Government e-procurement effort gathers steam

Professionalizing procurement in government can still be possible if the Government Electronic Procurement System (G-EPS) can successfully take off as planned.

The G-EPS represents the government’s first step toward electronic procurement that will provide both government agencies and suppliers a more open, transparent and competitive environment for the procurement of goods and services by the government.

Since the G-EPS’ launch last year, the Procurement Service of the Department of Budget and Management (DBM) has noted a steady increase in the participation of government agencies and suppliers in the e-procurement project.

As of Aug. 7, the Procurement Service recorded 1,713 government accounts that have registered with the G-EPS and among them were 715 national agencies, 213 government-owned and controlled corporations, 98 state universities and colleges and 78 local government units.

Although the President did not touch on the G-EPS in her recent State of the Nation Address (SONA), a report issued by her office to accompany her speech carried an update on the project. Based on the SONA report, as of last month, 5,844 supply and equipment requirement notices have been posted in the G-EPS by 1,098 government agencies and downloaded by 1,933 registered suppliers.

Also, 28 public access terminals have been set up to enable greater access to the G-EPS where 540 products or goods have been listed for all registered suppliers to see. Since then, these figures have already increased with the Procurement Service reporting last week a total of 2,080 registered suppliers, 7,071 notices with a high of 69 new notices posted daily, and 1,327 posted awards.

Meanwhile, training on the G-EPS has been provided so far to 1,097 agencies, 1,494 suppliers, 140 budget officers of 90 agencies and 439 auditors of the Commission on Audit.

The G-EPS’ first year of operation is being funded by a P20-million grant from the Canadian International Development Agency (CIDA). A company called Merx, which has a contract until the end of the year, is hosting the pilot system in Canada.

The pilot system only consists of the electronic bulletin board where agency procurement opportunities are posted, the supplier registry that holds the database of registered suppliers, and the electronic catalogue of the price list of commodities that can be acquired without bidding.

The government is still in the process of bidding out anew the G-EPS’ second phase, which will feature online payment, virtual store and electronic bidding submission. The five-year project cost is pegged at P250 million. Short-listing of eligible bidders will take place this month, while awarding should be sometime in November this year to meet the G-EPS’ full implementation by January 2003.

Meanwhile, the Procurement Service charges its client-agencies a four percent service fee, which helps fund the G-EPS’ operations. Lawyer Estanislao Granados Jr., director of the Procurement Service, said the whole project could take the government three to four years to complete at a cost of P400 million to P600 million when done in-house.

Snafu

The first attempt to start the bidding process experienced a hiccup last month when the government declared a "bid failure" when only one of the nine eligible bidders passed (out of 17 parties in the pre-qualification stage). Seeing how it put the government at a disadvantage for lack of competition, the Inter-Agency Bids and Awards Committee (IABAC) promptly called for a new bidding.

Granados explained that there was technically no bidding during that first instance since they were just in the eligibility stage.

"But we decided to call it a failed bidding because it was anyway part of the entire process…The board only wanted to emphasize that there must be sufficient competition because if there’s none, what’s going to limit the ‘winner’ to bid exactly P250 million," he added.

Granados said a number of those who joined the first call for bids were found ineligible for reasons that included the lack of mayor’s permit to operate a business, and failure to establish a three-year track record and to meet the requirements for subcontractor agreements.

For the second round of bids, lawyer Jose Luis Syquia, procurement adviser and G-EPS deputy project manager, said they will still push for the same eligibility requirements along with two modifications meant to "relax" the requirements. The first will now allow the IABAC to review the contracts of subcontractors to establish their experience in implementing an e-procurement system although they may not have the three-year track record, which remains necessary for the prime contractor representing them in the bid. The second modification accepts that bidders may not have directly operated an electronic procurement system but have at least developed one in the past with features similar to that of the G-EPS’ first phase.

Strict standards

Caveat emptor, which means "let the buyers beware," and caveat vendator, which means "let the vendors beware," should be taken more seriously in government when the manual procedures at the Procurement Service meet the transparency features of the G-EPS.

The Procurement Service has long put in place a very rigid quality standard monitoring practice that makes suppliers go through the eye of the needle to earn the right to sell to the government. These manual procedures are being carried out only by a handful of inspectors who do the tedious testing of all common goods by randomly sampling two percent of deliveries to the DBM’s warehouse in Manila.

For example, a Procurement Service inspector counts each piece in a walis-tingting to see if a supplier meets the Department of Trade and Industry (DTI) standard on the definite number of pieces in a broom to conform to the average grip of a Filipino.

