CAMPOMANES, Amie Rhose Julia Q.

AB Political Science

SEALING THE HOLES IN THE PHILIPPINE PROCUREMENT SYSTEM

INTRODUCTION

Background of the Study

In countries all across the world, corrupt tion in public procurement has vast negative
outcomes. It displaces taxpayers’ resources to schemes that are inefficient, impractical, and
perhaps even harmful. The higher degree for control entrusted to elected authorities in
implementing these policies, as well as the presence of multiple private sector companies in the
program, both add to the system's vulnerability to embezzlement. The developing country
Philippines endeavors to eradicate corruption and any of all its forms. The intention of this
seminar paper is to thoroughly examine the Philippine Procurement System, its operation,
development and reforms. This seminar paper is intended to present the motives and intentions
on addressing the inadequacy of the Philippine Procurement System.

In the following chapters, I will discuss some problems that the study aims to address.
This would cover corruption, vulnerabilities and incompetence in implementing reforms in the
procurement system. It will then be followed by the theoretical framework or approach in
relationship with the study. The researcher used structuralism in relation to the study since it
caters understanding in policy change, individuals that make policy decisions and the institutions
in which they operate. Next to it would be the methods and materials used in the making of the
seminar paper. It includes the speeches, interviews, official documents, news and its relevance to
the paper. This seminar paper also provides a literature review consisting of existing knowledge
of the subject. It is intended for establishing an in-depth understanding about the chosen topic
through the works of key experts. Following this is the options, where the researcher provides
either the results of the study or research insights. In this paper, the researcher presented the
findings of the study, aimed at answering the two statement of the problem mentioned in the
statement of the problem. The options will be followed by the conclusion, presenting the
summary of the findings and the relationship of the results to the literature and theory. Next
would be the recommendation to the government or institution that may be involved or
concerned about the findings. Lastly, the reference covering all the sources used and mentioned
in this study. Overall, this paper will look into the structure, procedure and approaches of the
Philippine pubic procurement as illustrated in the procurement instruction manual and existing
procurement laws and regulations.

The researcher’s motive behind the making of the study is to provide a deeper
understanding of the country's issues with public procurement transparency and to help them
strengthen the rule of law, justice processes, and legal systems. The Philippine Procurement
System is often disregarded and unfamiliar to the public. This lack of knowledge poses a risk and
even acknowledges the authority to practice corruption and abuse of power. With this intention,
the researcher embarked on this study to contribute to the existing studies in reinforcing integrity
and effective procurement system.

Statement of the Problem

The expense of corruption is nowhere more visible than in public procurement. Accounts
from the past prove that corruption existed in the procurement system throughout history. Other
than employee wages and welfare services, government procurement usually covers for a large
percentage of public spending. The majority of this huge investment goes to significant public
programs like water supply, transportation, hospitals, and infrastructure. As a response, the
Philippine government has set combating graft in government procurement a prime concern. In
an effort to address these persistent problems, the government also initiated various reforms to
the previously flawed procurement system. To further achieve a corrupt-free procurement
system, the reforms created were in lined with international standards. Promoting
competitiveness, ensuring transparency, optimizing practices, improving service quality, getting
adequate financial planning in fighting corruption, and reinforcing accountability were all given
top priority in procurement. While the reforms established a procurement system that adhered to
global standards, they were often undone by major shortcomings in the implementation system,
as evidenced by pervasive corruption in day-to-day procurement operations.
This study aims to address the following questions:

1.) Why is the Philippine Procurement System still vulnerable and penetrable of corruption
and embezzlement?
2.) Are the existing reforms in the Philippine Public Procurement effective?

Theoretical Approach

When trying to understand reforms, understanding the exercise of authority to the actors
that is responsible for policy decisions, and recognizing the institutions in which they operate
should also be considered. In this chapter, structuralism is related to the study of Philippine
procurement system’s policymakers and their limits in anticipating the effects of policy and the
degree to which it is implemented effectively. Various efforts have been made in addressing the
loophole in the procurement system, however, reforms aiming to ensure an effective
procurement system still need a series of studies and considerations to be made. In the
Philippines, it may be said that its weak integrity in the policy environment reflects what
policymakers take into account when navigating flaws and their manner of addressing them.
Further, the navigation of these flaws are often identified from events that are out of the control
of the individual exercising authority, and appears to have limited options about how, if it is
attainable, to reform or fully solve them. These constraints can also be identified to have a
relation with issues of power since if not all, then some of policymaking frameworks are
intended to protect and serve the interests of certain groups or powers. It also reaches their
concerns that their choices may seem limited because they might encounter powerful criticisms
if they initiate to reform an established structures or practices. In the context of government,
particularly the legacy and of past policies or policy succession, it shows that majority of the
policy decisions are grounded on enactments that pre-existed and the vast percentage of public
expenses is allotted on government plans that persists by routine, carried out by government
workers recruited in the past. A series of pattern and structure has been followed as a framework
over the course of time, making reforms struggle in gaining effectivity. It does not denote that
the current policymakers are not provided with a choice or that their choices are of no
importance. Rather, political representatives tend to enforce existing legislation before enacting
new ones, and the influence of their new regulatory decisions is minimal as compared to the
overall output of legislative action.

