40333 2nd UPDATE August 2005 Philippines COUNTRY PROCUREMENT ASSESSMENT REPORT 2ndUPDATE THE WORLD BANK Country Operations and Services Unit East Asia and Pacific Region August 2005 Regional Vice President : Jemal-ud din Kassum, EAP Country Director : Joachim von Amsberg, EACPF Sector Director : Marisa Fernandez-Palacios, EAPCO Task Team Leader : Cecilia Vales, EAPCO Contents Foreword --------------------------------------------------------------------------------------------------- 9 Introduction ------------------------------------------------------------------------------------------------11 Big Achievements So Far ----------------------------------------------------------------------------- 12 Assessment of Progress ------------------------------------------------------------------------------ 16 Consolidated Agreed Actions ------------------------------------------------------------------------ 16 Procurement Under Foreign Assisted Projects (FAPs)---------------------------------------- 17 Funding Requirement for Agreed Actions -------------------------------------------------------- 19 Table Table 1: Status of Completed, Ongoing and Open Agreed Actions ------------------------ 12 Table 2: Procurement Under Foreign Assisted Projects (FAPs) ---------------------------- 17 Table 3: Philippine Bidding Documents Harmonized with ADB, JBIC and the WB ----- 18 Table 4: Amount of Threshold per Contract for Procurement Methods and Prior Reviews ----------------------------------------------------------------------------------------- 19 Appendices Appendix 1 - List of CPAR 2nd Update Mission Participants ---------------------------------- 21 Appendix 2 - Speech of Undersecretary Laura B. Pascua ----------------------------------- 23 Appendix 3 - Summary of Achievements and Ongoing Agreed Actions ------------------ 25 Appendix 4 - Status of Procurement Training and G-EPS Update ------------------------- 37 Appendix 5 - Report on Progress of Reform in LGUs ----------------------------------------- 41 Appendix 6 - Report on Progress of Reform in the Health Sector ------------------------- 47 Appendix 7 - Report on Progress of Reform in the Education Sector --------------------- 50 Appendix 8 - Baseline Indicator System Report ------------------------------------------------ 53 Appendix 9 - Matrix of Weaknesses and Targeted Activities (as of November 2004) - 73 Appendix 10 - Procurement Annex to the Loan Agreement --------------------------------- 77 Appendix 11 - CPAR Update February 2004----------------------------------------------------- 79 Acronyms and Abbreviations ADB - Asian Development Bank GPPB - Government Procurement Policy Board AIM - Asian Institute of Management GPRA - Government Procurement Reform Act AO - Administrative Order ICB - International Competitive Bidding BAC - Bids and Awards Committee INT - Department of Institutional Integrity BSP - Bangko Sentral ng Pilipinas IRRs - Implementing Rules and Regulations BOT - Build-Operate-and-Transfer JBIC - Japan Bank for International Cooperation CIAP - Construction Industry Authority of the Philippines LC - Letter of Credit CDF - Countryside Development Fund LCE - Local Chief Executive CIDA - Canadian International Development Agency LGU - Local Government Unit COA - Commission on Audit LOI - Letter of Instructions CPAR - Country Procurement Assessment Report NBI - National Bureau of Investigation CPPR - Country Portfolio Performance Review NCB - National Competitive Bidding CSC - Civil Service Commission NGA - National Government Agencies DBM - Department of Budget and Management NGO - Non-Government Organization DepEd - Department of Education NEDA - National Economic and Development Authority DILG - Department of the Interior and Local Government OSG - Office of the Solicitor General DOJ - Department of Justice PCAB - Philippine Constructors Accreditation Board DOH - Department of Health PEAC - Pre-qualification, Evaluation and Awards Committee DPWH - Department of Public Works and Highways PD - Presidential Decree DTI - Department of Trade and Industry PPB - Procurement Policy Board EO - Executive Order PSB - Philippines Shippers' Bureau EPS - Electronic Procurement System PS - Procurement Service GAAM - Government Accounting and Audit Manual PWI - Procurement Watch, Inc. GEF - Global Environment Facility TIP - Transparency International Philippines G-EPS - Government Electronic Procurement System TTL - Task Team Leader GFI - Government-Financing Institution TWG - Technical Working Group GOCC - Government-Owned and/or Controlled WB - World Bank Corporation WBOM - World Bank Office Manila GOP - Government of the Philippines WG - Working Group GPIS - Government Procurement Information System Acknowledgements The Country Procurement Assessment Report We would also like to acknowledge the active (CPAR) Second Update report was prepared in No- participation of other government officials: vember 2004 by a Team led by Cecilia Vales (Senior Constancia de Guzman (Chairperson, Presidential Procurement Specialist). The Team comprised Joel Anti-Graft Commission), Teodoro Encarnacion Turkewitz (Senior Public Procurement Specialist), (PresidentialAssistant on Infrastructure Projects). The Rene Sd. Manuel (Procurement Specialist), Dominic private sector was represented by Manolito Madrasto Aumentado (Procurement Specialist), Noel Sta. Ines (Philippine ConstructorsAssociation) andAristo Mitra (Procurement Specialist), Jose Luis Syquia (Consult- (Philippine Institute of Certified PublicAccountants). ant) and Evelyn Quirante (Program Assistant). The Civil society organizations stalwarts provided Team worked closely with representatives from the enlightened discussion on governance, such as Asian Development Bank: Richard Ondrick, (Chief Josefina Esguerra (Executive Director, Procurement Country Officer), Jimmy Wu (Portfolio Manager) and Watch, Inc.), Jose Concepcion (Chairman, Cesar Valbuena (Procurement Specialist), and the Ja- NAMFREL), Father Vicente Cajilig (Center for pan Bank for International Cooperation: Izuru Kimura Contextualized Theology and Ethics, University of (Representative) and Flerida Chan (Project Officer). Santo Tomas and others who are named in Appendix 1 ­ List of Participants. The success of the CPAR process was largely attributed to the ownership and commitment to This Report is a follow-up of the original CPAR, which procurement reform demonstrated by the was part of the Public Expenditures, Procurement and Government's Procurement Policy Board (GPPB) and Financial Management Review, and the CPAR Update its Technical Support Office (TSO), led by Laura which was published in February 2004. The original Pascua (Undersecretary, Department of Budget and CPAR was prepared in June 2002 and published in Management) representing the GPPB Chairman and March 2003, by a Team led by ChristianA. Rey (Task Jose Martin Syquia (Executive Director, Government Team Leader). Procurement Policy Board, Technical Services Office). GPPB representatives who participated were:Arcadio Publication review and advice were received from Cuenco (Assistant Commissioner, Commision on Leonora Gonzales (External Relations Officer) who Audit), Elmer Dorado (National Economic and also acted as CommunicationsAdviser. Overall design Development Authority), Antonio Molano, Jr. and layout of the Report was done by Horace Crowe (Director, Department of Public Works and (Consultant). Highways),Aida Carpentero (Director, Department of Education), Ricardo SanAndres (Assistant Secretary, Department of National Defense), Joselyn Alvarado Chris Hoban (Assistant Secretary, Department of Science and Manager, Portfolio and Operations Technology, Loraine Sanchez (Director, Department Manila, Philippines of Finance), Ireneo Vizmonte (Director, Department of Trade and Industry) andArturo Baloaloa (Director, Department of Energy). Foreword Ithas been three years since the comprehensive assess- It is laudable that consistent Government ownership of ment of the Philippines public procurement system was the CPAR process, through the Technical Support Of- completed and published in the Country Procurement fice of the Government Procurement Policy Board, was Assessment Report (CPAR) in June 2002. Substantial evident in this CPAR 2nd Update, and that the joint progress has been made since major procurement re- CPAR Mission from November 2 to 5, 2004 resulted in form activities identified at that time were completed a fruitful dialogue as the Report presents. It is also and are now being implemented. The CPAR process remarkable that many development partner organiza- achieved its goal of being an analytical tool to help as- tions were able to participate, and civil society organi- sess the public procurement system in the Philippines zations and their members could air their issues, and in the process helped to generate a dialogue with concerns and suggestions. The result is a document the Government to improve procurement practices, and that truly captures the Philippines' many achievements to help civil society and the private sector understand in procurement reform, provides a benchmark on the better the processes and procedures in place at that time. progress made compared with international standards, Following the significant progress reported in the No- identifies strengths and weaknesses, and records the vember 2003 CPAR Update, this Second Update aims agreements in moving the reforms forward. to: (a) record the status of agreed actions and analyze their relevance to existing priorities; (b) benchmark the Finally, it is worth citing the significant achievement procurement reform progress against international stan- made in the harmonization and alignment efforts in the dards and in the process identify its strengths and weak- use of country systems. Foremost of these are the nesses; (c) discuss and agree on measures to address harmonization of the bidding documents for works, the weaknesses; and (d) review the status of harmoni- goods and consulting services across many government zation and/or alignment activities. This CPAR 2nd Up- agencies and with the international development date was also used to identify governance issues partners policies and procedures. The documents are pertaining to procurement for input to the preparation now being used for all national public procurement by of the World Bank's Country Assistance Strategy for every entity, including the Local Government Units. 2006 to 2008. We wish to commend the executive and legislative This new Strategy supports reforms like these, which branches of government for continuing to pursue a key are examples of "islands of good governance." These governance measure that will reduce corruption in the reforms help fight corruption and support better gover- long term. Much now will depend on the ongoing nance in the public sector, eventually resulting in im- implementation, monitoring and enforcement of these proved services to the poor. While there are still many institutional and policy reforms to ensure their challenges in implementing these reforms, the achieve- sustainability in achieving good governance. ments cited in this Report demonstrate that there are also many successes that we can encourage, and em- power and enable others to build upon. Joachim vonAmsberg Country Director, Philippines World Bank Office Manila August 2005 I. Introduction 1. Overview 2. Ownership The Country Procurement Assessment Report The procurement reform process on the part of the (CPAR) process proved to be a successful mechanism Government had been very strong since the original in assessing the country's public procurement system, June 2002 CPAR, and that is evident in this 2nd identifying its strengths and weaknesses, and Update. The GPPB, through its TSO, participated providing an avenue for a dialogue among key fully in defining the objectives and the various stakeholders to address the weaknesses. The June activities of the Mission, the identification of priority 2002 CPAR, and its subsequent first update in areas, the execution of this second Mission and in November 2003, resulted in an agreement to act upon the formulation of the agreed actions and expected sixty-six (66) activities to address the existing lead times for completion. The improvements in the weaknesses in the country's public procurement country's procurement reform are, therefore, driven system. So far, as discussed in Section II of this by the Government. The development partners' CPAR 2nd Update, ninety five percent (95%) were assistance came in the form of funding resources and either completed or ongoing as of November 2004. providing expert advice on international procurement On account of the improvements made, it is necessary best practices. and critical therefore to follow-up the implementation of agreed actions in particular, and the overall 3. Mission Preparatory Activities and progress of the procurement reform in general. It is Schedule also important to determine and assess the impact of the Reform thus far, its strengths and weaknesses, The CPAR Team reviewed and updated the original and again use the updated CPAR as a tool for dialogue CPAR Agreed Action Plan in advance of the actual on how to address the weaknesses uncovered. Along Mission as detailed in Section II of this 2nd Update. this line, a Joint CPAR 2nd Update Mission was The GPPB spearheaded two major activities that conducted from November 2 to 5, 2004, with the determined the way forward: (a) a meeting of following main objectives: (a) to assess the progress procurement experts on October 22, 2004 identified of procurement reform and identify priority areas for the reforms' next key priority areas; and (b) an the next three years; (b) review the status of the assessment or benchmarking of the reforms' progress Philippines' Procurement Harmonization Program using the Baseline Indicator System (BIS) done by a and identify next steps; (c) review international Technical Working Group composed of Ms. Flerida experience on procurement monitoring and Arias, Atty. Pia Zobel Ruiz and Atty. Jose Luis performance measurement; and (d) firm up the roles Syquia. Thus, these preparatory activities resulted of civil society organizations and the private sector in a compressed four-day Mission that covered to achieve sustainability. extensively the substantial areas of the COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 11 progress of the Reform. In her welcome remarks, to the Public Works Sector as discussed in Section Undersecretary Pascua set the Mission's and the 6 of this 2nd Update. reforms' direction and reiterated the Government's resolve in pushing procurement reform forward 4. Completed Agreed Actions at the (Appendix 2). National Level II. Big Achievements So Far The foundation of the reform lies in the promulgation of the Government Procurement Laudable achievements have been made since the Reform Act (Republic Act No. 9184) in January June 2002 CPAR, as listed in the Summary of 2003 and the issuance of its Implementing Rules Achievements and Ongoing Agreed Actions in and Regulations (IRRs) in September of the same Appendix 3. Table 1 presents a year, which covers all summary status. The first update The reforms' progress on the national government entities, to the CPAR recorded sixty-six and local levels where forty-one agreed including local government (66) agreed actions. As of actions are completed and/or ongoing units. Consultations with November 2004, 42 or 64 % as of November 2004; resulting in a 95% the civil society at large and were completed, 19 or 29% were completion record. comments from donor ongoing as of November 2004 institutions strengthened while only 5 or 7% were not yet started. the reform measures mandated by the Law and its IRRs. This was followed by concerted efforts to It is worth mentioning the reforms' progress on the develop harmonized bid documents and thus, the national and local levels where forty-one agreed following key reform measures are now in place and actions were completed and/or ongoing as of being implemented: November 2004, resulting in a 95% completion record. The two remaining actions not started were a. A single oversight body called the Government Procurement Policy Board (GPPB); those pertaining to: (a) development of a good record-keeping system for LGUs and, (b) training b. Procurement planning and budget linkage of Government E-Procurement System staff and the through the Annual Procurement Plan; Commission on Audit (COA) in the area of system c. Approved Budget for the Contract as ceiling for security. On the other hand, the twenty (20) sectoral bid prices; actions (Education, Health and Public Works) d. Use of Government Electronic Procurement completed and/or ongoing agreed actions consisted System becomes mandatory, including the post- of 87% of the total for the three sectors. The ing of bid opportunities and awards of contracts; remaining actions not started are those pertaining e. Fixed responsibilities and accountabilities of the Bids and Awards Committee (BAC), BAC Sec- Table 1: Status of Completed, Ongoing and Open retariats, Technical Working Groups, and the Agreed Actions bidders; Completed On-Going Open TOTAL f. A national and local training program for capac- National/Local Levels 27 14 2 43 ity building on the new procurement system, its Sectoral Levels 15 5 3 23 documents and forms ­ the Status of Procure- Total 42 19 5 66 ment Training on the Laws, Rules and Regula- Percent 64% 29% 7% 100% COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 12 tions for the period October 2002 to December 5. Implementation in Local Government 2004, and the status of the procurement training Units conducted by the Government Procurement Policy Board ­ Technical Support Office (GPPB- The Procurement Law repeals the procurement TSO) from October 2002 to December 2004 and related sections of the Local Government Code, status report on the G-EPS are shown in Appen- thereby making the new law and its IRRs mandatory dix 4; for all LGUs. One of its major reforms is prohibiting g. Move towards professionalization of procure- the Local Chief Executive being directly involved in ment officials; the bidding process, since it provides that the BAC h. Use of standard bidding forms and manuals ­ Chairman should not be the head of the procuring the standard bidding documents for works, goods entity. Conversely, training of LGUs' staff on the and consulting services as harmonized with de- new procurement system are ongoing through the velopment partners institutions are discussed in Composite Team of Regional Trainers, where each Sections 13 to 15 of this Report; Team is comprised of trainers from DBM, DILG, COA, and the Philippine League of Local Budget i. Standard bidding procedures using non-discre- Officers. As of December 2004, seventy-two (72) tionary bid evaluation criteria; provinces, or 91% of the total number of provincial j. Mandated lead-time for each procurement step; governments, one thousand one hundred seventy nine k. Stricter rules on alternative methods of procure- (1179) municipalities or 79% of the total number of ment; municipal governments, and one hundred nine (109) l. Clearly defined protest mechanism; cities or 92% of the total number of city governments, m. Penal, civil and administrative sanctions against were trained, accounting for 80% of the local erring procurement officers, bidders and contrac- government units.Appendix 4 of this Report provides tors; a detailed account of the training in the LGU level as of November 2004. While capacity building is n. Legal assistance and indemnification packages underway, remaining concerns are: (a) the need to for BAC members who are subjected to harass- develop a mechanism to accredit procurement ment; lecturers, organizations and training programs to o. Strengthened involvement of civil society organi- ensure that quality is maintained; (b) inadequate zations, professional associations and non-gov- keeping of procurement records in most LGUs; and ernment organizations in policy formulation and (c) monitoring of actual procurement performance. reform implementation; A detailed report on progress of the reform in the p. Harmonized standard bidding documents con- LGUs is in Appendix 5. taining provisions on fraud and corruption, con- flict of interest and prohibition against relatives 6. Progress of the Reform in Key within the third civil degree of consanguinity and Sectors affinity; and q. Issuance of Rules for Blacklisting and Suspen- The results of the implementation of reform measures sionofBidders,Constructors,SuppliersandCon- over the three year period are exemplified in the three sultants. sectors that were subjected to institutional analysis. