83962 Philippines Country Procurement Assessment Report 2012 .8 JICA © 2013 Asian Development Bank All rights reserved. Published in 2013. Printed in the Philippines. ISBN 978-92-9254-324-2 (Print), 978-92-9254-325-9 (PDF) Publication Stock No. RPT136131-2 Cataloging-In-Publication Data Asian Development Bank.    Philippines country procurement assessment report 2012. Mandaluyong City, Philippines: Asian Development Bank, 2013. 1. Philippines.   2. Country Procurement Assessment Report.   I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Note: In this publication, “$” refers to US dollars. 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Public Information Center Fax +63 2 636 2584 adbpub@adb.org Printed on recycled paper ii Contents Figures, Graphs, Tables, and Boxes v Acronyms and Abbreviations vii Currency Equivalents ix Prefacex Acknowledgmentsxii Foreword from the Government Procurement Policy Board xiii Foreword from the Asian Development Bank xiv Foreword from the Japan International Cooperation Agency xv Foreword from the World Bank xvi Executive Summary xvii 1. Background 1   1.1 Country Economic Context 1    1.2 Country Assistance Strategies and Portfolios 2   1.3 Public Sector Procurement 3    1.4 The 2008 Country Procurement Assessment Report 4    1.5 Key Findings under the 2008 Country Procurement Assessment Report 5    1.6 Accomplishments after the 2008 Country Procurement Assessment Report 6   1.7 Further Challenges 9    1.8 Country Procurement Assessment Report Process 10 2. Findings, Assessments, and Recommendations 12    2.1  Pillar I: The Legislative and Regulatory Framework 12     2.1.1 Procurement Legislative Framework 14     2.1.2  Implementing Regulations and Documentation 17    2.2  Pillar II: Institutional Framework and Management Capacity 19      2.2.1  Links to Public Financial Management Systems 22     2.2.2 Management Capacity 24     2.2.3 Institutional Development Capacity 25    2.3  Pillar III: Procurement Operations and Market Practices 31      2.3.1  Efficiency of Procurement Operations and Practices 32      2.3.2  Functionality of the Public Procurement Market 35     2.3.3  Contract Implementation and Completion 36    2.4  Pillar IV: Integrity and Transparency of the Public Procurement System 38     2.4.1 Internal Control and Audit 39     2.4.2 Efficiency of Appeals Mechanism 43     2.4.3 Degree of Access to Information 44     2.4.4  Ethics and Anticorruption Measures 45 iii Contents 3. Country Risk Assessment 52 4. Foreign-Assisted Projects 57   4.1 Legal Basis 57   4.2 Harmonization 57 5. Action Plan 61 ANNEXES   1 2012 Action Plan for the Philippine Public Procurement System 63   2 Composition of Country Procurement Assessment Report Working Group 69   3 Loan Portfolio and Lending Program of Major International Financing Institutions in the Philippines 71   4 Summary of 2010 Agency Procurement Compliance and Performance Indicator Assessment Ratings for 17 Agencies 77   5 Recommendations and Agreements on Civil Society Organization Participation 85   6 Comparison of Government of the Philippines, ADB, and World Bank Procurement Rules 87   7 Review of the World Bank’s National Competitive Bidding Procurement Annex 93   8 Review of ADB’s National Competitive Bidding Procurement Annex 95 9A The World Bank’s National Competitive Bidding Requirements 99 9B ADB’s National Competitive Bidding Annex to Procurement Plan 100 10 Status of Actions Agreed in 2008 Country Procurement Assessment Report Update  102 iv Figures, Graphs, Tables, and Boxes FIGURES   1 Graphical Representation of the Baseline Indicator Pillars for the Philippine Public Procurement Systems in 2008 and 2012 xx   2 Baseline Indicator Assessment Scores, 2008 and 2012 53   3 Graphical Representation of the Agency Procurement Compliance and Performance Indicator Pillars for the Philippine Public Procurement System in 2012 54 GRAPHS   1 Legal and Regulatory Framework 13   2 Institutional Framework and Management Capacity 20   3 Procurement Operations and Market Practices 32   4 Integrity and Transparency of the Public Procurement System 39 TABLES   1 Government of the Philippines Procurement Budget, 2008–2012 4   2 Summary of Baseline Indicator Scores for Pillar I: Legislative and Regulatory Framework 12   3 Summary of Agency Procurement Compliance and Performance Indicator Results for Pillar I: Agency Compliance to Legislative and Regulatory Framework 13   4 Summary of Scores for Baseline Indicator 1: Public Procurement Legislative and Regulatory Framework Achieves the Agreed Standards and Complies with Applicable Obligations 14   5 Summary of Scores for Baseline Indicator 2: Existence of Implementing Regulations and Documentation 18   6 Summary of Scores for Pillar II: Institutional Framework and Management Capacity 20   7 Summary of Agency Procurement Compliance and Performance Indicator Results for Pillar II: Agency Institutional Framework and Management Capacity 21   8 Summary of Scores for Baseline Indicator 3: The Public Procurement Is Mainstreamed and Well Integrated into the Public Sector Governance System 23   9 Summary of Scores for Baseline Indicator 4: The Country Has a Functional Normative and/or Regulatory Body 24 10  Summary of Scores for Baseline Indicator 5: Existence of Institutional Development Capacity 25 11 Status of Compliance with the Philippine Government Electronic Procurement System Registration, 2008 and 2012 27 12  Suppliers, Contractors, and Consultants Registered with the Philippine Government Electronic Procurement System, 2011 27 13  Summary of Baseline Indicator Scores for Pillar III: Procurement Operations and Market Practices 31 14  Summary of Agency Procurement Compliance and Performance Indicator Results for Pillar III: Agency Procurement Operations and Market Practices 33 15  Summary of Scores for Baseline Indicator 6: Efficient Procurement Operations and Practice 34 16  Summary of Scores for Baseline Indicator 7: Functionality of the Public Procurement Market 35 17  Summary of Scores for Baseline Indicator 8: Existence of Contract Administration and Dispute Resolution Provisions 36 v Figures, Graphs, Tables, and Boxes 18 Summary of Baseline Indicator Scores for Pillar IV: Integrity and Transparency of the Public Procurement System 39 19 Summary of Agency Procurement Compliance and Performance Indicator Results for Pillar IV: Integrity and Transparency of the Agency Procurement Systems 40 20 Summary of Scores for Baseline Indicator 9: Effective Control and Audit System 41 21 Government Agencies with Internal Audit Services, 2011 42 22 Government Agencies with Internal Audit Services, March 2013 42 23 Summary of Scores for Baseline Indicator 10: Efficiency of Appeals Mechanism 43 24 Summary of Scores for Baseline Indicator 11: Degree of Access to Information 45 25 Summary of Scores for Baseline Indicator 12: Ethics and Anticorruption Measures 46 26 Level of Risk of the Philippine Public Procurement System by Indicator 55 27 Updates on Harmonization Activities for the Government of the Philippines 58 28 Number of Conflicting Paragraphs in the Philippine Bidding Documents 59 29 Threshold per Contract 59 BOXES   1 Summary of Recommendations for Pillar 1 19   2 Government Integrated Financial Management Information System 22   3 Summary of Recommendations for Pillar 2 30   4 Summary of Recommendations for Pillar 3 37   5 Summary of Recommendations for Pillar 4 49 vi Acronyms and Abbreviations ABC – approved budget for the contract ADB – Asian Development Bank AIM – Asian Institute of Management APCPI – agency procurement compliance and performance indicator APP – Annual Procurement Plan BAC – Bids and Awards Committee BLI – Baseline Indicator BOT – Build–Operate–Transfer CBCP – Catholic Bishops Conference of the Philippines COA – Commission on Audit COFILCO  –  Confederation of Filipino Consulting Organizations CPAR – Country Procurement Assessment Report CSC – Civil Service Commission CSO – civil society organization CTM – composite team member CWG – CPAR Working Group DBM – Department of Budget and Management DENR Department of Environment and Natural Resources DepEd – Department of Education DOF – Department of Finance DPWH – Department of Public Works and Highways EO – Executive Order FAP – foreign-assisted project FY – fiscal year GAA – General Appropriations Act GAP – Guide in the Audit of Procurement GCC – General Conditions of Contract GDP – gross domestic product GOCC – government owned and controlled corporation GPM – generic procurement manual GPPB – Government Procurement Policy Board GPRA – Government Procurement Reform Act HOPE – head of the procuring entity IAS – internal audit service IAU – internal audit unit vii Acronyms and Abbreviations IFI – international financial institution IRR – Implementing Rules and Regulations IRR-B – Implementing Rules and Regulations Part B JICA – Japan International Cooperation Agency LGU – local government unit MAPS – Methodology for Assessing Procurement Systems MDB – multilateral development bank MSMEs – Micro, Small and Medium Enterprises NCB – national competitive bidding NEP – National Expenditure Program NGA – national government agency OECD – Organisation for Economic Co-operation and Development OECD-DAC – Organisation for Economic Co-operation and Development–Development Assistance Committee OMB – Office of the Ombudsman OSFMD – Operations Services and Financial Management Department PBD – Philippine Bidding Document PDF – Philippine Development Forum PFM – public financial management PGIAM – Philippine Government Internal Audit Manual PhilGEPS – Philippine Government Electronic Procurement System PMR – Procurement Monitoring Report PPP – public–private partnership PPS – Public Procurement System PRC – People’s Republic of China RA – Republic Act SWG – Sub Working Group TSO – Technical Support Office viii Currency Equivalents Currency Unit =  Philippine peso (P) $1.00 =  P42.50 (January 2012) 1 Japanese yen (¥)  =  $0.012 ¥1.00 = P0.555 Fiscal Year The fiscal year (FY) of the government ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 31 December 2008. ix Preface P roper public procurement practices directly reflect good governance. Transparent and effective procurement practices minimize expenditure and create opportunity. Procurement is an enormous component in the process by which governments build infrastructure, such as schools and hospitals. It involves the management of significant amounts of money and is therefore often the cause for allegations of corruption and government inefficiency. The difference between getting public procurement right and doing it wrong has the potential to be either highly rewarding, or highly damaging. In some nations, reforms implemented to improve the efficiency of public procurement have resulted in savings of 1% of a country’s gross domestic product. One can see why public procurement is so significant to the development of a country and its people. Citizens have the right to expect their government to spend these funds for the good of the people. In the past, corruption, inefficiency, ignorance, and disorganization have resulted in billions of pesos worth of losses. It is with the importance of these issues in mind that this report is produced to report on the state of procurement in the Philippines today. Ownership of Procurement Reform The Government Procurement Reform Act (GPRA) took effect on 23 January 2003. Through the GPRA and its oversight body, the Government Procurement Policy Board (GPPB), the country’s public procurement system has continuously improved the processes for acquiring goods, works, and services in an effort to be more transparent, efficient, economical, and accountable. The GPPB has issued more than 80 rules through resolutions that amended the Implementing Rules and Regulations of the GPRA to ensure that the procurement system remains current. The Government of the Philippines spearheaded the 2012 Country Procurement Assessment Report (CPAR) process in collaboration with its stakeholders. The periodic CPAR assessment demonstrates a continuing effort by the government, through the GPPB and its Technical Support Office (GPPB-TSO), to continually improve the system. The CPAR Working Group (CWG) was organized by the GPPB, comprised of representatives from major procuring entities, development partners, private sector entities, civil society organizations, and the Philippine Government Electronic Procurement System. The CWG was chaired by the Executive Director of the GPPB-TSO, and cochaired by the Director, Operations Procurement for East Asia, Southeast Asia and Pacific, Operations Services and Financial Management Department (OSFMD) of the Asian Development Bank (ADB). The full composition of the CWG is in Annex 2. Date and Basis of the Report The CPAR has become a regular review process that enables the government, its development partners, and other stakeholders to record the progress of reforms, diagnose the health of the current public procurement system, and continue the dialogue to determine and agree upon actions needed to push reforms further. x Preface On 15 April 2011, the Philippine Development Forum Sub-Working Group (PDF SWG) on Procurement discussed the status, activities, and accomplishments of the Philippine Public Procurement System (PPS).1 The participants agreed that a number of improvements to the PPS had been implemented as detailed in the 2008 CPAR Action Plan. They also reached a consensus that it was time to assess the effectiveness and impact of these improvements and to identify remaining weaknesses, particularly in the GPRA’s implementation and enforcement, and agree on an action plan to further implement reform. On 11 May 2011, the GPPB formally agreed to the commencement of the 2012 CPAR Update with technical assistance provided from ADB.2 This CPAR process was intended to be the third major update since the first exercise in 2002 and the second in 2008. Minor updates were conducted in 2003 and 2005. On 12 October 2011, the PDF SWG on procurement approved the update concept memorandum, which became the basis for carrying out the review during October 2011–March 2012. Seven focus group discussions were conducted in November 2011 to discuss recurrent and emerging issues. A baseline indicator (BLI) assessment workshop, which was attended by members of the CWG, was conducted during 1–2 December 2011 at the Eugenio Lopez Center in Antipolo City, Rizal. The workshop reviewed the status of accomplishments of the PPS during 2008–2011, using the Organisation for Economic Co-operation and Development–Development Assistance Committee Methodology for Assessing Procurement Systems. A series of parallel meetings ensued in January 2012 among members of the GPPB Inter-Agency Technical Working Group, the GPPB-TSO, and representatives of development partners to refine and agree on the positions and scores given for certain subindicators. A second workshop was conducted on 10 February 2012, where the BLI assessment score was finalized and remedies to address identified weaknesses in the PPS were discussed. A third workshop was held on 2 March 2012 to review the results of the agency procurement compliance and performance indicators3 (APCPI) and to finalize the 2012 CPAR Action Plan. Based on the integrated assessment results, the CPAR technical team drafted and finalized the CPAR. On 16 March 2012, the GPPB approved the 2012 CPAR Action Plan which was then reviewed and approved by the PDF SWG on 19 April 2012. On 28 May 2012, the members of the CWG agreed to upgrade the update to a full CPAR, in recognition of the amount of effort and consultations that were undertaken. The CWG was supported by a technical team composed of Dennis S. Santiago (Executive Director, GPPB-TSO); Jose Luis Syquia (Senior Procurement Specialist and Team Leader, OSFMD, ADB); Galia Ismakova (Senior Procurement Specialist, OSFMD, ADB); Helena Ireen Baylon (Public Management Officer, Philippine Country Office, ADB); Kota Yasumura (Representative, Japan International Cooperation Agency [JICA]); Floro Adviento (Program Manager, JICA); Flerida Chan (JICA); Cristina Santiago (JICA); Samuel Haile Selassie (Senior Procurement Specialist, East Asia & Pacific Regional Procurement Unit 1, World Bank); Cecilia Vales (Lead Procurement Specialist, East Asia & Pacific Regional Procurement Unit 1, World Bank); Noel Sta. Ines, Dominic Aumentado, and Rene Manuel (Senior Procurement Specialists, East Asia & Pacific Regional Procurement Unit 1, World Bank); and consultants Alicia Tiongson, Genmaries Entredicho Caong, and Juanito Gomez III.  1 The PDF is the primary mechanism of the government for facilitating substantive policy dialogue among stakeholders on the country’s development agenda. It is cochaired by the Department of Finance and the World Bank, and is composed of representatives from various multilateral development banks, bilateral funding agencies, government agencies, private sector, academe and civil society organizations. The Sub-Working Group on Procurement, which is chaired by the Government Procurement Policy Board Technical Support Office and cochaired by the World Bank, is the group tasked with the procurement reform agenda, and is composed of representatives from key government agencies, civil society organizations, the private sector, and development partners such as ADB; the World Bank; JICA; the Australian Agency for International Development; the United States Agency for International Development; European Union; and the embassies of the People’s Republic of China (PRC), France, Japan, the Republic of Korea, Spain, and the United Kingdom. 2 RETA 7277: ADB. 2009. Governance and Capacity Development Initiative (Phase 2). Manila. 3 Scoring benchmarks of the agency procurement compliance and performance indicator (APCPI): The APCPI scoring system uses a four-point rating scale based on recommended benchmarks obtained from the average scores of a pilot assessment for 19 government agencies conducted in 2010. The rating system ranges from a score of poor (0) to very satisfactory (3) for each subindicator (refer to Annex C of the APCPI User Guide). Most of the subindicators have recommended benchmark or thresholds where performance above threshold will merit a satisfactory or very satisfactory rating, while performance below would receive a fair or poor score. The ranges and scores vary, depending on the subindicator. The GPPB has the sole discretion to maintain or change the scoring benchmarks based on the average performance of procuring entities over a period of time. xi Acknowledgments T he Country Procurement Assessment Report Working Group (CWG) would like to acknowledge the support and cooperation provided by the representatives of the Government Procurement Policy Board (GPPB) Inter-Agency Technical Working Group and Technical Support Office (GPPB-TSO), the Asian Development Bank (ADB), the Japan International Cooperation Agency, and the World Bank, who dedicated significant time and effort to produce this report. Special mention is given to Department of Budget and Management Undersecretary Laura Pascua for providing overall guidance to the conduct of the assessments; and to GPPB-TSO Executive Director Dennis Santiago for leading the workshops, meetings, and focus group discussions. Susan Cristobal of ADB, Ruth Cruz of the World Bank Manila Office, and Liza Vega of the GPPB-TSO handled all the logistical requirements. xii Foreword from the Government Procurement Policy Board G ood governance is not simply an instrument in the Aquino administration’s reform campaign; it is the very foundation of our development agenda. Reform measures to improve the delivery of public services, the management of public funds, and the elimination of graft and corruption continue to be urgent priorities, particularly in the implementation of crucial governmental programs, activities, and projects. A competitive, transparent, fair, and efficient public procurement system is one of the pillars of our good governance platform. The 2012 Country Procurement Assessment Report (CPAR), as in previous CPARs, continues to be a tool for feedback and dialogue. The report helps establish a standard for measuring the performance of the Philippine public procurement system, allowing us to identify both the strengths and weaknesses of our procurement environment. More importantly, the CPAR serves as a crucial reference point for formulating an effective plan of action and a distinct procurement reform road map that will improve the government procurement processes and, in the long term, ensure its competitiveness, transparency, and integrity. Although much has been achieved toward this end, we recognize that much more remains to be done, especially with respect to confronting challenges that face the administration’s drive for procurement reforms. We worked on harmonizing our rules and regulations with those of our development partners, as well as improving and implementing the professionalization program for procurement personnel. We have also begun to implement an efficient mechanism for evaluating procurement performance and monitoring compliance with the procurement law, rules, and regulations, specifically at the level of the procuring entity. Finally, we intend to broaden our engagement with civil society in procurement monitoring, as well as strengthen our capacity to reach out to citizens and tap them as valuable partners in our efforts to reform the public procurement system. With this, I wish to thank our development partners for their continuous and invaluable support to our drive against corruption: the Asian Development Bank, which spearheaded the 2012 CPAR and provided technical and financial assistance, alongside the Japan International Cooperation Agency and the World Bank. My deepest gratitude is likewise extended to all dedicated government procurement personnel at the national and local levels, the members of the bids and awards committees, secretariats, technical working groups, civil society observers, policy makers and implementers, as well as various other procurement stakeholders who continue to play a key role in enhancing the government procurement processes and procedures. Your unflagging commitment to transparent, accountable, and participative leadership will be instrumental not only in reforming our procurement system, but also in bringing the benefits of good governance directly to the Filipino people. Florencio B. Abad Chairman Government Procurement Policy Board xiii Foreword from the Asian Development Bank T he 2012 Country Procurement Assessment Report (CPAR) provides the most recent comprehensive picture of the public procurement environment in the Philippines. With the 2012 CPAR, I am happy to find that public procurement in the country has taken a positive momentum to reforming both policy and practice. The 2012 CPAR presents a scorecard of achievements and progress made against best international practice following the Baseline Indicators of the Development Assistance Committee of the Organisation for Economic Co-operation and Development and the World Bank. It identifies both the remaining and the persistent challenges needing further attention, and, like the previous CPARs, proposes measures to address them. It includes an action plan reached between the government and its development partners, including financial commitments, to mitigate those challenges. The 2012 CPAR is the third such assessment conducted in the country, and the Asian Development Bank is pleased to have led the exercise. While still making use of baseline indicators as the norm, the 2012 CPAR now uniquely features the use of Agency Procurement Compliance and Performance Indicators (APCPI). Developed by the government, the APCPI gauges the extent to which instituted procurement reforms have been cascaded down and taken root within agencies and local governments. Included also are related reviews and assessments on a protest mechanism, approved budget ceiling, the Philippine electronic procurement system, and civil society involvement as procurement observers, which have all enriched the findings and recommendations. I wish to commend firstly the government for its commitment to pursue, through the Government Procurement Policy Board and its Technical Support Office, the long-term process of strengthening the public procurement system; and secondly, the development partners for consistently supporting this cause. The 2012 CPAR provides us with a new platform for dialogue and continuing cooperation to promote an efficient, transparent, and integrity-based Philippine public procurement. Neeraj Jain Country Director Philippines Country Office Asian Development Bank xiv Foreword from the Japan International Cooperation Agency O n behalf of the Japan International Cooperation Agency (JICA), I wish to commend the Government of the Philippines for its continuing efforts to make the procurement process more efficient and transparent. Significant progress has been made in harmonizing the domestic procurement guidelines with those of the international financial institutions following the approval of the revised Implementing Rules and Regulations of Republic Act 9184 in 2009. The bidding requirements have been substantially simplified, thereby further enhancing competitiveness in the bidding process. JICA is pleased to have fully harmonized with the government national competitive bidding for procurements financed under the local currency portions of JICA official development assistance loans. We believe that this is an important milestone toward the use of country systems as envisioned under the 2005 Paris Declaration on Aid Effectiveness of the Development Assistance Committee of the Organisation for Economic Co-operation and Development. In addition to making the procurement process more efficient and transparent, we believe that it is equally important for the government to make the contract provisions fair not only to the government but also to the contractors. There must be an objective and balanced allocation of risks. Unfair risk allocation to the contractors should be avoided. This is particularly important in foreign-assisted projects involving contracts that are bid through international competitive bidding. We are thoroughly convinced that an efficient and transparent procurement process backed up with internationally accepted contract norms would be beneficial to the government in the long run in terms of attracting capable and well-established contractors of international caliber to participate in international competitive bidding for foreign-assisted projects, thereby promoting more competition and consequently resulting in the reduction of the bid prices. Before closing, I would like to take this opportunity to express our sincere thanks to the Government of the Philippines, the Asian Development Bank, and the World Bank for their continuing collaboration in the pursuit of procurement reforms in the Philippines. JICA remains committed to be part of the dialogues to achieve further improvements in the procurement process. Takahiro Sasaki Chief Representative JICA Manila Office xv Foreword from the World Bank T he World Bank commends the Government of the Philippines, through its Government Procurement Policy Board (GPPB) and its Technical Support Office, for pursuing the country’s procurement reform agenda and ensuring that it moves forward. As the 2012 Country Procurement Assessment Report (CPAR) shows, the country’s public procurement system has improved, compared to its rating in 2008. The CPAR is an important process to determine the progress of the procurement reforms launched 10 years ago, through the enactment of the Government’s Procurement Reform Law (Republic Act 9184). The new CPAR provides us with an evidence-based approach that will lead us to measure performance at the agency level. This performance measurement will enable the government to address rooted bottlenecks in the system, thereby resulting in better service delivery. The World Bank looks forward to supporting the next round of procurement reforms, which will continue to provide value for money and the best-fit methods that will complement the country’s existing procurement framework. The new wave of reforms will lead to innovative approaches and strategies that will minimize unnecessary procedures and transaction costs, both for buyers and suppliers. We hope that through these reforms, the government will be able to link policy and agency objectives more directly with its development agenda and enhance efficiency and transparency. All these reforms will result in creating more opportunities for better and more jobs, more savings, improved service delivery, and greater support to small and medium-sized enterprises. More importantly, the new wave of reforms will help the government to be more accountable and effective, which is the core of the social contract of President Benigno Aquino III with the Filipino people. The World Bank is committed to support a country-led engagement, including an increased focus on performance measurement and management; a modern approach for risk management that shift to principles and results, rather than on procedural compliance; and the development of a modern procurement profession. We thank our major development partners, the Asian Development Bank, for leading this year’s CPAR engagement, and the Japan International Cooperation Agency, for actively supporting the process. We also acknowledge the important role of other development partners, including representatives from civil society and the private sector, for their active involvement. Motoo Konishi Country Director, Philippines World Bank xvi Executive Summary Improvements in Public Procurement Regulations 1. The passage and promulgation of Republic Act 9184, otherwise known as the Government Procurement Reform Act (GPRA), resulted in the replacement of multiple laws, rules, and regulations by a unified public procurement legal framework. The GPRA aimed to reduce opportunities for graft and corruption; harmonize the system with international standards and practices; and promote transparency, competitiveness, and accountability. In 2009, the revised Implementing Rules and Regulations (IRR) for the GPRA were issued to address deficiencies in domestic and foreign-funded procurements in government, and adopt some of the good practices of the multilateral development banks (MDBs). Hence, some of the important reform measures put in place to improve the public procurement processes in the revised IRR include (i) the significant reduction of eligibility requirements for all types of procurements; (ii) the introduction of rules to encourage foreign bidders to participate, such as the posting of bid opportunities in internationally prescribed websites that provide greater access to information and an extension of the period for the preparation and submission of bids; and (iii) the inclusion of specific guidelines linking the agency’s procurement planning and budget preparation processes. These amendments have helped improve competitiveness, increase the number of suppliers and contractors bidding for government projects, and steer financial management and procurement processes toward greater economy and efficiency. Accomplishments Since the 2008 Country Procurement Assessment Report 2. In line with efforts to harmonize the public procurement systems of the Government of the Philippines and the MDBs, the Philippine Bidding Documents were further revised and harmonized and the Generic Procurement Manuals are undergoing revisions to incorporate amendments to the revised IRR. The usability of the Philippines Government Electronic Procurement System (PhilGEPS) for MDB-funded procurements was also assessed and found to be adequate. Procurement reforms were also cascaded to local government units (LGUs) through the development of the Local Government Procurement Manual, Barangay4 Procurement Manual, and the Community Participation Manual. To improve the participation of civil society organizations (CSOs) as observers in the procurement process, a manual on procurement monitoring was developed and rolled out in selected municipalities in 2012. 3. To further strengthen institutional capacity development, the Government Procurement Policy Board Technical Support Office (GPPB-TSO) was transferred from the Procurement Service to the Department of Budget and Management (DBM) as an attached agency, thereby granting it more stability and independence. A centralized electronic portal on government procurement, PhilGEPS, was continuously developed and is now implementing five of its major components under Phase 1: the Electronic Bulletin Board, the Supplier’s Registry, the Electronic Catalogue, the Virtual Store and the Merchant’s Registry System. Hence, since the 2008 4 A barangay is the basic administrative unit of government. As the lowest level of political and governmental subdivision, barangays are under the administrative supervision of cities and municipalities. xvii Executive Summary CPAR, there has been a significant increase in the number of government agencies and suppliers that are registered with the PhilGEPS and procuring entities that are posting procurement opportunities in the system. 4. Capacity development programs were also instituted during the period including: the development and pilot testing of 15 module training course to professionalize procurement personnel in government; the development, issuance, and adoption by the Commission on Audit of the Guide in the Audit of Procurement, including the training of Commission on Audit auditors; the issuance by the DBM of guidelines on the establishment of procurement units in all government agencies; and the conduct of procurement training by private sector organizations for their members, as well as by selected government agencies for suppliers, contractors, and consultants. The Magna Carta for Micro, Small and Medium Enterprises has facilitated access to sources of funds, and provided them with a fair share of government contracts, related incentives, and preferences. The contractor’s licensing and registration procedures for government projects was streamlined, and a web-based one-stop-shop system integrates all business registration-related transactions. 5. The agency procurement compliance and performance indicators (APCPI) was developed primarily as a tool to evaluate procurement performance and compliance at the agency level, collect information for national procurement statistics, and strengthen the capability of the GPPB-TSO to monitor and enforce national compliance with the procurement regulations. Likewise, through the Guide in the Audit of Procurement, internal and external controls of procurement transactions are now effectively contributing to efforts in handling fraudulent and corruptive practices. 6. In addition, several programs were introduced to improve procurement procedures and practices. These include the issuance of a circular on the management of government records by the National Archives of the Philippines that cover procurement and contract management, and the implementation of integrity development action plans and the Integrity Development Review by a number of government agencies to address corruption prevention. Areas for Improvement and Further Challenges 7. The CPAR process has identified challenges and areas for improvement that the government needs to address with regard to the implementation and enforcement of the GPRA. It has also strengthened the process of communication and collaboration among the government, development partners, procuring entities, and other stakeholders in devising appropriate actions to address all of the challenges. Hence, for instance, the collaboration in the development of the APCPI and its use reveal improved compliance with the GPRA at the agency level. However, despite efforts to simplify and standardize the procurement processes at local governments, the APCPI also indicates that continued compliance with the GPRA remains a major challenge. Overall, the GPRA needs to be communicated further to LGUs, the private sector, civil society, the media, and the public in general. Support from different stakeholders, all the way down to the local level, is required to promote strong public awareness and involvement. 8. Five major issues pertaining to differences and inconsistencies between the GPRA and the MDBs’ rules on national procurement that warrant further review are as follows: • The restrictions on foreign ownership of Filipino firms and the nationality requirements for joint venture arrangements that limit the entry of foreign bidders • The use of the Approved Budget for the Contract as the ceiling for bid prices and the award of contracts • The institution of an independent and autonomous complaint appeals body to resolve protests • The absence of procedures for international competitive bidding in the GPRA, as it is assumed that this is applicable only to foreign-funded procurements • The absence of prequalification procedures xviii Executive Summary 9. With respect to the institutional framework and management capacity, areas for improvements include (i) examining the conflict of interest between the regulatory and contract review functions of the Government Procurement Policy Board (GPPB); (ii) strengthening compliance with the submission of required procurement monitoring reports, Annual Procurement Plans and APCPI assessment results, and the posting of contract award information; (iii) defining the skills and knowledge competency required by specialized procurement jobs and monitoring the compliance to these standards among agencies; and (iv) developing a staff performance evaluation system for procurement personnel, based on results and professional behavior. 10. To ensure the integrity and transparency of the procurement process, issues on the sustainability of CSO funding and participation need to be addressed, including their qualification requirements under the GPRA; the training, registration, and mapping of CSOs to maximize deployment; and compliance with the submission of observers’ reports as a feedback mechanism. 11. Other emerging issues that result from differences in conditions, standards, and interpretation of procurement regulations and processes under existing practices of MDBs and procuring entities include the following: • There is misconception about the conduct of advance procurement action under MDB-funded projects, as compared to the requirement of the commitment and appropriation of funds before the award of contracts. Procuring entities can start the initial processes for procurement without the allotment advice issued by the DBM, as long as the Notice of Award is not issued. This needs to be explained and properly disseminated to other procuring entities and the MDBs. • Some LGU officials apply the GPRA for public–private partnership projects, which is contrary to the Build–Operate– Transfer law. There is also no defined policy to determine whether an infrastructure project should be considered as a government procurement transaction under the GPRA, or as a public–private partnership project. Country Procurement Assessment Report Assessment Risk Ratings 12. For this CPAR process, the Public Procurement System is given a rating of medium or moderate risk. The overall risk level is based on the levels of achievement obtained in the four pillars, which are elaborated further in this report. The pillar for Legislative and Regulatory Framework fully achieves international standards, and is given a low risk level. The pillars for Institutional Framework and Management Capacity, Procurement Operations and Market Practices, and Integrity and Transparency of the Public Procurement System adequately achieve the prescribed standards, and are assessed as having a medium or moderate risk. Figure 1 shows government scores in 2008 and 2012 as they compare with the maximum scores for each pillar. Next Steps 13. A 2012 CPAR Action Plan integrating all the existing and proposed initiatives and recommendations to address the areas for improvement in the Public Procurement System is presented at the end of this report. The action plan provides the road map and agenda for procurement reforms to be undertaken by the government, together with its development partners during 2013–2016. Some of the priorities focus on strengthening monitoring and enforcement and procurement capacity, and improving procurement processes and practices, i.e., (i) implementation of the professionalization program, (ii) implementation of the APCPI and development of mechanisms to enforce compliance, (iii) review and possible revision of the IRR to provide procedures for international competitive bidding, (iv) establishment of an independent complaints or protest review body and development of its governing rules and procedures, and (v) development and implementation of a framework to sustain and ensure CSO participation in procurement monitoring. The Philippine Development Forum Sub-Working Group on Procurement will continue to monitor the implementation of the action plan, ensure the availability of funding support and address issues that may arise during implementation. xix Executive Summary  raphical Representation of the Baseline Indicator Pillars for the Philippine Public Figure 1  G Procurement Systems in 2008 and 2012 2008 and 2012 Baseline Indicator Assessment Scores of the Philippine Procurement System Pillar I: Legislative and Regulatory Framework 3.0 2.5 2.0 1.5 1.0 0.5 Pillar IV: Integrity and Transparency Pillar II: Institutional of the Public Framework and Procurement System Management Capacity Pillar III: Procurement Operations and Market Practices Maximum baseline indicator rating 2008 Government score 2012 Government score Pillar Maximum Baseline Indicator Rating 2008 Government Score 2012 Government Score I 3.00 2.63 2.56 II 3.00 2.08 2.08 III 3.00 1.64 2.22 IV 3.00 1.96 2.09 Source: CPAR Working Group, 2012. xx During 2008–2012, the Philippine government’s average annual procurement is at $7.5 billion, increasing at an average growth rate of 5.6%. This accounts for an average of 21% of national budget and 3.7% of GDP . Background 1.1  Country Economic Context 1. The Philippine economy grew at an average of 4.8% 1 results-based management are underway; and progress in legislation and implementation, such as a move to zero-based budgeting to force departments to improve budget efficiency from 2000 to 2012 as a result of fiscal consolidation, and targeting, have helped. However, many challenges remain macroeconomic stability, and a strong international economic to improve budget execution and reporting in order to realize environment. While fiscal and economic reforms made positive results in public service delivery. A vibrant civil the Philippine economy one of the most open to trade and society has played an important role in holding government capital inflows, its growth continued to lag in comparison to accountable; however, the capacity of civil society is its Association of Southeast Asian Nations neighbors as per insufficient in some areas, particularly at the local level. capita gross domestic product (GDP) dropped. Growth during Limited fiscal resources, weak institutional integrity, and this period was accompanied by low inflation; strengthening low functional efficiency have limited access to the justice external accounts; and a healthier, improved, and better system, particularly by the poor, and more broadly, have capitalized domestic banking sector. In 2009, the economy limited the effectiveness of the justice system. Greater trust was hit by global food- and fuel-price hikes, the subsequent in the justice system is critical to improving the country’s financial crisis, and typhoons that caused massive floods in investment climate. the capital region. With the new administration in place, the economy has recovered rapidly due to double-digit growth 3. Continued weakness in the global economic in exports—specifically in the electronics and business environment, the ongoing European debt crisis and the process outsourcing industries—a real estate construction slowing of the PRC economy pose significant downside risks to boom, and solid private consumption backed by remittance growth in the Philippines. Strong domestic fundamentals—a inflows from overseas Filipino workers. The GDP growth rate current account surplus, ample reserves (the country is a reached 7.6% in 2010, the highest since the mid-1980s.1 net external creditor), a flexible exchange rate, and strong Philippine growth prospects are favorable, but strong and banking and corporate balance sheets—provide substantial sustained reforms are needed to push the country’s growth buffers in case the external environment deteriorates. potential. Nonetheless, the Philippines remains exposed through trade links. Although not as exposed as its more trade-dependent 2. Weak public institutions and systems, and insufficient neighbors, the G-3 (US, Japan, EU) accounts for about 40% budget resources have severely affected the quality and of the Philippines’ exports. Meanwhile, slowing growth in the efficiency of public service delivery and economic regulation People’s Republic of China (PRC)—a key support to the global at all levels of government. The new government, led by a economy in 2009—adds to the downside risks since about president who ran and won on a good-governance platform, 12% of Philippine exports are shipped there. Manufacturing has initiated reforms to improve public finances and to exports (mainly electronics) have proved highly susceptible strengthen the investment climate for more inclusive growth, to a fall in global demand, which would cause substantial job which development partners are keen to support. Reforms in losses for the country in that sector. While remittances were public procurement, public financial management (PFM), and resilient during fiscal year (FY) 2009, inflows from Europe 1 ADB. 2011. Country Partnership Strategy: Philippines, 2011–2016. Manila. 1 Philippines Country Procurement Assessment Report 2012 have started to contract and a decline in overall flows cannot procurement, budget transparency, accountability, and be ruled out in case of a severe global downturn. performance monitoring. ADB will support constructive engagement between civil society organizations (CSOs) and 4. The baseline growth projection for the Philippines is sector agencies, as well as local governments. 