INTRODUCTION ______

Procurement is one of the most important aspects of the logistic services in any organization, especially with the government. The government created Republic Act No. 9184 (RA 9184) in its advocacy to eradicate corruption, or to at least minimize it, as well as to standardize the procurement process in all the governmental agencies and its instrumentalities.

Procurement Process is used to describe the procedure for the supply of equipment, materials and other resources required to carry out a project/program. It usually involves sub-processes such as sourcing, purchasing, monitoring, quality assurance and contract administration.

In most occasions, there is a tendency to fast–track the procurement process to meet project/program schedule. Hence, those involve in the procurement process are subjected to pressures given that they have to carry it out efficiently and effectively.

On October 29 and 30, 2009, the selected DOH COBAC Secretariat staff conducted a pilot testing of the Procurement Monitoring Process Tool for the future monitoring activities of the procurement process. The primary intentions of the activity are as follows:

1. To evaluate the efficiency and effectiveness of the monitoring tools and its process;2. To assess the institution’s level of implementation of RA 9184;3. To provide information on the newly issued Revised Implementing Rules and

Regulations (IRR) of RA 9184;4. To provide an avenue for an interactive and collective resolution of any procurement

concerns.

Pilot Site:

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MONITORING PROCESS______________________________________________

The Monitoring Team needs information that would help them assess the over-all procurement process and performance of the DMC and to satisfy the objectives as defined earlier in this report. Appropriate tools and various methodologies were developed and being used to come up with reliable and accurate monitoring results.

A. TOOLS

The Procurement Monitoring Tools are vital instruments to gather information as accurately as possible. However, there is a need to use different tools to validate and minimize the errors as much as possible. The tools used in this study are the following:

1. Procurement Document Checklist

The Procurement Document Checklist determines the completeness of the procurement documents being used as prescribed under the law. It is applied to determine the presence or absence of a particular procurement document.

2. Procurement Process Checklist

The Procurement Process Checklist is a tool to determine compliance with the procurement process as prescribed in the IRR. It lists all the stages of the procurement process in order to validate its implementation. It also serves as a guide for the Monitoring Team in the conduct of the Focus Group Discussion with the Procurement Unit.

3. Self-Administered Questionnaire

The Self-Administered Questionnaire is provided to the BAC, the BAC Secretariat and TWG members prior to the monitoring visit. This allows them to identify the factors that affect their procurement functions. It also provides the monitoring team an understanding of the working relationship of the Procurement Unit with the other units/divisions of the organization.

4. SWOT Analysis Form

The SWOT Analysis Form is used to identify the strengths, weaknesses, opportunities and threats of the Procurement Unit. It is also used to determine the appropriate action to be undertaken.

5. Feedback Form

Basically, the Feedback Form allows the Procurement Unit to give their comments on the monitoring team particularly on the tools and processes used in the conduct of the activity. It serves as an input for the enhancement and improvement of the monitoring visit.

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B. METHODOLOGIES

Just like the monitoring tools, the methodology on how the monitoring visit will be conducted is also critical. The use of appropriate methodology facilitates the efficiency and effectiveness of data gathering.

1. Self Administered Survey

The Self Administered Survey is done in order to gather information directly from the procurement practitioners. This method is used to assess the level of implementation of RA 9184 and its Implementing Rules and Regulations. It is also useful in validating the responses of the BAC, BAC Secretariat and TWG. It is given prior to the monitoring visit to provide ample time to answer the questionnaire.

2. Review of Documents

The Monitoring Team does the review of documents of the completed packages using the Procurement Document and Process Checklists.

3. Focus Group Discussion

For the Focus Group Discussion, the Monitoring Team asks first the procurement practitioners to do the SWOT Analysis. The results of the SWOT analysis as well as the two checklists are being used in the conduct of the Focus Group Discussion.

RESULTS____________________________________________________________________

Using the tools and methods designed for the monitoring activity, the team came up with following findings:

A. DOCUMENTS

The results of review of documents for the procurement of goods were based on the completed packages from the DMC’s purchases for CY 2009. The filing system of the documents is a combination of per kind and a per package basis. As to the per kind filing of documents, all Purchase Requests, all Abstract of Bids, all Resolutions, and all Purchase Orders are filed separately. The rest of the documents are filed together per package. Also at that time, the hospital was preparing documents to be submitted for COA’s pre-audit. One of the documents reviewed is the document for the Supply, Delivery and Installation of Medical Gas Piping System.

