PROCUREMENT OBSERVERS GUIDE

1. PROCUREMENT OBSERVERS GUIDE CAPACITY DEVELOPMENT DIVISION Government Procurement Policy Board Technical Support Office (GPPB-TSO)

2. CORRUPTION C = M + D - A Corruption= Monopoly + Discretion - Accountability Capacity Development Division

3. LOSSES DUE TO CORRUPTION • P95 billion (as of 2001, as estimated by Procurement Watch, Inc.) lost due to procurement leakage Capacity Development Division

4. LOSSES DUE TO CORRUPTION • P20% of the Philippine budget is lost to corruption each year • What is 20% of the national budget? • In 2010 for instance when the national budget was Php 1.54 trillion, the 20% loss would be Php 308.2 billion on an annual basis. Capacity Development Division

5. 308.2 BILLION COULD HAVE… • Built an additional 598,446 classrooms, or • Hired an additional 1.6 million teachers, or • Constructed 127.78 kilometres of roads (new, PCCP, flat terrain, 2007 prices) Capacity Development Division

6. PROCUREMENT OBSERVING Section 13 of R.A. 9184 “to enhance the transparency of the process, the BAC shall, in all stages of the procurement process, invite, in addition to the representative of the Commission on Audit, at least two (2) observers to sit in its proceedings, one (1) from a duly recognized private group in a sector or discipline relevant to the procurement at hand, and the other from a non-government organization: Provided, however, That they do not have any direct or indirect interest in the contract to be bid out. The observers should be duly registered with the Securities and Exchange Commission and should meet the criteria as set forth in the IRR.” Capacity Development Division

7. WHO CAN OBSERVE? Three kinds of observers: A representative from the Commission on Audit From a duly recognized private group in a sector or discipline relevant to the procurement at hand An observer from a civil society/ non- government organization Capacity Development Division

8. QUALIFICATIONS OF A CSO OBSERVER Has to belong to an organization duly registered with Securities and Exchange Commission or the Cooperative Development Authority Has to have the knowledge, experience and expertise in procurement and in the subject matter to be bid. no actual or potential conflict of interest in the contract to be bid; and Any other relevant criteria that may be determined by the BAC of the procuring entity. Capacity Development Division

9. OBSERVER’S RESPONSIBILITIES • Familiar or have sufficient knowledge on RA 9184 and its revised IRR • Observe the stages of procurement • Prepare areport either jointly or separately indicating their observations made on the procurement activity conducted for submission to the HOPE, copy furnished the BAC Chairman, the GPPB and the Office of the Ombudsman/Resident Ombudsman. • Immediately inhibit and notify in writing the procuring entity concerned any actual or potential conflict interest in the contract to be bid Capacity Development Division

10. OBSERVER’S RESPONSIBILITIES • Acknowledge the receipt of the invitation; • Call the procuring entity and inform them if a representative should be sent, stating the name and her position in the organization. • Inquire about what transpired during the previous stage/s, and request for documents and list of BAC observer invitees, in order to be guided accordingly. Capacity Development Division

11. OBSERVER’S RESPONSIBILITIES WHY REPORT? • To give feedback to the procuring entity • Documentation of the process • To assess the extent of the BAC’s compliance with the provisions of the IRR of the GPRA • Improvements in the gaps and deficiencies • To ensure integrity in the process • Report can result to filing of corresponding administrative or criminal complaint • A bidder can be blacklisted • Presence of observer makes the BAC more wary of committing irregularities Capacity Development Division

12. OBSERVER’S RESPONSIBILITIES NOTE: If no report is submitted by the observer, then it is understood that the bidding activity conducted to the BAC followed the correct procedure. Capacity Development Division

13. OBSERVER’S RIGHTS • Attend any or all stages of the procurement process. • Record what they have observed during any of the procurement proceedings. • Access procurement-related documents upon request and subject to signing of a Confidentiality Agreement, such as: • Annual Procurement Plan and PPMP • Minutes of the BAC meetings • Abstract of bids • Opened proposal • Post qualification summary report Capacity Development Division

14. WHAT IS A CONFIDENTIALITY AGREEMENT? • Also known as non-disclosure agreement • A legal contract between a government procuring entity and a volunteer or team of volunteer procurement observers that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to by third parties. It is a contract through which the parties agree not to disclose procurement information covered by the agreement. Capacity Development Division

15. OBSERVER’S ACCOUNTABILITY • Accountable and liable for any or all actions in case of failure to perform duties and responsibilities or in case of inappropriate behavior during the bidding process. • Observers are accountable to the organization he/she represents and should be sanctioned accordingly depending on the policy of the organization. Capacity Development Division

16. POSSIBLE CONSEQUENCES AGAINST ERRANT OBSERVERS • Disqualification from participating in the procurement process. • They may be charged with a civil or criminal case when the circumstances so warrant and all the requisites are present, under existing civil and criminal laws. Capacity Development Division