5.0% for 2012 and 2013. The Philippines is benefitting from strong domestic consumption with household spending fueled 6. The current ADB portfolio in the Philippines consists by robust remittance flows, and improved government spending of 42 active projects (10 loans, 27 technical assistance thanks to relative political stability and an improved fiscal projects, and 5 grants). The total loan commitment stands position. However, key downside risks to growth remain, as at $1.233 billion, technical assistance totals $35.32 million the increased uncertainties in the Eurozone and slowdown in and grants amount to $13.9 million. In accordance with its the PRC adversely impact global demand and lead to a further country partnership strategy (CPS), the loan portfolio and slowdown in investments. Capital inflows may moderate as lending program is allocated to the following sectors: two foreign investors retain their “wait and see” stance and as transport projects, one energy project, two health projects, and structural impediments to growth remain. Consumption, which two agriculture and natural resources projects. There is also accounts for 75% of GDP, is expected to drive overall growth one project each on social protection, financial reforms, and as remittances continue to grow, albeit at a slower pace due judicial reforms. Technical assistance support focuses on fiscal to the slowdown in Europe and continued uncertainty in the policy, public expenditure management, and the strengthening Middle East. The current account is projected to remain in of policy formulation and strategic planning at the national surplus (although narrowing somewhat), driven by remittances and local government levels. There are projects to strengthen and some recovery in electronics exports early in the year. local governance, water supply, water resource management and sanitation, environment, renewable energy development, public–private partnerships in health, and improvements in 1.2 Country Assistance Strategies education. Grants were given for integrated coastal resources and Portfolios management, energy efficiency, and rehabilitation efforts for typhoon-ravaged areas. The complete list of ADB-funded   Asian Development Bank projects is in Annex 3. 5. The key objective of the country partnership strategy   World Bank of the Asian Development Bank (ADB) with the Philippines, 2011–2016 is to help the country achieve high, inclusive, and 7. The World Bank’s country assistance strategy for the sustainable growth. Its proposed lending program will focus on Philippines for 2010–2013 was built on the theme “Making infrastructure, environment, and education and will continue Growth Work for the Poor” to support the government’s to combine policy-based lending with capacity development priorities. It intends to assist the Philippines in pursuing to support broader governance reforms while gradually macroeconomic stability, an improved investment climate, expanding sector policy and investment lending. ADB will better public service delivery for the poor, reduced continue and deepen its efforts to strengthen governance and vulnerabilities, and better governance. The World Bank’s reduce corruption at the country, sector, and project levels, strategy supports government agencies, local government as specified in its Second Governance and Anticorruption units (LGUs), and other sectors of society to demonstrate Action Plan. The main priorities for reform include (i) legal improved accountability and transparency for better and regulatory reforms in budget execution and reporting; socioeconomic outcomes. It also addresses emerging (ii) strengthening national and local government capacity global challenges, such as climate change, disaster for revenue generation, planning, budgeting, PFM, and risk management, and resilience to external shocks, procurement; (iii) further institutionalizing results-based and emphasizes a knowledge agenda that supports the management reforms in key sector and oversight agencies; Philippines in addressing its own development challenges. (iv) strengthening the capacity of accountable institutions, including the judiciary; and (v) capacity development 8. The World Bank portfolio in the Philippines is for social accountability measures with an emphasis on comprised of 24 active projects, with net loan commitments 2 Background of $1.8 billion as of December 2011. Human development has services, and development of communities through the highest allocation in terms of net commitment, followed improvement of infrastructures and promotion of by infrastructure, rural development, social development, local industries. and governance. Eight of the projects are in the rural and environment and natural resource sector; six support human 10. The Philippine official development assistance development; five support infrastructure; two improve (ODA) portfolio of the Japan International Cooperation sewerage infrastructure, and one project each support Agency (JICA) includes 70 projects (15 loans, 31 technical governance, tax administration, and judicial reforms. There cooperation, 5 general grant-aid, 6 development studies, are also a total of 126 grants under the trust fund portfolio and 13 nongovernment organization [NGO] projects). The in the amount of $182.9 million to support a stable macro JICA ODA portfolio is broken as follows: ¥212.9 billion is for economy, an improved investment climate, better public loans, ¥5.8 billion is for technical cooperation, ¥6.7 billion is service delivery, reduced vulnerabilities, good governance, for general grant-aid, ¥1.1 billion is for development studies, and cross-cutting tasks. Under the country assistance and ¥209.9 million is for NGO support. Among the loan strategy, World Bank exposure to the Philippines is expected projects are major arterial roads and bridges, flood control, to increase to up to $1.9 billion in FY2012. The composition of irrigation, support to agrarian reform communities, disaster the World Bank’s current loan portfolio and lending program is rehabilitation and credit support for agricultural production, in Annex 3. environmental development and logistics improvement. The technical cooperation involves capacity building for   Japan International Cooperation Agency maintenance of roads and bridges, fiscal reforms, good governance, livelihood improvement projects, enhancement of 9. Based on the revised country assistance policy for the basic social services, environmental protection, and disaster Philippines, Japan will support the Philippines in its pursuit prevention. The summary of JICA assistance is in Annex 3. of inclusive growth. Towards this end, Japan will assist the Philippines to (i) improve the investment climate in order to attract 1.3  Public Sector Procurement more local and foreign investments through the improvement of transport networks in the National 11. During 2008–2012, the Government of the Philippines Capital Region, improvement of infrastructure related spent an average of P318 billion annually ($7.5 billion) to energy and water, enhancement of administrative for its public procurement requirements, increasing at an capacity, securing maritime safety, and human average rate of growth of 5.6%. This accounts for an average resource development for industries; of 21% of the national budget and 3.7% of GDP. Nearly (ii) overcome vulnerability to various risks affecting 64% was spent on capital outlay expenditures consisting the impoverished, particularly risks related to mostly of public infrastructure, while 36% was utilized environment, natural disasters, climate change as for maintenance and operating expenses of government well as infectious diseases; agencies. This is almost double the amount spent annually (iii) strengthen bases for human life and production during 2003–2005, due mainly to the government policy of activities through improvement of “hard” and “soft” increasing investments in public infrastructure and providing infrastructures to address issues related to natural more services to the public. There was a significant rise in disasters and environment, development of social public procurement expenditures in 2009 (P346.4 billion) safety nets including healthcare, enhancement as government announced a stimulus package to stimulate of agricultural production and activity as well as the economy due to the world economic slowdown in order improvement of the processing and distribution of to cushion the impact of fuel price increases and step-up agricultural products; and rehabilitation efforts in areas ravaged by two major typhoons (iv) secure peace in Mindanao by promoting the peace that hit the country. In 2012, the government prioritized the process through socioeconomic development in construction of additional school buildings and infrastructure conflict-affected areas, strengthening of governance, facilities resulting in another considerable increase in the reduction of poverty, improvement of access to social procurement budget (Table 1). 3 Philippines Country Procurement Assessment Report 2012  overnment of the Philippines Procurement Budget, 2008–2012 Table 1  G (P’000 at 2012 prices) Expense Class 2008 2009 2010 2011 2012 Maintenance and Operating Expenses Repair and Maintenance 24,988,621 25,971,178 15,961,725 27,323,018 23,840,915 Supplies and Materials 41,277,811 54,741,223 38,653,287 43,654,486 46,624,505 Utility Expenses 6,705,812 8,518,300 7,992,292 8,570,571 10,226,686 Training and Scholarship Expenses 7,160,583 14,169,660 8,597,618 13,732,616 12,658,872 Professional Services 22,805,652 20,240,315 26,606,659 19,397,525 24,074,489 Printing and Binding Expenses 1,131,623 11,436,404 1,091,465 1,246,187 1,681,526 Advertising Expenses 132,796 1,143,207 792,077 1,063,905 802,309 Subscription Expenses 1,381,716 276,835 188,044 244,243 262,022 Subtotal 105,584,614 136,497,122 99,883,167 115,232,551 120,171,324 Capital Outlay Land and Land Improvement 5,525,203 7,513,183 4,554,235 1,968,168 2,237,928 Buildings and Structures 10,837,703 25,169,597 10,934,998 38,108,411 31,509,745 Furniture, Fixtures, Equipment, and Books 5,583,390 9,969,495 6,001,223 6,735,049 7,522,147 Transportation Equipment 2,524,880 6,249,912 1,286,881 1,611,905 11,146,977 Machineries and Equipment 11,996,851 11,914,185 8,970,938 10,166,946 13,021,600 Public Infrastructure 138,463,865 149,080,079 156,564,227 130,837,719 186,722,241 Subtotal 174,931,892 209,896,451 188,312,502 189,428,198 252,160,638 Total 280,516,506 346,393,573 288,195,669 304,660,749 372,331,962 Percentage of National Government Budget 21.34% 24.15% 19.57% 18.52% 20.50% Percentage of Gross Domestic Product 3.63% 4.32% 3.20% Source:  Department of Budget and Management. 2008–2012. Budget of Expenditures and Sources of Financing. Philippines. 1.4 The 2008 Country Procurement Bidding Documents (PBDs) for works and goods as Assessment Report harmonized with ADB, Japan Bank for International Cooperation (JBIC) (now JICA), and the World Bank; 12. In 2007, a country procurement assessment report (ii) the generic procurement manuals (GPMs) in four (CPAR) was compiled to assess the accomplishments volumes, as harmonized with ADB, JBIC, and the World of the government in its procurement reform programs. Bank; and (iii) the joint training of procurement staff The report, released in October 2008, identified the following through the national training program using the state accomplishments up to the end of 2007: universities and colleges. • Harmonization activities were completed by • In November 2006, an assessment on the acceptability 2007, leading to a closer alignment of the public of the Philippine Government Electronic Procurement procurement system with the guidelines of the System (PhilGEPS) for MDB-funded projects was multilateral development banks (MDBs). Three areas conducted, and ADB and the World Bank have accepted were fully harmonized: (i) the standard bidding its use for national competitive bidding (NCB) and documents, through the issuance of the Philippine shopping procedures, subject to several modifications. 4 Background • The NCB thresholds for procurements funded by • Allegations or perception of procurement ADB were raised, and now stand at $5 million or corruption. Allegations or perception of procurement less from $2 million for works, $1 million or less corruption were reported despite the 5-year from $500,000 for goods, and $100,000 or less from implementation of the GPRA since January 2003. $50,000 for shopping procedures. For the World The previous CPAR reported that, although there was Bank, the threshold was further raised at $15 million considerable progress in terms of the promulgation of or less from $5 million for works; $3 million or less rules and regulations, bidding documents, manuals from $1 million for goods; and for shopping method, and forms, the implementation and enforcement to $200,000 or less from $100,000 for works, and of the law at the agency level remained weak, and $100,000 or less from $50,000 for goods. that the objectives of the reforms have not been fully • The World Bank introduced a piloting program on achieved. Moreover, there were continuing reports of the use of country systems in early 2008. In August abuses or the inappropriate use of power. In 2008, the 2009, the Philippines was accepted as a candidate Philippines ranked 141 in the Corruption Perception pilot country, the only one in East Asia to have been Index issued by Transparency International. In 2011, considered. The country’s public procurement system there was a notable improvement as it ranked 129 was reviewed in accordance with the guidelines for among 183 countries. the use of country systems piloting program. However, • Public awareness. Public awareness was very low in a review of the final report by its Operational as only 13% of the general public was aware of the Procurement Review Committee, in consultation existence of the procurement law, and only 30% with the International Technical Advisory Group, the of government employees were familiar with the World Bank decided not to pursue the Philippines implementation requirements of the GPRA despite its as a pilot for the use of country systems for the enactment in 2003. As a remedial measure, and as following reasons: recorded in the CPAR, the Government Procurement * the Philippines’ legislation includes provisions Policy Board (GPPB) crafted Resolution No. 01-2009 that restrict the eligibility of foreign bidders; dated 24 April 2009 to increase awareness of the * there is no independent procurement complaint law. The GPPB’s strategy focused on targeted training review body; of government staff through its composite team * there is mandatory imposition of price controls members (CTMs) and state universities and colleges. on bid prices in open competitive bidding through Moreover, in view of the high profile procurement the approved budget for the contract (ABC); and cases that were published as violations of the GPRA, * the existing bid opening procedures and there was a general indication that public awareness practices deviate from the practices acceptable of the law had increased. to the World Bank. • Government Procurement Reform Act imple- Only two countries were found to be eligible for pilot mentation and enforcement. Seven of the 2008 status, but then the entire piloting program for the use CPAR recommendations were critical to improving of country systems was discontinued in June 2011. implementation and enforcement. These were: i. Review, revise and implement a national training program. 1.5 Key Findings under the 2008 Country ii. Hasten the implementation of the career program Procurement Assessment Report of professionalizing procurement practitioners. iii. Develop simpler bidding documents and manuals 13. The key findings of the 2008 CPAR were grouped into five for small users, especially LGUs, barangays, major challenges: (i) allegation or perception of procurement people’s organization, and communities. corruption, (ii) public awareness or communication of the iv. Issue policies on record keeping and public reform to the public, (iii) Government Procurement Reform Act disclosures of documents to provide the public (GPRA) implementation and enforcement, (iv) procurement with better access to procurement data and policies and mechanisms, and (v) public and private sector information. partnership. 5 Philippines Country Procurement Assessment Report 2012 v. Strengthen the capacity of GPPB Technical on cash deposit, which should be at least 10% of the Support Office (GPPB-TSO). ABC, if the Net Financial Contracting Capacity is not vi. Pursue the expansion of the PhilGEPS phases 2 sufficient to comply with the requirements set in the to 5. bidding documents; and (vii) a letter authorizing the vii. Prepare and issue Implementing Rules and head of the procuring entity (HOPE) or his or her duly Regulations (IRR) Part B (IRR-B) to harmonize authorized representative/s to verify the documents with the rules for foreign-assisted projects. submitted for the eligibility check. The PhilGEPS or • Procurement policies and mechanisms. The 2008 the procuring entity registry system also eliminated CPAR stated that the following features of the GPRA the need to submit the same documents for every were not in accordance with international practices: bidding activity. i. the use of the ABC as ceiling for bid prices; • Rules were introduced to encourage foreign bidders ii. the absence of an independent complaint review to compete, such as: (i) the posting of procurement body; and opportunities on the website prescribed by the iii. the removal of prequalification and its relevant development partner or international financial replacement by eligibility screening, which is institution (IFI), (ii) the extension of the period for the restricting competition by requiring at least 16 bid submission and pre-bid conference to at least documents to be screened on the basis of pass 30 days before the submission and receipt of bids, or fail criteria. (iii) the substitution of eligibility documents with the • Private and public sector partnership. The 2008 equivalent documents issued in the foreign bidder’s CPAR reported weak competition, with an average country, (iv) the English translation of all documents of three bidders submitting bids per contract. submitted by foreign bidders, and (v) the submission Many companies were also unaware of the positive of sworn statements that participating foreign bidders features of the GPRA that meant to allow equal are not blacklisted from bidding by their respective treatment of bidders. governments or an IFI whose blacklisting rules have been recognized by the GPPB. • The PBDs for goods and infrastructure projects were 1.6 Accomplishments after the 2008 Country further harmonized with the guidelines of the MDBs. Procurement Assessment Report • Specialized bidding documents were introduced in the interests of economy and efficiency for 14. Since the issuance of the 2008 CPAR, several reform specialized items, such as the proposed PBDs for measures were instituted to further improve the government’s information and communication technology goods public procurement processes. Some of these are as follows: and services, and the customized bidding documents • In August 2009, the revised IRR of the GPRA were for textbooks and manuals. issued to cover both government and foreign-funded • Procurement reforms were further cascaded to procurements activities. It improved competitiveness the LGUs. Under the Japan Social Development by reducing bidders’ eligibility documentary Fund administered by the World Bank, the GPPB, in requirements. The average number of bidders that partnership with the Transparency and Accountability submitted bids increased from three to five. Network, revised the Local Government Procurement • The IRR significantly reduced the number of eligibility Manual and the Barangay Procurement Manual, and requirements from 16 to 7. The following requirements developed the Community Participation Manual and were removed: (i) the Bureau of Internal Revenue the Procurement Observer’s Guide. registration certificate; (ii) a statement that the • To improve the participation of civil society bidder is not blacklisted; (iii) the tax clearance organizations (CSOs) as observers in the certificate; (iv) other appropriate licenses that may procurement process, the Procurement Observer’s be required by the procuring entity; (v) statements Guide was rolled out in selected municipalities on the availability of key personnel and equipment for in 2012. The Catholic Bishops Conference of the infrastructure projects; (vi) a certificate of hold out Philippines (CBCP)—Sangguniang Laiko ng Pilipinas 6 Background (Laiko),2 also developed a training manual on good 16. In 2010, with World Bank assistance, the APCPI was governance for its observers. developed as a tool to evaluate procurement performance at • The GPPB, through Resolution 10-2012, dated 1 June the agency level, collect information for national procurement 2012, approved the use of the agency procurement statistics, and strengthen the GPPB-TSO’s capability to compliance and performance indicator (APCPI) by monitor and enforce national compliance with procurement all procuring entities as the standard performance regulations. The assessment tool was pilot-tested in monitoring and evaluation tool. 17 procuring entities comprised of NGAs, government owned and controlled corporations (GOOCs), and LGUs. 15. Capacity development programs were instituted in the following areas: 17. Reforms in the GPRA have contributed significantly • In terms of institutional capacity development, to the government’s anticorruption efforts. Sanctions and in 2011 the GPPB-TSO was transferred from the penalties are imposed under the GPRA for public officials, Procurement Service to the Department of Budget and bidders, contractors, suppliers, and consulting firms found Management (DBM) as an attached agency, thereby guilty of violating its provisions. Moreover, erring bidders, granting it more stability and independence. In 2008, suppliers, contractors, and firms may be blacklisted or the DBM issued guidelines on the establishment suspended in accordance with the Uniform Guidelines of procurement units in all national government for Blacklisting of Manufacturers, Suppliers, Distributors, agencies (NGAs). Contractors and Consultants, issued in August 2004. Several • In 2010, the Commission on Audit (COA) developed, government agencies developed and implemented integrity issued, and adopted the Guide in the Audit of development action plans and integrity development reviews, Procurement (GAP), and trained more than 900 of as implemented by the Presidential Anti-Graft Commission its auditors nationwide. It also conducted training and the Office of the Ombudsman (OMB) to address corruption programs on forensic audit for 1,000 auditors. prevention. Internal and external controls of procurement • In 2009, through funding from the World Bank, the transactions are now effectively contributing to efforts to GPPB engaged the Asian Institute of Management handle fraudulent and corruptive practices. Internal control (AIM) to develop 15 procurement training modules to systems also link the procurement system to the overall public professionalize government procurement personnel financial system. and conduct a pilot training program from May to August 2009. 18. In 2008, then President Gloria Arroyo issued an order • Private sector organizations, such as the Philippine to suspend the procurement of 11 high-profile projects Constructors Association, the Confederation of funded from official development assistance, including the Filipino Consulting Organizations (COFILCO), and Cyber Education Project worth P104 billion. She instructed the Philippine Institute of Civil Engineers have given these projects to be implemented through local financing regular training on procurement for their members. instead. The directive was given amid allegations of huge • The Department of Health, Department of Education kickbacks in major foreign-funded projects, including the (DepEd) and the Bureau of Internal Revenue, likewise scrapped $329 million National Broadband Network deal conducted trainings on the GPRA for their suppliers, with the PRC’s ZTE Corp.3 In the same year, due to findings contractors, and consultants. of collusion in the bidding process, the World Bank cancelled • The National Archives of the Philippines issued a three major road projects, and debarred seven firms and circular on the management of government records one individual under the National Road Management and that cover procurement and supply contracts. Improvement Project 1. In 2009, the DepEd cancelled the procurement contracts for noodles under the Food-for-School Program over allegations of overpricing and false nutritional 2 Sangguniang Laiko ng Pilipinas, formerly Council of the Laity, is one of the Episcopal Commissions of the CBCP. Laiko has a mandate from the CBCP to organize and empower the lay faithful as catalyst for social transformation. 3 The Philippine Star. 2008. Headlines. 20 February. 7 Philippines Country Procurement Assessment Report 2012 claims.4 In 2010, the bidding for a P500 million contract for being engaged during budget consultations, and government the supply of driver’s licenses was cancelled after bidders agencies are forging integrity pacts with the private sector.6 questioned the terms of reference issued by the then Land Transportation Office chief, over concerns that they favored 20. The following additional features and improvements in one particular contractor. As a result, the Department of the PhilGEPS were noted: Transportation and Communications decided to reissue • The online Virtual Store was launched in July 2011 new terms of reference that would allow the participation of to facilitate the online ordering of common supplies more bidders, and ordered the LTO not to be involved in the and equipment carried on stock by the Procurement procurement of drivers’ licenses.5 Service, for use by all government procuring entities. The proposal to charge a user’s fee is currently under 19. In his 2011 State of the Nation Address, President review by the Cabinet Cluster on Good Governance. Benigno Aquino III laid down the key initiatives to reduce The development of the Electronic Bid Submission red tape, enforce anticorruption measures, and penalize law System is undergoing final testing. An expansion of violators under his reform agenda. These include (i) upholding the present Supplier Registry System through the transparent and competitive bidding, (ii) investigating “Government of the Philippines’ Official Merchants disadvantageous projects and contracts, and (iii) increasing Registry System” has been ongoing since December civil society participation in governance. For item (i), the 2011, and the training of suppliers started in January President reported that the Department of Public Works and 2012. Trained suppliers are currently uploading their Highways (DPWH) has simplified its bidding requirements by eligibility documents and populating the database reducing the number of required documents from 20 to 5. It in the registry.7 The Merchant Registry System will also adopted a new cost structure for determining the ABC, be mandatory for all suppliers who wish to deal which minimizes leakage by reducing the allocation of indirect with government, and will be a precursor to the costs by as much as 8%. The DPWH generated savings of introduction of the e-Bidding Module. This registry P2.51 billion from 3,692 projects from July 2010 to June 2011 will have links to other government departments, as a result of such reforms. For item (ii), on the investigation such as the Department of Trade and Industry. The of disadvantageous projects, savings of P479 million were e-Bidding Module is currently being pilot-tested in generated by the Philippine Charity Sweepstakes Office two agencies.8 in 2011 through the cancellation of marketing-focused • Based on a 2012 assessment of the PhilGEPS, its television shows and reduction of the advertising budget. In current features were found to have complied with June 2011, the President cancelled the P18.5 billion Laguna the MDBs’ procurement procedures and principles, Lake Rehabilitation Project due to inconsistencies between and are deemed to be appropriate for MDB-funded the project components and its intended objectives, and procurement. These features include: registration, the lack of transparency in the review and approval of the e-payment, bid matching, a United Nations standard project. In particular, a Department of Environment and products and services code catalogue, advertisements Natural Resources (DENR) study found that the areas to of opportunities, document download functions, and a be dredged were in danger of being silted again in 3 years virtual store. without a massive rehabilitation of the watersheds, due to • Data on government agencies’ compliance with the heavy deforestation and erosion. The DENR further noted PhilGEPS registration requirement indicates a marked that the approval of the supply contract was done without the increase from 11.44% in 2008 to 22.48% in 2012. benefit of a thorough review. As for item (iii), CSOs are now 4 GMA Television News. 2009. 12 May. 5 Manila Standard Today. 2011. 2 May. 6 http://www.gov.ph/2011/07/25/the-2011-state-of-the-nation-address-technical-report/ 7 PhilGEPS. 2011. Accomplishment Report. Manila. 8 PhilGEPS Assessment Mission. 20–27 June 2012. Aide Memoire. p. 5. 8 Background 1.7  Further Challenges • The fourth issue is the absence of procedures for international competitive bidding in the GPRA, as it 21. Despite accomplishments in strengthening the is assumed that this is applicable only to foreign- legal and institutional framework for procurement, the funded projects. government still faces challenges on the implementation • The fifth issue pertains to the absence of and enforcement of the Government Procurement prequalification procedures. The current system of Reform Act. Some of the issues were carried over from eligibility screening under the GPRA does not conform previous concerns on legislation existing prior to the GPRA, with internationally accepted standards for highly as well as recommended courses of action that have not yet complex procurements where prequalification may be been implemented. The CPAR helped identify these issues, and applicable. strengthened the process of communication and collaboration between the government, development partners, procuring 23. Emerging issues. Additional issues have emerged entities, and other stakeholders with regard to developing involving differences in the conditions and standards appropriate courses of action to address the identified established under MDB practices and those of procuring challenges. These courses of action are discussed in Annex 1. entities. These resulted in differences in the interpretation of procurement regulations and processes. These issues are 22. Major issues in the current legal framework. There as follows: are five major issues in the GPRA that warrant further review. • The conduct of procurement activities prior to • The first issue involves nationality restrictions on firms budget approval, allocation and availability. Some and joint venture arrangements that limit the entry of MDBs, such as ADB, allow such practices under foreign bidders. The current legal framework restricts advance procurement, which is in contrast with the government procurement to firms with 60% Filipino government’s rule requiring the commitment and ownership for goods, and 75% Filipino ownership appropriation of funds prior to the issuance of the for infrastructure projects. This discourages the Notice of Award. participation of foreign bidders. • A potential conflict of interest in the role of the COA • The second issue is the imposition of the ABC as auditor as an observer during the bidding process. ceiling for bid prices and the award of contracts. Some COA auditors are reluctant to participate in the The government posits that the ABC is an effective bidding process, as this may conflict with their post- procurement and budgetary control mechanism that audit functions. However, the Supreme Court of the addresses concerns related to the abuse of discretion, Philippines has ruled that the COA is not prevented lack of transparency, collusion, and runaway bid from questioning previous acts of government prices. On the other hand, development partners see officials, including procurement activities, if these are this as a restriction to free and open competition and erroneous or irregular.9 the application of free market rules. • The application of the GPRA in public–private • The third issue pertains to the existence of an partnership (PPP) projects. Some national and local independent and autonomous review body to resolve government officials use the GPRA for PPP projects, protests. There is a proposal for the GPPB to serve even if these are supposed to be covered by the as the independent review body, but this is not part Build–Operate–Transfer (BOT) Law. of its mandate, and questions have been raised on a potential confusion of roles, given its nature as a 24. Compliance of LGUs with the GPRA remains a policy-making body. Thus, alternative solutions need challenge, due to the absence of a comprehensive strategy to be considered. to communicate reforms, develop capacity, and monitor 9 Development Bank of the Philippines v. COA. G.R. No. 107016. 11 March 1994; Villanueva v. COA. G.R. No. 151987. 18 March 2005. 9 Philippines Country Procurement Assessment Report 2012 performance at the local level. As the principal agency tasked  Country Procurement Assessment Report to monitor compliance with the GPRA, there is a need to Related Activities strengthen the capacity of the GPPB-TSO to assess the level of compliance at the local level, and collect and disseminate 26. The CPAR process began with an organizational procurement information. Since procurement reforms need meeting of the CPAR Working Group (CWG) to discuss and support from different stakeholders, strong public awareness agree on the objectives, scope, approach, and methodology and involvement at both the national and local levels must for this exercise. Research and interviews were conducted to be promoted. There is also a need to validate whether update the status of accomplishments under the 2008 CPAR procurement-related incidences of corruption have decreased Action Plan. This was followed by the APCPI assessment in as a result of the government’s increased focus on good 17 pilot agencies. From December 2011 to February 2012, governance. two BLI assessment workshops were held to discuss the overall performance of the PPS and update the 2008 BLI rating. Two more workshops were conducted to formulate the 1.8 Country Procurement 2012 CPAR Action Plan. Simultaneously, seven focus group Assessment Report Process discussions were conducted to clarify the status of selected recurring and emerging issues, identify constraints, and   Assessment Tools recommend measures to address these issues, and gather inputs for the 2012 CPAR Action Plan. In addition to this, 25. The assessment of the country’s public procurement ADB hosted a workshop on 11 June 2012 to discuss issues system (PPS) utilized two tools under the Organisation for and concerns related to the sustainability of civil society Economic Co-operation and Development–Development participation in the procurement process. Assistance Committee (OECD-DAC) Methodology for Assessing Procurement Systems (MAPS). The first tool is the 27. A PhilGEPS assessment mission was held during Baseline Indicator (BLI), which is a country-level assessment 20–27 June 2012 to determine its usability for MDB-funded of the formal and functional features of the existing system operations, particularly in project procurement. The findings compared to international standards. The BLI comprises and recommendations of the following studies were also used: 4 pillars and 12 indicators that constitute a sound PPS. The (i) Professionalization of Public Procurement Practitioners second tool is the APCPI, which was developed by the GPPB and Functions: “Developing a Career Stream for Public to evaluate compliance at the agency level, in line with the Procurement Practitioners,” (ii) Study on Protest Mechanism, intent of the compliance and performance indicators under and (iii) Study on Alternatives to the ABC as a procurement the MAPS. The APCPI was conducted in 17 pilot agencies and budget control mechanism. The results of the BLI (15 NGAs and 2 LGUs) to capture how national reforms have assessment and the Action Plan were presented to the GPPB cascaded to procuring entities and LGUs (Annex 4). The APCPI and the Philippine Development Forum Sub-Working Group assessment is one of the innovations featured in this CPAR. (PDF SWG) on Procurement for their comments. The names and organizations of all stakeholders who participated in this process are in Annex 2. 10 Compliance of LGUs with the GPRA remains a challenge, due to the absence of a comprehensive strategy to communicate reforms, develop capacity, and monitor performance at the local level. Findings, Assessments, and Recommendations 2.1 Pillar I: The Legislative and Regulatory Framework Table 2  S  ummary of Baseline Indicator Scores for Pillar I: Legislative and Regulatory Framework 2 28. The legal and regulatory framework is generally the 2008 2012 Maximum starting point for the development of a sound governance Indicators Score Score Score system. For procurement, such a framework sets the rules Indicator 1: Public 2.25 2.63 3.00 and procedures to be observed, and provides the legal procurement legislative basis for ensuring the rights and responsibilities of various and regulatory participants in the process. It links the procurement process framework achieves to the overall governance structure and defines the obligations the agreed standards of the government in complying with internal and external and complies with requirements. Pillar I has two indicators: Indicator 1 assesses applicable obligations whether the public procurement legislative and regulatory Indicator 2: Existence 3.00 2.50 3.00 framework achieves the agreed-upon standards and complies of Implementing with applicable obligations; and Indicator 2 evaluates the Regulations and Documentation existence of implementing rules and documentation. The availability and dissemination of procurement implementation Average Score 2.63 2.56 3.00 regulations is important for a correct and consistent application Rating: 57/66 (86%), substantially achieved level of achievement of the legislative and regulatory framework as well as for an Source: CPAR Working Group, 2012. effective undertaking of the procurement operations. 29. In 2012, the existing legal framework governing reached among the members of the CWG that the GPRA does public procurement was found to have fully achieved the not provide for prequalification procedures (BLI 2c). Table 2 baseline standards of a good procurement system, with and Graph 1 show the results of the BLI assessment. a score of 2.56. Indicator 1 shows that the Philippine public procurement legal and regulatory framework meets 30. Agency compliance with the legislative and international standards and complies with applicable regulatory framework. Although the national legal and obligations of international best practice, with an average regulatory framework fully achieves the baseline standards, score of 2.63. This reflects an increase from the 2008 CPAR the APCPI assessment shows that compliance at the score of 2.25, which is due to improvements in advertising agency level only meets the established APCPI benchmarks. rules and time limits (BLI 1c) and in the rules of participation At the agency level, compliance is measured through three (BLI 1d). Indicator 2 shows that the government achieves indicators: (i) the use of public bidding as the default method the standards set for implementing rules and documentation, of procurement in terms of value and volume of contracts and provides processes and procedures that are not included awarded; (ii) the use of alternative methods in general, and in the higher-level legislation. However, there is a decrease the specific modes (shopping, negotiation, direct contracting, from the 2008 CPAR score of 3.00, as a consensus was repeat order, limited source) as provided for under the GPRA 12 Findings, Assessments, and Recommendations Graph 1  Legal and Regulatory Framework 3.0 2.5 2.0 1.5 3.00 2.63 2.56 2.63 2.50 2.25 1.0 0.5 0.0 Pillar I: Legislative and Indicator 1: Legislative and Indicator 2: Existence of Regulatory Framework Regulatory Provisions Implementing Rules 2008 Score 2012 Score Source: CPAR Working Group, 2012. in terms of value; and (iii) the competitiveness of the bidding 31. In 2010, the total procurement of all sampled agencies process in terms of the average number of bidders who represented 4.5% of national procurement. Procurements acquired bid documents, submitted bids, and passed bid done through public bidding accounted for 73% of the total in evaluation. Table 3 presents the APCPI assessment results terms of value, which is within the acceptable level set. The indicating the level of compliance for related indicators. GPRA states that all procurement shall be conducted through competitive bidding, except under exceptional circumstances  ummary of Agency Procurement Compliance and Performance Indicator Results Table 3  S for Pillar I: Agency Compliance to Legislative and Regulatory Framework Assessment Conditions Benchmark 2010 Results Indicator 1. Competitive Bidding as Default Procurement Method (a) Public bidding contracts by value of total procurement (%) 70 73 (b) Public bidding contracts by volume of total procurement (%) 30 16 Indicator 2. Alternative Methods of Procurement (a) Alternative modes of contracts by value of total procurement (%) 25 27 (b) Shopping contracts by value of total procurement (%)  5 10 (c) Negotiated procurement by value of total procurement (%) 10 15 (d) Direct contracting by value of total procurement (%)  3  4 (e) Repeat order contracts by value of total procurement (%)  3  1 Indicator 3. Competitiveness of the Bidding Process (a) Average number of bidders who acquired bidding documents  6  7 (b) Average number of bidders who submitted bids  5  5 (c) Average number of bidders who passed bid evaluation  3  3 Pillar I Score 1.00 1.14 Rating: Acceptable Source: CPAR Working Group, 2012. 13 Philippines Country Procurement Assessment Report 2012 where alternative methods of procurement are allowed. The 2.1.1  Procurement Legislative Framework value of procurements done through alternative methods was slightly above the benchmark, at 27%. One explanation  Findings for this is the increase in the threshold for small-value procurements from P100,000 to P500,000, as well as the 33. Indicator 1 reflected a substantial level of achievement, introduction of other negotiated procurement modalities, such as the legislative and regulatory framework met the agreed- as procurement with nongovernment organizations (NGOs), upon standards and complied with applicable obligations set community participation, and from United Nations agencies. for a well-functioning public procurement system. The findings show that the legislative framework is adequately recorded and 32. Shopping, negotiated procurement, and direct contracting organized; covers all types of procurement using the national registered higher results than the benchmarks at 10% for budget; and is well-structured, consisting of a legislative act, shopping, 15% for negotiated procurement, and 4% for direct a set of implementing regulations, bidding documents, and contracting. These methods were used extensively by the DepEd procurement manuals. It also defines the allowable procurement (for textbooks); the Department of Health (for the purchase methods. Despite this however, there remains no independent of drugs and vaccines from United Nations organizations); protest mechanism under the law. The legal framework provides and the Department of Environment and Natural Resources for public bidding as the default procurement method, and (for goods not available at the Procurement Service, repair of establishes the procedures and timelines for this method. vehicles, and equipment and facilities). This indicates a need Table 4 presents the results for this indicator. to improve the procurement planning practices of procuring entities, particularly in the use of alternative methods and 34. The scores below indicate improvements from the 2008 its conditions in order to increase the number of publicly bid BLI assessment, particularly for subindicators 1(c) and 1(d). contracts. In terms of competitiveness of the bidding process, The current score of 3 for subindicator 1(c) is a result of the there was an increase in the number of bidders who acquired extension of the timeframe for the preparation of bids whenever bidding documents, which indicates greater interest in the international competition is sought. Under the revised IRR, public procurement process. The average number of bidders a longer period of 30 days from the pre-bid conference is submitting bids also increased from three in 2008 to five in provided in cases with international bidders. The increase in 2010, and an average of three bidders passed bid evaluation. subindicator 1(d) is prompted by the inclusion in the revised  ummary of Scores for Baseline Indicator 1: Public Procurement Legislative and Table 4  S Regulatory Framework Achieves the Agreed Standards and Complies with Applicable Obligations Maximum Subindicators 2008 Score 2012 Score Score 1(a) – Scope of application and coverage of the legislative and regulatory framework  3  3  3 1(b) – Procurement methods  2  2  3 1(c) – Advertising rules and time limits  1  3  3 1(d) – Rules on participation  2  3  3 1(e) – Tender documentation and technical specifications  3  3  3 1(f) – Tender evaluation and award criteria  3  3  3 1(g) – Submission, receipt, and opening of tenders  3  3  3 1(h) – Complaint  1  1  3 Total Score 18 21 24 Average Score 2.25 2.63 3.00 Rating: 21/24 (88%), substantially achieved Source: CPAR Working Group, 2012. 