The results of the review of documents are shown in the table below:

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PROCUREMENT DOCUMENT CHECKLIST FOR GOODS

REQUIREMENTS REMARKS1. Pre-procurement Conference

a. APP/PPMP Prepared by the end-users by the end of the preceding year

b. Minutes of Pre-procurement Conference

Available In the form of printed copies and actual

minutes on the record bookc. Appropriation Fundd. Purchase Request Available on items which is not included

in APPe. Authority from DBM

2. Preparation of Bid Documents and Invitation to Bida. Approved Budget Cost

Available Also reflects consistently on the Invitation

to Bid, Bid Documents and Abstract of Bids

b. Certificate of Availability of Funds

Implemented by August 2009 Duly signed by accountant

c. Appropriation Fund d. Sample of Bid Documents

Includes all the necessary information for

the procurement such as ITB, GCC, SCC and IS

3. Advertisementa. Copy of Advertisement

Published in Bandera Posted in DMC Website and other

conspicuous places in the hospital Not posted in PhilGEPS due to some

problem in registration4. Pre-Bid Conference

a. Minutes of the Conference Available in both printed and actual copiesb. Copy of Supplemental Bid

Bulletin Sample: Change in Schedule of Bid

Openingc. Order of Bid Documents Orders of payment and receipts

5. Opening of Bidsa. Bid Security Receiptsb. Eligibility Checklist Available in a table form and ordinary

checklist (for use of bidders)c. Eligibility Documents Reviewed CLE Bio Company as a Sample

Complete d. Abstract of Bids Used Medical and Surgical Supplies and

Drugs and Medicines as samples Dated and signed by the authorized

signatories Reflects the resolution to recommend the

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award of contract for drugs and medicines, office supplies, medical and surgical supplies and laboratory supplies

Also, it reflects the comments of the TWG on the LCB

6. Bid Evaluation and Deliberationa. Technical Evaluation Report b. Minutes Not Availablec. Resolutions (if necessary) Not Available

7. Post-Qualificationa. Recommendation from the

TWGNot Available

b. Post qualification and evaluation reports

Available for infrastructures Sample reviewed: Supply, Delivery and

Installation of Medical Gas Piping System8. Approval of the Contract

a. Notice/Letter of Award

Includes details about performance security which should be in the form of cash, check or combination of the two for 5% of the Contract

b. Purchase Order Attached is the inspection and acceptance report

c. Performance Bond

Present in the form of receipts and certificates which states that the bid security shall take as a part of the performance bond

d. Copy of Contract

Available for infrastructure and services Copy reviewed: Supply and Installation of

Medical Gas Piping Systeme. Notice to Proceed Available for infrastructure

ALTERNATIVE MODES OF PROCUREMENT1. Direct Contracting

a. Certificate of Exclusive Distributorship

b. Certificate of No Sub-dealers Not Availablec. Certificate of Requisitioning

OfficerNot Available

2. Negotiated Procurementa. Certificate of Failure of

BiddingNot Available

b. Certificate to Negotiate Not Available3. In Case of other alternative modes

a. Justification through BAC Resolution

Not Available

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Other relevant findings:

Annual Procurement Plan (APP) does not have a column for the proposed mode of procurement.

Service items like Janitorial, Security and Laundry services are not included in the APP

The Budget cost totaled to P361,677,316.30 which is chargeable to allotment fund, hospital income and income from Philhealth.

Supplemental Procurement Plans (SPPs) are made available for items not included in APP.

Resolutions to recommend the award of contract are made available only for infrastructures and service items.

In case of local shopping as alternative mode, price quotations from suppliers and abstract of canvass are available in the property section.

The documents are in a very organized manner, all procurement files are stored in a particular place.

The therapeutic committee determines from the APP what would be given importance.

B. PROCESS

The assessment of the process was obtained through interview and focus-group discussion with the HBAC chair, members and the secretariat using the Procurement Process Checklist. The Focus Group Discussion was done separately with the HBAC and HBAC Secretariat.

The Procurement Process Checklist

PROCUREMENT PROCESS CHECKLIST

STAGES OF PROCUREMENT REMARKS1. Pre-procurement Planning

a. Preparation of WFP and PPMP

√ End-users prepare their respective PPMP in coordination with the evaluation of the Quality Assurance Committee (OAC)on products prior to bidding.

Format of the PPMP does not contain the mode of

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b. Consolidation of PPMP to APP

c. Review and recommending of approval

d. Approval of APP

e. others

√

√

√

√

procurement.

Property consolidates the PPMPs to APP. Likewise, the APP does not contain the mode of

procurement. The Consolidated APP is submitted to the Head

of Procuring Entity (HoPE) – Chief of Medical Center.

