Cost-effective procurement is the antidote to misgovernance and corruption. The World Bank estimates that government spending on public procurement ranges between 13 to 25 percent of gross domestic product (GDP), and that up to 25 percent of the value of contracts can be lost to bribes, overpricing, kickbacks and other nuances of endemic corruption.

The cost of corruption in the Philippines is assessed as being higher; up to 40 percent of the value of procurement contracts could be siphoned off and pocketed. As tracked by the Department of Budget and Management (DBM), procurement items, as a percentage of total expenditure, have averaged 25.2 percent during the past decade.

This was the impetus for the enactment last year of the New Government Procurement Act (NGPA), Republic Act (RA) 12009 that supplanted RA 9184 and embodies provisions that promotes transparency, efficiency, accountability, and sustainability by encouraging adoption of solutions that are tailor-fit to project needs.

This culminates a procession of procurement reforms that were initiated by President Corazon Aquino following the EDSA People Power Revolution of 1986 that also ushered in the enactment of the 1987 Constitution. A system of centralized procurement was established. Through technical assistance from the Canadian government, the Philippine Government Electronic Procurement System (PHILGEPS) was initiated. During the succeeding administration of President Fidel Ramos, the passage of the Local Government Code facilitated procurement by provincial, municipal and city governments.

President Joseph Ejercito Estrada issued enabling executive orders that laid the groundwork for a draft government procurement reform bill that paved the way for RA 9184, the precursor of the newly enacted comprehensive procurement law. The modernization of PHILGEPS gained momentum during President Benigno Aquino III’s administration. This paved the way for modernization of its virtual store, centralized procurement of government vehicles, and adoption of environment-aligned processes during President Rodrigo Duterte’s administration.

Broader propagation of the top six changes in the National Government Procurement Act is being advocated by former Budget and Finance Secretary Benjamin Diokno, who is now serving as Bangko Sentral Monetary Board Member.

First: introduction and adoption of the proportionality principle. In crafting their requirements, procurement entities must rely on the “fit-for-purpose” approach that guides prospective bidders to hew closely to what is necessary.

Second: removal of hierarchy in the procurement modes. Competitive bidding is no longer the primary mode, but simply one of the available options. This broadens the range of viable options for the procuring entity and paves the way for innovation and enhanced savings.

Third: strengthened procurement planning. The linkage between planning and budgeting is strengthened through conduct of market scoping. Moreover, life cycle assessment and life cycle cost analysis further enhance the quality of decision-making. Institutionalization of pooled procurement that facilitates bulk purchasing brings about economies of scale.

Fourth: introduction and institutionalization of the new five (5) modes of procurement. These are: a) competitive dialogue; b) unsolicited offer with bid matching; c) direct acquisition of items totaling less than ₱200,000; d) direct sales, in which the procuring entity directly buys from a supplier that has satisfactorily delivered goods to another government agency through competitive bidding; and e) direct procurement for science, technology and innovation-related requirements.

Fifth: institutionalization of sustainable and green public procurement. The green parameters are included in the technical specifications to ensure that the goods are environment-friendly, over and above customary compliance with economic viability and social desirability.

Sixth: emphasis on two bid evaluation approaches. These are: a) the Most Economically Advantageous Bid (MEAB) that underlines the primacy of technical and financial components of a project; and b) Most Advantageous Bid (MAB) zeroes in on desirability and viability of the technical component, over and above financial costs.

Evidently, much has been learned from the crucible of experience. The adoption of best practices in planning and budgeting is likely to produce results that elevate the quality of governance in the realm of public service.