14 Findings, Assessments, and Recommendations IRR of provisions that allow the participation of government now required to be posted on the website prescribed by the owned and controlled corporations (GOCCs) in competitive relevant development partner; (ii) where the participation of biddings, under certain conditions. Subindicator 1(h) on the international bidders is considered advantageous and a longer protest mechanism reflects no improvement, because an bid preparation period is necessary, the bid submission period independent review body has not yet been established. will be extended and a pre-bid conference will be held at least 30 calendar days before the submission and receipt of bids; 35. Non-procurement related activities. There are three (iii) foreign bidders may substitute the required eligibility areas that fall outside the coverage of the GPRA. The first documents with appropriate equivalent documents issued by involves procurements financed from official development their respective countries; (iv) all documents submitted by assistance, which is governed by Republic Act (RA) 8182, as foreign bidders should be translated into English, if necessary; amended by RA 8555 (Official Development Assistance Act). and (v) bidders are required to submit sworn statements that The second relates to the acquisition of rights of way or sites they are not blacklisted from any public bidding conducted for national government infrastructure projects, governed by the government, or by any development partner whose by RA 8974 (An Act to Facilitate the Acquisition of Right-of- blacklisting rules have been recognized by the Government Way Site or Location for National Government Infrastructure Procurement Policy Board (GPPB). Notwithstanding the Projects and for Other Purposes). The third covers public– foregoing additional provisions, participation of purely foreign private partnership (PPP) arrangements, which are utilized bidders for locally-funded procurements may only be allowed as financing tools for faster delivery of infrastructure projects under certain circumstances mentioned in the revised IRR. and other services. An issue however, is the lack of defined policy in determining whether an infrastructure project should 37. Procurement methods. The GPRA prescribes be considered as a government procurement transaction competitive bidding as the general mode of procurement, under the GPRA, or may be better implemented as a PPP except under certain conditions that allow the use of alternative project under the BOT Law, RA 6957, as amended by RA 7718 methods.10 The method of procurement to be used should be (An Act Authorizing the Financing, Construction, Operation indicated in the approved annual procurement plans (APPs). and Maintenance of Infrastructure Projects by the Private The APCPI results in Table 3 show that 73% of the total value of Sector, and for Other Purposes). There is also some confusion contracts reviewed were procured through public bidding. This on the procedures for inviting proposals under the BOT Law, is slightly higher than the 70% benchmark set for all agencies. as several LGUs use the procurement law to implement BOT As mentioned earlier, the revised IRR now provide additional projects. There are current government efforts to study or alternative methods of procurement. Also, the threshold for devise policies for PPP projects. shopping has been increased to P100,000 for immediate purchases covered by unforeseen contingencies, and P500,000 36. Amendments to the Implementing Rules and for the procurement of ordinary or regular office supplies and Regulations for foreign-funded procurements. One of the equipment that are not available in the Procurement Service. notable findings of the 2008 CPAR was that the GPRA did not The use of small-value procurement, which is limited to at least specify the appropriate standards for international competitive three suppliers, contractors, or consultants for contracts not tendering, as it simply acknowledged that the procurement exceeding P500,000, has been increasingly resorted to by rules specified in treaties and international or executive procuring entities in their small contracts or projects. This agreements should be respected. The 2008 CPAR Action Plan resulted in a decline in the number of contracts procured recommended the drafting and issuance of an IRR-B to provide through public bidding, particularly for agencies with smaller guidance in the implementation of international competitive procurement requirements. The APCPI pilot testing revealed tendering for foreign-funded procurement. However, a decision that the value of procurements done through alternative was subsequently reached to formulate a single set of IRR, methods was 27% of the total value of contracts reviewed. This covering both domestic and foreign-funded procurements. The is slightly higher than the 25% benchmark. The use of shopping, revised IRR issued in July 2009 include the following provisions negotiated procurement, and direct contracting were also higher for international competition: (i) procurement opportunities are than the prescribed benchmarks (Table 3). IRR of RA 9184. Section 48.2. 10 15 Philippines Country Procurement Assessment Report 2012 38. Nationality requirements for foreign bidders. The the participation of GOCCs as bidders. The revised IRR now GPRA establishes the eligibility requirements for different explicitly provides that GOCCs may be eligible to participate procurement methods based on legal, technical, and in public biddings if they can establish that they are legally financial qualifications, but the nationality requirement among and financially autonomous, operate under commercial prospective bidders continues to restrict wholly-owned foreign laws, and are not dependent agencies of the government or entities from participating in public procurement. With respect the procuring entity. However, issues were raised regarding to the procurement of goods and consulting services, there is an the degree of independence of GOCCs from the government, eligibility requirement that 60% of the interest of partnerships as many of these institutions continue to receive financial or the outstanding capital of corporations should belong to support from the government. This may affect the fairness citizens of the Philippines. For infrastructure projects, 75% of the procurement process and encourage direct negotiation Filipino ownership is required. Foreign bidders may be eligible arrangements with procuring entities. Moreover, ADB is of the to participate (i) when allowed under any treaty or international view that the condition stating that a GOCC should not be a or executive agreement; (ii) when the foreign bidder is a dependent agency of the government tends to defy the intent citizen, corporation or association of a country whose laws or of this provision, because all GOCCs—being government- regulations grant reciprocal rights to citizens, corporations, or owned—are naturally dependent upon the government. associations of the Philippines; (iii) when the goods sought Therefore, there is a need to clarify the matter of a GOCC’s to be procured are not available from local suppliers; or independence from the government. (iv) when there is a need to prevent situations that defeat competition or restrain trade. Development partners insist that 41. Tender documentation and technical specifications. the limitations on foreign ownership continue to limit the entry Procuring entities prepare the bidding documents following of foreign bidders for domestically funded contracts. There is the Philippine Bidding Documents (PBDs) and standard forms a need to review the provisions on nationality requirements prescribed by the GPPB. The specifications and other terms under RA 9184 in relation to the guidelines of international indicated in the bidding documents reflect the minimum financial institutions (IFIs). requirements or specifications required to meet the needs of the procuring entity. The GPRA does not allow any reference to 39. Advertising rules and time limits. To ensure brand names, and neutral specifications are used in preparing transparency and competitiveness, the GPRA requires the the required technical specifications. The IRR also allows advertisement of bidding opportunities for contracts under procuring entities to require the bidders to pay for the bidding competitive bidding. Under the revised IRR, advertisement documents, but only to recover the cost of its preparation and in at least one newspaper of general nationwide circulation development. On 24 February 2012, the GPPB approved the is mandatory for contracts undertaken through competitive Guidelines on the Sale of Bidding Documents, which prescribe bidding, except for contracts with an approved budget for the maximum fee corresponding to the appropriate range of the the contract (ABC) of P2,000,000 and below for goods, ABC for the project. These guidelines were issued to rationalize P5,000,000 and below for infrastructure projects, and the fees and lessen the discretion of procuring entities in P1,000,000 and below or those whose duration is 4 months prescribing such fees.11 or less for consulting services. It has also extended the period for bid preparation when international participation is sought, 42. Approved budget for the contract as ceiling for providing for a period of 30 days from pre-bid conference contract award. The GPRA includes a provision on the to bid opening. In addition, except for certain alternative imposition of the ABC as the ceiling for bid prices and the methods of procurement, the posting of all bid opportunities in award of contracts for procurements from the national prescribed websites is required, including those identified by budget. All bids above the ABC are automatically rejected. the development partners. Development partners do not generally adhere to this practice for international competitive bidding procurements, because 40. Rules on participation for government enterprises. of the view that price control mechanisms are inappropriate The 2008 CPAR noted the lack of rules and regulations for in an open competitive bidding environment. There may also Guidelines on the Sale of Bidding Documents. Section 2. http://www.gppb.gov.ph/issuances/Guidelines/2012/SaleBiddingDocs.pdf 11 16 Findings, Assessments, and Recommendations be concerns regarding the accuracy of the estimates and BAC denies the request, a bidder may file a verified protest with the quality of their preparation. Nevertheless, development the head of the procuring entity (HOPE), accompanied by a partners have recognized the ABC in varying degrees. While the nonrefundable protest fee. The HOPE’s decision on the protest Japan International Cooperation Agency (JICA) has accepted is final. In April 2010, an ADB and World Bank study confirmed the use of the ABC for its national competitive bidding (NCB) that the system falls short of the international standards procurements, the World Bank only agreed to adopt it for set out in the Organisation for Economic Co-operation and NCB under the following conditions: (i) bidding documents Development–Development Assistance Committee (OECD-DAC) are obtainable free of charge on a freely accessible website, baseline indicator, and observed that it is neither independent (ii) the agency has procedures in place to ensure that the ABC nor objective. is based on an engineer’s estimate, (iii) the agency has trained cost estimators to estimate prices and analyze bid variances, 46. The study recommended short-term measures that and (iv) the agency has established a system to monitor and involve the amendment of the IRR provisions on the protest report bid prices relative to the ABC and engineer’s estimate. mechanism to define procedural requirements, amend the For its part, ADB agreed to advertise the ABC, but does not protest fee, and provide clear guidance on the overall appeal reject bid prices that exceed it. process. The study also recommended long-term alternatives to strengthen the independence of the protest body, such as the 43. The 2008 CPAR Action Plan recommended a study to establishment by the HOPE of an independent panel of experts determine the advantages and disadvantages of the ABC to the to hear disputes, the submission of disputes to an independent government. A World Bank study on the ABC was discontinued, panel by agreement of the parties, or the designation of the because of difficulties encountered in data gathering. GPPB as the independent review panel. With respect to the Nevertheless, in a separate ADB-financed study, government designation of the GPPB as the independent review panel, stakeholders expressed the view that the ABC is an effective reservations were raised by several sectors on the GPPB’s procurement control mechanism, because it sets a specific independence and ability to act as a review panel, as it is ceiling for contract award, simplifies the bid evaluation process, primarily a policy-making body. limits the exercise discretion in determining the reasonableness of bid items, and minimizes runaway bid prices. 2.1.2 Implementing Regulations and Documentation 44. As a budgetary control mechanism, the ABC fixes the maximum amount to be released by the Department of  Findings Budget and Management (DBM). The conclusion reached by the government stakeholders is that a status quo on the use of 47. Indicator 2 reflects a rating of 83% compliance, the ABC should be maintained until more practical alternatives which is lower than the previous score of 100%. This is are identified. However, there was a consensus that the due to a change in the score obtained for subindicator 2(c) capacity of government estimators needs to be improved, and on procedures for prequalification. In the 2008 assessment, that guidelines on the preparation of technical specifications the eligibility screening process of the GPRA was considered for common and uncommon use items need to be developed in the same manner as prequalification. However, in the and disseminated. There was also an agreement to establish current assessment, the CPAR Working Group (CWG) agreed a network of existing government databases and formulate that eligibility screening is not akin to prequalification, and standard templates for the preparation of a program-of-work that the provisions on competitive bidding do not provide for infrastructure projects. for prequalification procedures. Nevertheless, the baseline standards for the indicator were substantially achieved, 45. Complaint and protest mechanisms. The GPRA and its because of the existence of implementing regulations and IRR establish the right of bidders to contest a decision of the documentation in the legal and regulatory framework that have procuring entity. Decisions of the Bids and Awards Committee been assessed to meet all the baseline elements of a good (BAC) may be questioned by bidders at any stage of the public procurement system. Table 5 provides a summary of the procurement process through a request for reconsideration. If the ratings for this assessment. 17 Philippines Country Procurement Assessment Report 2012  ummary of Scores for Baseline Indicator 2: Existence of Implementing Regulations Table 5  S and Documentation 2008 2012 Maximum Subindicator Score Score Score mplementing regulation that provides defined processes and procedures not included in 2(a) – I  3  3  3 higher-level legislation 2(b) – Model tender documents for goods, works, and services  3  3  3 2(c) – Procedures for prequalification  3  0  3 Procedures suitable for contracting for services or other requirements where technical capacity 2(d) –   3  3  3 is a key criterion 2(e) – User’s guide or manual for contracting entities  3  3  3  eneral conditions of contracts for public sector contracts covering goods, works and services 2(f) – G  3  3  3 consistent with national requirements and, when applicable, international requirements Total Score 18 15 18 Average Score 3.0 2.50 3.0 Rating: 15/18 (83%), substantially achieved Source: CPAR Working Group, 2012. 48. Revised Implementing Rules and Regulations. Bidding Documents (PBDs). The PBDs for goods and works As mentioned earlier, instead of developing an IRR-B, the were harmonized with the procurement procedures of ADB, GPPB decided to issue a single set of IRR for both locally- JICA, and the World Bank for NCB procurements. This version funded and foreign-assisted projects (FAPs). In May 2009, of the PBDs includes a chapter on foreign-assisted projects, the GPPB created an Executive Committee, composed of which contains some provisions that are still unacceptable representatives from the National Economic and Development to the IFIs. Details of the remaining differences between Authority, and major procuring entities, to review the latest the government’s procedures and those of the IFIs are draft of the revised IRR. After a series of deliberations, the discussed in Section 4 of this report. The PBDs for goods GPPB approved the revised IRR on 22 July 2009, which and infrastructure projects (as harmonized with development became effective on 2 September 2009. The revised IRR partners) were issued in December 2010. The PBDs for incorporates several international standards, which results information and communication technology projects were in greater harmonization with the guidelines of the IFIs. drafted with assistance from the Canadian International Additional amendments include the prerogative for the IFI Development Agency, and are based on World Bank and and the government to agree on additional track-record European Union directives on information and communication requirements for foreign bidders.12 Furthermore, foreign technology. The PBDs for the procurement of textbooks and consultants may now be hired for assignments that involve manuals were recently approved by the GPPB. regulated professions in the country, as long as the foreign consultant is duly authorized by the appropriate government 50. Generic procurement manuals. The 2008 CPAR professional regulatory body.13 pointed out the need to draw up generic procurement manuals (GPMs) that will suit local government units (LGUs), 49. Philippine Bidding Documents. The issuance of the especially the smaller units such as barangays. A set of local revised IRR in 2009 resulted in the revision of the Philippine government procurement manuals was developed with funding IRR of RA 9184. Section 23.5.2.5. 12 IRR of RA 9184. Section 24.3.3 (b). 13 18 Findings, Assessments, and Recommendations from ADB and is currently being revised with funding from  ummary of Recommendations Box 1  S the Japan Social Development Fund. Barangay procurement for Pillar 1 manuals were also developed in 2008 with funding from ADB. These were approved by the GPPB in July 2011. The GPMs • The Government of the Philippines should continue to are being revised to incorporate amendments in the revised conduct a study on the nationality requirements for joint IRR, including resolutions and guidelines issued by the GPPB. ventures, in line with international standards, with the The mandatory use of these manuals by government agencies possibility of amending the Government Procurement and LGUs will be monitored through the APCPI tool. There is Reform Act and allied laws. While wholly owned a need to train local government procurement officials on the foreign participation is not possible under the current GPMs in order to ensure better compliance with the GPRA. The legal framework, the revised Implementing Rules and Regulations incorporated several considerations for LGU manuals will prevent LGUs from introducing restrictions international participation. For better appreciation and that can limit competition at the local level. clarity of application, a section integrating all provisions on international participation should be included in 51. Procedures for prequalification. The GPRA replaced the revised Implementing Rules and Regulations. As a prequalification with an eligibility check and a post- supplement to the Philippine Bidding Documents, qualification process that assesses the qualifications of a primer for foreign bidders’ participation should also participating bidders. Eligibility screening is not the same as be developed. Regarding the reciprocity rule, the list of prequalification, because it involves a simple pass–fail check countries offering reciprocal rights should also be issued. of the eligibility requirements of participating bidders. • The Government Procurement Policy Board (GPPB) should issue guidelines to clarify government owned 52. The government believes that the present system is and controlled corporations’ independence from the the more appropriate approach for government procurements, government as a condition to participate in public biddings. especially for projects that are not highly complex or • The following measures are recommended to address specialized. Development partners, on the other hand, believe the issue of the approved budget for the contract that eligibility screening, like the use of the ABC as a contract (ABC): (i) develop and implement credible standards and guidelines for the preparation of the ABC for ceiling, may restrict competition. The eligibility check requires common and uncommon use items; (ii) share of existing the submission of some documents that are not necessarily databases of agencies on prices, using the Philippine linked to the capacity of a bidder, and a bidder may be Government Electronic Procurement System (PhilGEPS) disqualified for nonsubmission of a minor documentary as a possible repository for such databases; (iii) the requirement. It is for these reasons that eligibility screening Department of Public Works and Highways should share cannot be fully used for foreign-funded procurements. The its cost estimation system, and prepare a template for CWG agreed that the GPRA’s competitive bidding procedures the preparation of the program of work for civil works do not provide for a prequalification process. projects that can be used by all agencies and posted in the PhilGEPS website; (iv) develop and implement training programs for government cost estimators for all types of procurements; (v) conduct a study on the 2.2 Pillar II: Institutional Framework and accuracy and effectiveness of the ABC; and (vi) develop Management Capacity clear guidelines and standards on the preparation and review of technical specifications for common and 53. Pillar II is designed to examine the government’s uncommon use items, and green and sustainable public institutional framework and its capacity to oversee, manage, and procurement, and train procuring entities. support efficient procurement operations and implementation. • The GPPB should review the proposal to establish an It is important for focal points within the government to independent complaint or protest review body. possess sufficient capacity and qualifications to supervise the • The GPPB should provide training to local government public procurement system and monitor its implementation. officials on the use of the local government and barangay Pillar II has three indicators: Indicator 3 considers whether procurement manuals. public procurement is mainstreamed and integrated into public • The GPPB should review its procedures on eligibility sector governance, in particular public financial management screening. The foregoing recommendations are part of the 2012 Country Procurement Assessment Report Action Plan. Source: CPAR Working Group, 2012. 19 Philippines Country Procurement Assessment Report 2012 (PFM); Indicator 4 focuses on the presence of a functional on the existence of a functional normative and/or regulatory normative and/or regulatory body for public procurement; and body, having obtained an average score of 2.25. However, Indicator 5 looks at the institutional development capacity of this is lower than the 2008 average score of 2.75, because various stakeholders in the procurement process. the GPPB has been exercising procurement review functions that may be in conflict with its policy and oversight functions. 54. The public procurement system (PPS) did not obtain a The government obtained a score of 1.5 for institutional full achievement rating for Pillar II, with a score of 2.08, similar development capacity, which is higher than the 2008 average to that obtained in 2008. Indicator 3 shows a substantial link score of 1.25. This is due to an increased compliance with and integration of public procurement with broader public the requirement to post procurement information at the sector governance systems. It obtained an average score of Philippine Government Electronic Procurement System 2.5, which is an improvement from the 2008 average score (PhilGEPS) (as noted from the APCPI results). Table 6 and of 2.25, due to improvements in multiyear budget planning Graph 2 show the Baseline Indicator (BLI) scores for the three (3a). Indicator 4 is substantially compliant with the criteria indicators and the levels of achievement. Summary of Scores for Pillar II: Institutional Framework and Management Capacity Table 6   Maximum Indicators 2008 Score 2012 Score Score Public procurement is mainstreamed and well integrated into the Indicator 3:  2.25 2.50 3.00 public sector governance system Indicator 4: The country has a functional normative and/or regulatory body 2.75 2.25 3.00 Indicator 5: Existence of Institutional Development Capacity 1.25 1.50 3.00 Average Score 2.08 2.08 3.00 Rating: 25/36 (69%), partial or less than full achievement Source: CPAR Working Group, 2012. Graph 2  Institutional Framework and Management Capacity 3.0 2.5 2.0 1.5 2.5 2.75 1.0 2.08 2.08 2.25 2.25 1.25 1.5 0.5 0.0 Pillar II: Indicator 3: Indicator 4: Indicator 5: Institutional Public Sector Functional Normative Existence of Framework and Governance and/or Institutional Management Regulatory Body Development Capacity Capacity 2008 Score 2012 Score Source: CPAR Working Group, 2012. 20 Findings, Assessments, and Recommendations 55. Agency institutional framework and management not have appropriate procurement organizations, even on an capacity. The compliance and performance of agencies under ad hoc basis. Pillar II were evaluated through the following indicators: (i) presence of required procurement organizations such as 57. Preparation of the annual procurement plan, the BAC and the BAC Secretariat or Procurement Unit; (ii) the use of the PhilGEPS, and the existence of systems for preparation of annual procurement plans (APPs) for all types collecting and disseminating procurement information. of procurement; (iii) the use of the PhilGEPS; and (iv) the Of the agencies assessed, 82% have prepared and updated existence of a system for disseminating and monitoring their APPs for all types of procurement. Three of the sampled procurement information. Table 7 presents a summary of the agencies (Procurement Service, the Department of Transport assessment results for this pillar. and Communications, and the city government of Marikina) did not have consolidated APPs. All sampled agencies have 56. Procurement organizations in agencies. At the published bid opportunities on PhilGEPS’ and their own procuring entity level, the APCPI results show that all websites. Most agencies (94%) have websites providing sampled agencies have existing BACs and BAC Secretariats procurement information at no cost. However, not all of these or Procurement Units, as prescribed under the GPRA. This organizations have posted contract award information. The may be explained by the fact that most of the respondents compliance rate for the preparation of procurement monitoring were national government agencies (NGAs) and first-class reports (PMRs) was only at 41%, and the posting of these cities. As such, there is a need to investigate compliance at reports at agency websites was even lower at 18%. the municipal and barangay levels, because some LGUs may  ummary of Agency Procurement Compliance and Performance Indicator Results Table 7  S for Pillar II: Agency Institutional Framework and Management Capacity Average Results Assessment Conditions Benchmark 2010 Indicator 4. Presence of Procurement Organizations (a) Creation and operation of Bids and Awards Committee(s) Compliant 100% compliant (b) Creation and operation of a bids and awards committee secretariat or procurement unit Compliant 100% compliant Indicator 5. Procurement Planning and Implementation (a) An annual procurement plan is prepared for all types of procurement Compliant   82% compliant Indicator 6. Use of Government Electronic Procurement System (a) Agency registered with the PhilGEPS Compliant 100% compliant (b) Percentage of bid opportunities posted at the PhilGEPS 100% 106% compliant (c) Percentage of contract award information posted at the PhilGEPS  20%   53% compliant Percentage of contract awards procured through alternative methods posted in the PhilGEPS (d)   20%   35% compliant Indicator 7. System for Disseminating and Monitoring Procurement Information Presence of website that provides minimum, up-to-date procurement information easily (a)  Compliant   94% compliant accessible at no cost Preparation of procurement monitoring reports and submission to Government Procurement (b)  Compliant   41% compliant Policy Board (c) Posting of procurement monitoring report in agency website Compliant   18% compliant Pillar II Scorea 3.00/1.00 2.07 Rating: Satisfactory a   Benchmark Score for Indicators 4, 5, 6(a), and 7 is 3. Benchmark Score for Indicator 6 (b, c, and d) is 1. Source: CPAR Working Group, 2012. 21 Philippines Country Procurement Assessment Report 2012 2.2.1 Links to Public Financial  overnment Integrated Financial Box 2  G Management Systems Management Information System  Findings The Government of the Philippines has recognized the need for the development of a government integrated financial 58. The government received a rating of 83% compliance for management information system (GIFMIS). Such an integrated Indicator 3, or a level of substantial achievement with baseline system is expected to allow greater financial management and control at the oversight and agency levels, and facilitate standards for public procurement to be mainstreamed to the records management and reporting of general accounts at public governance system. This was due to improvements various levels of government. The GIFMIS will facilitate the in the procedures for multiyear budget planning, such as the generation of vital information on all aspects of government issuance of Department of Budget and Management (DBM) financial transactions that can be made accessible to Circular Letter 2011-11 in November 2011, which requires the public through information technology, and greater government agencies to develop forward estimates covering participation of civil society organizations in fiscal governance. annual requirements beyond the current fiscal year up to As an initial step, a memorandum of agreement was executed FY2016. An efficient procurement system provides information among the key oversight agencies—the Commission on to support the process of budget development and execution. Audit, the Department of Budget and Management, and It benefits from the PFM system with regard to timely the Bureau of Treasury in the Department of Finance—to appropriations and availability of funds to support the award create the Steering Committee for developing the GIFMIS and payments of contracts. Table 8 shows the summary of and implementing a public financial management reforms scores for this indicator. road map. Following this, Executive Order 55 was issued by the President on 6 September 2011, directing the automation of the financial management systems of the Commission 59. Links between annual procurement plans and on Audit, the Department of Budget and Management, and the budgetary process. One of the amendments to the IRR the Department of Finance to serve as the backbone of the is the inclusion of specific guidelines linking the agency’s government’s financial reporting system, and provide the procurement planning to its budget preparation process. In the deliverables and authority/functions of the Public Financial formulation of the APP, end-user units are required to prepare Management Committee (GIFMIS Committee). and submit the Project Procurement Management Plan for their programs, activities, and projects to the Budget Office.14  overnment of the Philippines. 2011. Directing the Source: G Integration and Automation of Government Financial If warranted, the plan will be included in the procuring entity’s Management Systems. Executive Order 55. Manila. budget proposal, which may be approved by the head of the procuring entity (HOPE). Upon approval, the BAC Secretariat consolidates these into a proposed APP. When the General Appropriations Act (GAA), corporate budget or appropriation forward estimates that cover the annual requirements ordinance becomes final, the end-user unit revises and adjusts beyond the current fiscal year (2012), i.e., for 2013–2016. the Project Procurement Management Plan based on the This circular letter is the current government policy on approved budget, and the BAC finalizes the consolidated APP multiyear budget planning. The forward estimates will be for approval. The agency’s budget reflects its expected needs used to determine the extent of the annual costs of all ongoing and expenditures, based on its planned programs, activities, budgetary programs and projects, which will be set aside to and projects. ensure continuous funding, provided the government does not change its expenditure policies.15 60. The 2008 CPAR found that agencies do not prepare multiyear plans that are linked to the annual budget process 61. Commencement of procurement activities prior or the APPs. In 2011, under DBM Circular Letter 2011-11, to the issuance of certificate of availability of funds or the government required government agencies to draw up allotment. Under DBM Circular No. 2010-9, procuring entities, IRR of RA 9184. Sections 7.3.1–7.3.5. 14 DBM Circular Letter 2011-11. 15 22 Findings, Assessments, and Recommendations  ummary of Scores for Baseline Indicator 3: The Public Procurement Is Mainstreamed Table 8  S and Well Integrated into the Public Sector Governance System Maximum Subindicator 2008 Score 2012 Score Score  rocurement planning and associated expenditures are part of the budget 3(a) – P 2  3  3 formulation process and contribute to multiyear planning  udget law and financial procedures support timely procurement, contract 3(b) – B 2  2  3 execution, and payment 3(c) – No initiation of procurement actions without existing budget appropriations 3  3  3 Systematic completion reports are prepared for certification for budget 3(d) –  2  2  3 execution and for reconciliation of delivery with budget programming. Total Score 9 10 12 Average Score 2.25 2.5 3.0 Rating: 10/12 (83%), substantially achieved Source: CPAR Working Group, 2012. including government owned and controlled corporations this issue, the National Economic and Development Authority (GOCCs) that are tapped as implementing units and recipients proposed the inclusion of Project Evaluation Form 7 in the of fund transfers from the national government, can commence basic requirements for any submission to its Investment their procurement activities even without any allotment issued Coordination Committee. The committee’s Project Evaluation by the DBM. DBM Circular No. 2010-9 provides that: Form 7 incorporates the detailed procurement plan and APP. Nevertheless, this may not be enough to address the Pending approval of the GAA and/or receipt of reservations of implementing agencies. allotments (obligational authority) issued by DBM, agencies can start the initial processes of their 63. A notice of award may be issued to the winning bidder procurement activities, based on the proposed budget only upon receipt of the special allotment release order or levels per the National Expenditure Program (NEP), agency budget matrix, or upon receipt of the actual cash specifically in conducting public bidding. (Section 1) transfer by the GOCC.16 This implies that a procuring entity can advertise the invitation to bid and proceed with the bidding up 62. GPPB Circular No. 01-2009 also supports the conduct to the recommendation of the award of contract without the of advance procurement activities, provided that the ABC of a special allotment release order, agency budget matrix, or cash project is based on the budget level in the NEP. However, for transfer, as long as the procuring entity has an ABC and has foreign-funded projects, the inclusion of a project’s budget in identified its source of funding, which are prerequisites to the the NEP and GAA requires a signed loan agreement. The DBM issuance of a notice of award. will not issue the Multiyear Obligational Authority for multiyear contracts without the signed agreement. Hence, implementing 64. Link to public financial management. The 2008 CPAR agencies are not inclined to conduct advance procurement Action Plan noted that there is no link between the financial activities, as no definite project exists until the loan agreement management system and the procurement system to ensure is signed, and there is a likelihood that the Commission on enforcement of the law. In 2011, Executive Order (EO) 55 was Audit (COA) will disallow any expense incurred related to issued directing the automation of the financial management any advance procurement activity that is not supported by systems of the COA, DBM, and the Department of Finance, a budget item in the NEP and GAA. In an effort to address and the creation of a PFM committee that will eventually GPPB NPM No. 066-2012. 16 23 Philippines Country Procurement Assessment Report 2012 integrate procurement into the financial management system. 66. Normative and/or regulatory body. The GPRA Government Integrated Financial Management Information established the GPPB as a policy-making, regulatory, and System Resolution 01-2011 requires DBM, COA, and the monitoring body on government procurement. It is an Bureau of Treasury to issue a reporting system that captures interagency body composed of 12 cabinet secretaries from the budget utilization and identifies variances. The PFM Committee executive department and one representative from the private is currently developing a financial management manual. sector, who is appointed by the President. It is chaired by the Secretary of the DBM, and the Director General of the National 2.2.2  Management Capacity Economic and Development Authority sits as alternate chair. Under the GPRA,17 the GPPB is tasked to (i) formulate and  Findings amend public procurement policies, rules, and regulations; and, when necessary, amend the IRR, and prepare generic 65. The government obtained a rating of 75% compliance procurement manuals and bidding documents on procurement; (substantially achieves baseline standards) for Indicator 4 (ii) ensure proper implementation of the GPRA and the IRR by on the existence of a functional body to oversee procurement the procuring entities; (iii) establish a sustainable training responsibilities. There was a decrease from the 2008 program to develop the capacity of government procurement assessment score, because of the finding that the GPPB officers and employees; and (iv) conduct an annual review has been exercising contract review functions that may be of the effectiveness of the GPRA and its amendments. The in conflict with its policy and oversight functions. It should GPPB has been considered by government agencies as a be noted that the primary function of a normative and/or policy authority on public procurement. However, EO 423 regulatory body is to provide guidance on the interpretation issued in 2005 gave the GPPB the responsibility for reviewing of rules, and to support training and capacity development. procurements undertaken through alternative modalities with Table 9 summarizes the scores for Indicator 4. an ABC of at least P500 million.  ummary of Scores for Baseline Indicator 4: The Country Has a Functional Normative Table 9  S and/or Regulatory Body Maximum Subindicator 2008 Score 2012 Score Score  he status and basis for the normative and/or regulatory body is covered in 4(a) – T  3 3  3 the legislative and regulatory framework 4(b) – The body has a defined set of responsibilities  3 3  3  he body’s organization, funding, staffing, and level of independence and 4(c) – T  2 3  3 authority (formal power) to exercise its duties should be sufficient and consistent with the responsibilities The responsibilities should also provide for separation and clarity so as 4(d) –   3 0  3 to avoid conflict of interest and direct involvement in the execution of procurement transactions Total Score 11 9 12 Average Score 2.75 2.25 3.0 Rating: 9/12 (75%), substantially achieved Source: CPAR Working Group, 2012. Section 63. 17 24 Findings, Assessments, and Recommendations 67. The CPAR Working Group (CWG) noted that this was 2003, the GPPB-TSO has issued 595 non-policy opinions, not considered in the 2008 CPAR and, as a result, changed while its help desk has accommodated 1,237 walk-in and the score for this indicator to reflect the actual situation. 16,238 phone-in queries. The GPPB-TSO’s operations have The review function has created a possible conflict-of- been funded by the Procurement Service, which is an agency interest issue with the GPPB’s regulatory responsibilities, as attached to the DBM that is tasked to handle the procurement it immerses the board in actual procurement transactions. of commonly used office supplies and equipment for the In relation to this, a PhilGEPS assessment mission noted government. The dependence of the GPPB-TSO on the the lack of an “operational procurement organization” whose Procurement Service for its budgetary requirements was role should be separate from the essential procurement raised as an issue in the 2008 CPAR. In the 2010 GAA, the policy and regulatory functions of the GPPB. This operational GPPB-TSO was recognized as an attached agency of the procurement organization should be able to manage the DBM, and now receives regular budgetary support from entire government e-procurement functions and support the the national government. This provides more stability and agencies’ management of their procurement systems. DBM independence for the GPPB-TSO to carry out its mandate. has issued an official order creating a task force to study and implement the establishment of a new operational 2.2.3  Institutional Development Capacity procurement organization.  Findings 68. Organization, technical and funding support. The GPPB has a technical support office that provides 69. Indicator 5 on the existence of institutional development administrative and technical support. The Government capacity was assessed at 50% compliance, or a level that Procurement Policy Board Technical Support Office (GPPB- partially achieves baseline standards. The public procurement TSO) is headed by an executive director who sits as the system relies heavily on the capacity of participants from both board secretary. Currently, the GPPB-TSO is composed of the public and private sectors to understand and implement five units and divisions—the Legal and Secretariat Division, procurement law, rules, and procedures. An increase in the Performance Monitoring Division, the Capacity Building the score for Baseline Indicator (BLI) 5(a) from the 2008 Division, the Information Management Division, and the assessment is due to the higher compliance rate of pilot Administrative and Financial Unit; and has a staffing agencies in the posting of procurement opportunities at the complement of 29 positions. Since its establishment in PhilGEPS. Table 10 shows the scores for Indicator 5.  ummary of Scores for Baseline Indicator 5: Existence of Institutional Table 10  S Development Capacity Maximum Subindicator 2008 Score 2012 Score Score The country has a system for collecting and disseminating procurement information, 5(a) –  1 2  3 including tender invitations, requests for proposals, and contract award information The country has systems and procedures for collecting and monitoring national 5(b) –  1 1  3 procurement statistics  sustainable strategy and training capacity exists to provide training, advice and 5(c) – A 2 2  3 assistance to develop the capacity of government and private sector participants to understand the rules and regulations and how they should be implemented  uality control standards are disseminated and used to evaluate staff performance 5(d) – Q 1 1  3 and address capacity development issues Total Score 5 6 12 Average Score 1.25 1.50 3.0 Rating: 6/12 (50%), partial achievement Source: CPAR Working Group, 2012. 