Public Procurement

Procurement is commonly defined as the acquisition of appropriate goods and/or services at the best possible price to meet the needs of the purchaser in terms of quality and quantity, time, and location. The procurement process formally starts from the point where the need to make a purchase to deliver an objective has been identified, and its process ends when the product has been used up or sold on, or the service contract has been delivered completely and the supplier or contractor is paid in full. The procurement function makes it possible for organizations to plan, acquire and distribute their needed resources - from paper and pens, to mobility items, IT systems and applications, security contracts, consultancies - to continue the business operations of the firm. In any organization,procurement is the largest or second-largest category of expenditure. In contemporary business parlance, the term procurement is an “umbrella” term which includes in its sphere concepts such as logistics and inventory management, online transactions, sourcing and outsourcing, supply chain management and operations, and eBidding. Procurement is an essential function that helps shape corporate strategy and success.

All organizations aim for good procurement practices and that means value for money – that is, buying something that is fit for purpose, taking into account the overall cost. A good procurement process should also be delivered efficiently, to limit the time and expense for the parties involved.

Procurement is also a major activity in government. In the Philippines, hundreds of billions of pesos is spent by the government to buy the goods and services it needs to operate the bureaucracy, carry out projects and deliver services to its citizens. The World Bank, a development partner, cites that for the past four years, an average of P121 billion worth of infrastructure, equipment, materials, supplies, and services pass through government procurement processes each year which accounts for 15% of the country’s annual budget.

Procurement plays a central role in delivering all Philippine government priorities – from the free drugs and medicines at public hospitals, the public school buildings, desks and chairs, to the guns and ammunitions of the military and police and the electronic systems that supported our recently-concluded automated elections.

The Philippines’ procurement system used to be described as cumbersome and prone to corruption as there were many outdated and inconsistent laws and many agencies dealing with issuance of guidelines and procedures in procurement. The public perception was that government procurement was characterized by fraud, inefficiency and lack of transparency. As a result, there was very low trust and confidence in the public procurement system.



The Government Procurement Reform Act (Republic Act No.9184 s. 2003)

With the passage in January 2003 of the Government Procurement Reform Act (GPRA) or Republic Act No. 9184 (RA 9184), the Philippine procurement system was rationalized and harmonized with international standards and best practices.

RA 9184 espoused the principles of transparency, competitiveness and accountability. It also mandates the use of streamlined procurement processes and monitoring of government procurement activities by the public. More importantly, the GPRA created the Government Procurement Policy Board (GPPB), as the central policy and monitoring body with the following functions:

• Protect national interest in all matters affecting public procurement, having due regard to the country’s regional and international obligations
• Formulate and amend, whenever necessary, the implementing rules and regulations and the corresponding standard forms for procurement
• Ensure that Procuring Entities regularly conduct procurement training programs and prepare a Procurement Operations Manual for all offices and agencies of government; and
• Conduct an annual review of the effectiveness of the Government Procurement Reform Act and recommend any amendments thereto, as may be necessary

The GPPB acts as the oversight authority in all government procurement. It is headed by the Secretary of the Department of Budget and Management as Chairman and the Director-General of NEDA as Alternate Chairman. The Members of the Board are comprised of the Secretaries or the authorized representatives of the Departments of Public Works and Highways, Finance, Trade and Industry, Health, National Defense, Education, Interior and Local Government, Science and Technology, Transportation and Communications, and Energy. A representative from the private sector appointed by the President also sits as a Member of the Board. Representatives from the Commission on Audit and from relevant government agencies and professional organizations from the private sector are invited in GPPB Meetings to serve as Resource Persons.

The GPRA likewise provided for the creation of the GPPB Technical Support Office (TSO) which provides technical and administrative support to the GPPB.

Standard bidding documents and generic procurement manuals were developed by the GPPB-TSO and anti-corruption provisions were incorporated in the law, including provisions for sanctions and penalties for non-compliance with the rules and guidelines. To enhance transparency in government procurement processes, the law also required the invitation of observers from the Commission on Audit, the civil society or professional organizations and from non-government organizations to sit in procurement proceedings conducted by government agencies. The GPPB-TSO also embarked on a comprehensive training program to educate, professionalize and improve the skills of government procurement practitioners.

Another important breakthrough in the Government Procurement Reform Act is the provision mandating all government agencies to utilize the Government Electronic Procurement System (now the PhilGEPS http://philgeps.gov.ph) as the single portal that shall serve as the primary source of information on all government procurement. The procurement process across all government agencies, from all branches of government, to local government units and public schools and universities, now involves announcing and advertising all procurement opportunities, inviting qualified parties to bid, evaluation of bids, awarding of contracts, monitoring of delivery and performance and payment. The whole process is recorded and posted electronically for others to see.



The Philippine Government Electronic Procurement System (PhilGEPS)

What has become PhilGEPS today had its beginnings as the Pilot Electronic Procurement System (Pilot EPS) in November 2000. By utilizing the accessibility of the internet, the EPS was established with the assistance of the Canadian International Development Agency (CIDA) as a common portal for registration of suppliers and advertisement of bid opportunities.

The passage of the Government Procurement Reform Act in 2003 further boosted the importance of PhilGEPS. This law set forth the rules and regulations for government procurement transactions as guided by the principles of transparency, competitiveness, streamlined procurement processes, accountability, and public monitoring. It required all government requirements from goods, consulting services to civil works to be centrally posted through an internet infrastructure which will be called the Philippine Government Electronic Procurement System (PhilGEPS).