Methods and Materials

This paper primarily concerns the Philippine Government’s Procurement Policy Board,
Procurement Transparency Group and the private sector. The GPPB of the Philippines was
established by the Government Procurement Reform Act (GPRA), better known as Republic Act
9184 as a policy and control body for all procurement subjects concerning the country's interest.
It has the authority to establish and reform public procurement laws, guidelines, and regulations,
as well as amend the Implementing Rules and Regulations as needed. The GPPB will utilize this
authority to enforce the use of standardized bidding guidelines and formats, as well as generic
contracting materials, to make the legislation and its enforcement easier to understand. In order
to engage in public procurement effectively, the private sector must also incorporate major
improvements. It is critical to strengthen individual private sector ethics norms and policies, as
well as to establish private sector joint effort to ensure increased government adherence with the
existing legal system.

This study refers to a process and policy, specifically the procurement system of the
Philippines. Since the Procurement Assessment Report of the World Bank in 2002 classified the
Philippine public procurement system as dysfunctional for the sole reason of it featuring
numerous rules and regulations, there have been significant improvements a decade after. Efforts
in reforming the procurement system was made by the government in aiming for a procurement
system that is effective and transparent to all. Regardless, its consultations and legal analysis
with private entities and the public sphere reveal that the government needs to integrate the
missing key components of the standards and enhance procurement agencies' execution in action.

It will be discussed in the form of a case study, an in-depth research about the Philippine
procurement system and its existing reforms, primarily the government’s reform in the
procurement system in the 2003 also known as the GPRA. The following cases that will be
analyzed are published articles from Asia Pacific Economic Cooperation, Government
Procurement Policy Board of the Philippines, Senate Economic Planning Office and journals
from experts in the field. However, this paper does not provide direct documents from
government. Although it was claimed that authorities can allow information, available to the
public according to the public officials and employees code of conduct and ethical standards,
there is no procedure in place and no enforcement system. As a result, the public also has no
means of accessing government information, and that there is no compliance process in place to
ensure that public agencies answer to demands for information.

REVIEW OF RELATED LITERATURE

In recent times, project failures and underspending by government departments are

rampant and has been cited as one of the factors for previous interruptions in government
expenses. Throughout history, it has been identified that the Philippine public procurement is a
breeding ground for government corruption. However, the Philippine administration has
continually implemented changes to address the country's long-standing procurement system
loopholes.

As reported by the Budget and Management Department, procurement was identified as a

factor for the government’s underspending, and this has been repeated in several news accounts.
According to government data, government expenditure is lost by as much as 22 billion
Philippine pesos annually due to the corruption in procurement. This reveals that the Philippine
procurement system is in dire need of immediate and effective reform. With an effective reform,
it will not only prevent underspending in the government’s budget, but also help in slowly
eradicating corruption in the country.

Jones (2013) provided that in order to resolve these vulnerabilities, a series of steps have already
been adopted. He asserted that the centerpiece of which were the 2003’s Procurement Reform
Act of the government and the act’s following IRR (Implementing Rules and Regulation). This
act is significant to the actual process of Philippines in shifting the country’s procurement system
to a corrupt free and reformed system. World Bank (2008: 8-9 as cited in Jones, 2013) claimed
that the objective was to establish a procurement system that adhered to global standards.
However, as shown in the pervasive corruption in the procurement procedures, the reform was
often compromised with consequential flaws in its execution regardless of it adhering to foreign
quality standards. In a 2008 report, the World Bank pointed out “much progress has been made
in procurement reform in terms of rules and regulations but implementation and enforcement are
still weak, and the objectives of the reform has not been fully achieved” (WB, 2008: 45; Carilo,
1994: 113-118).