25 Philippines Country Procurement Assessment Report 2012 70. Collection and dissemination of procurement documents to build up the database in the registry.20 The information. All government agencies are mandated to use Merchant Registry System will be mandatory for all suppliers the PhilGEPS.18 Manufacturers, suppliers, consultants, and who wish to deal with government, and will be a precursor contractors are required to register in the system to be able to the introduction of the e-Bidding Module. This registry will to participate in government procurement opportunities.19 have links to other government departments, such as the It was launched by the Procurement Service in 2006, and Department of Trade and Industry. The e-Bidding Module is its construction and enhancement were awarded to a local currently being pilot-tested in two agencies.21 service provider—Ayala Systems Technologies. This company developed three features of the PhilGEPS: the Electronic 72. Compliance with the PhilGEPS registration. Bulletin Board, which allows the posting of procurement Table 11 shows that the compliance of procuring entities with opportunities and notices of awards, the electronic distribution the PhilGEPS registration requirement has markedly increased of bid documents, and the automatic notification of bid notices since the 2008 CPAR. The agency procurement compliance and bid supplements; the Subscriber Registry, which is a and performance indicator (APCPI) results show that all registry of government agencies and all suppliers, contractors, sampled agencies have published bid opportunities on the manufacturers, distributors, and consultants; and the PhilGEPS and in their own websites (as shown in Indicator 6 Electronic Catalogue, which provides a price list of commonly of Table 7). Despite the benefits derived by procuring entities used goods, supplies, materials, and equipment that can be in the use of the PhilGEPS, there seems to be a lack of purchased from a centralized procurement system managed appreciation for its value at the barangay level. This may be by the Procurement Service. In addition, the Virtual Store caused by one of the following factors: (i) the lack of access was launched in July 2011 to facilitate the online ordering to information and communication technology facilities, of common-use supplies and equipment carried on stock particularly in remote areas of the country, (ii) the limited by the Procurement Service. The system is connected to the number and value of procurements done by barangays; Procurement Service Inventory Management System, which (iii) the lack of personnel dedicated to managing and reporting provides real-time advisories to agencies on inventory levels. procurement-related activities; and (iv) the lack of training on From a pilot test of five government agencies, the Virtual Store procurement for many barangay officials. Therefore, there is a is now utilized by 60 government agencies. need to strengthen the capacity of local barangay officials to use the PhilGEPS and implement the GPRA, and develop more 71. Other phases for further development of the PhilGEPS effective systems to monitor compliance. include: an Electronic Payment involving the electronic transfer of funds from the procuring entities to the 73. One positive effect of increased compliance with Procurement Service, the introduction of user fees for system the procurement law is the significant rise in the number of usage, the ability to download bidding documents, and the suppliers, contractors, and consultants registered with the implementation of an online bid submission process. The PhilGEPS at 43% (from 33,331 in 2008 to 58,128 in 2011), proposal to charge a user fee is currently under review by as shown in Table 12. In 2011, of the 58,128 registered the Cabinet Cluster on Good Governance. The development prospective bidders, 86% consisted of manufacturers, dealers, of the Electronic Bid Submission system is undergoing final and suppliers of goods and services. This may be an indication testing, and the expansion of the present Supplier Registry of the private sector’s improved confidence in the government System through the “Government of the Philippines’ Official procurement process. Merchants Registry System” was implemented in December 2011. The training of suppliers started in January 2012. 74. Posting of procurement information. Despite the Trained suppliers are currently uploading their eligibility increased postings of bid opportunities on the PhilGEPS 18 RA 9184. Section 8. 19 IRR of RA 9184. Section 8.2.2. 20 Supra note 7. 21 Supra note 8. 26 Findings, Assessments, and Recommendations  tatus of Compliance with the Philippine Government Electronic Procurement Table 11  S System Registration, 2008 and 2012 2008 2012 Agencies Level of Agencies Level of Government Total Number of Registered with Compliance Registered with Compliance Procuring Entity Agencies the PhilGEPS (%) the PhilGEPS (%) NGAs 1,829 1,456 79.61 1,621  88.63 GOCCs 1,041 575 55.24 997  95.77 SUCs 190 180 94.74 190 100.00 LGUs 43,709 3,138  7.18 7,706  17.63 City 136 113 83.09 134  98.53 Province 80 71 88.75 77  96.25 Municipality 1,498 818 54.61 1,220  81.44 Barangay 41,995 2,136  5.09 6,275  14.94 Total 46,769 5,349 11.44 10,514   22.48 GOCC = government owned and controlled corporation, LGU = local government unit, NGA = national government agency, PhilGEPS = Philippines Government Electronic Procurement System, SUCs = state universities and colleges. Source: Philippines Government Electronic Procurement System. Table 12  S  uppliers, Contractors, and 75. Usability of the Philippine Government Electronic Consultants Registered with the Procurement System for procurements funded by Philippine Government Electronic multilateral development banks. An assessment of Procurement System, 2011 the usability of the current features of the PhilGEPS for multilateral development bank (MDB)-funded procurements Category 2008 2011 was conducted in November 2006, and followed up in June Manufacturers, Dealers, 28,442 50,136 2012. The assessment found that the current operating and Suppliers features of the PhilGEPS comply with MDB procurement Contractors  4,419  6,845 procedures and principles, and may be used for MDB-funded Consultants   470  1,147 procurement. These features include registration, e-payment, Total 33,331 58,128 bid matching, a United Nations Standard Products and Services Code catalogue, advertisement of opportunities, Source: Philippine Government Electronic Procurement System. document download functions, and virtual store on a limited scale. The virtual store functionality requires a follow-up website, there is still a limited number of procuring entities assessment to determine the efficiency of the procurement that post contract award information, even though it is procedures used by the Procurement Service in procuring required by law. The level of compliance with the posting of the products that are sold virtually in the PhilGEPS. The contract award information stood at a low of 53% for public assessment noted the lack of an operational procurement bidding and 35% for alternative methods. There is a wide organization that will function separately from the GPPB, and discrepancy in the number of postings of bid opportunities will have wider and more comprehensive management roles and contract awards on the PhilGEPS website. Hence, there than the Procurement Service. is a need to enforce compliance with the posting requirement, not only for contract award information, but also for APPs and 76. The need for such a new organization is acknowledged annual procurement monitoring reports (PMRs). as e-procurement systems are expanding and their potential 27 Philippines Country Procurement Assessment Report 2012 impact on procurement and other government functions has 78. In addition to serving as a monitoring tool, the increased. The government has already created a task force APCPI provides a basis for analyzing procurement-related that will study the establishment of a similar corporatized information, but it needs to be linked to other government- structure for an integrated management of the government’s related databases for policy and decision-making purposes. operational e-procurement system. As regards the linkage A major component of the APCPI is the submission of the to PFM system, the assessment provided the following annual PMR. The report summarizes all the procurement recommendations: (i) the PhilGEPS should collaborate with activities of an agency in the APP. It includes data on the the COA to ensure the appropriate use of the current available posting of bid opportunities and contract award information, features, and establish the acceptability of e-documents in prescribed procurement timelines, average number of bidders procurement audit and their validity as evidence in court who acquired bidding documents, submitted bids, and cases; (ii) the PhilGEPS and GPPB should be included in the bids that passed evaluation. The PMRs are required from Project Management Group of the Government Integrated government procuring entities, and must be submitted to the Financial Management Information System, and a subgroup GPPB after the end of each semester. When consolidated into on procurement should be formed for better integration; a national database, information from the annual PMR will and (iii) a high-level steering group should be created to serve as a source for national procurement statistics and comprehensively review the final form of the PhilGEPS, and the GPPB can use the data to analyze performance, trends, the data linkages required among the PhilGEPS, the GPPB’s and reform-related issues. Since the APCPI has not yet been monitoring and evaluation of procurement performance, and implemented in all agencies, the full potential of the annual the COA’s audit functions. PMR as a source of information has not yet been achieved. While the rules exist on the submission of semestral PMRs 77. Agency procurement compliance and performance and APPs to the GPPB, compliance with these requirements indicators. The 2008 CPAR identified the need to strengthen among agencies remains weak. Despite of the existence of the procurement monitoring system to determine agencies’ agency websites that provide minimum and up-to-date compliance with the GPRA and to collect information procurement information, the APCPI results only show a 41% for national procurement statistics. The APCPI system compliance rate for the preparation of PMRs among the pilot was developed by the GPPB as a tool to respond to this agencies, and a lower rate of 18% for the posting of these need. The APCPI is patterned after the Organisation for reports at the agency websites (Indicator 7, Table 7). Economic Co-operation and Development–Development Assistance Committee (OECD-DAC) Methodology for 79. The national training program. The GPPB Assessing Procurement Systems (MAPS) BLIs and CPI, and established the National Training Program for Procurement serves as an improvement on previous tools used by the Officers in 2004, which covers the GPRA, Philippine GPPB to monitor agency procurement performance, such Bidding Documents (PDBs), and the generic procurement as the Online Monitoring Evaluation System and the Agency manuals (GPMs). The GPPB-TSO trained a pool of trainers Procurement Performance Indicators discussed in the 2008 composed of representatives from the DBM, the COA, and CPAR. The APCPI was developed in 2010, and pilot tested the Department of the Interior and Local Government from in 19 national government agencies (NGAs) and GOCCs 13 regions nationwide, known as composite team members implementing World Bank-funded projects to assess agency (CTMs). The CTMs rolled out the training to local government performance and compliance using 2009 data. A second units (LGUs), with administrative and logistical support APCPI assessment was conducted in 17 procuring entities provided by the Philippine League of Local Budget Officers. for the 2012 CPAR. There is a need to expand the coverage The GPPB also partnered with the Development Academy of of the APCPI for all government agencies. However, since the the Philippines to form another pool of trainers composed APCPI is a self-assessment tool, it needs to be validated by of representatives from state universities and local and third parties. The information generated through the APCPI state colleges and universities, called the state universities exercise will support the GPPB-TSO in monitoring compliance and colleges trainers. This group rolled out the training to with the GPRA. national agencies nationwide. As of 30 April 2008, 30% of national agencies and 85% of the LGUs had had at least one representative trained on Republic Act (RA) 9184 and its 28 Findings, Assessments, and Recommendations IRR.22 The training continued after the release of the revised and attended by participants from various procuring IRR in 2009, covering 22% of the national agencies and 13% entities that provided feedback and comments to of the LGUs (excluding barangays) (footnote 22). improve the modules. The Government Procurement Professionals of the Philippines was formed as an 80. However, the membership of both the composite initiative from the graduates of the pilot batch to serve team and the state universities and colleges trainers has as potential trainers. declined over the years, because several of them were either • Road map to certification. In 2009, a study to develop reassigned to other responsibilities, retired from government career streams for public procurement practitioners service, or have moved to the private sector. The GPPB’s was completed. The study proposed changes in the partnership agreements with the Philippine League of organizational structure of the procurement units Local Budget Officers and the Development Academy of the in every agency, as well as amendments to the Philippines expired in 2010. Currently, training is conducted position classification and salary grade structure of upon request by agencies. The training may have improved procurement personnel. Standardization of benefits awareness of the GPRA, and taught the correct and practical across government agencies was also proposed, application of the procurement rules and procedures, but it such as honoraria for the Bids and Awards Committee may not have improved the overall skills and capacity of the (BAC) members, award of team incentives, and trainees. For example, the training may not have enhanced a competency requirements for selected procurement procurement staff member’s capacity to conduct judicious functions.23 The study suggested that practitioners procurement planning, or may not have provided adequate should take competency tests and training courses, tools for the preparation of realistic cost estimates and as it envisioned that the procurement function will suitable technical specifications. be recognized as a profession in the long term, where practitioners will have to attend a procurement course 81. The professionalization program. As a response to and pass a licensure examination under the supervision the need for a more sustainable training program, the GPPB of the Professional Regulation Commission. The launched a professionalization initiative in 2006 that was challenge to build procurement capacity remains, intended to present a career path for procurement practitioners and there is a need to develop a sustainable strategy in the government and correct weaknesses in capacity to strengthen the capacity of government officials to development. It was envisioned to be a sustainable program to understand and implement the procurement rules be implemented in three phases: and regulations. There is also a need to review the • Development of the training curriculum. The AIM modules to align them with procurement-specific professionalization program involves formal training, competency requirements. During the focus group and a four-stage certification program that is designed discussions with procurement practitioners and the to raise the level of proficiency and effectiveness of academe, the academe expressed interest in working government procurement personnel. The program with the government to review the existing modules is also envisioned to provide a methodology for the and in teaching courses on public procurement. systematic matching of skills against standardized • Pilot testing and implementation. The requirements for the selection and recruitment of professionalization program is expected to be pilot- procurement personnel, as recommended under the tested in several procuring entities and LGUs, with OECD-DAC methodology. The syllabus and materials the assistance of identified academic and training for 15 modules under the training component of the institutions. This will require the revision of the training professionalization program were developed by the modules to align these with the recent amendments to Asian Institute of Management (AIM) with funding from the IRR, as well as the development of standards and the World Bank. A pilot training session was conducted a certification program. Data from GPPB-TSO. 22 E. Boncodin. 2009. Developing a Career Stream for Public Procurement Practitioners. Manila. Unpublished. 23 29 Philippines Country Procurement Assessment Report 2012 Box 3  Summary of Recommendations for Pillar 2 • The Financial Management Manual should include procedures integrating procurement and logistics processes; business standards on the processing of invoices, electronic submission, tracking and release of payments; and performance evaluation of personnel responsible for preparing and approving payments. The implementation of the Government Integrated Financial Management Information System (GIFMIS) should also be fast-tracked to improve these processes. In addition, as recommended in the Philippine Government Electronic Procurement System (PhilGEPS) Assessment, the PhilGEPS and the Government Procurement Policy Board (GPPB) should be part of the GIFMIS Project Management Group, and a procurement subgroup within GIFMIS should be created. • Executive Order 423 and other policies entrusting procurement review functions to the GPPB should be revisited and revised, to ensure the independence of the GPPB. As discussed in the PhilGEPS assessment mission, the task force created by the Department of Budget and Management should study the management roles of the Procurement Service and the PhilGEPS, so that these may be merged into a new operational procurement organization. • The GPPB should develop mechanisms to ensure compliance with the requirements for posting of contract award information, the annual procurement plan and the annual PMR on the PhilGEPS and the agency’s website. This is connected with the recommendation on the collection and monitoring of procurement information. • With the issuance of GPPB Resolution No. 10-2012 on 1 June 2012, government procuring entities are now mandated to use the agency procurement compliance and performance indicator (APCPI) as the standard performance monitoring and evaluation tool. Training modules should be developed to expand the coverage of the pilot testing and eventual nationwide rollout of the APCPI. Links need to be established to confirm the validity of information provided by procuring entities in the APCPI self-assessment reports through third parties, such as the Commission on Audit auditors and/or civil society representatives. • The GPPB should provide agencies with standard and simple data gathering tools and formats for encoding and consolidating required procurement-related information to ensure the submission of the annual PMRs and the APCPI, and to link this database with other government-related databases to improve decision making at the national level. • The GPPB should establish a procurement professionalization working group that will formulate policies, develop or improve training modules, run courses on public procurement, and support the certification program for procurement personnel. The working group should review and update the Asian Institute of Management’s modules, to align these with competency standards defined in the career stream study and to ensure that these conform with the certification requirements. In collaboration with various academic and training institutions, a trainer’s training program should be conducted to roll out the training component of the professionalization program as a public–private partnership undertaking. A system should also be developed and implemented to accredit and monitor trainers and training institutions, and evaluate the professionalization program. Upon the completion of these activities, the GPPB should issue circulars that require procurement practitioners to enroll in the professionalization program, and should consider the development and implementation of the certification and testing program for procurement personnel. As a long-term measure, the GPPB should explore the possibility of a board examination for certified procurement professionals in coordination with the Professional Regulation Commission. • The GPPB should develop and implement a performance evaluation system specifically intended for procurement personnel. The foregoing recommendations are part of the 2012 Country Procurement Assessment Report Action Plan. Source: CPAR Working Group, 2012. 82. Performance evaluation of procurement personnel. personnel. However, closer investigation revealed that One of the identified weaknesses under institutional and this system refers to the general system used by the Civil management capacity in this CPAR assessment is the Service Commission (CSC) to evaluate all government absence of a defined staff performance evaluation process personnel. A procurement-specific performance evaluation based on results and professional behavior. The results of system is needed to assess the capacity of procurement the APCPI assessment indicate that government agencies personnel in carrying out their functions, identify strengths have a system to evaluate performance of its procurement and weaknesses, and formulate a more relevant training and 30 Findings, Assessments, and Recommendations incentives program to address identified capacity issues. 85. The procurement operations and market practices This will help improve the quality of service delivery, motivate of the public procurement system (PPS) in 2012 indicates personnel to carry out their duties and responsibilities better, a substantial level of achievement, with a score of 2.22 possibly minimize graft and corruption, and support the (Table 13 and Graph 3). This is an improvement from the efficient and effective management of scarce resources at 2008 CPAR score of 1.64. Indicator 6 on the efficiency of all levels of government. However, there is still a need to procurement operations and practices, and Indicator 7 on explain the value of such a system to the oversight agencies the functionality of the public procurement market reflect responsible for its development and implementation. less-than-full achievement with average scores of 2; albeit higher than the 2008 CPAR average scores of 1.25 for 83. The CSC is tasked to formulate and administer programs Indicator 6 and 1.33 for Indicator 7. The increase in scores relevant to the development and retention of a qualified are due to the availability of clearer guidelines for records and competent work force in the public service. Parallel to management and provisions on delegating authority for this, the performance evaluation system for procurement procurement-related actions and decisions, and lesser personnel should be linked to the competency standards and systemic constraints encountered by the private sector in qualification requirements that will be established under the accessing public procurement contracts. Indicator 8, on professionalization program and approved by the CSC. contract administration and dispute resolution provisions, reveals substantial achievement of baseline standards, with an average score of 2.67. This is higher than the 2008 2.3 Pillar III: Procurement Operations CPAR average score of 2.33, and is due to the presence of and Market Practices clearer procedures for undertaking contract administration responsibilities. 84. Pillar III looks at the relationships and dynamics between the public and private sector participants in the 86. The results of the APCPI assessment for indicators 8, public procurement system. A thriving public procurement 9, and 10 show a number of challenges. First, the ratio of market should have a competitive private sector that has the value of actual procurements conducted to the value of confidence in the competence of the procuring entities at all approved APPs was only 50%, which means that only half levels to administer public procurement in accordance with of the planned items in the procurement plan were actually the legislative and regulatory framework. Pillar III is made procured. This indicates that agencies may be planning up of three indicators: Indicator 6 examines the efficiency of beyond their requirements, and need to review the manner procurement operations and practice, Indicator 7 reviews the in which procurements are done, as the funds set aside functionality of the public procurement market, and Indicator 8 for procurements are not properly utilized. Second, the looks at the existence of contract administration and dispute- ratio of failed biddings to the total number of procurement resolution provisions. activities was relatively high (at 13%), possibly due to the  ummary of Baseline Indicator Scores for Pillar III: Procurement Operations and Table 13  S Market Practices Maximum Indicators 2008 Score 2012 Score Score Indicator 6: Efficient Procurement Operations and Practice 1.25 2.00 3 Indicator 7: Functionality of the Public Procurement Market 1.33 2.00 3 Indicator 8: Existence of Contract Administration and Dispute Resolution Provisions 2.33 2.67 3 Average Score 1.64 2.22 3 Rating: 22/30 (73%), substantially achieved Source: CPAR Working Group, 2012. 31 Philippines Country Procurement Assessment Report 2012 Graph 3  Procurement Operations and Market Practices 3.0 2.5 2.0 1.5 2.67 2.22 2.33 1.0 2.00 2.00 1.64 1.25 1.33 0.5 0.0 Pillar III: Procurement Indicator 6: Efficient Indicator 7: Indicator 8: Existence Operations and Procurement Functionality of the of Contract Market Practices Operations Public Procurement Administration and Market Dispute Resolution 2008 Score 2012 Score Source: CPAR Working Group, 2012. lack of bidders, the inability to comply with eligibility or controls in the systems that influence human behavior and other requirements, or the weakness of agency procurement institutional performance. The increase in scores from 1.25 personnel in preparing clearer technical specifications and in 2008 to 2.00 in 2012 can be explained by the existence of reasonable cost estimates. enhanced rules and regulations governing the management of procurement and contract management records, and 87. The APCPI assessment also showed that most agencies office orders delegating procurement-related responsibilities complied with the prescribed timelines for the procurement (baseline indicator 6c). Table 15 provides a summary of the of goods, infrastructure projects, and consultancy services, ratings for this assessment. except for infrastructure projects with an approved budget for the contract (ABC) of P50 million and below, and that the 89. Competency and qualification requirements for average length of time to release payments for procurement procurement personnel. While Volume 1 of the generic contracts was 35 calendar days. Table 14 presents the results procurement manuals (GPMs) defines the qualification, of the APCPI assessment for selected indicators in Pillar III. skills, and knowledge requirements for procurement personnel, there is still no systematic matching of skills 2.3.1 Efficiency of Procurement Operations against the requirements for competitive recruitment. The and Practices professionalization program recommends a career path for procurement practitioners, and identifies the specific  Findings competency and qualification requirements for procurement functions, which need to be approved by the CSC and the 88. The government received a rating of 67% compliance Department of Budget and Management (DBM). The program (less-than-full achievement of baseline standards) for is expected to ensure that staff undertaking the procurement Indicator 6. Some areas need further improvements to functions on an ad-hoc basis will have sufficient knowledge of correct the weaknesses and gaps at both the national and procurement. local levels. Procurement operations capacity and practices depend on the staffing, knowledge, skills, and capabilities 90. Procurement training for government officials of the human resources involved, and the incentives and and the private sector. In order to meet the increasing gap 32 Findings, Assessments, and Recommendations  ummary of Agency Procurement Compliance and Performance Indicator Results Table 14  S for Pillar III: Agency Procurement Operations and Market Practices Assessment Conditions Benchmark 2010 Results Indicator 8. Efficiency of Procurement Processes Percentage of total value of procurement against total value of approved annual (a)  50% 50% of APP procurement plans  ercentage of failed biddings and total number of procurement activities conducted (c) P 10% 13% Indicator 9. Compliance with Procurement Timeframes (a) Average number of days to procure goods 28 CDs/124 CDs 101 CDs Average number of days to procure infrastructure projects with an approved budget for the (b)  28 CDs/113 CDs 121 CDs contract of P50 million and below  verage number of days to procure infrastructure projects with an approved budget for the (c) A 28 CDs/144 CDs 126 CDs contract of more than P50 million (d) Average number of days to procure consulting services 34 CDs/170 CDs 154 CDs Indicator 10. Timely Payment of Procurement Contracts Payments are released upon submission of complete and required documents as provided (a)  30–45 CDs 35 CDs for in the contract Indicator 11. Capacity Building for Government Personnel and Private Sector Participants There is a system within the agency to evaluate the performance of procurement personnel (a)  Compliant 59% compliant Percentage of participation of procurement staff in annual procurement training (b)  50%–70% Trained 73% trained (c) Agency has activities to inform and update bidders on public procurement Compliant 41% compliant Indicator 12. Management of Procurement and Contract Management Records The Bids and Awards Committee Secretariat has a system for keeping and maintaining (a)  Fully Compliant 76% FC; 18% SC; procurement records 6% PC Implementing unit has and is implementing a system for keeping and maintaining contract (b)  Fully Compliant 59% FC; 29% SC; management records 12% NC Indicator 13. Contract Management Procedures Agency has well defined and written procedures for quality control, acceptance, and (a)  Compliant 82% compliant inspection of goods, works, and services Supervision of civil works is carried out by qualified construction supervisors (applicable for (b)  Compliant 85% compliant works only)  gency implements Contractors Performance Evaluation System for its works projects and (c) A Compliant 62% compliant uses results to check contractors qualifications (applicable for works only) Pillar III Scorea 3.00/1.00 1.85 Rating: Acceptable CD = calendar days, FC = fully compliant, NC = noncompliant, PC = partially compliant, SC = substantially compliant. a   Benchmark score for indicators 11(a) and (c), and 13 is 3. Benchmark score for indicators 8–10, 11(b), and 12 is 1. Source: CPAR Working Group, 2012. 33 Philippines Country Procurement Assessment Report 2012  ummary of Scores for Baseline Indicator 6: Efficient Procurement Operations Table 15  S and Practice Maximum Subindicator 2008 Score 2012 Score Score  he level of procurement competence among government officials within the 6(a) – T 1 1 3 entity is consistent with their procurement responsibilities  he procurement training and information programs for government officials 6(b) – T 2 2 3 and for private sector participants are consistent with demand  here are established norms for the safekeeping of records and documents 6(c) – T 0 2 3 related to transactions and contract management There are provisions for delegating authority to others who have the capacity 6(d) –  2 3 3 to exercise responsibilities Total Score 5 8 12 Average Score 1.25 2.0 3.0 Rating: 8/12 (67%), less-than-full achievement Source: CPAR Working Group, 2012. in training requirements, the GPPB conducts trainings for on required documents to be submitted in the technical procurement personnel upon the request of procuring entities. review and evaluation of goods, infrastructure projects, and In addition, civil society organizations (CSOs) offer training consulting services. Procuring entities maintain the above for their members who serve as observers in the procurement records, but these are not consolidated in an integrated process. Private sector groups, such as the Philippine procurement records management system, as they are kept Constructors Association, the Confederation of Filipino in different operating units. Consulting Organizations (COFILCO), and the Philippine Institute of Civil Engineers, provide regular training in public 92. Most procurement-related records are kept by the BAC procurement for their members. Three government agencies Secretariat, while contract-related records may be found offer trainings for their suppliers and bidders: the Department at the project management office or end-user unit. Further, of Health, the Department of Education (DepEd), and Bureau the disbursement and payment records are normally filed of Internal Revenue. The results of the APCPI assessment with the finance or accounting office of the procurement for Indicator 11b show that only 73% of the procurement entity. Records are generally kept for audit purposes. Of the personnel of the sampled agencies participated in the annual sampled agencies in the APCPI assessment, 76% claim to procurement training conducted by them, and only 41% of have a system for keeping procurement records; while 59% the sampled agencies have activities to inform and update claim to have a system for maintaining contract management bidders on public procurement. records. Given that many procuring entities are not aware of the issuance by the National Archive of the Philippines, there 91. Procurement and contract records management. is a need to inform all procuring entities about the existing General Circular No. 1 issued by the National Archive of the records management norms. Philippines on January 2009 provides rules and regulations governing the management of government records and 93. Delegation of procurement-related responsibilities. public archives, and specifies the list of documents that Procurement-related responsibilities are generally delegated to must be kept for operational purposes. These guidelines the lowest competent levels through orders issued by head of also cover procurement and supply records and specify the the procuring entity (HOPE). Most government agencies have periods for keeping various types of procurement documents. guidelines for the delegation and approval of procurement- The Commission on Audit (COA) issued Memorandum No. related actions, and compliance with these guidelines is being 2005-027 on 28 February 2005, which provides guidelines monitored through internal control mechanisms. 34 Findings, Assessments, and Recommendations  ummary of Scores for Baseline Indicator 7: Functionality of the Public Table 16  S Procurement Market Maximum Subindicator 2008 Score 2012 Score Score  here are effective mechanisms for partnerships between the public and 7(a) – T 2 2 3 private sector  rivate sector institutions are well organized and able to facilitate access to 7(b) – P 1 2 3 the market  here are no major systemic constraints (e.g., inadequate access to credit, 7(c) – T 1 2 3 contracting practices) inhibiting the private sector’s capacity to access the procurement market Total Score 4 6 9 Average Score 1.33 2.0 3.0 Rating: 6/9 (67%), less-than-full achievement Source: CPAR Working Group, 2012. 2.3.2 Functionality of the Public (the Philippine Constructors Association, COFILCO, and Procurement Market the Philippine Institute of Civil Engineers) provide trainings for their members who sit as BAC observers, while some  Findings government agencies conduct regular trainings for their suppliers and bidders. However, the level of competition in 94. The government obtained a score of 2 (less-than-full public bidding remains low, particularly in local government achievement of baseline standards) for Indicator 7. This is units (LGUs). There is still a need to conduct regular an improvement on the 2008 CPAR score of 1.33, as some trainings for the private sector, and create greater awareness of the earlier constraints to private sector participation have on the procedures and benefits of participating in public been overcome. For instance, the lack of access to credit procurement, especially at the local level. facilities has been addressed by the passage of the Magna Carta for Micro, Small and Medium Enterprises (MSMEs). 96. Private sector constraints to market access. The The limited participation of private sector organizations in the 2008 CPAR identified constraints that inhibit private sector public procurement consultation process, and the difficulties access to the procurement market, including cumbersome encountered in getting licenses and permits have also been eligibility requirements, difficulties in securing licenses and addressed through the issuance of streamlined licensing and permits, lack of access to credit, and substantial delays in registration requirements. Table 16 provides a summary of the payments. Some of these problems have been addressed ratings for this assessment. through the reduction in the number of required eligibility documents under the recent revision of the Implementing 95. Mechanisms for public–private partnerships Rules and Regulations (IRR). These include the streamlining in procurement. The Government Procurement Reform of licensing and registration procedures for contractors; the Act (GPRA) encourages private sector participation in development of a one-stop shop, web-based system that the procurement process by (i) using representatives integrates all to business registration, called the Philippine from professional organizations and nongovernment Business Registry; and an integrated regional registration organizations (NGOs) to serve as BAC observers in all through the National Economic Research and Business stages of the procurement process to ensure transparency, Assistance Centers. and (ii) ensuring that a private sector representative sits in the GPPB and in its interagency technical working group. 97. The Magna Carta for MSMEs addresses the issue As discussed earlier, selected professional organizations on lack of access to credit by providing for the mandatory 35 Philippines Country Procurement Assessment Report 2012 allocation of credit resources to MSMEs. In particular, all in the GPRA substantially meet the baseline standards. The lending institutions are required to allocate at least 8% of increase in scores from 2.33 in 2008 to 2.67 in 2012 was their total loan portfolios to micro and small enterprises, and brought about by the existence of key provisions on contract at least 2% for medium-sized enterprises. The Department administration. These were complemented by a high level of Public Works and Highways (DPWH) has also reduced the of compliance with Indicator 13 of the APCPI. While all the number of bidding requirements for infrastructure projects elements of a good dispute resolution process were met, from 20 to 5, through simplified bidding procedures; and has including enforcing dispute resolution outcomes, there is still adopted a new cost structure for determining the ABC, which no mechanism to monitor the results of dispute resolution minimizes leakages by reducing the allocation of indirect cases. Table 17 provides a summary of the scores for this costs by as much as 8%. There is still a need to improve Indicator. the systems and procedures for securing licenses and permits, and to streamline and link government registration 99. Contract administration. There are explicit provisions procedures. One of the constraints to market access that in the procurement regulations on contract administration was raised by CSOs during focus group discussions is the procedures, particularly for final acceptance, inspections, apparent interference by local government officials and tests, quality control, and issuance of contract amendments, politicians toward the procurement process. It appears as found in the general conditions of contract (GCC) and that, despite efforts to make the process more transparent, in the guidelines on contract implementation for each there are still some local government officials who influence type of procurement. The standard clauses in the GCC for procurement to favor selected bidders or contractors. There tests, inspection, and contract amendments are based were suggestions to strengthen project monitoring at the on internationally accepted standards, and are largely local government level to discourage the practice. harmonized with those of ADB, the Japan International Cooperation Agency (JICA), and the World Bank. Agencies 2.3.3 Contract Implementation and Completion implementing infrastructure projects carry out the supervision of these projects through qualified construction supervisors,  Findings and the majority implement the Contractors Performance Evaluation System to check contractors’ performance and 98. The government received a score of 2.67 for Indicator 8, as qualifications. This is validated by the APCPI results for the contract administration and dispute resolution provisions Indicator 13 (Table 14). Most sampled agencies followed  ummary of Scores for Baseline Indicator 8: Existence of Contract Administration Table 17  S and Dispute Resolution Provisions Maximum Subindicator 2008 Score 2012 Score Score  rocedures are clearly defined for undertaking contract administration 8(a) – P 2 3 3 responsibilities that include inspection and acceptance procedures, quality control procedures, and methods to review and issue contract amendments in a timely manner Contracts include dispute resolution procedures that provide for an efficient and 8(b) –  3 3 3 fair process to resolve disputes arising during the performance of the contract 8(c) – Procedures exist to enforce the outcome of the dispute resolution process 2 2 3 Total Score 7 8 9 Average Score 2.33 2.67 3.00 Rating: 8/9 (89%), substantial achievement Source: CPAR Working Group, 2012. 36 Findings, Assessments, and Recommendations Box 4  Summary of Recommendations for Pillar 3 • The Government Procurement Policy Board (GPPB), in close coordination with the Civil Service Commission and the Department of Budget and Management, should develop qualification standards for procurement personnel, and finalize and implement the proposed career stream for public procurement practitioners. • The GPPB should issue a supplemental circular adopting the National Archives Office and Commission on Audit guidelines on the maintenance, safety, security, and custody of procurement and contract management records, including the existence of the necessary infrastructure to support such systems for all types of procurements and procuring entities. • On the request of the private sector, the GPPB and the Department of Trade and Industry (DTI) should expand current initiatives on procurement training through a distance learning approach, to encourage more bidders to learn about the Government Procurement Reform Act under a more facilitative environment. • The DTI, through the Philippine Trade Training Center, and other related training agencies should include modules on how to access government procurement opportunities in its entrepreneurship training for small and medium-sized enterprises (SMEs). The GPPB, in collaboration with the private sector, should likewise develop a primer on government procurement to assist SMEs. The communications plan should be implemented to include SMEs. • The DTI should include an option under the Philippine Business Registry for the registration of business enterprises that want to get involved in government procurement. To improve information sharing among government agencies, the Philippine Government Electronic Procurement System should also link with other databases of related licenses and registration requirements. The GPPB should incorporate in the revised bidding documents procurement process flow charts, lists of requirements, tables of fees, and timelines for securing procurement-related licenses. In order to improve the licensing and registration system for contractors and consultants, the Philippine Contractors Accreditation Board licensing system should be digitized, and a system for the categorization and classification of government consultants should be developed and implemented. • The Department of Public Works and Highways should include penalties for noncompliance with the detailed engineering guidelines in its Design Guidelines, Criteria and Standards, and should adopt such guidelines in all major infrastructure projects. The Commission on Audit should monitor compliance with these guidelines by including them in the Guide in the Audit of Procurement. The foregoing recommendations are part of the 2012 Country Procurement Assessment Report Action Plan. Source: CPAR Working Group, 2012. the GPRA provisions on quality control; acceptance; and weakness that was also identified in the 2008 CPAR Action the inspection of goods, works and services. For agencies Plan is the inability of some agencies to comply with guidelines implementing infrastructure projects, 85% of works supervision on detailed engineering, particularly the conduct of feasibility was carried out by qualified construction supervisors, while or preliminary engineering studies to establish the technical 62% implemented the Contractors Performance Evaluation viability of projects. System for their projects. One of the recommendations of the 2008 CPAR Action Plan is to pilot value engineering as a policy 100. Dispute resolution. All disputes arising from the for selected infrastructure projects costing over P50 million. implementation of contracts are required to be submitted The DPWH reports that value engineering is now conducted for arbitration in accordance with Republic Act (RA) 876 in all its foreign-assisted projects (FAPs). Procedures for the (the Arbitration Law) and RA 9285 (the Alternative Dispute application of value engineering will be developed for all types Resolution Act of 2004). Executive Order (EO) 1008 also of projects and funding sources under the revised Guidelines created an arbitration machinery for construction disputes. for Design and Build Projects. The release of final payments Section 59 of RA 9184 states that the parties to a contract has also improved, as APCPI pilot agencies reported 90% may agree in writing to other alternative modes of dispute compliance with contract provisions on payment, upon the resolution. The GCC has standard clauses pertaining to the complete submission of required documents. An area of settlement of disputes through arbitration. The government 37 Philippines Country Procurement Assessment Report 2012 allows international arbitration for contracts involving 103. For the 2012 assessment, the government showed international competitive bidding, provided that such partial compliance with the baseline standards, having adherence to international arbitration is clearly stated in the obtained a score of 2.09. This reflects a slight increase from conditions of the loan agreement and contract documents. the 2008 CPAR score of 1.96 (Table 18 and Graph 4). The government obtained an average score of 1.80, or partial 101. Enforcement of dispute outcomes. The Philippines is achievement of baseline standards, for Indicator 9 on effective a member of the New York Convention on the Enforcement of control and audit systems. This reflects a slight increase from Arbitral Awards, and was a signatory to the Arbitration Rules the 2008 CPAR average score of 1.60, due to the development and Model Law on International Commercial Arbitration of and implementation of the Guide in the Audit of Procurement the United Nations Commission on International Trade Law (GAP), and a training program for external auditors. The on 21 June 1985. The model law is incorporated in RA 9285 government obtained an average score of 1.0, or limited and Section 60 of RA 9184, and provides that arbitral awards achievement, for Indicator 10 on the efficiency of the appeals are appealable by way of petition for review to the Court of mechanism, which reflects a decline from the 2008 average Appeals. Arbitration as a dispute resolution mechanism is score of 1.8, due to issues on the existence of an independent based on the mutual agreement of parties. It is assumed complaints review body. Indicator 11, on the degree of access that both parties will honor the decision rendered by the to information, registered a score of 3, or full achievement of duly appointed arbitrator. However, the party may still go to baseline standards. This is an increase from the 2008 CPAR court for the enforcement of arbitral award. Foreign arbitral average score of 2.0, due to compliance with all the conditions awards, although final and binding upon the parties, are not set for this indicator. Indicator 12, on ethics and anticorruption immediately executory in the Philippines, as these have to measures, showed an average score of 2.57 (substantial be confirmed by the regional trial court to be enforceable. achievement), which is a slight increase from the 2008 Considering that foreign arbitral awards are subject to judicial CPAR average score of 2.43, due to the existence of special review, the regional trial court may also reject, vacate, or set measures to prevent and detect fraud and corruption in public aside an award under specified grounds. A decision issued by procurement. the regional trial court assailing the foreign arbitral award is appealable to the Court of Appeals, and then to the Supreme 104. The APCPI findings for this pillar show that agencies Court under Rule 45 of the Rules of Court. Monitoring of generally comply with the requirement to invite CSOs or outcomes of the dispute resolution cases continues to be professional associations to serve as observers in public weak due to the absence of procedures. bidding activities, but the frequency of CSO attendance is only 35% (Table 19). CSO participation as independent observers in the procurement process faces many challenges, particularly 2.4 Pillar IV: Integrity and Transparency in the area of sustainability. The findings further show that of the Public Procurement System 94% of sampled agencies have internal audit units, and that 69% of these agencies have reported that the internal audit 102. Pillar IV focuses on the availability of mechanisms units regularly conduct audits of procurement processes and on, and the capacity for, independent control and audit transactions. Of the sampled agencies, 87% claimed that of procurement operations to ensure accountability and they comply with the number of days to resolve requests compliance. It also looks at complaints systems, the ability for reconsideration and protests, based on the prescribed to challenge decisions with administrative and judicial review timelines under the GPRA, but only 21% of these agencies bodies that possess appropriate levels of independence submit all decisions to the GPPB and post these on the and authority to impose corrective measures and remedies, agency and GPPB websites. The low rate of compliance is due and the existence of mechanisms to enforce anticorruption to the fact that most agencies are not aware of the directives measures. There are four indicators under Pillar IV: Indicator 9 to submit and post such decisions. In terms of compliance on the existence of an effective control and audit system, with anticorruption measures, 88% of agencies have specific Indicator 10 on the efficiency of appeals mechanisms, anticorruption programs, such as integrity development action Indicator 11 on the degree of access to information, and plans and integrity development reviews. Indicator 12 on ethics and anticorruption measures. 