Approving Auhority : HoPE

HBAC, Accounting, Budget and COA receive copies of the Consolidated APP.

HBAC Secretariat prepares the Approved Budget of the Contract (ABC) for each procurement project with the use of the GPPB approved form.

FOR COMPETITIVE BIDDING2. Preparation of Invitation to

Apply for Eligibility and to Bid (IAEB) and the Bid Documents

√ HBAC prepares the IAEB and Bid Document for each procurement project based on the ABC and Consolidated APP.

3. Review and Approval of IAEB and Bid Documents

√ Reviewing Authority: HBAC Approving Authority: HoPE

4. Pre-procurement Conferencea. At least seven (7) days

before the advertisement

b. Matters being discussed

√

√

It is usually conducted a month before the bidding.

During this stage of the procurement process, the HBAC members, end-users and QAC convene to discuss mode of procurement, scheduling of procurement activity, and evaluation of the items to be procured.

5. Advertisementa. Place of Advertisement √ It is posted in conspicuous place, DMC website,

an d Newspaper (usually Bandera) IAEB is not posted in the PhilGEPS because

DMC encountered problems in uploading the PhilGEPS.

6. Issuance of Bid Documentsa. Form of Bid Documents

(whether hardcopy of softcopy)

b. Price range of Bid Documents

√

√

Bid Document is in printed form. It also contains financial proposal form and

sample forms.

Bid Document fee is based on the items to be procured, its ABC, and the prospective number of

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Bidders per procurement project.7. Pre-bid Conference

a. At least twelve (12) calendar days prior to deadline of submission

b. Matters being discussed

√

√

It is conducted seven (7) days after the last day of publication.

Matters taken up during this stage includes discussion on the contents of the bid documents, clarification on the technical specification, and other requirement.

8. Preparation and Issuance of Bid/ Supplemental Bulletina. Person Responsible for

the preparation

b. Person responsible for the approval

c. Person responsible for issuance / posting

d. Place of posting / issuance

√

√

√

√

HBAC Secretariat prepares the Bid Bulletin based on the matters taken up during the Pre-bid Conference.

Approving Authority: HBAC

HBAC Secretariat is responsible for the posting of the Bid Bulletin.

It is posted in the DMC website and conspicuous place.

Posted at least seven (7) days before the Bid Opening.

9. Bid Opening including eligibility checka. Issuance of Notice of

Eligibility or Ineligibility

b. Decision on Request of Motion for Reconsideration for those who were declared as ineligible

√

√

During the Bid Opening, the HBAC use the pass/fail criteria.

Deadline for submission is strictly followed. The Eligibility envelope is opened first, followed

by the Technical Proposal and lastly by the Financial Proposal.

Bid Proposals are opened in the presence of the bidders and observers. Disqualified bidders are immediately informed and instructed to submit their Motion of Reconsideration (MR) within three (3) days.

Motions of Reconsideration are resolved within seven (7) days.

10. Bid evaluation and Determination of Lowest Calculated Bid (LCB)

√ HBAC conducts the bid evaluation seven (7) days from Bid Opening.

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11. Post-qualification of the LCB √ It is conducted by HBAC. HBAC Secretariat prepares the Abstract of

Calculated Bids.12. Deliberate Technical

Working Group (TWG) Recommendation. If approved, declare and approve Lowest Calculated and Responsive Bid (LCRB).

√ QAC conducts the evaluation of LCRB for medical equipment.

Written reports are only for infrastructure and equipment.

13. Approval and Issuance of Notice of Award (NOA)

√ HBAC Secretariat prepares the NOA. It is approved by the HoPE.

14. Purchase Order/ Contract Preparation and Processing

√ It is performed by the Property. But for services, the HBAC Secretariat prepares

the contract.15. Submission of Performance

Security and Other Documentary Requirements

√ It is performed by Property. But for services and infrastructure, order of

payment is issued by HBAC Secretariat.16. Approval of Purchase Order/

Contract√ It is approved by HoPE.

17. Issuance of Approved Purchase Order/ Contract and Notice to Proceed (NTP)

√ This responsibility lies with Property. Notice to Proceed applies only to Infrastructure

and Lease contracts.

FAILURE OF BIDDING18. Actions take when there is a

failure of bidding19. Process of conducting a re-

bid

√

√

Rebidding is conducted.

Rebidding follows the prescribed procurement process.

ALTERNATIVE MODES OF PROCURMENT (Activities undertaken and conditions being satisfied):

20. Limited Source Bidding √ It was conducted last 2008.

21. Direct Contracting √ This is for supplies.

22. Repeat order √

23. Local Shopping √ It is the most commonly used alternative mode of procurement.

It is approximated at 20% of the procurement activity for 2009.

