No more lowest bid

With a consumption-led economy, government spending remains the biggest driver of growth in the Philippines. The country’s gross domestic product (GDP) grew by 6.3 percent for the first six months of this year. Clearly, this robust growth was greatly generated by the infrastructure sector. It was largely aided by higher investments in the Build Better More (BBM) program pursued by President Ferdinand “Bongbong” Marcos Jr. (PBBM) funded under the Congress-approved 2024 budget.

The proposed P6.352 trillion for next year’s budget – as endorsed by PBBM for approval – is currently going through the scrutiny of the 19th Congress. In his budget message to the Congress, PBBM cited the proposed 2025 General Appropriations Act (GAA) bill aims to sustain his administration’s “Agenda for Prosperity.”

To ensure the continued momentum of the country’s GDP growth for the first semester, the Department of Public Works and Highways (DPWH) got the biggest increase in the proposed budget for next year. An allocation of P898.9 billion for the DPWH was provided under proposed 2025 GAA bill.

At the Kapihan sa Manila Bay news forum last Wednesday, Department of Budget and Management (DBM) Secretary Amenah Pangandaman attributed much of the GDP growth for this period to the ramping up of the government’s infrastructure spending that reached P612 billion. It notably exceeded the programmed P543-billion expenditures for the first six months of this year.

Pangandaman noted in particular that higher spending financed the vigorous implementation of construction of new roads, bridges, ports and the completion of ongoing projects of the DPWH nationwide. It also reflected the expedited processing of payment claims by the DPWH to its contractors, from the 2023 obligations and the current year’s budget, she added.

Thus, the GDP growth for the first semester jumped by this much from a low of 4.3 percent for the same period in 2023. It was the same period last year that used the national expenditure program (NEP) funded under the 2023 GAA approved in the first regular session of Congress. The 2023 NEP was largely based on the 2023 GAA bill prepared by the previous administration of former president Rodrigo Duterte.

Pangandaman admitted they “tweaked a bit” the original 2023 GAA bill as drafted by her immediate predecessor at the DBM. Naturally, the Pangandaman-led DBM included the present administration’s own priority projects, activities, programs (PAPs). And of course, the pet projects of lawmakers of the newly convened Congress found their way to the line-item budgets of the state agencies. Remember, the Supreme Court struck down as unconstitutional the notorious congressional “pork-barrel” budget allocations in 2013.

Thus, many heads of agencies of the Marcos administration held back much from their Congress-approved 2023 NEP. Since they were generally still fairly new in the government at that time, Pangandaman called out the respective heads of more than half of the executive departments for “underspending” their 2023 budgets.

The same underspending also bedevilled the previous administration despite Mr. Duterte’s declared policy to pursue a “golden age for infrastructure.” Adopting the “Build, Build, Build” program – the forerunner of the present administration’s BBM program – the Duterte administration aggressively pursued construction of more road networks, new ports and airports, additional train tracks all the way to building a subway system in Metro Manila. However, a number of these big-ticket infrastructure projects got stuck in various contentious issues, from right-of-way legal disputes to ensuing procurement controversies in state agencies.

Consequently, many of these big ticket infrastructure projects suffered delays and remained in the pipeline of such agencies as the Department of Transportation (DOTr), the Department of Information and Communications Technology, the Department of National Defense (DND), among them. There were also capital outlay projects under the modernization program of the DND for the Armed Forces of the Philippines while the DOTr, for example, implement foreign-assisted projects.

The delayed projects exasperated then president Duterte. If he could have his way, Mr. Duterte wanted to do away with the “lowest bid” requirement under the government’s procurement rules and regulations. As far as the former chief executive was concerned, the “lowest price bid” rule does not guarantee quality of work of the contractor.

This is not to mention the “failure of bidding” if none of the contractors meet the government’s lowest-bid rule. The hocus-pocus begins when two successive “failure of bidding” will automatically result in negotiated bidding.

This lowest bid rule is now a thing of the past, Pangandaman announced.

The DBM secretary reiterated that the newly signed law, Republic Act (RA) 12009, or the New Government Procurement Act, removed this “lowest price bid” from RA 9184, or the Government Procurement Reform Act. Signed by PBBM on July 20 this year, RA 12009 also streamlines the procurement process from three months to 60 days. The new law also standardized all government procurement forms and institutionalized electronic procurement in each and every state agency, including all government-owned and -controlled corporations and government financial institutions.

This law also introduces the “most economically advantageous responsive bid” concept, allowing for rated criteria in selecting a winning bidder. “This frees us from the obligation of selecting the ‘lowest price bid’ when there is a better choice. This will ensure that we get not only the best prices but the best deals for our clients – the Filipino people,” PBBM declared in his speech after he signed RA 12009.

Pangandaman disclosed the interagency body headed by the DBM is finalizing the implementing rules and regulations (IRR) for RA 12009. For greater transparency, she added, RA 12009, the bids and awards committee (BAC) requires a representative from the private sector/civil society organizations.

Once the IRR comes out, Pangandaman believes there will be much faster implementation of PAPs. She reiterated the DBM’s gentle reminders to all state agencies with low obligation rates to ramp up their NEP as funded by the 2024 GAA for the remainder of this year. No longer bound by the “lowest price bid,” this will hopefully also cut out a major source of corruption and wheeling-and-dealing in public biddings.