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 13 Summaries on the progress made in each sector are Public Works. Agreed actions recorded in the presented below: CPAR that were completed include: (a) use of a computerizedregistryforeligibilityscreening;(b) Health. All agreed actions in the June 2002 issuance of amendments to theArbitration Law; CPAR have been completed, except for the re- (c) a report on capacity, quality and size of con- view and implementation of reforms in terms of tracts for works under foreign assisted projects, decentralizing procurement. In this regard, De- including the mix of national and foreign fund- partment Memorandum No. 74 was issued in- ing; (d) a report on bid prices/variation orders forming all Directors of the Centers for Health relative to engineer's estimates in projects with Development to: (a) constitute their Bids and and without fixed budget ceilings; (e) download- Awards Committee (BAC); (b) institutionalize ing of bid documents from agency websites; and theAnnual Procurement Plan; and (c) institution- (f) the introduction of value engineering through alize a procurement monitoring system that will case studies. However, there are agreed actions ensure adherence to the new law, its IRRs and that remain incomplete or not started. These are: standard documents and forms. However, sup- (a) rationalization of licensing procedures and port is needed in: (a) developing and conducting harmonization with eligibility screening require- training programs on the new procurement sys- ments; (b) use of a computerized registry in all tem; and (b) the development of the Contract Dis- projects including those procured in provinces tribution System into a fully functional and and districts; (c) strengthening the quality assur- effective system that is utilized in all regions. The ance mechanism for design and supervision; and, detailed report on the Health Sector is attached as (d) specialized training on cost estimation and Appendix 6. analysis of bid variances. A review of these agreed actions resulted in new lead times for their completion. Education. Almost all agreed actions identified in the June 2002 CPAR were accomplished, no- table of which was the adoption of the competi- 7. Civil Society Observers tive bidding process for textbooks which resulted ingreaterefficiencyandeconomy. Thefocusnow The need for civil society's participation in the of the Department of Education (DepEd) is the procurement process was enabled by R.A. 9184 and creation of its own Procurement Service Unit and itsIRRsparticularlybybeing"observers"inallstages the operation of a national textbook delivery pro- of the procurement process to enhance its gram to ensure that the books reach the students. transparency and monitor the agencies' compliance It is necessary to support DepEd in its down- withtheLaw,andimplementingrulesandregulations. stream reform actions, such as the conduct of In pursuing this objective, the GPPB arranged a training sessions to build capacity on such mat- ters as procurement planning, database and Civil Society Observers are "observers" in records management, local and international pro- all stages of the procurement process to curement practices, and project management. A enhance its transparency and monitor the Special Report detailing the progress in this sector agencies' compliance with the Law and is presented inAppendix 7. IRRs. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 14 meeting of the various civil society organizations introduction of a professional indemnity insurance, (CSOs), professional associations (PAs), non- andpromotionofjointventureswithlocalandforeign government organizations (NGOs), religious groups, partners. However, it was felt that these initiatives andtheacademewhohavebeenactivelyparticipating are not enough and more resources are needed. They in monitoring procurement activities and goods recommended that Government should consider: (a) delivery. The participants recommended the inclusion of the private sector in the national establishment of a CSO Alliance comprising PWI, training program; (b) 7adoption of a policy on value as the secretariat, the Catholic Bishops' Conference engineering; (c) improving the validation process of of the Philippines (CBCP), the University of Santo documentary submissions of constructors; and (d) Tomas Center for ContextualizedTheology & Ethics rationalizing the foreign assisted contracts' (UST- CCTE) and Social Research Center (UST- requirements for average annual turnover (AAT), the SRC), National Movement for Free Elections experience qualification for international competitive (NAMFREL), Philippine Constructors Association bidding (ICB) and the amount of threshold for (PCA), Confederation of Filipino Consulting National Competitive Bidding (NCB). Organizations Inc. (COFILCO), the Bishops- Businessmen's Conference (BBC), and the 9. Anti-corruption Program Transparency and Accountability Network (TAN). The CSO Alliance proposed: (a) a massive The Government, in April 2001, issued a directive informationcampaignonthenewpublicprocurement reconstituting and enlarging the powers of the system,itsdocumentsandforms;(b)institutionalizing Presidential Anti-Graft Commission (PAGC, the standard monitoring system for BAC observers formerly Presidential CommissionAgainst Graft and and a case-handling system linked to the Office of Corruption). Chairperson Constancia De Guzman the Ombudsman; (c) screening and accrediting advised the meeting of its mandate and activities. observers; and (d) providing for an information Among its tasks is to strengthen the integration of support system for trained CSOs. anti-corruption efforts in the entire bureaucracy that includes key agencies such as: the Commission on 8. Private Sector Audit, the Ombudsman, the Civil Service Commission, the National Bureau of Investigation Constructors, suppliers and consultants are important and the Department of Justice. With the appointment partners in the operation of the public procurement of Chairperson De Guzman, major policy and systemandintheimplementationofthereform. They operational changes are underway to reduce recognized that the new Government Procurement corruption. On procurement matters, the plan is to ReformAct provides more transparent and efficient strengthen the role of internal audit units in all technology and more objective standards. However, agencies, which will serve as the monitoring and they have two main concerns: (a) insufficient enforcement arm of the executive leadership in knowledge and lack of understanding of the new law implementingitsanti-corruptionprogram. Theoutput and system; and (b) the stringent qualification of internal audit units will bridge the critical gap from requirementsofforeignassistedcontracts. To address implementation to enforcement by COA and the these, they have a number of ongoing initiatives such Office of the Ombudsman. The CPAR Team as: development of an accreditation system internal recommended that this program and its key to their association, briefings and seminars on the law, implementer, PAGC, be supported. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 15 and regulatory framework; (b) existence of III. Assessment of Progress implementing regulations and documentation; (c) mainstreaming procedures into public financial 10. Baseline Indicator System management; (d) functional normative body at the center; (e) existence of contract administration and In her speech that opened the CPAR Mission, dispute resolution provisions; (g) presence of an Undersecretary Pascua mentioned that the "Baseline appeals mechanism; and (h) structural, ethics and Indicator System (BIS)" recently developed by the anti-corruption measures. However, there are five OECD-DAC/WB offers a systematic way of specific benchmarks where 50% or less of the benchmarking the country's procurement reform baseline elements are met. These are: (a) existence efforts against established indicators for achieving of institutional development capacity; (b) efficient economy, efficiency, transparency and equal procurementoperationsandpractice;(c)functionality opportunity for bidders. As a pre-Mission activity, a ofthepublicprocurementmarket;(d)effectivecontrol BIS Technical Working Group was tasked to assess and audit system; and (e) degree of access to structural performance and determine the progress information. of the Philippines' public procurement system on four key areas consisting of twelve (12) indicators that 12. Matching of Agreed Actions were the core components of a good public procurement system. The Report as adopted by the Having identified the lacking elements in the current CPAR Team is presented in Appendix 8. The BIS system, the Mission discussed the steps which are demonstrates that the components of an effective needed to address the gap. Ongoing activities were procurement system have been put in place, and now matched to the specific elements and new activities the challenge is to manage those components to were agreed on to ensure that the identified gaps are achieve improved outcomes. It was emphasized addressed. This resulted in a consolidated agreed during the Mission by Mr. Joel Turkewitz of the action plan as discussed in the following paragraphs. Bank's Central Procurement Unit that the BIS needs a separate set of indicators to measure actual IV. ConsolidatedAgreedActions procurement performance supported by a monitoring and data collection system from implementing units Based on the result of the BIS and the matching of up to the oversight agency. ongoing and new activities to address the gap, the CPAR Team adopted a consolidated agreed action 11. Strengths and Weaknesses plan (Matrix of Weaknesses and Targeted Activies (as of November 2004) as shown in Appendix 9. Applying the BIS result, the Philippines reform Amongst the key new actions are: achievement garnered an overall score of 68%, which translates to the percentage of the twelve indicators Inclusion of the private sector and the CSOs in where more than fifty percent (50%) of baseline the national training program; elements have been substantially met. The reform Provision of administrative support to the CSO achievements done so far account for passing the Alliance; standard in the following benchmarks: (a) legislative COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 16 Assisted Projects (FAPs) Replication of appropriate BIS for national agen- cies and LGUs to monitor actual performance InJanuary2003,theGovernmentanditsdevelopment under the law; partners, ADB, JBIC and the World Bank agreed to Development of actual performance indicators harmonize six procurement areas to reduce and implementation of a system for data collec- transaction costs, simplify procedures, facilitate tion and information analysis; decision-making and reduce capacity building costs Support for strengthening the role of PAGC, in- for foreign assisted contracts. The move towards cluding through the internal audit units of each further reliance in the Philippine's country systems agency; and will depend largely on completion of the Issuanceofpoliciesonvalueengineeringandpro- harmonization activities. Since then, four of these curement security instruments. areas are either ongoing or completed as shown in Table 2. 13. Philippine Bidding Documents IV. Procurement Under Foreign (PBDs) Harmonized withADB, JBIC and Table 2: Procurement Harmonization as of June 30, 2005 Expected Completion Funding Area Update as of June 30, 2005 Date Support 1. Implementing Done. IRRs for domestic funded contracts Done USAID and Rules and were issued in September 2003. FAPs WB-IDF Regulations are covered by Sections 4 and 43 of the Law. 2. Bidding Done in August 2004. Works and Goods Done WB documents for Documents harmonized with ADB, JBIC works, goods and WB. Consulting Service harmonized and consulting with WB. services 3. Training and Ongoing. Included in the June 2006 WB-IDF certification professionalization study. program 4. Procurement Ongoing. Procurement Manual drafted January 2005; pilot testing USAID and manual and will be harmonized simultaneous with to start April 2005 ASEM 2 issuance in January 2006. Seven (7) Grant national agencies, one (1) GOCC, and one (1) LGU were selected as pilots. 5. Procurement Not yet started. To be done June 2006 ASEM 2 reporting simultaneously with Procurement Grant format Manual's harmonization. 6. Registration Not yet started. June 2005 To propose and licensing for a WB- procedures IDF Grant with eligibility COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 17 the WB Table 3: Harmonized Bidding Documents Harmonized with ADB, JBIC and the WB The country's Procurement Harmonization Program Number of Conflicting took a big leap forward with the issuance of GPPB Paragraphs In: Resolution No. 10-2004 dated August 20, 2004, as Bidding Consulting amended by GPPB Resolution No. 01-2005 dated Documents Works Goods Services January 24, 2005 requiring mandatory use, by July Original Number 128 145 171 1, 2005, of the PBDs for Works and Goods as of Conflicting harmonized with ADB, JBIC and the World Bank, Paragraphs and the PBDs for Consulting Services as harmonized Harmonized 101 117 162 with the World Bank. The mandatory use of the Paragraphs documents is enforceable by law based on Section 6 Remaining 27 28 9 and Article VI thereof, providing as well Un-harmonized corresponding penalties for violators. From the first Paragraphs identification of conflicting rules for each document, Percent 79% 81% 95% to workshops and discussion meetings, and then to Harmonized (%) final compromises to harmonize the conflicting rules, it took nineteen months to finish the initial edition other hand, the differences between the national rules which became the first harmonized bidding for Consulting Services has been reduced from six documents issued within the East Asia and Pacific (6) to four (4) rules; a reduction of 33%. Moreover, Region. The magnitude of this achievement is it is an evolving process since adoption of the described in Table 3. documents will provide more avenues for further harmonization. The differences, which are the basis 14. Differences with the World Bank for revising the standard Annex to the Procurement Rules and Updating the Loan Schedule of Loan Agreement are adopted by the Agreement's Annex to Procurement Government.Affected Loan Agreements have been Schedule amended accordingly. SeeAppendix 10 for the latest standard ProcurementAnnex to LoanAgreement. The Loan Agreement's Annex to the Procurement Schedule identifies unacceptable national 15. Threshold per Contract for procurementrulesthatdonotconformtoprocurement Procurement Methods bestpractices.PriortotheissuanceoftheHarmonized Bidding Documents, there were nineteen national With the progress in the harmonization efforts rules for Works and Goods that were unacceptable betweentheGovernmentofthePhilippinesanddonor to the Bank and were included in the NCB agencies as shown by the positive rating attained by ProcurementAnnex to all LoanAgreements. While applying the BIS, the number of agreed actions the harmonization process was not 100%, its outcome ongoing and concluded, and the current capacities of drasticallyreducedthedifferencesfromnineteenrules contractors and suppliers in terms of volume and size to eight (8), a reduction of 60%, that are now of contracts the amount of thresholds per contract identified in the NCB Procurement Annex. On the for the different types of procurement methods and COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 18 prior reviews requires a proportionate adjustment to for the project. The thresholds identified in Table 4 properly integrate the current state. Subject to the and the prior review thresholds will be adopted assessment of the procurement needs and content of depending on the risk rating resulting from the the project, the revised threshold for each method of Assessment. procurement is presented below in Table 4. V. Funding Requirement for 16. Prior Review Threshold AgreedAction AProcurement CapacityAssessment will be applied 17. Possible Funding Sources to each new project which will include the risk rating Aside from ADB, JBIC and the World Bank, other Table 4: Amount of Threshold per Contract for development partner agencies such as: USAID, Procurement Methods CIDA, EU, UNDPandAUSAID met with the CPAR Team to discuss the consolidated agreed actions and Amount of Threshold per Contract for Procurement Methods possible funding resources. The EU has indicated Item Category Amount per its readiness to fund the activities of standardization Contract of specification on commonly used items. TheADB agreedtoreviewitspossiblefundingontheexpansion ICB Works Over $5,000,000 Goods Over $1,000,000 of the G-EPS. USAID proposed to revive the Anti- Corruption Summit for the Philippines. The World Bank proposed for GPPB to fully utilize the IDF NCB Works Over $200,000 to $5,000,000 Grant on Procurement Oversight Agency and the Goods Over $100,000 ASEM 2 Grant on Strengthening Procurement to $1,000,000 Institutions for Good Governance. The CPAR 2nd National Consulting Not more than Update Mission agreed to have a separate meeting Consultant Services $200,000 to flesh out funding requirements. Shortlisting The February 2004 CPAR can be found inAppendix 11. