“The Establishment of Procurement Service-Department of

Budget and Management (PS-DBM), an In-Depth Study”

A Thesis Presented to the

Faculty of Jose Rizal University
School of Law

In Partial Fulfilment
Of the Requirement for the Degree of
Juris Doctor (JD)

By

ROXANNE TABUG
2019

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 CHAPTER 1
PRELIMINARY PAGES
“The Establishment of Procurement Service-Department of
Budget and Management (PS-DBM), an In-Depth Study”

ABSTRACT

The Government seeks to attain economy and efficiency in all aspects of

its operations, consistent with the National Cost Reduction Program. The cost of
the government operation can be substantially reduced through greater efficiency
in the procurement of supplies and materials.1

In support of the government’s policy for transparency in government

transactions and efficiency in procurement processes, hence the
institutionalization of the Procurement Service of the Department of Budget and
Management under Letter of Instructions No. 755 as the regular organizational
unit to implement and operate a central procurement system for common use
supplies mandated by Executive Order No. 285 s. 1987.

This study is an exploratory survey or an in-depth study on the

establishment of the Procurement Service of the Department of Budget and
Management (PS-DBM), its effectiveness in carrying out the policy statement of
the Executive Order No. 359 which states that procurement of government
1
LOI 755 entitled as Relative to the Establishment of an Integrated Procurement System for
National Government and its Instrumentalities. Herein, the Procurement Service under the
Department of Budget and Management shall design and implement an integrated
procurement system for supplies, materials and other items needed by the government.
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supplies, materials and equipment shall be done in most economical and efficient
manner. It also seeks to explore its effect to all National Government Agencies,
including State Universities and Colleges and Government Owned or Controlled
Corporations and their subsidiaries which were required to purchase common-
use supplies, materials and equipment on the said institution in relation to section
53 (e) of RA 9184 An Act Providing for the Modernization, Standardization and
Regulation of the Procurement Activities of the Government and for other
Purposes.

The Researcher submits that no government policy is perfect as it carries a

consistent room for improvement for a better and more efficient enforcement.
This study hence seeks to probe on the pros and cons as well as the strengths
and weaknesses of having the PS-DBM under LOI No. 755 as the regular
organizational unit to operate a central procurement system for common use
supplies as mandated by EO No. 285. Thereafter, the Researcher would provide
uniform memorandum guidelines or policy recommendations particularly on
addressing the discovered critical loopholes and weaknesses of the program for
the better implementation of the government procurement process.

This study will be conducted from November 2018 to February 2019. The
conduct of the study is divided into four phases with each phase carrying its own
set of activities. It ranges from the thesis statement up to the presentation of the
data. By analysis, the study is more descriptive rather than statistical. The main
tools of this study shall be in the forms of questionnaire-checklist and interview
schedule.

The researcher’s identity as a student will be disclosed to avoid

inconveniences to the interviewee that this research will not be used to judge
such covered institutions as to compliance to the law.

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 It is the policy of the Government to promote economy, efficiency and
effectiveness in the delivery of public services and the successful performance
by line departments and agencies of their mandated tasks can only be assured if
auxiliary services are likewise adequately provided.2

2
EO 285 s. 1987entitled as the Abolishing of the General Service Administration and
Transferring Functions to Appropriate Government Agencies. The said transfer shall include
applicable appropriations, records,property and equipment, and such personnel as may be
necessary.
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 TABLE OF CONTENTS
CHAPTER 1
Abstract………………………………………………………………… 2

List of Related Laws and Jurisprudence………………………….6

Definition of Terms…………………………………………………....8

CHAPTER II
Background of the Study……………………………………………11

Thesis Statement……………………………………………………..16

Social Relevance of the Study……………………………………..17

Scope and Limitation………………………………………………..18

Methodology………………………………………………………….19

CHAPTER III
Relevant Provision of Laws………………………………………..20

Relevant Jurisprudence…………………………………………….35

Key Findings and Analysis…………………………………………51

CHAPTER IV

Conclusion……………………………………………………………61

Recommendations …………………………………………………62

Bibliography………………………………………………………….63

Annex “A” ……………………………………………………………65

Annex “B”…………………………………………………………….79

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 LIST OF RELATED LAWS AND
JURISPRUDENCE
The following are the list of Laws and Jurisprudence

1. Letter of Instruction No. 755 entitled as Relative to the Establishment of

an Integrated Procurement System for National Government and its
Instrumentalities;

2. Executive Order No. 285 s. 1987 entitled as the Abolishing of the

General Service Administration and Transferring Functions to
Appropriate Government Agencies;

3. Executive Order No. 359 Reiterating the policy and prescribing

Guidelines and Procedures in the Implementation of the Provisions of
Executive Order No. 285 “Abolising the General Services Administration
and Transferring its Functions to Appropriate Government Agencies” on
the Operation of a Procurement System for Common-Use Ofiice Supllies,
Materials and Equipment.

4. Republic Act No. 9184 Government Procurement Reform Act;

5. Implementing Rules and Regulations of Republic Act No. 9184;

6. Philippine Sports Commission versus Dear John Services,Inc. G.R

No. 183260;

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 7. Office of the Ombudsman- Mindano versus Richard T. Martel and
Abel A. Guinares. G.R. No. 221134, March 01, 2017;

8. Bank of the Philippines versus Atlanta Industries G.R. No. 193796 July
2, 2014;

9. Ramon M. Atienza, in his capacity as Vice Governor of the Province

of Occidental Mindoro versus Jose T. Villarosa in his capacity as
Governor of the Province of Occidental Mindoro G.R. No. 161081. May
10, 2005; and

10. Thunder Security and Investigation Agency/ Lourdes Lasala versus

National Food Authority Region 1 and NFA Regional Bids and Awards
Committee. G.R. No. 182042 July 27, 2011.

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 DEFINITION OF TERMS
1. Procurement - refers to the acquisition of Goods, Consulting Services,
and the contracting for Infrastructure Projects by the Procuring Entity.
Procurement shall also include the lease of goods and real estate. With
respect to real property, its procurement shall be governed by the
provisions of Republic Act No. 8974, entitled “An Act to Facilitate Republic
Act No. 9184 4 the Acquisition of Right-of-Way Site or Location for
National Government Infrastructure Projects and for Other Purposes”, and
other applicable laws, rules and regulations;

2. Procurement Service- the body to implemented the provisions of this

Letter of Instructions. The Service shall be attached to the Office of the
President and shall report to a Procurement Council, which is hereby
created to consist of the Minister of the Budget as Chairman and as
Members, the Chairman of the Commission on Audit, the Minister of
Finance, the Minister of Industry, and the Presidential Assistant for
Economic and Development Affairs;

3. Department of Budget and Management - is an executive body under

the Office of the President of the Philippines. It is responsible for the sound
and efficient use of government resources for national development and
also as an instrument for the meeting of national socio-economic and
political development goals;

4.  GPPB - refers to the Government Procurement Policy Board established

in accordance with Article X of this Republic Act 9184;

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 5. IRR - refer to the implementing rules and regulations to be promulgated in
accordance with Section 75 of Republic Act 9184;

6. Bids and Awards Committee (BAC) refers to the Committee established

in accordance with Rule V of IRR of RA. 9184.

7. Common-Use Supplies and Equipment (CSE). Refer to those goods,

materials and equipment that are used in the day-to-day operations of
Procuring Entities in the performance of their functions. For the purpose of
this IRR, CSE shall be those included in the Electronic Catalogue of the
PhilGEPS;

8. Executive Agreements refer to International Agreements except that they

do not require legislative ratification;

9. Goods. Refer to all items, supplies, materials and general support

services, except Consulting Services and infrastructure projects, which
may be needed in the transaction of public businesses or in the pursuit of
any government undertaking, project or activity, whether in the nature of
equipment, furniture, stationery, materials for construction, or personal
property of any kind, including non-personal or contractual services, such
as, the repair and maintenance of equipment and furniture, as well as
trucking, hauling, janitorial, security, and related or analogous services, as
well as procurement of materials and supplies provided by the Procuring
Entity for such services. The term “related” or “analogous services” shall
include, but is not limited to, lease of office space, media advertisements,
health maintenance services, and other services essential to the operation

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 of the Procuring Entity;

10. Republic Act 9184 an act providing for the Modernization,

Standardization and Regulation of the Procurement Activities of the
Government and for other Purposes,” otherwise known as the Government
Procurement Reform Act.

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 CHAPTER II
INTRODUCTION
BACKGROUND OF THE STUDY
The Procurement Service started out as a project which was created
through a Memorandum of Agreement among the then Budget Commissions
(now the Department of Budget and Management), the Commission on Audit
(COA), the Department of Finance (DOF) and the University of the Philippines.
The project was called the Procurement Pilot Project or the PPP which was
created on June 24, 1976. The PPP was tasked to centrally procure common-
use items or office supplies for the government. It was created because there
was a major procurement scam which happened in Cebu City and it cost the
government a huge amount of money.

The government of then President Ferdinand E. Marcos saw the potential

of the PPP of generating savings for the government. On October 18, 1978,
Letter of Instructions No. 755 was issued converting the PPP into what is now the
Procurement Service (PS). The mandates of the PS are: the operation of a
government-wide procurement system; the price-monitoring of common-use
supplies, materials and equipment; the identification of supplies, materials and
such other items, including equipment and construction materials, which can be
economically purchased through centralized procurement; the identification of

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sources of supply which are able to offer the best prices, terms and other
conditions for items procured by the government; Continuous evaluation,
development and enhancement of its procurement system, coverage and
procedure; and the management and maintenance of the Government Electronic
Procurement System or the PhilGEPS.

The Procurement Service which is composed of Executive Offices,

PhilGEPS Group, Operations Group, Contract Management Group, Financial
Management Group, Administrative Group, is tasked with centralized
procurement of commonly used supplies, materials and equipment (CSEs)
needed by the government, to purchase directly from reliable sources in
economic lot sizes while observing optimum specificationsand making prompt
payment.

In July of 1987, Executive Order (EO) No. 285 was issued abolishing the
Bureau of Supply Coordination and transferring the procurement and price-
monitoring functions to the PS.

Two years after, in June of 1989, EO No. 359 was issued reiterating the
policy that the procurement of government supplies, materials and equipment
shall be done in the most economical and efficient manner. The same Executive
Order made possible the adoption of simplified bidding procedures as authorized
under LOI 755 by PS Inter-Agency Bids and Awards Committee (IABAC). It also
established the Procurement Policy Board (PPB), an independent inter-agency
body composed of various government departments and private sector
representation. The PPB was created as a policy-making entity and governing
body overseeing implementation of procurement reforms in the government.

Further, EO No. 359 which covers all National Government Agencies,

State Universities and Colleges (SUCs), GOCCs and their subsidiaries are
covered by the Executive Order, authorized the charging of service fees
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equivalent to 5% of the value of the supplies, materials and equipment procured
to cover the personnel services and other operational expenses of the PS. The
establishment of PS Regional Depots was also made possible3.

The rationale of the establishing the Procurement service is to substantially

trim down government operations cost through government-wide procurement
system and price monitoring of common-use supplies, materials and equipment.

In line with the mandate of Executive Order No. 285, the Procurement
Service (PS) of the Department of Budget and Management (DBM) and its Inter-
Agency Bids and Awards Committee created under Letter of Instructions No. 755
shall be maintained as the regular organizational units to implement and operate
a central procurement system. Accordingly, DBM shall in accordance with
Executive Order No. 86, establish Regional Depots as part of the regular
organization structure of the Procurement Service from which government
agencies may locally purchase their common use supplies, materials and
equipment requirements.

The operating procedures of the procurement system shall be prescribed

by the Procurement Service (PS). Said operating procedures shall remain in
force unless subsequently modified in consultation with the Systems and
Procedures Bureau (SPB) of DBM, subject to the approval of the Procurement
Policy Board.

The operating procedures of Procurement Service – DBM shall cover the

preparation and submission of the annual agency procurement programs for
brand-new supplies, materials and equipment which are covered by the
procurement system. The appropriations for the Annual Procurement Programs
of Agencies shall be identified in their annual Work and Financial Plan. Said
3
PS QUALITY MANAGEMENT MANUAL V2
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Work and Financial Plan shall serve as the basis of the Department of Budget
and Management in the release of the Agency's quarterly allotments and monthly
funding warrants. The agencies shall remit in advance to the Procurement
Service the funds needed to service their requirements for supplies, materials
and equipment as reflected in said Work and Financial Plan. Lastly, the adoption
of simplified bidding procedures as authorized under Item 12 of Letter of
Instructions No. 755 by a Procurement Service Bids and Awards Committee
whose composition shall be determined by the Procurement Policy Board4.

Under the Letter of Instruction 755, the Procurement Service shall be

attached to the Office of the President and shall report to a Procurement Council,
which is hereby created to consist of the Secretary of the Budget as Chairman
and as Members, the Chairman of the Commission on Audit, the Secretary of
Finance, the Secretary of Industry, and the Presidential Assistant for Economic
and Development Affairs.

The Procurement Council, with the assistance of the Procurement Service,

shall design and implement an integrated procurement system for supplies,
materials and other items needed by the government. The said Council shall
identify those supplies, materials, and such other items, including equipment and
construction material, which can be economically purchased through central
procurement and which it shall cover within its scope of activity. Likewise, it shall
determine the technical specifications of items that it will procure for agencies of
the government and identify the sources of supply which are able to offer the
best prices, terms and other conditions for the items procured by government

4
EXECUTIVE ORDER NO. 359“Reiterating the Policy and Prescribing Guidelines and Procedures
in the Implementation of the Provisions of Executive Order No. 285.”
JULY 2, 1989.
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 The Council shall adopt such pre-qualification and other requirements as
will ensure that only reliable and adequately capitalized suppliers are chosen. It
shall deal directly with reputable and duly licensed manufacturers for products
manufactured in the Philippines and with exclusive or duly designated distributors
for imported products not locally manufactured. Priority shall be given to
companies registered with the Board of Investments and to companies that have
no past due obligations with government financing institutions. National
government agencies and government- owned or controlled corporations shall
purchase all their requirements from the Procurement Council/Service, of items
that are decided upon as being within its coverage. The list of items that shall be
handled by the Council/Service shall include paper and office supplies and the
most commonly used items of government usage, as may be approved by the
President. Exceptions may be made for Regional Offices of national government
agencies, for specific agencies, or for items, with the Council's approval

In return, the Ministries/Bureaus/Offices/Agencies of the government shall

routinely report to the Procurement Council, data on current purchases, as a
means of crosschecking on the cost of items procured by the Service. The
Resident/Corporate Auditors of the government shall routinely report to the
Procurement Service, information on agency purchases as may be required by
the Council, including data on purchases made for items not covered by the
Council such as specifications, source and unit cost5.