38 Findings, Assessments, and Recommendations  ummary of Baseline Indicator Scores for Pillar IV: Integrity and Transparency Table 18  S of the Public Procurement System Maximum Indicators 2008 Score 2012 Score Score Indicator 9: Effective Control and Audit System 1.60 1.80 3 Indicator 10: Efficiency of Appeals Mechanism 1.80 1.00 3 Indicator 11: Degree of Access to Information 2.00 3.00 3 Indicator 12: Ethics and Anticorruption Measures 2.43 2.57 3 Average Score 1.96 2.09 3 Rating: 35/54 (65%), partially achieved Source: CPAR Working Group, 2012. Graph 4  Integrity and Transparency of the Public Procurement System 3.0 2.5 2.0 1.5 3.00 2.43 2.57 1.0 1.96 2.09 2.00 1.60 1.80 1.80 0.5 1.00 0.0 Pillar IV: Integrity Indicator 9: Indicator 10: Indicator 11: Indicator 12: and Transparency Effective Control Efficiency of Degree of Ethics and of the Public and Audit System Appeals Access to Anticorruption Procurement Mechanism Information Measures System 2008 Score 2012 Score Source: CPAR Working Group, 2012. 2.4.1  Internal Control and Audit brought about by the development and rollout of the GAP. There was no improvement in Indicator 9c, due to the absence  Findings of procurement-related internal control requirements that define the procedures for periodic reporting and compliance 105. Indicator 9 on effective control and audit systems with findings. Table 20 shows the summary of scores for this reflected a rating of 60% compliance, or partial achievement indicator. of baseline standards. This indicates a minimal improvement from the previous assessment, as gaps in the internal 106. Legal framework for internal and external control. control systems have not yet been fully addressed. The slight The Commission on Audit (COA) derives its mandate from increase in the score from 1.60 in 2008 to 1.80 in 2012 was the 1987 Constitution, and is authorized to audit all accounts 39 Philippines Country Procurement Assessment Report 2012  ummary of Agency Procurement Compliance and Performance Indicator Results Table 19  S for Pillar IV: Integrity and Transparency of the Agency Procurement Systems Assessment Conditions Benchmark 2010 Average Resultsa Indicator 14. Civil Society Participation in Public Bidding Civil society organizations or professional associations are invited for every public (a)  100% Compliant 94% compliant bidding activity Percentage of civil society and/or professional organizations’ attendance in public (b)  20% of activities 35% of activities bidding activities attended attended Indicator 15. Internal and External Audit of Procurement Activities Creation and operation of internal audit unit as prescribed by the Department of (a)  Compliant 94% compliant Budget and Management (Circular Letter No. 2008-5, 14 April 2008) Conduct of regular audit of procurement processes and transactions by internal (b)  Compliant 69% compliant audit unit nternal audit recommendations on procurement-related matters are implemented (c) I Compliant 69% compliant within 6 months of the submission of the auditor’s report Agency Action on Prior Year’s Audit Recommendations on procurement-related (d)  60%–70% Compliant 80% of transactions recommendations Indicator 16. Capacity to Handle Procurement-Related Complaints The Bids and Awards Committee resolved Motion for Reconsiderations, Protests (a)  Compliant 87% compliant and Complaints within 7 calendar days as per Section 55 of the Implementing Rules and Regulations All decisions on monitoring reports/complaints/protest are submitted to the (b)  Compliant 21% compliant Government Procurement Policy Board, and the dispositive portion are publicly posted in the agency and the board’s websites Indicator 17. Anticorruption Programs Related to Procurement Agency has specific anticorruption program related to integrity development (e.g., an (a)  Compliant 88% compliant integrity development action plan and/or an integrity development review) Agency has specific policies and procedures in place for detection and prevention of (b)  Compliant 63% compliant corruption associated with procurement. Pillar IV Score 1.00 2.02 Rating: Satisfactory a   The benchmark score for indicators 14 (a), 15 (a, b, and c), 16, and 17 is 3. The benchmark score for indicators 14 (b) and 15 (d) is 1. Source: CPAR Working Group, 2012. pertaining to the utilization of government funds nationwide, of agencies through the creation of internal audit services in including procurement-related transactions. The COA’s all government agencies. The DBM also issued the National power to conduct an external audit is further strengthened Guidelines on Internal Control Systems in October 2008 by the Government Auditing Code and the Government to guide all government agencies and LGUs in designing, Accounting and Auditing Manual. Audits of national implementing, and monitoring their internal control systems. government agencies (NGAs) and LGUs are conducted on an This includes internal control and management procedures annual basis. In terms of internal control, the Department of for processing of procurement actions. The Government Budget and Management (DBM) issued Administrative Order Auditing Code and the Government Accounting and Auditing 70 in March 2004 to strengthen the internal control systems Manual discuss the procedures for internal control and 40 Findings, Assessments, and Recommendations Table 20  Summary of Scores for Baseline Indicator 9: Effective Control and Audit System Maximum Subindicator 2008 Score 2012 Score Score  legal framework, organization, policy, and procedures for internal and 9(a) – A 2 2  3 external control and audit of public procurement operations are in place to provide a functioning control framework  nforcement and follow-up on findings and recommendations of the control 9(b) – E 2 2  3 framework provide an environment that fosters compliance  he internal control system provides timely information on compliance to 9(c) – T 1 1  3 enable management action The internal control systems are sufficiently defined to allow performance 9(d) –  2 2  3 audits to be conducted  uditors are sufficiently informed about procurement requirements and 9(e) – A 1 2  3 control systems to conduct quality audits that contribute to compliance Total Score 8 9 15 Average Score 1.60 1.80 3.00 Rating: 9/15 (60%), partial achievement Source: CPAR Working Group, 2012. management of all financial transactions. In 2011, the properly addressed are normally carried over to the next audit DBM issued a circular requiring the use of the Philippine period, and are not reported again until the agency concerned Government Internal Audit Manual (PGIAM) to explain and fully complies with the audit recommendations. The audit clarify the nature and scope of internal audit in the public report includes a section called Action on Prior Year’s Audit sector. Training on the rollout of the PGIAM started in 2012. Recommendations that monitors this activity. A 2010 review The GAP developed by COA follows a risk-based approach of audit reports of major procuring entities and LGUs shows and has specific risk-based tools, but procurement audit has that about 20%–30% of audit findings relate to procurement. not yet been fully implemented. On 20 October 2011, the COA These include noncompliance with the GPRA’s provisions issued Resolution No. 2011-009, adopting the integrated on procurement methods, the improper use of alternative results- and risk-based audit methodology, and the use of methods, the preparation of unreasonable approved budgets the Integrated Results- and Risk-Based Audit Manual, for the contract (ABCs), splitting of contracts, failure to including the Forensic Audit Manual, as primary guides for properly post-qualify contractors, and failure to prepare the conduct of an integrated audit of agencies. correct annual procurement plans (APPs). 107. Enforcement and follow-up on audit findings and 108. The 2010 Audit Report on Official Development Assistance recommendations. Financial audits are carried out annually Projects identified procurement-related deficiencies in several by the COA as part of its mandate to report on the accounts of FAPs, such as unrealistic targets, delays in procurement all agencies and instruments of government to Congress and schedules, unclear criteria in evaluating technical proposals, the President of the Philippines. Internal audits of procurement delays in the review and evaluation of documents, incomplete activities are likewise required to be carried out annually by deliverables, and contracting without covering appropriations. the internal audit services of government agencies. COA The APCPI assessment shows that 69% of agencies conduct resident auditors prepare their audit reports annually, but regular internal audits of procurement transactions, 69% comply responses to the auditors’ recommendations can take up with audit findings and recommendations within 6 months of the to a year to be enforced. Audit findings that have not been submission of the auditor’s report, and an average of 80% of 41 Philippines Country Procurement Assessment Report 2012 audit recommendations found in the Action on Prior Year’s Audit APCPI results show that 94% of all sampled agencies had Recommendations are implemented within the year. IAUs, as prescribed under Circular 2008-5. For the most part, these IAUs were found to be performing pre-audit functions, 109. Internal audit units in national agencies and local and were checking the completeness of supporting documents government units. Administrative Order 70 authorizes in a manner that did not meet international internal auditing the creation of internal audit units (IAUs) in all government standards. Moreover, the establishment of formal IAUs was agencies. DBM Circular 2008-5, issued on 14 April 2008, affected by the delay in the approval of the Rationalization provides guidelines on the organization and staffing of internal Plan of agencies. The 2008 CPAR states that more than 65% audit services, IAUs, and management divisions in all NGAs of LGUs (cities and municipalities) do not have IAUs. and government owned and controlled corporations (GOCCs). The World Bank has supported efforts to strengthen IAUs 110. Internal control system and procedures. Although nationwide by assessing the quality of the internal audit the DBM issued the PGIAM in 2011 to guide internal auditors function and developing an internal audit manual for national on the nature and scope of internal audit functions and the agencies in accordance with international standards. The institutional arrangements, protocols, and processes for Australian Agency for International Development likewise the conduct of internal audits, there appears to be limited supported the development of the PGIAM. In 2011, IAUs information on procurement audits in the PGIAM. There is a existed in 67% of NGAs, 40% of constitutional commissions, need to review and propose amendments to the PGIAM to 50% of legislative agencies, and 62% of GOCCs. Table 21 include specific procedures on internal audits of procurement, provides a breakdown of all government agencies with IAUs, and mainstream the enforcement and follow-up of internal showing a national compliance level of 62% as of 2011. The audit findings and recommendations. Once procurement Table 21  Government Agencies with Internal Audit Services, 2011 No. of Agencies Authorized No. of Agencies No. of Agencies Percentage Government Entity to Establish IAS with IAU Yet to Create IAU Compliance (%) Departments  21 14  7  67 Constitutional commissions   5  2  3  40 Legislative agencies   2  1  1  50 Judicial agencies   1  1  0 100 Government owned and controlled corporations/  77 48 29  62 Government financial institutions Total 106 66 40   62 Source: Department of Budget and Management Oversight Unit for Internal Audit. Table 22  Government Agencies with Internal Audit Services, March 2013 No. of Agencies Authorized No. of Agencies No. of Agencies Percentage Government Entity to Establish IAS with IAU Yet to Create IAU Compliance (%) Departments  21 18  3  86 Constitutional commissions   5  2  3  40 Legislative agencies   2  1  1  50 Judicial agencies   1  1  0 100 Government owned and controlled corporations/  77 52 25  68 Government financial institutions Total 106 74 32   70 Source: Department of Budget and Management Oversight Unit for Internal Audit. 42 Findings, Assessments, and Recommendations becomes an inherent component of internal auditing, written 112. Appeals process. The GPRA allows decisions of the standards for internal control units should be developed in Bids and Awards Committee (BAC) to be questioned through accordance with international standards. Moreover, the the filing of a request for reconsideration. There are also clear timelines for reporting and monitoring compliance are not procedures for the filing of protests. Protests are resolved clear, and there is a need for the DBM to clarify the period strictly on the basis of records available with the BAC within a for the implementation of approved audit findings and the period of 7 days. The head of the procuring entity (HOPE) has issuance of audit follow-up reports. Oversight agencies, the authority to resolve the protest and render a final decision such as the DBM, the COA, and the Civil Service Commission up to the limit of his or her contract-approving authority. (CSC), should complete and mainstream internal control A protest may be filed after paying a nonrefundable protest systems in all government agencies, and monitor compliance fee of not less than 1.0% of the ABC. The fee requirement may among these agencies. discourage bidders from filing protest, particularly with respect to large value procurements. A protest mechanism study was 2.4.2  Efficiency of Appeals Mechanism conducted in 2010 with ADB and World Bank support, to review the existing appeals institutions for procurement under  Findings the GPRA. 111. Indicator 10 reflected a rating of 33% compliance, or 113. The study concluded that the appeals process is significantly below baseline standards, because of the lack not transparent and provides unclear procedures on the of an independent complaints review body, lack of access submission of evidence, pleadings, hearings, and remedies. to decisions on appeal, and limited availability of records on The complainant is not given the right to present evidence which to base decisions. All these elements are essential to beyond the documents submitted during the bidding process. ensure the integrity of the public procurement system (PPS). The 2012 score of 1.00 is lower than the 2008 score of 1.8. 114. Administrative review and enforcement of This is mainly due to the findings of the protest mechanism remedies. The complaints review system has specific study that no independent appeals mechanism exists. Table 23 procedures, reasonable conditions, and timelines for provides a summary of the ratings for this assessment. decisions. The enforcement authority and mechanisms are Table 23  Summary of Scores for Baseline Indicator 10: Efficiency of Appeals Mechanism Maximum Subindicator 2008 Score 2012 Score Score  ecisions are deliberated on the basis of available information, and the final decision 10(a) – D 3 1  3 can be reviewed and ruled upon by a body (or authority) with enforcement capacity under the law  he complaint review system has the capacity to handle complaints efficiently and a 10(b) – T 3 3  3 means to enforce the remedy imposed  he system operates in a fair manner, with outcomes of decisions balanced and 10(c) – T 2 0  3 justified on the basis of available information  ecisions are published and made available to all interested parties and to the public 10(d) – D 1 1  3  he system ensures that the complaint review body has full authority and 10(e) – T 0 0  3 independence for resolution of complaints Total Score 8 5 15 Average Score 1.8 1.0 3.0 Rating: 5/15 (33%), poor or limited achievement Source: CPAR Working Group, 2012. 43 Philippines Country Procurement Assessment Report 2012 clearly established under Sections 55 to 58 of Republic Act 117. Complaints review body. The HOPE is the first level of (RA) 9184. Due to the requirement in the GPRA that protests authority that reviews decisions of the BAC under the GPRA. should be resolved strictly on the basis of records of the However, there are views that the HOPE is not an independent BAC, other available and potentially relevant sources of review authority, as he or she is part of the procuring entity information are not utilized. The limited source of information handling the procurement activity concerned. When an also raises doubts on the quality of decisions taken on aggrieved bidder wants to appeal a decision or decisions appeal. In addition, the provision for a higher judicial review of the HOPE, the Office of the President may serve as the is considered a difficult option, because of the slow pace independent administrative body that reviews procurement- of the judicial process. Therefore, there is no guarantee related decisions under the Administrative Code of 1987. The that remedies will be relevant and effective in correcting GPRA further provides that decisions of the HOPE are subject questionable decisions. to judicial review by the regional trial court. 115. The protest mechanism study also notes that the GPRA 118. During the conduct of the 2008 CPAR, the Organisation does not clearly specify procedures to enforce remedies, and for Economic Co-operation and Development (OECD) clarified that there is generally no possibility of seeking a suspension that the complaints mechanism refers to an independent of the decision or contract. In response to these findings, the administrative review body, rather than judicial review. The protest mechanism study recommends (i) a review of the protest mechanism study found that the existing mechanism current procedures for the filing of complaints, so that these under the GPRA falls short in terms of independence specify the grounds for the filing of requests for reconsideration and autonomy. One of the options recommended was for and protests; (ii) drawing up of guidelines to explain that the Government Procurement Policy Board to act as the complaints can be made against substantive decisions, and interim complaints review body, but this may conflict with are not simply based on compliance with formal requirements; its policy-making responsibilities. For these reasons, it (iii) inclusion of remedies that the BAC and the HOPE may was recommended that the government should consider impose to address breaches, such as the ability to annul establishing an independent complaints review body. individual acts; and (iv) the possibility of rendering decisions to correct and amend documentation. The APCPI findings 2.4.3  Degree of Access to Information show satisfactory compliance by BACs to resolve requests for reconsideration and protests, as prescribed by the GPRA.   Findings However, there were questions on the effectiveness of such protest mechanisms to resolve issues and complaints. 119. The government fully achieved the baseline standards for degree of access to procurement information under 116. Publication of decisions. The publication of decisions Indicator 11. It was found that procurement information on requests for reconsideration and protests was previously (i) is easily accessible in media of wide circulation and not mandatory and was left to the discretion of the BAC and availability; (ii) can be found at a centralized location; (iii) is the HOPE. This discretion led to a lack of transparency and relevant and complete; and (iv) helps interested parties to accountability on decisions rendered. With the issuance understand the procurement processes and requirements, of Executive Order 662-A, all NGAs, GOCCs, GFIs, state and monitor outcomes, results, and performance. This reflects universities and colleges, and LGUs are directed to make all an improvement from the 2008 CPAR assessment results. procurement-related information available to the Procurement However, an issue remains with respect to communicating Transparency Group and the general public on a timely basis, the GPRA to LGUs. Therefore, there is a need to implement a except those that are legally and judicially restricted. Decisions strategic communication plan to increase awareness of the on complaints and protests are therefore mandated to be GPRA, especially in the LGUs. Table 24 provides a summary of published or posted on the website of the agency concerned. the rating for this indicator. However, not all agencies are aware of such requirement and the results show that most do not comply with the executive 120. Publication of procurement information. In the issuance. context of the Methodology for Assessing Procurement Systems (MAPS), public access to procurement information 44 Findings, Assessments, and Recommendations Table 24  Summary of Scores for Baseline Indicator 11: Degree of Access to Information Maximum Subindicator 2008 Score 2012 Score Score nformation is published and distributed through available media with 11(a) – I 2 3 3 support from information technology when feasible Total Score 2 3 3 Average Score 2 3 3 Rating: 3/3 (100%), full achievement Source: CPAR Working Group, 2012. is essential to transparency and creates a basis for a the plan at the subnational level is to support the activities social audit by interested stakeholders. As such, ease of sponsored by university networks and the knowledge for access should be characterized by quality, relevance, and development centers, which have high levels of interest in comprehensiveness of information on the PPS. To date, procurement reforms. Another avenue for communicating the the Philippine Government Electronic Procurement System implementation of transparency in public procurement is to (PhilGEPS) website (www.philgeps.net) serves as the primary review and scale-up the geo-tagging model developed by the source of information on public procurement, specifically on Department of Agriculture for its Mindanao Rural Development bid opportunities, contracts awarded, and other procurement- Project. This project uses geo-tagging to enhance transparency related statistics and updates. In addition, the GPPB website in procurement and support the supervision of contracts that (www.gppb.gov.ph), provides information on procurement include farm-to-market roads, bridges, irrigation, agro-forestry, policies, guidelines, issuances, trainings, and workshops, and marine sanctuary rehabilitation. Photographs of projects and other reference materials on public procurement. It at different stages of implementation are geo-tagged, which also provides a forum for real-time online discussions on allows bidders and other stakeholders, including the general procurement issues and concerns, through the online chat public and civil society organizations (CSOs), to conduct virtual support and discussion board. Finally, it posts the names visits to projects in remote and conflict-affected areas. of companies and firms that are blacklisted and suspended from participating in government procurement. The Uniform 122. Public disclosure policy. Civil society has been Guidelines on Blacklisting requires all agencies to publish clamoring for a systematic and rationalized disclosure policy blacklisted company names on the GPPB website. The APCPI for procurement information. The proposed Freedom of assessment shows that most agencies have easily accessible Information Act was approved by the Senate on 14 December websites that provide minimum and up-to-date procurement 2009, but still needs to be enacted. The latest version of information at no cost. the Freedom of Information Act filed in Congress includes a provision on the protection and/or disclosure of procurement- 121. Strategic communication plan. The desired impact related proprietary, commercial, or financial information that is of the GPPB’s proposed strategic communication plan is to sensitive in nature. As such, there is a need to advocate for the provide information to show that procurement reforms are passage of this bill in both houses of Congress. being implemented successfully. The 2008 CPAR initiated the preparation of the communications plan. The plan involved 2.4.4 Ethics and Anticorruption Measures the conduct of a survey to gauge citizens’ awareness of the GPRA. However, the plan remains unimplemented due  Findings to insufficient resources. Multilateral development banks (MDBs) may consider allocating resources to implement the 123. The government received a rating of 86% compliance strategic communication plan as part of capacity development for Indicator 12, or almost full achievement of the baseline technical assistance in their projects. One way to implement standards, as it has sufficient ethics and anticorruption 45 Philippines Country Procurement Assessment Report 2012 measures in place. This is an improvement from the 2008 enforced. There is also a need to organize information on the CPAR rating. Table 25 provides a summary of the ratings for number of procurement-related graft cases filed, prosecuted, this assessment. and resolved, which will allow stakeholders to monitor the enforcement of decisions. 124. Evidence of enforcement of rulings. The GPPB has begun uploading to its website procurement-related Supreme 125. Special measures to prevent and detect fraud and Court decisions from 1959 to the present. The Sandiganbayan24 corruption in public procurement. The government has (www.sb.judiciary.gov.ph) also posts on its website decisions several special measures to prevent and detect fraud and and resolutions of cases from 2001 to the present. Further, corruption in public procurement. However, these initiatives the COA and the Office of the Ombudsman (OMB) share a need to be integrated into a comprehensive program to be database on their procurement-related cases. Nevertheless, more effective. They should also consider the findings and there is a need to strengthen information gathering on recommendations of both the internal (IAS) and external procurement-related cases that have been prosecuted and (COA) auditors. There are a number of activities led by the decided upon. For example, a separate level of monitoring private sector that combat corruption. Under the Unified and analysis is needed to verify whether penalties were Code of Conduct for Business of the Integrity Initiative—a Summary of Scores for Baseline Indicator 12: Ethics and Anticorruption Measures Table 25   Maximum Subindicator 2008 Score 2012 Score Score  he legal and regulatory framework for procurement, including tender and 12(a) – T 3 3 3 contract documents, includes provisions addressing corruption, fraud, conflict of interest, and unethical behavior and sets out (either directly or by reference to other laws) the actions that can be taken with regard to such behavior  he legal system defines responsibilities, accountabilities, and penalties for 12(b) – T 3 3 3 individuals and firms found to have engaged in fraudulent or corrupt practices 12(c) – Evidence of enforcement of rulings and penalties exists 2 2 3  pecial measures exist to prevent and detect fraud and corruption in public 12(d) – S 2 3 3 procurement  takeholders (private sector, civil society, and ultimate beneficiaries of 12(e) – S 2 2 3 procurement/end-users) support the creation of a procurement market known for its integrity and ethical behaviors  he country should have in place a secure mechanism for reporting fraudulent, 12(f) – T 2 2 3 corrupt, or unethical behavior  xistence of Codes of Conduct/Codes of Ethics for participants that are 12(g) – E 3 3 3 involved in aspects of the public financial management systems that also provide for disclosure for those in decision making positions Total Score 17 18 21 Average Score 2.43 2.57 3.00 Rating: 18/21 (86%), substantial achievement Source: CPAR Working Group, 2012. The Sandiganbayan is the special anti-graft court of the Philippines, which has jurisdiction over criminal and civil cases involving graft and corrupt practices, and other 24 offenses committed by public officers and employees, including those in GOCCs. (1987 Philippine Constitution, Article XI, Section 4) 46 Findings, Assessments, and Recommendations campaign led by the private sector that aims to promote 128. Government performance on blacklisting. The common ethical standards among various sectors of GPPB issued the Uniform Guidelines on Blacklisting and society—some businesses have agreed to avoid any posts a consolidated blacklisting report on its website for involvement in procurement-related corrupt practices. This the guidance of all government agencies. The Philippine code also communicates rules and guidelines on giving or Contractors Accreditation Board under the Construction receiving gifts, entertainment, tokens of hospitality, and Industry Authority of the Philippines has its own guidelines contributions to or from public and private organizations; for blacklisting contractors under Sections 11–15 of RA and prohibits businesses’ employees and all third parties 4566 (the Contractor’s Licensing Law). If a contractor engaged by their companies from offering, promising, is found guilty of an offense, its license will be revoked or giving, demanding, or accepting concessions—directly or suspended for a fixed period of time. It may also be required indirectly—to obtain, retain, or secure any undue advantage to pay a fine. The blacklisting covers both government and in the conduct of business. They also committed to abide by private contracts. Government entities should also submit existing laws (i.e., RA 6370 and RA 3019) when transacting the names of blacklisted and suspended suppliers or with government agencies. contractors to the GPPB for publication on its website. As of 2011, there were 92 blacklisted contractors on the Philippine 126. The Coalition Against Corruption, an alliance of the Contractors Accreditation Board list and 10 blacklisted academe, business, CSOs, and the Catholic Church, in suppliers. The most common offenses include (i) failure to coordination with the Partnership for Transparency Fund, complete contracts or projects; (ii) contract abandonment, or also made efforts to engage civil society groups in setting up failure to comply with contractual obligations or any lawful public procurement monitors in the national and local levels. instructions; (iii) intolerable negative slippage of more than Better coordination of these anticorruption initiatives is 15%; (iv) falsification of public documents; (v) materials that needed. The efforts of the government and private sector do not comply with specifications; (vi) poor performance; and (business enterprises, CSOs, professional associations, and (vi) unsatisfactory quality of work. There was a significant Church-based groups) should be synchronized, and these decline in the number of blacklisted contractors since 2008 should complement each other to create a meaningful impact (from 182 in 2008 to 92 in 2011), but there was also an in fighting corruption in public procurement. increase in the number of government agencies that reported blacklisted suppliers, from only 1 in 2008 to 10 in 2011. This 127. Different government agencies have their own is an indication of improved compliance with the blacklisting anticorruption programs. The OMB is the primary agency procedures and the requirement to submit the names of in the Constitution tasked to address graft and corruption blacklisted firms to the GPPB. However, the situation is in government, and it has embarked on a number of different for LGUs. As reported in the 2008 CPAR, not all LGUs anticorruption initiatives: are aware of the GPPB’s Blacklisting Guidelines, and those • A lifestyle check of public servants, where the that are aware seldom comply. While some LGUs admitted actual assets of officials holding sensitive positions that some suppliers and contractors fail to perform under a are compared with their income from government contract, they only reprimanded them. service. • The recovery of ill-gotten wealth and unlawfully 129. Application of national blacklisting to multilateral acquired assets of government officials. development bank-funded projects. Under their guidelines, • The Integrity Development Review (IDR) which looks the MDBs may agree to recognize the debarment process at how government agencies are internally addressing of borrowing countries within certain conditions. However, corruption and governance issues. this option has not yet been exercised by the MDBs. On the • A multisectoral anticorruption council that was other hand, Section 25.2 of the Implementing Rules and launched in March 2007, involving the executive Regulations (IRR) of the GPRA requires a bidder to execute a department, Congress, judicial and constitutional sworn statement attached to its bid that “it is not blacklisted or bodies, LGUs, and CSOs. The council serves as the barred from bidding by the government or any of its agencies, or consultative and coordinating body for the National LGUs, including foreign government or foreign or international Anti-Corruption Program of Action. financial institutions (IFIs), whose blacklisting rules have been 47 Philippines Country Procurement Assessment Report 2012 recognized by GPPB.” The conditions set by the IRR and the • development of a CSO participation framework requirements imposed by the MDBs make it difficult to achieve to clarify the roles and contributions of CSOs in harmonization in this area. procurement monitoring in a manner that allows and respects the diverse philosophies and motivations of 130. Civil society organization and private sector the CSO community; participation in public procurement. The GPRA requires the • provision of common procurement monitoring participation of civil society and private sector observers to deliverables, tools, procedures, standard manuals, ensure transparency, competition, accountability, and integrity and basic training content; of the procurement process. These organizations serve as • establishment of a CSO registry, with the Government independent sources of information that may be used to report Procurement Policy Board Technical Support Office actual violations of the law and possible improvements to the (GPPB-TSO) leading the process and engaging CSOs procurement policy. Several CSOs participate as observers, in setting registry parameters; including Transparency International Philippines, Procurement • improvement of CSO access to information about Watch Incorporated, the Transparency and Accountability procurement activities, and technical and financial Network, Government Watch, the Abra Group for Good support, including incentives and recognition; Governance, the Catholic Bishops Conference of the Philippines • conducting of an in-depth study to develop appropriate (CBCP)–Sangguniang Laiko ng Pilipinas (Laiko). The Makati mechanisms for establishing sustainable financing Business Club has organized the Philippine Procurement and explore the establishment of a common fund from Network, an association composed of several CSOs involved in such options as (i) official development assistance, public procurement. private sector, or savings from procurement; (ii) a small percentage of project cost; (iii) part of the fees paid by 131. In addition, professional organizations such as suppliers (e.g., documents, registration); (iv) funds the Philippine Constructors Association, the National embedded in the cost of a procurement monitoring Confederation of Contractors Association, the Philippine project; and (v) a CSO participation fund from the Institute of Civil Engineers, the Confederation of Filipino Department of the Interior and Local Government; Consulting Organizations (COFILCO), the Philippine Institute the study should provide details on the management of Certified Public Accountants, and the Philippine Chamber of structure of the common fund, the specific uses and Commerce and Industry have representatives who participate disbursement of funds, the responsibilities of the as observers. All are involved in the procurement process CSOs, and mechanisms for transparency. in different government agencies and in various parts of the country. Some CSOs have conducted social audit and social 133. The Japan Social Development Fund supports a project control operations. In the area of capacity development, a CSO that aims to strengthen the participatory engagement of manual on procurement monitoring was developed and rolled communities in the regular activities of barangay and municipal out in 2012 in selected municipalities. The CBCP-Laiko has also BACs. The Transparency and Accountability Network and the developed a training manual (Observers for Good Governance) GPPB are implementing this project. The project is intended for its own observers. to support the institutionalization of participatory procurement processes, whereby communities and civil society groups 132. Both the 2008 and 2012 CPARs found the sustainability are expected to be involved in key elements of procurement of CSO engagement to be a major issue that hampers the processes, such as public biddings, canvassing, bid awards, involvement of observers in the procurement process. This is contract monitoring, reporting, and oversight. It is hoped that validated by the APCPI results, which show that only 35% of a partnership to be developed among communities, CSOs, and procurement activities are attended by CSOs and private sector LGUs for procurement reform will be mutually beneficial for all observers. A workshop was organized by ADB on 11 June 2012 stakeholders, especially poor communities. to discuss issues and concerns on the sustainability of CSO involvement in public procurement, and identify initiatives and 134. Another reason for the decline of CSO observers mechanisms to ensure sustainable financing (Annex 5). The in public biddings is the difficulty encountered by many workshop recommended the nongovernment organizations (NGOs) and individuals 48 Findings, Assessments, and Recommendations Box 5  Summary of Recommendations for Pillar 4 • The Government of the Philippines should review and propose supplementary guidelines to the Philippine Government Internal Audit Manual to include specific procedures on internal audit of procurement, and the enforcement of findings and recommendations, including timelines for compliance. • The Government Procurement Policy Board (GPPB) should review the current policies and procedures for the filing of complaints and protests, taking into consideration the findings of the protest mechanism study, particularly the protest fee requirements. • The GPPB should issue guidelines to reiterate or complement the requirement to submit decisions on procurement-related disputes and post the dispositive portion of such decisions on the websites of the GPPB and in the procuring entities concerned. • The government should establish an independent complaint or protest review body, and develop its governing rules and procedures. • The GPPB should conduct the survey on the experience and feedback of users of procurement information, and implement the Strategic Communication Plan for Procurement Reform. • Civil society organizations (CSOs) should lead the advocacy for the passage of the Freedom of Information Act, which includes a provision on the protection and/or disclosure of procurement-related proprietary, commercial, or financial information of a sensitive nature. • The GPPB, in collaboration with the Office of the Ombudsman and the Commission on Audit, should develop a database of procurement-related cases emanating from the Commission on Audit and referred to the Office of the Ombudsman, including cases filed and resolved. • A study should be conducted to harmonize the rules of the government and international financial institutions on blacklisting or debarment. • A unified framework and mechanism should be developed to sustain and ensure CSO participation in public procurement monitoring, based on a multisector approach that will include the possibility of accessing a national procurement fund. The CSOs should also be allowed to submit proposals on their sustainability and participation in the procurement process. • The unified framework and mechanism discussed should likewise include (a) the review of the requirements for CSO participation under the Government Procurement Reform Act, (b) the establishment of a registration process for third-party monitors, and (c) the review and development of a proposed code of conduct on procurement monitoring in order to promote the involvement of more organizations and individuals at the local government level. • The GPPB and procuring entities should require the names of nongovernment organization and CSO observers in agency procurement monitoring reports for the purpose of mapping by GPPB, and information sharing with procuring entities and CSOs. • The GPPB should provide an online platform within the Philippine Government Electronic Procurement System for the submission and consolidation of observers’ reports, with comments from the procuring entity, and disseminate standard and simplified templates for these reports. The foregoing recommendations are part of the 2012 Country Procurement Assessment Report Action Plan. Source: CPAR Working Group, 2012. (particularly at the local level) in meeting the qualification and barangays, and so there is a need to examine these requirements of IRR of the GPRA. The IRR requires observers requirements and explore ways to encourage more citizen to (i) be a member of an organization registered with the involvement in the procurement process. Securities and Exchange Commission or the Cooperatives Development Authority; (ii) possess knowledge, experience 135. Corollary to this, the GPPB-TSO has no information on or expertise in procurement, or in the subject matter of the the number of available CSO observers in any given location, contract to be bid; and (iii) have no actual or potential conflict their fields of expertise and level of training, and their areas of of interest in the contract to be bid. There are very few trained operation. As such, there is a need to register and map CSOs observers who fulfill these requirements in the municipalities throughout the country according to their expertise and location 49 Philippines Country Procurement Assessment Report 2012 in order to maximize their deployment and develop appropriate activities of the BAC. Observers are expected to submit these strategies to address the absence of observers in some areas. reports to the HOPE, with copies to the GPPB and the OMB. In LGUs, “special purpose” CSOs representing special interest If no report is submitted, there is a presumption that the groups remain largely unmonitored and unnoticed. There are BAC correctly followed the bidding procedures. These reports reported cases where local government officials create their serve as a feedback mechanism to improve the procurement own CSOs or NGOs to use the legal provision on observers for process, and a tool for the exchange and sharing of knowledge their own benefit. There is therefore a need to establish the and information. However, compliance with the submission legitimacy of CSOs involved in public procurement monitoring of the observer’s report is weak, and the enforcement of and develop a code of conduct for observers. follow-up actions is not monitored. As a result, these reports cannot be properly utilized as a feedback mechanism. Some 136. One important concern that was raised pertained to the reasons for nonsubmission include (i) the lack of simple and limited amount of information received by the GPPB-TSO from standardized training on the GPRA for observers, including CSOs on their findings and participation in the procurement versions in Filipino or the local dialect; (ii) the absence of process. The responsibilities of CSO observers under the standardized formats for the observers’ reports; and (iii) the GPRA include the preparation of an observer’s report, which absence of a centrally accessible portal for the submission indicates their comments and findings on the procurement and consolidation of these reports. 