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By: Joy Aceron*
On March 16, 2020, Philippine President Rodrigo Duterte placed the entire island of Luzon with a population of almost 50 million under “Enhanced Community Quarantine” (ECQ) as a response to the growing threat of COVID-19. To date, over 400 have been found positive of COVID-19 in the Philippines, 33 of whom had died. The ECQ is a social distancing measure that involves strict home quarantine of all households, suspension of transportation, regulation of provision for food and essential health services and heightening of presence of uniformed personnel to enforce quarantine procedures.
On March 23, 2020, the House of Representatives and Senate deliberated and passed a bill that grants immense powers to the president to address the COVID-19 threat. The proposed legislation was quickly signed into law on March 25, 2020 with the title Bayanihan We Heal as One Act or Republic Act 11469.
Among the powers granted to the president by RA 11469 are exemptions to the government procurement law in order to undertake procurements in the most “expeditious manners” (Section 4.k). Some of the items listed that can be procured with exemptions include:
Expanding coverage of Negotiated Procurement in the Procurement Policies
Public procurement in the country is governed by a law called the Government Procurement Reform Act (GRPA) or Republic Act 9184. [1] The GPRA’s prescribed mode of procurement is public competitive bidding. However, Section 48 of the same law also provides for “Alternative Modes of Procurement." One of the Alternative Modes in the GRPA (Section 48.e) is Negotiated Procurement defined in the GPRA as:
“a method of Procurement that may be resorted under the extraordinary circumstances provided for in Section 53 of this Act and other instances that shall be specified in the IRR, whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.”
GRPA Sec. 53.b provides that Negotiated Bidding is allowed
“In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.”
Negotiated Procurement is further defined in the 2016 Revised Implementing Rules and Regulations of GPRA. Sec. 53.2 of 2016 IRR adds the following sentence to what is provided for in Section 53.b of the GPRA:
“….In the case of Infrastructure Projects, the Procuring Entity has the option to undertake the project through negotiated procurement or by administration or, in high security risk areas, through the AFP.” [2]
On March 9, 2020, the Government Procurement Policy Board (GPPB) passed Resolution 03-2020 entitled Approving the Adoption of Efficient, Effective and Expedient Procurement Procedures During a State of Public Health Emergency. The said resolution further expands the “Emergency Cases” that can use Negotiated Procurement to include:
“…. the provision of immediate response and initial recovery steps to avoid loss of life, injury, disease and other negative effects on human, physical, mental and social well-being, together with damage to property, destruction of assets, loss of services, social and economic disruption and environmental degradation.” [3]
Procurement guidelines for health emergency
GPPB Resolution 03-2020 was passed in response to the declaration of the State of Health Emergency (Proclamation 922) declared by President Duterte last March 9, 2020 which mandates that
“the relevant government entities shall be capacitated to facilitate the sufficient and immediate access to funding, particularly for all concerned government agencies and local government units, intensify government response and measures such as easing procurement process, mandatory reporting, and enforcing quarantine and disease control prevention measures”
It is still unclear if the Bayanihan We Heal As One Act will utilize GPPB Resolution 03-2020 to guide its procurement activities. The Resolution was passed before the said legislation. Especially for a law that provides for encompassing powers, the exemptions or points of departure from existing laws and guidelines must be clear. Also, there should still be controls and accountability measures accompanying the exemptions in a way that will not compromise the goal of efficient and fast procurement to respond to the state of emergency.
In the GPRA, some of the notable accountability mechanisms include strict boundaries of what can be under Negotiated Procurement, clear liabilities of concerned government officials especially the head of the procuring entity which comes with appropriate sanction and penalties, representation/ participation of civil society in the procurement process, proactive disclosure of information, policy regulation through the GPPB and legislative oversight. All public procurements are also subject to the usual auditing of the Commission on Audit.
Will the special powers of the president on the conduct of procurement under RA 11469 include the same accountability measures? The said law only institutes only one accountability measure: reporting to Congress. This will not be sufficient, especially in controlling corruption in procurement.