Convincingly, the abovementioned rationale of Procurement Service

establishment is categorically favorable to the government expenditure reduction.
However, the implementation of the operation itself becomes problematic
because of certain loopholes in the system. The efficiency of Procurement

5
Letter of instruction No. 755. “Relative to the Establishment of an Integrated Procurement
System for the National Government and Its Instrumentalities. ‘’
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Service- Department Budget and Management 6is quite wanting due to its failure
in catering the demands for supply of the national agencies and since the latter is
required to quarterly deposit funds to PS-DBM in exchange for paper and office
supplies including the most commonly used items of government usage, the
funds deposited will likely to pile up without availing the supplies demanded, thus
funds are wasted, if not unused. In that instance, the real situation reveals the
fiasco of the very rationale of the Procurement Service which is to reduce cost on
government operations.
Also, the PS-DBM as embodied in the Letter of Instruction No. 755 and in
harmony with the Executive Order No. 285, is silent with penalty clause in
instances of operating procedure violations.
Consonant with the above-mentioned issues, this paper plans to craft a
recommendation addressing both actual and anticipated loopholes while
stressing the Pros and Cons of PS-DBM operation.

THESIS STATEMENT

In line with the National Cost Reduction Program, the focal point of this
study will circulate on the bare bone provisions of laws and related rules and
regulations regarding the establishment of Procurement Service under the
Department of Budget and Management. Thispaper intends to ascertain whether
the rationale of creating Procurement Service validates and compliments its
actual operation. Pursuing such inquest, the researcher aims to craft a resolution
that will succor the procurement system for better handling and operations. To
accomplish such, the researcher shall be funneled by the following guiding
questions and issues:

6
Herein referred to as PS-DBM
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 1. Why do we have to evaluate the PS-DBM in the light of its end purpose of
substantially reducing government operation cost in the procurement of
supplies and materials?
2. What are the implications of the establishment of PS-DBM to the
government agencies including their regional offices?
3. Does the PS-DBM totally cater the complete supply demands of all
National government agencies, including State Universities and Colleges
and government-owned and controlled corporations and their subsidiaries?
4. Are there available options for the government agencies in cases of failure
to receive their demanded supplies from PS-DBM?
5. How can the Procurement Service be enhanced particularly if the different
government agencies, including State Universities and Colleges and
government-owned and controlled corporations and their subsidiaries,
directly bid to suppliers which are accredited by the government?

Social Relevance of the Study

The magnitude of public procurement is quite significant. It accounts for a

substantial fraction of the demand for supply of goods, materials, and services in
the nation and is progressively treated as and desirable tool for emerging
government operations. Furthermore, government procurement plays an
enormous role in upgrading government services.

The governmental procurement system is too intricate and complicated to

innovate in so many ways. Therefore, this paper is relevant in illustrating the
mechanics of operating the procurement systemin attempting to avail of more
innovative and improved ways. This study attemptsto identify ways to amplify the

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proficiency of government’s budget execution and government procurement
system for maximum sufficiency and innovation. This study will not solely initiate
on the enhancement of procurement expenditure itself, but also will provide a
fund saving pattern or mechanism for all government agencies.

The paper will further examine the organization, process and methods of
government procurement in the Philippines as stipulated in the procurement laws
and regulations and in the procurement instruction manual as embodied in the n
PS Quality Management Manual. In that manner, this study will provide the
answers on whether the establishment of Procurement Service- Department of
Budget and Management (PS-DBMP) is serving its purpose particularly on
achieving greater economy in government operations.

Scope and Limitation

Although this Study is intended to review the effectiveness of procurement

service established under the Department of Budget and Management, it is
limited to the central offices of Philippine National Police (PNP) and the Armed
Forces of the Philippines and as such, does not cover the procurement activities
of all other national government agencies. Also, the Study primarily focuses on
the actual operation consonant to the all procurement rules and related laws.

In conveying the experiences of each of PNP and AFP, emphasis is placed

on the practical experiences of the procurement, contracting and/or legal officers
or employees interviewed. The narratives and reports will be basically based
upon first hand accounts of the interviewees. Further, the interviews will be
conducted to sufficiently provide a substantial idea on the subject matter
involved. Finally, all findings, conclusions and recommendations in this Study are

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generally limited to records and events that transpired during the last two (2)
years, i.e. 2016 and 2018.

Methodology

For this scholastic analysis, in order to provide the background and origins
necessary to realize operational, actual and realistic recommendations, this study
will first establish the legal environment before directing to gather the actual
experiences, operations and practices among all the primary participants, namely
the Procurement Service- DBM and the target government agencies, which are
PNP and AFP. This will be possible through an in-depth legal research covering
the various laws and jurisprudence governing the present procurement system.

Subsequently, given that the legal framework has been established,a

descriptive and qualitative approach would be used. A qualitative method to
research on the operational background and actual procedure on Procurement
Service through interviewing and observation, in that sense, the intricacies and
operational issues will be discerned by the researcher. Further, the researcher
then gathers the experiences and outlook of the Uniformed Personnel of the PNP
and AFP with regards to procurement operations and with respect to their
organization. Questionnaire, supplemented by interviews or phone surveys will
be utilized to gather at the very onset the collective statements of the
participants, supported by factual data records.

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 CHAPTER III
DISCUSSION
STUDY OF RELEVANT PROVISIONS OF LAWS AND
JURISPRUDENCE

RELEVANT PROVISION OF LAWS

Essentially, every laws, rules and regulations are constructed based on a

rationale which rationale is based on circumstances, which may be unforeseen events
or anticipated occurrences. Indeed, it is unviable to dissect and explore the relevant
provisions of laws in relation to Procurement Service without discoursing on the turn of
events which led to the drafting and passage of the said provision of laws including its
implementing rules and regulations. Hence, as a matter of course, while the sets of
rationale are being unfolded, the gradual development of laws will likewise be inevitably
divulged in.

An immense procurement swindle in 1975 steered to the creation of a

commissioned group that was tasked to restructure and reorganize all prevailing
procurement systems and services in the country. Then President Ferdinand E. Marcos
considered it necessary to establish and institutionalize a procurement service system
that would cater productivity and greater efficiency in various government operations.

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The Commissioned team was constituted comprising of the Agency heads of the
Department of Finance, the Commission on Audit, the Department of Budget and
Management, and the University of the Philippines. The team was successful in
identifying enhancement and advancement in the creation of policy and government
procedure procurement which led to the bases for the Procurement Pilot Project (PPP)
on its operation of a centralized procurement of common suppliers, materials and
equipment. The Presidential order caused to the creation of the Procurement Pilot
Project (PPP) on June 24, 1976, a project that tested the sustainability and capability of
centralized procurement of common use supplies for government agencies.

Consequently, the Procurement Pilot Project was converted into the Procurement

Service (PS) by virtue of Letter of Instructions (LOI) No. 755 dated October 18, 1978,
signed by President Marcos.Under the Letter of Instruction No. 755, Procurement
Service was attributed or attached to the Office of the President but was placed under
the Department of Budget and Management which was then, Ministry of Budget, for
executive regulation and administration resolution purposes.

The mechanics of the Procurement System were earlier tested and validated
from 1976 to 1978 in an experimental implementation of a centralized form of
procurement on a limited basis. On July 28, 1987 the President issued Executive Order
No. 285 reiterating the mandate of Letter of Instruction No. 755 by abolishing the
General Services Administration and transferring the procurement and price monitoring
functions of the Supply Coordination Office to the Procurement Service.

The establishment of Procurement Service was stable and constant with the
approval and adoption of a policy of procuring supplies and materials in the most
reasonable, cost-conscious and efficient manner, by buying out directly from
unswerving sources in economic lot sizes, by perceiving optimum specifications and by
making prompt and speedy payment.

However, with the issuance of Executive Order (E.O.) No. 285, signed by then
President Corazon C. Aquino on July 25, 1987, the General Services Administration
and its Building Services and Real Property Management Office and Supply
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Coordination Office were obliterated and eventually abolished. Its functions were
engrossed and absorbed by appropriate and different government agencies and
departments. The Procurement Service for that matter, absorbed its operation of a
government-wide procurement system for common office supplies and the monitoring of
prices.

Two years after, on June 2, 1989, President Aquino issued E.O. No. 359
reiterating the policies spelled out in Letter of Instruction 755 and Executive Order 285
and prescribed the guidelines and procedures in the operation of the Procurement
Service. The Executive Order also gave way to the establishment of Regional Depots
as part of the Procurement Service’s regular organizational structure.

Moreover, with the coming of the information age, new technologies started to
thrive. The passage of the Electronic Commerce Act of 2000 provided the impetus for
the establishment of e-government procurement under a global concept.In response to
the challenge of e-government, the Pilot Electronic Procurement System (EPS), was
launched on November 22, 2000 through E.O. No. 322, and the Implementing Rules
and Regulations of E.O. No.  262 issued on October 10, 2000.

The Pilot Electronic Procurement System is an integral part of the

comprehensive government procurement reform program designed to improve
transparency, efficiency and value for money. The pilot system now in place is an
information site consisting primarily of a Public Tender Board, Electronic Catalogue, and
a Supplier Registry.

The Pilot Electronic Procurement serves as the central portal to advertise and

distribute specifications for public bidding opportunities and also contains information
related to doing business with the government such as rules and regulations, press
releases, a directory of government agencies and contacts, planned and historical
agency procurement, bid matching for suppliers, potential competitors, winning bidders,
and a frequently asked questions section. Succeeding phases will make other aspects
of the procurement process available to all stakeholders like the Virtual Store which

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supports online procurement of both common and non-common use items; the
Electronic Payment; Charges and Fees which allows charges for system usage and
downloading of bid documents; and, in the full implementation of the system,  the
Electronic Bid Submission module will allow prospective bidders to submit their tenders
online.

In August of 2006, and enhanced version of the Pilot Electronic is Submission

was launched with more features and functionality. Now called the Philippine
Government Electronic Procurement System (PhilGEPS), it is the central and definitive
source of information on the procurement of common goods, general support services,
civil works,   and consulting services. Other phases of the system are now being
developed to make the system more responsive to the needs of both government and
suppliers and to support other aspects of the procurement process.

The creation of Philippine Government Electronic Procurement System

(PhilGEPS) has proved undying attempt to improve further the Procurement System in
the Philippines. It has been the single, centralized electronic portal that serves as the
primary and definitive source of information on government procurement.

Government agencies, as well as suppliers, contractors, manufacturers,

distributors and consultants, are mandated to register and use the system in the
conduct of procurement of goods, civil works and consulting services. Through the use
of the Philippine Government Electronic Procurement SystemPhilGEPS, transparency
in government procurement is enhanced since opportunities to trade with government
and the ensuing transactions are provided online.The Philippine Government Electronic
Procurement SystemPhilGEPSwas made possible with the assistance of the Canadian
International Development Agency through the Policy, Training, and Technical
Assistance Facility (PTTAF) on its initial phase.

Consequently, the Government Procurement Reform Act (GPRA) or Republic Act

No. 9184 which was signed by Her Excellency Gloria Macapagal-Arroyo on January 10,
2003 has come to play. Its Implementing Rules and Regulations-A (IRR-A) took effect
on October 08, 2003.
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 The Government Procurement Reform Act (GPRA) prescribes the procurement
process for all government agencies.The GPRA also created the Government
Procurement Policy Board (GPPB) as the oversight authority in all government
procurement.Also with the signing into law of Republic Act No. 9184, the Government
Procurement Policy Board – Technical Support Office (GPPB-TSO) was created.

The Government Procurement Reform Act (GPRA) was envisioned to address

the lack of transparency and competition, eliminate collusion and political interference
as well as lessen the delays in the procurement process. However, despite the reforms
and the recognition of Government Procurement Reform Act (GPRA) by multilateral
institutions such as the World Bank as a world class legislation, 7 controversies continue
to haunt the Philippine procurement system. The latest of which was the National
Broadband Network (NBN) deal controversy.  In September 2007, allegations of bribery,
collusion, and overpricing of the NBN deal caught the public’s attention.    Senate
witness Rodolfo “Jun” Lozada8 testified to the existence of nepotism and the “tailor‐
fitting” of projects in public procurement to benefit an elite few.  Lozada, in his testimony
in the Senate Blue Ribbon Committee hearing declared that the country has a
“dysfunctional” and “supply driven” procurement system.

The procurement process prior to the enactment of the GPRA lacked

transparency and competition since bid announcements were confined only to print
media. Such practice opened the process to manipulation by officials to favor certain
suppliers and contractors. There are anecdotes of contractors who hoard copies of
newspapers to prevent circulation of the bidding invitation for local projects, thereby
limiting competition to a few favored ones.   To level the playing field and to make the

7
Former World Bank Philippines Country Director Joachim von Amsberg recognized the GPRA
as a legislation with “world class” quality during a press conference in 2007.

8
Jun Lozada is an electronics and communications engineer who served as a technical
consultant to former Socioeconomic Planning Secretary Romulo Neri on the National
Broadband Network (NBN) project. He testified in the Senate and implicated former
Commission on Elections chair Benjamin AbalosSr and First Gentleman Jose Miguel Arroyo in
the allegedly overpriced and anomalous ZTE‐NBN deal.

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bid invitation known all over the country, in addition to print media with national
circulation, bidding announcements are now posted on the website of the procuring
agency as well as on the Philippine Government Electronic Procurement System
(PhilGEPS) website.  

Likewise, prior to GPRA, there was no general procurement law.  In place were
117 laws including executive orders (EOs), presidential decrees (PDs) and
administrative orders (AOs), which were employed in order to fill in for the lack of a
general procurement law.    This array of laws often resulted in confounding and
conflicting interpretations of the provisions that increased the possibilities of delays and
irregularities in the bidding and procurement process. The old system also provided
varying procurement processes for each sector, e.g. one process for infrastructure and
another one for agriculture. Moreover, there used to be no or hardly any monitoring and
assessment of the implementation of the contract.   The GPRA, in contrast, recognizes
the PhilGEPS as the sole portal which will serve as the primary source of information on
procurement in government. Among the features of the PhilGEPS are the electronic
bulletin board, which also serves as a public tender board; a registry of all
manufacturers, suppliers, distributors and consultants; and an electronic catalog of all
current purchases and sales. The law also integrates all the various schemes into a
uniform system regardless of sector classifications.

Lastly, the  Anti‐Graft and Corrupt Practices Act (RA 3019), the Code of Conduct
and Ethical Standards for Public Officials and Employees (RA 6713), and the Civil
Service Law, were among    the laws that provide penal/administrative sanctions to
procurement officials who are proven guilty of soliciting/accepting bribes from
bidders/contractors prior to the GPRA.   The GPRA, without prejudice to the other laws,
provides for the penalty of imprisonment from six to 15 years for both BAC/procurement
officials and bidders/contractors proven guilty of committing the offenses defined by the
GPRA.    In sum, the GPRA makes the procurement process much simpler and faster.  
The major difference is in the assessment of suppliers.  Both the old and new schemes

25 | P a g e
evaluate the contents of the bids of all bidders.  However, now that the GPRA is in
place, the evaluation process is made simpler and more transparent. 9

Onthe other note, since the Procurement Service-PhilGEPS aims to provide

excellent customer service to attain optimum customer satisfaction by ensuring efficient,
responsive, economical, prudent and professional service to clients and other
stakeholders, hence, the creation of the Procurement Service Regional Depots
Being the government’s overall “marketer”, the procurement service has expanded its
scope in terms of goods, materials and services it procures. The need to promote
Procurement Service’ products and services has also expanded over the years reaching
various areas in the Philippine archipelago.

