nkti final

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.

Last September to November 2009, the pilot-testing of the DOH Procurement

Monitoring Process was successfully undertaken. Now with a more comprehensive and

result-oriented monitoring tool and process, the DOH Procurement Service commits itself

to continue its procurement monitoring activities in all DOH procuring entities.

The objectives of the monitoring visit include the following:

1. To provide an avenue for collective and interactive resolution of procurement

issues/ concerns;

2. To identify key areas of development relative to the existing procurement

process; and

3. To educate the procuring entities of the salient features of the Revised

Implementing Rules and Regulations.

Monitoring Site:

The National Kidney and Transplant Institute is a tertiary medical specialty center

formerly known as the National Kidney Foundation of the Philippines (NKFP) created on

January 16, 1981 by virtue of Presidential Decree 1832 signed by then President Ferdinand

E. Marcos. It was created with a three-fold mission of service, training and research

primarily for the benefit of the Filipino people afflicted with kidney and allied diseases and

in pursuance of the policy of the state to secure the well-being of the people by providing

them with the specialized health and medical services.

The Institute is situated in a 58,899 square meter parcel of land located along East

Avenue, Quezon City, near the Quezon City Hall and is accessible to all types of land

transportation. NKTI is a three-story edifice which can accommodate 250 patient beds.

Presently, the Institute has an actual bed capacity of 247 patient beds.

There are other government hospitals in the neighborhood namely the Lung Center

of the Philippines, East Avenue Medical Center, the Philippine Heart Center, the Philippine

Children Medical Center and East Avenue Medical Center. Each hospital has its own field of

specialization and NKTI is presently the only government hospital specialized in renal

diseases and organ transplantation. It is the center for referral of kidney patients from

various regional hospitals nationwide and is recognized as the lead agency in voluntary

blood services.

THE MONITORING PROCESS___ ________________________________________________________

The Monitoring Team needs information that would help them assess the over-all

procurement process and performance of the NKTI and to satisfy the objectives as defined

earlier in this report. Appropriate tools and various methodologies were developed and

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. Agency Compliance Performance Indicator

Agency Compliance Performance Indicator (ACPI) shall be used as the ultimate tool

of the monitoring activity. It is a set of condition that enables the Monitoring Team to

identify the performance of an agency in the procurement process. This instrument shall be

used as a guide of the Monitoring Team in presenting the results of monitoring.

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 members of the BAC, the

BAC Secretariat and TWG 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. Agency Procurement Report

The Agency Procurement Report is a tool to be used to determine the agency’s

performance relative to the time frame and procurement profile. This tool will also support

the ACPI.

B. METHODOLOGIES

Just like the monitoring tools, the methodology on how the monitoring visit will be

conducted is also critical. The use of appropriate methodologies 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 on the first day of 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 Agency Procurement Report.

3. Focus Group Discussion

For the Focus Group Discussion, the Monitoring Team uses the Procurement

Process Checklist to direct the flow of dialogue. The results of Agency Procurement Report

and some items in ACPI are also in the FGD.

RESULTS AND EVALUATION

After three days in NKTI, with the use of the tools and methods designed for the

monitoring activity, the Monitoring Team came up with an assessment of the procurement

process of the institution. The results are presented through the use of the ACPI.

Significant findings that are not covered by the ACPI were classified under other findings.

The ACPI is a valuable tool composed of four pillars – namely (1) Compliance with

Legislative and Regulatory Framework, (2) Agency Institutional, (3) Procurement

Operations and Market Practices, and (4) Integrity and Transparency of Procurement

System. These pillars gauge the performance and ultimately the adherence of a procuring

entity with the provisions of the RA 9184 and its Implementing Rules and Regulations.

Furthermore, under these pillars are indicators which effectively measure the level of

adherence of a DOH Procuring Entity.