50 One of the identified weaknesses under institutional and management capacity in this CPAR assessment is the absence of a defined staff performance evaluation process based on results and professional behavior. Country Risk Assessment 137. For the 2012 CPAR, the Philippine public procurement system (PPS) received a rating of medium or moderate 3 there is a need to continuously train local officials to ensure continuity of the procurement function. Other reasons for risk. This is based on the levels of achievement obtained low compliance are as follows: (i) contractors are required in the four pillars, which reflect international standards to undergo local accreditation in some municipalities prior and baselines set through the Organisation for Economic to participation; (ii) some city governments require suppliers Co-operation and Development–Development Assistance and contractors to secure a local business registration, Committee (OECD-DAC) Methodology for Assessing effectively excluding those located outside the locality; Procurement Systems (MAPS). The four pillars received the (iii) suppliers are not interested in the small amounts of following ratings: LGU contracts, and the remote location of many projects do Pillar I:  Legislative and Regulatory Framework, 86% of the not attract enough bidders; (iv) not all LGUs are aware of baseline or substantial achievement, low risk the Philippine Government Electronic Procurement System Pillar II: Institutional Framework and Management Capacity, (PhilGEPS) website, and not all post the bidding results; 69% of the baseline or partial achievement, (v) public officers within the LGUs have reported collusion medium or moderate risk among the bidders, as well as between bidders and officials, Pillar III: Procurement Operations and Market Practices, 73% and political interference; and (vi) public officers have also of the baseline or substantial achievement, medium reported monopolies among some suppliers. While measures or moderate risk are in place to address constraints to the participation Pillar IV:  Integrity and Transparency of the Public Procurement of bidders, private sector confidence on the existence System, 65% of the baseline or partial achievement: of equal treatment remains low, particularly at the local medium or moderate risk government level. 138. Figure 2 provides a graphical comparison of the 140. The APCPI results show the following concerns among Baseline Indicator (BLI) ratings for 2008 and 2012 for each national agencies: (i) there is a lower number of contracts pillar and shows the areas of weaknesses in the PPS. procured through competitive bidding in terms of volume; (ii) despite an increase since 2008, the number of bidders 139. Risk analysis. While there have been marked who acquire and submit bids still does not meet the OECD- improvements in the BLI assessment at the country level, DAC BLI benchmark; (iii) very few procuring entities post there are still a number of risks in the implementation contract awards and alternative methods of procurement at and enforcement of some provisions of the GPRA. The the PhilGEPS website; (iv) a very small number of procuring most prominent of these risks is compliance at the local entities submit and post the procurement monitoring reports government level. Competitiveness at the LGU level remains (PMRs); and (v) there is a decline in the number of CSOs low, particularly in second and third class municipalities and observing the procurement processes because of CSOs’ lack barangays, as evidenced by the limited compliance with of resources and capacity to do so. Public awareness on the the requirement to publish and post bid opportunities. The GPRA is very limited as a result of poor communication of conduct of regular local elections every 3 years also results the reform down to the local level. While the legal framework in a high turnover of trained procurement officials, and has been strengthened and the national rating has increased 52 Country Risk Assessment Figure 2  Baseline Indicator Assessment Scores, 2008 and 2012 2008 and 2012 Baseline Indicator Assessment Scores of the Philippine Procurement System Pillar I: Legislative and Regulatory Framework 3.0 2.5 2.0 1.5 1.0 0.5 Pillar IV: Integrity Pillar II: Institutional and Transparency Framework and of the Public Management Capacity Procurement System Pillar III: Procurement Operations and Market Practices Maximum baseline indicator rating 2008 Government score 2012 Government score Source: CPAR Working Group, 2012. to 73% in 2012 from 67% in 2008, the implementation and the implementation and enforcement of the system is reflected enforcement of the GPRA remains weak. Table 26 presents the in the funding resources pledged in the action plan. Specific level of risk for each of the BLIs used for this assessment. It project procurement risks will be based on the project capacity shows that national government agencies received a medium assessment normally conducted during project preparation. or moderate risk rating, while LGUs received a high risk rating. Moreover, an anticorruption plan on procurement is normally discussed and agreed with the executing or implementing 141. Mitigating risks. Measures to mitigate risks at the agency, and incorporated in the loan agreement. country level were formulated in the 2012 action plan to improve the PPS, and are discussed in Section 5 of this report. For 142. Agency-level risk assessment. Using the results of the foreign-assisted projects (FAPs), measures that are intended APCPI assessment and scoring system, the overall risk at the to mitigate the country procurement risk are discussed in the agency level for performance and compliance (as represented procurement arrangements for these projects and presented in by the sampled agencies) is moderate, based on the levels Section 4. Support from development partners to strengthen of achievement obtained. The APCPI ratings are as follows: 53 Philippines Country Procurement Assessment Report 2012  raphical Representation of the Agency Procurement Compliance and Figure 3  G Performance Indicator Pillars for the Philippine Public Procurement System in 2012 2012 Agency Procurement Compliance and Performance Indicator Assessment Scores of the Philippine Procurement System Pillar I: Legislative and Regulatory Framework 3.0 2.0 1.0 Pillar IV: Integrity Pillar II: and Transparency Institutional of the Public Framework and Procurement System Management Capacity Pillar III: Procurement Operations and Market Practices Maximum score 2012 Government score Source: CPAR Working Group, 2012. Pillar I: acceptable (moderate risk), Pillar II: satisfactory 143. ADB’s procurement capacity assessment looks at an (low risk), Pillar III: acceptable (moderate risk), and Pillar IV: executing or implementing agency’s organizational and staff satisfactory (low risk). The risk ratings utilized are based on the capacity, information management, procurement practices, agency compliance with the established benchmarks, where an effectiveness, and accountability measures. That of the World acceptable rating meets the benchmarks while a satisfactory Bank analyzes the legal aspects and procurement practices, rating exceeds the benchmark. There are differences in procurement cycle management, organizations and functions, the scoring system between the BLI and APCPI, but they support and control systems, record keeping, staffing, general generally fall within the same pillars. Moreover, the APCPI risk procurement environment, and the private sector viewpoint. assessment can be used by multilateral development banks Both MDBs use the results of their capacity assessments (MDBs) as a guide or benchmark, but should not replace the to set prior review thresholds, develop the supervision plan usual tools they use to assess the procurement capacities of (extent and depth of post review and audits) and the action executing and implementing agencies. plan to strengthen procurement capacity. 54 Country Risk Assessment Table 26  Level of Risk of the Philippine Public Procurement System by Indicator Level of Risk Local Achievement Government Indicator Level National Unita Mitigating Measures Presence and use of legal and   1.  FA – 88% L L Review possible amendments of the Government regulatory instrument from highest Procurement Reform Act to provide procedures for level to detailed regulation and international competitive bidding and nationality bidding documents requirements for joint ventures. Existence, availability, and quality   2.  FA – 83% L M Formulate clarificatory guidelines on the application of implementing regulations and of prequalification, rollout, and training on local documentation government and barangay manuals Procurement mainstreamed  3.  FA – 83% L M Integrate procurement and logistics procedures and into the public sector business standards on processing and release of governance system payments in the Financial Manual Presence of a functional normative   4.  SA – 75% M L Remove contract review function of the Government and/or regulatory body Procurement Policy Board Existence of institutional   5.  PA – 50% H H Implement Agency Procurement Compliance and development capacity Performance Indicator and ensure enforcement and compliance in all government agencies, implement professionalization program Operational effectiveness and   6.  SA – 67% M H Finalize and implement proposed career stream for efficiency of the system at the public procurement personnel, monitor compliance entity level to records-keeping guidelines at the local level Positive market response to   7.  SA – 67% M H Conduct more procurement training for small and procurement solicitations medium entrepreneurs at the local level, improve and streamline further registration and licensing requirements Existence of contract   8.  FA – 89% L H Monitor progress of dispute resolution cases; administration and dispute strengthen contract implementation monitoring resolution by civil society organizations Existence of effective control and   9.  PA – 60% H H Formulate specific procedures on internal audit audit system of procurement and enforcement of findings and recommendations 10.  Efficient appeals mechanism NA – 33% H H Establish an independent complaint or protest review body, and develop its governing rules and procedures 11.  Access to information FA – 100% L H Implement the strategic communication plan Presence of ethics and 12.  FA – 86% M M Develop and implement programs to sustain and anticorruption measures ensure participation of civil society organizations in procurement monitoring Country Average 73% M H Agency Compliance M H FA = full achievement, H = high, L = low, M = medium, NA = no achievement, PA = partial achievement, SA = substantial achievement. a Data for the local government units were obtained by the World Bank from the results of the Agency Procurement Performance Indicators conducted in 2008   and the procurement capacity assessments of projects funded by local government units. Source: CPAR Working Group, 2012. 55 Development partners, on the other hand, believe that eligibility screening, such as the use of the ABC as a contract ceiling, may restrict competition. Foreign-Assisted Projects 4.1  Legal Basis 4 offshoot of the government’s experience with some bilateral agreements where financing is tied to specific contractors, 144. The Government Procurement Reform Act (GPRA) suppliers, or consultants. recognizes the procurement procedures of international financial institutions (IFIs) if they are expressly indicated in the pertinent financing agreements, which are considered as 4.2 Harmonization executive or international agreements. The act specifically states that: 147. The 2008 Country Procurement Assessment Report (CPAR) reported that, since 2003, ADB, the Japan International Any treaty or international or executive agreement Cooperation Agency (JICA), and the World Bank have agreed affecting the subject matter of this Act to which the on six procurement areas for harmonization. Of the six, three Philippine Government is a signatory shall be observed.25 were reported to have been accomplished. These are the Philippine Bidding Documents (PBDs), procurement manuals, 145. The revised IRR further amplifies the observance of an and the procurement reporting format. Two areas, the IRR for international or executive agreement, but encourages the use FAPs and the training and certification program, were plotted of competitive bidding as a general policy in foreign-funded and expected to be completed by 2009 and 2014, respectively. procurements. As a caveat, the revised IRR provides that: The last area for harmonization, the registration and licensing procedures with eligibility screening, was pursued between the Unless the Treaty or International or Executive Agreement Department of Public Works and Highways (DPWH) and the expressly provides use of foreign government/foreign Construction Industry Authority of the Philippines–Philippine or international financing institution procurement Contractors Accreditation Board, without the involvement procedures and guidelines, this IRR shall apply to of development partners. Table 27 presents the updates on Foreign-funded procurement for goods, infrastructure the harmonization activities covering the IRR for FAPs, the projects and consulting services by the Government training and certification program, PBDs, and the procurement of the Philippines... The Government of the Philippines manuals. Moreover, the Government Procurement Policy Board negotiating panels shall adopt, as its default position, (GPPB) will issue the following manuals that are planned to use of this IRR, or at the very least, selection be harmonized with ADB, JICA, and the World Bank: the LGU through competitive bidding, in all Foreign-funded Procurement Manual, the Community Participation Manual, Procurement...26 and the Procurement Observer’s Guide. 146. The government also encourages negotiating panels to 148. The Philippine Bidding Documents. The latest adopt the national procurement rules, or at least ensure the version of the PBDs was issued on 17 December 2010 and use of competitive bidding, for future agreements. This is an became effective on 22 February 2011. With the exception RA 9184. Section 4. 25 IRR of RA 9184. Section 4.3. 26 57 Philippines Country Procurement Assessment Report 2012 Table 27  Updates on Harmonization Activities for the Government of the Philippines Expected Funding Area As of March 2012 Completion Date Support IRR The revised IRR was issued on 22 July 2009 and became effective on Done World Bank 2 September 2009. The original agreement was to come up with an IRR-B for foreign-funded procurement, but the government later on decided to issue only one set of IRR for both locally-funded and foreign-assisted projects. Training and 15 modules for the Professionalization Program were developed, and a pilot 2014 World Bank Certification Program training was conducted from May to August 2009. Participants in the training course established the Government Procurement Professionals of the Philippines. There are ongoing efforts to train trainers on updates to the Government Procurement Reform Act and to establish a procurement professionalization working group composed of the Government Procurement Policy Board, procurement practitioners, academe (Ateneo School of Government, University of the Philippines–National College of Public Administration and Governance, the Asian Institute of Management, the Local Government Academy, and the Philippine Trade Training Center) and CSO representatives that will formulate policies, develop training modules, and implement courses on public procurement and the certification of procurement personnel. LGU Procurement The first edition of the manuals were harmonized with ADB, JICA, and the 2013 World Bank Manual World Bank in July 2008. Due to the 2009 IRR amendment, the updated LGU Procurement Manual will be subjected to a harmonization process as well. Community-Based To be harmonized with ADB, JICA, and the World Bank 2013 World Bank Procurement Manual CSO Procurement To be acceptable to ADB, JICA, and the World Bank 2013 ADB/World Guide Bank ADB = Asian Development Bank, CSO = civil society organization, IRR = Implementing Rules and Regulations, JICA = Japan International Cooperation Agency, LGU = local government unit. Source: CPAR Working Group, 2012. of the PBDs for consulting services, the PBDs for goods and 150. With respect to consulting services, difficulties were works were harmonized with the procurement procedures of encountered in the harmonization of conflicting provisions, in ADB, JICA, and the World Bank, and were accepted for use view of the number of varying rules or procedures between the in the procurement contracts using the national competitive government and the IFIs. Table 28 shows an improvement in bidding (NCB) method funded by these institutions. the percentage of harmonized provisions in the PBDs for goods and works since the 2008 CPAR. 149. The fourth edition of the PBDs for goods and works are fully harmonized with the procurement procedures of JICA. 151. Procurement manuals. The GPMs are currently being For ADB and the World Bank, a chapter on FAPs is included revised to incorporate the changes in the revised IRR, and are in the PBDs, which refer to the use of their guidelines over expected to be issued along with the LGU and barangay manuals. government’s procurement rules. For both goods and works, the World Bank follows the government’s special conditions of 152. National competitive bidding procurement annex to contract, but uses a separate bid data sheet; while ADB has its the loan agreement. The 2008 CPAR noted that the number separate set of rules, both contained in its bid data sheet and of government procurement rules considered unacceptable special conditions of contract. by ADB and the World Bank for their NCB procedures has drastically reduced. In particular, the World Bank reduced the 58 Foreign-Assisted Projects Table 28  Number of Conflicting Paragraphs in the Philippine Bidding Documents Bidding Documents Works Goods Original number of conflicting paragraphs 128 145 Harmonized paragraphs (2008 Country Procurement Assessment Report) 101 117 Harmonized paragraphs (Philippine Bidding Documents fourth edition) ADB = 9, World Bank = 14 ADB/World Bank = 15 Remaining unharmonized paragraphs ADB = 18, World Bank = 13 ADB/World Bank = 13 Percent harmonized (to date) ADB = 86%, World Bank = 90% 91% Percent harmonized (2008 Country Procurement Assessment Report) 79% 81% Increase in percentage of harmonized provisions from 2008 ADB = 7%, World Bank = 11% 10% ADB = Asian Development Bank. The Japan International Cooperation Agency has now agreed to use the country system for national competitive bidding, as well as the Philippine Bidding *  Documents, which are now 100% acceptable to it. Source: CPAR Working Group, 2012. original list of 27 unacceptable Government of the Philippines 154. Procurement method threshold. Aside from the rules to 8, while ADB reduced it to 9. The remaining reduction of the conditions for the use of NCB procedures, unacceptable procurement rules and practices were published continuing harmonization is evidenced by an increase in the as Annexes 8A and 8B of the 2008 CPAR, and have been thresholds for NCB following government procedures. Table 29 appended as an NCB annex to the loan agreements of ADB shows the current thresholds per mode of procurement for and the World Bank. JICA has no NCB annex of unacceptable procurement activities funded by ADB and the World Bank. procurement rules, as it is now 100% harmonized with the government under its NCB method. Threshold per Contract Table 29   153. To update their NCB annexes, ADB and the World Bank Procurement conducted a review of their current NCB policies against the Method Category Current Amount revised IRR of the GPRA. Using a checklist of 25 international International ADB: Works $5,000,000 and above procurement practices, the acceptable and remaining competitive World Bank: Works $15,000,000 and above unacceptable government rules were identified. The checklist bidding is in annexes 6, 7, and 8 of this report. Moreover, as a International ADB: Goods $1,000,000 and above result of this review, ADB developed a revised NCB annex competitive World Bank: Goods $3,000,000 and above (Annex 9B) and the World Bank developed a revised NCB bidding Annex (Annex 9A). They also agreed to include an item on National ADB: Works $100,000 to below the prequalification of bidders for large or complex works competitive $5,000,000 or highly specialized procurements consistent with the BLI bidding World Bank: Works Below $15,000,000 finding that the GPRA does not adopt a prequalification National ADB: Goods $100,000 to below process. ADB further added a number of conditions that were competitive $1,000,000 not clearly defined in the 2008 NCB Annex. These involve bidding World Bank: Goods Below $3,000,000 the nominal pricing of bidding documents, the minimum Shopping ADB: Works and Goods Below $100,000 period for bid submission, the anticorruption provisions in the bidding documents, the rule on single bid submission, World Bank: Goods Not more than $100,000 (off the shelf and the rules for shopping, the requirements for participation by commodities) government owned and controlled corporations (GOCCs), and the provision for price adjustment. WB: simple works Not more than $200,000 Source: CPAR Working Group, 2012. 59 The government believes that the present system is the more appropriate approach for government procurements, especially for projects that are not highly complex or specialized. Action Plan 155. This section of the report introduces all the existing and proposed initiatives and recommendations to address the areas for improvement in the public procurement system 5 156. The action plan prioritizes recommendations and identifies responsible entities, sources of funding, and implementation schedules. The implementation schedules (PPS) as a result of the assessment conducted. The full list of are further classified into actions that can be implemented recommendations is in Annex 1. The 2012 CPAR Action Plan in the short term (2012–2013), medium term (2012–2014), provides a road map and agenda for procurement reforms to be and long term (2012–2016). These are categorized according undertaken by the government and its development partners to the following key results areas: (i) communications during 2012–2016. The proposed actions are composed of strategy for procurement, (ii) strengthening monitoring and (i) measures that were not implemented in the 2008 CPAR enforcement, (iii) strengthening procurement capacity, and Action Plan; (ii) recommendations to deal with recurring (iv) improvements in procurement processes and practices. and emerging issues, previous studies, and consultations The 2012 CPAR Action Plan was presented to the Government with various stakeholders; (iii) issues raised during the BLI Procurement Policy Board (GPPB), which approved it on assessment workshops, and recommendations to address 30 March 2012. It was then presented to the Philippine the subindicators that were not met; (iv) results of the agency Development Forum Sub-Working Group (PDF SWG) on procurement compliance and performance indicator (APCPI) Procurement, which endorsed it in 19 April 2012. assessment; and (v) additional recommendations and refinements introduced during subsequent action planning workshops. Annex 10 provides a summary of completed and ongoing activities under the 2008 CPAR. 61 The Coalition Against Corruption, an alliance of the academe, business, CSOs, and the Catholic church, in coordination with the Partnership for Transparency Fund, also made efforts to engage civil society groups in setting up public procurement monitors in the national and local levels. Annex 1 2012 Action Plan for the Philippine Public Procurement System (as of March 2012) Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule I. Communications Advocate for the passage of the Freedom BLI 11(a) Absence of a policy on the TAN, Congress Government 2012–2013 Strategy for of Information Act that includes a protection and/or disclosure Procurement provision on the protection and/or of proprietary, commercial, disclosure of proprietary, commercial, or personal, or financial information financial information. of a confidential or sensitive nature related to procurement a. Review and implement BLI 11(a) Need to implement GPPB, PCA 2012–2013 Strategic Communication Plan for communication plan and Procurement Reform. disseminate information on b. Conduct of survey on awareness of procurement reform public procurement. II. Strengthening a. Finalize and implement APCPI in all BLI 5(a), 5(b) Need to strengthen the GPPB, PhilGEPS, World Bank 2012–2013 Monitoring and government agencies and develop APCPI 7(b), procurement monitoring system procuring Enforcement mechanisms to enforce compliance (c) to determine compliance with entities to its submission to GPPB and its the GPRA at the agency level and posting at the agency and PhilGEPS to collect information for national websites. procurement statistics b. Provide agencies with standard, Need to enforce compliance in simplified data gathering tools the submission of procurement and formats for encoding monitoring information to and consolidation of required the GPPB such as posting of procurement-related information. annual procurement plans, c. Develop mechanisms to ensure contract award information and compliance to the preparation and annual PMR submission of annual procurement Need to develop the mechanisms plans, PMR to the GPPB and posting for the analysis of procurement- in PhilGEPS and the agency website. related information and linkage d. Link APCPI results with other with other government-related government-related databases to databases improve decision making at the national level. Establish linkages with COA resident BLI 5(b) Need to verify and validate, GPPB, COA 2012–2013 auditors and/or civil society through audit, the reliability representatives to confirm validity of of procurement information APCPI self-assessment reports. collected and monitored on national procurement continued on next page 63 Annex 1 Annex 1  continued Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule Issue supplemental circular adopting BLI 6(c) Need to inform procuring entities GPPB 2012–2013 the NAP guidelines on the maintenance, APCPI 12(a), on the existing norms for the safety, security, and custody of (b) management of records and to procurement and contract management monitor and enforce compliance records including the existence of the to existing guidelines necessary infrastructure to support such a system. a. Establish a covenant among BLI 8(c), 9(b) Weak monitoring of outcomes of GPPB, COA, World Bank 2012–2014 oversight agencies to strengthen the dispute resolution cases due ODESLA, DBM, IDF coordinative linkages on monitoring to lack of procedures OMB, COST, and enforcement of audit private sector findings, compliance with the GPRAs, and enforcement of the anticorruption laws. b. Develop database on procurement Lack of organized information GPPB, OMB, World Bank and graft-related cases. on the number of graft-related ODESLA IDF cases filed, prosecuted, and resolved Review and propose supplementary BLI 9(a), Lack of clear guidelines for the DBM, COA, GOP 2012–2014 guidelines to the Philippine Government 9(c), 9(e) internal audit of procurement GPPB Internal Audit Manual to include processes, for periodic specific procedures on internal audit of reporting to management procurement and the enforcement of and for compliance to and findings and recommendations. enforcement of internal audit recommendations a. Conduct a pilot test on utilizing BLI 12(e) Lack of regular pool of observers IFIs, private ADB 2012–2013 a portion of the funds for project APCPI 14(b) to service procuring entities sector, GPPB, monitoring and evaluation to due to lack of funds to sustain CSOs mobilize CSOs as third-party operations monitors. This will include: (i) possibility of accessing a national procurement fund, (ii) the review of the requirements for CSOs in the GPRA, (iii) the establishment of an accreditation process for third party monitors, and (iv) the review and development of a proposed code of conduct on procurement monitoring. b. CSOs to submit proposals to maintain their sustainability and participation in the procurement process. Require names of NGO/CSO observers in BLI 12(e) Involvement of special purpose GPPB, CSOs ADB 2012–2013 agency PMRs for the purpose of mapping APCPI 14(b) CSOs who represent special by GPPB and information sharing with interests specially at the local procuring entities and CSOs. government level Provide an online platform within BLI 12(e) Weak compliance to the GPPB, CSOs, ADB, 2012–2013 the PhilGEPS for the submission and submission of observers’ PhilGEPS World Bank consolidation of observers’ reports, with reports; lack of enforcement of comments from the procuring entity, follow-up action taken and disseminate standard, simplified templates for observers’ reports. continued on next page 64 2012 Action Plan for the Philippine Public Procurement System Annex 1  continued Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule III. Strengthening a. Establish a procurement BLI 5(c), 6(a) Need to develop a sustainable GPPB, Training World Bank 2012–2013 Capacity in professionalization working group strategy to strengthen the Institutions Procurement that shall formulate policies, develop capacity of government officials training modules, and implement to understand and implement courses on public procurement and the procurement rules and on the certification of procurement regulations personnel. b. Review and update the modules of the Asian Institute of Management to align with procurement-specific competency standards defined in the Career Stream for Public Procurement Practitioners’ Report or other applicable studies. c. Train trainers from various institutions and roll out professionalization module or program as a public– private partnership undertaking. d. Develop system for the accreditation and monitoring of trainers and training institutions and to evaluate the conduct of professionalization program. Develop training modules to carry out the BLI 5(a), 5(b) Need to train procuring entity 2012–2013 APCPI self-assessment and roll out to personnel on the conduct of the procuring entities APCPI self-assessment a. Develop specific qualifications BLI 5(d), 6(a) Need to define the skills GPPB, CSC, World Bank 2012–2014 standards for procurement personnel. and knowledge competency DBM IDF b. Finalize and implement the proposed requirements for specialized career stream for public procurement procurement jobs and to monitor practitioners. compliance to standards among agencies Develop and implement a performance BLI 5(d), Lack of specific system to GPPB, DBM, 2012–2014 evaluation system specifically for APCPI 11 evaluate the performance of CSC procurement personnel. procurement personnel Develop and implement the certification BLI 5(c), 6(a) Need to develop a sustainable GPPB, training 2012–2014 and testing program for procurement strategy to strengthen the institutions, personnel, align this with the DBM capacity of government officials CSC, approved procurement positions, and to understand and implement Professional secure accreditation with appropriate the procurement rules and Regulation government agencies for recognition regulations Commission of tests, certificate, and license on (PRC) public procurement. Expand current initiatives on procurement BLI 6(b), 7(a) Absence of regular training GPPB, DTI, PCA CoST 2012–2013 training for the private sector through a programs on public procurement distance learning approach. for private sector a. Develop a primer to assist SMEs BLI 7(b) Need to strengthen SME capacity GPPB, DTI, PCA CoST 2012–2013 interested in participating in to access procurement market at government procurement activities. the local government level b. Provide training for SMEs, goods manufacturers, suppliers, and consultants on how to access procurement opportunities through the regular programs of the PTTC and other DTI-related training agencies. continued on next page 65 Annex 1 Annex 1  continued Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule Develop and implement training programs BLI 1(f) Need to develop capacity of GPPB, DPWH, JICA 2012–2014 for government cost estimators for all procuring entity personnel DOTC, PS-DBM, types of procurements. to develop more credible DTI government estimates Conduct training to local government BLI 2(e) Need to train local government GPPB World Bank 2012–2013 officials on the use of the Local procurement officials on the Government and Barangay Procurement generic procurement manuals Manuals. to ensure better compliance to the GPRA a. Draft MOA between GPPB and COA BLI 9(b) Need for capacity building for GPPB, COA 2012–2013 for regular updating of the GAP. COA auditors on the analytical component of the GAP b. Train auditors on analytical tools and COA World Bank skills on further evidence gathering for case build-up, and eventual referral to procurement-related cases to OMB. Develop training program on procurement BLI 9(d) Lack of capacity building DBM, COA, World Bank 2012–2014 for internal auditors. for internal auditors on procuring IDF procurement audit entities Develop and conduct regular special BLI 12(d) Need to train investigators, OMB, COA, DOJ, World Bank 2012–2014 training programs on fraud detection prosecutors and auditors on ODESLA for purposes of prosecution (target: fraud detection investigators, prosecutors, auditors) a. Issue circular or order requiring BLI 5(c), 6(a) Need to develop a sustainable GPPB, training 2012–2016 procurement practitioners to enroll in strategy to strengthen the institutions professionalization program. capacity of government officials b. Explore institutionalizing board to understand and implement examination for certified procurement the procurement rules and professionals in coordination with regulations the PRC. a. Review the revised IRR to integrate BLI 1(b) Lack of appropriate standards GPPB World Bank 2012–2013 all provisions on foreign bidders’ and guidelines for international participation in one section. competitive bidding that are b. Review possibility of amending consistent with international GPRA to provide procedures for standards international competitive bidding. c. Develop a primer for foreign GPPB, DOF bidders participating in government procurement in the Philippines. d. Issue the list of countries granting reciprocal rights to citizens, corporations, and associations of the Philippines. IV. Improvement Conduct further study on the nationality BLI 1(d) Need to harmonize provisions GPPB, NEDA, World Bank 2012–2013 in Procurement requirement for joint ventures in line with on nationality requirements as Economic Processes and international standards. provided for under RA 9184 Cluster Practices vis-à-vis guidelines of IFIs Promulgate necessary guidelines to BLI 1(d) Need to resolve the participation GPPB 2012–2013 implement Sections 23.6. and 24.6 of the of government owned enterprises revised IRR, and clarify the requirement in competitive bidding as it regarding government corporate entities’ relates to independence from the independence from the GOP. government continued on next page 66 2012 Action Plan for the Philippine Public Procurement System Annex 1  continued Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule Establish an independent complaint or BLI 1(h), Lack of independent GPPB ADB 2012–2013 protest review body, and develop its 10(a), 10(c) administrative body or special governing rules and procedures. court to review procurement- related complaints and appeals Formulate clarificatory guidelines on the BLI 2(c) Need to provide guidelines GPPB 2012–2013 application of prequalification procedures on when to apply the prequalification procedures Include business standards on processing BLI 3(b) Lack of published business GPPB, PFM AusAID 2012–2014 of invoices, faceless transactions, standards for processing time for Inter-Agency electronic submission, tracking and invoices by agencies that meet Committee release of payments, and performance obligations under the contract evaluation of personnel responsible for preparing and approving payments, in the GIFMIS and financial management manual being developed by the PFM Committee. a. Develop a generic Financial BLI 3(d) Need to develop the system PFM Inter- AusAID 2012–2014 Management Manual that includes to integrate the procurement Agency procurement and logistics processes. system within the budgetary Committee b. Fast track the implementation of the and financial systems to provide (DOF, DBM,COA) GIFMIS. information on the completion of major contracts Review and amend EO 423 delegating BLI 4(d) Possible conflict in GPPB’s GPPB 2012–2013 contract review responsibilities to GPPB. duty to review contracts for negotiated procurement a. Include an option for PhilGEPS BLI 7(c) Difficulties in securing licenses PhilGEPS, CoST 2012–2014 registration in the DTI Philippine and permits GPPB, DTI Business Registry. b. Interlink databases on government licenses issued. c. Incorporate in the bidding documents process flow, timelines, list of requirements, updated contact details, and table of fees for Philippine Contractors Accreditation Board (PCAB), Food and Drugs Administration or other required licenses and tax clearance. d. Digitize PCAB licensing system e. Develop and implement a categorization and classification system for consultants doing work for the government. a. Finalize the DPWH design guidelines, BLI 8(a) Noncompliance of some DPWH, COA World Bank 2012–2016 criteria and standards to include agencies on detailed guidelines for detailed engineering, engineering guidelines penalties for noncompliance, and adoption in all major infrastructure projects. b. Include compliance to guidelines on detailed engineering in the GAP. Review policies on the filing of protests BLI 10(b) Existence of policies that GPPB 2012–2013 including protest fee requirements discourage filing of protest (protest fee requirement) continued on next page 67 Annex 1 Annex 1  continued Recommended BLI/APCPI Responsible Funding Key Result Area Action/Measure Indicator Specific Weaknesses Entity Source Schedule Issue guidelines on the posting of BLI 10(d) Decisions are not mandated GPPB 2012–2013 decisions on procurement-related to be published nor posted in disputes in the GPPB and in the procuring the website entities websites to strengthen the implementation of Executive Order 662. a. Develop credible standards and BLI 1(f) There is a need to improve GPPB ADB 2012–2014 guidelines for the preparation of guidelines and procedures in ABC for common and uncommon the preparation of government use items. estimates and technical b. Share existing databases of agencies specifications PhilGEPS on prices using the PhilGEPS as DPWH possible repository. The DPWH should share their cost estimation system and prepare a template for the preparation of the program of work for civil works projects that can be used by all agencies and posted in the PhilGEPS website. c. Develop system for the independent GPPB review of the accuracy and reasonableness of the ABC within the agency. d. Develop clear guidelines and GPPB ADB standards for the preparation and review of technical specifications for common and uncommon use items, including considerations for green and sustainable public procurement. e. Compliance with the requirement APCPI to post contract awards, notices to 6(c),(d) proceed, and approved contracts at PhilGEPS. Conduct further studies on the ABC, BLI 1(f) The use of the ABC as ceiling GPPB, DPWH, ADB (study 2012–2013 such as: (i) effectiveness of ABC, and for award is not an acceptable DOTC, PS-DBM, on accuracy (for accuracy (ii) alternatives to the ABC as ceiling for rule for foreign-funded contracts DOH, DepEd of ABC) of ABC) contract award. because it limits competition; imposes particular limitations 2012–2014 in international bidding as (for international firms face higher alternatives costs than local ones to ABC) Conduct study IFI and GOP blacklisting BLI 12(b) Need to harmonize blacklisting GPPB, PDF, World Bank 2012–2013 guidelines for possible harmonization and guidelines with those of IFIs World Bank implementation of cross-debarment. ABC = approved budget for the contract, ADB = Asian Development Bank, APCPI = agency procurement compliance and performance indicator, AusAID = Australian Agency for International Development, BLI = baseline indicator, COA = Commission on Audit, CoST = Construction Sector Transparency Initiative, CSO = civil society organization, CSC = Civil Service Commission, DBM = Department of Budget and Management, DepEd = Department of Education, DOF = Department of Finance, DOH = Department of Health, DOJ = Department of Justice, DOTC = Department of Transport and Communications, DTI = Department of Trade and Industry, GAP = Guide in the Audit of Procurement, GIFMIS = Government Integrated Financial Management Information System, GOP = Government of the Philippines, GPPB = Government Procurement Policy Board, GPRA = Government Procurement Reform Act, IFI = international financial institution, IRR = Implementing Rules and Regulations, JICA = Japan International Cooperation Agency, NAP = National Archive of the Philippines, NEDA = National Economic and Development Authority, ODESLA = Office of the Deputy Executive Secretary for Legal Affairs, OMB = Office of the Ombudsman, PCA = Philippine Constructors Association, PCAB = Philippine Contractors Accreditation Board, PDF = Philippine Development Forum, PFM = public financial management, PhilGEPS = Philippine Government Electronic Procurement System, PMR = procurement monitoring reports, PRC = Professional Regulation Commission, PS = Procurement Service, PTTC = Philippine Trade Training Center, RA = Republic Act, SMEs = small and medium-sized enterprises, TAN = Transparency and Accountability Network. Source: CPAR Working Group, 2012. 