“ Procurement Reform in the Philippines: Achievements and Remaining Challenges ”

“Procurement Reform in the Philippines: Achievements and

Remaining Challenges”

Fragmented Laws and Rules (100++)

• Presidential Decree 1594 (Works)

• Executive Order 262 (Goods)

• Executive Order 164 (Consulting Services)

• Executive Order No. 40 • Republic Act 7160 - Local

Government Code (Procurement Provisions)

No Standardized Procurement Documents

Absence of a single agency with a mandate to formulate procurement policy, rules and procedures.

Procurement EnvironmentPrior to GPRA

Existence of Conflict of Interest in Government Contracting (approving authority, bidders, observers)

Lack of Transparency in Procurement Information Dissemination

Unclear Accountability of Persons Involved in Procurement activities

Weak opportunity for Public Monitoring of Procurement Activities

Procurement Environment Prior to GPRA

2002 CPAR

From the overall findings of the CPAR, the public procurement system in the Philippines

is dysfunctional. It is characterized by multiple laws, rules and regulations which while adhering to the principles of competition and transparency, are

inefficient and prone to abuse. It also contributes to lowering public funds’ value for money.

A conducive breeding space for graft and corruption…

“An Act Providing for the Modernization, Standardization and Regulation

of the Procurement Activities of the Government and for Other Purposes”

Republic Act No. 9184Government Procurement Reform

Act (2003)

Government Procurement Reform Act (GPRA)

Governing Principles

TR

AN

SPA

REN

CY

GPRA

ACCOUNTABILITY

PUBLIC MONITORINGACCOUNTA

BILITY

CO

MPE

TITION

STREAMLINED PROCESS

Key Reform Measures

Key Reform Measures

• Competitive Bidding as Primary Mode of Procurement.

• Allowance of Centralized or Decentralized Procurement.

• Use of Non-Discretionary Pass/Fail Criterion.

Key Reform Measures

• Shift from Pre-Qualification Regime to Simplified Eligibility Checking.

• Use of the Approved Budget for the Contract (ABC) as Ceiling for Bid Prices.

• Creation of a procurement policy oversight body – Government Procurement Policy Board.

Key Reform Measures• Introduction of a Protest Mechanism

• Participation of Observers in all stages of procurement process.

• Issuance of the Standardized Philippine Bidding Documents (PBDs), Generic Procurement Manuals (GPMs) and Local Government Procurement Manuals (LGPMs)

• Establishment of civil, administrative and criminal sanctions

Key Reform Measures• Establishment of a National Procurement Training

Program to ensure the conduct of regular procurement trainings for procurement capacity development of government procurement practitioners.

• Development of the Procurement Professionalization Program currently being pilot tested to professionalize government procurement practitioners.

• Regular conduct of training activities and seminars for prospective bidders - suppliers, contractors, and consultants.

Impact of Reform Measures

Sources of Information

Experiences from the Ground Feedback from

various stakeholders

The 2012 Country Procurement Assessment

Report

Government Procurement Reform Act

IMPACT OF REFORM MEASURES

Impact of Reform Measures

• As of 2006, the DepED had realized a total of Php2.6 billion in savings, with an average reduction of 50% in the price of textbooks that allowed achievement of a textbook-to-student ratio of 1:1.

• One textbook that was being purchased for an average of PhP 100.00 came down to PhP45.00 in competitive bidding.

• DOH reported an average reduction of 27% in the prices of pharmaceuticals due to increased competition.

• DPWH reported an average reduction of 15% to 20% of contract cost when compared with budget estimates.

Source: 2008 CPAR

Impact of Reform Measures

• Bidding time has been cut in half, and transparency is attained through compliance with the requirement of posting of advertisement, Notice of Award, Actual Contract and Notice to Proceed in the PhilGEPS.

• Alignment with international practice improved, and the national procurement system became more widely used following the increase in the National Competitive Bidding (NCB) thresholds to US$ 1 Million for goods and US$ 5 Million for works.