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 19 Appendix 1 - List of CPAR 2nd Update Mission Participants Government Procurement Policy Board Laura Pascua, Undersecretary, DBM Antonio Molano, Jr., Director, DPWH Carlos Madamba, Jr., Senior Economic Development Specialist, NEDA Arcadio Cuenco, Assistant Commissioner, COA Ireneo Vizmonte, Director, DTI Joeelyn Alvarado, Assistant Secretary, DOST Aida Carpintero, Director III, DepEd Lorraine Sanchez, Designated Head, DOF Ricardo San Andres, Assistant Secretary, DND Theresa Ann Diaz, Director III, DOH Manuel Ocampo, Director of Information Technology and Management Services, DOE Robert Martinez, Director DTI Arturo Baloaloa, Director, DOE Government Procurement Policy Board-Technical Staff Office Jose Martin Syquia, Executive Director Elmer Dorado, Assistant Executive Director Dennis Nacario, Staff Genmaries Entredicho, Staff Pia Zobel Ruiz, Staff Dana Marie Casiano, Staff Mila Manalastas, Staff Alvin Dellora, Staff Ma. Lourdes Tuazon, Consultant Jeff Taylor, Consultant Other Government Officials Teodoro Encarnacion, Presidential Assistant, Office of the President Constancia de Guzman, Chairperson, PAGC Fiorello Estuar, Private Sector Member to GPPB Arnaldo Reyes, Program Development Officer II, DOST Christine Gulmatico, Administrative Officer V, DepEd Mary Grace Quintano, State Counsel IV, DOJ Kenneth Ronquillo, Director, DOH Joel Lazo, Director, DOH Civil Society Organizations Josefina Esguerra, Chief Executive Officer and President, PWI Cipriano Ravanes, Executive Director, PWI Jose Concepcion, Jr., National Chairman, NAMFREL Nestor Malapajo, Jr., Officer-In-Charge, NAMFREL Rev. Fr. Vicente Cajilig, OP, Director, UST-CCTE Pablito Baybado, Assistant Professor, UST-CCTE Jose Lugay, Chairman, Advocacy Against Graft & Corruption, CBCP Edgardo Tirona, Member Committee, CBCP Mia Munoz Zafra, Member Committee, CBCP Victorino Guiterrez, Member Committee, CBCP COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 21 Private Sector Manolito Madrasto, Executive Director, PCA Armando Alli, President, COFILCO Cesar V. Tuason, Second Vice President, COFILCO Ariston Mitra, Member, PICPA Asian Development Bank Richard Ondrik, Chief Country Officer Shouhua Wu, Senior Portfolio Management Specialist Cesar Valbuena, Procurement Specialist Japan Bank for International Cooperation Isuru Kimura, Representative Flery Chan, Project Officer Other Development Partners Angus MacDonald, Counsellor, Development Cooperation, AusAID Gerard Belanger, Head of Aid, Canadian Embassy Christina Pineda, Senior Program Officer, Canadian Embassy Michael Yates, Mission Director, USAID Frank Hess, Operations Counsellor, EU Deborah Landey, Resident Coordinator, UN World Bank Joel Turkewitz, Senior Public Procurement Specialist Cecilia Vales, Senior Procurement Specialist Noel Sta. Ines, Procurement Specialist Dominic Aumentado, Procurement Specialist Rene Manuel, Procurement Specialist Evelyn Quirante, Program Assistant Alice Tiongson, Consultant Jose Luis Syquia, Consultant Noriel Sicad, Consultant COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 22 Appendix 2 - Speech of Undersecretary Laura B. Pascua Good morning, on behalf of Secretary Boncodin who We meet today to look at Progress made on these chairs the GPPB, let me welcome all of you to this commitments, 43 all in all, left uncompleted from 2rd CPAR Mission. And let me thank the World the 1st and 2nd CPARs, to look at problems holding Bank (WB) for initiating and hosting this Mission. up their accomplishment and to solve them or If I recall, our first CPAR was done in 2001-2002 in identify the next steps in instances where substantial the context of a bigger effort to review the financial accomplishment have been made. Today and management, expenditure management and procure- tomorrow, we also look at the initial findings and ment reforms being pursued by government. We progress report made on technical assistance were still shepherding the Government Procurement projects, which are being pursued as part of this Reforms Act in Congress and hence the agreed ac- CPAR funded from the grants from the WB. These tions then had to do with the successful passage of include the diagnostic study to strengthen the PS in the law, preparing the IRRs, linking it with the new the light of the GEPS, the recommendation to COAAudit Manual, establishing the GPPB, and en- professionalize the procurement function in suring that important safeguards were put in place government, the study of the capacities of local like ensuring the LGUs and NGOs were consulted, contractors and suppliers and the introduction of setting up a national training program, making pro- Value Engineering to improve the design and cost curement planning mandatory, and ensuring that efficiency of proposed infrastructure projects. there would be no negotiations after determination of best bid. This is why the GOPand the WB decided to expand the participation to this CPAR Mission to include During the 2nd CPAR last year, as a result of all GPPB members of the Interagency BAC who successful passage of the law and the important have approved these projects and, as major completion of IRR-A, and development of the guide procurement departments, would have a stake in for local procurement, three out of five commitments these TAs as well as the pursuit of some of the 43 that I mentioned above were judged as commitments I mentioned above. accomplished, including agency specific actions like adoption of the pass/fail criteria in DPWH, But the different donor organizations have a stake standardization of estimated cost per bidding for also in these procurement reforms and we would textbooks, and streamlining of textbooks' content like to thank the USAID for helping us pass the evaluation, the review of the staffing of the procurement law and helping finance the drafting Procurement and Logistics Server in DOH, and the of the procurement manual which is shortly to be Drug Price Monitoring System. During that 2nd presented to the GPPB, the CIDA for financing the CPAR, 13 more emerging issues dealing with last 3 years of the GEPS pilot using the Merks strengthening Procurement Practices and Processes System and helping us ensure the proper were identified. development of our own GEPS. And the EU and COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 23 WB for giving the grants by which we are able to The development of a Code of Ethics for CSO BAC finance the training of all government procurement observers, training of CSOs and development of the personnel in the NGA, GOCCs and LGUs in the CSO network by PWI, the Round Table Discussion GPRA and its IRRs and now in the SBDs. They with 10 CSOs including nationwide groups like also financed the development of the Harmonized NAMFREL, CBCPTAN, PCA, and COFILCO offer Bid Documents, the planned dissemination of which some answers; as well as the meeting with senior we talk about tomorrow as part of the Harmonization officials last October 22 which included PAGC and effort. We hope to interest the other donors from the Ombudsman. They point to the need to 1) the ADB, and JBIC in the use of these Philippine develop an information system for greater Harmonized Bid Documents as well as the drafting transparency, like the GEPS, 2) develop the Internal of Procurement Side Letters to facilitate the adoption Audit Unit in departments to cover the Monitoring of common procedures and formats. Lastly, we have of Procurement, 3) strengthening the role of COA included the PWI and the PCA in this Mission to in enforcing compliance with the law, 4) further also contribute their expertise to make Procurement strengthen the Oversight Committee on Procurement ingovernment more transparent and accountable. and,5) expand the role of CSOs and Media in reform. While we sometimes like to pat ourselves on the We have much to tackle in the next four days and back with the progress made in setting in place the the Baseline Indicator System developed by the new Procurement Law in government; disturbing OECD and the WB offers a systematic way of developments like the further downgrade we got benchmarking the country's procurement reform under the quality of public and institutional world efforts against established indicators of achieving competitiveness study, including that for economy, efficiency, transparency, and equal government procurement and the corruption issue opportunity for bidders. I therefore hope that by in the military procurement finance management, Friday, we as a group come to a consensus on how make us realize that we have a long way to go in to cooperate and work together to realize more of achieving the anti-corruption aspects of the promise of procurement reform for improving procurement. public services, identifying more savings for COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 24 Funding USAID USAID/ ADB WB-IDF . law 2003 by the 31, February Reform and Audit on of training by on and completed. being functions. Rules issued Law/ part and is mandated its October October on alities as Procurement of ipassed was 2003 as convened 23, Procurement Rules developed; regions) training 2003 established as was fectiveef (6 was defines program 4, Board Law Status 2003. Implementing circularized Board Government which Instrument 2003. Done. The 10, Done. The Regulations-A September became 8, Done. Government Act Rules. Done. rainingT auditors Implementing Regulations of Continuous conducted. Done. The February Done. The Policy Law other and 2002 2003 2003 Actions Timetable 2003 December December December June Corporation Agreed Agency Audit Audit Ongoing Budget Budget Budget echnical of Procurement on on of of Procurement -T fice Of and Board Board Responsible Management Management Management/ Department and Government Policy Commission Commission Department and Department and overnmentG Policy Services Government-Owned-and-Controlled work Achievements an of Policy Action of and the for of new Procurement Procurement of AGENCIES, rules scope Philippines Forms. Accounting the Agreed of and program Implementingsit, Forms. and the and on Procurement and promulgation Procurement. enactment include . on Law Government TIONAL to Law and Law implementing after traininga the the Regulations studya NA preparation Government Summary-3 Documents on Documents Activity BY and Manual and Board. Government Passage.1 Prepare Update Develop Establish Conduct the Omnibus 2. regulations Law Bidding 3. Audit Procurement 4. auditors Rules Bidding 5. Policy 6. of Board. Appendix Area PROCUREMENT and completed ongoing Key and Framework PUBLIC Strengthen Legal Policy Strengthen Organization fingfatS 2 Funding WB-IDF (ASEM Grant); tnemnrevoG from Grant2 5 in IDF; cover agencies pursue B to funding ADB December CPRMU W ASEM will pilot CIDA/WB-IDF tnemnrevoG from in pursue to funding ADB December CPRMU s' . the s' with for the has GPPB- of March The of 2003 and by GOCCs been will training 31, Law of rainorT Full by February 2004. modules coordination Practitioner well. and have Boncodin. reengineer- implementing by the the Rules in Academy LGUs, consultant completed; the as Boncondin. is on and and and Documents Manual on conducted round arted.st partnership in Academy Harmonized March 2005. proedures. study October alities ocurement accomplishment Secretary Law auditors. of being Pr First on and Program NGAs, domestic cover accomplished consultants April domestic the Rules LGUs LGUs the by Service System raininngT Bidding as trainings agencies for developed Procurement to of for be with is the Secretary Implementing for for Development Documents Board. to for with on Government by Procurement the has systems public the SUCs signed activity the Status Instrument national Government-Electronic its On-going. Regional and Regulations Government Policy of training training Local accomplished TSO the Development with Philippines and Bidding training 2005. Ongoing. Contracts international signed deadline this Ongoing. ontractC required been Procurement the Procurement ing Completion 2005. On-going. rainingT Implementing Regulations. Procurement and be other le and 2003 2004 2004 2003 Timetab June December June December Corporation and Agency Service Budget Audit Procurement Procurement Regulations of on Board Board/Civil Responsible Government Policy Government Policy Commission Professional Commission Department Management-Procurement Service Commission Government-Owned-and-Controlled function: program system. Action conducted. . transparency be (NGA) on AGENCIES, training to procurement Procurement entity Agreed procurement the Studya audit. needs and regulation TIONAL nationala public Prepare Implementation corporatize independent the NA training to Activity new as procurement BY Establish.7 the Professionalize Study Enforce for In-depth 8. 9. Service 10. through Area PROCUREMENT Key fingafst Procurement and PUBLIC Strengthen Organization and Improve Practices Processes for with Grant will ing Funding Audit IFIs conduct brief Commission on auditors leadtimes Foreign- Assisted Projects Procurement ASEM a by for have of 2003 will non 31, be 2004. Securities mandates Commission for contract for provides submitted the and commonly- to legal June allow and follow-up possibility Investigative by G-EPS 2005. The 9184 on October alities Law for steps. Audit Procurement for NGOs. feature Committee The indemnification of the not price key Needs audit on the of explore monitors supplies; March R.A. as of framework by by and of 38 for does to Center provides wardsA sanctions. Procedure. and Inc./Government-watch/ completed Law supplies. XXI monitoring regularly Law and Status Instrument enhancing atch, penal Done. Section leadtime Audit Done. The negotiation amount. Done. Study consultants. activities of Commission monitoring W Philippine Journalism/other Ongoing. PS used price common-use completed Done. The assistance Bids members. Done. Article for Report other and 2002 2003 2004 2003 2003 2003 Timetable June June December June June December Corporation and Services and Service Agency Audit Budget Interior on Management/ echnical Budget of of Procurement of and Cities of Government/Department Board-T Bank Responsible Management-Procurement Budget Commission Department and Services Department Local of League Government Policy fice/ProcurementfO orld Department Management W Government-Owned-and-Controlled bid an (IRR). (IRR). the of ared as through or amount provide Evaluation to lieu prep Government Board and in Action time monitoring and prohibit guidelines to (Administrative opening and Fund. Department Bid AGENCIES, les included non-banking lead and contract bid and by Local be the subjected satisfactory audit Ru should by Agreed Oversight Commission General law and to of penalities after insertions Reference and of of contracts. and demand issued TIONAL sanctions the submitted processing of of price of works) frameworka Development ermsT Interior Service Solicitor Committee on be Improve and of small NA procurement Implementing monitoring function members and Civil the to to Committee/Procurement for Activity 129). of BY Enforce The Develop Congressional Price The ardswA 1.1 fice Develop application through Order 12. Regulations negotiation (goods 13. for Constituency 14. important 15. Of support wardsA and harassment. 