17. WHAT TO OBSERVE?

18. ADVERTISEMENT OF THE INVITATION TO BID (IB) OR REQUEST FOR EXPRESSION OF INTEREST (REI) Observer must: • Ask for the PhilGEPS reference number and check for posting in the PhilGEPSwebsite. Check whether it was posted for seven (7) calendar days or longer. • Check if the ITB / REI is posted in the Procuring Entity’s Bulletin Boards. • In order to verify whether the bid notice has indeed been published and/or posted, the observer can ask when the opportunity was advertised or posted. Capacity Development Division

19. ADVERTISEMENT OF THE INVITATION TO BID (IB) OR REQUEST FOR EXPRESSION OF INTEREST (REI) • Observer may request for a copy of the newspaper advertisement in case the bid notice is required to be advertised in a newspaper. • Upon seeing a copy of the advertised or posted bid notice, check the completeness of the information included therein. Capacity Development Division

20. PRE-BID CONFERENCE Observer must check if: • Pre-bid conference is mandatory based on the ABC or EPC, as the case may be. • All the bidders who have expressed their interest to participate were invited Take note that the presence of bidders is not required. • The eligibility, technical, and financial requirements of the procurement at hand were thoroughly discussed. • Clarifications and questions were encouraged and entertained. • Clarifications and questions not immediately addressed during the conference were answered through the issuance of a supplemental/bid bulletin. Capacity Development Division

21. PRE-BID CONFERENCE Observer must check if: • The Supplemental/Bid Bulletin if any, was posted on the PhilGEPS and the PE’s website, if it was issued not later than seven (7) calendar days before the deadline of the submission of bidsand all prospective bidders who had bought bidding documentswere provided a copy. • The conference proceedings are recorded and minutes must be made available to all participants not later than three (3) calendar days after the conference. Capacity Development Division

22. RECEIPT AND OPENING OF BIDS Observer must check if: • All the bids were submitted on/before the published deadline. • No late submission of bids, including eligibility requirements, was entertained by the BAC. • The following periods from the last day of posting of ITB/REI up to the submission and receipt of bids have been observed by the BAC • The bid box was properly sealed/locked. • The BAC members comprising a quorum were present before the start of the bidding. Capacity Development Division

23. RECEIPT AND OPENING OF BIDS Observer must check if: • The checklist on the required documents for the eligibility check is reflected on the board and/or in a document prepared and distributed to members of the BAC, BAC Secretariat, the TWG, and Observers. • Prospective bidders submitted their eligibility envelopes along with their technical and financial envelopes properly sealed and duly marked. • The BAC used non-discretionary “pass or fail” criterion in determining the completeness of each bidder’s eligibility requirements or statements. • Remaining bid envelopes of bidder/s declared ineligible by the BAC, when one or more of the required documents was found to be missing, incomplete or patently insufficient, shall have been immediately returned to the bidders unopened. Capacity Development Division

24. RECEIPT AND OPENING OF BIDS Observer must check if: • If a bidder modifies its bid, it must be done before the deadline for submission and receipt of bids. • If a bidder withdraws its bid, it must be done through a letter before the deadline for the receipt of bids. • In case the BAC declares a failure of bidding in this stage of the procurement process, the BAC’s declaration of failure should be based on the following grounds: • No prospective bidder submits a Letter of Intent (in the case of consulting services) or no bids are received; or • All prospective bidders are declared ineligible. Capacity Development Division

25. BID EVALUATION Observer must check if: • The evaluation of bids was completed no later than seven (7) calendar days from the deadline of the receipt of the proposals. • Computations were accurate. • All bids must be accompanied by a bid security in the form and amount prescribed in the revised IRR of R.A. 9184. Otherwise, the BAC must automatically disqualify the bid. Capacity Development Division

26. BID EVALUATION Observer must note that: • In case of discrepancies, the following shall prevail: • Words over figures; • Unit prices over total prices; • Bill of quantities over detailed estimate • Placing no price is considered as non-responsive. • Specifying a “0” or “-” means it is offered for free. • Unless the ITB specifically allows partial bids, those not providing all required items shall be considered non-responsive. Capacity Development Division

27. BID EVALUATION Observer must note that: • In case the BAC declares a failure of bidding at this stage, it shall be by reason of failure by all the bids to comply with all the bid requirements, or in the case of consulting services, there is no successful negotiation. Capacity Development Division

28. POST-QUALIFICATION • Observer must be prepared to join the BAC, TWG, and BAC Secretariat in verifying, validating, or ascertaining the veracity of statements and documents submitted by the bidder. • If the situation warrants, observer shall conduct additional research to ascertain questionable statements and documents submitted by the bidder. • The BAC should verify, validate and ascertain that the bidder with the LCB was not included in any government Blacklist. Capacity Development Division