The Procurement Service, as the government’s central procurement agency for

common-use supplies, has expanded its reach to promote our products and services all
around the Philippine archipelago. With the goal of providing every government agency
with quality common-use supplies, materials and equipment at competitive prices, the
PS established depots and sub-depots in various regions, provinces and cities across
the nation in accordance with Executive Order No. 359 signed by then President
Corazon C. Aquino in June of 1989.

The first PS depot was established in June 18, 1998 in Region V - Legazpi City.
Additional depots were established in 2004 namely Region XI - Davao City (March 26),
CAR - Baguio City (August 06) and Region X - Cagayan de Oro City (September 17).
Depots are supervised and operated by DBM Regional Offices. On March 29, 2004, the
first sub-depot was established in Negros Occidental, operated by the local government
unit under the supervision of the Provincial Government. In 2011, the said sub-depot
was considered a depot as it eventually expanded its operations catering to the entire
Region VI.
To date, there are a total of thirteen (13) operating depots, namely: Region I - La
Union (September 19, 2005), Region II - Tuguegarao City (February 02, 2005), Region
9
https://www.senate.gov.ph/publications/PB%202008-05%20-%20Plugging%20the
%20Loopholes.pdf
26 | P a g e
III - Pampanga (February 01, 2005), Region VII - Cebu City (July 02, 2005), Region VIII
- Tacloban City (December 01, 2012), Region XII - Koronadal City (March 13, 2006) and
Region XIII - Butuan City (September 18, 2006).

There are fourteen (14) sub-depots operating in the following areas, namely:
Surigao del Norte, Camiguin, Misamis Occidental, Mt. Province, Eastern Samar, Biliran,
Puerto Princesa City, Misamis Oriental, Calbayog City, Valencia City, Zamboanga City,
Zamboanga Sibugay, Maasin and Catarman. The next step in the growth is the creation
of Hubs. At present, there is one hub in Cagayan de Oro, and a second hub is planned
to be created in Legazpi City.

The depots are operated by the DBM Regional Offices. The only depot that is
operated by a local government is the one in Bacolod which is under the supervision of
Provincial Government of Negros Occidental.The 13 PS Regional Depots are now
operating under a computer system (The Regional Depots Database System designed
by the Regional Depot in CAR) that was designed to accelerate the daily operations of
regional depots such as Delivery Receipts, preparation of price quotations, monitoring
of available stocks, monitoring of out-of-stock items, and the issuance of official
receipts.10

Depot operation in the regions are supervised by the DBM Regional Directors
and covered by a Memorandum of Agreement (MOA) between the PS-PhilGEPS
Executive Director and the DBM Regional Directors. PS-PhilGEPS has propriety rights
over the depot. The depot shall be responsible for marketing and selling items that it
carries in inventory. Likewise, the depot may conduct regular monitoring, when
necessary, local market prices of common-use supplies, materials and equipment from
at least three (3) to five (5) local suppliers, and submit a price monitoring report to the
Depot Coordination Office (DCO) not later than two (2) weeks after the end of each
quarter. However, it is the PS-PhilGEPS that determines depot prices based on the
submitted price monitoring report and freight.
10
PS-PhilGEPS Depot Operations Manual

27 | P a g e
 Lastly, the operationalization of the PS Regional Depots has led to the opening of
PS Regional Sub-Depots to bring the services of PS closer to its clientele.The goal is to
open one sub-depot in every province so that every province would have a depot by
2010. The successful operation of the Bacolod City depot in Negros Occidental served
as an inspiration for PS to pursue this objective.As of August 2008, four Regional Sub-
Depots have already been opened in the provinces of Surigao del Norte, Camiguin,
Misamis Occidental, and Palawan. It is expected that a few more Regional Sub-Depots
shall have opened before the end of 2008, namely: Mt. Province; Biliran Province;
Ormoc City; Misamis Oriental; Quezon Province; Davao del Sur; Lanao del Norte; and
Bukidnon. By 2010, a total of 81 provincial sub depots shall have opened.

Along with other offices established in consonant with the goal of improving the
Procurement Service in the Philippines, The PX (Procurement Service Exchange)
Commissary was one of them all. The PX Commissary is a store operated by
government employee cooperatives within the premises of a government agency. The
opening of the PX Commissary serves as a source for all government employees to
avail of goods and other household items which are mostly priced lower than existing
market prices.The establishment of PX Commissaries is pursuant to Executive Order
No. 524 issued on April 10, 2006. Its operation is guided by Circular Letter No. 2006-06
which prescribes the necessary guidelines on how to operate a government
commissary. The PX Commissary is part of the non-cash benefit that the present
administration offers to government workers. Likewise, with the goal of providing every
government employee or office an opportunity to finally own a computer, PS launched
the “PC ng Bayan” Project on June 20, 2005. The grand launching was held at the
Tejeros Hall of Camp Aguinaldo in Quezon City.The “PC ng Bayan” was conceptualized
as a research tool for the children of government employees and as a basic entry-level
technical equipment for all government agencies, particularly the local government units
(LGUs).Dubbed as “PC ng Bayan” Project because of its affordability, it has become
one of the top selling products of PS. The PC is sold at less than P17,000.00, printer
included.

28 | P a g e
 Following the success of the “PC ng Bayan” project, the “Laptop ng Bayan”
project was launched. The Project, like the “PC ng Bayan”, aimed to provide laptop
computers at a very affordable price without sacrificing the quality of the product. In fact,
the laptop units that PS is carrying are a lot cheaper than the laptops readily available in
the market because the units are bought directly from the manufacturers.The PS started
to offer the “Laptop ng Bayan” Project in July of 2008 and these sold like hotcakes.11

Additionally, the Regional Inter-Agency Bids and Awards Committee (R-IABAC)

was created on December 18, 2006 to help generate economic activity all over the
country. The R-IABACs were created to provide in-house Bids and Awards Committees
support to serve the requirements of PS Regional Depots. It was established to bring
the procurement activities of common-use goods to the regions by giving opportunities
to local manufacturers, suppliers and dealers to the supply of their products.Since the
R-IABACs are envisioned to have the same composition and processes observed by
the IABAC, its membership consists of different Director-level representatives from
different Department Regional Offices holding office in the same region.Most of the R-
IABACs now operating have conducted successful biddings and were able to purchase
for their respective depots.

The creation of the R-IABACs necessitated the creation of a team to traffic the
communication between and among the various R-IABACs and the IABAC. In addition,
it needed a team to facilitate the flow of activities of the R-IABACs. In response to this
need, PS created the R-IABAC Coordination Unit. The R-IABAC Coordination Unit
ensures the smooth flow of bidding activities in all the R-IABACs.

Having dissected and divulge into the different laws, rules, regulations and even
offices created in the pursuit of an improved Procurement Service in the Philippines, the
procurement framework comes next to give a total outlook on the procurement
system.As above-mentioned,the current legislative framework is contained in Republic
Act (RA) 9184 or the Government Procurement Reform Act of 2003. It was signed into
law on January 10, 2003. The implementing rules and regulations (IRR) were revised
several times: October 8, 2003; September 2, 2009; and, more recently, August 25,
11
Procurementservice.org
29 | P a g e
2016. The governing principles, as provided by Section 3 of RA 9184, are:
transparency, competitiveness, streamlined procurement process, accountability, and
public monitoring.

We rely on Laffont and Tirole’s (1993) A Theory of Incentives in Procurement and

Regulation in analyzing and understanding public procurement. In the basic auction
model, Laffont and Tirole analyzes bidding in the natural monopoly context, that is, the
government sells a natural monopoly contract, such as a DPWH auction for the
construction of a road, or a Department of National Defense auction for the construction
12
of a new ship. They reiterate a previous result (Demsetz 1968) that competitive
bidding should be pursued when there are many possible candidate buyers of the
contract, or in our example, many possible candidate builders. This is because
competition elicits the selection of the most efficient firm and thereby ensures
production efficiency and low cost. This frames the default mode that is competitive
bidding in the Philippines’ procurement law, RA 9184, and its Implementing Rules and
Regulations.

In the spectrum of incentive contracts, Laffont and Tirole explain the basic
contracts at opposite ends: the cost-plus-return contract at one end and the fixed-price
contract at the other end. In the cost-plusreturn contract, the government pays the firm
(i.e., the contractor) its realized cost plus some return or profit. In the fixed-price
contract, the government pays a fixed price to the firm. In between are incentive
contracts which can have a combination of the two and with incentives designed in
according to some predetermined rule. Among their results in the basic model are that a
fixed-price contract induces the firm to exert the right amount of effort to be efficient
because the firm is the residual claimant of cost savings. In contrast, a cost-plus-return
contract does not induce the right amount of effort for cost reduction because the firm
does not appropriate any of the cost savings.There are appropriate 7 uses for cost-plus-
return contracts. For instance, cost-plus-return contracts tend to be more favored for
really high-tech projects because these tend to elicit more favorable results quality-wise

12
A Theory of Incentives in Procurement and Regulation
30 | P a g e
and outcome- wise given that high-tech firms are usually risk-averse and seek
insurance when forecast errors are substantial. In standard production contracts and
low-tech projects, risk aversion by firms is less and fixed-price contracts tend to be more
favored. The above-discussed characteristics of fixed-price contracts frame the
Philippine procurement law’s default prescription of determining and announcing the
approved budget for the contract (ABC) duly approved by the head of the procuring
entity in the government.

Procurement Law should encourage competition. The UP interviewee stated that

the law should be able to encourage competition. Currently, the existing laws do not
inspire small firms to grow bigger since they find a segment of government procurement
that is essentially only for them. For example, Small B (up to Php 15 million in contract
price) projects only invite contractors that are licensed as C or D. He asks if they could
require an AAA-licensed contractor, even for a Small B project. 13

The system of public procurement in the Philippines is based on a conventional

two tier structure. At one level, operational responsibility for procurements is delegated
to the line agencies (national government agencies, state-owned or controlled
corporations and local government units), which in performing this role, are known as
procuring entities. In each procuring entity, management of the procurement is
undertaken and the recommendation of the contract award is made by the bids and
awards committee. Amongst the key tasks of the committee are to advertise an
invitation both to apply for eligibility to bid and to submit a bid, conduct pre-bid
conferences, determine the eligibility of prospective bidders, receive and open bids,
conduct the evaluation of them, undertake the post-qualification process, recommend a
14
contract award to the head of the procuring entity, and resolve bid challenges. The
bids and awards committee is supported by a technical working group, consisting of

13
The Promises and Pains in Procurement Reforms in the Philippines

14
GOP, 2009; Government Procurement Policy Board [GPPB], 2009a: 12-13; GPPB, 2009b: 14-
127

31 | P a g e
suitably qualified personnel with technical, financial and legal expertise in the area
relevant to a procurement. Its role is to help the committee in aspects of procurement
which require such expertise, including drafting specification and contracts and
evaluating bids.

Over and above the procuring entities is an umbrella body, known as

Government Procurement Policy Board. It is responsible for the formulation of
procurement policy, recommending amendments, when required, of the GPRA, as well
as drafting and amending the Implementing Rules and Regulations. Also part of its brief
is to draft and amend the generic procurement manual and standard bidding
documents. Whilst not involved in day-to-day purchasing, the Board exercises
supervision over procuring entities to ensure that they comply with the GPRA and its
IRR’s, and other laws relating to procurement. Another part of its remit is to build up
expertise in procurement by organizing and conducting training courses through its
technical support office, that cover the legal, financial and technical aspects of the
procurement process.15

Essentially, the process followed in public procurement involves the following

stages. At the outset, the procuring entity draws up an annual plan detailing all the
approved procurements for the financial year, followed by a detailed drafting of
specifications for each procurement. At the appropriate time, an invitation to apply for
eligibility and to bid is advertised. For the procurement of goods, one or more pre-bid
conferences are conducted, which can be attended by all would-be bidders, in order to
clarify specifications, tender procedures and other relevant matters, as well as to
answer queries from those attending. After this, bids are submitted, consisting of three
envelopes to be handed in at the same time: one containing application for eligibility to
bid, a second containing technical proposals and the third the financial proposals. An
eligibility screening is conducted, which focuses upon, amongst other things, the track
record of the company, its financial standing, any commitment it may have to on-going

15
Congress of the Philippines [COP], 2003; GOP, 2009

32 | P a g e
contracts, and its fulfillment of nationality requirements. If any company fails to meet
eligibility requirements, its bid proposals cannot be considered and its bid rescinded. In
the case of infrastructure projects and consultancy services, the eligibility screening is
undertaken separately from the tender and prior to the pre-bid conference. Those
companies declared eligible are then required to submit only two envelopes: one
16
containing the technical and the other the financial proposals.

With these developments, it is but apparent that Philippines government has

introduced reforms to deal with the longstanding shortcomings of its procurement
system. The reforms focused on, in relation to procurement, fostering competition,
increasing transparency, standardizing procedures, enhancing end-product quality and
contractor reliability, ensuring proper planning and budgeting, combating corruption, and
strengthening accountability. Whilst the reforms in theory have created a procurement
system in line with international best practices, they have all too often been undone by
serious weaknesses in the system of implementation, as revealed by continuing
widespread corruption in day-to-day procurement practices.

The highlight of the reform is centering on the reform under the GPRA was to
establish a mandatory framework of procurement planning and budgeting. Hitherto,
government agencies often did not draw up detailed yearly procurement plans, since
there was no legal obligation to do so. Those that did, did not then always adhere to
them. Without proper planning, there was little way of determining whether the
procurements were compatible with the policy priorities of the procuring entity and how
much of its capital and current budgets to earmark for them. A consequence of the latter
was that approved procurements were not undertaken or projects were abandoned or
delayed for lack of sufficient funds.

As the first stage in the planning process, according to the GPRA and its
Implementing Rules and Regulations end-user units of a procuring entity draft a list of
requested procurements for the following financial year, including a statement of the
16
GOP, 2009; Government Procurement Policy Board [GPPB], 2009a

33 | P a g e
need for each procurement, and providing details in each case of the type and extent of
the goods, services and works to be procured, the procurement method to be adopted,
time schedules of the procurement and contract implementation, and the estimated
contract value. The list, known as the project procurement. management plan, is then
submitted to the budget office of the procuring entity for its evaluation. If approved, it is
then vetted by the head of the procuring entity, following which, subject to any
amendment, it is consolidated with the plans of the other end user units to form the
annual procurement plan of the procuring entity. Once the budget for the procuring
entity has been finalized, the end-users units will be asked to adjust their project
procurement management plans in light of the funding allocated to their programs and
activities. The annual plan is then accordingly amended and submitted to the bids and
awards committee for its evaluation and approval.

Another aspect of the procurement process introduced by the GPRA which has
promoted transparency are pre-bid conferences. Under this arrangement, the bids and
awards committee of the procuring entity meets the prospective bidders, before bids are
submitted. The purpose of the meeting is to explain eligibility requirements, and
specifications, provide clarifications in response to queries, and where necessary to
arrange on-site visits for infrastructure projects. Pre-bid conferences are useful in the
case of technically complex procurements and reduces confusion and uncertainty on
the part of bidders when they submit their bid proposals.

