PROCUREMENT PROCUREMENT REFORMSREFORMS

ALEXANDER A. PADILLA

Undersecretary of Health

Chairperson, Procurement Coordinating Committee & Central Office Bids & Awards

Committee

1st National Staff Meeting CY 2007, January 24-25, 2007, Clark Field, Pampanga

Initial ChallengesPolicies

• Unresponsive(e.q Some drugs not included in PNDF)

• Not clear, varied

• Weak enforcement

• Ambiguities in accountabilities

Systems and Processes

• Absence of SOPs

• Very poor planning

• Non- adherence to Annual Procurement Plan.

• Poor item specifications & TOR formulation

• Weaknesses in drug selection and registration

• Inconsistent drugs procurement w/ regional morbidities

• Unshared data, files & documents

• Wide price discrepancies

• Inadequate transparency in procurement processes

• Lack of monitoring and evaluation system

• Weaknesses in the drugs quality assurance and inspection & acceptance

Resources

• Inadequate number of skilled/professional staff

• Inadequate supply and equipment support

• Unavailability of baseline and comparative data (price)

Organizational

• Inefficient supply chain structure

• Inadequate stakeholders’ participation

Slow/long Procuremen

t Process

High Transaction

Cost

Inability to Procure

PROCUREMENT INEFFICIENCIES

Graft & Corruption

Tedious Procuremen

t Process

BASISRepublic Act No. 9184

Government Procurement Reform Act

“An Act providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for other Purposes”

EFFECTIVITY: JANUARY 26, 2003

Mainstream Procurement

Reforms

• More COMPETITION, TRANSPARENT & PROFESSIONAL PROCUREMENT

• Greater procurement EFFICIENCY

•RESPECT for DOH procurement

•Less CORRUPTION

• Better QUALITY

goods/services

•Greater VALUE for MONEY

•Budgetary SAVINGS

•More EFFECTIVE Use of FUNDS

•Improved SERVICE DELIVERY

• Debt reduction

•Better chance to achieve health outcomes

•Better access to health services

•Improved DOH/gov’t. reputation

•Enhanced respect for rule of law

•Increased access of local market to DOH contracts

•Better conflict prevention or resolution

PROCUREMENT IMPACT

ECONOMIC IMPACT

SOCIAL IMPACT

Adapted from: Figure 1.1 “Torchlight,” Harmonizing Donor Practices for Effective Aid Delivery: Volume 3: Strengthening Procurement Practices in Developing Practices , World Bank, OECD Publishing, 2005,

Hierarchy of Reform Objectives

Procurement Reforms THRUSTS

1.Mainstreaming RA 9184 to various health reform areas, overcome resistance to change and eliminate graft and corruption

2.Capacity development by

• improving systems,tools, practices & procedures

• professionally training procurement staff to function to full capacity and to implement standards and regulations

• Educating/informing service providers & end-users

• enhancing management controls, governance & performance

3.Benchmarking and monitoring and evaluation

4.Implementation of ethical practices

Procurement Reforms SPECIFIC Targets

1.Increase compliance to standard procurement procedures based on RA 9184

2.Enhance procurement systems and tools and integrate with IT, systems in logistic, warehousing and financial management

3.Promote transparency and accountability in procurement transactions

4.Adoption/application of Agency Procurement Performance Indicator (APPI) to benchmark and monitor performance and identify capacity gaps and subsequent improvements in DOH units

5. Promotion and socialization of the ethical framework and core values on procurement

On savings …………………

Gains and Accomplishments

Savings Specific savings on …

53% Various drugs & medicines

43% Equipment for electrification projects

42% Printing of letterheads

33% IT equipment & construction materials delivery

25% Supplies, materials, services

17% Electrical/mechanical supplies & equipment

15% Various office supplies & equipment

15% Vehicles & supplies/materials

Estimated savings realized by the Philippines as a result of posting procurement opportunities on the GEPS, 2004

Source; Government Electronic Procurement System in Harmonizing Donor Practices for Effective Aid Delivery: Volume 3: Strengthening Procurement Practices in Developing Practices , World Bank, OECD Publishing, 2005,

Procurement Processed, COBAC, 2006

Items Contract

Amount in million pesos

% distribution

of Goods

Total % Distribution

GOODSVaccines+ syringes 307 64.50% 63.43% }Antiheminthics 33 6.93% 6.82% } 74.59%Other drugs & medicines 21 4.41% 4.34% }Health supplies/equipment 23 4.83% 4.75%Other relief/Disaster goods 23 4.83% 4.75%Trimedia placements 21 4.41% 4.34%IT equipment 4 0.84% 0.83%Other goods & services 44 9.24% 9.09% Total goods 476 100.00% 98.35%CIVIL WORKS 3 0.62%CONSULTING SERVICES 5 1.03%Grand total 484 100.00%