24. Negotiated Procurement √

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Public Competitive Bidding is the main mode of procurement. This is done semi-annually.

Shopping and Repeat Order are the most commonly used alternative modes of procurement.

Observers are invited during Pre-bid Conference and Opening of Bids. Observers include NAMFREL, GIRL SCOUT, BOY SCOUT, COA and Chamber of Commerce.

OVER-ALL EVALUATION

PILLAR I: The Legislative and Regulatory Framework

The DMC established strategies and initiatives to cascade RA 9184 and harmonized the IRR at the agency level.

One of the initiatives that they have done is creating a special BAC focusing only on infrastructure projects. This can make the processes easier for the agency. These strategies were satisfactorily executed by the agency. Identified issues regarding these strategies were resolved.

PILLAR II: The Central Institutional Framework and Management Capacity

All of the members of the procurement division (RBAC, TWG and the Secretariat) have been oriented on the rules and regulations of RA 9184. Most of the procurement staff was trained on concerns regarding the implementation of the law.

The agency has also been duly registered with the Government Electronic Procurement System and is able to access the information vital to the performance of their duties in PhilGEPS. At the time of the pilot testing, there is a glitch in the system that makes GEPS inaccessible for them; this problem is also experienced by the CHD-Davao. However, according to them the glitch has been fixed and they are able to access but yet to try posting.

PILLAR III: The Procurement Operations and Market Prices

A. Organizational Structure

Formalized Procurement offices and officials are created pursuant to the RA 9184. At the time of the test was conducted, the hospital has a committee for goods. The committee has a chairperson and five regular members. The BAC Secretariat is composed of three members, each from different departments like the property and the supply sections. TWG members review and evaluates during the process.

There is an existing balance between specialization and centralization of authority, and organizational efficiency. The number of layers from head of the procuring entity that are

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involved in separate actions/decisions/approvals within the procurement flowchart is three, from the chair person to the final approval of the HoPE. The two BACs acting independently from each other and the BAC chairpersons are both third highest ranking officials and other members are at least fifth ranking. All activities are approved by the highest official who is the HoPE.

The DMC adopted all the standard and documentation procedures as prescribed with the presence of procurement manuals, forms and bidding documents. However, some documents are incomplete. The Annual Procurement Plan although present, is not complete and did not follow the required format. The APP does not include the procurement method and the schedule of activities that should be stated in the APP.

B. Agency Procurement Process

On the method of procurement, the agency conducted the alternative forms of procurement amounting to not more than 25% of the total value of the contracts in APP. The satisfactory threshold for alternative modes should not be more than 10%. 20% of the total procurement or 80% of all alternative methods are through Local Shopping. That means 75% of procurement are done through public bidding.

There is an average of three to five companies bidding for goods, especially for drugs and medicines, and hospital supplies. The number of bidders decreases for highly technical items like machines, health scanners and the like.

The timeline for the preparation of bids, from the issuance of Invitation to Bid, issuance of bidding documents to the opening of bids, follows the directive prescribed by the IRR-A. This gives the prospective bidders ample time to prepare and submit their bids thus making it as competitive as possible.

1. Transparency

Since the procurement of the items listed in the APP is conducted semi-annually, all of the items are consolidated to one advertisement including the schedule of activities, consisting of the pre bid conference, availability of bids, submission of bids and other activities that they may deem necessary, the IAEB is advertised to newspapers of general circulation (Bandera). Such posting is done only if the amount is more than two million pesos. Before posting in the newspaper, it is also posted in PhilGEPS and conspicuous places within the hospital and the CHD-Davao which is just across the street. The awarded bidder is provided a NOA and the losing bidders are subsequently informed.

The DMC also invites observers from both the private and public sectors to observe the bidding process, and according to the FGD conducted with all the members, observers are always present in pre-bid conferences and the opening of bids. From all the pilot sites, DMC has the most number of observers invited and attendance of these bidders.

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2. Efficiency

Most of the procurement activities conducted by the agency is incorporated in the APP. Resolutions are made in cases that sub-allotments are issued to the agency.

Most bidding process, from opening of bids to the award of contract, takes not more than twenty days. With the exception of highly technical items that may take more time due to extensive evaluation. The opening of bids to the bid evaluation and the post qualification is done at the same time or continuously and could be done in one day. The team unfortunately does not have data on the percent of the bid processes are declared null and void or a failure before the signature of the contract. However, the existence of these failures of biddings cannot be denied, since it really occurs especially for government procurement.