68 Annex 2 Composition of Country Procurement Assessment Report Working Group Country Champions and Ardeliza R. Medenilla, Department of Public Works Other In-Country Stakeholders   and Highways Theresa G. Vera, Department of Health Undersecretary Laura B. Pascua, Department of Budget Ireneo Vizmonte, Department of Trade and Industry   and Management Noel Salumbides, Department of Trade and Industry Antonio V. Molano, Jr., Department of Public Works Executive Director Dennis S. Santiago, Cochair, Government   and Highways   Procurement Policy Board – Technical Support Office Arnaldo C. Reyes, Department of Science and Technology Peter Paul Gianan, Department of Science and Technology Estanilao C. Granados, Jr., Procurement Service Development Partners Sixto Antonio, Procurement Service Fiorello R. Estuar, Private Sector Representative, Government Asian Development Bank   Procurement Policy Board Yinguo Huang and Xavier Humbert, Cochairs Claudia Buentjen Philippine Government Electronic Jose Luis Syquia (Team Leader) Procurement System Galia Ismakova Rosa Maria Clemente Helena Ireen Baylon Joele H. Eayte World Bank Civil Society Representatives Samuel Haile Selassie Manolito P. Madrasto, Philippine Constructors Association Cecilia Vales Reylynne Dela Paz, Transparency and Accountability Network Noel Sta. Ines Toix Cerna, Transparency and Accountability Network Dominic Aumentado Rene Manuel Government Procurement Policy Board – Technical Support Office Japan International Cooperation Agency Dennis Lorne S. Nacario Floro Adviento Jennifer M. Torril Kota Yasumura Bryan S. Bigalbal Patrick San Juan Allyson S. Goleetian Flerida Chan Warren Paul A. Nicdao Cristina Santiago Andy G. Matula Liza E. Vega Government Representatives Katrina L. Paala Richard Moya, Department of Budget and Management Rocilyn C. Azcarraga Aida N. Carpentero, Department of Education Val Cyrus R. Cerdina 69 Annex 2 Meeting Participants Focus Group Discussion on Licensing and Joint Venture Requirements of Bidders, Focus Group Discussion on Civil Society 10 November 2011 Organizations Related Concerns, Theresa G. Vera, Department of Health 8 November 2011 Aida N. Carpentero, Department of Education Edward Gacusana, Makati Business Club Ardeliza R. Medenilla, Department of Public Works Polly Dichoso, Bishops-Businessmen’s Conference   and Highways   for Human Development Ramon F. Allado, Philippine Contractors Accreditation Board Rechie Tugawin, Government Watch Sergie Retome, Philippine Contractors Accreditation Board Telibert Laoc, National Movement for Free Elections Leilanie del Prado, Construction Industry Authority of the Caroline Belisario, Procurement Watch  Philippines Edgardo J.T. Tirona, Sangguniang Laiko ng Pilipinas Maria Victoria Gregorio, Department of Public Works Gladys Selosa, ANSA-EAP   and Highways Vien Suerte Cortez, ANSA-EAP Ireneo Vizmonte, Department of Trade and Industry Reylynne F. Dela Paz, Transparency and Accountability Network Patricia Rosales, Philippine Constructors Association Joy Aceron, Government Watch Focus Group Discussion on Public–Private Focus Group Discussion on Competency and Partnerships and Procurement, 10 November 2011 Performance Standards for Procurement Catherine Gonzales, Department of Transportation and Personnel, 9 November 2011  Communications Redentor Zapata Jr., Professional Regulation Commission Al S. Bitangcol III, Public–Private Partnership Center Robert Ong, Professional Regulation Commission Cherry-Anne N. Austria, Public–Private Partnership Center Ardeliza R. Medenilla, Department of Public Works and Neil G. Ortile, Public–Private Partnership Center  Highways Moreno Maranon, Department of Public Works and Highways Debbie Rabi, Department of Health Ramonito Jimenez, Department of Public Works and Highways Myrna S. Chua, Department of Budget and Management Ardeliza R. Medenilla, Department of Public Works and  Highways Focus Group Discussion on Professionalization Maria Victoria Gregorio, Department of Public Works and Program for Procurement Personnel,  Highways 9 November 2011 Dodjie Aumentado, World Bank Aida N. Carpentero, Department of Education Edmund Talle, Government Procurement Professionals of the Focus Group Discussion on Private Sector Related   Philippines, Inc. (GPPPI) Concerns, 14 November 2011 Yolanda Villanueva, GPPPI Nilda Catalan, Bureau of Micro, Small and Medium Enterprise Joele H. Eayte, GPPPI Development, Department of Trade and Industry Ruth Romano, GPPPI Rodolfo Penalosa, Confederation of Filipino Consulting Edna Estifania A. Co, University of the Philippines-National   Organizations (COFILCO)   College of Public Administration and Governance (UP-NCPAG) Ronaldo Elepano, Jr., Philippine Constructors Association Mark Anthony Gamboa, UP-NCPAG Estelita Yambao, CECOPHIL Novel V. Bangsil, UP-NCPAG Verna Faye Manlangit, COFILCO Herisadel P. Flores, UP-NCPAG Aurma Manlangit, Ateneo School of Government Focus Group Discussion on Commission on Audit Karen Barmi, Ateneo School of Government Related Concerns, 14 November 2011 Rechie Tugawin, G-WATCH, Ateneo School of Government Arcadio B. Cuenco, Jr., Commission on Audit Aida Maria Talavera, Commission on Audit Cecilia Vales, World Bank 70 Annex 3 Loan Portfolio and Lending Program of Major International Financing Institutions in the Philippines (as of 31 December 2011) A.  ADB Loan Portfolio and Lending Program Loans Net Loan Effectiveness Closing Amount Loan No. Project Title Date Date ($ million) 2507 Philippine Energy Efficiency 10/31/11 6/30/13 31.1 1772 Infrastructure for Rural Productivity Enhancement Sector Project 02/02/04 06/30/11 65.2 2311 Integrated Coastal Resource Management Project 01/29/07 06/30/13 33.8 2465 Agrarian Reform Communities II 03/04/09 06/30/15 70.0 2137 Health Sector Development Project 01/12/05 12/31/11 13.0 2515 Credit for Better Health Care 08/19/09 08/19/15 57.7 2662 Social Protection Support 01/12/11 03/31/16 400.0 2715 Financial Market Regulation and Intermediation Program 06/27/11 04/15/12 200.0 2840 Justice Reform Program 2/15/2012 3/31/2012 300.0 2836 Road Sector Institutional Development Project 7/20/12 6/30/2016 62.0 Total 1,232.8 Grants Net Grant Effectiveness Closing Amount Grant No. Project Title Date Date ($ million) 0071 Integrated Coastal Resources Management 06/29/07 06/30/13 9.0 0142 Philippine Energy Efficiency 05/28/09 06/30/13 1.5 0148 Enhancing Midwives’ Entrepreneurial and Financial Literacy 11/27/09 06/30/13 0.4 0162 Typhoon Ketsana (Ondoy) Project 10/01/09 03/31/10 3.0 0279 Tropical Storm Washi (Sendong) Project 12/26/11 06/23/12 3.0 Total 13.9 71 Annex 3 Technical Assistance Effectiveness Closing Net TA Amount TA No. Project Title Date Date ($’000) 7074 Strengthening Provincial and Local Planning and Expenditure Management 04/30/08 07/31/11 650.0 Phase 2 7190 Harmonization and Development Effectiveness 01/05/09 12/31/12 900.0 7332 Support to Policy Formulation in the Philippines 08/12/09 03/31/12 225.0 7482 Support for the Preparation of the Harmonized Sector Assessments, Strategies 12/12/09 03/31/12 225.0 and Roadmaps for the Philippines 7654 Structural Transformation Study of the Philippine Economy 11/18/10 05/31/12 150.0 7796 Strengthening Public–Private Partnership in the Philippines 03/24/11 07/31/13 9,700.0 7806 Results Oriented Strategic Planning and Development Management for 04/13/11 04/30/13 1,000.0 Inclusive Growth 7809 Support to Local Government Revenue Generation and Land 05/19/11 09/30/13 1,500.0 Administration Reforms 7912 Strategic Policy Actions for Successful Structural Transformation and Inclusive 10/24/11 11/30/12 225.0 7754 Mitigation of Climate Change Through Increased Energy Efficiency and the Use 02/24/11 08/30/12 925.0 of Clean Energy 7781 Rural Community-Based Renewable Energy Development in Mindanao 04/27/11 08/31/13 2,000.0 7109 Integrated Natural Resources and Environmental Management SDP 09/10/08 06/30/12 1,141.0 7258 Agusan River Basin Integrated Water Resources Management 06/19/09 05/3011 1,180.0 7716 Decentralized Framework for Sustainable Natural Resources and Rural 01/18/11 12/30/13 1,300.0 Infrastructure Management 7257 Public–Private Partnership in Health 05/14/09 11/30/12 1,000.0 7513 Computer Access Membership Program 08/11/10 04/30/13 500.0 7586 Capacity Development for Social Protection 10/12/10 07/13/12 800.0 7587 Strengthened Gender Impacts of Social Protection 09/02/10 01/31/13 300.0 7733 Support for Social Protection Reform 01/12/11 01/31/13 1,400.0 7955 Education Improvement Sector Development Program 12/09/11 12/31/12 1,500.0 7138 Improving Public Expenditure Management 12/18/08 03/30/12 800.0 7210 Supporting Governance in Justice Sector Reform in the Philippines 01/10/09 05/31/12 2,000.0 7451 Support to Local Government Financing 01/29/10 06/30/12 700.0 7870 Strengthening Institutions for an Improved Investment 11/26/11 01/31/14 1,000.0 7434 Strengthening Transparency and Accountability in the Road Subsector 01/15/10 03/31/12 1,000.0 7122 Water District Development Sector Project 10/09/08 12/31/11 1,200.0 7683 Urban Water Supply and Sanitation 01/19/11 03/31/12 2,000.0 TOTAL 35,321.0 Source: Asian Development Bank. 72 Loan Portfolio and Lending Program of Major International Financing Institutions in the Philippines B.  Japan International Cooperation Agency Official Development Assistance Portfolio Loans Effectiveness Loan Amount Loan No. Project Title Date Closing Date (¥ million) PH-P220 Rural Road Network Dev. Project (Phase III) 09/25/2001 03/31/2012 6,205 PH-P221 Help for Catubig Agricultural Advancement Project 01/23/2002 01/23/2013 5,210 PH-P228 CNS/ATM Systems Development Project 02/21/2003 05/21/2017 22,049 PH-P231 Urgent Bridges Construction Project for Rural Development 09/24/2002 09/24/2011 18,488 PH-P235 ARMM Social Fund for Peace and Development Project 04/04/2004 12/06/2012 2,470 PH-P236 Arterial Road Bypass Project (I) (Plaridel and Cabanatuan) 07/29/2004 07/29/2012 6,223 PH-P237 Central Mindanao Road Project 04/06/2004 12/31/2011 3,717 PH-P239 Pasig Marikina River Channel Improvement Project (Phase II) 06/21/2007 06/21/2015 8,529 PH-P241 Pinatubo Hazards Urgent Mitigation Project (Phase III) 04/15/2008 04/15/2015 7,604 PH-P242 Agrarian Reform Infrastructure Support Project (Phase III) 04/15/2008 04/15/2017 11,802 PH-P243 Environmental Development Project 01/07/2009 01/07/2016 24,846 PH-P244 Agriculture Credit Support Project 03/23/2010 03/23/2017 14,608 PH-P245 Logistics Infrastructure Development Project 12/24/2009 12/24/2016 30,380 PH-P246 Post Ondoy and Pepeng Short Term Rehabilitation Project 09/21/2010 09/21/2013 9,912 PH-P247 Road Upgrading and Preservation Project 07/21/2011 07/21/2023 40,847 Total 212,890 Technical Cooperation Project Title Amount (¥ million) Improvement of Quality Management for Highway and Bridge Construction and Maintenance 130.2 Irrigation Association Strengthening and Support Project 174.5 Strengthening of Flood Forecasting and Warning System for Dam Operations 218.8 Strengthening of Local Health Systems in the Province of Benguet 380.0 Capacity Development for Water Quality Management 724.0 Strengthening of Flood Management Functions of the Department of Public Works and Highways 386.0 Capacity Development on Tourism Statistics in Local Government Units 147.5 Capacity Development Program for Metro Iloilo-Guimaras Economic Development Council and Banate Bay 304.6 Resource Management Council, Inc. Creation on Non-Handicapping Environment for Persons with Disabilities in Rural Areas 119.0 Enhancement of Local Governance and Community Empowerment in Micro-Watersheds in Misamis 186.0 Small Water Districts Improvement Project 1,049.5 ARMM Human Capacity Development Project 428.6 Philippine Coast Guard Education and Human Resource Management System Development Project 231.0 ASEAN University Network/Southeast Asia Engineering Education Development Network Phase 2 20.6 continued on next page 73 Annex 3 Table  continued Project Title Amount (¥ million) Project on Capability Building for a Comprehensive National Competition Policy 16.0 Prevention and Control of Leptospirosis in the Philippines 167.6 The Project on System Loss Reduction for Philippine Electric Cooperatives 30.0 Enhancement of Earthquake and Volcano Monitoring and Effective Utilization of Disaster Mitigation Information in 180.0 the Philippines Project on Enhancing the Capacity for Collection and Application of Fingerprints 33.5 Comprehensive Etiological and Epidemiological Study on Acute Respiratory Infections in Children 105.1 Capacity Development on Transportation Planning and Database Management in the Philippines 126.3 Capacity Development Project for Improvement of Safety and Efficiency for Air Navigation System 118.7 (Individual Expert) Advisor to Chief, Philippine National Police 33.1 (Individual Expert) Police Administration 12.7 Strengthening Maternal and Child Health Services in Eastern Visayas 151.3 (Individual Expert) Coast Guard Administration 15.9 Project on Integrated Coastal Ecosystem Conservation and Adaptive Management under Local and 194.1 Global Environmental Impacts in the Philippines (Individual Expert) Planning and Policy Advisor on Agribusiness Development 14.2 (Individual Expert) Public Health Program Coordinator 38.2 (Individual Expert) Integrated Transport Implementation and Management 18.0 (Individual Expert) Senior Advisor for Regional Development of ARMM 37.5 Total 5,792.5 General Grant Aid Project Title Amount (¥ million) Project for the Improvement of Meteorological Radar 3,372.0 Improvement of Aurora Memorial Hospital 1,089.0 Rehabilitation of Flood Forecasting and Warning Systems in the Pampanga and Agno River Systems 1,155.0 Project for Flood Disaster Mitigation in Camiguin Island 1,013.0 Food Aid Program (MINDANAO) 57.2 Total 6,686.2 Development Study Project Title Amount (¥ million) Development Study on Promotion of Local Industry in ARMM 239.7 An Analytical Study of the Non-Investment Incentive Laws of the Philippines 18.5 Study on Integrated Water Resource Management in the Pampanga River Basin 264.7 Master Plan Study on Airport Strategies in the National Capital Region 5.8 Study for Improvement of Water Supply and Sanitation in Metro Cebu 272.6 Local Governance and Rural Empowerment for Davao Region 297.2 Total 1,098.5 74 Loan Portfolio and Lending Program of Major International Financing Institutions in the Philippines Nongovernment Organization Projects Project Title Amount (¥ million) Safe Vegetables Promotion Project in Benguet 42.4 Project to protect children’s rights by children on/off streets 14.3 TB Control and Prevention Project in Socio-economically Unprivileged Areas in Metro Manila, in the Philippines 17.6 Improving Financial Access of Small Scale Farmers in Mindanao 6.2 Negros Silk Industry Support Project 8.1 Income Generation Through the Development and Management of an Agro-Forestry Farm in Barangay Catablingan, 8.6 General Nakar, Quezon Community Based Rehabilitation Project on Health and Livelihood 12.2 Aftercare Rehabilitation of Drug Addicts in Manila 10.0 Formation of Health and Sanitation Support Systems for Minorities in the Amnay Area 18.9 Rabies Prevention and Control Project in Marinduque, Catanduanes, Cebu and Camiguin 38.0 Food Security Based on Permaculture Development Model for Indigenous Mangyans in the Amnay Area 17.0 Watershed Reforestation and Environmental Education Program 12.6 Empowering the Community Through Improving Access to Basic and Quality Education for Reconstruction and 4.0 Peace Building Total 209.9 Source: Japan International Cooperation Agency. C.  World Bank Loan Portfolio Net Loan Effectiveness Amount Sector Project Name Date Closing Date ($ million) EASHH 2nd Women’s Health and Safe Motherhood 12/28/05 06/30/13 16.0 National Program Support for Health Sector Reform 03/27/07 03/31/12 110.0 EC Trust Funds for Health Sector Reform 06/04/07 06/30/12 8.6 Subtotal – EASHH 134.6 EASHE National Program Support for Basic Education 01/01/07 12/31/12 200.0 Support for Basic Education Reform 06/20/08 12/31/12 37.7 Subtotal – EASHE 237.7 EASHS Social Welfare and Development Reform 02/19/10 6/30/14 405.0 Subtotal – EASHS 405.0 EASPS Participatory Irrigation Development Project 11/03/09 03/31/15 70.4 Land Administration and Management Project II 10/11/05 03/30/12 15.4 Mindanao Rural Development Project II 07/03/07 12/31/12 83.8 continued on next page 75 Annex 3 Table  continued Net Loan Effectiveness Amount Sector Project Name Date Closing Date ($ million) GEF-Mindanao Rural Development Project II 10/16/09 12/31/14 6.4 National Program Support for Environmental and Natural Resource 11/27/07 12/31/12 50.0 Management GEF-Environmental and Natural Resource Management Project 11/27/07 12/31/12 7.0 Laguna de Bay Institutional Strengthening Project 04/02/04 04/30/14 15.0 National Roads Improvement and Management Project II 04/16/09 12/31/12 232.0 Rural Power Project 9/25/2009 12/31/2012 50.0 GEF-Electric Cooperative Loss Reduction 11/5/2004 12/31/2013 12.0 Support for Strategic Local Development and Investment Project 02/28/07 6/30/2012 100.0 Manila Third Sewerage Project 03/06/06 06/30/12 64.0 Regional Infrastructure Project 10/11/12 11/30/2016 50.0 GEF-Manila Third Sewerage Project 08/16/07 11/30/2012 5.0 ARMM Social Fund 11/05/10 05/31/13 61.6 KALAHI-CIDSS 02/24/11 05/31/14 156.5 Mindanao Trust Fund 03/30/06 12/31/12 8.8 GEF-Integrated POPs 06/24/11 6/30/2016 8.6 GEF-Climate Change Adaptation 01/31/11 12/15/2015 5.0 GEF-Chiller Energy 01/05/11 1/1/2017 3.6 CAT-DDO 12/15/11 10/31/2014 500.0 Subtotal – EASPS 1,505.1 EASPR Support for Tax Administration 06/25/07 06/30/201 11.0 LEGES Judicial Reform Support 12/04/03 06/30/12 21.4 Subtotal-EASPR 32.4 Subtotal Active Loans (FY2012) 2,314.8 Closed in FY2012 Development Policy Loan 8/8/2011 3/31/2012 250.0 GEF-Rural Power Project 05/06/2004 12/31/2011 9.0 Closed in FY2011 Ozone Depletion Substance Phase-out (Montreal Protocol) 10/06/94 06/30/11 30.0 GFR 08/27/10 12/31/10 450.0 Second Agrarian Reform Communities Development 07/31/09 12/31/10 60.0 Subtotal – Closed in FY2011 540.0 Closed in FY2010 Metro Manila Urban Transport 12/06/01 03/31/10 60.0 Subtotal – Closed in FY2010 60.0 ARMM = Autonomous Region in Muslim Mindanao, CAT-DDO = Development Policy Loan with Catastrophe Deferred Drawdown Option, EASHE = East Asia Sector for Health and Education, EASHH = East Asia Sector for Human Development, EASHS = East Asia Sector for Human and Social Development, EASPR = East Asia Sector for Poverty Reduction, EASPS = East Asia Sector for Sustainable Development, FY = fiscal year, GEF = Global Environment Facility, KAHALI-CIDSS = Kapit-bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services, LEGES = Legal Department East Asia and Pacific. Source: World Bank. 76 Annex 4 Summary of 2010 Agency Procurement Compliance and Performance Indicator Assessment Ratings for 17 Agencies Average All Assessment Conditions Agencies DAR DA DA-NIA DBM-PS DepEd DOE DENR PILLAR I. COMPLIANCE WITH LEGISLATIVE AND REGULATORY FRAMEWORK Indicator 1. Competitive Bidding as Default Procurement Method Percentage of public bidding contracts in (a)  73 86 82 96 80 70 69 14 terms of value of total procurement Percentage of public bidding contracts in (b)  16    0.68  7  1 54 21 27    0.84 terms of volume of total procurement Indicator 2. Alternative Methods of Procurement  ercentage of alternative modes of (a) P 27 14 18  4 20 30 31 86 contracts in terms of value of total procurement  ercentage of Shopping contracts in (b) P 10 13  1  2 ...    0.51 ... 37 terms of value of total procurement Percentage of Negotiated Procurement in (c)  15 ... 18  1  4 18 29 31 terms of value of total procurement Percentage of Direct Contracting in (d)   4  1    0.38    1.28 12 12  2  2 terms of value of total procurement Percentage of Repeat Order contracts in (e)   1    0.29    0.43 ...  3    0.10 ...    0.51 terms of value of total procurement Percentage of Limited Source contracts (f)  ... ... ... ... ... ... ... in terms of value of total procurement Indicator 3. Competitiveness of the Bidding Process Average number of bidders who (a)   7  5  4  7  5 27 No Data  6 acquired bidding documents  verage number of bidders who (b) A  5  5  4  5  2  5 No Data  5 submitted bids Average number of bidders who passed (c)   3  2  3  4  2  5 No Data  4 bid evaluation continued on next page 77 Annex 4 Annex 4  continued Average All Assessment Conditions Agencies DAR DA DA-NIA DBM-PS DepEd DOE DENR PILLAR II. AGENCY INSTITUTIONAL FRAMEWORK AND MANAGEMENT CAPACITY Indicator 4. Presence of Procurement Organizations Creation and operation of Bids and (a)  100% compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Awards Committee(s) or BAC(s)  reation and operation of a BAC (b) C 100% compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Secretariat or Procurement Unit Indicator 5. Procurement Planning and Implementation APP is prepared for all types of (a)  82% compliant Compliant Compliant Compliant No Data Compliant Compliant Compliant procurement Indicator 6. Use of Government Electronic Procurement System (a) Agency registered with PhilGEPS 100% compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant  ercentage of bid opportunities posted (b) P 106% compliant 86 100 23 84 63 No Data 96 at PhilGEPS Percentage of contract award (c)  53% compliant 0 No Data 7 100 60 No Data 88 information posted at PhilGEPS Percentage of contract awards procured (d)  35% compliant ... 97 3 49 49 No Data 2 through alternative methods posted in PhilGEPS Indicator 7. System for Disseminating and Monitoring Procurement Information Presence of website that provides (a)  94% compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant minimum, up-to-date procurement information easily accessible at no cost  reparation of Procurement Monitoring (b) P 41% compliant Compliant Not Not Compliant Not Compliant Compliant Not Compliant Not Reports and submission to GPPB Compliant Compliant  osting of Procurement Monitoring (c) P 18% compliant Not Not Not Compliant Not Compliant Not Compliant Not Compliant Not Report in agency website Compliant Compliant Compliant PILLAR III. PROCUREMENT OPERATIONS AND MARKET PRACTICES Indicator 8. Efficiency of Procurement Processes  ercentage of total value of procurement (a) P 50% of APP 89 17 24 72 8 75 12 against total value of approved APPs Percentage of total number of contracts (b)  172 88 77 50 68 100 322 43 awarded against total number of procurement activities done through public bidding Percentage of failed biddings and (c)  13 14 12 7 31 2 No Data 2 total number of procurement activities conducted continued on next page 78 Summary of 2010 Agency Procurement Compliance and Performance Indicator Assessment Ratings for 17 Agencies Annex 4  continued Average All Assessment Conditions Agencies DAR DA DA-NIA DBM-PS DepEd DOE DENR Indicator 9. Compliance with Procurement Timeframes Average number of days to (a)  101 CDs 45 CDs 98 CDs 111 33 CDs 121 No Data 136 CDs procure goods Average number of days to procure (b)  121 CDs ... 98 CDs 181 ... 81 No Data 136 CDs infrastructure projects with ABC of P50 million and below  verage number of days to procure (c) A 126 CDs ... ... ... ... ... No Data 136 CDs infrastructure projects with ABC above P50 million Average number of days to procure (d)  154 CDs 38CDs 75 CDs ... ... ... No Data 278 CDs consulting services Indicator 10. Timely Payment of Procurement Contracts  ayments are released upon submission (a) P 35 CDs NLT 30 CDs 30-45 CDs 7 3-5 CDs More than 45 90 CDs 37.5 of complete and required documents as provided for in the contract Indicator 11. Capacity Building for Government Personnel and Private Sector Participants  here is a system within the agency (a) T 59% compliant Compliant Compliant Not Compliant Compliant Not Compliant Not Compliant Compliant to evaluate the performance of procurement personnel Percentage of participation of (b)  73% trained 81% 100% 100% Not Compliant 80% No Data 87% Trained procurement staff in annual procurement training Agency has activities to inform and (c)  41% of pilot Compliant Not Compliant Compliant Compliant Not Compliant Compliant update bidders on public procurement agencies Compliant Indicator 12. Management of Procurement and Contract Management Records The BAC Secretariat has a system (a)  76% FC; 18% Fully Fully Fully Fully Substantially Substantially Fully for keeping and maintaining SC; 6% Partially Compliant Compliant Compliant Compliant Compliant Compliant Compliant procurement records Compliant mplementing Unit has and (b) I 59% FC; 29% Substantially Fully Not Compliant Fully Substantially Substantially Fully is implementing a system for SC; 12% Not Compliant Compliant Compliant Compliant Compliant Compliant keeping and maintaining contract Compliant management records Indicator 13. Contract Management Procedures Agency has well defined and written (a)  82% compliant Compliant Compliant Compliant Compliant Compliant Compliant Not procedures for quality control, Compliant acceptance and inspection of goods, works and services Supervision of civil works is carried out (b)  85% compliant ... Compliant Compliant ... No Data Compliant Not by qualified construction supervisors Compliant (applicable for works only) Agency implements Contractors (c)  62% compliant ... Compliant Compliant ... No Data Compliant Not Performance Evaluation System for its Compliant works projects and uses results to check contractors qualifications (applicable for works only) continued on next page 79 Annex 4 Annex 4  continued Average All Assessment Conditions Agencies DAR DA DA-NIA DBM-PS DepEd DOE DENR PILLAR IV. INTEGRITY AND TRANSPARENCY OF AGENCY PROCUREMENT SYSTEM Indicator 14. Civil Society Participation in Public Bidding Civil society organizations or (a)  94% compliant 100% 100% 100% 100% 100% Compliant 100% professional associations are invited for Compliant Compliant Compliant every public bidding activity  ercentage of civil society (b) P 35% 43% 37% 23% 2% 23% No Data 60% of and/or professional organizations’ activities attendance in public bidding activities Indicator 15. Internal and External Audit of Procurement Activities Creation and operation of internal audit (a)  94% compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant unit as prescribed by DBM (Circular Letter No. 2008-5, 14 April 2008)  onduct of regular audit of procurement (b) C 69% compliant Compliant Compliant Compliant Compliant Compliant Not Compliant Not processes and transactions by internal Compliant audit unit nternal audit recommendations on (c) I 69% compliant Compliant Compliant No Data Not Compliant Not Compliant Compliant Not procurement-related matters are Compliant implemented within 6 months of the submission of the auditor’s report Agency Action on Prior Year’s Audit (d)  80% of 92 86 47 100 No data 86 95 Recommendations on procurement- recommendations related transactions Indicator 16. Capacity to Handle Procurement-Related Complaints  he BAC resolved Motion for (a) T 87% compliant, Within 7 CDs Within 19 Within 7 CDs 10 CDs 7 CDs Within 7 CDs Reconsiderations, Protests and 8 CDs average 7 CDs Complaints within seven (7) calendar days as per Section 55 of the IRR  ll decisions on MRs/complaints/protest (b) A 21% compliant Not Not Compliant Not Compliant Not Compliant Compliant Not are submitted to GPPB, and dispositive Compliant Compliant Compliant portion are publicly posted in the agency and GPPB websites Indicator 17. Anticorruption Programs Related to Procurement Agency has specific anticorruption (a)  88% IDR IDAP IDAP IDR IDAP IDAP IDAP & IDR program related to integrity development (e.g., IDAP or IDR)  gency has specific policies and (b) A 63% Not Compliant Compliant No Data Compliant Not Compliant Compliant procedures in place for detection and Compliant prevention of corruption associated with procurement. continued on next page 80 Summary of 2010 Agency Procurement Compliance and Performance Indicator Assessment Ratings for 17 Agencies Annex 4  continued Assessment Conditions DENR-LLDA DOF-BIR DOH DPWH DSWD DOTC LWUA Marikina SC-APJR Valenzuela PILLAR I. COMPLIANCE WITH LEGISLATIVE AND REGULATORY FRAMEWORK Indicator 1. Competitive Bidding as Default Procurement Method  ercentage of public bidding (a) P 85 68 51 97 83 99 79 92 37 52 contracts in terms of value of total procurement  ercentage of public bidding (b) P 1 8 41 6 4 32 1 31 14 20 contracts in terms of volume of total procurement Indicator 2. Alternative Methods of Procurement Percentage of alternative (a)  15 32 49 3 17 0.84 21 8 64 48 modes of contracts in terms of value of total procurement Percentage of Shopping (b)  6 0.41 1 0.50 1 0.28 12 5 63 13 contracts in terms of value of total procurement Percentage of Negotiated (c)  8 21 37 2 7 0.56 2 8 ... 33 Procurement in terms of value of total procurement  ercentage of Direct (d) P 1 12 11 0.87 ... ... 6 2 1.02 1.03 Contracting in terms of value of total procurement Percentage of Repeat Order (e)  ... ... 0.03 ... ... ... ... 0.10 ... 0.91 contracts in terms of value of total procurement Percentage of Limited Source (f)  ... ... ... ... ... ... ... ... ... ... contracts in terms of value of total procurement Indicator 3. Competitiveness of the Bidding Process Average number of bidders (a)  5 4 6 8 13 5 2 12 6 1 who acquired bidding documents Average number of bidders (b)  6 3 4 7 3 5 2 11 4 1 who submitted bids  verage number of bidders (c) A 1 1 1 4 3 3 2 10 4 1 who passed bid evaluation PILLAR II. AGENCY INSTITUTIONAL FRAMEWORK AND MANAGEMENT CAPACITY Indicator 4. Presence of Procurement Organizations Creation and operation of Bids (a)  Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant and Awards Committee(s) or BAC(s)  reation and operation (b) C Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant of a BAC Secretariat or Procurement Unit Indicator 5. Procurement Planning and Implementation APP is prepared for all types of (a)  Compliant Compliant Compliant Compliant Compliant Not Compliant Not Compliant Compliant procurement Compliant Compliant Indicator 6. Use of Government Electronic Procurement System  gency registered with (a) A Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant PhilGEPS Percentage of bid opportunities (b)  95 100 100 100 100 71 100 382 100 100 posted at PhilGEPS Percentage of contract award (c)  1 53 100 82 100 0.49 1.57 0 100 100 information posted at PhilGEPS continued on next page 81 Annex 4 Annex 4  continued Assessment Conditions DENR-LLDA DOF-BIR DOH DPWH DSWD DOTC LWUA Marikina SC-APJR Valenzuela  ercentage of contract awards (d) P 0 2 58 0.19 43 99 0.71 0 20 99.87 procured through alternative methods posted in PhilGEPS Indicator 7. System for Disseminating and Monitoring Procurement Information  resence of website that (a) P Not Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant provides minimum, up-to-date Compliant procurement information easily accessible at no cost  reparation of Procurement (b) P Not Compliant Compliant Compliant Not Not Not Not Compliant Compliant Monitoring Reports and Compliant Compliant Compliant Compliant Compliant submission to GPPB Posting of Procurement (c)  Not Compliant Compliant Compliant Not Not Not Not Not Not Monitoring Report in Compliant Compliant Compliant Compliant Compliant Compliant Compliant agency website PILLAR III. PROCUREMENT OPERATIONS AND MARKET PRACTICES Indicator 8. Efficiency of Procurement Processes  ercentage of total value of (a) P 76 73 81 21 54 8 26 106 17 99 procurement against total value of approved APPs  ercentage of total number (b) P 50 100 135 85 61 85 100 1379 97 88 of contracts awarded against total number of procurement activities done through public bidding Percentage of failed (c)  7 47 13 0.91 36 4 14 16 3 5 biddings and total number of procurement activities conducted Indicator 9. Compliance with Procurement Timeframes Average number of days to (a)  ... 49.55 CDs 117 CDs 111 CDs 77 CDs 136 70 CDs No Data 207 CDs 124 procure goods Average number of days to (b)  ... ... 162 CDs 111 CDs ... 125 ... No Data ... 113 procure infrastructure projects with ABC of P50 million and below Average number of days to (c)  67 CDs ... 56 CDs 140 CDs ... 141 126 CDs No Data ... 144 procure infrastructure projects with ABC above P50 million Average number of days to (d)  n/a 37 CDs 143 CDs 315 CDs ... 166 ... ... ... 170 procure consulting services Indicator 10. Timely Payment of Procurement Contracts Payments are released upon (a)  10 CDs 15–30 CDs NLT 30 CDs After 45 CDs No Data Not 30 CDs 30–45 30–45 No Data submission of complete Compliant and required documents as provided for in the contract Indicator 11. Capacity Building for Government Personnel and Private Sector Participants There is a system within (a)  Not Compliant Compliant Compliant Compliant Not Compliant Not Compliant Not the agency to evaluate the Compliant Compliant Compliant Compliant performance of procurement personnel  ercentage of participation of (b) P 8 90 100 90 29 No Data 100 54 100 No Data procurement staff in annual procurement training continued on next page 82 Summary of 2010 Agency Procurement Compliance and Performance Indicator Assessment Ratings for 17 Agencies Annex 4  continued Assessment Conditions DENR-LLDA DOF-BIR DOH DPWH DSWD DOTC LWUA Marikina SC-APJR Valenzuela Agency has activities to inform (c)  Not Compliant Compliant Not None Not Not Not Not Not and update bidders on public Compliant Compliant Compliant Compliant Compliant Compliant Compliant procurement Indicator 12. Management of Procurement and Contract Management Records The BAC Secretariat has (a)  Fully Fully Fully Partially Fully Fully Fully Substantially Fully Fully a system for keeping and Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant maintaining procurement records Implementing Unit has and (b)  Substantially Fully Fully Substantially Fully Fully Fully Not Fully Fully is implementing a system Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant Compliant for keeping and maintaining contract management records Indicator 13. Contract Management Procedures Agency has well defined and (a)  Compliant Compliant Compliant Compliant No Data Compliant Compliant Not Compliant Compliant written procedures for quality Compliant control, acceptance and inspection of goods, works, and services  upervision of civil works (b) S Compliant Compliant Compliant Compliant ... Compliant Compliant Compliant ... Compliant is carried out by qualified construction supervisors (applicable for works only) Agency implements (c)  Not Compliant Compliant Compliant ... Compliant Not Not ... Compliant Contractors Performance Compliant Compliant Compliant Evaluation System for its works projects and uses results to check contractors qualifications (applicable for works only) PILLAR IV. INTEGRITY AND TRANSPARENCY OF AGENCY PROCUREMENT SYSTEM Indicator 14. Civil Society Participation in Public Bidding Civil society organizations (a)  100% 100% 100% 100% 100% 100% 100% Compliant Not 100% or professional associations Compliant Compliant Compliant are invited for every public bidding activity Percentage of civil society (b)  No Data 41 19 83 11 6 70 2 17 85% of and/or professional activities organizations’ attendance in public bidding activities Indicator 15. Internal and External Audit of Procurement Activities  reation and operation (a) C Compliant Compliant Compliant Compliant Compliant Compliant Compliant Not Compliant Compliant of internal audit unit Compliant as prescribed by DBM (Circular Letter No. 2008-5, 14 April 2008)  onduct of regular audit (b) C Not Not Compliant Compliant Compliant Not Compliant ... Compliant Compliant of procurement processes Compliant Compliant Compliant and transactions by internal audit unit nternal audit (c) I ... Compliant Compliant Compliant Compliant ... Compliant ... Compliant No Data recommendations on procurement-related matters are implemented within 6 months of the submission of the auditor’s report continued on next page 83 Annex 4 Annex 4  continued Assessment Conditions DENR-LLDA DOF-BIR DOH DPWH DSWD DOTC LWUA Marikina SC-APJR Valenzuela  gency Action on Prior Year’s (d) A No Data 100% Compliant 92% 78% 87% 27% 76% 87% 62% Audit Recommendations on procurement-related transactions Indicator 16. Capacity to Handle Procurement-Related Complaints The BAC resolved Motion for (a)  n/a 6.33 CDs Within 7 Within 7 Within 7 7 n/a 7 7 7 Reconsiderations, Protests CDs CDs CDs and Complaints within seven (7) calendar days as per Section 55 of the IRR All decisions on MRs/ (b)  n/a Not n/a Not Not Not n/a Not Compliant Not complaints/protest are Compliant Compliant Compliant Compliant Compliant Compliant submitted to GPPB, and dispositive portion are publicly posted in the agency and GPPB websites Indicator 17. Anticorruption Programs Related to Procurement Agency has specific (a)  Not IDAP IDAP IDAP IDAP IDAP IDAP Not IDAP Citizen’s anticorruption program related Compliant Compliant Charter to integrity development (e.g., IDAP or IDR) Agency has specific policies (b)  Not Compliant Compliant Not Compliant Not Compliant Compliant Compliant Citizen’s and procedures in place for Compliant Compliant Compliant Charter detection and prevention of corruption associated with procurement. ABC = approved budget for the contract, APP = annual procurement plan, BAC = Bids and Awards Committee, BIR = Bureau of Internal Revenue, DBM = Department of Budget and Management, DENR = Department of Environment and Natural Resources, DepEd = Department of Education, DOF = Department of Finance, DOH = Department of Health, DOTC = Department of Transport and Communications, DPWH = Department of Public Works and Highways, GPPB = Government Procurement Policy Board, IDAP = integrity development action plan, IDR = integrity development review, PhilGEPS = Philippine Government Electronic Procurement System, PS = Procurement Service. Source: CPAR Working Group, 2012. 84 Annex 5 Recommendations and Agreements on Civil Society Organization Participation Issues Recommendations Comments/Agreements 1. Sustainability • Pilot test the utilization of a portion of project funds allocated for • Bid out monitoring and evaluation of of civil society monitoring and evaluation components of foreign-assisted or foreign-assisted projects to CSOs. organization (CSO) locally-funded projects to provide support for CSO participation. • Allocate percentage of earnings from participation in • Set up a national procurement integrity endowment or sale of bid documents to CSO training public procurement investment fund where private companies can contribute funds monitoring to support CSO participation in public procurement monitoring. • Develop database of volunteer observers with appropriate basic training on the Government Procurement Reform Act (GPRA). • Explore the possibility of tapping retirees, community-based volunteers, and the academe as volunteers in procurement monitoring 2. Absence of a • Develop a guide on the conduct of third-party observation, • Reports should not only cover the guide in observing defining the role of observers in relation to promoting procedures, but also the actual public biddings transparency and accountability. conditions and problems • Issue standard checklists for observers with substantial • A standard checklist and a narrative of information for monitoring and policy agencies. observation 3. Availability, quality, • Government Procurement Policy Board-Technical Support • Central management is needed in order and other related Office to develop a simple and standard training module on the to set the focus, and manage the whole concerns on GPRA for CSO training program. Provide for an avenue to training on GPRA • Finalize, pilot test, and roll out CSO Manual for Procurement consolidate findings. Trainings using the Monitoring vernacular in the case of the barangays. • Customized trainings for barangays. 4. Submission and • Institutionalize validation of observers report and enforce • An alliance or coalition of CSOs with utilization of Section 13.4(b) of the Revised Implementing Rules and consolidated reports shall be a force observers’ report Regulations for observers to submit their report to procuring to reckon with as they synthesize the entity, copy furnished the Government Procurement Policy reports, and rate agencies based on Board and OMB or Resident OMB. these. • Provide an online platform within the PhilGEPS for submission • Empower CSOs through the use of their and consolidation of observers’ reports reports. • Institutionalize a mechanism for gathering, summarizing and • The alliance, coalition, or network of establishing trends based on existing reports. CSOs should be nationwide so that an • Include Commission on Audit and/or Resident COA and oversight agency can easily touch base Internal Audit Units and/or Services in the recipients of with an observer in the region. observers’ report. continued on next page 85 Annex 5 Annex 5  continued Issues Recommendations Comments/Agreements 5. Legitimacy of • Establish an accreditation process for observers special purpose • Invite or mainstream special purpose nongovernment CSOs involved in organizations to provincial procurement network public procurement • Set up multistakeholder provincial procurement networks or activities, specially provincial procurement integrity councils that shall indirectly at local level provide check and balance among CSOs. • Review and improve proposed code of conduct on procurement monitoring. • Require names of nongovernment organization and CSO observers in agency procurement monitoring reports. These data shall be shared by the Government Procurement Policy Board to CSO networks for validation. • Enforce and ensure that all observers sign declaration of conflict of interest. • Organizations to endorse and vouch for credibility and integrity of observers Note:  Issues in italics are carried over from 2008 Country Procurement Assessment Report. Source: CPAR Working Group, 2012. 86 Annex 6 Comparison of Government of the Philippines, ADB, and World Bank Procurement Rules A. Checklist Comparing Republic Act 9184 Procedures and ADB and World Bank Policies RA 9184 Issues Yes No ADB and World Bank Policy Remarks   1. Are there eligibility ü Eligibility restrictions based There is an eligibility requirement of 60% restrictions based on on nationality of bidders Filipino ownership for procurement of goods and nationality of bidder and/or are not allowed. consulting services, and 75% Filipino ownership for origin of goods (other than procurement of infrastructure projects. primary boycotts)? Unacceptable. Retain in the national competitive bidding (NCB) Annex as an unacceptable rule.   2. Are there primary boycotts ü Asian Development Bank The law has no policy on boycott. which are established (ADB): No boycotts are Acceptable. by law? allowed. World Bank: Only primary boycotts are acceptable.   3. Are bidding opportunities ü ADB: Advertisement is The law requires advertisement of invitations to advertised in the required for contracts bid/request for expression of interest for contracts local press? estimated to cost $500,000 undertaken through competitive bidding (except for or more for goods and related contracts with an approved budget for the contract services, and $1,000,000 or [ABC] of P2 million and below for procurement more for civil works. of goods, P5 million and below for procurement World Bank: Advertisement is of infrastructure projects, P1 million and below required for all public bidding. or those whose duration is 4 months or less for consulting services), and posting of all bidding opportunities, except certain alternative methods of procurement. Acceptable.   4. Are prospective bidders ü ADB: A period of at least As a general rule, the earliest possible time for bid allowed at least 30 days for 28 days for bid preparation preparation is less than 30 days. However, if the bid preparation (except for is required. procuring entity determines that by reason of the commodities/small goods World Bank: A period of method, nature, or complexity of the contract to be contracts)? at least 30 days for bid bid or when international participation will be more preparation is required. advantageous to the Government of the Philippines, the time for bid preparation is more than 30 days. Unacceptable. Retain in the NCB Annex as an unacceptable rule. continued on next page 87 Annex 6 Annex 6  continued RA 9184 Issues Yes No ADB and World Bank Policy Remarks   5. Are contractors/suppliers ü Prequalification of bidders for There is no prequalification under the law. prequalified for large/ large/specialized contracts is Unacceptable. Include in the NCB Annex the specialized contracts? required. prequalification process of bidders for large, specialized, or highly complex contracts.   6. Are minimum experience, ü Minimum experience, Yes, the minimum experience, technical, and technical and financial technical and financial financial requirements are explicitly stated in the requirements (for pre- or requirements should be bidding documents. post-qualification) explicitly explicitly stated in the Acceptable. stated in the documents? bidding documents. Registration should not be ü Registration system showing There is a registration of contractors that captures used as a substitute for category of contractors is basic qualification data. advertisement when open required. Acceptable. competition is required. However, when advertising for civil works, borrowers could indicate the required minimum category of contractor specified in the registration system.   7. Is an invitation to prequalify ü Invitation to prequalify is There is no prequalification process under the law, advertised for each required. thus no invitation to prequalify is advertised. procurement involving Unacceptable. Include the advertisement of large or complex potential invitation to prequalify in the NCB Annex. contracts?   8. Are joint ventures with local ü Forcing foreign firms to form In order to meet the eligibility requirement on firms required for foreign joint ventures with local firms Filipino ownership, foreign firms are compelled to firms’ eligibility? for reasons of eligibility is form joint ventures with local firms. not allowed. Unacceptable. Retain in the NCB Annex as an unacceptable rule.   9. Are joint venture partners ü Joint venture partners are Yes. Acceptable. jointly and severally liable? jointly and severally liable. 10. Are there set limitations to ü Limitations on the number of The law does not set limitations on the number of the number of firms who firms are not allowed. firms who can bid for a contract. can bid for a contract? Acceptable. 11. Are parastatals allowed ü Government-owned Government corporate entities are eligible to to bid? enterprises are allowed to participate in competitive bidding if they can bid if they (i) are financially establish that they (a) are legally and financially autonomous, (ii) operate autonomous, (b) operate under commercial law, and under commercial law, and (c) are not dependent agencies of the Government of (iii) are independent from the Philippines or the procuring entity. borrower and its purchasing Acceptable for the World Bank. Include in the NCB contracting authority. Annex of ADB, and delete the word “the Government of the Philippines” from condition (c). It should be: “not dependent agency of the procuring entity, the executing agency or the implementing agency.” continued on next page 88 Comparison of Government of the Philippines, ADB, and World Bank Procurement Rules Annex 6  continued RA 9184 Issues Yes No ADB and World Bank Policy Remarks 12. Are bidders required to ü Registration with a local For infrastructure projects, persons and entities register with a local or authority as a precondition meeting the 75% Filipino ownership may federal authority as a prior to bidding should be participate in public bidding if he has been issued a condition for bidding? discouraged. license by the Philippine Contractors Accreditation Acceptable only if registration Board to engage or act as a contractor. criteria and process are cost Unacceptable. reasonable/efficient and Retain in the NCB Annex as an unacceptable rule. qualified foreign firms are not precluded from competing. 13. Are extensions to bid ü Extension to bid validity may Yes, extension of bid validity is allowed for validity allowed? be allowed if justified by valid reasons. exceptional circumstances. Acceptable. 14. Are there restrictions on the ü Restriction on the means of There are no restrictions on the means of delivery means of delivery of bids? delivery of bids is not allowed, of bids. except when bidders have to Acceptable. submit physical samples, then they can be required to deliver bids by mail, by courier, by hand, etc. 15. Is preference given to ü Preference based on region Preference to domestically produced and suppliers or contractors or locality of registration is manufactured goods, supplies, and materials that based on region or locality not allowed. meet the specified or desired quality, in accordance of registration, small size, with the provisions of Commonwealth Act No. 138, ethnic ownership, etc? is adopted in the GPRA. There is also preference to domestic entities, subject to certain conditions. The award shall be made to the lowest domestic bidder or lowest domestic entity, provided his bid is not more than 15% in excess of the lowest foreign bid. Unacceptable and to be retained in the NCB Annex as an unacceptable rule. 16. Are there restrictions ü Restriction on sources of labor There are no restrictions on sources of labor and on sources of labor and and materials is not allowed, materials in the law. material? except for unskilled labor, if Acceptable. available locally. 