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The 2011 State of the Nation Address Technical Report
INTRODUCTION
 
“Tuwid na Daan”
or the Straight Path is a phrase repeatedly mentioned by President Benigno S.Aquino III to pertain to his governance direction for the country.Essential to this concept of 
“Tuwid na Daan”
is the battle cry
“Kung Walang Corrupt, Walang Mahirap.”
 
The administration believes that corruption is the root cause of the country‘s woes,
and eliminating corruption will necessarily lead to renewed investor confidence, eventual growthand development, poverty reduction, and attainment of peace.
The straight path, however, does not only pertain to the President‘s anti
-corruption campaign. Italso encompasses a way of doing things right, where the process is participatory; the programsare holistic; growth is sustained; the peace policy is comprehensive; and development issustainable. Through the living examples of our leaders, led by the President, this re-awakenedsense of right and wrong continues to be translated to economic value.It is in this light that the accomplishments of the Aquino Administration, since the first State of the Nation Address (SONA) in July 2010, are being highlighted:
A. GOOD GOVERNANCE AND ANTI-CORRUPTION
 
Taking the initial step in the achievement of ―
Kung Walang Corrupt, Walang Mahirap
‖, where
eradicating corruption is seen as the key approach to development, President Aquino laid thefoundations for a clean, transparent, and responsive government. Key reforms continue to beinstituted to reduce red tape, enforce anti-corruption and anti-red tape laws, and penalize thosewho violate these laws. The government is also fixing the incentive structures to recognize meritand reward good performance with the aim of ensuring the sustainability of the Aquino reformagenda. These and other initiatives are presented below:1. Institutionalizing Public Accountability1.1.
 Reforming the budgeting and project identification processes
 
1.1.1. Government‘s prudent expenditure management was a result of the use of the Zero
-BasedBudgeting (ZBB) approach in 2010. The ZBB enables the government to identify and terminateprograms that are no longer delivering intended outcomes. The savings generated from theseterminated programs were channelled to programs that are performing well and to other priorityprograms to address critical gaps in education and health. As part of the ZBB approach, theDepartment of Budget and Management (DBM) is also gradually transferring Special PurposeFunds back to the departments for greater accountability and making the Priority DevelopmentAssistance Fund (PDAF) more transparent.
 
Due to the prudent management of public funds, the government has been able to provide P12billion in funding for other key social and economic services that were not included in the 2011General Appropriations Act, including:
 
P850 million for the salaries of 10,000 registered nurses hired and deployed to poor ruralcommunities in the country;
 
P4.2 billion to build 20,000 houses for the military and the police; and
 
P423 million for the acquisition of the US Hamilton-class cutter, which will helpstrengthen the perimeter security within the Malampaya area1.1.2. In an effort to address issues about the quality of road projects, the Road Board
strengthened the identification and selection of projects funded by the Motor Vehicle User‘s
Charge through the proper use of the Highway Development Management version 4 (HDM-4), aplanning tool that prioritizes or selects projects based on actual needs and economicconsiderations.The Road Board also implemented standard unit costs nationwide that is 30% lower thanprevious cost estimates; and clearly defined the design and specification of its projects to makethese conform to international standards, where previously, Programs of Work were not required.1.1.3. The President directed the DBM to establish a comprehensive database of governmentmanpower through an enhanced Government Manpower Information System (GMIS). TheGMIS shall provide a complete and accurate database of all positions, incumbents, andauthorized compensation in the Executive, Legislative, and Judicial Branches of the government,including Government-Owned or Controlled Corporations (GOCCs), Government FinancialInstitutions (GFIs), and Constitutional Offices. The GMIS shall also be linked with the personnelinformation systems of concerned agencies such as the Civil Service Commission (CSC) and theGovernment Service Insurance System (GSIS).1.1.4. To eliminate wasteful spending and fund conversion in the military, the DBM changed itsprevious policy of releasing Personnel Services (PS) allotments in full to agencies. Now, releasesof PS are done for filled positions only. This means that no amount is released to the agencies ontop of their actual PS requirement.1.1.5. Moreover, the DBM launched on 20 July 2011 the Electronic Transparency andAccountability in Lump-sum Fund System (eTAILS). The eTAILS is a management informationsystem that digitizes the processing of lump-sum funds and supports the timely disclosure of lump sum fund release information on the DBM website. This helps the government keep track of information on the release, while enabling the public to scrutinize how their money is beingallocated.1.2.
Upholding transparent and competitive bidding
 Allegations of collusion in the bidding of public works projects are being addressed throughtransparency reforms and strict adherence to public bidding rules. The DPWH now posts allprojects on its website. The DPWH has also simplified bidding procedures by reducing the
 
required 20 documents to just five (5) documents. It has also adopted a new cost structure fordetermining the approved budget cost (ABC), which minimizes leakage by reducing theallocation for indirect costs by as much as 8%. To cite an example, the DPWH was able to bidout the 7.53-km Plaridel By-pass Road Contract Package No. 2 in Bulacan for only P543 millionin 2010, at one-third of the cost of the slightly longer 7.93-km Contract Package No. 1 that wasbid out in July 2008. While the two projects are of the same road specifications, the cost of Contract Package No. 1 was 8.5% above the approved agency estimate while Contract PackageNo. 2 cost 23% lower than the agency estimate, saving a total of P163.2 million.
As a result of these reforms, the DPWH generated savings of P2.51 billion in taxpayers‘ money
from the 3,692 projects (civil works, goods, and consultancy services) from July 2010 to June2011. The DPWH expects total savings of roughly P6 to P7 billion by the end of this year as aresult of transparent and competitive bidding. The savings can then be utilized for other prioritydevelopment projects.The P2.51 billion savings generated by the DPWH includes the P1.07 billion saved from thereview and bidding of contracts under the Post-Ondoy and Pepeng Short-Term InfrastructureRehabilitation Project (POPSTIRP).On 26 May 2010, the DPWH was granted a loan by the JICA worth P5.05 billion for 79 contractpackages under the POPSTIRP. Of these contracts, 19 were cancelled due to lapses in theprocess. The 19 contracts were approved and signed even prior to the release of the SpecialAllotment Release Order (SARO) for the project, which is against government procurementlaws.Likewise, the government has conducted open and competitive bidding for the reinsurance needsof the National Power Corporation (NPC), the Power Sector Assets and Liabilities ManagementCorporation (PSALM), the National Grid Corporation of the Philippines (NGCP), and the MetroRail Transit Corporation (MRTC). This generated savings amounting to over US$8 million orabout P370 million from the lower bids of the winning re-insurers compared to the approved
 budget for the contract and last year‘s premium. Moreover, the insured agencies get impr 
ovedcoverage by having lower deductibles that allow them to claim for losses or damages at lowerparticipation limits.1.3.
 Ensuring transparency and accountability in local governance
1.3.1. The DILG‘s full disclosure policy, issued in August 2010, requ
ired all Local GovernmentUnits (LGUs) to be transparent to the public by posting in local bulletin boards, newspapers, andwebsites information on the utilization of government funds and the implementation of projects.As of 31 May 2011, a total of 1,473 LGUs (68 provinces, 119 cities and 1,286 municipalities) or86% of the 1,714 LGUs nationwide have fully complied with this policy. For purposes of transparency, the DBM also posted the annual internal revenue allotment (IRA) from 2006 to2010 per region from the provincial down to the barangay level on its website.
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