AGENCY COMPLIANCE PERFORMANCE INDICATOR

Pillar 1: Compliance with Legislative and Regulatory Framework

INDICATOR 1. AGENCY COMPLIANCE WITH THE PROCUREMENT LAW

1

Procurement

Through

Competitive

Bidding

(a) Ratio of contracts procured through

public bidding in terms of value with overall

procurement contracts

75.75%

(b) Ratio of contracts procured through

public bidding in terms of volume with

overall procurement contracts

2

Procurement

Through

Alternative

Methods

(a) Alternative methods are generally in the

approved APP

The APP does not

include the mode of

procurement.

(b) Ratio of contracts procured through

alternative means in terms of value and with


24.25%

(c) Ratio of contracts procured through

shopping in terms of value with overall


5.42%

(d) Ratio of contracts procured through

Direct Contracting in terms of value with


18.45%

(e) Ratio of contracts procured through

Limited Source Bidding in terms of value with


0.03%

(f) Ratio of contracts procured through

Negotiation in terms of value with overall


0.09%

(g) Compliance with prerequisite conditions

for the use of alternative methods of

procurement

Resolutions and other

requirements are

available.

3

Advertising

Rules and

Time Limits

(a) All Invitation to Bid advertised and posted

as mandated by law in terms of location and

time frame

IBs are posted in

PhilGEPS,

conspicuous places

and the website.

Advertisement in

newspapers, if

required, has been

done.

(b) Contract award results are posted as

mandated by law for Public Bidding,

Shopping, Small Value contracts, Limited

Source Bidding and Negotiation

Notices of Award are

posted in PhilGEPS.

4

Rules on

participation

(a) Average number of bidders who bought

bidding documents 6

(b) Number of bidders who downloaded bid

documents from PhilGeps websitenone

(c) Average number of bidders who

submitted bids 5.03

(d) Average number of bidders declared

ineligible or disqualified0.33

(e) Number of failed biddings 37

(f) Number of contracts awarded with only

one bidder participating 41

INDICATOR 2. AGENCY COMPLIANCE WITH IMPLEMENTING RULES AND

DOCUMENTATION

5

Procurement

Planning

Activities

(a) APP is prepared for all types of

procurement and used as basis for annual

procurement;

APP includes the

following items:

1. Operating Room /

Anesthesia

Supplies

2. Medical Supplies

3. Hemodialysis

Supplies

4. Radiology Supplies

5. Peritoneal Dialysis

Supplies

6. Office / IT/

Printing

7. Pulmonary

Supplies

8. Dietary

9. Pharmaceuticals

10. Housekeeping

Supplies

11. Engineering

Supplies

12. Laboratory

Supplies

(b) Number of times APP has been updated 3

(c) Ratio of actual procurement with the

APP124%

Pillar 2: Agency Institutional Framework and Capacity

INDICATOR 3. EXISTENCE OF REQUIRED PROCUREMENT ORGANIZATIONS

6

Presence of

Procurement

Organizations

(a) Presence and number of BAC, TWG, BAC

Secretariat, as applicable

BAC – 5 members

TWG- 5 members

Secretariat-3

members

(b) Ratio of number of successful projects

completed with number of meetings100%

7

Procurement

Unit

(a) Presence of Procurement Unit whether

permanent or ad hoc

Yes, Procurement

Unit is permanent

(b) Procurement Unit functions as BAC

Secretariat

No. The BAC

Secretariat is separate

from the

Procurement Unit

INDICATOR 4. EXISTENCE OF AGENCY INSTITUTIONAL DEVELOPMENT CAPACITY

8

PhilGEPs

Registration

and Posting of

Information

(a) Agency registered with PhilGEPS Duly registered

(b) Percentage of bid opportunities posted 100%

(c) Percentage of contract award information

posted 100%

9

System of

disseminating

(a) Presence of website that provides

minimum, up-to-date procurement

Website is available

procurement

information

through

website

information easily accessible at no cost

1

0

Systems and

procedures

for monitoring

and

analyzing

procurement

information

(a) Availability and submission of

Procurement Monitoring Reports

1

1

Sustainable

training

program for

procurement

personnel

(a) Number of procurement staff trained

through national training program with total

number of procurement staff

Seven (7)

