i)COAshouldincludeaspartofitsAnnualReportanassessment
ofadequacyofinternalcontrolmechanisminweakagencies;and,(ii)trainingof
investigatorsonfraudexaminationandaudit.
d)To be done–ProvideactiveassistancetoOmbudsmanforsuccessfulprosecutionof
procurementcases.
To be done–Agenciesshouldinstituteadequateinternalcontrolmechanismtoensurethat
timelyinformationareprovidedtoagencymanagement.LinktoNo.10.
a)Ongoing.SupporttoPWIinimprovingtrainingdesignanddeliveryforBACcivilsociety
observers(CSOs).
b)To be done-InformationsupportsystemfortrainedBACCSOs.
c)To be done-AdministrativesupporttothenewcoalitionofBAC-CSOs.
LinktoNo.3.
To be done-Issuanceofguidelinesforproperrecordmanagementfornationalagencies
andLGUs.PreparetheTORandhireconsultant.
RESPONSIBLE AGENCIES, FUNDING AND TIMETABLE
a)ProcurementManualissuedin
January2007;Pilottestingin6
agenciesdone.
b)IDFGrantonStrengtheningInternal
Auditon-going;IAmanualbeing
drafted).
CommunicationPlantobedeveloped
andimplementedbyGPPB,asagreed
inthisCPAR.
a)&b)Done.Guidelinesbeing
implemented.Listofblacklisted
suppliersandcontractorspublished
intheGPPBwebsite
(www.gppb.gov.ph).
c)COAwilldevelopandimplement
ProcurementAuditGuide.
d)trainingofOmbudsmanstaff
carriedinthisCPAR.
DBM,underAusAIDfunding,is
developinginternalcontrolsystem.
TheseactionsarecarriedinthisCPAR
aspartofCommunicationStrategy.
CarriedinthisCPAR.
CarriedinthisCPAR
86
INDICATOR
Functionality of the Public Procurement
Market
Effective control and Audit System
Degree of Access to Information
Annex 9: Status of Actions Agreed in 2005 CPAR Update (as of November 2007)
SPECIFIC WEAKNESS
8..Inadequateinternalcontrolmechanismsforundertakingprocurementoperationsatthe
contractinglevel.
9.Theparticipationrateofbiddersinresponsetocompetitivetenderinvitationsisnotconsistent
withthecapacityofthemarketplace.Lessuseofcomplaintandprotestmechanisms.
10.Lackofenforcementandfollow-uponfindingsandrecommendationsfromthe
controlframework.
11.Theinternalcontrolsystemdoesnotprovidetimelyinformationoncompliancetoenable
managementaction.
12.WhilethelawrequirespublicationintheG-EPS,websitesandnewspapers,thefullaccessto
informationbythecivilsocietyisnotyetfullyinstitutionalized.
13.Systemdoesnotexistyettocollectkeydatarelatedtoperformanceoftheprocurementsystem
andtoreportregularly.
14.SomeagenciesandLGUsarenotmaintainingrecordstovalidatedata.
CURRENT ACTIVITIES/ACTIONS TO BE UNDERTAKEN
a)Done -implementationofProcurementManualinallagenciesandharmonizationwith
donors.
b)To be done–(i)strengthentheinternalcontrolmechanismatagencylevelby:
enforcingthelawthatmandatescreationofinternalauditunits;(ii)prepareinternal
auditmanualonprocurement;and(iii)implementationofatrainingprogramfor
internalauditors.
a)To be done-intensiveinformationdisseminationandfamiliarizationonthenew
lawtotheprivatesectorandcivilsocietytobringtrustandconfidenceinthenewsystem.
b)To be done-supporttoprivatesectorinitiativesontrainingsonthenewsystem.
c) To be done-includeprivatelearninginstitutionsinaccreditationofprocurement
traininginstitutestocatertoprivatedemand.
d)To be done-issuanceofapolicythatadvertisementsshouldincludekeyevaluation
criteria.
a)Ongoing.ImplementtheGuidelinesforSuspensionandBlacklistingofBidders,
SuppliersandConstructors.DonorswillreviewforpossibleadoptioninFAPs.
b)To be done-StrengthentheroleofPresidentialAnti-GraftCommissioninensuringthat
procurementauditisinstitutionalizedthroughtheinternalauditunitsofeachagency.
Trainingonfraudexaminationandaudit.
c)To be done–(i)COAshouldincludeaspartofitsAnnualReportanassessment
ofadequacyofinternalcontrolmechanisminweakagencies;and,(ii)trainingof
investigatorsonfraudexaminationandaudit.
d)To be done–ProvideactiveassistancetoOmbudsmanforsuccessfulprosecutionof
procurementcases.
