Thursday, March 12, 2015

A second look at the procurement law

NO less than the World Bank hailed the Philippine procurement law as “world class” when it was enacted 12 years ago.
Authors of Republic Act No. 9184, known as the Government Procurement Act, claimed that it would put an end to collusion in public bidding, bid rigging, bid fixing, and other anomalies associated with bidding for government contracts for goods, services and consultancies.
We were made to believe that from then on, biddings in government would be open, transparent, and free of political influence.
Government procurement is perceived as a major source of corruption in the bureaucracy. It was estimated that at least 20 percent of government contracts go to commissions or kickbacks. Twenty percent may even be a very conservative estimate.
If we are to believe the testimonies at the Senate of former Vice Mayor Ernesto Mercado of Makati City, 33 percent of every contract cost in his city goes to the pockets of his erstwhile boss, then Mayor Jejomar Binay.
In March 2008, the World Bank’s anti-corruption unit, the Department of Institutional Integrity (INT) in its report after reviewing a major road project that it funded with $150 million loan, found that “the entire National Road Improvement and Management Project-1 (NRIMP-1) has been corrupted” and had put “at least $30-45 million” of the loan at risk,” or lost to “a cartel” of contractors, bureaucrats, politicians.
The report was well documented, with interviews from witnesses who said that bribes were shared with “relevant local media and nongovernment organizations…to avoid bad publicity.”
As a result, the World Bank debarred four contractors involved in alleged collusion, bid rigging and other anomalies from its projects.
Many years ago, a budget secretary estimated that roughly P47 billion is lost in government to corruption.
Investigations at the Senate and the House of Representatives mostly involve corruption in the procurement process. Sadly though, we hardly know the findings, conclusions and recommendations in most of these investigations, and how the problems were addressed.
Procurement-related anomalies we read and hear indicate serious inadequacies in what the World Bank once hailed as a “world class” procurement law. Problems about lack or absence of transparency, the existence of cartels among bidders, and collusion between government procurement officers and private contractors and suppliers continue to hound almost every contract involving public money.
The law has failed to encourage competition, eliminate collusion and reduce political interference that causes delays in the procurement process.
The law already provided the payment of honoraria to members of the Bids and Awards Committee (BAC) in government agencies that should not exceed the equivalent of 25 percent of their basic monthly salary. The amount was obviously not enough. In some cases, the BAC gets 25 percent of the contract cost, which may be in millions of pesos, instead of the legitimate amount equivalent to 25 percent of their monthly basic pay.
Corruption exists in procurement projects even in calamity-stricken areas like Tacloban, which was almost flattened by the raging waters brought on by super typhoon Yolanda in November 2013, and Bohol, which was struck by a powerful earthquake less than a month before Yolanda wreaked havoc in Eastern and Central Visayas.
Twelve years is long enough for the government and Congress to take a second hard look at the procurement law to check if its provisions are still relevant in achieving its goals “to promote good governance and its effort to adhere to the principle of transparency, accountability, equity, efficiency, and economy in its procurement process.”
The provisions of the law may be great, but the bigger challenge is in the implementation stage. Competitive bidding, as provided in the law, is hardly observed as cartels continue to operate in cahoots with government officers.
How could there be competitive bidding when bidders connive among them and with government to rig the bidding process, to allow a bidder who uses various company names or allows another to use other’s name to join what appears most of the time as a ‘show’ in which winners are pre-assigned? And then contracts are split among the bidders and they all end up winning. Don’t tell me that the BAC members are unaware of these shenanigans happening under their noses.
Competitiveness and transparency are major principles behind the government procurement system, but when these are both trampled upon, something must be seriously wrong.
Transparency, for instance, is a big question in the biddings for equipment, supplies and services at the Commission on Elections (Comelec) for the conduct of the 2016 synchronized elections.
The credibility of the biddings would definitely have a bearing on the results of the elections. Comelec ought to exercise extreme caution in its procurement process. But with serious questions that poll watchdogs are raising, the Comelec has a lot more to explain and do prove transparency and competitiveness in its procurement system.

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