16. securities institutions. security Area PROCUREMENT Key PUBLIC funding ASEM Funding Initial by WB-IDF (25) 34 it all 2003 for and all of Inc., and Policy on being training with central and demand checklist. nation- 31, and public 77% with fices 22% The 2004. traininga Organiza- trained MOA Agencies: of beoT atch, completed Implementing report . twenty-five High Procurement BACa Associations, W for Rules options. Inc. sharing State 2004, barangays9 Inc.,is MOAa the bidding (head Colleges: and procurement andfafst Ethics, October alities of beoT 2004, of Society 31, provinces, and with atch, least NCR. W (funds).s atch, observing web-baseda system of specify December W signing Corporations NCR 92% and of of Procurement Regulations. quarterly at Organizations in the 31, by developed Civil publica 18 as Government Government-Owned in monitor observe in additional Code for Professional 68% and to to Inc. as Procurement Implementing developed Status Instrument Done. The Regulations Ongoing. AugustfosA for registered. workshop accordance National 38% Controlled GOCCs registered): Universities cities, municipalities were in Rules Government Board compliance Ongoing. Procurement invited processes agencies requires with completed Done. AutustfosA and Society with atch, well purposes W Observer package tions as Procurement Civil wide, for bidding. also reporting/information dissemination partners. other and 2003 2002 2002 2003 Timetable June December December December Corporation Phils. Phils. and Inc./ Inc./ Agency Responsible rementucorPtnemnrevoG Budget atch, atch, of W International W International Board arency arency Policy Department Management/Procurement Services Procurement ranspT Procurement ranspT Government-Owned-and-Controlled of all of and forms. by Bank training Action procurement training AGENCIES, with Electronic and in and Organizations Agreed bond Credit/other ation of implementation and guidelines TIONAL surety 60% Systems. Government articipps guidelines . NA for of Government Activity BY Replace Push Encourage society' levels. all Develop Society 17. guarantee/Leters 18. agencies Procurement 19. civil at 20. National Civil Area PROCUREMENT Key PUBLIC Enhance ransparencyT Funding WB-IDF 2003 of and 31, Bids linked be Section and Reform by as the to of requires Plan in Rules 8; 2005. methods Rules approving Professionalization October chair Law No. of the completed be Committee. the March provided Procurement of circularized be as prohibits to of7 in 2004. Procurement Activity alternative to Implementing Law wardsA part in on is Implementing Rules. Status Budget. of and Done. Done. Done. The authority and Done. Section Annual to Ongiong. This Study completed Done. Rules procurement 48 Regulations. Government Act Regulations Audit Ongoing; December Law 2002 2002 2002 2003 New 2003 from of 2003 2003 Timetable days December December December June December 60 approval Procurement December June of of and and and and Board Agency Government Interior Budget Budget Audit Audit of of of Circular Budget Procurement Local of Policy on on Government/League Board/Department and Responsible ernment Department Local Cities Department Management Department Management Gov Policy Interior Department Management/Government/ Procurement Commission Commission and Units- Units' in not training audit formulation Regulations Annual and Implementing Manual Action concerns/ Committees. of covered the . the in and should Local . procurement in Audit Bill. Government Units' procurement Government of the acity with Government and implement procurement Agreed Rules wardsA the contractors and by Local cap Studya to the and on and Local mandatorys adequately enacted. Executives method dealt is that represented is implementation Plan Unit build be PROCUREMENT Procurement Government be Bill Chief Bidding the Develop Implementation and payment (to Regulations). Update Accounting Develop program Activity will Implementing the the Ensure procurement and Local UNIT the Local Make Professionalize Rationalize 21. procurement proposed 22. views of once 23. chair 24. Procurement Government 25. function level 26. expedite suppliers Rules Area GOVERNMENT Key LOCAL Public Procurement Funding 2004. 2004. 2003 31, December December October by by of as completed completed Status beoT beoT 2004 2004 etable Tim December December of and Agency Highways/ Procurement and Interior of orks Board/Department W Government Responsible Government Policy Public Department Local system phase) Action implementation) keeping (pilot (full Agreed record and gooda PROCUREMENT Provinces/cities Municipalities Activity Develop UNIT 27. for: Area GOVERNMENT Key LOCAL Funding for Units for 2003 Law process is involves 31, the, Law program been Further facilitate requires . and registry model technical to Quality which Assurance has implemented This be October Licensing existing study Needs bidders. WB-funded rainingT of However of the updated implementation, will required of Needs. streamline. 5-year for to an Program, Quality 2004 two electronic regions as this.s UNCITRAL of streamlined. study on under the and on has considered. ance completed. use to Status ContractorsehT test successful. being prohibit is elaboration participation Enhancement based being in-depth assist beoT additional the out December assistance Done. Done. Ongoing. DPWH strengthened Assurance of Ongoing. Pilot projects and on roll developed by 2004 2003 2003 2003 2003 2003 2004 Timetable June June June June June June December SECTOR Agency WORKS Responsible PUBLIC DPWH/CIAP CIAP/DPWH GPPB/DPWH/CIAP-PDCB DPWH/ADB DPWH DPWH DPWH be an in a need for allowed to criteria all also be be will by fail will criteria classroom, not Action but award. licensing assurance to contractors. or implement fail per price. of supervision. of should practice. and processes pre-qualification pass which or cost should bid registry prior arbitration and quality and Agreed license on except pass progress and licensing PCAB license law design projects resulting streamline standard design adopt estimated purposes, contractors the the registration international on to and the to the for to computerized following Activity without withit of plan procurement Foreign 28. bidot present Review Study to 29. align 30. contractors;fo Adopt all ADB-funded Standard budgetary Provide/strengthen Use computerization. action registration 31. for of scheduled 2002. 32. for limitation 33. mechanism 34. projects of arency Area and of Key and ranspT Policies Procedures Legal Framework evorpmI , wardsA Procurement Practices Processes Evaluation Bid -od- Delivery Inspection, Payment Enhance Funding 2003 of 2004. being and 2003, school) 31, rainingT the is for at Service pursued. with (English, "school" fed.fast at levels curriculum, be being to (except seminar Regional fully policy AIM December fiersof is December the October of newe to in Nationwide at on be th training. implementation to needs levels process Division supply training levels Procurement as of Science). with all improvements textbook at for and "open". ficersof needs and activity members completed is new Status Done. Because this Done. Further the Math Done. BAC procurement -goingnO Division established be still system to Procurement level seminar Regional undertaken. Ongiong. Nationwide supply and undertaken. unit but 2003 2004 2003 2003 2003 Timetable December December December June June SECTOR Agency Agencies EDUCATION Responsible DepED DepED DepED DOH/SEMP2/All DepED DepED bid School of of5 the its system raw compete of and Action IV No. relax of allow to English to textbook Rule to and on fessionalization). procurement District Policy law monitoring procurements Agreed 1-A, (prof Policy the authors Math policy importation of empowerment and General on the fectiveef Division, DepEd' Section Book textbooks. foreign and an inventory and for of Science, members and Activity for evaluation. . Revise 8047 National Amendment Streamline rainingT Regional, Develop trengthenS acity 35. AR the the requirements materials 36. textbooks locally textbooks. 37. content 38. committee 39. planning at Levels. 40. cap Area and Building Key Framework Policy Legal and -od- -od- Organization Planning Monitoring Capacity dingnuF 2003 31, now month. still accredidation of one for October 6months, training. of 2002. of instead to AIM 2002. 2003. as notification. up to instead of suppliers; wider weeks. Status Ongoing. Done. Registration and Done. Instead 2-3 Done. Staffsent week for preparation. August November August Done. One Done. Done constructors/consultants under Done Done Done 2003 2003 2003 2003 2003 2002 2003 able imetT 2003 2003 2003 December December June December December December June December June December SECTOR Agency Management Management Management Health Health/Social Health Health/Social Health/Social Health/Social Health/Social Health/Social Health/Social Health/Social of of and of of and Agencies of and of Management of Management of Management of Management of Management HEALTH 2 2/All 2 2 2 2 2 2 Responsible Department Department Expenditure Project Department Department Expenditure Project Department Expenditure Project Department Expenditure Project Department Expenditure Project Department Expenditure Project Department Expenditure Project Department Expenditure Project s and of wider bid Drug' and process. the ation). process . and of contract suppliers, Action ensure for delay monitor the Price of Department decentralization to Food of Division. to of of registration allocation avoid Procurement to of Drug price Agreed (professionaliz the on terms procedure cash and implement competition in empowerment Services and amechanism Bureau the the and shorten and process amecahnism staffing performance Service. aNational members the astudy to Legal System. the Activity reforms by Review procurement. Develop Strengthen Training Streamline Streamline approval Develop Review Logistics Establish Conduct 41. Health of 42. participation 43. capacity 44. committee 45. review 46. and 47. evaluate constructors/consultants. 48. and 49. Monitoring 50. pharmaceuticals. Area and and Building and Key Organization Advertisement Capacity -do- Procedures Practices -do- Monitoring Organization Staffing - Systems Procedures -do t ed from with -IDF/B -IDF;B Propos Funding W ASEM2 W nmentrevoG pursue pursue B to additional funding ADB Government to funding ADB W II, its on 13, will 2004 to An are fectivity system and of Update 31, toola ef GPPB inform to April Phases Procurement the Impact to the Act private Project discussed compliance as Report. November signed on September has as by of developed with Notice Second August well 20005; to1 Government was be Reform Reform and issued G-EPS of as circualla known, the 26, will AR request implementation the upon. CP as agencies' V Government Act, Evaluation of was consultants Recommendations Law monitoring/survey developed contracdt provider 2004 the Full of GPPB-TSO issued ofI the the 6, Many September acted atustS the be and, LGUs by IV 2005. Ongiong. The evaluate with Reform of Procurement Monthly online will 2004. Done. Upon DILG all Procurement IRR-A. G-EPS service April Proceed 2004. Phase be III, from 15, Done. Report during Mission. being 2004 2004 able 2004 imetT 2004 2004 June March December December March of Agency Government Audit/ Procurement Procurement Local Procurement on Service Financing Board Board/Department and Responsible vernment vernment Go Policy Go Policy Interior rnmentevoG Board/Procurement Policy Service Commission Procurement International Institutions to . and of Monitoring Audit for Board- a Foreign mix respect Government as on security quality, Action plan the the of Policy with on Local acity under fice to E-Procurement Act/Implementing Act/Implementing system cap Agreed Of Government of Commission on works including funding. and capability the for information Procurement of Reform Reform E-Procurement tool. implementation Services Regulations. Regulations Government andffast area the reporta foreign in Projects, and Activity and and contracts Evaluation Prepare Implement 1. nda Government echnicalT Disseminate enforcement Procurement Rules 2. Procurement Rules 3. transactional rainingT.4 of systems auditors Prepare.5 size Assisted national Issues/Priorities Area and Key Emerging Strengthen Organizational Capacity Improve Procurement Practices Processes for sed 2 Bank 2 reques Propo Funding WB-IDF/ ASEM Government will Japan International Cooperation ASEM tnarG WB-IDF RA 2004 the the CP be 31, s' be been in of 2005. to LGUs, cover be the to No. Public to Documents to were still of have developed the the March still consultantsl August by during Mission. capability for Practioner with Academy NGAs, Implementation Administration of has Program SUCs for Bidding training the full Resolution for by as and of by Full Update Reference Manuals of has downloading documents. Reference of Status modules repor discussed well. Ongoing. GPPB-TSO the Procurement Development coordination Development Philippines GOCCs, Harmonized as accomplished Done. The was Second Recommendations considere. Ongoing. ermsT allow finalized. reviewed. Done. G-EPS to bidding Ongiong. ermsT Projects drafted Done. Guidelines of approved 2004 2004 2004 2004 2004 able 2004 Timet December September September December September June of of Public of of Agency Highways/ Units Highways Audit Agencies/ Procurement Procurement and on Procurement Procurement and Highways Procurement Procurement orks Department orks Board Board/Department W Board/All Government Board/Department or and Board/Department W Board Responsible ernmentvoG Policy Government Policy Public Commission ernmentvoG Policy Local Government Policy Health Works Goverment Policy Public ernmentvoG Policy in sector small national Manual Government budget or for and Action private Bidding prices/variation Estimatess' manual. fixed documents estimating in Rules including variances. method bid Services Agreed Procurement on skills bid levels Engineer without the agencies/Local bidding of and of Harmonized all government, . to of (9) procurement on at local reporta and analyzing procurement Implementing or society with nine the Activity relative testing Procurement website. and rainingT civil least the in Prepare Pilot at Downloading Improvement Include 6. Documents agencies, and 7. orders projects ceilings. 8. in Units. 9. from agency 10. prices 1.1 works Regulations Area Key ed funding Grant2 will B trainer Propos Funding W provide for ASEM waste 2004 Bank. still project. and under 31, 15 will orld pilot are the bid selected of was 14, W the supply engineering the DPWH procurement. August June at projects of value expert on and water Build of as of 2004 undertake and introduction Secretariat. is Status foreigna 18, GPPB to number Done. Initial concept by conducted and The have Done. A management Design Ongoing. ylwenehthtiwenodeblliwsihT PWI of items. with ADB, prices standalone with A CSOs documents of for items. bidding WB. monitoring used Alliance the harmonized in and the works created as Done for JBIC Ongoing. G-EPS commonly doneeblliwyduts able 2004 2004 2005 2004 2004 Timet June June June June June of of of on atch, Agency Highways Highways Highways W Procurement and Procurement and Procurement Procurement and Procurement orks orks orks Responsible mentnrevoG Board/Department W Policy Public mentnrevoG Board/Department W Policy Public mentnrevoG Board Policy mentnrevoG Board/Department W rnment Board/Commission Policy Public Gove Policy Audit/Procurement oratedprocnI ferent to with actual dif foreign to items, on by supplies, basis, the Action estimates Begin. experience. s Society in data value of pilota invite procurement criteria cost and contract. Civil medical procured on money Agreed build" of wardsA procurement and one for Government' and roads, books and systema international and projects least as qualification requirements disseminate analysis designs value at building Bid manual. share observers. common and, in the and to and of Activity that best "design selected bidding supply Introduce Pilot Capacity Define Collect prices classrooms, 12. engineering check ensure three experts 13. schemes 14. Organizations artnersp Committee 15. match procurement 16. bid e.g. water arency Area ranspT Key Enhance Appendix 4 - Status of Procurement Training and G-EPS Update Status of Procurement Training on Procurement Laws, Rules and Regulations (October 2002 ­ December, 2004) Percentage of Agencies No. of Existing Agencies No. of Trained Agencies Agencies Trained National Government 7391 549 62.32% Agencies (NGAs) Main/Regional Offices 435 404 92.87% Bureaus 145 48 33.10% Attached Agencies 159 97 61% Local Government 1,6922 1,228 77.23 % Units (LGUs) (excluding barangays) Provinces 79 66 83.54% Cities 119 91 76.47% Municipalities 1,494 1,071 71.68% Government-Owned or 7233 167 40.14 % Controlled Corporations (GOCCs) and other Government Corporate Entities (GCEs) Chartered GOCCs 76 61 80.26% Non-Chartered GCEs 57 14 24.56% GOCCs by Judicial 590 92 15.6% Decisions State Universities and 1124 112 100% Colleges (SUCs) SUCs in NCR 8 8 100% SUCs in other regions 102 102 100% Other attached SUCs 2 2 100% TOTAL 3,266 2,056 70% 1Source: Department of Budget and Management (DBM) Directory, Organization and Productivity Information Bureau (OPIB) ­ DBM, Agencies' Main Offices, Agencies' Website 2Source: Department of Interior and Local Government 3Source: Department of Finance 4Status Report on G-EPS (2001-December 2004) COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 37 1200 1000 800 600 Agencies 400 200 0 4th Qtr. 2002 2003 2004 Status Report on G-EPS (2001-December 2004)5 Agency Total No. of Agencies Registered 3,558 w/G-EPS No. of Agencies Trained on 2,993 G-EPS No. of Notices Posted 75,842 No. of Agencies who Posted 3,531 on G-EPS No. of Awards Posted 10,529 Supplier Total No. of Suppliers 3,186 Trained No. of Registered 11,176 Suppliers No. of Suppliers that 6,734 Downloaded Notices No. of Notices Downloaded by 16,536 Suppliers No. of Downloaded Notices 59,064 by Suppliers 5Source: Office of Philippine Government Electronic Procurement System (PhilGEPS) AGENCY 45000 40000 No. of Agencies Registered w/ 35000 G-EPS 30000 No. of Agencies Trained on G- 25000 EPS 20000 No. of Notices Posted 15000 10000 No. of Agency who Posted on G- EPS 5000 No. of Awards Posted 0 2001 2002 2003 2004 SUPPLIER 30000 No. of Suppliers Trained 25000 No. of Registered Suppliers 20000 15000 No. of Suppliers that Downloaded Notices 10000 No. of Notices Downloaded by 5000 Suppliers 0 No. of Downloaded Notices by 2001 2002 2003 2004 Suppliers Appendix 5 - Report on Progress of Reforms in LGUs 1. In line with the thrust to fully disseminate the new procurement procedures, the Government Procurement Policy Board (GPPB) spearheaded a move to create an efficient and expeditious system of rolling out training of Republic Act (R.A.) 9184, otherwise known as the "Government Procurement Reform Act," and its Implementing Rules and Regulations Part A (IRR-A) to more than 48,000 local government units. The Department of Budget and Management (DBM) tasked the Local Government Academy (LGA), the training arm of the Department of Interior and Local Government (DILG), to bring together a team of national trainors and to assist in advocating the new law through the conduct of training for a pool of trainors from every region who, in turn, will handle the training of procurement officials - such as the members of the Bids and Awards Committee (BAC), BAC Secretariat and the Technical Working Group (TWG) - in the respective Local Government Units (LGUs) located in their own regions. The pool of trainors consisted of a Composite Team of Regional Trainors for each region. Each team was comprised of representatives from DBM, DILG, Commission onAudit (COA), and the Philippine League of Local Budget Officers (PHILLBO).1 The objective was to bring together different departments dealing with different facets of local government so that together they could answer all possible questions and resolve issues plus provide information to LGUs. The goal of the entire program was to train all LGUs in the country on the basic provisions of R.A. 9184. The strategy includes the standardization of all materials for the training and the distribution of Frequently Asked Questions (FAQs) from concluded training on R.A. 9184 to the participants. 