(b) Presence of in-house training program on

procurement cascaded to the lowest level

Present (100%)

(c) Presence of budget for procurement

training Available

Pillar 3: Procurement Practices and Market Operations

INDICATOR 5. EFFICIENCY OF AGENCY PROCUREMENT OPERATIONS AND PRACTICES

1

2

Compliance

with

Established

Procurement

Timeframes

Compliance with timeframes in the following

activities:

(a) Posting of Invitation to

Bid/Advertisement 27 Calendar Days

(b) Issuance of Bid Documents 14 Calendar Days

(c) Conduct of Eligibility Check 13 Calendar Days

(d) Submission/Opening of Bids 1 Calendar Days

(e) Bid Evaluation10 Calendar Days

(f) Post-qualification

(g) Issuance of Notice of Award 16 Calendar Days

(h) Contract Signing and Approval 19 Calendar Days

(i) Issuance of Notice to Proceed 36 Calendar Days

(j) Posting of Invitation to Bid to Contract

Award86 Days

INDICATOR 6. PRIVATE SECTOR PARTICIPATION IN AGENCY PROCUREMENT

1

3

Sufficiency of

Bidders

Participating in

Bidding

Processes

Average number of eligible bidders

5

1

4

Participation of

Civil

Society

Organizations

and

Professional

Associations

as BAC

Observers

(a) Civil society organizations or professional

associations are invited for every public

bidding activity

Invites

Representatives from

COA, Internal Audit,

OMBUDSMAN,

NAMFREL, CBCP, and

DOH as Observers

Pillar IV: Integrity and Transparency of Procurement System

INDICATOR 7. EFFECTIVENESS OF CONTROL AND AUDIT SYSTEMS

1

5

Existence of

Internal

Control and

Audit Unit

(a) Presence of Internal Control Unit as

prescribedNone

(b) Conduct of regular audit of procurement

processes and transactions by Internal Audit

Unit

Not Applicable

(c) Review of Internal Audit Unit covers

entire agency operations Not Applicable

INDICATOR 8. EFFICIENCY OF PROCUREMENT BLACKLISTING AND COMPLAINTS

MECHANISM

1

7

Use of

Blacklisting

Procedures

Capacity to

Handle

(a) Number of bidders/contractors

blacklistedNone

(b) Number of days to conduct blacklisting

procedures Not applicable

1

8

(a) Average number of Motions for

Reconsideration filed with the BAC

Less than 1% of the

total number of

bidders in 2009

Procurement

Related

Complaints

(b) Action taken by the BAC on Motions for

Reconsideration

The BAC convenes

whether to grant or

deny the motions

(c) Actual number of days to resolve protests 7 days

Other Findings:

ACTUAL VALUE OF PROCUREMENT 885,760,532.01

TOTAL AMOUNT OF APP 719, 685, 604.12

RATIO OF ACTUAL PROCUREMENT OVER APP 124%

Based on the table above, the actual procurement exceeds the APP by 24%. As pointed out

in the ACPI (Pillar 1, Indicator 2) the APP includes only those enumerated and does not include Civil

Works (Infrastructure Projects) and procurement of equipment. These projects amount to more or

less 40% of the total actual procurement. The APP does not include the mode of procurement and

source of fund. Although the APP was updated, three times for 2009, Supplemental PPMPs were not

issued.

Bid Evaluation Reports and Post-qualification Report are prepared only for highly technical

projects like infrastructure and equipment. Reports/recommendations are in the form of a letter

addressed to the BAC. The reports/recommendation however, does not follow the prescribed form.

During the FGD, the Monitoring Team was informed that the BAC, during the pre-

procurement conference, orients the end-users on how to prepare their PPMPs. The Head of

Procuring Entity issues an order regarding the submissions of the PPMPs.