3. Effectiveness

Most of the publicly bid contracts are awarded lower than the actual ABC for the project or item. As described by the members of the RBAC for goods, they do not deviate from the ABC and make decisions as to what would be the most advantageous for the hospital, its patients and still cost effective.

There are no instances in procurements done by public bidding that increased its contract price. The team failed to gather data from documents presented regarding this matter. However, this may happen on procurement done in negotiated procurement, but the increase would be considerable.

Of course, protest on the bidding process is inevitable but, fortunately the occurrence is minimal.

PILLAR IV: The Integrity of the Public Procurement System

The DMC has their own formal internal control and audit units from the Commission on Audit existing in accordance with the law as most of the government agencies and offices have. The Internal Auditor is the person responsible in evaluating and assessing the correctness of the process free from fraud and biases.

Since protest rarely happens to the DMC, there are no data gathered on the effectiveness and efficiency of the protest systems.

CONCLUSION AND RECOMMENDATIONS

A. Conclusion

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There are, of course good points and bad points for each agency especially in terms of procurement.

In terms of the good points, the DMC’s procurement documents are filed in a very organized manner. All documents are stored in a particular place that means easy access to documents when needed.

Another thing is the process itself, based on the discussions done; the team could see that there is coherence on the process and understanding of the responsibilities of each member of the Procurement Unit.

However, there are some points that are needed to look carefully, like the absence of certain documents.

There are documents that are not available or if available, are incomplete and is neither consistently practiced nor done at all. A good example is the Resolutions for Award. There are instances that there are some transactions or packages does not have resolutions for award. Although the occurrence is minimal, the presence of these documents is an indicator that the procuring entity consistently follows the prescribed rules and regulations and should be available and fully documented.

Also, the APP is incomplete, as it does not have a column that indicates the mode of procurement. Post-qualification reports are done but also inconsistently, since post-qualification is not conducted for other goods.

To conclude, DMC-Davao complied with the provisions prescribed by RA 9184 and it’s IRR-A. As mentioned earlier, there are some instances of minimal deviation. With respect to the whole program of procurement from planning to implementation, it can be considered as successful.

B. Recommendation

It is highly recommended that the following actions and initiatives be undertaken to improve the performance of the procurement activities in DMC:

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1. Constant review of the law particularly the rules and regulations as prescribed in the Revised IRR of RA 9184 also known as the Government Procurement Reform Act. Since for all procurement activities for 2010 and beyond are governed by the Revised IRR, it is fundamental for the procuring unit to be familiarized with the changes and apply the law with utmost care and diligence.

2. Enhance the knowledge and skills on the procurement by procurement trainings and seminars.

Coordinate with the GPPB and DBM regional office to determine the best possible time for the interactive and proactive programs that are available for the respective members of the RBAC, RBAC Secretariat and the members of the TWG. It is also important to set the date of the activity to determine the availability of attendees. Review of the procurement organizational resources, structure and skills profile, ensures that there is the right balance in regional capability

It is also recommended to create or designate a staff to constantly check for updates of the GPPB resolutions, circulars and guidelines. Coordinate also with the DOH Procurement Service if there are trainings and seminars to be conducted especially regarding procurement process.

3. Develop a long-term plan improvement plan based on SWOT analysis

SWOT analysis is a very helpful tool in improving over-all competency of the procurement process. Recognizing what strengths to develop, maintain and maximize, opportunities to grab, potentials to realize, weaknesses to overcome, and risks to minimize are very good bases of improvement plans of any organization. The best people to know these things are the people within the organization. With this knowledge, it is easier to come up with a plan, strategies and contingencies.

4. Development of a better record-keeping system to facilitate easy reference of procurement documents

Plan and create a checklist of all documents needed for all of the procurement, both for bidding and other alternative modes. File it as to per package for public bidding and per transaction or package for other modes (i.e., shopping, direct contracting, etc., etc.)

Keeping records in digital form brings a range of benefits including improved service delivery through faster access to accurate business information and cost savings as a result of a reduction in the quantities of paper stored. Also, create digital or soft copies of

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each particular document so as it would be easier to change and reformulate as necessary based on the information that would be required.

5. Develop strategies to maximize the output of the personnel

Rotation of duties for personnel, for instance, all the staff should be able to do all the tasks that can be designated to anyone of them. Therefore, if a certain member is unavailable, in emergency situations, another staff can perform the tasks without incurring delay in the performance or delivery.

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As a government institution, procurement should be used as a deliberate tool to achieve developmental outcome more than anything else. For the Department of Health, the goal is to develop and uplift the Filipino’s over-all national health status through providing top notch healthcare and governance.

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