The most significant step to enhance transparency was the creation of a

comprehensive E procurement system, known as PhilGEPS, set up in 2007. The
expressed aim is that it becomes “the primary source of information” for procurement,
and creates “a more efficient, convenient, transparent, and open procurement
process”17PhilGEPS publishes procurement laws, regulations and bidding procedures,

17
Philippine Public Procurement Service [PPPS], 2009

34 | P a g e
and announces procurement opportunities, known as bid notice abstracts, with a facility
to download bid documents. Bid notice abstracts contain information on the type of
goods, services and infrastructure project to be procured, the approved budget ceiling
for the contract, and the mode of procurement to be adopted and details of any pre-bid
conference. The on-line portal too discloses the name of the company awarded a
contract, the reason for the award, and the contract sum. A further provision is an E
catalogue for purchasing low value items

Indeed, having explored on the laws, rules, regulations, process of procurement

and its framework, the Procurement Service in the Philippines is undeniably a growing
and developing mechanism in pursuit of efficient government operations.

RELEVANT JURISPRUDENCE

The Procurement Service in the Philippines has its own loopholes since it is
growing and developing throughout the years, attached to this development are decided
cases involving government agencies and/or its officials as well as private entities
and/or individuals.

Probably the infamous decided case of Jun Lozada The case stems from the
alleged corruption scandal precipitated by a transaction between the Philippine
government, represented by the National Broadband Network (NBN), and ZTE
Corporation (ZTE), a Chinese manufacturer of telecommunications equipment.  Former
National Economic Development Authority (NEDA) Secretary Romulo Neri sought the
services of Lozada as an unofficial consultant in the ZTE-NBN deal.The latter avers that
during the course of his engagement, he discovered several anomalies in the said
transaction involving certain public officials. 5 These events impelled the Senate of the
Philippines Blue Ribbon Committee (Blue Ribbon Committee) to conduct an

35 | P a g e
investigation thereon,for which it issued a subpoena directing Jun Lozada to appear and
testify on 30 January 2008.

The Philippine National Broadband Network controversy which is also referred to

as the NBN–ZTE deal or NBN–ZTE mess, involved allegations of corruption in the
awarding of a US$329 million construction contract to Chinese telecommunications
firm ZTE for the proposed government-managed National Broadband Network (NBN).
The contract with ZTE was signed on April 20, 2007 in Hainan, China. Following the
emergence of irregularities, President Gloria Macapagal-Arroyo cancelled the National
Broadband Network project in October 2007. On July 14, 2008, the Supreme Court
dismissed all three petitions questioning the constitutionality of the national broadband
deal, saying the petitions became moot when the project was cancelled.

Moreover, there are more than hundreds of cases decided by the Supreme Court
in relation to Public Procurement. One of those cases is the case between Philippine
Sports Commission versus Dear John Services,Inc.18 The facts of the case were as
follows: In December 2001, respondent Philippine Sports Commission (PSC) published
an "Invitation to Bid" for its janitorial and security services. Pursuant thereto, respondent
Dear John Services, Inc. (Dear John Services) submitted its letter signifying its intent to
participate in the bidding and subsequently paid the bidding fee. On March 8, 2002,
PSC Chairman Eric Buhain, in a memorandum, cancelled the prebidding conference
pending evaluation of all procedures and documents relative to the bidding policies.
When the review was completed, the "Invitation to Apply for Eligibility and to Bid" was
advertised in order to comply with the requirements set forth in Executive Order (E.O.)
No. 40, Series of 2001 and in its Implementing Rules and Regulations. The pre-bidding
and bidding dates were then scheduled to April 16, 2002 and April 26, 2002,
respectively. Among the bidders who qualified and submitted the necessary documents
for prequalification were Dear John Services8 and Consolidated Building Maintenance,
Inc. (CBMI). A procedure for the conduct of the public bidding, entitled "Instruction to
Bidders," was given to the qualified bidders. The bidding was held as scheduled and the
18
G.R No. 183260 Philippine Sports Commission versus Dear John Services,Inc.
36 | P a g e
sealed bids were opened. Dear John Services’ bid amounted to P18,560,078.00 while
that of CBMI amounted to P 27,419,097.00. PSC, however, awarded the contract to
CBMI because Dear John Services allegedly failed to reach the 60% lower limit of the
Approved Agency Estimate(AAE). Dear John Services sent a letter, dated May 8, 2002,
to Buhain requesting that its bid be reconsidered and stating therein that the AAE
amounting to P 32,554,050.00 should have been disclosed prior to the bidding and that
its revelation after the opening of the bid was highly irregular. Subsequently, Dear John
Services filed a Complaint against PSC for injunction before the RTC praying, among
others, that a temporary restraining order (TRO) be issued enjoining PSC and its
officers (petitioners) from awarding the janitorial services to CBMI; that a preliminary
injunction be issued restraining PSC from availing of CBMI’s janitorial services; and that
after the hearing, the injunction be made permanent. On May 14, 2002, the RTC issued
a TRO, enjoining PSC from awarding its janitorial services to CBMI and/or allowing the
latter to perform its contract in the event that it had been awarded. The said TRO was
extended until May 20, 2002. Thereafter, the prayer for the extension of the TRO and
the request for the issuance of the writ of preliminary mandatory injunction were denied
in the RTC Order, dated May 20, 2002. The Complaint was later on amended to include
Buhain, in his capacity as Chairman of PSC, and the chairman and members of the
Bids and Awards Committee (BAC), namely, Cesar Pradas, Eugene De Vera, Noel
Elnar, Emerenciana Samson, Cesar Abalon, Julia Llanto, and Edgardo Mateo. After the
trial on the merits, the RTC dismissed the complaint, in its November 29, 2006 Decision,
for lack of merit. It upheld the authority of the PSC to award the service contract to
CBMI because the latter’s bid was advantageous to the government.

In this case, the procurement process was discussed which involves the
following steps: (1) pre-procurement conference; (2) advertisement of the invitation to
bid; (3) pre-bid conference; (4) eligibility check of prospective bidders; (5) submission
and receipt of bids; (6) modification and withdrawal of bids; (7) bid opening and
examination; (8) bid evaluation; (9) post qualification; (10) award of the contract; and
(11) notice to proceed. Parenthetically, from the first step of the procurement procedure,

37 | P a g e
E. O. No. 40 and its implementing rules are clear to the effect that the approved budget
for the contract and the source of the funding should be divulged to prospective bidders.

Further, highlighted in this case is the settled rule that where the invitation to bid
contains a reservation for the Government to reject any or all bids, the lowest or highest
bidder, as the case may be, is not entitled to an award as a matter of right for it does not
become the ministerial duty of the Government to make such award. Thus, it has been
held that where the right to reject is so reserved, the lowest bid or any bid for that matter
may be rejected on a mere technicality, that all bids may be rejected, even if arbitrarily
and unwise, or under a mistake, and that in the exercise of a sound discretion, the
award may be made to another than the lowest bidder. And so, where the Government
as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the
losing bidder has no cause to complain nor right to dispute that choice, unless an
unfairness or injustice is shown. Accordingly, he has no ground of action to compel the
Government to award the contract in his favor, nor to compel it to accept his bid. Verily,
a reservation in the advertisement for bids of the right to reject any bid generally vests in
the authorities a wide discretion as to who is the best and most advantageous bidder.
The exercise of such discretion involves inquiry, investigation, comparison, deliberation
and decision, which are quasi-judicial functions, and when honestly performed, may not
be reviewed by the courts. In such cases, there is no binding obligation to award the
contract to any bidder and in the exercise of such discretion the award may be made
validly to whoever among the participating bidders has submitted the most
advantageous bid.

Another case is the one between Manila International Airport Authority versus
Olongapo Maintenance Services Inc. and Triple Crown Services, Inc. The case
highlighted that the rationale behind the requirement of a public bidding, as a mode of
awarding government contracts, is to ensure that the people get maximum benefits and
quality services from the contracts. More significantly, the strict compliance with the
requirements of a public bidding echoes the call for transparency in government
transactions and accountability of public officers. Public biddings are intended to

38 | P a g e
minimize occasions for corruption and temptations to abuse of discretion on the part of
government authorities in awarding contracts.

Next is the case of the Office of the Ombudsman- Mindano versus Richard T.
Martel and Abel A. Guinares.19 The ancedents of the case were that In 2003, Martel was
the Provincial Accountant of Davao del Sur while Guiñares was its Provincial Treasurer.
They both served as ex officio members of the Provincial Bids and Awards Committee
(PBAC) of Davao del Sur, together with Victoria GiveroMier (Mier), Provincial Budget
Officer; Edgar CajilingGan (Gan), Provincial Board Member; and Allan Putong (Putong)
(PGSO).

In the Purchase Requests, dated January 24, 2003, February 18, 2003 and July
15, 2003, the Office of the Governor of Davao del Sur requested the acquisition of five
service vehicles, namely: two (2) Toyota Hilux 4x4 SR5, one (1) Mitsubishi L300 Exceed
DX, and two (2) Ford Ranger XLT 4x4 M/T, for the use of the Governor and the Vice-
Governor.The procurement of the five (5) vehicles was not subjected to a public bidding
as it was immediately effected through direct purchase pursuant to the recommendation
of Putong as PGSO. The recommendation was approved by the members of the PBAC,
which included Martel and Guiñares. Accordingly, the said vehicles were purchased and
delivered to the provincial government. The disbursement vouchers for the five (5)
vehicles were signed by Martel and Guiñares as Provincial Accountant and Provincial
Treasurer.

Subsequently, a concerned citizen wrote to the Ombudsman, reporting the lack of public
bidding of the said procurement. Acting thereon, the Ombudsman launched an
investigation concerning the acquisition of the said vehicles.

 The applicable laws involved in the case is Republic Act No. 9184 since the
procurement of service vehicles by government is covered by R.A. No. 9184 or
Government Procurement Reform Act, which took effect on January 26, 2003, and
19
G.R. No. 221134, March 01, 2017

39 | P a g e
before that, by R.A. No. 7160, otherwise known as An Act Providing for a Local
Government Code of 1991. COA Circular No. 92-386, which prescribes rules and
regulation on Supply and Property Management in Local Government Units (LGUs),
pursuant to Section 383 of R.A. No. 7160.

Verily, Section 10 of R.A. No. 9184 provides that "[a]ll procurement shall be done
through Competitive Bidding, except as provided for in Article XVI of this Act." Likewise,
Section 27 of COA Circular 92-386 provides that "[e]xcept as otherwise provided herein,
acquisition of supplies or property by local government units shall be through
competitive public bidding." Hence, there is a clear mandate by R.A. No. 9184 and COA
Circular 92-386 that public bidding is the primary process to procure goods and services
for the government.

A competitive public bidding aims to protect public interest by giving it the best
possible advantages thru open competition. It is precisely the mechanism that enables
the government agency to avoid or preclude anomalies in the execution of public
contracts. Strict observance of the rules, regulations, and guidelines of the bidding
process is the only safeguard to a fair, honest and competitive public bidding.

Only in exceptional circumstances that R.A. No. 9184 and R.A No 7610 allow the
procuring entity to forego the strict requirement of a public bidding. Section 53 of R.A.
No. 9184 provides that negotiated procurement may be availed by the procuring entity
only in specific occasions, such as when there are two (2) failed biddings. Similarly,
Section 369 of R.A. No. 7160 provides that negotiated purchase may be availed in case
where public bidding has failed for two (2) consecutive times. Section 35 of R.A. No.
9184 provides, among others, that there is a failure to bid if no bids are received.
In this case, no public bidding was conducted in the procurement of the service vehicles
for the Governor and Vice-Governor. The absence of public bidding was a glaring
violation of R.A. No. 9184 and R.A. No. 7160 and COA Circular No. 92-386, unless the
respondents could prove that the resort to a negotiated bidding, as approved by the

40 | P a g e
PBA was proper . The CA and the Ombudsman similarly found that the PBAC utterly
failed to justify the negotiated procurement. There was no failure to bid because there
was no invitation to bid and no bids could have ever been received.

Further, in the case of Land Bank of the Philippines versus Atlanta Industries 20,
the issue of this case revolved on the question of whether or not the SLA between the
Land Bank and the City Government of Iligan is an executive agreement similar to Loan
Agreement No. 4833-PH such that the procurement of water pipes by the BAC of the
City Government of Iligan should be deemed exempt from the application of RA 9184.

It has been decreed on the decision that while mandating adherence to the
general policy of the government that contracts for the procurement of civil works or
supply of goods and equipment shall be undertaken only after competitive public
bidding, RA 9184 recognizes the country's commitment to abide by its obligations under
any treaty or international or executive agreement. This is pertinently provided in
Section 4 of RA 9184 which reads as follows:

“Sec. 4. Scope and Application. - This Act shall apply to the Procurement of
Infrastructure Projects, Goods and Consulting Services, regardless of source of funds,
whether local or foreign, by all branches and instrumentalities of the government, its
department, offices and agencies, including government owned and/or -controlled
corporations and local government units, subject to the provisions of Commonwealth
Act No. 138. Any treaty or international or executive agreement affecting the subject
matter of this Act to which the Philippine government is a signatory shall be observed.”

The IRR of RA 9184 further supplements the law's treatment of treaties and
international or executive agreements as follows:

Section 4. Scope and Application of the IRR

20
G.R. No. 193796 July 2, 2014

41 | P a g e
 4.1 This IRR shall apply to all procurement of any branch, agency, department,
bureau, office or instrumentality of the GOP, including government-owned and/or
-controlled corporations (GOCCs), government financial institutions (GFis), state
universities and colleges (SUCs) and local government units (LGUs).

4.2 Any Treaty or International or Executive Agreement to which the GOP is a

signatory affecting the subject matter of the Act and this IRR shall be observed.
In case of conflict between the terms of the Treaty or International or Executive
Agreement and this IRR, the former shall prevail.

4.3 Unless the Treaty or International or Executive Agreement expressly provides

use of foreign government/foreign or international financing institution
procurement procedures and guidelines, this IRR shall apply to Foreign-funded
Procurement for goods, infrastructure projects, and consulting services by the
GOP.

Consistent with the policies and principles set forth in Sections 2 and 3 of this
IRR, the GOP negotiating panels shall adopt, as its default position, use of this IRR, or
at the very least, selection through competitive bidding, in all Foreign-funded
Procurement. If the Treaty or International or Executive Agreement states otherwise,
then the negotiating panels shall explain in writing the reasons therefor.However, Under
the fundamental international law principle of pactasuntservanda, which is in fact
embodied in the afore-quoted Section 4 of R.A. No. 9184, the RP, as borrower, bound
itself to perform in good faith its duties and obligation under Loan No. 7118-PH.
Applying this postulate in the concrete to this case, the IABAC was legally obliged to
comply with, or accord, primacy to, the WB Guidelines on the conduct and
implementation of the bidding/procurement process in question.

