Despite anomalies, there are few checks on corrupt local officials

(Conclusion)

In 1998, the city of Manila decided to construct six deep wells, at a cost of P20 million, to alleviate the effects of El Niño. But it was so delayed that only one deep well was completed within the contracted period.

This, says the Commission on Audit (COA), made the "emergency nature of the award and contract unjustifiable." Worse, residents say that when the other wells were finally completed, they were usable only for a few days before they conked out.

The COA says that part of the problem was that the company that did the project was "unqualified" for it. Such problems are common in local government projects across the country, where even non-existent firms have been allowed to vie for — and win — overpriced multimillion-peso contracts.

Corruption is a major problem, but systemic inefficiency in procurement procedures and the lack of political will of local officials are also to blame.

Local officials, however, refuse to take responsibility, but insist on passing the blame to others. Meanwhile, national agencies such as the Department of the Interior and Local Government (DILG) and the Office of the Ombudsman are slow to act on the anomalies.

In Caloocan, where the city government’s list of accredited suppliers was found to include 16 fictitious firms, the general services officer said it was not her responsibility to verify the existence of companies bidding for projects.

Similarly, Rizal Gov. Rebecca Ynares chose not to conduct an investigation on a useless asphalt batching plant that cost the town of Cainta more than P60 million. She also did not exercise her power to suspend the town’s mayor, even after the provincial council secretary was told the COA audit report was basis for an administrative charge and a suspension.

A year after a COA task force completed a series of special audits of six cities (Caloocan, Makati, Manila, Marikina, Pasig and Valenzuela) and one town (Cainta), little has been done to address the issues raised by the auditing team. So far, the DILG has asked only for updates and recommendations from Cainta. The six cities have been ignored, although DILG local government supervision director Rolando Acosta says that a letter for Makati has been prepared.

Ombudsman Simeon Marcelo, for his part, says that his office is looking at cases involving Makati and Cainta, but the efforts are still in the "case build-up" stage. He says he doesn’t remember seeing the reports on the other cities that were submitted to the Office of the Ombudsman before he assumed the post last year.

"There’s a basic problem about the COA audit reports," comments Marcelo. "These are only a road map, a framework for a more intensive case build-up. That’s our problem right now, which we are trying to resolve. People are under the impression that if there’s a case filed based on a COA report, that’s sufficient. Maybe that’s sufficient for probable cause, but the problem is that the moment it gets to courts, the case is dismissed."

The COA task force that did the special audit already had a hard time getting the reports to the Ombudsman last year. One of the task force members says she was offered P750,000 by a Makati supplier to water down the findings that they will bring before the Ombudsman.

The auditor was also visited by two Makati officials. The auditor recalls the official as saying, "You’re being foolish, you’re turning down something that can make you rich. You’re just making those inside (the Ombudsman’s Office) richer."

Overall Deputy Ombudsman Margarito Gervacio, to whom the COA task force submitted its reports, allegedly had a hand in the initial recommendation of a special team in the Office of the Ombudsman to dismiss the case against Makati. COA sources said Marcelo later rescinded the dismissal and ordered further investigation.

Gervacio says there were no such maneuverings on the Makati case. He said in a letter that he "vehemently den(ies) that I received some amounts in connection with the case. There is absolutely no basis for this unkind allegation."

Yet even as the COA reports go through the Ombudsman grinder, sheer inefficiency is tripping up the procurement process of many local governments, causing losses that amount to millions, even billions, of pesos. The delay in the construction of Manila’s six deep wells, for instance, cost the city P16.8 million — which, the COA says, the local government never bothered to charge the slowpoke contractor.

A study conducted in some parts of Mindanao, meanwhile, traced delays in one area to the ignorance of the requisitioning offices when it came to accomplishing the purchase request form. Some local governments, on the other hand, chose to pre-select the suppliers whenever they were buying goods through canvassing. The study noted there was also no clear delineation of functions among the procurement personnel, not only leading to delays, but also allowing those involved with ample discretion that could tempt them to commit anomalies.

In addition, the study found that unnecessary delays in many aspects of the procurement process — such as the release of payments to suppliers — led to other problems. Some suppliers, for instance, lost interest in doing business with the local governments, thereby depriving these of a wider choice, as well as the best possible value for the least amount of money.

Carmelo Ocampo, logistics and supply management consultant of the Philippine Institute for Supply Management, points out, "How can you get the best prices if you are not getting the best suppliers? It’s a given that you have to attract good suppliers."

