Institutionalizing transparency in the procurement process

Governing in a democracy, set against the backdrop of a complex and interconnected global economy, is always a challenge. Government corruption is a tendency that presents itself especially when transactions are done behind closed doors, far from the scrutiny of the public.

To be sure, the Philippines has had laudable initiatives to ensure transparency and accountability in government transactions. An earlier procurement law was enacted in 2003. However, the ingenuity of the corrupt knows no bounds, and over the past two decades they have been able to circumvent the law and continue with their irregular practices — to the detriment of the Filipino taxpayer.

Now comes Republic Act 12009 or the New Government Procurement Act (NGPA). Signed into law in July this year, it is the biggest law to combat graft and corruption in the Philippines.

According to President Ferdinand “Bongbong” Marcos, Jr., this law is “a testament to our unwavering commitment to build a government that truly serves the people by ensuring that every peso spent is accounted for and is used for the benefit of the Filipino people.”

The International Monetary Fund lauded the passage of the law. According to its 2023 Country Report, this would “help further enhance the legal and institutional framework for transparent and competitive public procurement.”

Meanwhile, the World Bank said that with the NGPA, the Philippines has taken a big step forward.

During her presentation at Stratbase’s Pilipinas Conference, Department of Budget and Management Secretary Amenah Pangandaman said: “Through these efforts, the NGPA aims to significantly reduce — if not eliminate — bottlenecks in the procurement process.”

Let me zero in on what we believe are the salient aspects of the law.

Foremost, competitiveness. The previous thinking was that the best project for the government is the one offered at the lowest price. But now we know that real value transcends just a low price tag. The NGPA was designed to enhance the competitiveness of the public procurement system by striking a balance between cost-effectiveness and broader value considerations in procurement decisions, ensuring a fit-for-purpose approach.

To do this, the NGPA incorporated a Most Economically Advantageous Responsive Bid (MEARB) option for evaluating offers, alongside the Lowest Calculated Responsive Bid (LCRB). This allows procuring entities to also consider energy consumption, maintenance, sustainability, or disposal costs to ensure that the winning bid will provide high-quality outputs at a reasonable cost.

Dr. Jamil Paolo Francisco, Executive Director of the Rizalino S. Navarro Policy Center for Competitiveness, Asian Institute of Management (AIM), said that one of weakest spots in national competitiveness is government efficiency. This means any reform that will improve procurement and planning will be beneficial.

Second, transparency. Open contracting is a basic requirement by the NGPA, which requires disclosure of data and documents at all stages of procurement including planning and up to contract implementation, as well as the disclosure of beneficial ownership information of suppliers, manufacturers, distributors, contractors, or consultants to participate in government procurement.

During the conference, Dr. Philip Arnold Tuano, Dean of the Ateneo School of Government, emphasized the need for capacity building — training and workshops for the public to create experts who can support the implementation of the revised process under the new procurement law.

Furthermore, representatives from civil society organizations are included at all levels of the procurement process. All procurement-related conferences will also have video recordings to ensure transparency.

Dr. Francisco Magno, non-resident fellow and program convenor of the Stratbase ADR Institute and director of the La Salle Institute of Governance, said: “You have observers, but if these observers do not have the capacity, and they don’t have the support, then they become token participants. So, I believe there is a need for some kind of strengthening of watchdogs. So, you need a procurement institute, so the financing is something that can be discussed.”

He added: Corruption is perpetrated because of hidden transactions. But if the transactions are open and there are digital platforms for monitoring, including video recording, then these transactions have this electronic footprint, and people can monitor.

In terms of accountability, there is a need to enhance the prosecution of corrupt officials by strengthening the Office of the Ombudsman. The office needs more manpower and more law experts, who can run after powerful government officials. Data shows that the Ombudsman is successful in prosecuting barangay officials but fails to catch the big fish.

The law’s provisions are sound and practicable. They are attuned to the times. As always, however, no matter how comprehensive and well-thought out the laws are, the challenge lies in the implementation. Government officials, who vow to serve the public’s interests, themselves tend to circumvent the law for their personal interests and to favor some bidders over others.

The law is good, but it is not designed to work on its own. Having civil society observers during the procurement process is not enough. What we need is a truly collaborative approach — all sectors working together to ensure that the objectives of the new procurement law are achieved, for the benefit of the Filipino people and for the better competitiveness of the Philippines as an investment destination.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.