2. After having trained the trainors, the Government Procurement Policy Board Technical Support Office (GPPB-TSO) then entered into a Memorandum of Agreement (MOA) with the PHILLBO for the organization, arrangement, management and administration of the procurement training to be conducted by the Composite Team for LGUs in all the regions with DBM acting as the lead agency and over all coordinator of the Team. The methodology of the LGU training programs generally utilized lecture- discussions, open forums, and workshops using case analyses and mock biddings, and pre-training and post-training evaluation sheets. 3. Table 1 shows the status report on the training of LGUs conducted by the Composite Teams from April to December 2004. This table is based on those reports that have been sufficiently documented by the GPPB-TSO. It has to be mentioned as well that, prior to the creation of the Composite Teams, the GPPB- TSO had initially conducted regional training on the new procurement law, and that this training included LGU participants composed of Local Government Officials, Local Budget Officers, Engineers, Municipal Treasurers, BAC Members/Secretariat and Procurement/Supply Officers. The training was conducted in Regions II, III, IV, V, VI, VII, VIII, IX, X, XI, NCR, and the Cordillera Autonomous Region (CAR) within a period from October 2002 until December 2003. Using the same GPPB-TSO pool of speakers, a similar 1The PHILLBO is a private organization whose membership consists of local budget officers throughout the country and whose purpose is to constantly build up, improve and strengthen the capacities of its members in LGUs through appropriate interventions responsive to the changing demands and opportunities of the times. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 41 Table 1: Summary Status Report of the Training for Local Government Units (period covering April to December 2004) Participants (LGUs) Percentage of Region Province Municipality City LGUs Trained II 4 trained/4 P 113 trained/117 M 8 trained/8 C 125/129 100% 96.58% 100% 96.90% III 5 trained/5 P 85 trained/90 M 3 trained/3 P 93/93 100% 94.44% 100% 94.90% III 7 trained/7 P 103 trained/118 M 10 trained/12 C 120/137 100% 87.29% 83.33% 87.59% IV - A2 5 trained/5P 103 trained/132 P 11 trained/11 P 119/148 100% 78.03% 100% 80.41% V 6 trained/6 P 73 trained/107 M 6 trained/10 C 85/123 100% 68.22% 60% 69.11% VI 6 trained/6 P 117 trained/117 M 16 trained/16 C 139/139 100% 100% 100% 100% VII 4 trained/4 P 114 trained/120 M 12 trained/12 C 130/136 100% 95% 100% 95.59% VIII 6 trained/6 P 129 trained/139 M 4 trained/4C 139/149 100% 92.81% 100% 93.29% IX 3 trained/3 P 44 trained/66 M 5 trained/5 C 52/74 100% 66.67% 100% 70.27% X 5 trained/5 P 85 trained/85 M 8 trained/8 C 98/98 100% 100 % 100% 100% XI 4 trained/4P 38 trained/43 M 4 trained/5 C 46/52 100% 28.37% 80% 88.46% XII 4 trained/4 P 38 trained/45 M 5 trained/5 C 47/54 100% 84.44% 100% 87.04% XIII 4 trained/4 P 49 trained/70 M 3 trained/3 C 56/77 100% 70% 100% 72.73% CAR 6 trained/6 P 51 trained/76 M 1 trained/1 C 58/83 100% 67.11% 100% 69.90% National 3 trained/4 M 12 trained/13 C 15/17 Capital Region 75% 92.31% 88.24% (NCR) Autonomous 3 trained/5 P 34 trained/94 M 1 trained/1 C 38/100 Region of Muslim 60% 36.17% 100% 38% Mindanao (ARMM) Total 72 trained/79 P 1,179 trained/1,494 M 109 trained/119 C 1,360/1,692 91.14% COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 78.92% 91.60% 80.38% 42 1For Region IV-B, training was handled by the Commission on Audit. program was also conducted by the PHILLBO in November and December 2003, at Tagaytay City, Iloilo City and Davao City, covering the three island clusters of Luzon, Visayas and Mindanao, respectively. These special PHILLBO training seminars had a total of two thousand two hundred and sixty-two (2,262) participants, composed of Local Government Officials, Local Budget Officers, Engineers and Municipal Treasurers. 4. The GOP, through the DBM-Procurement Service (PS), has also been actively marketing the G-EPS to the LGUs, by conducting regional seminars and hands-on trainings for LGUs on its use. Table 2 shows how many LGUs have already undergone hands-on training on the G-EPS beginning in October 2002, while Table 6 shows the number of LGUs registered with the G-EPS, vis-ŕ-vis the total number of existing LGUs. Table 2: Number of LGUs Trained (hands-on) on the G-EPS (period covering October 1, 2002 to December 31,2004) 4th Qtr 1stQtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2002 2003 2003 2003 2003 2004 2004 2004 2004 Total LGUs 90 33 22 0 81 34 11 18 54 343 Table 3: Total Number of LGUs v. LGUs Registered with G-EPS (as of December 31, 2004) Total Number of LGUs Total Registered with G-EPS Provincial Government 79 60 City Government 119 107 Municipal Government 1,494 438 Barangay 41,975 41 Total 43,667 646 5. From the above, it can be said that the GOP has been undertaking a vigorous program to disseminate and market the new procurement law and the G-EPS to the LGUs. Moreover, despite a low number of hands- on training on the use of the G-EPS, there appears to be a high rate of LGU registration with the G-EPS at the provincial and city government levels. This high rate of registration appears to spring from the continuous information campaigns of the GPPB-TSO on the new procurement law, because the training invariably identifies the G-EPS as one of the mandatory features of the reform. As such, registration with the G-EPS may, in fact, be considered as one of the indicators of the impact of R.A. 9184, and given the high rate of registration in the Provincial and City Governments, it becomes apparent that LGUs at this level are increasingly becoming aware of the law and adopting it. On the other hand, the low rate of G-EPS registration in Barangays may be attributed to a lack of training at that level and sheer lack of infrastructure. 1GPPB-TSO 2Id. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 43 6. To further elucidate on the impact of R.A. 9184 on the LGUs, the survey of the GPPB-TSO on LGU compliance with the Annual Procurement Plan (APP) BAC requirements may prove to be helpful. This survey was conducted by the GPPB-TSO in twenty-seven LGUs ­ comprising twenty-three cities/ municipalities and thirteen provinces ­ representing the CAR, Regions I, III, IVA, IV-B, V, VI, VII, IX, XI, and the National Capital Region (NCR), from June to December 2004. First of all, it showed that all the respondents affirmed that they adopted a centralized system of procurement, which means that these LGUs are able to consolidate procurement requirements at either the Provincial, City or Municipal levels; thereby facilitating the introduction of reforms, as most efforts may be focused on only one main and central office. Secondly, looking at theAPPand BAC provisions of R.A. 9184, Table 4 shows the percentage of compliance by the respondent LGUs with essential provisions of the law on the preparation and use of theAPP, and the formation of the BAC. It should be noted, however, that some assertions contained therein may be self- serving and would have to be validated. At any rate, the results of the survey may be sufficient to justify the assertion that the reforms in the new procurement law may effectively be implemented at the Provincial, City and Municipality levels. Table 4: LGU Compliance with APP and the BAC Requirements (as of December 31, 2004)1 APP Requirement Percentage of Compliance Preparation of the Annual Strategic Plan 89.8% Approval of APP by Head of Procuring Entity or 2nd Ranking 100% Official, duly designated APP is consistent with yearly-approved budget 100% APP has provisions on foreseeable emergencies, based on 69.6% historical records APP includes a Project Procurement Management Plan 75.2% (PPMP) for each individual project Existence of PMO that is supposed to be responsible for 48.4% preparing and updating the PPMP BAC Secretariat is responsible for the consolidation of the 45.75% PPMPs into an APP 1GPPB-TSO COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 44 Recommendations 7.Accrediting Procurement Training Programs. As pointed out above, the nationwide procurement training program of the GPPB-TSO is considered by almost all participants as both effective and advantageous. However, with the onset of this program, various groups have reportedly been undertaking their own seminars and training programs on the new law for both NGAs and LGUs - sometimes charging hefty amounts. While the initiatives of these groups and organizations may be a welcome sign of an increased demand for knowledge on the law, the quality of these programs have sometime been questioned, and the danger of misinformation has been raised. In fact, it has been reported that some speakers would merely use the presentations of the GPPB-TSO designated trainors but would not be able to explain the contents thereof. It should be noted that the GPPB has been training a national composite team of trainors specifically for the purpose of ensuring that the new procurement law would be rolled-out to the regions with the appropriate quality checks. These composite teams are also the same groups that are currently being trained on the new harmonized Philippine Bidding Documents, so that they may likewise conduct the next level of training in the regions. Despite this, it is recognized that these composite teams are still insufficient to cope with the present demand for training - discounting even the private sector. As such, although independent groups and organizations may be allowed to conduct their own training programs on the new procurement law, it is highly recommended that the GPPB develop a mechanism to accredit procurement lecturers and the organizations that seek to conduct public procurement training seminars, to ensure the quality of both, including that of the entire program. Although the accreditation system may not necessarily include in- house training programs, agencies seeking qualified speakers therefore may simply refer to the list of accredited lecturers maintained by the GPPB. This accreditation system may also be linked to the GOP's efforts to develop a certificate program and professionalize the public procurement practice. 8. Record Keeping and Maintaining of LGU Performance. To support the training programs and as a "follow-through" for capacity building efforts at the LGU level, there is a need to strengthen the LGUs' capacity to to manage and maintain procurement records. These records will, in turn, serve as critical input for micro-level maintenance of LGU procurement performances. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 45 Appendix 6 - Progress of Reforms in the Health Sector 1.As provided in the November to December 2003 Country ProcurementAssessment Report (CPAR) Update, all the activities and agreed actions in the March 2003 CPAR for the Health Sector have been completed, except for the review and implementation of reforms in terms of decentralization of procurement. In this regard, Department Memorandum No. 74, dated June 19, 2003, was issued by the Secretary of Health, directing all Directors of the Centers for Health Development (CHDs) (the equivalent of the Regional Offices) to: (i) constitute/reconstitute their Bids and Awards Committees (BACs) in accordance with Republic Act (R.A.) 9184, otherwise known as the "Government Procurement Reform Act;" (ii) institutionalise the preparation of theAnnual Procurement Plan (APP); and (iii) institutionalise a procurement monitoring system that will ensure adherence to the procurement timelines provided in R.A. 9184. However, there is still a need for developing the capacities of the BACs in the various regions through training programs and seminars on procurement. Moreover although the decentralized BACs were created by Department Memorandum No. 74, the Department of Health (DOH) maintains a centralized distribution system for essential drugs.1 It should be noted that a Contract Distribution System (CDS) was developed by the DOH with assistance from the World Bank for the purpose of monitoring the demand and consumption of essential drugs. But, until now, this is being fully implemented only in one region, i.e., Region VI. Among the barriers to the full implementation of the CDS are misconceptions in the regions regarding the payment of distributors, issues on the procurement of drugs at the CHD level, warehousing, the need to upgrade facilities, and problems in managing the supply chain.2 2. As part of organizational reforms, by virtue of Department Order No. 210-E, datedAugust 2002, the DOH restructured its Procurement and Logistics Service, by dividing it into two divisions, the Procurement Division and the Materials Management Division, each headed by a Director. The former acts as the Secretariat for the Central Office Bids and Awards Committee (COBAC) and is responsible for requirements planning, sourcing and ordering, while the latter is responsible for receipt of goods, preparation of payment documents, storage and distribution. Thus, by separating logistics from the actual procurement activities, there is an increased check and balance in the new organizational set-up. 3. With the DOH dividing its Procurement and Logistics Service into the Procurement Division and the Materials Management Division, it has established an internal oversight committee, the Procurement Committee, to ensure effective operation and proper coordination between these two offices as well as the finance units. However, a lot more has to be done on the logistics side, particularly in distribution , as there have been problems in recent deliveries. In the case of SEMP2, while procurement (through UN agencies) 1Based on an interview with Department of Health Undersecretary Alexander A. Padilla, Engr. Joel N. Lazo, Chief of the Procurement Division, Department of Health, and Dr. Maria Virginia Guzman-Ala, Chief, Project Management Division, Department of Health (October 4, 2004). 2Id. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 47 and deliveries up to central warehouses have improved a lot, the on-ward distribution to the end-points (field offices) in the system is a concern. Often, vaccines and drugs are distributed to the end points with only a short time remaining before their expiry dates. The problems have become critical recently because of a logjam in the contract of a forwarder that is effecting the distribution of vaccines and drugs. 4. The November to December 2003 CPAR Update noted the strengthening of the capacity of the Bureau of Food and Drugs (BFAD) so that the registration process has been shortened from six (6) months to two (2) to three (3) weeks. Recently, the BFAD bid out the development of anAutomated Total Solution that is intended to further speed up the process. The project is fully locally funded and covers the purchase of equipment, system design, network installation and internet services. Hardware delivery will be completed early this year to allow the Design Phase and Pilot Testing to be accomplished in 2005, and the full implementation of the system is planned for 2006. Recommendations 5. Supporting DOH Reforms. The DOH may need technical assistance to further develop the CDS into a fully functional and effective system that is utilized in all regions. This may require addressing such issues as the authority of CHDs to procure drugs, the upgrade of existing facilities, and a review of the DOH's entire centralized logistics network for drugs, i.e., not only from planning to contracting, but including warehousing and distribution. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 48 Appendix 7 - Progress of Reforms in the Education Sector 1. Among the activities and agreed actions in the March 2003 Country Procurement Assessment Report (CPAR) for the Education Sector are the development of an effective procurement planning and inventory monitoringsystemattheRegional,Division,DistrictandSchoollevels,andthestrengtheningoftheDepartment of Education's (DepEd's) procurement capacity. To this end, DepEd, has focused much attention to two major areas of reform, namely the National Textbook Delivery Program (Textbook Count) and the creation of its very own Procurement Service (PS). 2. In 2003, the DepEd undertook its firstTextbook Count program, involving the procurement and delivery of thirtysevenmillion(37Million)textbooksandteachers'manualsunderthe2nd SocialExpenditureManagement Project (SEMP2)/Third Elementary Education Project (TEEP), amounting to One Billion Three Hundred Million Pesos (Php1.3 Billion), awarded to six publisher/printer groups. This involved five thousand six hundred twenty-three (5,623) delivery sites and over thirty thousand (30,000) separate deliveries nationwide. 