Also, inspectors scribble pens on sheets of paper until the ink runs out. Each pen must write 1.5 kilometers long without skipping, splitting or blotting. Other goods being tested individually are paper clips for thickness, scotch tapes for length and the pieces of paper in a ream. For insect sprays, inspectors submit cockroaches to various testing methods to see which product can really kill bugs effectively and fast.

But the real litmus test will be the ability of the G-EPS to professionalize government procurement by attracting the best suppliers online and dictating to them the quality and price of goods and services that the government wants, without the middlemen. Aside from the impact on cost effectiveness, bid notices and awarding will also become transparent in the G-EPS, making it a tool against graft and corruption.

With the G-EPS, Granados said they could better follow their three buying principles: buy more for less, from the best source, and pay fast. These principles, he added, make the Procurement Service the biggest buying and fastest paying government agency in the country today.

Graft-buster

Under Executive Order No. 40, all government agencies are required to buy their common goods from the Procurement Service by using the G-EPS, which the DBM unit owns and operates. Unfortunately, compliance has been wanting with only 15 percent of the entire bureaucracy presently buying from the Procurement Service.

Granados noted that the main reason many agencies go on with their own procurement activities, especially for common goods like office supplies, is the lack of sanctions that may be imposed against them if they bypass the Procurement Service’s system. If at all, only administrative actions may be taken after a post-audit.

"There’s no excuse not to buy from us unless an agency can source a particular good (at an) even lower (price) than what we have. But it should never be the case because we have proven that our common goods here are half-price lower than National Bookstore’s and 40 percent lower than Binondo’s and Divisoria’s," said Granados.

As a bulk buyer, the Procurement Service can then resell to an agency even just a single pen at a volume price.

And although the Procurement Service always goes for the lowest price that meets their minimum specifications, Granados said their method doesn’t welcome smugglers since they always demand importation papers.

"Our buying is designed to level the playing field. Everyone should be bidding based on our minimum specifications so the issue left is only cost," he added.

The G-EPS is also a way of forcing all suppliers to register their businesses, otherwise they never get the chance to supply the government.

Granados hopes that in the next two years, all 3,114 government offices will transact with them and use the e-procurement system. He said they even have plans to let agencies with sub-procurement portals to connect to the G-EPS.

IT products

End-user agencies are expected to submit to the Procurement Service their minimum specifications for computer systems, which are classified as non-common goods. The Procurement Service would still test the computer products.

Meanwhile, Granados said they are planning to package their own leasing program for the government, which currently restricts outright computer purchases indefinitely.

"Our (planned) leasing scheme for PCs can wire the country in six months. We want IT companies to offer lease packages of PCs with Internet connection and service maintenance for both brand new and old equipment," he said.

Right now, 39 percent of the bureaucracy is registered with the G-EPS, although only 30 percent is supposed to be online. Granados said this could mean that some agencies send their people to Internet cafés to access the G-EPS because they don’t have their own computer systems in their offices.

Procurement reform bill

The procurement reform bill or House Bill No. 4809 went through second reading last week under the sponsorship of Rep. Rolando Andaya of the House committee on appropriations. In the Senate, its counterpart, Senate Bill No. 2248, is being endorsed by several solons led by Sen. Edgardo Angara of the committee on constitutional revisions.

Syquia said the bill has a high chance of being passed this year, which should strengthen the compliance with the G-EPS, especially in order to speed up the bidding process. The Procurement Service, Granados said, is ready to take on this challenge as it targets to have the procurement portal’s e-bidding capability up by June 2003.

With the procurement reform bill, it is expected that there would be stiffer sanction of at least six years’ imprisonment for those who bypass the G-EPS. In this regard, Granados said it is also high time that agencies take seriously the preparation of their annual Agency Procurement Management Plan, which the Procurement Service uses to project the government’s total supply consumption.

The procurement reform bill also includes local government units among the compulsory users of the G-EPS.

Procurement Watch

Meanwhile, a non-government organization called Procurement Watch Inc. is lobbying for public and private sector support for the success of e-procurement in government. In a forum that marked the second anniversary of the Bayantrade e-marketplace, Jacinto Gavino of Procurement Watch said their organization is doing research on how to reform procurement practices in government through partnerships with selected agencies.

"E-procurement is a change management process…We are looking for patterns of difficulties (to address), for example, the training of suppliers. The amount of training needed is high in order to improve procurement in government," he said.

In addition, Gavino said they are closely watching the passage of the procurement reform bill, which calls for the inclusion of a non-government organization as a bidding and awards committee observer.