Institutional Reform: The Passage of the

Procurement System Law in the Philippines

A Case Study

Prepared by:

Christine Joy N. Abique

2018-1-0084

BA Political Science – Second year

Submitted to:

Ms. Aileen Joy A. Pactao

Instructor 1

November 12, 2019

 INTRODUCTION

Corruption is the most prevalent political issue in the Philippines which exists and continue to
prosper from pre-Martial Law era up until today. It is a sign of a weak and unhealthy rule of law
existing in the country. It takes many forms and ranges from petty bribes up until huge
“commissions” for public sector contracts. The passage of laws that push for government reforms in
the Philippines must be initiated by the executive branch of the government by providing thorough
analysis of the problem, and needs to be supported by civil society groups.

Generally, corruption has two forms; first is the state capture, it occurs when “the influence
that narrow interests can exert on the state to adopt or implement laws and regulations that accrue
to their private benefit”, and second is administrative corruption, it is when there is a “mis-
implementation of laws or regulations to accommodate bribes or to extract money.”

In the Philippines, combats against corruption has long history but it remains as firm and
prevalent as it was even after the emergence of numerous anticorruption agencies or the
impeachment of president, proven of immense corruption and plunder, corruption never subsided.
The only remedy for this political cancer is to target one of its major and specific source, and hope
to collapse the entire “great wall” of corruption – the public procurement (Campos & Syquia, 2006).

This symptom of weak rule of law usually occurs inside bureaucratic offices, and one of the
major sources of it is public procurement. The Social Weather Station (2002) released survey result
showing that aside from Tax and Customs Administration, the Department of Public Works and
Highways, Department of Education, Department of Health, and the Department of National
Defense are the agencies which are often conducting public procurement, and belongs to the most
corrupt government agencies in the country.

BACKGROUND

The Philippines’ procurement system before the passage of RA 9184 was only guided by the
Presidential Decree 1594. This regulation for the procurement of goods and services was easily
swayed because there was no law that bounds the Executive branch, and because of this, rules and
regulations were passed over another creating confusion in the procurement system. The existing
regulations only apply to the procurement process in the national level, leaving Local Government
Units to their own techniques and process of purchasing. Despite of this mistake in the procurement
system, no measures were taken by the government to neutralize the existing rules.

Due to these issues in the procurement system, initiating institutional reforms faces a
substantial disapproval from business sectors and politicians. This reform has can possibly lessen the
prospects of extortions or extracting bribes, it may also disturb the affluences of influential groups or
individuals.

According to Campos and Syquia (2006), the proposed procurement can only be passed
when they overcome the barriers such as making an effort for unification of the Executive branch.
Second, civil society groups need to be organized to be push reforms and movements to make the
Legislature to act. Third, the reformers from Executive branch and civil society groups must work
together to achieve one goal. Lastly, prominent politician must be recruited to push the passage of
the policy-reform.

In 1998, Benjamin Diokno was appointed as secretary of the Department of Budget and
Management. This department is mandated to supervise the process of purchasing goods and
supplies by the government, on the other hand, it failed to meet its function because it only
managed the 15% of the government’s total purchases. Because to this, Diokno recognized the
importance of developing “Filipino Medium-Term Expenditure” (MTEF), and asserting reform in the
Philippine’s budgeting system.

Meanwhile, the procurement system of infrastructure ventures and consulting services was
outside the supervision of the Department of Budget and Management, the process was regulated
by numerous law, rules, and regulations. The existence of these problematic rules and regulations
also added to continuous failing bids, court-contested bids, and post-contract awards (Campos &
Syquia, 2006). Diokno realized that an all-controlling law must be passed to rationalize the existing
problematic rules. He eventually gained technical assistance from the Canadian International
Development Agency (CIDA) to formulate an automated procurement system.

