Fighting corruption

E·N·Q·U·I·R·Y
DEMAREE RAVAL

Fighting corruption
Sunday, 11 10, 2002

The Philippines is now ranked No. 11 among countries where corruption is endemic. From a previous ranking of No. 23 in the list only a year ago, our country has jumped up or, rather, slunk down 12 steps in the chart of shame. This should come as a reassuring note to those who have perfected the science of scam and the guiltless guile or rigged transactions.

The country lost P95 billion potential revenues due to corruption last year; P21 billion from kickbacks in the procurement of goods, infrastructure and services, and P74-billion potential leakage in combined public-private transactions.

Corruption has become so ingrained in the present government, that one no longer has to drop veiled suggestion about “mutual benefits” when he wants to bag a contract. One simply walks in and announces, “Mr. Government Official, sign this, and you’ll be as rich as Clint Eastwood and even buy a bank” – and the deal is done. At the stroke of a pen the country is robbed billions; at the flourish of a signature, a boulevard by the bay is built.

But bad news looms in the horizon for government thieves.

Upon his return from the conference of the Global Organization of Parliamentarians Against Corruption (GOPAC) in Ottawa, Canada, where he was elected member of the Board of Directors, Sen. Ed Angara proceeded to sponsor Senate Bill 2248 on Reform in Government Procurement, which is intended to stem the problem of corruption in the procurement of goods, services and equipment by the government.

The bill addresses the lack of competition and transparency in the procurement, which is intended to stem the problem of corruption in the procurement of goods, services and equipment by the government.

The bill addresses the lack of competition and transparency in the procurement process. The present practice of issuing Invitations to Bid through the print media is open to manipulation. Not a few of us are strangers to stories about cartels of contractors buying all printed copies of newspapers to prevent circulation of the bidding announcement. This effectively limits competition among themselves, in which case they could dictate the terms of the contract, either as a consortium or as subcontractors to the pre-determined winner of the bid. To level the playing field, Bill No. 2248 provides that bidding announcements are, in addition to the publication, to be posted on the website of the concerned agency as well as on the government electronic procurement system website. To insure transparency and pinpoint accountability, optimum use of information technology will be harnessed to include application on an electronic system of auditing all the bidding transactions.

Another reform initiative is the adoption of a simple eligibility check method, that veers away from the present complex and highly subjective pre-qualification procedure which enable members of the Bids and Awards Committee (BAC) to limit the number of participants in the bidding. One recalls the highly controversial bidding for patrol vessels, where no less than the government of a European country had to question the improbable disqualification by the BAC of the leading shipbuilder in Europe, because somebody had the imprudence of adopting subjective criteria designed for the favored bidder. Based on the account of those who participate regularly in government procurements, it is at the pre-qualification stage where “favorites” are anointed. At this point, without conducting any bidding yet, the victor is the entity that can quote the right price: the lagay to many. Bill No. 2248 replaces the present procedures with a “Pass/Fail” marking system, where incomplete documents are given a “Fail” mark, while complete documents give bidders clearance to the next stage of the process. This proposal alone is expected to dramatically reduce the bid processing time, which will inevitably result in a drastic reduction in opportunities for corruption.

The bill also eliminates the floor price and the use of the approved budget for the contract as the ceiling price. A floor price prevents the government from taking advantage of potential savings from lower bids. On the other hand, bids offered above the budget ceiling are a waste of time and effort and will be automatically rejected. Take the case of the VRIS project: The Supreme Court voided the contract when it found out that the winning bid was beyond the amount appropriated by Congress for the project.

The fourth reform minimizes the discretion of the BAC members. At present, bid offers are decided on the bases of quality and price. In reality, it is difficult to measure quality and its trade-off with price. It requires too much subjectively, which in turn exposes the process to legal challenges. The DILG Fire Trucks Scam is a case in point. The contract was recommended for award to Columbian, which ranked first in the bid evaluation. Columbian eventually pulled out from the bidding, and Daeyang was awarded the contract. The bill does away with the questionable discretion of BAC members in the processing of bids. Instead, a clear two-stage eligibility criterion that separates the review of quality from the ranking of bid price will be applied. Protests from disgruntled bidders will be minimized, since the determination of the winning bid is straightforward and free from the dubious judgment call of the BAC.

Another key reform is the requirement of a warranty on civil works, and the imposition of a cap on price adjustments and change orders. This will prevent anomalies such as the DPWH car repair scam, or even that boulevard by the bay, from happening.

Finally, and most importantly, is the adoption of open and competitive public bidding as the norm in all levels of procurement. The much-abused and often perverted alternative modes of procurement, such as limited source bidding, direct contracting, repeat order, shopping and negotiated procurement will be allowed only in well-defined exceptional circumstances.

The boulevard by the bay was paved with good intentions, but littered with pages of anomalous contracts and rigged transactions. Bill No. 2248 may have come too late, but with its passage we would, nevertheless, be in the best position to nip in the bud many more such boulevards.


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