17. Is public bid opening ü Public opening of bids is Yes, public or competitive bidding is the primary required? Does it required, the conduct of mode of procurement. The opening of bids is done occur immediately or which should immediately on the same day of the deadline for bid submission. closely following the bid or closely follow the bid Acceptable. submission deadline? submission deadline. continued on next page 89 Annex 6 Annex 6  continued RA 9184 Issues Yes No ADB and World Bank Policy Remarks 18. Is a “two envelope” ü ADB: Two-envelope bidding is While the law requires two envelopes, the bid opening procedure allowed. envelopes are required to be opened on the same permitted for procurement World Bank: Two-envelope day of the bid opening. Transparency is achieved. of goods or works? bidding should be Acceptable. discouraged. Allowed only if (i) domestic law precludes use of one envelope, and (ii) adequate safeguards are provided against retaining second envelope unopened and incorporated in the two-envelope procedures and effective bid protest mechanisms are already in place for the due processing of bid complaints. 19. Is automatic rebidding ü ADB: Automatic rebidding The law allows award to a lone bidder provided it is required if too few bids is not acceptable. responsive. are received? World Bank: Automatic Acceptable for the World Bank. Unacceptable rebidding is acceptable, for ADB. Retain the provision in the NCB Annex provided all responsive of ADB that if a lone bidder obtains bidding bidders are allowed to bid, documents, bid opening and evaluation shall the process is efficient and not proceed and it shall be considered a failure no serious delays result. of bidding. 20. Is bracketing used in ü ADB: Bracketing is not ABC is used as a ceiling for acceptable bid prices. bid evaluation? allowed. For foreign-funded procurement, ABC shall World Bank: Using ABC as be applied as a ceiling provided the following a ceiling is allowed under conditions are met: (a) Bidding documents are certain conditions. obtainable free of charge on a freely accessible website. If payment is required, it could be made upon submission of bids. (b) The procuring entity has procedures in place to ensure that the ABC is based on recent estimates, and that the estimates are based on adequate detailed engineering and reflect the quality, supervisions, and risk- inflationary factors, as well as prevailing market prices. (c) The procuring entity has trained cost estimators, and in case of infrastructure projects, trained quantity surveyors. (d) The procuring entity has established a system to monitor and report bid prices relative to ABC and engineer’s or procuring entity’s estimate. (e) The procuring entity has established a monitoring and evaluation system for contract implementation to provide a feedback on actual total costs of goods and works. continued on next page 90 Comparison of Government of the Philippines, ADB, and World Bank Procurement Rules Annex 6  continued RA 9184 Issues Yes No ADB and World Bank Policy Remarks However, the Government of the Philippines and the foreign government or foreign or international financial institution may agree to waive the foregoing conditions. Acceptable for the World Bank. Unacceptable for ADB. Retain in the NCB Annex of ADB as an unacceptable rule. Are bid evaluation criteria ü Bid evaluation criteria other No bid evaluation criterion, other than price, is other than price allowed? than price are allowed only if required. quantified in monetary terms. Acceptable. 21. Is award made to lowest ü Award should be made to the The law mandates that award be made to the evaluated qualified and lowest evaluated qualified and lowest calculated and responsive bid. responsive bidder? responsive bidder. Acceptable. 22. Are price negotiations ü Price negotiation is not The law prohibits negotiation with the lowest conducted with winning allowed, except where the bid calculated and responsive bidder. bidders prior to contract price is substantially above Acceptable. signature? market or budget levels and then only if negotiations are carried out to try to reach a satisfactory contract through reduction in scope and/ or reallocation of risk and responsibility, which can be reflected in a reduction in contract price, subject to the Bank’s prior approval. 23. Are price adjustment ü Price adjustment is not Price adjustment is allowed when the cost of the provisions generally used? required, except for delivery of awarded contract is affected by any applicable goods or completion of works, new law, ordinance, regulation, or other acts of extending beyond 18 months. the government promulgated after bid opening and under extraordinary circumstances with prior approval of the Government Procurement Policy Board. Acceptable for the World Bank. Include in the NCB Annex of ADB that price adjustment shall be allowed for contracts extending beyond 18 months. continued on next page 91 Annex 6 Annex 6  continued RA 9184 Issues Yes No ADB and World Bank Policy Remarks 24. Are the terms and ü The terms and conditions to The size and nature of the contract are the bases conditions used in goods be used in goods and works for the terms and conditions specified in the bidding and works procurement procurement should be documents. generally appropriate for the appropriate for the size and Acceptable. size and nature of contract nature of the contract. To be intended? acceptable, they should be balanced, reasonable, and clearly address the most important issues that lead to problems during performance, e.g., risk allocation, payment, inspection, completion or acceptance, insurance, warranties changes, contract remedies, force majeure, governing law, and termination. 25. Are contract scope and/or ü Contract scope and/or Amendment to order (for procurement of conditions modified during conditions may be modified goods) and variation orders (for procurement of implementation? during implementation, infrastructure projects), are allowed under certain but the Bank’s approval is conditions. required for changes in those Acceptable. Retain the rule in the NCB Annex contracts that were subject that for contracts subject to prior review, any to prior review under the loan modification that would result to an aggregate agreement. increase of more than 15% should be subject to the Bank’s prior approval. Sources: Asian Development Bank, Government of the Philippines, World Bank. 92 Annex 7 Review of the World Bank’s National Competitive Bidding Procurement Annex Current Version Result of Review Using Checklist Remarks/Proposed Changes 1. Eligibility screening shall not be applied. Eligibility screening is not acceptable. Retain the None. However, bids that do not contain any of same wording. the following documents will not pass the documentary compliance check: (i) evidence of the required financial, technical, or production capability; (ii) audited financial statements; (iii) credit line, or cash deposit certificate; (iv) bid security; and (v) authority of the bid signatory. 2. A ceiling may be applied to bid prices provided Following harmonization process, these proposed Delete. the following conditions are met: (a) Bidding conditions in using the ABC were included in the documents are obtainable free of charge on Revised Implementing Rules and Regulations of a freely accessible website. (b) The agency Republic Act 9184 (or the Government Procurement has procedures in place to ensure that the Reform Act [GPRA]), for foreign-funded procurement. Approved Budget for the Contract (ABC) is based on engineer’s estimate. (c) The agency has trained cost estimators on estimating prices and analyzing bid variance. (d) The agency has established a system to monitor and report bid prices relative to ABC and engineer’s estimate. 3. Domestic or regional preferences will not be There is preference on domestically-produced Delete the word “regional.” applied in the evaluation of bids, and other and manufactured goods, supplies, and materials preference in effect in the Philippines will that meet the specified or desired quality, and to not be used except with prior concurrence domestic entities subject to certain conditions, of the Bank. under the GPRA. But regional or provincial preference is not in effect anymore. Retain the provision in the National Competitive Bidding (NCB) Annex. 4. In case of contracts for prior review, Modification of the contract scope/conditions is Clarify in the NCB Annex modification exceeding 15% of contract allowed under certain conditions in the GPRA. that the “more than 15% amount and material changes in the Acceptable. increase of the original conditions during implementation require Retain the rule in the NCB Annex that for contracts contract amount” is on an prior Bank concurrence. subject to prior review, any modification that would aggregate basis. result to an aggregate increase of more than 15% should be subject to the Bank’s prior concurrence. continued on next page 93 Annex 7 Annex 7  continued Current Version Result of Review Using Checklist Remarks/Proposed Changes 5. Foreign suppliers and contractors shall be In order to meet the eligibility requirement on None. allowed to participate, if interested, without Filipino ownership, foreign firms are compelled to first being required to associate with, or enter form joint ventures with local firms. into joint venture with local firms. Unacceptable. Retain the provision in the NCB Annex. Moreover, foreign bidders shall be allowed For infrastructure projects, persons or entities None. to bid, even without registration, licensing, meeting the 75% Filipino ownership may participate and other government authorizations, leaving in public bidding if he has been issued a license by compliance with these requirements for after the Philippine Contractors Accreditation Board to award and before signing of contract. engage or act as a contractor. Unacceptable. Retain the provision in the NCB Annex. 6. For works contract, the experience For foreign-funded procurement, the Government None. qualification requirement shall be: (i) at least of the Philippines and the foreign government or one previous contract at 80% of the estimated international financial institutions (IFIs) may agree cost of the contract being procured; and (ii) an on another track record requirement, other than that annual turnover from all works averaged specified in the GPRA. Thus, the current version over the last 3 years equal to 100% of the should be retained as it specifies the World Bank’s estimated cost of the contract being procured. track record requirement for works procurements. 7. Alternative procurement methods defined Acceptable. Retain in the NCB Annex. Update reference to in the implementing rules and regulations, “implementing rules and such as limited source bidding, direct regulations” into “Revised contracting and shopping, are acceptable. Implementing Rules and The use of the other alternative methods will Regulations (2009).” require prior Bank concurrence. 8. A period of at least 30 days for bid Under the GPRA, as a general rule, the earliest None. preparation shall be required. possible time for bid preparation is less than 30 days. However, if the procuring entity determines that by reason of the method, nature, or complexity of the contract to be bid, or when international participation will be more advantageous to the government, the time for bid preparation is more than 30 days. Unacceptable. Retain the provision in the NCB Annex. Source: World Bank. 94 Annex 8 Review of ADB’s National Competitive Bidding Procurement Annex Remarks/Proposed Current Version Result of Review Using Checklist Changes 1. Eligibility Eligibility screening shall not be applied. Eligibility screening is not acceptable. Retain the None. However, bids that do not contain any same wording. of the following documents will not pass the documentary compliance check: (i) evidence of the required financial, technical, or production capability; (ii) audited financial statements; (iii) credit line, or cash deposit certificate; (iv) bid security; and (v) authority of the bid signatory. National sanction lists may be applied Retain in the National Competitive Bidding (NCB) Annex. None. only with prior approval of the Asian Development Bank (ADB). 2. Advertising Bidding of NCB contracts estimated at The Government Procurement Reform Act (GPRA) requires None. $500,000 or more for goods and related posting of procurement opportunities (except for contracts services or $1,000,000 or more for civil with an approved budget for the contract (ABC) of P2 million works shall be advertised concurrently and below for procurement of goods, P5 million and below for with the general procurement notices on procurement of infrastructure projects, P1 million and below ADB’s website. or those whose duration is 4 months or less for consulting services) at the website prescribed by the foreign government or international financial institution (IFI). This is acceptable. Retain in the NCB Annex, the requirement of posting the procurement notices on the ADB’s website. 3. Price of Bidding Document The price of bidding documents should There is no ceiling or clear-cut guidelines in the pricing of None. be nominal, covering only reproduction bidding documents under the GPRA. Retain the provision in Indicate that the price of and mailing or courier costs. the NCB Annex as it encourages minimal pricing. bidding documents shall Retain the provision in the NCB Annex and include a ceiling or be in accordance with the maximum amount for pricing the bidding documents. Government Procurement Policy Board guidelines on the sale of bidding documents. continued on next page 95 Annex 8 Annex 8  continued Remarks/Proposed Current Version Result of Review Using Checklist Changes 4. Price Ceiling The approved budget for the contract The ABC is used as a ceiling for acceptable bid prices. None. (ABC) may be published, but it shall For foreign-funded procurement, the ABC shall be applied not be stated or implied that bid prices as a ceiling provided the following conditions are met: may not exceed the ABC, or that bid (a) Bidding documents are obtainable free of charge on a evaluation will in any way take into freely accessible website. If payment is required, it could be account the ABC. The ABC, budgetary made upon submission of bids. (b) The procuring entity has allocation, ceiling price, or similar procedures in place to ensure that the ABC is based on recent estimates of contract value may not estimates, and that the estimates are based on adequate be used to reject bids without prior detailed engineering and reflect the quality, supervisions, and concurrence of ADB. risk-inflationary factors, as well as prevailing market prices. (c) The procuring entity has trained cost estimators, and in case of infrastructure projects, trained quantity surveyors. (d) The procuring entity has established a system to monitor and report bid prices relative to the ABC and engineer’s or procuring entity’s estimate. (e) The procuring entity has established a monitoring and evaluation system for contract implementation to provide a feedback on actual total costs of goods and works. However, the Government of the Philippines and the foreign government/foreign or IFI may agree to waive the foregoing conditions. This is unacceptable. Retain the provision in the NCB Annex. 5. Preferences (i) No preference of any kind shall be Preference to domestically produced and manufactured None. given to domestic bidders or for goods, supplies, and materials that meet the specified domestically manufactured goods. or desired quality, in accordance with the provisions of (ii) Suppliers and contractors shall Commonwealth Act No. 138, is adopted in the GPRA. There None. not be required to purchase local is also preference to domestic entities, subject to certain goods or supplies or materials. conditions. The award shall be made to the lowest domestic bidder or lowest domestic entity, provided his bid is not more (iii) Foreign suppliers and contractors None. than 15% in excess of the lowest foreign bid. from ADB member countries shall be allowed to participate, Unacceptable. The provision should be retained in the if interested, without first being NCB Annex. required to associate with, or enter In order to meet the eligibility requirement on Filipino into joint venture with, local firms. ownership, foreign firms are compelled to form joint ventures (iv) Foreign suppliers or contractors with local firms. None. from ADB member countries Unacceptable. Retain the provision in the NCB Annex. shall be allowed to bid, without For infrastructure projects, persons or entities meeting the registration, licensing, and other 75% Filipino ownership may participate in public bidding if government authorizations, he has been issued a license by the Philippine Contractors leaving compliance with these Accreditation Board to engage or act as a contractor. requirements for after award and Unacceptable. Retain the provision in the NCB Annex. before signing of contract. continued on next page 96 Review of ADB’s National Competitive Bidding Procurement Annex Annex 8  continued Remarks/Proposed Current Version Result of Review Using Checklist Changes 6. Experience Qualification For works contract, the experience For foreign-funded procurement, the Government of the None. qualification requirement shall be: Philippines and the foreign government or IFI may agree on (i) at least one previous contract at 80% another track record requirement, other than that specified of the estimated cost of the contract in the GPRA. Thus, the current version should be retained being procured, and (ii) an annual as it specifies ADB’s track record requirement for works turnover from all works averaged over procurements. the last 3 years equal to 100% of the estimated cost of the contract being procured. 7. Anticorruption Provisions in Bidding Documents The Philippine Bidding Documents (PBDs) for goods, None. Anticorruption provisions in the infrastructure projects and consulting services have Instruction to Bidders section of ADB essentially adopted the anticorruption provisions on “corrupt standard bidding documents (SBDs) practices” and “conflict of interest (in relation to eligible shall be incorporated into NCB bidding bidders)” of ADB Standard Bidding Documents (SBDs), but documents including those under several provisions and definitions have not been reconciled Corrupt Practices and Eligible Bidders and included in the PBDs, such as: definition of “collusive clauses of the SBDs. practice” under ADB’s SBDs varies with the definition provided in the PBD; the PBDs do not include the provisions under Clause 3.1 (c and d), Instruction to Bidders of ADB’s SBDs; the PBDs do not include the statement under Clause 4.4, Instruction to Bidders of ADB’s SBDs. The provision should be retained in the NCB Annex. 8. Bidding Period Bidders shall be given a minimum period As a general rule, the earliest possible time for bid None. to prepare and submit bids of 4 weeks, preparation is less than 30 days. However, if the procuring counted from the date of invitation to entity determines that by reason of the method, nature, or bid or the date of availability of bidding complexity of the contract to be bid, or when international documents, whichever is later. participation will be more advantageous to the government, the time for bid preparation is more than 30 days. Unacceptable. Retain the provision in the NCB Annex. 9. Single Bid Submission When a lone bidder obtains a bidding The law allows award to a lone bidder provided it is None. document and submits bids at the responsive. This is unacceptable. Retain the provision in the deadline for bid submission under NCB Annex that if a lone bidder obtains bidding documents, a post-qualification bidding, bid bid opening and evaluation shall not proceed and it shall be opening and evaluation shall not considered a failure of bidding. proceed but it shall be considered a failure of bidding. Before taking any alternative procurement action, a proper assessment of the cause of lack of participation shall be made and ADB prior approval shall be sought for any proposal subsequent action. continued on next page 97 Annex 8 Annex 8  continued Remarks/Proposed Current Version Result of Review Using Checklist Changes 10. Shopping Method If included as a procurement method in The procedural guidelines for shopping procurements under None. the procurement plan, shopping shall the Guidelines for Shopping and Small Value Procurement be undertaken in accordance with ADB (Government Procurement Policy Board Resolution No. 09- Procurement Guidelines (April 2010, as 2009) and under ADB Procurement Guidelines have amended from time to time). remaining differences. To follow one set of procedural guidelines, retain the provision in the NCB Annex. 11. Contract Amendment In case of contracts for prior review, Amendment to order (for procurement of goods) and Clarify in the NCB Annex modifications exceeding 15% of contract variation orders (for procurement of infrastructure projects), that the “modification in amount and material changes in the are allowed under certain conditions, in the GPRA. This excess of 15%” is on an conditions during implementation is acceptable. Retain the rule in the NCB Annex that for aggregate basis. require prior ADB concurrence. contracts subject to prior review, any modification that would result to an aggregate increase of more than 15% should be subject to ADB’s prior approval. Source: Asian Development Bank. 98 Annex 9A The World Bank’s National Competitive Bidding Requirements 1. Eligibility screening shall not be applied. However, bids government authorizations, leaving compliance with that do not contain any of the following documents these requirements for after award and before signing will not pass the documentary compliance check: of contract. (i) evidence of the required financial, technical, or 5. For works contract, the experience qualification production capability, (ii) audited financial statements, requirement shall be: (i) at least one previous contract (iii) credit line, or cash deposit certificate, (iv) bid at 80% of the estimated cost of the contract being security, and (v) authority of the bid signatory. procured, and (ii) an annual turnover from all works 2. Domestic preference will not be applied in the averaged over the last three years equal to 100% of evaluation of bids, and other preference in effect the estimated cost of the contract being procured. in the Philippines will not be used except with prior 6. Alternative procurement methods defined in the concurrence of the Bank. Revised Implementing Rules and Regulations (2009) 3. In case of contracts for prior review, modification such as Limited Source Bidding, Direct Contracting resulting to an aggregate increase of more than 15% and Shopping are acceptable. The use of the of the original contract amount and material changes other alternative methods will require prior Bank in the conditions during implementation, require prior concurrence. Bank concurrence. 7. A period of at least thirty (30) days for bid preparation 4. Foreign suppliers and contractors shall be allowed to shall be required. participate, if interested, without first being required 8. Prequalification of bidders shall be required for large to associate with, or enter into joint venture, with local or complex works or highly specialized procurements. firms. Moreover, foreign bidders, shall be allowed to The invitation to prequalify shall be advertised bid, even without registration, licensing, and other concurrently on the Bank’s external website. Source: World Bank. 99 Annex 9B ADB’s National Competitive Bidding Annex to Procurement Plan 1. Eligibility 5. Preferences (i) Eligibility screening shall not be applied. However, bids (i) No preference of any kind shall be given to domestic that do not contain any of the following documents bidders or for domestically manufactured goods. will not pass the documentary compliance check: (ii) Suppliers and contractors shall not be required to (a) evidence of the required financial, technical, purchase local goods or supplies or materials. or production capability; (b) audited financial (iii) Foreign suppliers and contractors from ADB member statements; (c) credit line, or cash deposit certificate; countries shall be allowed to participate, if interested, (d) bid security; and (e) authority of the bid signatory. without first being required to associate with, or enter (ii) National sanction lists may be applied only with prior into joint venture with, local firms. approval of the Asian Development Bank (ADB). (iv) Foreign suppliers or contractors from ADB member countries shall be allowed to bid, without registration, 2. Advertising licensing, and other government authorizations, leaving compliance with these requirements for after Bidding of national competitive bidding (NCB) contracts award and before signing of contract. estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised 6.  Experience Qualification concurrently with the general procurement notices on ADB’s website. For works contract, the experience qualification requirement shall be: (i) at least one previous contract at 80% of the 3.  Price of Bidding Document estimated cost of the contract being procured, and (ii) an annual turnover from all works averaged over the last 3 years The price of bidding documents should be nominal, and the equal to 100% of the estimated cost of the contract being sale of bidding documents should cover only reproduction and procured. mailing/courier costs. Anticorruption Provisions in Bidding Documents 7.  4.  Price Ceiling Anticorruption provisions in the Instruction to Bidders The approved budget for the contract (ABC) may be published, section of ADB standard bidding documents (SBDs) shall be but it shall not be stated or implied that bid prices may not incorporated into NCB bidding documents including those exceed the ABC, or that bid evaluation will in any way take into under Corrupt Practices and Eligible Bidders clauses of the account the ABC. The ABC, budgetary allocation, ceiling price, SBDs. or similar estimates of contract value may not be used to reject bids without prior concurrence of ADB. 100 ADB’s National Competitive Bidding Annex to Procurement Plan 8.  Bidding Period 11.  Contract Amendment Bidders shall be given a minimum period to prepare and In case of contracts for prior review, modifications exceeding submit bids of 4 weeks, counted from the date of invitation to 15% of contract amount and material changes in the conditions bid or the date of availability of bidding documents, whichever during implementation require prior ADB concurrence. is later. 12. Prequalification 9.  Single Bid Submission Prequalification of bidders shall be required for large or complex When a lone bidder obtains a bidding document and works or highly specialized procurements. The invitation to submits bids at the deadline for bid submission under a prequalify shall be advertised concurrently with the general post-qualification bidding, bid opening and evaluation shall procurement notices on ADB’s website. not proceed but it shall be considered a failure of bidding. Before taking any alternative procurement action, a proper Participation by Government-Owned Enterprises 13.  assessment of the cause of lack of participation shall be made and ADB prior approval shall be sought for any proposal Government-owned enterprises are eligible to participate in subsequent action. competitive bidding if they can establish that they (a) are legally and financially autonomous; (b) operate under 10.  Shopping Method commercial law; and (c) are not dependent agencies of the procuring entity, or the executing agency, or the implementing If included as a procurement method in the Procurement agency. Plan, shopping shall be undertaken in accordance with ADB Procurement Guidelines (April 2010, as amended from time 14.  Price Adjustment to time). For contracts with long delivery or completion periods, generally beyond 18 months, including major civil works contracts, price adjustment provisions shall be provided. Source: Asian Development Bank. 101 Annex 10 Status of Actions Agreed in 2008 Country Procurement Assessment Report Update (as of December 2011) Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Legislative Lack of IRR governing a. Accomplished. The revised IRR of Republic Act 9184 was GOP, PDF (World Bank, and Regulatory procurement of foreign- issued in August 2009 and now covers foreign-funded ADB, CIDA) Framework funded projects procurement activities. 2 years Achieves b. For 2012 Action Plan, GPPB will review the blacklisting 2007–2009 Agreed guidelines of international financial institutions for possible Standards harmonization and implementation of cross debarment. The legal framework Accomplished. The revised IRR adopted acceptable time frames GOP, PDF (World Bank, does not provide for the for activities where foreign bidders may compete. ADB, CIDA) extension of time frames even if foreign bidders are expected to compete Existence of Lack of independent a. A Study on Protest Mechanism was finalized in April 2010. GPPB, World Bank Complaint administrative body or b. In March 2010, the GPPB agreed to act as the review body 2008 and Review special court to review through an independent panel. Mechanism for procurement-related c. For 2012 Action Plan, a review of the recommendations Procurement complaints and appeals from the Protest Mechanism Study will be conducted to determine those that can be immediately implemented and those that will need legislation or amendments to existing guidelines. d. For 2012 Action Plan, GOP will review the policy on appointing GPPB as the interim independent complaint review body. Existence of Lack of implementing a. Accomplished. The GPPB revised and approved the PBDs GPPB, GOP, CIDA Implementing rules and regulations for Goods and Infrastructure Projects (as harmonized Base guidelines and Rules and and harmonized with development partners) in December 2010; PBDs harmonization 2010 Documentation bid documents for information and communication technology projects for specialized were developed based on World Bank and European Union procurements Directives on Information and Communication Technology; PBDs for Procurement of Textbooks and Manuals have been approved by GPPB based on instructions and scope of work for small and medium-sized enterprises. Differences in a. Accomplished. The GPPB approved the Local Government GPPB, LGU leagues, COA, procurement practices Procurement Manual in November 2007 and is currently DBM, ADB, World Bank, and operations of LGUs being revised with the DILG. 2007 were not reflected in Harmonization, 2008 the provisions of the existing law continued on next page 102 Status of Actions Agreed in 2008 Country Procurement Assessment Report Update Annex 10  continued Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Barangay officials say a. Accomplished. The GPPB has approved the Barangay GPPB, LGU leagues, COA, the GPRA may not be Procurement Manuals in 2008. DBM, World Bank, ADB, applicable to the nature 2008 of their procurements Procurement Agencies do not prepare a. DBM Circular Letter 2005-12 establishes guidelines on GPPB, DBM, GOP Mainstreamed multiyear plans that contracting for multiyear projects. December 2007 into Budget are linked to the annual b. For 2012 Action Plan, the GOP will develop clear and Financial budget process or to the regulations and guidelines for multiyear contracts that will Processes preparation of annual integrate budgeting, expenditure, and procurement program. procurement plans There is no system a. EO 55 dated 6 September 2011 was issued directing the DBM, COA, European linking financial automation of the financial processes and created a PFM Community grant management system Committee that will eventually integrate procurement into 2011 and the procurement the financial management system. Government Financial system to ensure Management Information System Resolution 01-2011 enforcement of law requires DBM, COA , and the Bureau of Treasury to issue a reporting system that captures budget utilization and identify variances. b. For 2012 Action Plan, a generic financial management manual will be developed that includes procurement and logistics processes with financial management. c. For 2012 Action Plan, the implementation of the Government Financial Management Information System will be fast tracked. d. For 2012 Action Plan, business standards for processing of invoices will be developed. Normative Although, the GPPB Accomplished. The Government Procurement Policy Board GOP, DBM Procurement does not have to justify Technical Support Office is now an attached agency of the DBM 2010 Body has its activities before per the 2010 General Appropriations Act. Appropriate Congress, its financial Organization, stability is not secured Funding and by the legal framework Staffing Existence of Lack of compliance a. The GPPB has developed and revised the APCPI system GPPB, World Bank System for with requirements to to evaluate procurement performance at the agency level. Collecting and submit procurement Once approved, the APCPI will provide the procurement- Disseminating information. Feedback related information and will link other government related Procurement mechanism has not databases to improve decision making at the national and Information been established to agency levels. monitor procurement b. For 2012 Action Plan, the GPPB will finalize and activities implement APCPI and provide guidelines on validation of information submitted by agencies in the APCPI. Lack of analysis of For 2012 Action Plan, GPPB will ensure compliance to GPPB, COA procurement information submission of APCPI and link other government-related carried out on a databases to improve decision making at the national and national scale agency levels. continued on next page 103 Annex 10 Annex 10  continued Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Existence of Need to develop a a. The Asian Institute of Management developed 15 modules, GPPB Training for sustainable strategy to with pilot training conducted during May–August 2009. World Bank, ADB Government develop the capacity b. There are ongoing efforts to train trainers on updates to and Private of government the GPRA. Sector officials to understand c. For 2012 Action Plan, the modules of the Asian Institute Participants and implement the of Management will be reviewed and revised to align with procurement rules and competency and certification requirements. regulations d. For 2012 Action Plan, a procurement professionalization working group will be established to formulate policies, develop training modules and implement courses on public procurement and on the certification of procurement personnel. e. For 2012 Action Plan, trainers will be trained and the revised training modules rolled out. f. For 2012 Action Plan, the certification and testing program for procurement personnel will be developed and implemented. g. For 2012 Action Plan, the accreditation and monitoring systems for trainers and training institutions will be developed and implemented. Existence of Need to define the a. For 2012 Action Plan, specific qualifications standards GPPB, CSC, DBM, CESB Quality Control skills and knowledge for procurement personnel will be developed and approved Standards competency by DBM and CSC. to Evaluate requirements for b. For 2012 Action Plan, the proposed career stream for Procurement specialized procurement public procurement practitioners will be finalized and Staff jobs and to monitor implemented. Performance compliance with standards among agencies There is a need to jump a. Accomplished. Value engineering is conducted by DPWH DPWH, GPPB, and NEDA start the utilization on all its foreign-assisted projects. Infracom of value engineering GOP in infrastructure as provided for in the Medium-Term Philippine Development Plan to ensure the most cost-efficient designs and avoid overpricing of projects continued on next page 104 Status of Actions Agreed in 2008 Country Procurement Assessment Report Update Annex 10  continued Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Existence of Lack of established a. The NAP issued General Circular No. 1 on January GPPB, COA, NAP Norms for norms for the 2009 providing for rules and regulations governing the Safekeeping of safekeeping of records management of government records that cover procurement Records and documents and supply records. The Commission on Audit issued related to procurement Memorandum No. 2005-027 on 28 February 2005 providing transactions and guidelines on the required documents to be submitted contract management in the technical review and evaluation of infrastructure that must be kept at the projects, goods, and consulting services. operational level b. For 2012 Action Plan, GPPB will issue guidelines on the maintenance and safekeeping of procurement and contract management records and conditions to public access to procurement information. Private Access Absence of organized a. Private sector groups such as the Philippine Constructors DTI, GPPB Sector to efforts to address the Association, the Confederation of Filipino Consulting Procurement capacity of small and Organizations, and the Philippine Institute of Civil Engineers Market medium enterprises provide training on public procurement to its members on a to encourage their regular basis and the Department of Health, the Department participation in of Education, and the Bureau of Internal Revenue provide procurement and training for its suppliers on a regular basis. to help new entries b. For 2012 Action Plan, training on public procurement into procurement will be included in the programs for micro-, small, and marketplace medium-sized enterprises through the PTTC and other DTI-related training agencies. Existence of Many constraints inhibit a. Licensing and registration procedures for contractor’s DTI, PCAB Constraints to private sector access licenses and registration for government projects have been Private Sector to the procurement streamlined and the DTI has established one-stop-shops Access to market, such difficulties for the registration of business requirements. Procurement in getting licenses and b. For 2012 Action Plan, mechanisms to ensure timely Market permits payments of contracts by Procuring Entities will be developed. Efficient Lack of procedures to a. For 2012 Action Plan, a covenant among oversight GPPB, COA, PAGC, DBM, Processes monitor the outcome of agencies (GPPB, COA, PAGC, DBM, OMB) will be OMB to Resolve dispute resolution cases. established to strengthen coordinative linkages on Procurement- The anticorruption monitoring and enforcement of audit findings, and Related program requires compliance with the GPRAs. Disputes better coordination at a higher level. There are no special measures to prevent and detect fraud and corruption in public procurement. There is no organized a. There is an existing database of procurement-related fraud GPPB, COA, OMB information on the cases emanating from COA and referred to OMB. number of graft-related b. For 2012 Action Plan, a database on procurement-related cases filed, prosecuted, fraud cases will be developed. and resolved. continued on next page 105 Annex 10 Annex 10  continued Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Although there are a. The DBM has issued National Budget Circular 2011-5 DBM, AusAID written standards for the dated May 19, 2011 requiring the use of the Philippine internal controls, there Government Internal Audit Manual. The manual was is no periodic reporting completed in October 2011. to management to b. For 2012 Action Plan, the training program on ensure compliance with procurement for internal auditors will be developed and the standards. rolled out. Need to strengthen a. Accomplished. The COA developed the Guide in the COA, World Bank knowledge of auditors Audit of Procurement. With the training on the guide now on procurement institutionalized, about 900 auditors have been given training as of this period. Decisions are not a. The GPPB website shows excerpts of agencies’ decisions on GPPB mandated to be requests for reconsideration and protests filed by bidders. published nor posted in b. For 2012 Action Plan, GPPB will issue guidelines on the the website. posting of decisions on procurement-related disputes in its website or in the procuring entities website. Existence of policies a. For 2012 Action Plan, policies on the filing of protests GPPB that discourage filing including protest fee requirements will be reviewed. of protest (protest fee requirement) Lack of communication a. GPPB approved its communication plan in April 2009. GPPB, World Bank plan for dissemination b. For 2012 Action Plan, the communication plan will be of information on implemented. procurement reform Absence of a policy on a. For 2012 Action Plan, CSOs will advocate for the TAN the protection and/or passage of the Freedom of Information Act that includes a December 2010 disclosure of proprietary, provision on the protection and/or disclosure of proprietary, commercial, personal, commercial, or financial information of a commercial and or financial information sensitive nature related to procurement. of a commercial and sensitive nature related to procurement Need to train a. The COA has recently conducted trainings on forensic GPPB, OMB, COA, investigators, audit for more than 1,000 auditors. World Bank prosecutors and b. For 2012 Action Plan, special training programs on fraud auditors on fraud detection for purposes of prosecution will be developed detection and conducted. continued on next page 106 Status of Actions Agreed in 2008 Country Procurement Assessment Report Update Annex 10  continued Responsible Agencies, Indicator Specific Weaknesses Status of Activities/Actions to Be Undertaken Funding and Timetable Need to expand the a. The CSO Manual on Procurement Monitoring has been GPPB, CSO, World Bank, network of third- drafted and is expected to be rolled out and piloted by the JSDF party observers and first quarter of 2012 in 12 municipalities). strengthen their capacity to participate in the procurement process Weak compliance a. Several CSOs submit the observers’ report directly to GPPB, OMB, COA with the submission the head of the procuring entity but there is no exact of observers’ reports; information on the number of CSOs submitting observers’ lack of enforcement of reports. follow-up action taken b. For 2012 Action Plan, an online platform within the PhilGEPS will be provided for submission and consolidation of observers’ reports. c. For 2012 Action Plan, the validation of observers’ report will be institutionalized and Section 13.4(b) of the revised IRR for observers to submit their report to procuring entity, copy furnished the GPPB and OMB or resident OMB will be enforced. Some agencies do not a. COA Guide on Audit of Procurement checks for agency COA comply with guidelines compliance with detailed engineering guidelines. on detailed engineering. b. The DPWH is in the process of updating its DPWH Design Guidelines, Criteria and Standards (Orange Book) that includes the review and updating of the detailed engineering guidelines, funded by the World Bank under NRIMP 2.c. The DILG is in the process of preparing a new set of detailed engineering guidelines for local roads. ADB = Asian Development Bank, APCPI = agency procurement compliance and performance indicator, AusAID = Australian Agency for International Development, CESB = Career Executive Service Board, CIDA = Canadian International Development Agency, COA = Commission on Audit, CSC = Civil Service Commission, CSO = civil society organization, DBM = Department of Budget and Management, DILG = Department of the Interior and Local Government, DPWH = Department of Public Works and Highways, DTI = Department of Trade and Industry, GFMIS = Government Financial Management Information System, GOP = Government of the Philippines, GPPB = Government Procurement Policy Board, GPRA = Government Procurement Reform Act, IRR = Implementing Rules and Regulations, JSDF = Japan Social Development Fund, LGU = local government unit, NAP = National Archive of the Philippines, NEDA = National Economic and Development Authority, NRIMP = National Roads Improvement and Management Program, OMB = Office of the Ombudsman, PAGC = Presidential Anti-Graft Commission, PBD = Philippine Bidding Document, PCAB = Philippine Contractors Accreditation Board, PDF = Philippine Development Forum, PhilGEPS = Philippine Government Electronic Procurement System, TAN = Transparency and Accountability Network. 1  Data for the LGUs were obtained by the World Bank from the results of the Agency Procurement Performance Indicators conducted in 2008 and the procurement capacity assessments of LGU-funded projects. Source: CPAR Working Group, 2012. 107 Philippines: Country Procurement Assessment Report 2012 Proper public procurement practices directly reflect good governance. Transparent and effective procurement practices minimize expenditure and create opportunity. Procurement is an enormous component in the process by which governments build infrastructure, such as schools and hospitals. It involves the management of significant amounts of money and is therefore often the cause for allegations of corruption and government inefficiency. The difference between getting public procurement right and doing it wrong has the potential to be either highly rewarding, or highly damaging. In some nations, reforms implemented to improve the efficiency of public procurement have resulted in savings of 1% of a country’s gross domestic product. One can see why public procurement is so significant to the development of a country and its people. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two-thirds of the world’s poor: 1.7 billion people who live on less than $2 a day, with 828 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org Printed on recycled paper Printed in the Philippines