75%

Realized savings from selected major procurement packages, DOH Central Office, 2006

Procurement PackageABC(millions

in pesos)Actual Cost in millions

Percent savings

Various pharmaceuticals 19.69 7.92 60%Application/web servers 1.80 0.78 57%IT & Office Equipment 2.41 1.11 54%PPEs 20.00 10.03 50%Drugs & meds for Guimaras 26.19 13.45 49%Poster 1.44 0.80 45%Drug testing kits 1.50 0.87 42%ORS & chlorine granules 0.25 0.16 36%Printing materials 1.40 1.00 29%Blood donor bracelets 1.30 0.98 25%Gas chromatography 15.00 11.50 23%DOH wall calendar 1.42 1.14 20%Airconditioners 0.81 0.67 17%Computer supplies 1.55 1.28 17%IT equipment 0.41 0.35 15%Construction materials 0.27 0.24 11%Waste treatment provider 9.93 9.00 10%Blood donor photo ID system 0.76 0.69 10%Airconditioners 0.27 0.24 11%Rabies manual printing 0.55 0.51 7%Computers & peripherals 0.24 0.22 4%Media placements 14.25 13.87 3%TOTAL 121.44 76.81SAVINGS 37%44.63

Procurement Time/Duration

• Average procurement time vis-à-vis RA 9184 for goods have been significantly becoming shorter since 2005.

• 2005: 3 to 4 months

• 2006: 2 to 3 months

• Consulting services procurement needs improvement

Availability of Commodities

• No major vaccine stock-outs the past 2-3 years (excluding Hepa-B)

• Some medicines like anti-TB drugs, ARVs are more accessible

• Supplies and materials have become predictably available when requested/ required

Participation of civil society

Publication of all invitation to bid, bid results, price monitoring data, CO registered suppliers

Establishment of appeals, protests and blacklisting mechanisms

Establishment of Integrated development Committees

Formulation of the draft ethical framework for the selection, registration and procurement of medicines.

On increasing transparency and accountability and ensuring integrity of the procurement

process……………….

• Civil Society Forum on Transparency, Anti-Corruption and Citizen’s Participation on August, 2006

• COBAC recognized for its 100% compliance in posting in GEPS (Government Electronic Procurement System) of bidding opportunities and bidding results

• DOH recognized by GPPB & Civil Society as the agency that is most committed in correcting procurement mistakes/lapses

•

On increasing transparency and accountability and preserving integrity of the procurement

process………………

• Increasing requests for posting of bidding opportunities in DOH website of CHDs and hospitals without websites

• Formulation of the Delegation of authority- AO 2006-0034 for the central office, CHDs and hospitals

• Defined responsible personnel & officials for each procurement step

On increasing transparency and accountability and preserving integrity of the procurement

process………………

On increasing transparency and accountability and ensuring integrity of the procurement process……………….

Particulars based on COBAC data 2004 2005 2006

Letter of reconsideration during bidding process

6 16 5

Letter of reconsideration during contract implementation

3 10 11

Bidders complaints/observations 5 4 5

NAMFREL observations - 8 13

Blacklisted Suppliers(Document falsification, refusal to accept award, failure to post performance security)

2 3 3

• Establishment of appeals, protests & blacklisting of mechanisms

HEAD OF PROCURING ENTITY

SOH/CHD Director/MCC/HC

94Bids and Awards

Committees (BAC)

Integrity Development Committee

INTERNAL CONTROL/ OBSERVER

• DOH Internal Audit

• COA Field Office

Resident Ombudsman

EXTERNAL CONTROL/ OBSERVER

• NAMFREL

• Transparency and Accountability Network

• Procurement Watch

• COFILCO

• Other NGOs/ Private Sector

DOH Procurement Organizational Set-Up

Technical Working Groups

Subject Experts

Legal Office

Capability Development

• Training TARGETS:

• End-users/PMOs/AOs

• BAC, Secretariat, TWG Members, & Partners

• Rolled-out training on RA 9184 and use of Philippine Bidding Documents

• At least 300 participants or 31% of 1,500 target from 94 BACs

• Substantial CHD/hospitals’ initiated training

• Identified and oriented NAMFREL volunteers on red flags of corruption in procurement

Reforms in system, tools & procedures

• Mandated use of standard Philippine Bidding documents (edition II)

• Adoption of standard procurement forms

• Customized and tested at central office the DOH procurement manuals for goods and consulting services