The ABC is increased through the supplemental bid bulletins. There are documents

that were reviewed in which the ABC is not consistent in the other documents of the same

package.

BAC Secretariat had been provided an office to secure the safekeeping of various

procurement documents. However, due to the volume of the documents and packages that

the BAC Secretariat process, proper safekeeping has become a concern.

It was also raised that manpower is also an issue. Three (3) members including the

Head of the Secretariat processed more than 190 packages through public bidding for

2009.

The BAC Secretariat files the procurement package by their IAEB/IB numbers. The

documents are well maintained. The Procurement Unit files the POs and it is organized by

the number.

Notices to Proceed are present only for infrastructure projects and services like

janitorial and security services.

Purchase Orders (POs) include the mode of procurement being use for each

projects/items. However, some POs indicate two or more modes of procurement. For

instance, PO No. 0905-774/773 addressed to Zuellig, procurement is through Open

Canvass and Exclusive Distributorship. PO No. 0903-379 also awarded to Zuellig was

procured through Negotiation, Direct Contracting and Canvass. As explained, the items in

the aforementioned POs are included in the same Purchase Request and issued to a single

supplier. Such process had been adopted to simplify the issuance of POs.

The website http://www.nkti.gov.ph is available and accessible. However, there is

no web page assigned for the procurement opportunities and milestones.

There are also instances where the Approved Budget of the Contract (ABC) is

increased through the issuance of supplemental bid bulletins just before the opening of

bids.

Conclusions and Recommendations

A. Conclusion

Based on the information gathered from the procurement monitoring, the

Monitoring Team determined that the NKTI substantially complied with the provisions of

RA 9184 and its Revised Implementing Rules and Regulations on its procurement process.

The ratio of seventy six (76%) and twenty four (24%) of procurement through competitive

bidding and other alternative modes respectively, in terms of total contract prices,

indicates that competitive bidding was used as the main mode of procurement. Most of the

goods/services and infrastructure procured in 2009 was done through public bidding

which is advantageous to the interest of the agency. The recommended threshold provided

by the Government Procurement Policy Board (GPPB) is 90% bidding to 10% alternative

mode. NKTI has to improve the ratio for public bidding to alternative mode which is 76:24

to meet the recommended threshold provided by the GPPB in future procurements.

The NKTI procurement process is within with the prescribed time frame. The

procurement process is efficient since, on an average, the procurement process through

public bidding is around 86 days, which is within the latest allowable time of 124 days for

goods and services.

http://www.nkti.gov.ph/

However, there are various areas in the NKTI procurement process that needs

improvement and adequate attention. These are necessary for the betterment of the

procurement process and compliance with the Government Procurement Reform Act.

The presence, completeness and consistency of the procurement documents are one

of the areas which should be looked into. Incomplete procurement documents pertain to

either the essential procurement documents are not present or available or the lack of

necessary entries such as in the APP. Although, seldom did it occur, it is an indicator

relative to the compliance of the procuring entity with the prescribed rules and regulations.

Hence, the procurement process should be fully documented and the said documents

should be readily available. Also, posting of procurement opportunities and awarded

contracts in the PhilGEPs and NKTI website is important because it facilitates competition

and transparency. Certain procurement documents like Notice to Proceed must be

prepared and made available to the winning bidders so that the statutory requirement is

met and better documentation is achieved.

The increase of ABC by the issuance of Supplemental Bid Bulletin is one of the issues

that need to be looked into. As a rule, the ABC may be increased after the declaration of

failure of bidding. The BAC shall conduct a mandatory review and evaluation of the terms,

conditions, and specifications in the Bidding Documents, including its cost estimates. The

ABC may then be increased subject to required approvals. An option open for the BAC

should there be a need to increase the ABC is to cancel the bidding process with grounds as

prescribed by the law. The same procurement process shall be observed using the new set

of schedules. However, there is a need to update the APP or issue a Supplemental APP.