He then prepared for the conduct of an extensive research to gather information relating to
the problems in the government procurement, and based on this analysis, an all-encompassing law
must be formulated. He gained assistance from USAID for the conduct of this research. The draft
law was completed in six months, acquiring data from interviewing officials while digging into piles
of documents. The draft comprises of every details that is relating to the procurement system, such
as purchasing of goods and supplies, contracting civil works and consultants through build-operate-
transfer schemes, as well as rationalizing the national, provincial and local procurement process
(Gobiel & Jobidon, 1999 and 1999b as cited by Campos & Syquia, 2006).

On the other hand, Public Acquisition, Accountability, and Transparency (PAAT), the first
drafted law faced a lack of support within the Department of Budget and Management, and turned
out that the source of this conflict began during the entire preparatory process when researchers
failed to secure the support of key administrator of DBM. This lead to the postponement of the draft
law to be endorsed to the President. In the early 2000s, Diokno with the help of USAID, initiated a
budget reform program that includes the procurement process, such as trainings, workshops,
consultancies, and meetings with the USAID and other supporters.

The series of meetings with regards to this budget reform program brought a fruitful result
when the assigned technical working groups conceptualized two sets of administrative regulations,
first set was the complete revision of PD 1594, and second was the new Executive Order 262, to
replace the existing executive order that guides the procurement process of supplies and goods.
These regular meetings also gained supports from the members who collaborated to give
alternatives and correct incoherent analysis, therefore, establishing agreed-upon principles.

The drafted law was certified as “urgent” by the former president Joseph Estrada after
identifying some parts of the legislation to align it to the president’s promises and mandates, as well
as to cover the budding public protest about the president’s activities – mostly about corruption.
Eventually, the responsibility of stirring the proposed law was taken by the Presidential Legislative
Liaison Office (PLLO). The bill was sent to the Committee on Public Works, where Cong. Neptali
Gonzales agreed to be the main sponsor. The bill made it out easy from the Committee on Public
Works because of the efforts by Cong. Gonzales, it was then scheduled for floor debate in the House
of Representatives. Gonzales also has a strong influence inside the Committee on Rules – the
committee that has control on arranging the bill for floor debate. The bill was set to be on floor
debate on that day, it was also approved in the House on the same day with no amendment, and 36
congressmen asked to be co-sponsor of the bill.

The bill was immediately sent to the Senate, however the congressional recess has started,
and on the resumption of the session, the Senate were preparing for the impeachment trial of the
then president. The delayed and dying of the bill was also because it did not gain the sponsorship
from the Senate Committee on Constitutional Rules and Amendment since the committee prioritized
the impeachment trial and preparation for upcoming election.

Following the standing rule, the bill has to retake the process and passed from the House of
Representatives to the Senate.

On May 2001, Arroyo ascended to presidency from vice presidency to serve in the unexpired
term of Estrada; with the new head of government, new secretaries with their undersecretaries
were also appointed to every department. Emilia Boncodin was selected as the new secretary of the
Department of Budget and Management. Having a great interest in pushing the budget and
procurement reform, she appointed Laura Pascua as DBM Undersecretary and tasked to manage all
activities relating to budget and procurement reform including coordination with other agencies, as
well as reactivation of the Government Procurement Policy Board. Boncodin also ordered the
Technical Working Group (TWG) to formulate new executive order which later known as EO 40, that
would merge the implementing rules and regulation of the PD 1594, EO 262, and “new rules for
contracting consulting services,” included in EO 40 a simplified process of procurement for
Information and Communications Technology which states that the “Philippines’ electronic system
shall be single and centralized electronic portal for all types of procurement” (Campos & Syquia,
2006). However, since EO 40 is an executive act it cannot outlaw existing legislative acts such as the
LGC of 1991, PD 1594, and EO 164. Subsequently, EO 40 was signed by GMA on October 8, 2001
which her administration considered as early achievement to fight corruption and as fulfillment of
her promises.