To be done–Agenciesshouldinstituteadequateinternalcontrolmechanismtoensurethat
timelyinformationareprovidedtoagencymanagement.LinktoNo.10.
a)Ongoing.SupporttoPWIinimprovingtrainingdesignanddeliveryforBACcivilsociety
observers(CSOs).
b)To be done-InformationsupportsystemfortrainedBACCSOs.
c)To be done-AdministrativesupporttothenewcoalitionofBAC-CSOs.
LinktoNo.3.
To be done-Issuanceofguidelinesforproperrecordmanagementfornationalagencies
andLGUs.PreparetheTORandhireconsultant.
RESPONSIBLE AGENCIES, FUNDING AND TIMETABLE
a)ProcurementManualissuedin
January2007;Pilottestingin6
agenciesdone.
b)IDFGrantonStrengtheningInternal
Auditon-going;IAmanualbeing
drafted).
CommunicationPlantobedeveloped
andimplementedbyGPPB,asagreed
inthisCPAR.
a)&b)Done.Guidelinesbeing
implemented.Listofblacklisted
suppliersandcontractorspublished
intheGPPBwebsite
(www.gppb.gov.ph).
c)COAwilldevelopandimplement
ProcurementAuditGuide.
d)trainingofOmbudsmanstaff
carriedinthisCPAR.
DBM,underAusAIDfunding,is
developinginternalcontrolsystem.
TheseactionsarecarriedinthisCPAR
aspartofCommunicationStrategy.
CarriedinthisCPAR.
CarriedinthisCPAR
87
Annex �0: Key Source Documents
DevelopmentAcademyofthePhilippines,December2006.“Anti-CorruptionInitiativesinthePhilippines:CreatingVirtuousCirclesofIntegrityandAccountability,”ManilaPhilippines.
C.Virata&Associates,Inc..,May2006.“StudyonDesignandCostAnalysisofJBICODALoan-AssistedProjectsinthePhilippines,”Makati,Philippines.
Campos,J.Edgardo&JoseLuisSyquia,2006.“ManagingthePoliticsofReformOverhaulingtheLegalInfrastructureofPublicProcurementinthePhilippines,”WorldBankWorkingPaperNo.70.
Joint Document of the Government of the Philippines, The World Bank and the Asian Development Bank,Philippines,April30,2003.“ImprovingGovernmentPerformance:Discipline,EfficiencyandEquityinManagingPublicResources,APublicExpenditure,ProcurementandFinancialManagementReview,”Manila,Philippines.
OECD-DAC/WBProcurementRoundTable,January2005.“GoodPracticePapersonStrengtheningProcurementCapacitiesinDevelopingCountries”
OECD-DAC/WBProcurementRoundTable,July17,2006.“MethodologyforAssessmentofNationalProcurementSystems,Version4”
PhilippineCommissiononAudit,January2007.“AssessmentoftheLevelofImplementationofRepublicActNo.9184intheLocalGovernmentUnits,”QuezonCity,Philippines.
Philippine Country Team, World Bank East Asia and Pacific Department, June 21, 2007. “Country AssistanceStrategyProgressReport,”Manila,Philippines.
SocialWeatherStation,November2006.“PublicOpiniononProcurementReforms,”QuezonCity,Philippines.
SocialWeatherStation,June2007.“TransparentAccountableGovernance:The2007SWSSurveyofEnterprisesonCorruption,”MakatiCity,Philippines.
TheWorldBank,May23,2002.RevisedCPARProcedures,OPCPR,WashingtonDC.
TheWorldBank,March2003.“PhilippinesCountryProcurementAssessmentReport,”Manila,Philippines.
TheWorldBank,August2005.“PhilippinesCountryProcurementassessmentAssessmentReport,2ndUpdate,”Manila,Philippines.
Ursal,Sofronio,2006“Anti-GraftGuidebook,”QuezonCity,Philippines.
Verzosa, Cecilia Cabanero, 2005. “Counting on Communication, The Uganda Nutrition and Early ChildhoodDevelopmentProject,”TheWorldBank,WashingtonDC.
88
1818 H Street, NW, Washington, DC 20043 USAWebsite: www.worldbank.org
World Bank Office Manila23rd Floor, The Taipan PlaceF. Ortigas Jr. Road, Ortigas CenterPasig City PhilippinesTelephone: (63-2) 637-5855Website:www.worldbank.org.ph
International Finance Corporation11th Floor, Tower One, Ayala TriangleAyala Avenue, Makati City PhilippinesTelephone: (63-2) 848-7333Website: www.ifc.org
The World Bank in the PhilippinesSupporting Islands of Good Governance
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ES CO
UN
TRY PR
OC
UR
EMEN
T ASSESSM
ENT R
EPOR
T
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