Many local officials, academics, and NGO workers, now hope though, that with the passage of Government Procurement Reform Act (GPRA), widespread irregularities will be curbed and inefficiencies significantly minimized.

The GPRA, or Republic Act 9184, was signed into law last Jan. 10. The law derives it strength from a number of key features missing in previous laws. Among these are: transparent, objective, and nondiscretionary criteria for choosing suppliers; standardization of the procurement process and forms for all government agencies and local government units; mandatory electronic procurement for all agencies of government; professionalization of procurement officials; and requirement for bids and awards committees to allow civil society observers to sit in their proceedings.

Henedina Abad, dean of the School of Government at the Ateneo de Manila University says, "This is a good initiative to streamline the procurement system." Yet, she admits, the law is not perfect.

The Philippine Constructors Association (PCA) is among those who have already voiced their opposition to some of its provisions. Even though the PCA says the "intent of the law is noble," it finds some sections "grossly unfair and unconstitutional." One of these is Section 45, which allows a provincial-based contractor with the lowest bid among the provincial contractors participating in a bidding in their province to match within 48 hours the lowest calculated bid of a bidder whose principal office is located outside of the host province. "This concept," says the PCA, "is highly unethical and immoral as it promotes improvement of bids."

Aware of the newly enacted law’s loopholes, the Transparency and Accountability Network, a coalition of NGOs, and the Office of the Ombudsman have proposed training organizations so they can effectively monitor and evaluate public procurement.

With trained observers sitting in bidding procedures — and later writing a report — it is hoped that government would exert more effort to ensure transparency and improve efficiency in procurements. The observers are authorized to obtain copies of documents, such as the annual procurement plans, of the local agencies concerned. Should the observers spot any red flags, they are expected to submit their report to the Office of the Ombudsman.

Annual procurement plans and programs are based on development plans that development councils of local governments must prepare, according to the Local Government Code. But the sad state of procurement in many local governments is in many ways a reflection of the absence of meaningful development planning that should determine how provinces, towns and cities should spend their money.

The lack of seriousness with which some local governments approach their procurement planning and budget process can be seen in their seeming disregard of even the most basic requirements of the Local Government Code. As of the third week of October, Makati Councilor Oscar Ibay said his city government had yet to submit the proposed city budget to its Sangguniang Panglungsod. The deadline set by the Code is October 16. Failure to submit such a document is subject to administrative and criminal liabilities.

The code also requires legislative authorization of the coming year’s budget on or before the end of the current fiscal year through an approved ordinance by the Sanggunian. Some local governments, however, have not complied with this.

The city government of Valenzuela came up with an approved ordinance for its 2001 budget of P941 million only on Jan. 31, 2001. Marikina City’s legislative council approved an ordinance for its 2000 budget of P682 million on Jan. 12, 2000.

Former Irosin, Sorsogon mayor Eddie Dorotan says few local governments actually base their budgets on development plans. Apolinario Dichoso, senior program officer of Evelio B. Javier Foundation (EBJF), a nonprofit organization that seeks to promote exemplary practices in local governance, also remarks, "I can safely say that around 80 to 90 percent of local chief executives do not think of a development plan."

Dorotan was one local official who dared to be different. When he ran for mayor in 1992, Irosin was a fifth-class municipality. A single clan had ruled it for three decades. Contractors for projects in the small town were often personally handpicked by the local chief executive, and the payoffs ranged from 20 to 50 percent of the project costs.

Dorotan offered a platform of good governance. Among his first steps as mayor was to ensure efficiency and transparency in all procurements. He thus adopted a "competitive sealed envelope bidding process" where civil society representatives were asked to observe. In fact, Dorotan allowed NGOs to participate in all levels of his municipality’s governance, including what was then the Prequalification Bids and Awards Committee and the Municipal Development Council, where 75 percent of the members were from the nongovernmental sector.

The council took charge of planning, evaluating, and recommending proposed budgets. According to Dorotan, letting civil society participate in "planning, implementing, monitoring and evaluating government programs encourages accountability and transparency among local officials, and therefore curbs corrupt practices."

In a paper he submitted at Harvard University three years ago, Dorotan also says, "The practice of competitive bidding was followed for supplies and equipment needed by the municipality… After six years of innovative reforms, we were able eliminate corruption in the municipal government."

Irosin was upgraded to being a third-class municipality. From an income of P4 million in 1992, the town posted revenues of P40 million in 1998. Irosin received numerous awards in recognition of its accomplishments under Dorotan’s leadership.