B. Recommendations

It is recommended that the following actions and initiatives be undertaken to

improve the performance of the procurement activities of NKTI:

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 all procurement activities for 2010 and beyond are governed by the

Revised IRR, it is fundamental for the procuring entity to be familiar with the

changes and apply the law with utmost care and diligence.

2. Enhance the knowledge and skills of procurement practitioners through

procurement trainings and seminars.

Coordinate with the GPPB and with the DOH Procurement Service if there are

trainings and seminars to be conducted especially regarding procurement process

and to determine availability of interactive and proactive programs for the members

of the BAC, Secretariat and TWG.

It is also recommended to have a designated staff to constantly check for any

updates such as GPPB resolutions, circulars and guidelines.

3. Develop a long-term improvement plan

Recognizing the 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

procurements as well as the timelines of the process, 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.).

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 reduction in the quantities of paper stored. Also, create digital

or soft copies of 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 is one way of maximizing the output of the personnel. All

the staff should be able to do 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. This

could serve as a preparation for the proposed professionalization of the members of

the BAC, Secretariat and TWG.

6. Strict application and justification of alternative methods of procurement

NKTI should see to it that resort to any of the alternative methods of

procurement is justified by the circumstances and are within the thresholds

established in accordance with the law.

7. Public Bidding as a general rule

NKTI should favor public bidding in its procurement undertaking and avoid

resorting to alternative methods of procurement that are not properly justified.

8. Additional personnel for the BAC Secretariat

Due to the voluminous number of procurement documents and processes

that the BAC Secretariat handles, it is quite difficult to maintain the quality

standards needed for the procurement processes. All of the documents are being

prepared by the Secretariat’s three-man team. These documents are vital for the

whole process. The additional personnel is not just to assist the Secretariat in the

performance of their duties but also to maintain standard of quality and efficiency.

The Head of the Procuring Entity (HOPE) can designate personnel from other

departments (e.g. the Procurement Division or Supply Section) to permanently or

temporarily assist the Secretariat in the preparation of documents and the

performance of relevant processes.

9. Possible Transfer of the office of the BAC Secretariat

There is also a concern regarding the office of the BAC Secretariat. The office

is small and most of the time crammed up with documents that sacrifice the comfort

of both the staff and guests coming and going to the office.

A change of location to a larger space is recommended not only for comfort

but also for the proper safekeeping of documents. It is known that these documents

are critical and the Secretariat is responsible for their security. It is also advisable to

have the BAC office within the same area of the Procurement Division and/or

Supply Office for easier access of relevant documents and information.

10. Strengthen the Procurement Planning.

It is noted in the discussions earlier that NKTI’s procurement planning was

one of its best points. The BAC informs/orients the end-user units on how to

prepare the PPMPs. It is recommended to include orientations on the procurement

process for better understanding. This is also a good venue to resolve issues

between the BAC and the end-users.

11. The APP should be organized and should follow the prescribed format.

The APP is the basic and most important document in the whole

procurement process. As a general rule, no items shall be procured if it is not

included in the APP except through the issuance of the Supplemental Procurement

Plan (SPP) approved by the HOPE. Indicating the modes of procurement and the

sources of funds is important not only as it is prescribed by law but also it makes the

procurement process easier. If alternative modes are already included in the APP,

there is no need to create resolutions to resort to other modes of procurement. As

prescribed, alternative modes of procurement is 10% of the total value of the APP.

12.Include information regarding the Procurement in the NKTI Website.

The website of NKTI is very informative, however, there is no information

regarding procurement. Posting of bid opportunities and other procurement related

information could help increase bidders’ participation and subsequently increase

the chances of getting the most advantageous contract for the agency.

13.Establish Price Monitoring Systems

It is also recommended that price monitoring be established that will help

advance procurement. It will be a good source/reference in determining the

appropriate ABC because it can provide realistic, reliable, and updated unit costs.