In one case, PNP personnel has been involved in a procurement related case
wherein the Supreme Court, affirmed the dismissal of Philippine National Police (PNP)
officials over the anomalous choppers deal. The case stems from a 2009 procurement
of the PNP of two standards Robinson R44 Raven I light police operational helicopters
(LPOH) worth P62, 672,086.90, and one fully equipped Robinson R44 Raven II LPOH

42 | P a g e
worth P42, 312,913.10. The choppers were declared and priced to be brand new, but
investigation showed they were second hand, and pre-owned by the former First
Gentleman Jose Miguel Arroyo. Hence, Arroyo was sued for graft along with the PNP
executives, in a trial still ongoing before the anti-graft court Sandiganbayan. The
affirmation comes after the Court of Appeals in 2014 exonerated Piano of the
administrative charges. The Ombudsman appealed it before the SC.According to the
Supreme Court the Court of Appeals erred in exonerating Piano, one of the
respondents, of the charge of Serious Dishonesty and Conduct Prejudicial to the Best
Interest of the Service as found by the Ombudsman."

Likewise, the Supreme Court added that Respondent Police Director George
Piano, who is the Chairman of the PNP Inspection and Acceptance Committee (IAC).
The IAC plays a very important role in the procurement process of the agency, since it
has the responsibility of inspecting the deliveries to make sure they conform to the
quantity and approved technical specifications in the supply contract and the purchase
order and to accept or reject the same."Piano signed the resolution, which confirmed
that the choppers passed specifications and acceptance criteria. The Supreme Court
said Piano's signing of the resolution “is a distortion of truth in a matter connected with
the performance of his duties.

The PNP’s Weapons Tactics and Communications Division submitted a report

disclosing the non-conformity of the delivered helicopters to the approved technical
specifications, however, respondent Piano, as IAC Chairman, failed to make further
inquiries or validated the lack of compliance and deviation from requirements. Police
Director Piano’s act of signing the Resolution No. IAC-09-045 “is a distortion of truth in a
matter connected with the performance of his duties,” stated the High Court. The
Supreme Court added that “the 1987 Constitution itself underscores that public office is
a public trust and that public officers and employees must, at all times, be accountable
to the people. This imposes upon the SC the responsibility of holding public officers
accountable for their blatant disregard of the high standard of ethics, competence, and
accountability demanded of them.  Those in public service, such as herein respondent
P/Director Piano, are thus, cautioned to act in full accordance with this constitutional
43 | P a g e
standard, for this Court will not shirk from its duty of upholding administrative sanctions
against erring public servants.

Another procurement related case involving Philippine National Police is when

the Commission on Audit flags the PNP's purchase of 2,054 Mahindra vehicles in 2015.
The PNP completely blames the DBM despite taking an active role in the procurement.
It was the vehicle brand of the top officials of the Philippine National Police (PNP), and
the brand of patrol cars used by operatives in key police stations across the country.
Since now it is already a brand, in the PNP at least, associated with awry procurement
practices. The Commission on Audit (COA) has sounded the alarm on the Philippine
National Police for purchasing in 2015 over 2,000 Mahindra patrol vehicles worth P1.89
billion without going through important steps in procurement so that taxpayers’ money
could be used for the best. he questionable deal was done in two tranches. The first in
March 2015 by the PNP through the Procurement Service of the  Department of Budget
Management (PS-DBM), purchasing P1.54-billion 1,656 Mahindra Enforcers—patrol
vehicles intended for police stations nationwide. The second was done in December
2015 by the PNP on its own, buying P349-million 398 Mahindra Scorpios which are
SUVs intended for ranking PNP officers. The vehicles are easy to spot, especially inside
and around Camp Crame, standing out as the square and compact white cars usually
attached with patrol lights.

On the other hand, in the case of Antonio J. Villegas, as Mayor of Manila versus
The Business and Industrial Suppliers 21. A case before the passage of Republic Act No
9184 and Letter of Instruction No. 755. Here, the legal issue presented was the legality
of the constitution of the committee on awards, which on June 20, 1962 approved BISI's
bid. It will be recalled that, while at the first meeting on February 23, 1962, said
committee was constituted by City Mayor Villegas, City Treasurer Cudiamat and City
Auditor Erestain, at the meeting of June 20 following, the City Mayor was represented
by Fernando Manalastas. This deliberation, respondents challenge "as clearly illegal
and unauthorized under the law" which allowed "no substitution." By legal mandate,
Section 3 (c) of Republic Act 2264, purchases for cities in excess of P5,000.00 "shall be

21
G.R. No. L-21352 November 29, 1966
44 | P a g e
made" by a committee on awards composed of the City Mayor, City Auditor and City
Treasurer. The rule is well settled that officers, in letting municipal contracts, perform
not merely ministerial functions, but duties of a "judicial and discretionary nature." As
well established is the principle that judicial or quasi-judicial powers may not be
delegated. In the absence of constitutional or statutory authority, an administrative
officer may not alienate or surrender his discretionary power or power's which require
exercise of judgment, or deputize another for him with respect thereto. For, when a
public official is granted discretionary power, it is so be presumed that so much is
reposed on his integrity, ability, acumen, judgment. Because he is to look into the facts,
weigh them, act upon them, decide on them — acts that should be entrusted to no
other. The Mayor, therefore, was not empowered to delegate his duties as a member of
the committee on awards to Fernando Manalastas, his technical assistant on public
health, hygiene and sanitation.

It can be gleaned in the above old case that the Procurement Service in the
Philippines was not organized since it was not institutionalized yet. The beauty of the
law, rules and regulations reveals in itself when the past circumstances can be easily
resolved by new developed solutions and remedies.

In contrary, here is a case which was decided after the enactment of the
Procurement law which is Republic Act No. 9184. A case between Ramon M. Atienza,
in his capacity as Vice Governor of the Province of Occidental Mindoro versus Jose T.
Villarosa in his capacity as Governor of the Province of Occidental Mindoro,
respondent.22 The antecedents were, Petitioner Atienza and respondent Villarosa were
the Vice-Governor and Governor, respectively, of the Province of Occidental Mindoro.
On June 26, 2002, the petitioner Vice-Governor received the Memorandum dated June
25, 2002 issued by the respondent Governor concerning the “Authority To Sign
Purchase Orders of Supplies, Materials, Equipment, including fuel, repairs and
maintenance of the SangguniangPanlalawigan”. The said memorandum reads: For

22
G.R. No. 161081. May 10, 2005

45 | P a g e
proper coordination and to ensure efficient and effective local government
administration particularly on matters pertaining to supply and property management,
effective immediately, all Purchase Orders issued in connection with the procurement of
supplies, materials and equipment including fuel, repairs and maintenance needed in
the transaction of public business or in the pursuit of any undertaking, project or activity
of the SangguniangPanlalawigan, this province, shall be approved by the undersigned
in his capacity as the local chief executive of the province. The provision of DILG
Opinion No. 148-1993 which states that the authority to sign Purchase Orders of
supplies, materials and equipment[s] of the Sanggunian belongs to the local chief
executive, serves as basis of this memorandum.

In reply to the above memorandum, the petitioner Vice-Governor wrote the

respondent Governor stating that: We are of the opinion that … purchase orders for
supplies, materials and equipment are included under those as authorized for signature
by the Vice-chief executive of the Sanggunian on the basis of the DILG Opinion No. 96-
1995 as affirmed by the COA Opinions on June 28, April 11 and February 9, 1994 and
coursing it to the Governor for his approval is no longer necessary, the fact that [Secs.]
466 and 468, RA 7160 already provides for the separation of powers between the
executive and legislative. Such authority even include everything necessary for the
legislative research program of the Sanggunian. The core issue of the case revolved
around the question of ,”Who between the Governor and Vice-Governor is authorized to
approve purchase orders issued in connection with the procurement of supplies,
materials, equipment, including fuel, repairs and maintenance of the
SangguniangPanlalawigan. It is well settled in the case that it is the Vice-Governor who
has such authority. Under Rep. Act No. 7160, local legislative power for the province is
exercised by the SangguniangPanlalawigan and the Vice-Governor is its presiding
officer.Being vested with legislative powers, the SangguniangPanlalawigan enacts
ordinances, resolutions and appropriates funds for the general welfare of the province in
accordance with the provisions of Rep. Act No. 7160. The same statute vests upon the
ViceGovernor the power to: Be the presiding officer of the SangguniangPanlalawigan

46 | P a g e
and sign all warrants drawn on the provincial treasury for all expenditures appropriated
for the operation of the sangguniangpanlalawigan.

The same statute vests upon the Vice Governor the power to be the presiding
officer of the sangguniangpanlalawigan and sign all warrants drawn on the provincial
treasury for all expenditures appropriated for the operation of the
SangguniangPanlalawigan. Further, Section 344 provides: Sec. 344. Certification on,
and Approval of, Vouchers. – No money shall be disbursed unless the local budget
officer certifies to the existence of appropriation that has been legally made for the
purpose, the local accountant has obligated said appropriation, and the local treasurer
certifies to the availability of funds for the purpose. Vouchers and payrolls shall be
certified to and approved by the head of the department or office who has administrative
control of the fund concerned, as to validity, propriety and legality of the claim involved.
Except in cases of disbursements involving regularly recurring administrative expenses
such as payrolls for regular or permanent employees, expenses for light, water,
telephone and telegraph services, remittances to government creditor agencies such as
the GSIS, SSS, LBP, DBP, National Printing Office, Procurement Service of the DBM
and others, approval of the disbursement voucher by the local chief executive himself
shall be required whenever local funds are disbursed.

The said argument holds further water in corroboration of Section 39 of the

Manual on the New Government Accounting System for Local Government Units,
prepared by the Commission on Audit (COA), is instructive:

“Sec. 39. Approval of Disbursements. – Approval of disbursements by the Local

Chief Executive (LCE) himself shall be required whenever local funds are disbursed,
except for regularly recurring administrative expenses such as: payrolls for regular or
permanent employees, expenses for light, water, telephone and telegraph services,
remittances to government creditor agencies such as GSIS, BIR, PHILHEALTH, LBP,
DBP, NPO, PS of the DBM and others, where the authority to approve may be
delegated. Disbursement vouchers for expenditures appropriated for the operation of

47 | P a g e
the Sanggunian shall be approved by the provincial Vice Governor, the city Vice-Mayor
or the municipal ViceMayor, as the case may be.” 23

Laslty, in the case of Thunder Security and Investigation Agency/ Lourdes Lasala
versus National Food Authority Region 1 and NFA Regional Bids and Awards
Committee.24 The antecedents provides that sometime in September 2002, petitioner
Thunder Security and Investigation Agency, owned and operated by petitioner Lourdes
M. Lasala as sole proprietor, entered into a Contract for Security Services with
respondent National Food Authority (NFA), Region I. The contract provided that
Thunder Security will provide 132 security guards to safeguard the NFA’s personnel,
offices, facilities and properties in Region I for a period of one year from September 15,
2002 to September 15, 2003. Subsequently, Republic Act (R.A.) No. 91845 was
enacted on January 10, 2003, and took effect on January 26, 2003. Said law expressly
repealed, among others, Executive Order (E.O.) No. 40, Series of 20016 which
governed the bidding procedure of service contracts in the Government. Since
petitioner’s contract with the NFA was about to expire on September 15, 2003, the NFA
caused the publication of an Invitation to Apply for Eligibility and to Bid on May 11 and
18, 2003, intended for all private security agencies. Petitioner paid the bidding fee of P
1,000.00 on May 21, 2003 to signify its intention to participate in the bidding process.
However, on June 9, 2003, the NFA, through Assistant Regional Director Victoriano
Molina, chairman of respondent NFA-Regional Bids and Awards Committee (NFA-
RBAC), notified petitioner to submit the required documents not later than June 19,
2003 in order to qualify for the bidding.8 On June 26, 2003, the NFA-RBAC informed
petitioner that its application to bid had been rejected due to its failure to submit the
required documents. Aggrieved, petitioner sent a letter of protest to the NFA on July 10,
2003, contending that until the Implementing Rules and Regulations (IRR) of R.A. No.
9184 can be promulgated, no bidding should take place. Notwithstanding, respondents
rejected petitioner’s application. Respondents defended their position, citing an
instruction coming from then NFA Administrator Arthur C. Yap which directed that in the
23
Manual on the New Government Accounting System for Local Government Units
24
G.R. No. 182042 July 27, 2011

48 | P a g e
absence of the said IRR and due to the exigency of the service, respondents’ projects
would be temporarily guided by the provisions of E.O. No. 40, among others, provided
the same are consistent with R.A. No. 9184. Unfazed, petitioner filed before the RTC a
Petition for Prohibition and Preliminary Injunction, with a prayer for the issuance of a
Temporary Restraining Order (TRO) plus Damages, seeking, among others, to enjoin
respondents from awarding the contract to another security agency. On August 8, 2003,
the RTC issued a TRO against respondents. Correlatively, in its Order dated August 27,
2003, the RTC granted the writ of preliminary injunction in favor of petitioner and
directed respondents to desist from terminating petitioner’s services until further orders
from the RTC. The RTC held that the composition and the orders of the NFARBAC
were void because the IRR of R.A. No. 9184 has not yet been promulgated. The RTC
also found that no observers from the private sector were present in the bidding process
as required by law.

The legal issue of the case revolved around on the question of whether the Court
of Appeals committed a reversible error when it held that the respondents did not err in
applying E.O. 40 in the conduct of the bidding. Petitioner emphasizes that R.A No.
9184, which expressly repealed E.O. No. 40, was already in force at the time the
bidding was conducted in this case on July 16, 2003; hence, it was error for the NFA
and the NFA-RBAC to conduct the public bidding in accordance with E.O. No. 40.
Petitioner also abandons its initial stance regarding the need for implementing rules and
regulations, and now argues that even without its IRR, R.A. No. 9184 can be
understood and enforced. Petitioner adds that there is no provision of law or
jurisprudence which requires that there must first be an IRR before a law takes effect,
and adds that NFA Administrator Arthur C. Yap and his subordinates cannot suspend
the operation of R.A. No. 9184 and order that bidding be conducted in accordance with
E.O. No. 40 which was already repealed. Petitioner also insists that there was an
irregularity in the bidding process as the observers presented by respondents were
allegedly not independent and cannot be relied upon to observe the process diligently.
Petitioner further insists that the presence or absence of observers in the bidding
process is a question of fact which the CA cannot tackle in a petition for certiorari under

49 | P a g e
Rule 65. As such, the CA should have remanded the case to the RTC for the
determination of the question of fact. On the other hand, respondents through the Office
of the Government Corporate Counsel (OGCC), counter that petitioner failed to present
any evidence before the RTC and the CA to substantiate its claim that the NFA-RBAC
was not constituted in accordance with R.A. No. 9184. Having alleged a violation of law,
it was incumbent upon petitioner to prove by sufficient evidence that there was indeed
such violation. The OGCC points out that unlike petitioner, respondents were able to
prove sufficiently that there were actually three observers present during the bidding
process, which fact the RTC failed to consider. Moreover, the OGCC argues that
respondents’ reliance on E.O. No. 40, pending the promulgation of the IRR of R.A. No.
9184, was allowed by Section 77 of IRR-A. There was likewise no violation of any clear
and unmistakable right of petitioner as to warrant the issuance of the writ of preliminary
injunction. The OGCC points out that the rejection of petitioner’s application was
actually petitioner’s own fault because petitioner failed to submit the necessary
documents despite several notices.
Having discussed all the essentials and relevant laws, rules, regulations and
jurisprudence in relation to Procurement Service of the Philippines, it can be scrape
together that Philippine public procurement has a long way to go. The Government
Procurement Reform Act and its associated regulations enshrined the appropriate and
significant principles of transparency, civil sector involvement and the use of information
and communication technologies. However, the promises of this legislation still remain
unchanged and largely met. Presently, the obstruction to the possibility of sophisticated
procurement service is unreachable yet.