Over the years, the Philippine public procurement was continually challenged by its
lacking transparency. Prior to the GPRA, procurement regulations and standards stressed
transparency, but they were often disregarded or overlooked. In connection to this idea, Ingrams
(2016) makes a very valid point that transparency is a concept and action that allows both
insiders and observers within a company to access reliable data about its operations. It is
therefore vital in the plugging of the loopholes in the Philippine procurement system. This calls
attention to the pioneers of reforms to be taken into strong consideration and be put in a higher
priority.

FINDINGS/RESULTS OF THE STUDY

In this chapter, the researcher discussed the answers to the questions mentioned in the
statement of the problem. This will be done by presenting and incorporating published news and
articles from several government agencies and key experts in the study.

Philippine Public Procurement’s Vulnerability to Corruption

Public procurement has really been plagued with corruption over the course of time.
Corruption appears to be the most noticeable illustration and product of ineffective enforcement
in the Philippine Procurement System. Nepotism, bribery, embezzlement, kickbacks and theft
have all become rampant forms of corruption. In light to the first question in the statement of the
problem, this subheading will discuss the factors affecting the vulnerability and penetrability of
corruption and embezzlement in the Philippine Public Procurement.

Numerous factors may be identified to explain why the Philippine Procurement System is
penetrable of corruption. To illustrate, World Bank outlined some of the factors that promote and
facilitate the practice of corruption in public procurement, including the combination of poor
budget allocation system, complicated and obscure budget utilization and the prevalence of
clientelism in politics, and as well as bureaucracy. Adding to this, the committees facilitating
bids and awards, the technical groups and officials in a higher office undermine their ethical
responsibilities. Such weaknesses can also be classified to the ineffective monitoring and law
enforcement of the authorities responsible for observing the procurement system (Quah, 2003a:
99-100; Quah, 2003b: 244-245). Inefficiency in some reform provisions in relation to eligibility,
procurement system and the evaluation criteria in bidding can easily be manipulated to guarantee
that a special consideration is granted to a certain organization that has a good relationship with
influential families and powerful politicians.

RA 9184 of 2003 Regarded as One of the Most Successful Procurement Laws

The ADB as well as the World Bank, according to GPPB-TSO, find Republic Act 9184
to be one of the most successful procurement laws. With that being said, it addresses the second
question on the effectivity on the reforms in the Philippine Public Procurement. Procurement
under the guidelines of World Bank takes a little over a year, while procurement under RA 9184
takes just four months.

Philippines was also granted a risk ranking of medium to moderate by the Economic
Cooperation and Development Organization-Committee of Development Assistance-MAPS. The
following data is provided by the Country Procurement Assessment Report in 2012. It shows the
four pillars assessed by MAPS in which the Philippines ranked the following:

Pillar Score
Pillar I: Legislative and Regulatory 86% of the baseline or substantial
Framework achievement, low risk
Pillar II: Management Capacity and 69% of the baseline or partial achievement,
Institutional Framework medium or moderate risk
Pillar III: Market Practices and Procurement 73% of the baseline or substantial
Operations achievement, medium or moderate risk
Pillar IV: Transparency and Integrity of the 65% of the baseline or partial achievement,
Public Procurement System medium or moderate risk
 Regardless of this, GPPB-TSO asserted how further work needs to be done in its law
enforcement and operation. Majority of these procurement issues are classified as "human-
caused difficulties." Furthermore, purchasing entities are hesitant because they are receiving
conflicting messages from the Ombudsman and COA. The GPPB might be in charge of policy
development, but the Ombudsman and COA are in charge of examination and fine compliance.

CONCLUSION

It is identified in the paper that some of the reasons of the vulnerable Philippine
procurement system includes the combination of poor budget allocation system, complicated and
obscure budget utilization and the prevalence of clientelism in politics, and as well as
bureaucracy. Further, the authorities that are supposed to be monitoring and ensuring a strong
law enforcement in the procurement system are the same people who manipulates the system to
grant a special consideration to a certain organization that has a good relationship with influential
families, and powerful politicians. However, it is also provided that the reforms ensuring that
these practices are avoided and sanctioned is said to be effective. In an effort to address the
longstanding penetration of corruption in the Philippine procurement system, a reform system in
the Philippines was considered as one of the most successful procurement reforms ever passed.

