BEYOND BUDGET

Assalamu alaikum wa Rahmatullahi wa Barakatuh.

Last week, I had the honor of presenting proposed amendments to the procurement law during the Legislative-Executive Development Advisory Council Meeting, led by President Bongbong Marcos. Among the priority measures approved to be passed by Congress is the amendments to the Government Procurement Reform Act (GPRA).

The GPRA or Republic Act No. 9184, authored by my mentor, the late former Senate President Edgardo J. Angara and enacted on Jan. 10, 2003, is one of the most comprehensive anti-corruption laws in the country. It was regarded as world-class legislation by the World Bank (WB) as it addresses the lack of transparency and competition in procurement, eliminates collusion and political interference, and minimizes procurement delays.

However, two decades since its enactment, we now live in a world with tremendous technological growth that has changed and continues to change the way consumers, businesses, and industries work. The Covid-19 pandemic increased our need for digital transactions and exposed the inefficiencies in the law. Indeed, we need to address gaps concerning the procurement system.

During his second State of the Nation Address last July, the President urged Congress to enact a new procurement law that is responsive to the needs of the times, highlighting the need to not just become more effective, “but more – to become truly transformative.”

I wholeheartedly agree with our President – amending the GPRA is necessary. Amendments should adhere to international standards.

Hence, with Government Procurement Policy Board-Technical Support Office (GPPB-TSO) Executive Director Rowena Ruiz and Procurement Service (PS)-DBM Executive Director Dennis Santiago, I have committed to making this reform as monumental and world-class as its predecessor to fulfill our transformative vision for the country.

Our proposed amendments are aligned with the recommendations from the 2021 Methodology for Assessing Procurement Systems, conducted by the WB in cooperation with the Asian Development Bank (ADB) and GPPB-TSO.

In order to meet new challenges and international standards, we expanded the governing principles of the procurement law towards transparency, efficiency, competitiveness, proportionality, sustainable procurement, an accountability system, and public procurement professionalization.

Transparency in procurement and contracting processes continues to be a major concern across the globe based on a study by the Organization for Economic Cooperation and Development. They say corruption drains at least 20 percent of the procurement budget. Hence, as chair of the Philippine Open Government Partnership (PH-OGP), I committed to enhance transparency through ensuring equal access to information at all levels of the procurement process. Further, following the issuance of Executive Order No. 31 which institutionalized the PH-OGP, we proposed to allow observers from recognized private groups and civil society organizations to participate in the procurement process. The provision on the Disclosure of Relations will also be strengthened through the declaration of beneficial ownership.

Towards efficiency, we will streamline processes through digitalization and innovation by adopting electronic (e)-bidding and by modernizing the centralized procurement system of the PS-DBM. PhilGEPS offers innovative features and solutions including e-reverse auction, e-shopping/e-small-value procurement, and the e-marketplace which will be expanded to include non-common-use supplies with a registration facility for qualified suppliers.

We will also address the lack of proper procurement planning which has resulted in gross inefficiency caused by failed biddings and poorly crafted technical specifications. Our proposed strategies include mandatory market scoping and budgeting linkage. We also propose that technical specifications be based on relevant characteristics, performance/functionality requirements, and/or product or service standards.

To take advantage of economies of scale, minimize burden of conducting separate procurement, and to generate time/money savings, we will allow early procurement activities even pending funding approval, the engagement of procurement agents if necessary, and the use of a framework agreement to expand the bidder pool.

To ensure competitiveness, we will use the “fit-for-purpose” concept or “appropriateness” in the adoption of procurement modalities and address procurement challenges experienced on the ground. We will no longer be limited to the lowest bids available. It will be merit-based.

On the principle of proportionality, the level of scrutiny and complexity in the procurement process should match the value and nature of the projects/services being procured, to prevent red tape for low-value procurements while ensuring rigorous oversight for high-value contracts. New modalities will be introduced, including competitive dialogue, unsolicited offers with bid matching, and direct acquisition. The concept of adopting the “Most Economically Advantageous Responsive Bid” was also proposed.

On the principle of sustainable procurement, we are pushing for Green Public Procurement, to minimize negative environmental impacts, promote social responsibility, and support long-term economic sustainability. Life-Cycle Costing Analysis will be able to calculate the full cost of ownership, while Life-Cycle Assessment will be used to evaluate the project's environmental impact over its life cycle.

Towards public procurement professionalization, we will implement a System of Accountability which requires procurement officials to be well-trained, knowledgeable, and ethically responsible, ensuring competent decisions. We will also strengthen the GPPB-TSO's institutional framework and rationalize their composition.

Beyond budget, I believe it is high time we amend the 20-year-old GPRA law to ensure efficient public spending, keep up with the times, and adopt international best practices.
I am also pleased to share that both the WB and the ADB support our amendments to the GPRA. Speaking of WB, an earlier study by them showed that government can save at least 26 to 29 percent of total procurement cost should reforms in the procurement law be implemented. This is true in my own experience: since we started implementing initial reforms, in less than a year we have already saved ₱681.20 million (US$12.26 million) in 2022 just on common-use supplies and equipment. Imagine how much we can save with an updated and amended procurement law!

Let us take this opportunity to bring procurement to the next level. Bagong Procurement para sa Bagong Pilipinas. Let’s have a future-proof procurement system — one that we can truly say is at the heart of public service!

(Amenah F. Pangandaman is the current Secretary of the Department of Budget and Management.)