KEY FINDING AND ANALYSIS

This study examines the issues which inundated the implementation of the
public procurement law in the Philippines, particularly in light of the recent
concerns on delays in the procurement of supplies and materials to the

50 | P a g e
government agencies. Key lessons from experience are investigated through
interviews with government agencies, particularly with the Philippine National
Police and Armed Forces of the Philippines, focusing in the implementation and
execution of the Philippine procurement process. The numerous key informant
interviews greatly revealed the difficulties encountered and good practices
implemented under the current government procurement process.
The following questionnaire were formulated and inquired before the two
interviewees to answer and clarify the core issues on the performance and
efficiency on the establishment of PS-DBM in the procurement of supplies and
materials.
1. What are the implications of the establishment of PS-DBM, as centralized
Office for common supply demand to the government agencies including
their regional offices?
2. Does the PS-DBM totally cater the complete supply demands of all
National government agencies, including State Universities and Colleges
and government-owned and controlled corporations and their subsidiaries?
3. Are there available options for the government agencies in cases of failure
to receive their demanded supplies from PS-DBM?
4. How can the Procurement Service be enhanced particularly if the different
Government agencies, including State Universities and Colleges and
Government-owned and controlled corporations and their subsidiaries,
directly bid to suppliers which are accredited by the government?
5. In your opinion, what are the loopholes of PS DBM and what solutions
you will recommend to solve these loopholes?

With respect to the Armed Forces of the Philippines, we interviewed ITC

BENEDICT BODEGON, the commanding officer of procurement center under
the procurement service. On the other hand, with respect to the Philippine
National Police, we interviewed PSSUPT JAIME C CADATAL, Chief, Bids &
51 | P a g e
Awards Committee Secretariat Division. The following are his answers and
insights based on his actual experience of the PS-DBM procurement services.

Attached herewith is the transcript of the respective interviews conducted

with ITC BENEDICT BODEGON (hereinafter referred to as ANNEX “A”) and
PSSUPT JAIME C CADATAL (hereinafter referred to as ANNEX “B”)

Results of Key Informant Interviews

The answers to the core issues of this study with respect to the two separate
interviews are the following:
1. On the inquiry on whether or not PS-DBM totally cater the complete supply
demands of all National government agencies, including State Universities
and Colleges and government-owned and controlled corporations and their
subsidiaries. The interviewees answered on the negative. In fact, the main
problem of the PS-DBM is its capability in performing its supposed main
task of catering the complete supply demands of AFP and PNP.

2. On the question, on what are the implications of the establishment of PS-

DBM, as centralized office for common supply demand to the government
agencies including their regional offices, the interviewees’ insight is that
the PS-DBM being a small institution within an institution cannot
accommodate the demands of all the government agencies including their
regional offices. To be fair, their insights came from their operational
experiences in dealing with the PS-DBM.

3. On the question of whether there are available options for the government
agencies in cases of failure to receive their demanded supplies from PS-
DBM, again, the two interviewees answered on the negative. In fact, this
area of the procurement service is where they see the main problem.

52 | P a g e
 According to them, the PS-DBM cannot totally provide their demands,
therefore, since not all supplies are readily available, they had to wait until
such becomes available since they cannot request for another fund unless
the previous fund is exhausted, that is wherethe backlogs happens.

4. On the question on how can the Procurement Service be enhanced

particularly if the different government agencies, including State
Universities and Colleges and government-owned and controlled
corporations and their subsidiaries, directly bid to suppliers which are
accredited by the government. The two interviewees answered the same,
that the procurement service would be enhanced of independence would
be granted on their organizations. To illustrate, it would be best if AFP and
PNP would directly order to private suppliers their orders, in that way there
would be no delay and if such delay happens, their organizations would
not be stuck since their agreement with the private supplier is guided by a
contract of sale, they can rescind the contract in order to get back to their
previous statuses before they enter the contract.

Lastly, as to their opinion loopholes of PS DBM, the interviewees

have the same insights that the problem is not everything can be supplied
with PSDBM thus the problems in executing procurement strategy become
problematic. In particular, the PS-DBM must only receive payment based
on the supplies available in order to avoid delays and backlogs in the
demand of supplies and in effect the requesting government agency would
not be stuck in replenishing its respective budget while waiting for their
previous budget to be exhausted and eventually become zero.

Meanwhile, with respect to Armed Forces of the Philippines, as an

evidence on backlogs that usually takes place when the demands for common
supply and needs is not available in the PS-DBM therefore they have to wait

53 | P a g e
when such supplies becomes obtainable and in effect their budget becomes
hanging and therefore they’re quarterly budget stuck up in the PS-DBM. The
following documents are the proof of AFP’s quarterly budget stuck in the PS-
DBM and results to accumulation of unliquidated funds.

Document from the Armed Forces of the Philippines (AFP)

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55 | P a g e
56 | P a g e
57 | P a g e
58 | P a g e
 It can be gleaned from the above documents that the overwhelming
accumulation amount of unliquidated funds of AFP in the PS-DBM shows the veracity of
the claim of the interviewee in asserting the effect of the failure of PS-DBM to cater their
demands for common supply therefore making them paralize in demandind a
reflenishment of their quarterly budget.

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 CHAPTER IV
CONCLUSIONS AND
RECOMMENDATIONS

CONCLUSION

With the key result of the interviews conducted in the two different
agencies, the Armed Forces of the Philippines and the Philippine National Police,
the researcher concludes that the establishment of the PS-DBM does not in fact
enhance nor helps to improve the procurement service of the government.
PS-DBM may be the centralized unit to cater the supply of materials to the
government agencies and its regional offices, however, the same is not an
effective unit of the Department of Budget and Management in its actual
operation, since the Armed Forces of the Philippines and the Philippine National
Police have been experiencing delays and backlogs resulting and affecting the
supposedly proper supply of the respective agencie’s supply of materials. To put
emphasis, the accumulation of an overwhelming amount of unliquidated funds in
the AFP makes it evident that the PS-DBM fails into its core purpose.

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 It is but apparent that government agencies functions can be highly
affected by the lack of its materials supplies on its day-to-day operation. The goal
on the establishment of the Procurement Service under the Department of
Budget and Management was to improve the procurement operation and
services of the government and since the same has not been effective and worse
it has exsacerbated all the more the procurement operation, thus, the
establishment of PS-DBM can be concluded to be futile and ineffective.

RECOMMENDATIONS

To address procurement issues, the study recommends the following:

(1) For the government to pursue deliberate investments on and having a
political will for procurement system change;
(2) For the government to put a greater investment on planning and other
preparatory activities before the actual procurement;
(3) For the government to have an innovation orientation in public procurement;
and;
(4) For the government to Abolish the Procurement-Service under the
Department of Budget and Management and grant independency on the different
government agency to bid and purchase indenpendently with the private
institutions on their suppluu of materials.

Independent procurement planning in the different government agency

can be highly stematized since they can budget and manage their respective
supply of materials effectively on their own as they themselves will deal with the
private institutions, therefore, if ever delays would happen they can easily make
solutions themselves instead of waiting for the PS-DBM to respond with their
requests. Minimal problems will be encountered in this set up as compared to
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the centralized manner in the PS-DBM since the latter cannot cater the
demands of the govern` ment agencies. According to the key informant, it would
be more expedient if they will be given independence in their procurement
operation.

BIBLIOGRAPHY

1. LOI 755 entitled as Relative to the Establishment of an Integrated

Procurement System for National Government and its Instrumentalities.
Herein, the Procurement Service under the Department of Budget and
Management shall design and implement an integrated procurement
system for supplies, materials and other items needed by the government.

2. EXECUTIVE ORDER NO. 359“Reiterating the Policy and Prescribing

Guidelines and Procedures in the Implementation of the Provisions of
Executive Order No. 285.”
JULY 2, 1989.

3. Letter of instruction No. 755. “Relative to the Establishment of an

Integrated Procurement System for the National Government and Its
Instrumentalities. ‘’

4. https://www.senate.gov.ph/publications/PB%202008-05%20-%20Plugging
%20the%20Loopholes.pdf

5. Procurementservice.org

6. A Theory of Incentives in Procurement and Regulation

7. The Promises and Pains in Procurement Reforms in the Philippines

6. GOP, 2009; Government Procurement Policy Board [GPPB], 2009a: 12-

13; GPPB, 2009b: 14-127

9. Congress of the Philippines [COP], 2003; GOP, 2009

10. GOP, 2009; Government Procurement Policy Board [GPPB], 2009a

62 | P a g e
 11. Philippine Public Procurement Service [PPPS], 2009

11. G.R No. 183260 Philippine Sports Commission versus Dear John

Services,Inc.
12. 13Office of the Ombudsman- Mindano versus Richard T. Martel and
Abel A. Guinares. G.R. No. 221134, March 01, 2017;
13. Bank of the Philippines versus Atlanta Industries G.R. No. 193796
July 2, 2014;

14. Ramon M. Atienza, in his capacity as Vice Governor of the Province

of Occidental Mindoro versus Jose T. Villarosa in his capacity as Governor
of the Province of Occidental Mindoro G.R. No. 161081. May 10, 2005;
and

15. Thunder Security and Investigation Agency/ Lourdes Lasala versus

National Food Authority Region 1 and NFA Regional Bids and Awards
Committee. G.R. No. 182042 July 27, 2011.

63 | P a g e
ANNEX “A”
With respect to the Armed Forces of the Philippines, we interviewed ITC
BENEDICT BODEGON, the commanding officer of procurement center under
the procurement service

Start of the interview.

RESEARCHER: Sige sir
lTC BENEDICT BODEGON: kabutil ng mga ano nila, kanilang mga clients. And
ang isa pa dapat is tayo ah, being the or, just isa lang kasi tayong NGA eh,
RESEARCHER: OO.
lTC BENEDICT BODEGON: I don’t know what is happening with the other
department and other government agencies. Yung sinasabi ng totoo bang nag
sasubmit tayo ng, ng ating mga requirements for the next year. kasi kung
talagang sinasubmit natin yan let’s say magkaron sila ng cut off. Kung matapos,
basically dapat tapos na yung APP by may diba, sa nominal time line natin diba
the APP is done by May.
RESEARCHER: OO.
lTC BENEDICT BODEGON: Pwede ka na mag submit by the end of 2 nd quarter
kung ano yung mga supplies mong kailangan, and then dun na nila ipapasok yan
kung pano nila i-poprogram yung mga procurements nila. But that is a very big
ano eh, that’s a very big order kung baga sakin ah. Hindi ko kasi alam kung
anong organization structure or infrastructure nila (PSDBF) diba na question na
nga dati yan na why very small entity within department of budget and
management and yet they’re handling very big projects. So why are they doing
that? Para siguro panigurado na ma excecute natin yung ano natin? Does it
relate to the initial level of compliance natin? Pero ganun din eh, sa atin naman

64 | P a g e
kasi pag sinabing 53.5 talagang dun natin binibili sa kanila. Pumapayag lang ako
dito i-shopping pag nagbigay ng, which is hindi nila ginagawa diba? Supposedly
pagka pwede ko na iexucute na shopping pagka talagang nag bigay sila ng
certification na itong mga binibili naming sa inyo ay wala sa amin dito, hence you
can execute shopping. What is happening right now ang nagbibigay ng
certification end-user, kasi hindi nagbibigay yung (PSDBM).
RESEARCHER: Hindi daw sir nagbibigay
lTC BENEDICT BODEGON: Hindi nga
RESEARCHER: yung (president) ng availability.
lTC BENEDICT BODEGON: Ng availability, so ang ginagawa ng end-user yung
end user ang nag ce-certify. Sir pumunta kami ng (PSDBM) and they told us
wala dun yung pwede naming i-shopping.
RESEARCHER:Which is hindi dapat.
lTC BENEDICT BODEGON: Which is hindi dapat diba? So may mali din dun eh,
that in itself there is something wrong there, unang una programming yun ah,
pangalawa ayaw nila aminin na may non-availability or not in stock ang mga
supplies nila
RESEARCHER: Si PSDBM
lTC BENEDICT BODEGON: Si PSDBM
RESEARCHER: ayaw umamin
lTC BENEDICT BODEGON: Oo, So kumbaga they are trying to show us that
they can handle everything and yet they cannot do it. Why? Kasi sa sobrang
dami, Dito pa yan sa Manila ah, how much more kung pupunta ka sa ibang
lugar?
RESEARCHER: Until lang yung mga regional depots nila dun sa.
lTC BENEDICT BODEGON:Yah, oo case and point, yung sa catbalogan that’s a
major division there. Andun yung 8 thinfantry division and yet yung kanilang depot
is in tacloban so yung ating contracting office di kaya yung ating end user doon
sa catbalogan samar has to travel two and a half hours to go tacloban in order to
65 | P a g e
get supplies. Pag dating dun not in stock, biruin mo yung hassle ng pagiging
ganyan diba?
RESEARCHER: Sige sir, sir yan yung isang sub problem. Pero sir sige. Start na
tayo dun sa ano? Pwede mag state na tayo ng position.
lTC BENEDICT BODEGON: I am lTC Benedict Bodegon, the commanding
officer of procurement center under the procurement service.
RESEARCHER: Ok sir. Well basically yung ano ko is yung establishment ng
PSDBM so ano po yung nakikita nating implication ng establishment ngPSDBM
satin?
lTC BENEDICT BODEGON: Well basically on my office or unit is tasked with
supporting the logistical requirements of all, hindi naman lahat, of AFP unit under
program 4. So basically ang implication ng PSDBM it really is susunod natin is
mapapadali yung buhay ko. Being executing small budget procurements for 56
units and offices. Dito lang yan sa GSQ ganon kalaki yung unit na hinahandle
natin dito. Hindi pa natin binibilang yung unified commands saka yung KBU’s
kasi yung KBU’s saka unified commands under program 4 dito din nila binibigay
pagka over and above their ano. So ang implication is having a PSDBM that
could really cater to the needs of the different offices. I think it helps when it
comes to supporting the logistical requriements, specially mga commonly used
supplies and office supplies, editorial etc..
Pwede na bang dumiretso dun sa problem? The problem is not everything can
be supplied with PSDBM. So were having problems executing our procurement
strategy. Kasi nga most of them, ako ah, yung na experience namin doon kasi
nga I, myself am also availing the service of PSDBM. We have to, naipit
kumabaga yung aking 2 quarters kasi nga di ko ma zero yung aking residual
doon. Hindi naman kasi dapat sya supposedly residual kasi when I executed the
check or the L deduct. It was air marked for the whole thing that when I checked
the website of PSDBM they’re telling me the supplies I needed are there. So no
more pauses, executed the agency procurement request, funded it and validated
66 | P a g e
it with landbank. Punta kami dun, after siguro a span of 1 week, processing time
ng APR, when we go there several items that were included included in my APR
were not there. So that hampers kasi, pano kung kailangan ko papel,
napakalakas kong gumamit ng papel sa photo copy ko lang eh I can tell you how
many rims I consume everyday kasi beside small value procurement I also
manage /handle the payment of modernization projects. Sa distribution list ko
palang ng modernization project umaabot na ko pito. Eh nakita mo naman kung
gano kakapal yung kontrata nyan saka yung ano. Ang ginagawa ko na nga lang
para makatipid sa papel ang meron lang na talagang hard copy is si accountant
and si (COAN) all the rest soft copy lahat yan, but even then Malaki pa rin ang
aking requirement yung mga implication na sometimes na instead na makatulong
nagiging burden pa sakin kasi after I do that hihingi pa ko certification para ma
execute ko na shopping. Even then hindi din ako papayagan kasi teka muna i–
APR mo, mag antay ka baka next week dumating na.
RESEARCHER: Sir how often mangyari yun?