The results of this study can be best observed in the work of Jones in 2013, who asserted
that the centerpiece of the steps aimed to a better procurement system are the 2003’s
Government Procurement Reform Act (GPRA) and its implementing rules and regulation that
follows. World Bank (2008: 8-9 as cited in Jones, 2013) claimed that the objective was to
establish a procurement system that adhered to global standards. The same organization, World
Bank, declared that the 2003’s GPRA is considered to be one of the most effective reforms.

Structuralism, as mentioned in the theoretical approach is also observed in the findings. It

understands the exercise of authority to the actors that is responsible for policy decisions, and
recognizes the institutions in which they operate. In this context, it is provided in the paper how
it may be said that its weak integrity in the policy environment reflects what policymakers take
into account when navigating flaws and their manner of addressing them. This can be linked to
how numerous factors like how authorities preserve their relationship with influential families
and powerful politicians resulting to their lack of integrity in their workforce. This is also
manifested on how the committees facilitating bids and awards, the technical groups and officials
in a higher office undermine their ethical responsibilities. All of these reflects what the
authorities actually take into account.

RECOMMENDATION

This paper also envisions to contribute recommendations to be considered in future

reforms. In this chapter, the researcher segregated the recommendations mainly for three parties,
the government, private and business sector, and the civil society associations.

Recommendations for the Government

In line with the researcher’s recommendations, it is essential to note that the 2008 procurement
assessment report by the World Bank inspired and independently made most of these
recommendations, however, they were not yet implemented.

it is essential to note that the 2008 procurement assessment report by the World Bank
independently made and was the inspiration of most of these recommendations

 Strong integration of the APEC standards in the legislative system by applying initiatives
to order notice and a window of opportunity for public judgement prior to the
implementation of reforms and new regulations, acquiring institutions to inform
individuals concerned by bid campaigns, and acquiring institutions to discuss with losing
bidders.
 Encourage bidders to establish in force the ethical principles, training and risk
management to prevent corruption.
 Enhance the supervision of the GPPB to be able to keep in track of the procurement
system of the Philippine government and enforce penalties on agencies on those who fail
to comply.
 Establish reward initiatives to government departments that facilitate increased
accountability and comply with procurement laws.
 Incorporate a right to information to improve official accountability.
Recommendations for Business and Private Sector

 Adopt effective ethical code, training programs, and internal measures to track, restrict,
and mitigate corruption in its own operations.
 Assist private sector and civil society representatives in the procurement system
financially.
 Work in collaboration with the GPPB to find innovative methods to
optimize procurement accountability.

Recommendations for Civil Society

 Offer additional training for civil society representatives and involved private sector
stakeholders in response to recent procurement regulations
 Organize urban and local organizations to regulate the purchase and distribution of goods
and services at a community level by mobilizing capital.
 Implement end-to-end procurement supervision, from proposal planning to program
execution.

REFERENCES

 Congress of the Philippines (2003). An Act Providing for the Modernization,

Standardization and Regulation of the Procurement Activities of the Government and for
Other Purposes, Republic Act No. 9184. Manila: Author.
 Navarro, Tanghal. “The Promises and Pains in Procurement Reforms in the Philippines.”
PIDS. PIDS, April 2017.
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidsdps1716.pdf
 Andaya, Rolando Jr. (2008).   Harmonized Rules for Foreign Funded Procurement.
Presentation on the Occasion of the Philippine Development Forum 2008.
 Ateneo School of Government’ Government Watch Project. (2004).    Monitoring Report
on the Department of Public Works and Highways’ Various Infrastructure Projects.
 Angara, Edgardo. (Oct. 24, 2002).  Sponsorship Speech on the Government Procurement
Reform Act.  
 Fabella, Raul & De Dios, Emmanuel. (2007).  Lacking a backbone. The Controversy over
the National Broadband Network and the Cyber Education Projects.  University of the
Philippines School of Economics.
 Organisation for Economic Co‐operation Development‐Development Assistance
Committee.  (2005). Harmonising Donor Practices for Effective Aid Delivery. Volume 3
–Strengthening Procurement Practices in Developing Countries. Paris.
 Carilo, Ledivina (1994). “Enhancing Accountability in the Philippines.” In John Burns
(Ed.), Asian Civil Service Systems: Improving
 ADB & OECD (2006a). Anti-corruption Policies in Asia and the Pacific: Thematic
Review on Provisions and Practices to Curb Corruption in Public Procurement: Self-
assessment Report – Philippines. Manila: Author.
 Government Procurement Policy Board (2009a). Procurement Manual, vol. 1: Guidelines
on the Establishment of Procurement Systems and Organizations. Manila: Author.