3. The problems addressed under the 2003 Textbook Count were over-pricing, unqualified bidders winning bids, long delays in delivering textbooks, under-deliveries and substandard quality of textbook printing, binding and packaging. Under previous findings of the Philippine Center for Investigative Journalism (PCIJ), in 1998 and 1999, the average delivery period was twenty-four months and the average price per textbook was Ninety Pesos (Php90.00).1 Now, by virtue of the 2003 Textbook Count, the opening of bids up to awarding of contract were undertaken from November 13, 2002 to January 2003, so that the contracts were awarded on March 2003, at an average price of Forty-one Pesos (Php41.00) per textbook (with Lesson Guides). Moreover, deliveries were completed by the end of November 2003 ­ translating to a completed procurement cycle within twelve months.2 This program also helped achieve a textbook to pupil ratio of 1:1 (except for Math 3 textbooksforelementaryandMathIVtextbooksforhighschool),3 from previous ratios of 1:6 at the elementary level and 1:8 at the high school level.4 These results were achieved through: (i) the conduct of transparent bidding procedures that were publicly-viewed, taped and conducted with non-governmental organization (NGO) observers, all in accordance with Republic Act (R.A.) 9184; (ii) two-level, mutually exclusive, technical evaluation process (involving financial and content evaluation); (iii) planned and surprise plant visits with Civil Service Organization (CSO)/NGO partners to check on quality; (iv) the use of a common delivery schedule set by the DepEd as the client and not by the publishers/suppliers; (v) the use of CSOs and NGOs to monitor and inspect deliveries; (vi) detailed and full disclosure of deliveries to principals and district 1Presentation delivered by Department of Education Undersecretary Juan Miguel Luz, during the Combating Corruption Conference, Manila, Philippines, entitled "National Textbook Delivery Program (Textbook Count) ­ Libro Ko, Kinabukasan Ko" (September 21, 2004). 2Id. 3Based on an interview with Department of Education Undersecretary Juan Miguel Luz and Ms. Aida Carpentero, Director of the Procurement Service, Department of Education (September 20, 2004). 4 See Philippine Center for Investigative Journalism, Betrayals of the Public Trust: Investigative Reports on Corruption, at 65 (2000). COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 49 supervisors through individual letters; (vii) published school-by-school delivery schedules in local newspapers, with actual textbook numbers and range of delivery dates; and (viii) radio advertisements to announce textbook deliveries to the general public.5 4. The DepEd has also successfully undertaken its 2nd NationalTextbook Delivery Program for 2004 (Textbook Count 2), involving thirteen million six hundred thousand (13.6 Million) textbooks amounting to Six Hundred Sixty Million Pesos (Php660 Million), to over thirty-five thousand (35,000) delivery sites nationwide, from July through November 2004. Similar to the 1st Textbook Count, the 2nd Textbook Count involved partnering with an even larger number of CSOs and NGOs (18), as well as the Government Procurement Policy Board (GPPB); but, this time, the program also taps the Boy Scouts and Girl Scouts of the Philippines organized at each of the school sites.Aside from the World Bank financed SEMP2 and TEEPprojects, textbooks from the Asian Development Bank's Secondary Education Development and Improvement Project (SEDIP) were included in the textbook delivery program for the first time. This necessitated better coordination within and outside of DepED in view of the number of projects, suppliers/forwarder and delivery sites involved. 5. Using the provisions of Section 14 of R.A. 9184 and its Implementing Rules and Regulations Part A (IRR- A), which provides for the creation of a Secretariat in the procuring entity to support the Bids and Awards Committee (BAC), the DepEd created the PS. The creation of the PS was also committed to by the GOP to theWorld Bank under the SEMPloan, which provides for the improvement of the performance and efficiency of DepEd procurement systems, financial management and information communication systems. 6. The PS is tasked to act as BAC Secretariat at the central office in all biddings costing Two Hundred Fifty Thousand Pesos (Php250,000) and above, as well as provide technical support in the evaluation of bids, the implementation of a procurement tracking system, and the overseeing of contract administration, among others. All procurements below the Php250,000 threshold are handled by the Property Division. The PS is headed by a Director III, and has a staffing complement of sixteen.All the positions available have been filled from internal and external recruitments. 7. The general functions of the PS cover the acquisition of goods and consulting services, and the contracting for infrastructure projects; secretariat and support services to the BAC; the provision of efficient records management of procurement documents; and contract administration. Its special functions are: · Formulate plans, policies, standards and guidelines pursuant to R.A. 9184 and other relevant laws, rules and regulations. 5Supra note 1. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 50 · Procure goods and consulting services and contract for infrastructure projects, including lease of goods and real estate, through local or international competitive bidding, or when necessary, any of the alternative methods of procurement. · Maintain the procurement database and records management. · Liaise with the GPPB-Technical Support Office (TSO). · Provide opportunities for the training of personnel to professionalize the procurement service and the procurement functions within DepEd. · Advise the Secretary of Education on procurement matters. Recommendations 8. Supporting DepEd Reforms. The initiative of the DepEd to institutionalize internal procurement reforms through the creation of its PS has to be supported. In particular, now that the PS is fully staffed, it would need to undergo training sessions to build its capacity on database and records management, project management, local and international procurement procedures, and effective planning, among others. It would have to establish an effective partnership with the GPPB-TSO to be kept abreast with updates on the GOP's overall procurement reform program. It would also need to institutionalize its arrangements with CSOs/NGOs for a continued effective partnership in procurement and contract administration undertakings. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 51 Appendix 8 - Baseline Indicator System Report Baseline Indicator System with Weights The assessment of the Philippines' public procurement system was conducted on the basis of four (4) key areas called "Pillars," which are composed of twelve (12) Indicators that have been identified as the core components of a public procurement system. These twelve (12) Indicators are, in turn, composed of Baselines that are considered the desirable standards against which the existing elements of the Philippines' public procurement system may be assessed. The table below provides for the descriptive analysis of the rating as to where, how and why the Philippines fully or fails to achieve this standard. For the assessment, points were given to each Baseline, the total of which corresponds to weights assigned to each of the Indicators. In turn, the weights of these Indicators comprise the total score for each of the four (4) Pillars. To reflect their equal importance, each of the Pillars was given a weight of twenty-five percent (25%) each, amounting to a grand total of one hundred percent (100%). The distribution of points was based upon the importance and relevance of each of the Baselines and Indicators involved, in relation to the Philippines' public procurement reform program. PILLAR I ­ THE LEGISLATIVE AND REGULATORY FRAMEWORK (25%) Indicators Baselines Answers/Comments · Indicator 1 ­ Public · Baseline (a) ­ Scope of application and coverage of the procurement legislative and regulatory framework (20% of Indicator) legislative and regulatory framework 1. Contracting entities at all levels, including government · Yes. Sec. 4, R.A. achieves the agreed authorities, municipalities, regional authorities and utilities/state- 9184. standards and owned enterprise, are covered (5%) complies with applicable obligations 2. All areas of procurement; works, goods and consulting · Yes. Sec. 4, R.A. (15%) services are included (5%) 9184. 3. Procurement using public funds, irrespective of contract · Yes. Sec. 1, IRR- value, is included (5%) A, R.A. 9184. 4. The applicable legislative and regulatory framework is · Yes. R.A. 9184. structured, consistent, and accessible to users and all provides for open interested stakeholders (5%) and competitive bidding. COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 53 Indicators Baselines Answers/Comments · Indicator 1 ­ Public · Baseline (b) ­ Procurement methods (15% of Indicator) procurement legislative and 1. Stated preference for the use of open, competitive · Yes. Sec. 10, R.A. regulatory framework procurement unless otherwise justified in accordance with 9184. achieves the agreed the legislative and regulatory framework (3.75%) standards and complies with 2. International competitive tendering methods defined for · No. R.A. 9184 is applicable obligations specified contracts (e.g. where monetary thresholds exist) generally not open (15%) that are consistent with international standards (3.75%) to foreign competition, but exceptions exist. 3. Defined basis for the procurement method, if other than · Yes. Secs. 48 to 54, open competition (3.75%) R.A. 9184. 4. Negotiated procedures and direct purchasing only under · Yes. Secs. 50, 52 well defined and justified circumstances, subject to controls and 53, R.A. 9184. (3.75%) · Baseline (c) ­ Advertising rules and time limits (10% of Indicator) 1. Mandatory and accessible publication of opportunities for · Yes. Sec. 21, R.A. competitive procurement (3.33%) 9184. 2. Mandatory publication of result information on contract · Yes. Posting awards based on defined thresholds (3.33%) requirement in G- EPS. 3. Minimum time limits for submission of tenders and · Yes. Annex C, IRR- applications, which should be consistent with methods of A, R.A. 9184. procurement, national conditions and when applicable, international requirements (3.33%) · Baseline (d) ­ Rules on participation and qualitative selection (15% of Indicator) 1. Fair, predictable and defined rules for participation that rely · Yes. Secs. 23 and on qualifications and ability to perform the requirement 24, R.A. 9184. (3.75%) 2. Limited and controlled use of price preferential clauses · Yes. R.A. 9184 has (3.75%) clear conditions. 3. Debarment process if covered, on defined basis, allowing · Yes. R.A. 9184 has for due process and appeal (3.75%) blacklisting and protest mechanisms and. 4. Rules for participation of government-owned enterprise that · Yes. R.A. 9184 provide for equal treatment in competitive procurement allows GOCCs to bid (3.75%) competitively. · Indicators Baselines Answers/Comments · Indicator 1 ­ Public · Baseline (e) ­ Tender documentation and technical specifications procurement (5% of Indicator) legislative and regulatory framework 1. The minimum content of the tender documentation is · Yes. R.A. 9184 achieves the agreed specified (2.5%) provides for standards and minimum complies with requirements. applicable obligations (15%) 2. Neutral technical specification with reference to · Yes. R.A. 9184 international standards where possible (2.5%) prohibits use of brand names. · Baseline (f) ­ Tender evaluation and award criteria (15% of Indicator) 1. Objective, fair and pre-disclosed criteria for evaluation and · Yes. Secs. 32 and award of contracts (7.5%) 33 of R.A. 9184. 2. Clear methodology for evaluation of tenders based on price · Yes. Secs. 32 and and other fully disclosed factors leading to award of 33 of R.A. 9184. contract (7.5%) · Baseline (g) ­ Submission, receipt and opening of tenders (15% of Indicator) 1. Public opening of tenders in a defined manner that ensures · Yes. Sec. 29, R.A. the regularity of the proceedings (5%) 9184. 2. Clear requirement to maintain records of proceedings and · Yes. BAC process that are available for review/audit (5%) Secretariat required to keep records of bidding. 3. Requirement to maintain security and confidentiality of · Yes. Confidentiality tenders prior to bid opening (5%) clause and penal provisions in R.A. 9184. · Baseline (h) ­ Complaint review procedures (5% of Indicator) 1. Inclusion of complaint and remedy procedures that provide · Yes. Art. XVII, R.A. for fair, independent and timely implementation (5%) 9184. · Indicators Baselines Answers/Comments · Indicator 2 ­ · Baseline (a) ­ The existence and availability of implementing · Qualified Yes. IRR- Existence of I regulation that provides defined processes and procedures not A, R.A. 9184 covers mplementing included in higher level legislation (20% of Indicator) locally-funded Regulations and projects, while Documentation (10%) Foreign-Assisted Projects are covered by Secs. 4 and 43 of the law. · Baseline (b) ­ The existence and availability of model tender · Yes. Sec. 6, R.A. documents for goods, works and services (20% of Indicator) 9184 and Harmonized Philippine Bidding Documents. · Baseline (c) ­ The existence and availability of procedures for · Yes. Eligibility is pre-qualification (10% of Indicator) equivalent to prequalification. · Baseline (d) ­ The existence and availability of procedures · Yes. R.A. 9184 suitable for contracting for services or other requirements where allows QBS technical capacity is a key criteria (10% of Indicator) procedures for consulting services. · Baseline (e) ­ The existence and availability of user's guide · Qualified Yes. or manual for contracting entities (20% of Indicator) Procurement Manuals have been drafted and ready for issuance. · Baseline (f) ­ The existence and availability of General · Yes. In the Conditions of Contracts for public sector contracts covering Harmonized goods, works and services consistent with national Philippine Bidding requirements and international requirements when Documents. applicable (20% of Indicator) · PILLAR II ­ CENTRAL INSTITUTIONAL FRAMEWORK AND CAPACITY (25%) Indicators Baselines Answers/Comments · Indicator 3 ­ · Baseline (a) ­ Procurement planning and data on costing is part · Yes. Art. II, R.A. Mainstreaming of the budget formulation process and contributes to multi-year 9184 and P.D. 1177. Procedures into planning (30% of Indicator) Public Financial Management (9%) · Baseline (b) ­ Budget Law supports timely procurement, contract · Yes. P.D. 1177 and execution and payment (10% of Indicator) in GAA. · Baseline (c) ­ No initiation of procurement actions without · Yes. R.A. 9184 existing budget appropriations (20% Indicator) provides for Approval Budget for the Contract prior to procurement. · Baseline (d) ­ Contract execution is subject to budgetary · Yes. R.A. 9184, P.D. controls to ensure sufficient funding for contract (20% Indicator) 1177, P.D. 1445. · Baseline (e) ­ Budgeting system provides for timely · Qualified No. release of funds to make payments against contractual Delayed release of obligations (20% of Indicator) funds at times, but there is a pilot payment system through the banks for DPWH. · Indicator 4 ­ Functional Normative · Baseline (a) ­ The status and basis for the functional normative · Yes. Art. XX, R.A. Body (the Body) at the body at the centre (the Body) is covered in the legislative and 9184. Centre (8%) regulatory framework (30% of Indicator) · Baseline (b) ­ The responsibilities of the Body address a defined · Yes. Art. XX, R.A. set of functions which include, but are not limited to: the 9184. provisions of advise to contracting entities; drafting amendments to the legislative and regulatory framework and implementing regulations; providing monitoring of public procurement; providing procurement information; reporting on procurement to other parts of government; developing and supporting implementation of initiatives for improvements of the development of implementing staff (20% of Indicator) · Baseline (c) ­ Organization and staffing of the Body and the · Yes. Art. XX, R.A. level of independence and authority (formal power) of the body 9184 provides for to exercise its duties is sufficient and consistent with the cabinet-level responsibilities (30% of Indicator) representation and a Technical Support Office. · Baseline (d) ­ Responsibilities of the Body provide for separation · Yes. Art. XX, R.A. and clarity so as to avoid conflict of interest (20% of Indicator) 9184 provides for an independent inter- agency body. · Indicators Baselines Answers/Comments · Indicator 5 ­ · Baseline (a) ­ A system exists for collection and dissemination of · Qualified Yes. A Existence of procurement information, including tender invitations, request for central portal exists Institutional proposals and contract award information (15% of Indicator) but contract award Development information is not yet Capacity (8%) accessible. · Baseline (b) ­ A sustainable strategy exists to provide training · Qualified Yes. Sec. advice and assistance to develop the capacity of government 16, R.A. 9184 and and private sector participants to understand the rules and program to regulations and how they should be implemented (30% of professionalize Indicator) public procurement, but private sector is not included. · Baseline (c) ­ Systems and procedures exist for collection and · No. Rudimentary monitoring of national procurement statistics (25% of Indicator) system which has to be developed further. · Baseline (d) ­ Quality control standards are disseminated and · No. Quality control used to evaluate performance of staff and address capacity standards still have development issues (30% of Indicator) to be developed. · PILLAR III ­ PROCUREMENT OPERATIONS AND PUBLIC PROCUREMENT MARKET PERFORMANCE (25%) Indicators Baselines Answers/Comments · Indicator 6 ­ Efficient · Baseline (a) ­ At the contracting entity level, the level of · No. Professional Procurement procurement competence among government officials program is not yet in Operations and within the entity is consistent with their procurement full swing. Practice (10%) responsibilities (25% of Indicator) · No. The demand of Baseline (b) ­ At the contracting entity level, the · public and private procurement training and information programmes sector participants implemented for government officials, as well as for private still has to be met. sector participants is consistent with demand (25% of Indicator) · Baseline (c) ­ At the contracting entity level, the existence of · Qualified Yes. administrative systems for public procurement operations, and Administrative information databases to support monitoring of performance and systems exist, but reporting to and responding to the needs of other related these have to be government systems (25% of