1. PROCUREMENT REFORMS PROCUREMENT REFORMS ALEXANDER A. PADILLA Undersecretary of Health Chairperson, Procurement Coordinating Committee & Central Office Bids & Awards Committee 1 st National Staff Meeting CY 2007, January 24-25, 2007, Clark Field, Pampanga

2. Initial Challenges Policies 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

3. BASIS Republic 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

4. 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

5. 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

6. 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

7. On savings ………………… Gains and Accomplishments

8. SavingsSpecific 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,

9. Procurement Processed, COBAC, 2006 75%

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

11. 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

12. 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

13.  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……………….

14. 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………………

15. 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………………

16.  On increasing transparency and accountability and ensuring integrity of the procurement process………………. Particulars based on COBAC data200420052006 Letter of reconsideration during bidding process 6165 Letter of reconsideration during contract implementation 31011 Bidders complaints/observations 545 NAMFREL observations -813 Blacklisted Suppliers (Document falsification, refusal to accept award, failure to post performance security) 233 Establishment of appeals, protests & blacklisting of mechanisms

17. HEAD OF PROCURING ENTITY SOH/CHD Director/MCC/HC 94 Bids 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

18. 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

19. 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

20. 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

21. 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 200420052006 COBAC96,000209,000393,000 TWG168,750192,000378,000 Secretariat264,77025,079324,981 Total529,520426,0761,095,981

22.  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…………….

23. 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

24. 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

25. 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

26. 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

27. 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%)

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. You could have save another life, If you had bought just one more! -----Anonymous