EU urges reform in PH procurement system

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THE European Union has urged the Philippine government to do more in improving the transparency and competitiveness of its procurement system as it plays a key role in attracting job-generating investment into the country.

In a forum on Tuesday, Ambassador Guy Ledoux of the Delegation of the European Union to the Philippines, said the country has made progress in terms of attracting foreign direct investment (FDI), noting that inward FDI stocks in the country increased to 25 billion euros in 2013, mostly originating from the EU, from 10 billion euros in 2004.

However, the EU ambassador said that the latest figure is only a fraction of the more than 200 billion euros in FDI that European companies invest every year around the world.

That the Philippines has been a laggard in FDI growth can be traced to the bottlenecks in the country’s procurement policy, which blocks investments.


“Some of these companies are reluctant due to problems industry faces with procurement: companies encounter problems with tendering and bidding processes that seem to work against foreign bidders,” Ledoux said.

The EU ambassador said problems in the government’s procurement policy include short timeframes between publication of tenders and bid submissions which do not allow foreign bidders to complete all the formal requirements, for instance, the certification of eligibility and translation of documents.

In addition, he said the complex formal requirements such as certifications and business licensing and disclosure requirements that include details of similar contracts performed in other countries or details on prices are deterrents for participating in tenders.

To address this, Ledoux said public procurement must observe transparency, competition, equal treatment and non-discrimination.

“A transparent tendering process ensures that information about the procurement regime and individual procurement opportunities are made available to all interested parties,” he said.

The EU ambassador said competition through competitive tendering ensures a level playing field, offering all competitors equal chances and access to the same information. Lastly, equal treatment encourages companies to have confidence in the process and thus encourages the best firms to participate in the procedure.

Needed reforms
In this regard, Ledoux suggests certain reforms in the country’s public procurement system.

First, by joining the Government Procurement Agreement as an Observer, the government can show its engagement towards transparency, non-discrimination and international competition and benchmark its own policies against international ones.

Second, improve the legal framework for foreign bidders by allowing foreign companies to bid at a more equal footing.

“A procurement market open to foreign bidders is a key asset to significantly upgrade the level of competition and ensure better value for money. One way to facilitate this is to include all 28 EU Member States in the ‘reciprocity’ list envisaged in the Government Procurement Reform Act,” he said.

Third, implement the Government Public Procurement Board resolution to liberalize foreign bids for infrastructure project above P1 billion.

The EU ambassador said bringing down that threshold would benefit the government even more and would also allow more competition for smaller projects.

Govt initiatives
On the part of the government, Budget and Management Secretary Florencio Abad said to date, much-needed changes in the procurement system have been initiated.

These changes, he noted, were focused on clearing up procurement processes so that they are fairer, more transparent, and open to public engagement.

“For one, for example, we’ve expanded the coverage of the Philippine Government Electronic Procurement System, or PHILGEPS, so it could yield more information on the different phases of the procurement process,” he said.

Abad noted that at present PHILGEPS is not just limited to posting public bid opportunities but also provides information on projects awarded; enables suppliers, contractors, and consultants to register and participate in the procurement process through an online platform; and allows the public to scrutinize these particulars as projects commence and are later implemented.

“We’re also using information and digital technology as leverage for the Administration’s anti-corruption drive, especially as it applies in public procurement,” he added.

The Budget chief said the government has spearheaded a campaign across all government agencies for cashless and checkless transactions like the Cashless Purchase Card for government procurement.

He added that the government has also made concrete moves to establish electronic bidding within the procurement process, which involves the creation of electronic bid forms and a bid box, the online delivery of bid submissions, electronic notifications to suppliers on the receipt of bids, bid receiving, and electronic bid evaluation.

The selling of bidding documents was also rationalized and standardized to prevent the imposition of excessive or unreasonable fees, Abad said.

Standardization of the sale of bidding documents is expected to promote competition, regulate prices, and provide a uniform rate applicable to all procuring entities, he explained.

The government, he added, has already approved the Community Participation in Procurement Manual, so that communities on the ground can be guided on taking a proactive role in the public procurement process.

“These are only some of the many ways through which we’ve reformed and streamlined the public procurement system. While these changes are designed to yield real benefits for the public—besides improving transparency, accountability, and citizen engagement in the procurement process, there’s more that needs to be done,” he concluded.

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