Categorized | Advocacies

Dysfunctions in Public Procurement

Posted on 08 January 2012 by Ingming Aberia

In a recent Procurement Workshop organized jointly by the German Technical Cooperation International Services (GTZ-IS) and the Department of Health (DoH) for 16 provincial governments implementing the European Commission-funded Health Sector Policy Support Program (HSPSP), the procurement issues that were highlighted in one of the sessions included those that pertain to non-compliance with the Procurement Reform Act (RA 9184) and its implementing rules and regulations.

The HSPSP is one of the Philippines’ key interventions that aimed to improve the Filipinos’ overall health conditions as envisioned by the government’s FOURmula One (F1) for Health Strategic Framework. Jointly implemented by 16 F1 provinces, the DoH and the Department of Budget and Management (DBM), the HSPSP opened in 2007 and will close by the end this year—2010. Program components included, aside from grant provisions for infrastructure projects and procurement of goods (like medicines and hospital equipment) and services, Technical Assistance (TA) in the areas of Civil Works, Public Finance Management, and Procurement, among other TA packages that have been made available to the implementing agencies. The GTZ-IS provides the TA component for the HSPSP.

For its procurement activities, the HSPSP applied RA 9184 and, in a few cases where the World Bank was part of managing the funds, the bank’s own procurement guidelines. We may quickly add that RA 9184 and the WB procurement guidelines are essentially the same, except for some minor differences in terminologies or procedures.

I was trying to facilitate the session on procurement issues (about one caselet in particular) when one participant stood up to share his thoughts about what ails procurement in government. “More than knowledge on and technical skills in application of procurement guidelines, it’s about the behavior of people in charge of procurement. Some people in the Bids and Awards Committee (BAC), for example, simple choose to run away from their obligations when they think they are on head-on collision with other interested (and often more powerful) parties.”

The participants were discussing about a case (names were not identified but were known by participants in small groups as involving the then Governor—now Congressman—of Eastern Samar, Ben Evardone) which pertained to a government hospital (located in the town of Oras) in that province. Eastern Samar is one of the F1 16 provinces.

In violation of HSPSP guidelines, the works component (construction) of the hospital proceeded even without going through a bidding process and, equally important, without the benefit of a DoH-approved Detailed Architectural and Engineering Design (DAED). Funds for the project were also not yet released by that time (early 2010).

Sometime in April 2010, then Governor Evardone requested the regional office of DoH (also known as Center for Health Development, or CHD) to take charge of the bidding process for the Oras hospital. Project cost amounted to around Php 10M. Although the funds remained in the account of CHDs, the roles of the regional offices of DoH were limited to paying the winning contractors. The provincial governments, through the RA 9184-prescribed procurement procedures, determined who the winning contractors were. Thus the governor’s request was a novelty in all of HSPSP’s nationwide experiences.

The CHD in Region 8 (where Eastern Samar belongs) went ahead with conducting the initial procurement processes in September 2010. This abruptly careened to a halt, as prospective bidders raised a howl over what they called a sham of a project. Their reason: they found, upon inspection, that the Oras hospital which was subject for bidding was already more than halfway done.

The CHD aborted the bidding and discussed the problem with Eastern Samar’s current Governor, Conrado Nicart. The Provincial Government and DoH agreed to proceed with the bidding for a construction project worth Php 10 M, but this time for a separate facility within the Oras hospital. The Provincial Government further agreed to pay the contractor the amount spent for the construction work that has already been done.

It seemed the main issues had been resolved, except probably for how distorted government planning has become. Where planning for government projects used to precede procurement (or at least theoretically), now it looked like procurement was determining which projects needed to be implemented.

The story does not end there, however. Before the CHD could rebid any works project in Oras hospital (embarrassment on the first try aside), the congressional hearings on the national government’s 2011 budget caught up with the controversy. Then Governor and now Congressman Evardone reportedly talked things over with key officials of the DoH, including Secretary Enrique Ona, while the DoH budget was being deliberated on in the House of Representatives. Our source said Evardone wanted the bidding to proceed just like he requested it when he was still governor of Eastern Samar. Same source said Ona found no reason why Evardone’s request should not be granted.

So now it looks like the CHD would have to proceed to bid for a project that is more than halfway done (some say it is somewhere 65 percent accomplished, others say it is 75 percent accomplished).

Reacting to what his fellow participant just said, another participant—Victor Apura, who is from Eastern Samar—stood up and said: “It is correct to say that all of us have an opportunity to stop corruption in public procurement. But look at what the big guys are doing? They turn a blind eye on what are patently dysfunctional procedures. Are we now saying the world can count on the small guys—like us who are BAC members—to correct the anomalies? Sure there are wellsprings of heroism in all of us. But this is not all about being true to our calling, much less being a hero. It is more complicated than that. We have families and we are equally responsible for them. Who takes care of them when we are out of jobs just because we tried to be heroes?”

The workshop ended with questions to think about.

The author currently works as GTZ-IS consultant for Procurement under HSPSP. Reactions to this article are welcome at

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