THE PHILIPPINE GOVERNMENT PROCUREMENT SYSTEM An Overview

Problem Areas and Reform Measures PROBLEMS REFORMS Confusion caused by fragmented legal system Enactment of the Government Procurement Reform Act (GPRA) Inconsistent policies, rules, and regulations due to lack of standards Creation of the Government Procurement Policy Board (GPPB) Lack of transparency Use of PhilGEPS Lack of check and balance Participation of civil society To address these problems, the Philippine government introduced the following reform measures: First, enactment of an omnibus law, which is now known as the Government Procurement Reform Act. Second, formation of the Government Procurement Policy Board or the GPPB, which we will discuss in detail later. Third, making use of advances in information technology, establishment of the Philippine Government Electronic Procurement System to enhance transparency in the procurement process. And lastly, and most importantly, the institutionalization of civil society participation in government procurement. At this point, allow me to note that since these measures have been institutionalized in the procurement reform law, they may not be affected by any change in administration.

Enactment of GPRA over 100 procurement rules & regulations Implementing Rules and Regulations Executive Orders Administrative Issuances Memorandum Circulars over 100 procurement rules & regulations Government Procurement Reform Act 10 January 2003 Goods, Infrastructure, Consulting Services Coverage: NGAs and LGUs Presently, all government procurement activities -- from office supplies, to textbooks, to medicines, to military arms -- are covered by Republic Act 9184 or the Government Procurement Reform Act. The procurement reform law also applies to all forms of government entities – national (whether line agencies, government owned or controlled corporations, state universities and colleges) and sub-national or local governments. It also subjects all branches of government – executive, legislative, judiciary, and other constitutional offices -- to the same set of procurement rules. This is a stark contrast from the situation prior to its passage, when there was an estimated 100 procurement rules & regulations governing different types of bidding activities.

Application R.A. 9184 Applies to: National Government Agencies (NGAs) State Universities and Colleges (SUCs) Government Owned or Controlled Corporations (GOCCs) Government Financial Institutions (GFIs) Local Government Units (LGUs) R.A. 9184 governs the procurement of: Infrastructure Projects Goods (incl. Supplies, Materials, and Related Services) Consulting Services

Scope and Coverage Section 4, Revised IRR All fully domestically-funded procurement activities All foreign-funded procurement activities, unless otherwise provided in a treaty or int’l/executive agreement As may be agreed upon by the GOP and IFI in their treaty or int’l/executive agreement Projects funded from foreign grants Projects for International Competitive Bidding Consulting Services for National Competitive Bidding Definition of goods is structured broadly so as to exclude those falling under “infrastructure projects” or “consultancy services” Lease of Office Space is embraced within the legal contemplation of “goods.” GPPB Opinion dated 9/22/2005; query from NFA Reinsurance services falls under the meaning of goods (under “general support services”) GPPB Opinion dated 10/29/2003; query from GSIS Loan Agreements are executive agreements or commitments “Thus, for foreign funded procurement activities, the guidelines of the concerned International Financing Institution shall govern foreign assisted projects considering that loan agreements such as those entered into with IFIs fall within the phrase “international agreements or commitments” under Section 4 of R.A. 9184” GPPB Opinion dated February 18, 2004; query from National Transmission Corp (TransCo); also DOJ Opinion No. 46, series of 1987 IRR-A only covers fully domestically funded procurement activities, and cannot therefore be made to apply to foreign assisted projects.

Scope and Coverage GOP negotiating panels shall: Adopt as default position, use of the IRR or selection through competitive bidding Explain in writing if treaty or int’l/executive agreement states otherwise

Governing Principles Uniformly applicable to all government agencies Transparency Wider dissemination of bid opportunities Competitiveness Equal opportunity to all eligible bidders Streamlined Process Uniformly applicable to all government agencies Effective and efficient method System of Accountability “Answerable” Public Monitoring Awareness and vigilance

Key Features of GPRA Covers procurement of all government agencies General Rule is Public/Competitive Bidding Alternative Methods of Procurement allowed in highly exceptional cases Use of the Approved Budget for the Contract (ABC) as ceiling for the bid price Use of transparent, objective, and non-discretionary criteria Increased transparency in the procurement process Professionalization of procurement officials Inclusion of Penal and Civil Liabilities

Philippine Procurement Paradigm Assess Review studies Consolidate into APP Decide procurement method Approve APP Determine readiness Post/Advertise opportunity Open and evaluate bids Post-qualify Award and enter into contract Procure Identify Cost-benefit analysis Feasibility study Market study PPMP Oversee implementation Inspect and accept deliveries Release payment Implement Needs Satisfaction

Procurement Planning End User Budget Office BAC Sec / BAC Approving Authority 1 Prepare PPMP Evaluate PPMP and include in budget proposal Review and consolidate into APP Approve GAA/ Corporate Budget/ Ordinance 2 Revise PPMP Finalize procurement mode HOPE or 2nd in rank approves APP

Procurement Planning Actions Risks Identified Needs Assessment, Planning, and Budgeting Purchase is unnecessary Necessary but overestimated Unrealistic/Deficient budget Not aligned with the overall program Interference of high-level officials Informal agreement on contract Insufficient time frame Definition of Technical Requirements and/or Specifications Tailored for one company Too vague Not based on performance requirements Choice of Procurement Procedure Abuse of non-competitive procedures on the basis of legal exceptions through: Contract splitting; Abuse of extreme urgency; Abuse of other exceptions based on a technicality or exclusive rights, etc.; Untested continuation of existing contracts. Source: Integrity in Public Procurement: Good Practice from A to Z published by the Organisation for Economic Co-operation and Development on 2007.

Procurement Methods All Procurement shall be done through competitive bidding except as provided in R.A. 9184 Resort to alternative methods shall be made Only in highly exceptional cases To promote economy and efficiency Justified by conditions specified in R.A. 9184 and its IRR

Procurement Methods  Method Goods Infra Cons Competitive Bidding Limited Source Bidding Direct Contracting Repeat Order Shopping Negotiated Procurement

Bidding Process Pre-Bid Conference Bid Submission Opening of Pre-Procurement Conference Advertisement and/or Posting Pre-Bid Conference Bid Submission Opening of Technical Proposal (incl. eligibility docs) Opening of Financial Proposal Contract Award Bid Evaluation Post-qualification 19 19

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