lTC BENEDICT BODEGON: Madalas! Kumbaga 10/10 just to highlight kung ano
talaga yung problema natin with PSDBM. Ngayon everytime na magexecute ako
ng APR hindi bumabalik sakin yung aking taga ano dun, “sir kulang nanaman”,
“Sir may natira tayong three thousand” out of let say ang budget ko is thirty one
thousand yata. Thirty one thousand worth of supplies babalik sakin yun sabihin
“sir may sobra tayong twelve thousand, sir wala kasi to, wala kasi to,walang
ganire”. Sige iRe-APR natin. Sige kunin mo na lang natin kung anong may
available dun. Even then pagbalik naming dun kulang pa din, may maiiwan
maiiwan pa rin. So sometimes yung fund utilization ko with my quarterly
allocation ng PSDBM naapektuhan din kasi my policy kayo na hindi kayo pipirma
ng aking next quarter hangga’t hindi ko nauubos yung previous, Zero zero. Kasi
nga it was born out of AUM na bakit hindi nyo muna kiniclear bakit bago kayo
67 | P a g e
mag pirma, nandun lahat sa PSDBM na hindi nyo na execute. Kasi nga bakit kasi
ganun. We were suggesting previously with regards sa fund utilization pwede
bang parang supplier yan na kung ano lang ideliver yun lang gagawan ko ng L-
deduct. Ewan ko kung bakit hindi nag pursue yun o kaya yun lang issuehan ko
ng cheke. Kung baga cash on delivery ba. I don’t know what financial
management is doing about it or kung bakit ganun, sabi nila hindi daw po pwede
kailangan kung ano yung na execute mo for PSDBM yun din ang ano mo. So
that’s what additional problem ang na ano namin. Not only in supplies but also in
fund utilization ko.
RESEARCHER: kasi sir may memorandum circular statement.
lTC BENEDICT BODEGON: kaya nga, dahil mag appeal kayo sakin, lahat ng
naka airmark ng 53.5 na mode of procurement buo nyong ibibigay sakin. Ang
tanong ko lang dun is,kayo ba, can you reciprocate na buo ko binigay yung pera
buo ko din makukuha yung kailangan ko sa inyo which is not happening.
RESEARCHER: Are you satisfied with the service given by the PSDBM?
lTC BENEDICT BODEGON: speaking from a stand point na end user, im not
satisfied na I have to do remedial measures para mapunuan yung mga logistical
requirements ko. Sometimes it comes out of my MOE, mangutang muna tayo
saka na lang natin bayaran
RESEARCHER: sige sir. Would you Rate lang sir 1-10 satisfaction
lTC BENEDICT BODEGON:1-10 satisfaction, Bigyan natin ng 4.
RESEARCHER: sige
lTC BENEDICT BODEGON: Sa next question
RESEARCHER: Sir sa available options.
lTC BENEDICT BODEGON: Available options, kung ako ang gagawa. I am a
procuring entity as well, kung ako gagawa mismo I can have it done kasi nasa
akin ang pera, nasa akin ang control, ako ang nagbibigay at naghahanap ng
supplier. And pag nahanap ng supplier walang magawa ang supplier pag hindi

68 | P a g e
na deliver yan meron kang penalty. Kung akong bibili myself ipapa shopping ko
yan sigurado ko lahat ng requirement ko madedeliver sakin.
RESEARCHER: Pero sir
lTC BENEDICT BODEGON: Pero walang pero. Kasi that is based on ideal
circumstances. Kasi pagka naman shopping kung ano naman kailangan yun
naman pinapadeliver. Ano naman pinagkaiba kung ako bibili? Price? Basically
we have the same price. Magkaron man ng deviation sa price maliit lang.
RESEARCHER: Pero yun nga sir babalik tayo sa mandate natin sa GAA
lTC BENEDICT BODEGON: yung sa GAA we have no choice but to follow kasi
batas yan eh. So what will we follow? So ayun nga lang sinasabi ko if we follow
that ang daming nangyayari na sometimes it affects the operational requirements
ng opisina ko. Not only that it also affects yung fund utilization ko. Ang nautilize
ko pa lang ngayong taon is 1st quarter palang, yung 2nd quarter ko is nakabinbin
pa dyan sa Friday pa sila pupunta. Ano nga quarter ngayon? 3 rd quarter. Tapos
magkakarecopfund pa yan.
RESEARCHER: Sige sir last na to. Sa opinion nyo lang po, any solutions that
you could recommend in this problems?
lTC BENEDICT BODEGON: so basically sabi ko nga number 1 if we look into
the policies and procedure and policy guidances with regards to the execution
nung mga 53.5 natin, yung agencies to agencies, specifically PSDBM pero we
need to follow yung kunyari nagawa mo yung iyong indicative APP by May.
Masasubmit natin ngayon kung lahat ng units or somebody form J4 will have to
consolidate everything, na ito yung requirement ng supplies isubmit natin sa
magkakaron sila ngayon ng data ngayon kung gano kadami yung kailangan nila
for the next year servicing all of this units within metro manila and kung kailan
nila kukunin kasi saprocurement strategies sa PPNP nakalagay naman dun kung
kailan natin kukunin lahat.
Even not commonly used supplies pati yung sa travel although yung sa travel
ibang sakit ng ulo yun ayoko muna pasukin yun.iba yung nature ng travel natin
69 | P a g e
dito. Confine ourselves sa commonly used items mga office supplies janitorial
supplies etc etc. if we do that. I think we wont have any problem.
So basically PSDBM it has to improve services when it comes to infrastructure
and kung ano yung kailangan iprovide nila and also sa part ng end user like tayo
dito sa program 4. Kung susundin lang natin na sige eto yung shopping list for
next year. If we do that maganda ang lalabas satin. Sundin lang natin talaga, and
problema/8 nga do we have enough people to do that. Not only that, are our
people knowledgeable on that aspect. Meron tayong mga end user minsan
ngayon lang nakakita ng itsura ng APR ng UPR. Hindi kaya yung simpleng
requirement determination na parati nating tinuturo sa mga tao natin. That’s on
the part of the end user. Ano bang training meron yung PSDBM meron ba silang
warehousing, pagdating sa logistics management do they have the same? Is the
infrastrature available? Baka masyadong maliit yung ano nila. Hindi ko pa nga
napuntahan yung PSDBM sa malacanang, maliit lang diba? Tapos napaka
tedious ng process nila aalis yung tao natin alas ocho darating alas tres alas
kwatro na ng hapon kasi ang haba ng pila. Eh dun pa lang that’s another aspect
pano ko mautilize yung tao kung maghapon silang nandoon sa PSDBM getting
supplies napag na accommodate na sila na kulang sorry naubusan.
RESEARCHER: Sir sa aspect nay un, isa lang ba yung nag cacater?
lTC BENEDICT BODEGON: I think dito sa atin ang nag cater 56. For
comparison purposes dito sa akin sa (jsPC)ang mandato ko is to provide
logistical requirements of my catered unit in the fastest efficient manner saka
tama yung binigay and affordable prices. Ang reckoning ko jan is once I get the
procurement request until such time magkaron ng delivery at mabayaran yung
end users I should be doing it in less than 31 days follow the whole (AUV)
procurement process. Yung mandatory posting, yung canvass, yung pagdating
sa funding, sa delivery period at the same time sa payment. The whole “gamot”
is I must be doing this in 31days saka walang reklamo kung ano yung binigay na
tec scpecs man lang kung ano yung tec spec yun yung idedeliver.
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Hindi sa pagmamayabang, we were able to do it in 16 days we are averaging
about 42. Nung una kong dinatnan yan 75 yan and pataas. Dahil nga nag bago
tayo ng Sistema nagkaroon tayo ng kaunting shortcut we have tweak the system
in somewhat sinimplify natin yung iba. Isa pang nakita ko jan is bakit ang dami
daming hinahanap na dokyumento bakit ang dami daming pumipirma? Ang
sinasabi sa (GAM) ang sinasabi sa coa circular ang sinasabi sa 1445 ang
sinasabi sa fiscal letter ito lang dapat ang hihingin natin. Sinimplify natin yung
mga hihingin mo delivery receipt. Bakit ka hihingi ng delivery receipt na kopya?
eh dapat si sao lang yan. Eh bakit ka hihingi ng invoice eh dapat humihingi lang
nyan si finance.bakit ka humihingi ng collection receipt? Saan ba nakalagay yan
sa GAM? That’s one, tapos yung sa procurement natin yung mga system
generated na forms to support the procurement ginawa nating automated auto
fillup yung pag submit ng UPR ginawa nating automated na rin magsaksak ka
lang ng UPR mag lalabas an doon sa system automatic imamigrate nya doon sa
system natin etc. That’s one. Ngayon pwede naman natin siguro gawin yung
ganun. Yung LTFRB nga yung passport nga natin by appointment kung ano
oras.baka pwedeng ganun gawin natin kasi may impact din eh tapos sabihan na
tayo pwede ng padala yung order natin ganito pipickupin ma’am ito yung L-
deduct ada ito yung APR ito yung time available na pwede pickupin ito pwede
sila magbigay satin nun through communication. Para on the pointed time dun na
lang tayo mag paprocess at the same time maabisuhan tayo ng maaga na kung
nagpadala na tayo doon i-set aside na nila para sa atin. Sabihan na din tayo
agad na sir walang available nito eh. So iprepare nyo na lang din yung wala para
alam naman kung pano naming i-reAPR. Ang nangyayari kasi ngayon diba puro
manual ang process hindi sya automated and at this day and age dapat we are
using automation to simplify everything. That’s one way of doing this, improving
the system. Kasi ayun lang naman nakikita ko dyan.
RESEARCHER: so ayun yon system? How about yung depot nga nila?kailangan
ba nilang?
71 | P a g e
lTC BENEDICT BODEGON: Kasama na, sige simulan na natin sa lahat na. alam
mo naman yung docmplf diba?yung doctrina nila wala na tayo magagawa kasi
nakalagay na sa batas. Organization if you would look at it with the laki ng
kanilang cliented and that number of staff. Makikita mo naman sa organization
nila kumabaga sa pulis for every 10 tao may isang pulis man. Training hindi ko
alam kung anong meron silang training dun baka naman parang satin din dito
ikaw na dyan pwede ka na. Yung material na kailangan nila yung infrastructure
nila na kailangan. not only with the warehouse isama mon a pati automated
systems nila pati yung database management with regards to shopkeeping,
meron kasi diba sa warehouse/depot management.
Leadership, hindi ko nga alam sino leader ng PSDBM. I don’t know. Facilities
nila, yung last facility that they have. Yun yung mga dapat tingnan para
maimprove. Sa akin lang ah. When I look at a certain system na kailangan, yung
ang ginagamit kong basehan yung .mplf. if every aspect maitune mo to that end
goal to provide yung logistical requirements lahat. Yung common used supplies. I
think that would really attain kung ano yung gusto nilang mangyari in the first
place na ma utilize yung budget for that specific purpose. After dun ma satisfy
lahat ng logistical requirements clientel nila.
RESEARCHER :Sir comment about dun sa sila na yung mag cater sa motor
vehicles natin
lTC BENEDICT BODEGON: Sa akin wala akong problema. If they really want to.
We are at their whim. Kasi ipipila natin, hindi lang naman tayo nagpapabili,ilan
tayo dito nag papabili sa kanila. Pangalawa sometimes kasi natweak natin yung
gusto nating mangyari. Kasi gusto natin Toyota pwede natin I canalize. Minsan
na canalize natin na bilin natin. At pangatlo yung residual hindi na kailangan
babalik na agad satin. Pangalawa pa hindi pa tayo na charge ng admin fee. May
charge yan diba? Kapag ka na agency procurement request ka based dun sa
coa meron dun percentage na kinuhuha sa atin as admin fee. So kung sakali na
kung ano available sana natin lets say ang pera lang natin is 1 million
72 | P a g e
babawasan mo pa ng admin fee magkano na lang yung available satin para
maka bili doon sa gusto nating sasakyan? Imbis na Avanza mabili natin baka
foton na lang bumalik. Walang problema na tayo na lang ang bibili total pera
naman natin din yun. Ano pang logic kung bakit sila dapat ang bumili ng
sasakyan? Kung gusto nilang huwag luxury vehicle pwede naming ganito ang
bilhin. Ang dami naman natin (bac) na pwede naming mag execute. Dati siguro
pwede dahil dadalawa yung (bac) natin na nakita na natin yung problema na
bubulunan yung (bac) eh ngayon naman nagkaroon naman na tayo ng
adjustment we now have 4 bacs here with the option na magdagdag ng special
bacs kung maguguluhan yung 4 na bac.
RESEARCHER :Sir nakikita ko sa GBDP nakikita ko na unlimited yung authority
nila pag nagbigay sila ng solution na itong equipment na to or itong item na to
dapat common yung supplies.
lTC BENEDICT BODEGON: alam mo yun ang problema. That’s marrying what is
written in theory saka and yung actual punta ka ng GBBP magprepresent ka ng
ganito. Babanatan ka ng theoretical. Hindi nga nangyayari yan in theory ok yan
pero in reality eto yung ginagawa namindito hindi namin marry sa gusto mo
mangyari. Kaya nga humihingi kami ng authority, etong annex na to na
nexperience namin dito in the actual sense case and point.
Narinig mo yung (framework) agreement? We were the ones who pioneered the
ordering agreement. Basically ang ordering agreement is dahil wala tayong
warehouse dito sa atin. Ang sasabihin lang natin ordering agreement ito, ito yung
number of supplies na kailangan namin pero idedeliver mo lang pag nag execute
kami ng delivery over contract.kumbaga bibigay na naming sa iyo ang buong
kontrata let say for 10Million pero yung delivery mo “pichi-pichi” tapos pag nag
execute kami ng DOC dapat within 3 calendar days maideliver mo sa amin yung
ang ordering agreement. Here comes DBBP, may nakita sila sa new Zealand uy
framework agreement, framework agreement is basically a expanded framework
agreement kumbaga ordering agreement is good for 1 year framework
73 | P a g e
agreement is good for 3. Ang pinagkaiba lang ng ordering sa framework myoa
multiyear obligation authority.so we were part of the core group na sinabi na sige
test nyo yung framework agreement. Ito yung mga agencies na magtetest
Department of national defense, department of health,department of education 4
yan nakalimutan ko 1 . ang tanong can you give us the MYOA sabi namin eh
inorder us to give comment sa framework agreement that was what. Ang 2nd
issue namin eh coable ba ito. Kasi may pinapagawa kayo samin na mamaya
may nakikita kaming provision ng framework agreement that does not agree with
the coa circular. Oo daw, eh p****ina pano naming I execute yan, yung ang
naging problema na they wanted us to implement something na in theory
maganda tingan saka pangatlong tanong nga is ano bang history ng framework
agreement? Ano bang Sistema meron ang new Zealand na kinokopya natin? Do
they have the same system as we have here in the Philippines?
RESEARCHER: san yan sir?
lTC BENEDICT BODEGON: sa GBBP mismo. Pumunta kami dun kasi sinugod
namin kasi we were being tasked na iexecute na yung framework agreement so
wala tayong problema since we’ve been doing how many years yung ordering
agreement na yan. If you can assure us na mabibigyan tayo ng MYOA kasi
nakalinya na yung ililinya namin for framework agreement yung security and
janitorial services pati yung spare parts ng eroplano natin nakalinya na lahat yun
eh. Ang problema unang una ayaw kami bigyan ng MYOA ang pwede lang
bigyan ng myoa modernization. Pano natin ma execute?
Pag binigyan mo na sila ng actual case. Mga annex J etc. na sinasabi namin na
hindi pwedeng dapat speacially for military procurements may mga technical
specifications na ibibigay natin na hindi pwedeng malaman ng ibang tao.
RESEARCHER: Hindi ba tayo pwede magkaron ng sariling procurement law?
lTC BENEDICT BODEGON: I’m part of the technical working group that drafted
the defense acquisitions act. Meron na tayong draft. Actually fininalize na naming
2 weeks ago. Meron na.
74 | P a g e
Kung ang 9184 ang default mode of procurement is public bidding sa atin sa
defense acquisitions act ang default ay negotiated. Sa 9184 walang nakalagay
na donations doon DAA meron na
RESEARCHER :Sir ano pagkakaiba ng negotiated sa public?
lTC BENEDICT BODEGON: ang negotiated kasi basically based sa capability
requirements natin, tayo na magidentify ng capability anong platform ang gusto
natin. Na basic requirement is ginagamit ng atleast 2 allied countries. Saka yung
supplier is known and eligible. Ang gagawin natin sa negotiated i-indentify natin
kunyari gusto natin bumili ng eroplano multirole fighter, sino ba gumagawa ng
multirole fighters andyan ang Sweden andyan ang U.S. andyan ang Russia.
Magpapadala tayo sa kanila ng tenders. Ganun pa din atleast 2 ayun ang
ievaluate natin. Ang gusto ni presidente man is no object kung ano requirement
nyo kung naaprobahan yan ng senior readers pumasa din kay president dun sa
minimum requirement kasi ito yung gamit nating platform. Sige aprobahan natin
dun lang tayo magpapadala ng tenders. Kumabaga parang negotiated dito satin
papadalan pa ko ng 3 RFQ that is open. Anybody can join. Pero dahil nga may
secrecy aspect nililimitahan na lang natin kung kanino natin ibibigay.
RESEARCHER :kumbaga tayo yung mag choose
lTC BENEDICT BODEGON: we are the one’s choosing. Sa public bidding kasi
bibili ng bid talks andon nakalagay yung specifications. Minsan may bumibili ng
bidtalks hindi naman sumasali wala naman ginagawa binibenta sa instik. Kaya
ngayon ang polisiya natin ngayon yung mga dumadating dito for payments hindi
ko na binibigay sa bangko yung kumpletong package. Dati kasi nakalagay ibigay
ko lahat nakalagay sa LC. Bakit natin gagawin yan? Dyan pa lang makikita mo
na anong techspec meron tayo. Eh pano kung tarantado si landbank ibenta kay
china. Inirevise namin lahat ngayon. Tapos yung DAA na yun that is only for the
department of national defense and its bureau
RESEARCHER :hindi kasama DILG sir?
lTC BENEDICT BODEGON: department of national defense nga eh
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RESEARCHER: ok. Parehong military
lTC BENEDICT BODEGON: hindi ah civil in nature ang pulis.
RESEARCHER: Pano naging civil in nature ang pulis?
lTC BENEDICT BODEGON: kaya nga nagkaron ka ng PNP law.
RESEARCHER: may sarili silang modernization
lTC BENEDICT BODEGON: bahala sila sa buhay nila. Ang problema nyan we
are the ones teaching them how to do it. Wala silang tulad satin meron tayong
disong meron tayong sariling procurement service
RESEARCHER: yun yung complicated sakin sir yung disong disong nay an.
lTC BENEDICT BODEGON: alam mo yan disong disong na yan mahaba ang
history nyan. Sa ngayon nakikita mo na kung pano natin ilalatag yung
modernization process natin. Kung iintindihin mo nga napaka simple nga may
strategy ang pangulo. Saan nakalagay yun national security policy. Ang dami
nating titingnan dokyumento bago tayo umabot sa pagbili. National securtiy
policy, philippine developement plan from those 2 documents magkakaron tayo
ng national military strategy. Yung naririnig mong bantay laya from there ano
yung mga requirement natin based dito. Kasi pag tiningnan mo based national
security per se tinitingnan natin lahat, titingnan natin ofw,titingnan natin
environment lahat. So dun ka magkakaroon anong capability meron tayo
ngayon? Kumpara sa kung anong capability dapat meron tayo para makumpleto
natin tong sinasabi ng presidente. From there may joint assessment tayo na
ginagawa na ito ang kailangan natin. Doon natin nakikita kung pano natin
ilalatag. Kaya lang naman nagkakagulo yan dito kapag may bumulong “eh sir
ganito dapat”. Kaya pag nakita mo yung revised priority list natin horizon 1
horizon 2 horizon 3 versus doon sa binibigay nating pera nakalatag na maigi yan.
Makakaasa ka jan na may sisingit jan na “nag donate si jordan ng 2 cobra attack
helicopter” saan natin kukunin yung pera nyan? Pag tinanong ni presidente kung
may pera ba tayo? Meron sir, ayos hindi icharge. Pag balik ng DBM charge yan
sa modernization. Edi mag realign nanaman kami ng pera. Magandang latag yan
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hindi yan kumplikado kung maiintindihan mo. Yang yung kinokpya sa atin ng
pulis kaya pag prinesent natin yung kaso natin. Let say bibili tayo ng malaking
equipment let say frigade magkano yung frigade lets say 18million. Ilalatag lang
namin, sir ito yung sinabi ni presidente sa national security policy nya, ito yung
philippine developement plan. Besides yung bibilin natin platform pwede natin
magamit for disaster relief, protection ng ating national resources. Yun na
ngayon ang thinking hindi na purely for defense. Kaya nakita mo bumili tayo ng
napakalaking barko. Yung strategic (????) vessle besides using for war we could
use it for disaster relief magdalang mga C130 combat utility helicopter.
-END OF INTERVIEW-

