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Procurement Reforms

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					           PROCUREMENT
            REFORMS
      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 Challenges
Policies
•   Unresponsive(e.q Some drugs not included in PNDF)
•   Not clear, varied
•   Weak enforcement                                            Graft &
•   Ambiguities in accountabilities                            Corruption
Systems and Processes
•   Absence of SOPs
•   Very poor planning                                          Slow/long
                                                               Procuremen
•   Non- adherence to Annual Procurement Plan.                  t Process
•   Poor item specifications & TOR formulation
•   Weaknesses in drug selection and registration
•   Inconsistent drugs procurement w/ regional morbidities        High
                                                               Transaction     PROCUREMENT
•   Unshared data, files & documents
                                                                  Cost         INEFFICIENCIES
•   Wide price discrepancies
•   Inadequate transparency in procurement processes
•   Lack of monitoring and evaluation system                    Inability to
•   Weaknesses in the drugs quality assurance and                 Procure
    inspection & acceptance
Resources
•   Inadequate number of skilled/professional staff              Tedious
•   Inadequate supply and equipment support                    Procuremen
•   Unavailability of baseline and comparative data (price)     t Process
Organizational
•   Inefficient supply chain structure
•   Inadequate stakeholders’ participation
                  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
Hierarchy of Reform Objectives                                                                                              SOCIAL
                                                                                                                            IMPACT
                                                                                                                 ECONOMIC
                                                                                                                  IMPACT    •Better chance to
                                                            PROCUREMENT                                                     achieve health
                                                               IMPACT                                                       outcomes

                                                         •       More                                    •Greater VALUE     •Better access to
                                                         COMPETITION,                                    for MONEY          health services
                                                         TRANSPARENT &
                                                         PROFESSIONAL                                    •Budgetary         •Improved
                                                         PROCUREMENT                                     SAVINGS            DOH/gov’t.
       Mainstream                                        • Greater procurement                           •More              reputation
                                                         EFFICIENCY                                      EFFECTIVE Use
       Procurement                                                                                                          •Enhanced
         Reforms                                         •RESPECT for DOH                                of FUNDS
                                                         procurement                                                        respect for rule
                                                                                                         •Improved
                                                         •Less CORRUPTION
                                                                                                                            of law
                                                                                                         SERVICE
                                                         • Better QUALITY                                DELIVERY           •Increased access
                                                                        goods/services                   • Debt reduction   of local market to
                                                                                                                            DOH contracts
                                                                                                                            •Better conflict
                                                                                                                            prevention or
                                                                                                                            resolution
      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,
        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
   Gains and Accomplishments


On savings …………………
     Estimated savings realized by the Philippines as a result of
       posting procurement opportunities on the GEPS, 2004
  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
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
                                 Contract       %
                                                        Total %
           Items               Amount in distribution
                                                      Distribution
                              million pesos of Goods
GOODS
Vaccines+ syringes                     307      64.50%     63.43% }
                                                                        75%
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%
Realized savings from selected major procurement packages, DOH
                       Central Office, 2006
                              ABC(millions   Actual Cost     Percent
    Procurement Package        in pesos)     in millions     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           76.81
SAVINGS                                  44.63                37%
      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
On increasing transparency and accountability and ensuring
        integrity of the procurement process……………….


 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 preserving
         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 ensuring
    integrity of the procurement process……………….

    • Establishment of appeals, protests & blacklisting of
                        mechanisms

     Particulars based on COBAC data                    2004 2005 2006
    Letter of reconsideration during                      6    16   5
    bidding process
    Letter of reconsideration during                      3    10   11
    contract implementation
    Bidders complaints/observations                       5    4    5
    NAMFREL observations                                   -   8    13
    Blacklisted Suppliers(Document                        2    3    3
    falsification, refusal to accept award, failure to
    post performance security)
                          HEAD OF PROCURING ENTITY
                           SOH/CHD Director/MCC/HC


   Resident Ombudsman
                                                     Integrity Development Committee


                                       94
  EXTERNAL CONTROL/             Bids and Awards                 INTERNAL CONTROL/
      OBSERVER                 Committees (BAC)                     OBSERVER




• NAMFREL                    Subject Experts                  • DOH Internal Audit
• Transparency and                                            • COA Field Office
  Accountability
  Network                    Technical Working
                                  Groups
• Procurement Watch
• COFILCO                      Legal Office
• Other NGOs/   Private
  Sector



                 DOH Procurement Organizational Set-Up
                  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       Granting honoraria to COBAC
 mechanism for reward         and TWG members pursuant to
 to performing                DBM Budget Circular No. 2004-
 personnel involved in        5A and DOF-DBM-COA Joint
 procurement                  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
       On reward to performing personnel involved in
                   procurement…………….

                             •



 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
         Reforms tools, systems and procedures


Development      - Consolidation  of the Annual
of automated       Procurement Plans
systems to
                 - Guidelines for Health
facilitate and
further            Commodities Reference
organize           Information System (HCRIS)
procurement
                 - Simplified   Suppliers Registration
process &
                   System
enhance
sharing of       - Price monitoring
data/info
BENCHMARKING, MONITORING & EVALUATION



• 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
     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           Strategy to implement RA 9184
       Regulatory Framework      (6%)
II     Central Institutional     Professionalization Measures
       Framework &               (16%)
       Management Capacity
III    Procurement               Organization Structure(16%)
       Operations and Market     Procurement Process (30%)
       Practices                 Effectiveness (16%)
IV     Integrity of the Public   Accountability Measures(16%)
       Procurement System
BENCHMARKING, MONITORING & EVALUATION

• 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
  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
Application of the Ethical Infrastructure for a
          Good Procurement System



• 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
              CURRENT CHALLENGES


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 THRUSTS

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

				
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