With the implementation of RA 9184, all National Government Agencies (NGAs), Government Owned and Controlled Corporations (GOCCs), Government Financial Institutions (GFIs), State Universities and Colleges (SUCS) including Local Government Units (LGUs) are mandated to use the PhilGEPS. Suppliers, manufacturers, contractors, consultants are also required to register as well. Through the use of the PhilGEPS, transparency in government procurement is enhanced since opportunities to trade with government and the ensuing transactions are provided online. Information on changes in terms of references, bid schedules and on the winning bidder and contract amount are all accessible through the system. In addition, the electronic catalogue, which provides information on pre-approved cost of commonly used items, will help government auditors check that supplies purchased by a government agency are not grossly over-priced. Before the enactment of RA 9184, bid opportunities costing 2M and above for goods and consulting services and 5M and above for civil works should be advertised twice on two newspapers of general circulation. With the new law, opportunities are now required to be advertised only once in a newspaper of general circulation and posted continuously in the PhilGEPS for seven calendar days. As a result, the government has been able to save close to Php 1.05 billion in newspaper advertisement expenses alone as of June 2014.

As of December 31, 2014, the PhilGEPS hosted bid opportunities posted by 23,668 government agencies and accessed by 65,544goods and services providers. A total of 2,745,639 bid notices have been posted by various procuring entities in the system.

The PhilGEPS is presently managed by an Executive Director III who reports to the Procurement Service Executive Director IV and the Government Procurement Policy Board. The PhilGEPS management office consists of 43 officers and staff who perform the following critical tasks:

• Formulate, recommend and implement long and short range plans and strategies relative to the PhilGEPS project
• Regularly report to the GPPB and PS-PhilGEPS Executive Director IV on the status of the project
• Manage the contract/service level agreements with the outsourced system developers and service provider
• Administer the PhilGEPS system including the registration and provision of helpdesk services to the agencies and suppliers
• Develop and maintain the PhilGEPS Business Plan
• Monitor and evaluate the compliance of agencies and suppliers in the use of the PhilGEPS; and
• Update and improve market research and promote the use of the PhilGEPS for both government and private entities

The PhilGEPS has brought significant benefits to the government in terms of the following:

• Improved transparency in government procurement
• Enhanced competition and realization of value for money in procurement
• Improved administrative efficiencies
• Reduction in procurement costs, including newspaper advertisements
• Provision of audit trails through information posted in the system; and
• Serves as a medium in implementation of government procurement policies, transparency and good governance measures
• The expansive database of information in PhilGEPS aids government agencies in procurement planning and monitoring

Merchants – i.e. suppliers and contractors doing business with government derive the following gains from using the system:

• Access to government bid opportunities 24 hours a day and 7 days a week
• Downloading of electronic bid documents
• Automatic notification, through the user’s email, of bid postings and supplements
• Savings on newspaper costs, transportation and manhours
• Information on government bid projects is important in market research and in making business decisions

The PhilGEPS has been benchmarked and studied by neighboring countries such as Indonesia, Vietnam, Nepal, Bhutan and other countries such as Malawi, Tanzania, Papua New Guinea and Sierra Leone who envision having their own central e-procurement system. PhilGEPS officials have been invited to present the PhilGEPS program and experience in various fora, symposia and other gatherings of world-renowned e-Procurement organizations and practitioners such as those in the United States, South Korea and Singapore and in global gathering of procurement experts here and abroad. In March 2015, a study group led by the PhilGEPS Executive Director went to New Zealand to observe reforms and efficiencies in that country’s procurement system. In all these international gatherings, the efforts of the Philippine government in pushing for reforms in government procurement were recognized and commended. Multilateral development partners like the World Bank (WB) and the Asian Development Bank (ADB) acknowledge the fact that the PhilGEPS is a viable instrument in the government’s efforts at improving efficiency in the procurement function and has accepted the PhilGEPS for application on ADB and WB- funded procurement projects. Development partners and a multi-stakeholder foundation like CoSTPHILS also continue to support the PhilGEPS systems development, training endeavors and communications activities by providing grants and technical assistance.

PhilGEPS presently offers the following functionalities:

• Electronic Bulletin Board
• Government Official Merchants’ Registry
• Electronic Catalogue
• Automatic Bid Notification
• E-Bidding
• Electronic Payment of PhilGEPS Fees and Purchase of Bid Documents (for PS)

The modernization of the PhilGEPS is ongoing with the vision of making it the total provider of eProcurement solutions to the government and its stakeholders. This includes the installation of additional functionalities like a more integrated e-bidding system tied into the government annual procurement plans and a facility for electronic payment to merchants, purchase of bid forms and payment of other bidding fees. The contract was awarded in January 2014 and the transition to the new system is expected by October 2015.



Good procurement is essential to ensure good public services, from buying goods and services that work as they are supposed to, to achieving savings that can be ploughed back into front-line services. PhilGEPS is committed to proactively participate in the challenges of contributing to procurement reforms by maintaining a safe and secure internet-based, open, and competitive marketplace for government procurement. PhilGEPS also embraces the task in helping develop procurement professionals and partnering with other government agencies to bring about reforms that will reflect our fervor to ensure that procurement drives further advancement in our delivery of public services to match the Filipinos’ rightly held high expectations for a government that serves the public’s best interests.