Controlling corruption in procurements, especially in crisis situation
Procurement-related corruption in the Philippines continues to be popularly perceived as widespread and common despite the existing controls. This is on top of the worsening general state of corruption in the Philippines. According to Transparency International’s Corruption Perception Index, the Philippines dropped 14 notches to 113th from 99th in year 2018, its worse CPI ranking since 2012. An official of the Office of the Ombudsman announced last year that the Philippines is losing Php700 billion to corruption every year. That’s around 20% of the total budget appropriation of the country.
Several studies and empirical evidence have shown that crisis and disaster further exacerbate corruption and its ill-effects. A 2014 article published in the journal Public Choice stated that, “Natural disasters have a greater impact on public sector corruption in developed countries than in developing countries.” [4] A related empirical study in 2006 shows how corruption during disaster increases fatalities or how it literally kills. [5] “Corruption is a major factor in weakening efforts to bring the problem of disasters under control, says one study. It adds that “the solution is to reduce its impact by ensuring that transactions connected with disasters are transparent, ethically justifiable, and in line with what the affected population wants and needs.” [6]
One area that becomes more prone to corruption during a crisis situation is procurement. A recent article by Transparency International (TI) on corruption and coronavirus lists down procurement “of medicines and supplies in health systems [as] typically one of the most vulnerable areas for corruption” during pandemics. [7] This is consistent with a study in 2015 that says, “Corruption in emergency procurement not only reduces the amount and the quality of resources for life-saving operations, but it also influences public support for humanitarian relief by increasing transaction cost.” [8]
The TI article also shares some important figures on corruption in procurement, particularly on health:
The numbers seem to correspond to the estimate provided by the Ombudsman on the percentage of Philippine budget (20%) lost to corruption every year.
In the Congress deliberation on the Bayanihan We Heal As One Act, the Executive said it will mobilize Php 275 billion to respond to COVID-19. The Department of Finance has earlier announced that it is allocating Php27.1 billion as coronavirus war-chest and is seeking an additional US$1 billion loan for the same purpose.
Pegging the total budget for COVID-19 response at Php300 billion at least and using the UNODC estimate of percentage of public funds lost to procurement-related corruption globally (10-25%), we could extrapolate that we risk losing at least Php30 to Php75 billion of the total COVID-19 funds to corruption if we do not have the appropriate and effective controls and accountability mechanisms.
With the huge task at hand and insufficient health equipment and services literally leading to fatalities, it is an understatement to say that we cannot afford to lose money to corruption in this crisis situation. We need to control corruption in our COVID-19 response so as not to undermine our chance at defeating this global pandemic.
* Joy Aceron is Convenor-Director of Government Watch (G-Watch), a national citizen action and research for accountability that has been engaging public procurements since early 2000 (see www.g-watch.org). She is also a research fellow and adviser at Accountability Research Center based in School of International Service of American University (see www.accountabilityresearch.org).
References:
[1] Access the full copy of the Government Procurement Reform Act here: https://www.chanrobles.com/republicactno9184.htm#.XnrK2tMza8U
[2] See the 2016 Revised Implementing Rules and Regulations of GPRA here: https://www.gppb.gov.ph/laws/laws/RevisedIRR.RA9184.pdf
[3] See GPPB Resolution 03-2020 here: https://www.gppb.gov.ph/issuances/Resolutions/GPPB%20Resolution%20No.%20...
[4] Eiji Yamamura. Impact of natural disaster on public sector corruption. Public Choice. Vol. 161, No. 3/4 (December 2014), pp. 385-405.
[5] Escaleras, Monica, et.al. 2006. Public Sector Corruption and Natural Disasters: A Potentially Deadly Interaction.
[6] Alexander, David. Corruption and the Governance of Disaster Risk. Oxford Research Encyclopedias: Natural Hazard Science. October 2017.
[7] Transparency International. Corruption and Coronavirus: How to Prevent the Abuse of Power During a Global Health Pandemic. 18 March 2020. https://www.transparency.org/news/feature/corruption_and_the_coronavirus?fbclid=IwAR1uvTEHTa4cG0m_DdI7WKhDgyB76jXApSfJ_vvYqVWDO_Ltmxf0vpoOwNY)
[8] Saharan V. (2015) Disaster Management and Corruption: Issues, Interventions and Strategies. In: Ha H., Fernando R., Mahmood A. (eds) Strategic Disaster Risk Management in Asia. Springer, New Delhi.