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ANNEX “B”

With respect to the Philippine National Police, we interviewed PSSUPT

JAIME C CADATAL, Chief, Bids & Awards Committee Secretariat Division. The
following are his answers and insights based on his actual experience of the PS-
DBM procurement services.
Start of the interview:
RESEARCHER: Sir ang 1st question ko po is yung position nyo po here in the
logistic office and nature of your Job
PSSUPT JAIME C CADATAL: Ako yung Chief Contracts administration section
ng bidsand awards committee secretary of division. Basically, ako ang incharge
after magkaroon ng notice of award sa section na namin yung trabaho na namin
yon. Notice of award and then pag prepare ng contract pag sign ni chief saka ng
mga proponents and then yung notice to proceed and then yung mga posting
nyan kasi after ng contract signing meron tayong mga posting requirements to
comply sa GBPP saka sa website din ni PNP samin section yun after that yung
payment na ng suppliers. After ng delivery nila, kami din ang in charge sa
documentary requirements para mabayaran sila. And kasama noon yung mga
incidental na work na internal sa PNP kagaya nung end users certificate saka
authority to import kailngan sya kapag controlled items yung inimport ng supplier
gaya ng mga baril at mga vest.
RESEARCHER: So basically sir major yung role nyo po ditto sa bids and awards
po. So yung 2nd question sir yung sa PSDBM po hindi ba before wala o tayong
institutionalized na procurement service. Since nagkaroon na po ng
establishment nito ano na po ba yung nagging implication nya sa trabaho nyo
sir?

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PSSUPT JAIME C CADATAL: With regards sa amin sa PNP, pumapasok lang
si PSDBM kapag mayroon lang kaming mag eexpire na pera, ipapasa namin kay
PSDBM para sila ang mag procure. However sa situation namin ngayon since
2016 masisipag saka workaholic yung mga members ng bids and awards
committee. So from 2016 up to now wala pa kaming ni refer kay PSDBM na
procurement. Lahat kami ang nag procure para kay PNP.
RESEARCHER: So somehow independent po kayo from PS.
PSSUPT JAIME C CADATAL: Yes independent kami, Meron kaming sarili.
Unlike nung mga prior years pag yung mag expire na yung pera naming hindi
tayo pwedeng hindi mag procure, ipapasa namin sa kanila saka papasok si
PSDBM pag hindi naming kaya iprocure. Ipapasa namin pero kapag kaya
naming kami na mismo kasi si PNP na mismo mag procure.
RESEARCHER: So yung mga common supplies and materials kayo na rin po?
PSSUPT JAIME C CADATAL: Yes pero yung mga pinoprocure namin sa kanila
pa din kasi may mga office supplies na doon mabibili sa kanila.
RESEARCHER: Tapos sir follow up question lang po doon, incase na
magdemand kayo sa kanila ng supplies na cacater po ba nila? In those cases na
nagdemand po kayo?
PSSUPT JAIME C CADATAL: Panong supplies? Pag nagpoprocure kami sa
kanila>
RESEARCHER: yung common supplies and needs.
PSSUPT JAIME C CADATAL: Yung common supplies kasi hindi na aabot sa
point na ipapa-procure naming sa kanila. Kasi parang sila yung madaling
iprocure. So kayang kaya na sya iprocure unlike nung si public bidding kasi si
public bidding lang naman yung medyo mahirap na procurement.
RESEARCHER: Ok sir, so wala pong failure of supplies?
PSSUPT JAIME C CADATAL: Wala sa supplies.
RESEARCHER: Ah ok.

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PSSUPT JAIME C CADATAL: Parang lahat yun mga CEP. Capital out lace ng
mga items.
RESEARCHER: doon lang po nagkakaroon ng failure of supply?
PSSUPT JAIME C CADATAL: Parang failure bidding dati, pero since 2016 up to
now wala naman.
RESEARCHER: ok po, Follow up question to that po sabi nyo po independent
kayo pero incase lang sir na magkaroon ng failure sa supply meron po bang
alternatives ang PSDBM? If any?
PSSUPT JAIME C CADATAL: if any? Hindi kasi kami magkakaroon ng failures
sa supplies kasi meron kaming NHQ bac which is yung mother bac, meron
kaming sub bacs gaya ni LLS na yung maliliit na procurement dinededicate na
naming sa kanila. So si supplies hindi na sya under ni NHQ Bids and awards
committee kasi mga small body lang naman na yon. So meron na kaming isang
unit, actually dalawa, dalawang units na nagpoprocure para doon.
RESEARCHER: So kayo sir mismo ditto sa PNP meron na kayong backup plan?
PSSUPT JAIME C CADATAL: Yes meron na kaming internal rules.
RESEARCHER: Opo may internals rules na po kayo
PSSUPT JAIME C CADATAL: Nag create na kami ng sub rules sa bids and
awards committee. Parang mga delegated procurements.
RESEARCHER: Sir ang question ko po doon in relation to that, sa tingin nyo po
ba kung sakaling mga totally dependent na po kayo sa PSDBM kayo na po yung
directly mag bibid sa mga companies? Kumbaga separate na po tayo hindi na
centralized? Would that help po? Or would that e better?
PSSUPT JAIME C CADATAL: para sa akin better yun na nakahiwalay kami.
Actually nagkaroon ng executive order na parang sinasabi na lahat ng vehicles
ng government si PSDBM lang ang mag poprocure pero on our part nag secure
kami ng exemption para hindi kami masama doon. Which was granted na din ni
president na signed nya na din yung EO na exempt kami doon kasi mas alam
naming yung kailangan namin yung mga specs naming. And kada lugar iba’t iba
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kasi, parang hindi applicable isang sasakyan or ibang iproprocure natin sa ibang
lugar?
RESEARCHER: Sir ang core issue ko talaga yung pagdeposit nyo sa PSDBM
quarterly. Diba you deposit money quarterly for the supplies ang nagiging
problem po, hindi ko naman po nilalahat, hindi po naibibigay ng PSDBM yung
supplies na kailangan kaya nag pafile upyung deposited money sa PSDBM so
parang nagkakaroon ng waste.
PSSUPT JAIME C CADATAL: Hindi pa naman kami nagkaroon ng experience
na hindi na cater yung mga office supplies natin, So far naman accommodated
lahat, wala eh, talagang laging nagkakaroon. On our part ah, I don’t know sa
ibang agencies. Ganon ba sa kanila? Nag fafail ba sa kanila?
RESEARCHER: Opo.
PSSUPT JAIME C CADATAL: Ah talaga? Eh kasi siguro dahil meron nga
kaming delegated procurement.
RESEARCHER: Bali sir ang purpose po kasi namin dito kasi every law naman
po has loopholes po diba? Kaya po ayun po yung Nakita naming loophole ng
PSDBM, yung establishment non. Pero kayo lang sir, kung mayroon kayong
nakikitang loophole kahit maliit or malaki, sa PSDBM system?
PSSUPT JAIME C CADATAL: Sa system hindi kasi ako nainvolve sa
procurement nila, meron kasi kaming mga designated ni PNP mga deligrated
procurement. Kaya hindi ako makapagbigay ng comment doon.
RESEARCHER: Pero kung sakali lang po kung gusto nyo po iimprove pa yung
procurement system?
PSSUPT JAIME C CADATAL: Siguro bawasan yung fee nila.
RESEARCHER: Bakit po ano pong problem sa fee nila?
PSSUPT JAIME C CADATAL: wala naman,Yung part ng abc is magiging
service fee, sa procurement 5%. So instead na nabili mo sya ng items, goods
nagging service charge sya sa service procurement.
RESEARCHER: Tama, sayang.
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PSSUPT JAIME C CADATAL: So kung meron kang 500million, 5% nun tapon
na.ilang baril, ilang sasakyan na ang na procure mo kung hindi nakadeligate sa
kanila or mas lower yung fee.
RESEARCHER: So sir that would mean na mas ok kung direct na lang?
PSSUPT JAIME C CADATAL: Mas ok yung direct kasi sulit. Lahat nagagamit
mo, lahat nabibili mo.
RESEARCHER: yes tama, saka mas mapapabilis yung system.
PSSUPT JAIME C CADATAL: Oo saka yung preferred masusunod mo. Saka
mas mabilis yung transactions.
RESEARCHER: Ok sir.
-END OF INTERVIEW-

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