29. POST-QUALIFICATION • The BAC should undertake verification and validation on the sufficiency of the bid security as to the type, form, amount, wording and validity period. • The BAC should verify, validate and ascertain the legality of the licenses and agreements, among others. • At this stage, the failure of bidding may ONLY occur if no bidder passed the post qualification stage. Other than that, there should be NO OTHER reason for the declaration of a failure. Capacity Development Division

30. AWARD OF CONTRACT Observer must check if: • Notice of Award and Notice to Proceed were posted accordingly within the required calendar days after its issuance. • The decision of the HOPE or his/her duly authorized representative on whether or not to award the contract was made within seven (7) calendar days from the determination of the LCRB/HRRB. • The organization’s monitoring work extends to project implementation, compile all documentation/ observation reports and submit to the appropriate official. Capacity Development Division

31. AWARD OF CONTRACT Observer must check if: • The BAC should notify all losing bidders of their decision in writing within the same period. • In case of failure of bidding at this stage, the BAC may so declare only when the bidder with the LCRB or HRRB refuses, without justifiable cause, to accept the award of contract, and no award is made in accordance with Section 40 of R.A. 9184 and its revised IRR. Capacity Development Division

32. ALTERNATIVE METHODS OF PROCUREMENT Although observers are not required to be invited when the PE resorts to any of the alternative modes, observers should be vigilant whether conditions set forth in the GPRA were met. Capacity Development Division

33. CODE OF CONDUCT

34. CODE OF CONDUCT • Respect for rule of law Respect the laws, the procurement and government officials • Professionalism Procurement expertise and knowledge , uphold ethical and moral obligations as Procurement Observers. • Competence Utmost efficiency and effectiveness in the performance of duties and responsibilities, observations are accurate and well-documented. • Dedication High degree of commitment and dedication in performance of duties and responsibilities. • Honest and integrity Objective and act in accordance with the spirit of the law. Capacity Development Division

35. CODE OF CONDUCT • Diligence Conscientious and attentive in the performance of duties. • Accountability Responsible and prepared to take the consequences of actions. • Punctuality Punctuality in attendance and submission of reportorial obligations. • Impartiality Judgments must be based on the highest standards for accuracy of information and impartiality of decision- making. • Proper personal behavior Exercise sound judgment and proper decorum in interacting with procurement officials. Capacity Development Division

36. PROHIBITED ACTS • Conflict of interest • Kickbacks and acceptance of gratuities • Discussing detailed information such as but not limited to: • Advance information • Confidential proprietary information about other bidders • Technical information • Updates on the decisions made by the BAC Capacity Development Division

37. DO’S • Acknowledge receipt of invitation. Be on time. • Know your role and rights as observer. • Bring references that you may need. • Disclose conflict of interest. • Politely call the attention of BAC. Cite the applicable laws and rules. • Be assertive and persuasive. • Strictly observe and comply with the confidentiality agreement. • Prepare reports. Take note of critical observations. • Inhibit oneself in case of a possible conflict of interest in the event that you are related to any of the bidder or you have a personal interest in the item to be bid out or if you have a personal relationship with the BAC members. Capacity Development Division

38. DON’T’S • Don’t come unprepared. • Don’t engage in a debate with the BAC. • Don’t express your own opinion. • Don’t be combative. • Don’t be complacent. • Don’t engage in fishing expedition. • Don’t accept favors/gifts from the BAC or supplier or from anyone involved in the bidding. • Refuse to accept monetary consideration or any form of favor or gift or token. Capacity Development Division

39. TOOLS AND INSTRUMENTS

40. TOOLS AND INSTRUMENTS THAT CAN FURTHER HELP OBSERVERS IN THEIR DUTIES • Copy of Republic Act No. 9184 and its Implementing Rules and Regulations • Checklist of Basic Documents • Conflict of Interest Form • Procurement Observer’s Report (POR) • Agency Procurement Compliance and Performance Indicators (APCPI) Capacity Development Division

41. OTHER SUGGESTED TOOLS AND ACTIVITIES • Tracking system • Validate the accuracy and completeness of the reports before submission. • Keep track of actions made to the report Sample Format: Capacity Development Division

42. OTHER SUGGESTED TOOLS AND ACTIVITIES • Records System - Organize data to provide quick and easy reference Sample Format: Capacity Development Division

43. OTHER SUGGESTED TOOLS AND ACTIVITIES • Disclosure policy • Guidance on the release of some sensitive, confidential information or those that might have been sourced through unconventional means. • Those should only be released after a thorough verification and deliberation by the organization on the possible impact of releasing it. • Reporting to the public • Via press release • Broadcast through radio and TV • Symposiums, forums, conferences, etc. • Social networking sites, etc. • Formation of public/ media relations committee Capacity Development Division

44. THANK YOU!! Contact us at: Unit 2506 Raffles Corporate Center F. Ortigas Road, Ortigas Center Pasay City, Philippines 1605 TeleFax: (632)900-6741 to 44 Capacity Development Division