Indicator) improved because they do not yet adequately support monitoring performance. Although some agencies have successfully developed procurement systems and information databases to support monitoring activities. · Baseline (d) ­ At the contracting entity level, the existence and · Qualified Yes. E.O. implementation of internal control mechanisms for the 109-A provides for undertaking of procurement operations at the contracting level, signing authorities, including a code of conduct, separation of responsibilities as a and various laws and check/balance mechanism and oversight/control of signature/ executive orders to approval authority (25% of Indicator) strengthen internal control mechanisms have been issued. Although most agencies have internal audit units and/or internal · control systems, this has not been institutionalized on a nationwid scale. Indicators Baselines Answers/Comments · Indicator 7 ­ · Baseline (a) ­ The public procurement market in the country has · Yes. Sufficient Functionality of the sufficient numbers of producers/suppliers to provide for enough to conduct a Public Procurement competition and comparative pricing for goods, works and competitive bidding Market (10%) services when compared to prices paid for similar requirements for most items and in local, regional or international markets as applicable (30% of works. Indicator) · Baseline (b) ­ The quality and consistency of submissions by the · Yes. Private sector private sector to the government enables the application of the is generally capable process leading to the award and completion of contracts (20% of complying with of Indicator) bidding requirements. · Baseline (c) ­ The participation rate of tenderers in response to · No. Political competitive tender invitations is consistent with the capacity of interventions distort the marketplace (20% of Indicator) competition and participation rate. There are private sector companies that have not been participating. · Baseline (d) ­ The private sector confidence in the legal and · No. Few complaints regulatory framework governing the procurement process is received. evidenced by their use of complaints or protests mechanisms Information on (30% of Indicator) confidence level is lacking because R.A. 9184 is relatively new. · Indicator 8 ­ Existence · Baseline (a) ­ Procedures are defined for undertaking contract · Yes. R.A. 9184 of Contract administration responsibilities to include inspection and provides for contract Administration and acceptance procedures, quality control procedures and methods administration, Dispute Resolution to review and issue contract amendments in a timely manner variation orders/ Provisions (5%) (50% of Indicator) amendments and warranties. · Baseline (b) ­ Dispute resolution procedures are included in the · Yes. Art. XVIII of contract document providing for an efficient and fair process to R.A. 9184. resolve disputes arising during the performance of the contract (25% of Indicator) · Baseline (c) ­ Procedures exist to enforce the outcome of the · Yes. Arbitration Law dispute resolution process (25% of Indicator) provides for this. PILLAR III ­ THE INTEGRITY AND TRANSPARENCY OF THE PUBLIC PROCUREMENT SYSTEM (25%) Indicators Baselines Answers/Comments · Indicator 9 ­ Effective · Baseline (a) ­ A legal framework, organization, policy and · Qualified Yes. Laws Control and Audit procedures for internal and external control and audit of public such as P.D. 1445 System (8%) procurement operations exists and operates to provide a and R.A. 3456 functioning control framework (25% of Indicator) govern these matters. Existing systems in most agencies have to be improved. Most agencies have no internal audit units/ internal control systems. · Baseline (b) ­ Enforcement and follow-up on findings and · No. There is lack of recommendations of the control framework provide an enforcement. environment that fosters compliance (20% of Indicator) · Baseline (c) ­ The internal control system provides timely · No. Weak internal information on compliance to enable management action (20% of control in most Indicator) agencies. · Baseline (d) ­ The internal control systems are sufficiently · Yes. Internal control defined to enable performance audits to be conducted (10% of system existing are Indicator) clearly defined. · Baseline (e) ­ Auditors are sufficiently informed about · Qualified Yes. Some procurement requirements and controls systems to conduct auditors are not quality audits that contribute to compliance (25% of Indicator) sufficiently informed of procurement requirements. There are complaints about conflicting COA interpretations of procurement law. · Indicators Baselines Answers/Comments · Indicator 10 ­ · Baseline (a) ­ The existence and operation of a complaint review · Yes. Art. XVII of Efficiency of Appeals system that gives participants in the public procurement process R.A. 9184. Mechanism (5%) a right to file a complaint within the framework of an administrative and judicial review procedure (25% of Indicator) · Baseline (b) ­ Decisions are deliberated on the basis of available · Yes. Art. XVII of information and the final decision can be reviewed and ruled R.A. 9184. upon by a body with judicial capacity under the law (15% of Indicator) · Baseline (c) ­ The complaint review system has the capacity to · Yes. There are handle lodged complaints efficiently and a means to enforce the administrative, civil remedy imposed (25% of Indicator) and criminal liabilities in R.A. 9184. · Baseline (d) ­ The system operates in a fair manner, with · No. No sufficient outcomes of decisions balanced and justified on the basis of information exists in available information (10% of Indicator) this area. · Baseline (e) ­ Decisions are published and made available to the · No. There is no public (15% of Indicator) requirement to publish decisions. · Baseline (f) ­ Administrative review body is separate from the · No. There is no regulatory body (10% of Indicator) central administrative review body. · Indicator 11 ­ Degree · Baseline (a) ­ Access to information is supported by publication · Qualified No. R.A. of Access to and distribution of information through available media with 9184 requires Information (4%) support from information technology when feasible (50% of publication/ posting Indicator) in general newspapers, websites and the G- EPS, but full access of information is not fully institutionalized. · Baseline (b) ­ Systems exist to collect key data related to · Qualified No. performance of the procurement system and to report regularly Although some (25% of Indicator) agencies have systems, the key data actually needs to be identified. · Baseline (c) ­ Records are maintained to validate data (25% of · Qualified Yes. Indicator) Agencies maintain records. Contents of the records have to be defined. Indicators Baselines Answers/Comments · Indicator 12 ­ Ethics · Baseline (a) ­ The legal and regulatory framework for · Yes. R.A. 9184 and Anti-corruption procurement, including tender and contract documents, includes includes provisions Measures (8%) provisions addressing the issues of corruption, fraud, conflict of on all these matters. interest and unethical behaviour and states actions which can be Other laws also taken with regard to such behaviour (either directly or by address these, e.g., reference to other laws) (50% of Indicator) R.A. 3019 and 6713. · Baseline (b) ­ Special measures by the government to prevent · Qualified Yes. There and detect potential fraud and corruption in public procurement is an anti-corruption is addressed in an anti-corruption programme (25% of Indicator) program that involves CSOs, but it needs further development to address effectiveness. · Baseline (c) ­ Stakeholders (private sector and civil society) · Yes. There is strong support the creation of a procurement market known for its CSO involvement, integrity and ethical behaviour (25% of Indicator) which finds support in Secs. 13 and 64 of R.A. 9184. Assessment Ratings The followingAssessment Ratings per Indicator shall be used to determine the level of achievement met by the Philippines, to provide a profile or mapping of its existing public procurement system. TheAssessment Ratings are based upon the points garnered for each Baseline. Level of Achievement 0 ­ 20% of Indicator 21 ­ 50% of Indicator 51 ­ 80% of Indicator 81 ­ 100% of Indicator NA PA SA FA Legend: NA ­ No Baseline elements substantially met PA ­ Less than 50% of Baseline elements substantially met SA ­ More than 50% of Baseline elements substantially met FA ­ All baseline elements are substantially met Application Applying the BIS weights upon the Philippines' national procurement system, a Grand Total Score of 67.29% was garnered as a result of the scores achieved by the Philippines in the attached BIS Rating Sheet and Charts. Adopting the above Assessment Ratings for the Indicators, this translates to a Level of Achievement whereby more than fifty percent (50%) of ALL Baseline elements have been substantially met (SA). tn AF AF evemeihcAfolev % %4 .74 Le 89 6.29 % .44 22 % % % % % % % % % g 44.41 00.3 69.1 50.1 25.2 75.0 25.2 25.2 75.0 tin Ra 00 13 00 50 50 50 50 50 .20 .10 .10 .10 .00 .10 .10 .00 500.0 500.0 500.0 500.0 380.0 000.0 380.0 380.0 330.0 330.0 330.0 380.0 380.0 380.0 380.0 250.0 250.0 750.0 750.0 500.0 500.0 500.0 500.0 0% .0 25 % s 15 ht ig 0 0 0 0 0 0 0 0 We 20.0 15.0 10.0 15.0 05.0 15.0 15.0 05.0 050 050 050 050 830 830 830 830 330 330 330 830 830 830 830 520 520 570 570 050 050 050 050 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. e thse e ,ri l fa evihcak d s te te an m eiv ngirtc thiw itivtep naio for nt at m ti s orwe atlsi ra tesi snoi ses moc ortcaf esdi ud er ov ns nd pr leg cos niotc snoi aulc laeppa inse d ris atcifi dieif rnetin rdawa/noita ot s d es 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queR.3 mpoC.1 deni linee BIS sligeL da toal than 1r ants gu eniles eniles eniles Bas thans e Bas ehT-Irall toacdi lineesaB re Ba seaB seaB Ba lineesaB Ba lineesaB ed re No- Les- Mor- All- In ag Legend: NA PA SA AF Pi AF .0%08 0%0.8 % % % % % % 00 00 00 00 00 00 1. 2. 1. 1. 1. 2. 001.0 002.0 001.0 001.0 001.0 002.0 .0% 10 0 0 0 0 0 0 20 20 10 10 20 20 0. 0. 0. 0. 0. 0. notial er stne rof rof al nehw noitatne guer ghhi ni muc -e el nua do pr m or ofsnoiti secivr ts se en meri mucoD ngtine empl dedulcnit er ndetl forse abtius ur ed esrude asiyticapaclacinhcet edi gus' ndoClar querl nao d mi ans of nose deo oc pr ur onitalugeR tyilbialia ed erehwstne er ne us Ge atin of dnaskrow,sdoog of oc pr meri av av gnit dna d d an an dna av d gnirevocsctartn terni d anst en ec dnasesse mfoytilibalaiva ofytilibaliava ocrpfoytilibalaiva tyilbialia tyilbialai dna querr e ec e he ec an e melp mIfo tensixe ocrp ncetsi escivres corotc ednif ex d tensixe ncetsi otro ex tensixe nc tesi se e ehT ehT emenriuqerlanoti esitit na ncetsixE- ­)a( ­)b( anskrow,s ehT ehT ehT ex ­)c( no ­)d( ­)e( ehT en ­)f( thiwt el 2rotacdinI neilesaB desedivo pr atht noitasliglelevle escivresrof enilesaB od gorof neilesaB aticifial qu enilesaB gnitcar gnitcar ntoc aireitrcy ke neilesaB ntoc neilesaB iclbuprofsctartn Co tensisnoc abcipl ap AS AS AF AP % 60 1.7 %0.09 % 00 0. 10 %5.22 %09 17. 10% 70% 90% 80% 80% 90% 00% 40% 60% 40% 60% 80% 60% 20% 00% 00% 8. 2. 0. 1. 1. 0. 8. 2. 1. 2. 1. 1. 0. 1. 0. 0. 300.0 100.0 200.0 200.0 100.0 003.0 002.0 003.0 002.0 075.0 150.0 000.0 000.0 % 00 25. 00%.9 00%.8 00%.8 0 0 0 0 0 0 0 0 0 30 10 20 20 20 0 0 0 0 15 30 25 30 0. 0. 0. 0. 0. 30 20 30 20 0. 0. 0. 0. 0. 0. 0. 0. t ot en of sal d d dget at ory at ci m oni an tne het ot pos bu ot of publ body urec at ent ffats sti and eci oulhs ngriotino de uesssi m rt ngi tc ots d esivda regul of ra pro esi fo adv ortces m us ent nageaMlai pasi of ork neif of and ngit folevel noit proroft heyt annpl gnitsixe oftes rol ndsuf ntoc evi erc e at ew ex es w and and ase re rm de gnriot no emlp mi en het niotain atv ho ngitsoc no arey-itlu ontc,tne outhtiws ary onsisi evi ngi ot oni ngniairt pri d onit et rele nteC nol marf ass m and dy requ, lye prov report seitilibi paraesrof ytic edi and ans detani het atlsgiel gnirt mepl mi bo of messid yti nanciFcibl m urem onit budg addre eht on;i odyB dei prov ent atad eht otse procyle act ott mitrof onait ryotal ncuf ngidi ppous ent onsp regu d dyoB eht:ot at d of apaCt dna n onitalu messdi an res prov en onsitativni en edti ots prov; ehtfo otstsi ernm reg ecllocroftsixe era opmlevedyticapacss pacaC Pu otni nda butri m t esidv onsitagi at)ydoB an obl het ent rmofnit r)ew ngif het dyoB ts tiocell ng dernet res rds nda ontc mits urec ecjbussi pro eh(t onsital en mpoleved pola htiw het ddrea ort ualt hetrofsis milton ndme gnipoel m afts reetni cor gn exyge ndase edu res edu anniplt evitals pro het ndas noi ba ut d egil am regu mpoleveDl rul ndaats upps nda fos ratts ndaf of proc ec onai noi at e eht scitsi rol en w ractnocrof me rac dyoB ntetsi syst evi aret ngit urec dev;tne ofs udilcni govfoyticapac ework m ocrP ext afts at ansu het bu, ngitf en pro m ent onsc istxe emru esc Lat pro tne gn ngit rac ntoctsni ni onitaz d oftcilfnoc m n,oi eht dnat ands of d ofseitilbiisnops re rmofni rs attstne e Frala ngi m atts gnidi rnev emv orm(fytirohtua at am ocrP noi onitaitini empl ani doi syste opel ontcytial udgeB pay oN ntoC udgeB agas rmoN uttitsnIfo nca al heT heT udelcni dra;seiti mi pro Org nda ofseitilbiisnopseR nablaitsus av e A ard A ndeu emtsyS emru Qu ion utitt retsn ­ atul ­ ­) s ­ ­ ­ ­ ­ rmofni ­ dev ent onit ent nda ovrp; ­) ec ot ­) awt ot ­) ocrp ­ ormrf (a) rmof (b) and (c (d) (e) e my (a) reevocsi (b) ent (c (d) as enctsi (a ent (b) e ots detne (c (d) pe Mai Insl ­ get onitu onita ndiuftneiciffus ngit gofosrtap den lin pa uncF Ex e lin empl et ropri ec ure ­ retnec hcihwsnoit orkwe urem ­ urem ractnoc antpici ra nteC- 3rotac enilesaB bud enilesaB ex enilesaB app enilesaB ens seaB eka m 4rotac enilesaB het enilesaB uncf ractnoc mi amrf herto proc ot mirofsevitaitini enilesaB ependni antneiciffussisei dut enilesaB osytiralc 5rotac seaB proc and enilesaB anctsis as part be enilesaB naloitan of enilesaB uala ev II ndiI ndiI ndiI Pillar AP AP AP AF %00 %00 %00 00%. 50. 25. 50. 001 50% 12. % % % % % % % % % % % % % % 50.2 00.0 00.0 25.1 25.1 00.5 00.3 00.2 00.0 00.0 00.5 50.2 25.1 25.1 000.0 000.0 125.0 125.0 300.0 200.0 000.0 000.0 500.0 250.0 250.0 %00. 25 10% 00% 00% 10. 5. 052 052 052 052 003 002 002 003 005 052 052 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. ecn thiw nda e ot fo e t marofrePte tne nt at of atv yr es e m ure proc tesisnocsi gninairttne m asllewsa,salicif noi nda rmofni nda msi ot usr uessi ot gni of tneiciffuss d lano pri gnidaels eht toal ec d ractnoc d an utpsdi of gnirt s m and akrt odec anhce d pare es ot t eht putsid m an d rac e de a ocrp ofytic guer heityb anl dec wei ni rev d evlo rka of onituloseR antpecca ehtfo ure nda repo un noiti moc atinretniro ehtybs esnop ontc d res e Mtne ecit oflevel tytine hayrtnuoc e ent eht res apac an m ecnetsi an,snoit enctsi ecnal te era etp nehw al onissi gael gni ots ots th proc de ex nda systetne ex of ni udelcni m acrP e eht the es n rnmev opt ehtrofs rkaMt eht en nite esci mbus oni rers ni denivesis etupsiD akrt onit odhte are es and m tc omctuo ure and ocrP gorof nca mnrevog ngidulcni,level ba/kcehc a ytiroht en rka mocrof htiw eht e d as mt edi rves ofy atci ec d res ra d oni ndeurof ecpsni an ocrpriaf ci nsoit het,levelytit thiiwsalci het,levelytit htiwtnetsi eht,levelytit emru oc mrorfep tela het,levelytit msinahce gnit ans oniger,lacol end ni enctsi ppla ndeetfo enttsi ocrpt edu d ntoc rcof en en en of en ml en ovrp stc res an ts ra et en s m rattsini deni udelcni nerna ocrp eht en era ublP gnitc offit ro ractnoc en ntoc eht esitilbiis aulav emru ot nsoc ehtsel ra ms edu of ure def ot myle nda Optne gnitc roppa/ oc rseil rkow, emenri ab ntoc of noit mdAt 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Philippines Level of Achievement: BIS Pillars 22.44% 17.90% 15.05% 25.00% 12.50% 20.00% 15.00% 10.00% 5.00% 0.00% Pillar I (FA) Pillar II (SA) Pillar III (PA) Pillar IV (SA) Philippines Level of Achievement: BIS Indicators 9 6 .2 4 % 10 0 .0 0 % 10 0 .0 0 % 8 0 .0 0 % 9 0 .0 % 8 7 .5 0 % 6 5 .0 0 % 100.00% 5 0 .0 0 % 5 0 .0 0 % 3 5 .0 0 % 80.00% 2 2 .5 0 % 2 5 .0 0 % 60.00% 40.00% 20.00% 0.00% Philippines Level of Achievement: BIS Indicators 16 14 12 10 8 6 4 2 0 1 2 3 4 5 6 7 8 9 10 11 12 Rating 14.44 8 8.1 8 1.8 2.5 5 5 2.8 3.25 2 7 Weight 15 10 9 8 8 10 10 5 8 5 4 8 Indicators Appendix 9 - Consolidated Agreed Actions Matrix of Weaknesses and Targeted Activities (as of November 2004) Current Activities/Actions Responsible Agencies, Indicator Specific Weakness to be Undertaken Funding and Timetable Existence of 1. Contract award information not Issuance of guidelines GPPB -TSO institutional available and accessible in the existing reminding all heads of development system. procurement entities and capacity BACs to post in G-EPS awards of contract. TSO will monitor compliance. 2. Sustainable strategy is not yet a) On-going; GPPB, SUCs, Group of developed to provide training advice implementation of national CSOs and assistance to develop the capacity training the trainors of government and private sector program for agencies and participants to understand the rules and LGUs. regulations and how they should be b) On going; medium term implemented. approach to capacity building is to accredit State Universities and Colleges, including the National Defense College; c) On going; is the development of long term plan to professionalize procurement as a career for practitioners? d) Not started yet; is private sector training to be included in the training program. 