Reforms in tools, systems & procedures

Clearing houses for item specifications & TOR for services

Creation of TWG Pool at the central office

Establishment of Simplified Suppliers’ Registration System

BFAD prioritization of DOH procured drugs and medicines testing

BFAD continuous strengthening of drug registration

Enhancement of feedback mechanism to end-users

Establishment of central office Depot for all common office supplies

Reforms tools,systems, and procedures

Institutionalization mechanism for reward to performing personnel involved in procurement

Granting honoraria to COBAC and TWG members pursuant to DBM Budget Circular No. 2004-5A and DOF-DBM-COA Joint Resolution No. 2005-2

2004 2005 2006

COBAC 96,000 209,000 393,000

TWG 168,750 192,000 378,000

Secretariat 264,770 25,079 324,981

Total 529,520 426,076 1,095,981

No cases filed against COBAC/TWG except 1 which is already dismissed

Legal assistance and even liability insurance is already a right which is not the same with regard co-government employees

On reward to performing personnel involved in procurement…………….

•

Reforms tools, systems and procedures

Development of automated systems to facilitate and further organize procurement process & enhance sharing of data/info

-Consolidation of the Annual Procurement Plans

-Guidelines for Health Commodities Reference Information System (HCRIS)

-Simplified Suppliers Registration System

-Price monitoring

• Use of Agency Procurement Performance Indicator (APPI)

• Tool to monitor and evaluate actual implementation at the agency/micro level of RA 9184

• To benchmark and monitor progress on procurement reforms

• Indicator for F1 Monitoring & Evaluation

BENCHMARKING, MONITORING & EVALUATION

• APPI – derivative of Baseline Indicator System (BIS)

• BIS - macro indicator used for assessment and comparison of national public procurement systems

• Applied in the Philippines

• Total score of 67.89% in 2004

• 68% score translated to level of achievement = ALL baseline indicators substantially met

• Basis to recalibrate the Phil. public procurement strategy

BENCHMARKING, MONITORING & EVALUATION

APPI tells you whether an agency has ….

A strategy for achieving an effective procurement program & whether this strategy is in line with the national procurement reform policy

An organizational structure and employee capacity to support the strategy in line with the national procurement reform policy

Internal procurement processes that supports the strategy in line with the national procurement reform policy and is in accord with its organizational set-up

Whether the agency is able to undertake its procurement in an effective manner

APPI Pillars

Pillar Major indicator Description & Weights

I Legislative and Regulatory Framework

Strategy to implement RA 9184 (6%)

II Central Institutional Framework & Management Capacity

Professionalization Measures (16%)

III Procurement Operations and Market Practices

Organization Structure(16%) Procurement Process (30%) Effectiveness (16%)

IV Integrity of the Public Procurement System

Accountability Measures(16%)

• 2005: APPI piloted at central office:

• Self Assessment = 82% } Substantially• Consultant = 81% } Achieved• GPPB = 79% }

• Basis for improving system

• 2006 Score = 94.6% - Fully Achieved

• 2006: tested in a NCR hospital using 2005 data:

• Score = 24.1 % = Partially Achieved Level

• Oriented 15 supply officers from CHDs and hospitals to help COBAC deploy system

BENCHMARKING, MONITORING & EVALUATION

Ethical Framework for the Pharmaceutical Sector –Registration, Selection and Procurement

• Global initiative initiated by WHO, 2004

• Assessment of vulnerability to corruption & tool of accountability in registration, selection & procurement of pharmaceuticals

• Unified Core values: justice, transparency, efficiency,integrity & code of conduct

•Draft ethical framework and core values done with the selected hospital & CHDs and pharmaceutical industry

•Draft Code of Conduct on Procurement initiated by the Office of Ombudsman

Application of the Ethical Infrastructure for a Good Procurement System

1. Mainstreaming reforms, overcoming resistance to change

2. Narrowing the gaps and variations in procurement practices among DOH units

3. Adherence to the principle of transparency, efficiency, equity, economy, fairness & respect

4. Integration with logistics & financial management

5. Sustaining reforms

CURRENT CHALLENGES

MAINSTREAMING & CAPACITY BUILDING

1. Continuous capability building/training

2. Finalization and adoption of DOH customized procurement manuals

3. Development of procurement guidelines for drugs and medicines & other health products and services

4. Continuous promotion of transparency & accountability using GEPS and partnership with civil society

5. Automation/computerization of procurement systems and integration with logistics management and e-NGAs

CURRENT THRUSTS

Benchmarking, Monitoring & Evaluation

5. Adoption/application of APPI as a benchmarking and monitoring tool and basis for further improving procurement systems and practices among CHDs and hospitals

Ethical Framework on procurement

6. Finalization of the ethical framework & customization of the Code of Conduct for procurement

7. Promotion, socialization, & cascading ethical framework, core values at agency level

CURRENT THRUSTS

You could have save another life,

If you had bought just one more!

-----Anonymous