Fighting corruption in government procurement

The hearings in the Senate on the alleged overprice in the construction of the Makati City Hall parking building have put in the limelight Vice President Jejomar Binay, touted as the “most likely next president of the Philippines” because of his immense popularity among the masses. One of the allegations aired during the hearings was that the Binays were getting a 13-percent “commission” on Makati’s major infrastructure projects, which the family vehemently denies.

Allegations of fraud and corruption involving major local and national government projects and purchases never seem to end. These include the purported $30-million extortion attempt on the Czech ambassador by certain officials of the Department of Transportation and Communications in connection with the purchase of coaches for the Metro Rail Transit. There have also been questions raised on the purchase of body armor by the Department of National Defense, and on transactions involving the Philippine National Police’s Firearms and Explosives Office. These, of course, are mere allegations and have yet to be proven in a court of law.

Considering the very stringent provisions of the Government Procurement Reform Act (Republic Act No. 9184 or “An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for other Purposes”), one cannot help but ask: How can these allegations be true? What happened to the procurement principles of transparency, competitiveness, streamlined processes, accountability, and public monitoring? Don’t these purchases go through the pertinent bids and awards committee (BAC) composed of not less than five but not more than seven members of unquestionable integrity and procurement proficiency, plus a Commission on Audit representative and two observers, of which one is a representative of a nongovernment organization?

The Coalition Against Corruption (CAC), through its member-organizations such as the National Movement for Free Elections and the Bishops-Businessmen’s Conference for Human Development, provide capacity-building training, funding and volunteer observers to selected BACs of the Departments of Education, of Health, of Public Works and Highways, and of National Defense. The CAC’s involvement has led to lower prices of textbooks, medicines, and public works, and, in certain instances, has stopped purchases (for example, of military equipment) deemed questionable by designated observers.

These show that RA 9184 has had positive results. However, in view of the increasing and continuing allegations of corruption in government procurement, perhaps there is a need to revisit the law and its implementing rules and regulations, and come up with a more effective and systematic procurement policy.

The purchase of common supplies used by the government for its day-to-day operations is actually centralized in the Department of Budget and Management through the Philippine Government Electronic Procurement System (PhilGEPS), which is viewed as quite effective in meeting the principles of government procurement. This proves that centralized procurement does work.

With regard to the procurement of noncommon supplies and to infrastructure projects and consulting services, the concerned officials may hire service providers through competitive bidding to undertake their electronic procurement. It makes sense to centralize as well the procurement of noncommon supplies and infrastructure projects rather than leave these to the thousands of procuring entities of the national and local governments. A separate agency or division of the DBM may be designated for this centralized procurement, supported by an electronic procurement system platform similar to PhilGEPS. Appropriate checks and balances and controls would have to be put in place, including a list of accredited consultants and experts who may be tapped with respect to highly specialized purchases such as weapons and armaments.

With centralized purchasing, there would be no need to have BACs in each government agency and instrumentality covered by RA 9184, thus allowing government officials to better attend to the needs of their constituents. Also, the 10,000-strong Commission on Audit can focus on monitoring the implementation of government projects, and, with respect to procurement, can just zero in on the DBM.

The reduced opportunity to “earn” on government procurements will not sit well with politicians who spend millions of pesos to get elected and, once in power, proceed to recover their “investments.” Each year, there are thousands of government purchases covered by RA 9184, and NGOs are not always able to field qualified observers to the BACs, thus reducing an essential element of control in the government procurement law. It should be noted, however, that when collusion happens (say, among the BAC members and observers), no element of control will work. The solution may thus be to change the system into one where collusion is significantly reduced and the processes are rendered completely transparent. The envisioned centralized procurement could be such a solution.

(Note: Civic-minded retired and active professionals who wish to join the CAC corps of BAC volunteer observers may send an e-mail to [email protected].)

David L. Balangue ([email protected]) chairs the Coalition Against Corruption and is a former chair and managing partner of SyCip Gorres Velayo & Co.