3. Lack of systems and procedures for To be done ­ GPPB collection and monitoring of national a) Develop actual procurement statistics in addition to the performance indicators and absence of a similar system to collect implement a system for procurement related data to monitor data collection and performance of agencies. information analysis from contracting entities up to GPPB; b) Replicate appropriate BIS to assess national agencies and LGUs, as management tool. 4. Lack of quality control standards to To be done ­ include setting GPPB-TSO evaluate performance of staff and up of quality control address capacity development issues. standards to evaluate staff GPPB performance and address capacity development issues in the professionalization program mentioned in No. 2(c). Matrix of Weaknesses and Targeted Activities (as of November 2004) Current Activities/Actions Responsible Agencies, Indicator Specific Weakness to be Undertaken Funding and Timetable Efficient 5. At the contracting entity level, the a) Link to No. 2. GPPB procurement level of procurement competence b) To be done ­ conduct of operation and among government officials within the training program to improve practice entity is not yet consistent with their of skills in estimating prices procurement responsibilities. and analyzing bid variances. c) To be done as follow-up to Value Engineering (VE) Briefings which are: (i) to enhance capacity for value engineering focusing more on upstream reviews; (ii) issuance of guidelines to agencies for the use of value engineering. 6. At the contracting entity level, the a) On-going; should be GPPB procurement training and information linked to No. 2. Expansion programs implemented for government of the training should be officials, as well as for private sector done to meet demands. participants is not yet consistent with b) To be done ­ the training demand. program should include the private sector and the civil society observers. 7. While administrative systems exist a) Link to No. 3. a) GPPB at the contracting entity level, they do b) On-going; development b) GPPB, PS (September not adequately support monitoring of G-EPS will provide on 2005) procurement performance in most line information on agencies. commonly used supplies procurement such as prices, contracts performance, etc. c) To be done ­ collection of c) GPPB, PS (funding by technical specifications on EU) non-commonly used supplies such drugs, etc., catalogue and disseminate on line. d) To be done ­ stand alone d) GPPB, COA, G-Watch, by study on comparison of bid June 2005, funding by WB- prices for common IDF. procurement items, such as classrooms, medical supplies, water supply and books procured by selected agencies. e) On-going; e) GPPB, PS by September implementation of E- 2005 with possible funding Procurement as a from ADB. transactional tool. f) GPPB, BSP, IC, DOF and WB. Matrix of Weaknesses and Targeted Activities (as of November 2004) Current Activities/Actions Responsible Agencies, Indicator Specific Weakness to be Undertaken Funding and Timetable f) To be done as follow-up f) GPPB, BSP, IC, DOF and to recommendations in the WB. Security Report: (i) discuss procurement security relevance with BSP and Insurance Commission, and (ii) issue guidelines on selective reputable surety companies. 8. Inadequate internal control a) To be done ­ a) GPPB mechanisms for undertaking implementation of Procurement Manual to be procurement operations at the Procurement Manual in all issued in January 2005; Pilot contracting level. agencies and harmonization testing in 6 agencies; with donors. b) To be done ­ (i) b) January 2005 (Prepare for strengthen the internal possible IDF funding). control mechanism at agency level by: enforcing the law that mandates creation of internal audit units; (ii) prepare internal audit manual on procurement; and (iii) implementation of a training program for internal auditors. Functionality of 9. The participation rate of tenderers in a) To be done ­ ntensive GPPB the Public response to competitive tender information dissemination Procurement invitations is not consistent with the and familiarization on the Market capacity of the marketplace. The new law to the private reason is that political interventions sector and civil society to distort competition and participation bring trust and confidence rate. A number of private sector in the new system. companies are not participating. b) To be done ­ support to private sector initiatives on trainings on the new system. c) To be done ­ include private learning institutions in accreditation of procurement training institutes to cater to private demand. d) To be done ­ issuance of a policy that advertisements should include key evaluation criteria. Matrix of Weaknesses and Targeted Activities (as of November 2004) Current Activities/Actions Responsible Agencies, Indicator Specific Weakness to be Undertaken Funding and Timetable Effective control 10. Lack of enforcement and follow-up a) On-going; implement the a) GPPB and Audit on findings and recommendations from Guidelines for Suspension System the control framework. and Blacklisting of Bidders, Suppliers and Constructors. b) To be done ­ strengthen b) PAGC, COA the role of Presidential Anti- Graft Commission in ensuring that procurement audit is institutionalized through the internal audit units of each agency. Training on fraud examination and audit. c) To be done ­ (i) COA c) COA, OMB should include as part of its Annual Report an assessment of adequacy of internal control mechanism in weak agencies; and, (ii) training of investigators on fraud examination and audit. d) To be done ­ provide d) PAGC active assistance to Ombudsman for successful prosecution of procurement cases. 11. The internal control system of To be done ­ agencies PAGC, COA agencies does not provide timely should institute adequate information on compliance to enable internal control mechanism management action. to ensure that timely information are provided to agency management. Link to No. 10. Degree of 12. While the law requires publication a) On going. Support to a) GPPB access to in the G-EPS, websites and PWI in improving training information newspapers, the full access to design and delivery for BAC information by the civil society is not civil society observers b) OMB, COA yet fully institutionalized. (CSOs). b) To be done ­ information support system for trained BAC CSOs. 13. Some agencies and LGUs are not To be done ­ issuance of GPPB maintaining records to validate data. guidelines for proper record management for national agencies and LGUs. Prepare the TOR and hire consultant. Appendix 10 - Annex to the Procurement Schedule of Loan Agreement 1. Eligibility screening shall not be applied. However, bids that do not contain any of the following documents will not pass the documentary compliance check: (a) evidence of the required financial, technical or production capability; (b) audited financial statements; (c) credit line, or cash deposit certificate; (d) bid security; and (e) authority of the bid signatory. 2. In the case of prequalification, if any bidder is denied access to the bidding process for reasons unrelated to its financial and technical qualifications to perform the contract, prior concurrence of the Bank shall be sought. 3. A ceiling maybe applied to bid prices, with prior concurrence of the Bank in advance of bidding. However, the Approved Budget Estimate maybe disclosed in the advertisement or in the bidding documents. 4. Domestic or regional preferences will not be applied in the evaluation of bids, and other preferences in effect in the Philippines will not be used except with the prior concurrence of the Bank. 5. Suppliers and contractors will not be required to purchase only local goods or supplies or materials. 6. In case of contracts for prior review, modifications exceeding 15% of contract amount and material changes in the conditions during implementation require prior Bank concurrence. 7. Foreign suppliers and contractors shall be allowed to participate, if interested, without first being required to associate with, or enter into joint venture with, local firms. Moreover, foreign bidders shall be allowed to bid, even without registration, licensing, and other government authorizations, leaving these requirements for after award and before signing of contract. 8. For works contract, the experience qualification requirement shall be: (a) at least one previous contract at 80% of the estimated cost of the contract being procured; and (b) an annual turnover from all works averaged over the last three years equal to 100% of the estimated cost of the contract being procured. Appendix 11 - CPAR Update February 2004 (without Appendices) Overview Following the completion of the Country Procurement the more than sixty laws pertaining to public pro- Assessment Report in June 2002, which was published curement and institutionalizes transparency mea- in March 2003, there has been a great deal of progress sures including the use of electronic procurement in pushing procurement reform in the Philippines. This and the participation of Civil Society Organiza- CPAR Update was undertaken in November-December tions. The Law covers all national agencies, gov- 2003 to take stock of achievements so far, and to review ernment owned and controlled corporations, all the priorities for further action in procurement reform. government entities and instrumentalities. The inclusion of all Local Government Units in Discussions were held between the World Bank and the coverage of the Government Procurement the Government in November 2003 to review the status ReformAct. of actions identified in the first CPAR which were The issuance of Implementing Rules and Regula- recommended and taken, and to discuss tions (IRRs) for the Law on October 8, 2003. recommendations for future actions to carry forward The creation of the Government Procurement the reform process. The Japan Bank for International Policy Board vested with sole authority to oversee Cooperation (JBIC) and theAsian Development Bank procurement reform and protect the national inter- (ADB) also joined key meetings. The Bank Mission est in all matters affecting public procurement. A Team met with other key stakeholders such as the Technical Support Office was created by the Imple- Council of Engineering Consultants of the Philippines, menting Rules and Regulations to undertake the day-to-day operations of the GPPB in the perfor- the Philippine Contractors Association, Procurement mance of its duties and responsibilities in policy Watch, Incorporated and the Philippine Center for making, monitoring compliance, and training and Investigative Journalism. The list of participants to the advocacy. Mission and persons met by the Mission Team is presented in Appendix 1 (see the CPAR Update). In a Mandatory use of the Government Electronic Pro- curement System (G-EPS) for the procurement of wrap-up meeting held on December 11, 2003, the key common supplies and to promote transparency and findings and recommendations were discussed with the efficiency through the establishment of a central Government Procurement Policy Board (GPPB) government procurement web site to be the primary chaired by Secretary Boncodin. source of information on all government procure- ment transactions. Initially, this has involved the Big Progress in Procurement Reform posting of bid invitations and awards in the pro- curement web site. The monitoring and enforcement of procurement Laudable achievements have been made in the rules as well as ensuring efficiency and effective- Government's agenda for procurement reform in the ness for each step of the procurement process past year, as follows: through procurement audit. The provision of penal sanctions against violators Passage and promulgation of the Government Pro- of the Law, and its rules and regulations. curement ReformAct (GPRA) on January 10, 2003 (Republic Act No. 9184). The Law consolidates The development of a procurement manual and COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 79 standard bidding documents and forms (harmo- Emerging Issues/Priorities nized with thosse of the major international financ- ing institutions: World Bank, ADB and JBIC) to Several new issues emerged which were not included facilitate compliance with the new law. in the June 2002 CPAR. These arose from ongoing discussions with government, and issues that arose from Review of the June 2002 CPAR the completed activities. For example: Agenda Some key priorities identified by Government The CPAR was a comprehensive document that covered include the apparent high cost of some works and the entire public procurement system of the country goods procured by Government and the eligibility plus an in-depth study of three sectors: Public Works, of Philippine firms to compete for internationally Education and Health. It contained fifty financed contracts; recommendations and agreed actions. Responsible It was also noted that government has made government agencies reported on the status of considerable progress in electronic procurement completion of each agreed action. These agreed actions systems and further development now needs to be were classified into (a) national and local governments, pursued; and, and (b) the three sectors. The detailed status With the passage of the new Law, issuance of the arepresented in Appendix 2 (see the CPAR Update). Implementing Rules and Regulations and Most of the recommendations have either been completion of harmonized bid documents, a major completed (58%) or are on-going (26%). The data in challenge is to disseminate the new rules and Table 1 provides an overview. procedures, and provide training at all levels including local government units, the private sector Some activities that are still to be completed relate and in civil society. to: The focus of the CPAR Update therefore is on new Professionalization of the procurement function; activities to achieve these objectives. Discussions were Corporatization of procurement services; held on how to implement funding requirements and to Study on securities and bank guarantee; explore possible opportunities for partnerships with Streamline and reducing delay in registration and international organizations. There was a strong sense licensing procedures; of commitment among the various organizations to Establishment of record keeping systems at the work together to follow-up on the strong momentum LGU level; and for procurement reform­to achieve better governance Eligibility of textbooks with foreign authors and better value for money for public spending in the (Science, Math and English). Philippines. Some of these partnerships are reflected in the joint responsibilities shown in the matrix in Table 1: Status of Recommendations in the March Appendix 3. Important priorities that were identified 2003 CPAR are: Completed On-Going Open TOTAL National/Local Levels 15 7 5 27 Disseminate information on Government Procure- Sectoral Levels 14 5 4 23 29 12 9 50 ment ReformAct/Implementing Rules and Regu COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 80 lations to all stakeholders including local govern- No clear mechanism in submitting a legitimate pro- ments, the private sector and civil society; test; and Implement E-Procurement as a transactional tool; Hiring only of international firms as coordinating Preparation of a report on capacity, quality and size consultants. of contracts for works; These are legitimate concerns, which need to be Training on harmonized bidding documents at all addressed in the on-going efforts of the government to levels including national agencies, local govern- ensure an efficient, transparent and open competitive ments, the private sector and civil society; process, however, it appears that almost all of these Introduce a system of value engineering analysis issues had been addressed in the Law and in the on a pilot basis to check that designs and cost esti- Implementing Rules and Regulations. Further, some mates ensure best value for money; of them are likewise considered in the procurement Pilot "design and build" procurement schemes in manuals and harmonized bidding documents. What at least one contract; and appearstobelackingisthedisseminationofinformation Capacity Building of Civil Society Organizations and training of the private sector and civil society.These (CSOs). activities are included in the emerging issues/priorities presented in Appendix 3 (see the CPAR Update). Discussions with the Private Sector Meeting with GPPB and Next Steps The discussions with the Philippines Contractors In a meeting held on December 11, 2003, the GPPB Association and the Council of Engineering Consultants and the Bank agreed on the following next steps: of Philippines (CECOPHIL) indicated some positive elements in the introduction of the GPRA and IRRs. The discussions disclosed some serious concerns Appointment of the new Executive Director of relating to: TSO-GPPB soonest. The new TSO Executive Di- rector is on board. Qualification criteria for short listing of consult- Issuance of harmonized bid documents with neces- ants and contractors, especially under contracts sary forms. funded by International Financing Institutions; Responsible Agencies will implement agreed ac- Transparency of the pre-qualification/eligibility and tions on dates specified. Progress will be monitored jointly by the TSO-GPPB and the World Bank. evaluation processes; International partners will make the promised as- Lack of interest of contractors to participate in pro- sistance available. A request for ASEM 2 funds is vincial procurement as a result of provincial pref- being processed internally by the World Bank. erence provisions; GPPB will discuss with other donors possible as- Capacity building of Civil Society Organizations sistance. with extended participation as observers in the Bids FinalizeWorld Bank Procurement Side Letter. The andAwards Committees; TSO-GPPB, DOF and NEDA representatives will Adjustmentofpricesofcontractswithlongcomple- start discussing the draft Side Letter, included as tion periods; Appendix 4 (see the CPAR Update). . COUNTRY PROCUREMENT ASSESSMENT REPORT 2ND UPDATE 81 THE WORLD BANK 1818 H Street N.W. Washington, D.C. 20433 USA http://www.worldbank.org Country Office Manila 23rd Floor, The Taipan Place Francisco Ortigas, Jr. Road (formerly Emerald Avenue) Ortigas Center, Pasig City Philippines 1605 Telephone: (632) 637-5855 to 64 http://worldbank.org.ph The Philippine LGU Assistance Portal http://lguportal.org Knowledge Development Center Ground Floor, The Taipan Place Francisco Ortigas, Jr. Road Ortigas Center, Pasig City Philippines 1605 Telephone: (632) 917-3034, 917-3088 Fax. (632) 637-5870 http://www.worldbank.org.ph/kdc Anticorruption hotline: From the Philippines, dial 10511 for an AT&T operator and then dial 1-800-831-0463 or call collect at (704) 558-7046 2nd UPDATE