Source: 2008 CPAR

Impact of Reform Measures(World Bank Confidence in Country System)

WB NCB Threshold 2008 2013

Goods USD 1 Million USD 3 Million

Works USD 5 Million USD 15 Million

Consulting USD 200K USD 500K

2007 2008 2009 2012 20130%

10%

20%

30%

40%

50%

60%

70%

23%26% 26%

16% 9%

21%16%

19%

22%

37%

54%57%

53%

60%

53%

Disagree

Undecided

Agree

2013 SWS Survey of Enterprises on Corruption

- 53% say it is easier to get information for bidding on gov’t contract.

- Compared to about 5 years ago, it is now easier for anyone who wants to bid on a government contract to get information about the bidding.

Transparency InternationalCorruption Perception Index (CPI)

Year Rank CPI Score No. of Countries

2000 69 2.8 90

2001 65 2.9 91

2002 77 2.6 102

2003 92 2.5 133

2004 102 2.6 146

2005 117 2.5 159

2006 121 2.5 163

2007 131 2.5 180

2008 141 2.3 180

2009 139 2.4 180

2010 134 2.4 178

2011 129 2.6 183

2012 105 34 176

2013 94 36 177

2014 85 38 175

Challenges in Public Procurement

Total APP vs. Awarded Contracts(in terms of amount, NGAs)

75.80%

Awarded

24.20%

2011APP = PhP 137.91 B

Awarded = PhP 30.19 B

2012APP = PhP 131.17 B

Awarded = PhP 31.74 B

Awarded

21.89%

78.11%

Failed Biddings(Total Contracts Awarded vis-à-vis Number of Procurement

Activities)

2011

Procurement Activities = 8,731Contracts Awarded = 8,058

Difference = 673

2012

Procurement Activities = 11,450Contracts Awarded = 9,555

Difference = 1,895

Not Award

ed16.55

%

Awarded

83.45%

Awarded92.29%

Not Awarded7.71%

Approval Process/Review Process

14%

Late Release of SARO 5%

Low Number of Bidders

22%

Inadequate Training/Vary-ing Interpretation of Rules

3%

Lack of Manpower6%

Problems on Technical Specifications/TOR (Pref-erence; Highly complex

technical specifications or specialized goods )

17%

End users' late submission of the PR

22%

Poor Cost Estimates11%

PRIMARY CAUSES OF DELAYS AND FAILURES OF BIDDING

(Based on APCPI Confirmation Result of Participating Agencies)

What have we missed?Where is the disconnect?

How do we bridge the gap?

• Sharing the Lessons Learned:Country Effectivity of Procurement Legal

FrameworkCambodia 2012

LAO PDR 2007

Mongolia 2005 (Amended 2011)

Timor Leste 2005 (Amended 2010)

Vietnam 2013 (repealed Bidding Law of 2005

• How do we keep our system attune with modern procurement approaches and strategies?

– Principles Based vs. Rules Based approach – Professionalization / Competency Framework– Framework Agreement– SPP/GPP– WTO-GPA – Observer Status – Electronic Bidding / Electronic Reverse Auction– Open Contracting / Open Data Standards

• Stakeholders’ participation in government procurement.– Public procurement practitioners – competition v. negotiation– Market Operators – Policing their ranks / Integrity Pledge– How do we incentivize procurement opportunities and make it attractive to bidders?– CSO Participation / Sustaining Participation / Social Benefit Fund– SAIs, the impact of their function in decision making.– Innovative mechanisms to combat graft and corruption in procurement– Developing capacity of procurement investigators.

• Measuring results in public procurement?– OECD-DAC MAPS / APCPI – Compliance vs. performance– Peer Review Process– What are other available tools out there?

• What are the necessary steps to make procurement reform sustainable and irreversible?

Up by 240.8% from 2010-2015

Public procurement delayed is public service denied…

This is our Procurement Story…

…we are willing to Listen, and we are willing to Act!

Thank You…

Dennis S. SantiagoExecutive Director V

Government Procurement Policy Board – Technical Support Office