ALTERNATIVES

The failure to passage of the first all-encompassing law drafted with the help of US-based
researchers can be accounted to numerous reasons. The first one is the failure of the researchers to
secure the support of the key staff which is a significant downfall of the draft law. According to
Campos and Syquia (2006), the unified front of the Executive branch in effort is a must, to show
that the content of the draft was duly scrutinized, and was therefore gained the support of the
officials within the executive branch. The conflict and lack of support leads to the postponement of
the law to be endorsed. Subsequently, Sec. Diokno conducted budget reform program which
eventually produce a fruitful result that gained support and brought sense of ownership to the key
staff of the Department of Budget and Management.
 Sec. Diokno could have appointed a Filipino researcher to assist in the preparation of the
draft law. Since the foreign researchers were not thoroughly acquainted about the Filipino culture
and the ways of engaging the key staff to “buy-in” the bill within the department or the Executive
branch. However, the secretary also produced a good remedy to this conflict in the form of
workshops and seminars under the budget reform and procurement program.

The second constraint about the passage of the first draft of law was the timing of its
proposal to the Congress. It traveled within the Congress when both houses were nearing to their
Congressional Recess. The first three readings in the House of Representatives were a huge success
when it was approved without amendments. However, when it was sent to the Senate it waited for
the resumption of the Congress’ Session and was further neglected when the Senate was preparing
for the impeachment trial of Pres. Estrada, further, with the midterm election approaching, the
priorities of Senate committees were not the proposed bill but the preparation for this event. Given
the reason, the first drafted bill of the procurement system reform was pushed to bottom of the
priority list, until the new Congress was open with new set of elected congressmen and senators.
Following the rules, the bill will undergo again the legal process of passing a law, starting with the
House of Representatives.

This conflict must be a product of the delayed proposal of the bill and the series of
workshops and trainings initiated by the DBM to gain the support of the important staffs inside the
department before its actual proposal to the president and Congress. The bill should have been
proposed earlier to have an ample time for its deliberation, and three reading in the both Houses.

Lastly, the lack of support rendered and inputs to the bill by the civil society groups.
According to Campos and Syquia (2006), there are numerous groups that advocates for good
governance and anti-corruption, however they are lacking the coordination which muffles their
voices and only reached few audiences, which eventually has less effect on the existing problem of
corruption in the country. The DBM could have reached for the help of a civil society group that
advocates for the same problem in the government.

PROPOSED SOLUTION

In pushing government reforms, the Executive branch and the civil society groups must act
together in attaining one goal. While the civil society groups will be mobilized in pushing the
acceptance of the bill by the masses, monitoring the strict and successful implementation of the law
once it was passed, and show a united front to gain media points and attention; the executive
branch will provide for the technical assistance to analyze the problem and to provide solution vis-à-
vis the recruitment of influential politicians that will sponsor and champion the bill inside their
respective houses.

The second version of the bill became successful because of the cooperation by the
executive branch and the strong commitment of the influential politician, Cong. Gonzales to mobilize
his connections inside the Congress. However, the bill lacks the support from the civil society groups
which is a long-time problem in the Philippines, during the implementation of the new passed laws.
On the other hand, even though there was the Transparency and Accountable Network emerged
from the partnership of 20 non-governmental organizations, and created links with 13 universities
student councils, they were still lacking the information about the procurement process, thus there
must be another step to be taken to educate the driving force of the bill within the masses, by
conducting seminars and training relating to the subject and problem.

Further, the proposed solution of this case study anchored on the main argument provided
by the theory of co-production which states that in order to achieve a certain goal, the government
and the civil society groups must compromise and act together.

RECOMMENDATIONS

Pushing for government reforms can be quite challenging to its proponent, because it might
face a lot of impediments on the way to its proposal from the groups that will receive the damage
concerning the passage of reforms. Further, the initiative for reforms must garner analysis, scrutiny,
and alternatives from different groups and sectors. From this reason, the proponents of reform must
have regular consultation meetings with representatives from different groups and sectors.
Consultation meetings and gaining inputs of pluralist groups can contribute to the sense of
ownership and a wide range of ideas to consider from the different groups. Moreover, influential
politicians must be engaged in the passage of reform so they can champion the bill within their
respective houses, as well as to mobilize his connections to ensure the easy travel to be taken by
the bill inside the Congress.

REFERENCE

Campos, J. E. & Syquia, J. (2006). Managing the Politics of Reform