Minimizing Corruption At the Local Level MAKATI BUSINESS CLUB SEPTEMBER 21, 2004

1. Minimizing CorruptionAt the Local LevelMAKATI BUSINESS CLUBSEPTEMBER 21, 2004 Outline Why We Have to Make It Work City Procurement Experiences City Mechanisms and Processes

2. Why We Have To Make It Work Government will always have to deal with a twin predicament: • a constant lack of resources • an ever-increasing demand for services and facilities

3. The Naga City Context Why We Have To Make It Work 1998 • empty city coffers; a deficit of P 1M • narrow tax base • sluggish local economy • deteriorating basic services, especially for health and education • growing homeless urban poor population

4. The Naga City Context Why We Have To Make It Work 2004 • budget 10% lower than the previous year • need for expanded infrastructure program • growing demand for basic services: • increase in health service requirements • 10% rise in City Hospital patients • challenge of eradicating malnutrition • 7.7% annual growth in public high school enrolment over the past 3 years • need for a modern solid waste management system

5. Procurement and City Strategy City Procurement Experiences • To surmount the twin problems of lack of resources and increasing demand for services, Naga has adopted the following strategies: • Partnerships with the private sector and NGOs – to tap community resources and multiply LGU capacity • Internal reforms – to streamline and improve the productivity of the local bureaucracy, including procurement reforms

6. Procurement Outcomes City Procurement Experiences • Road construction – cost per kilometer of P 4.35M vs. a regular government standard of P 6M to 7M (or up to a P 2.94M or 38% difference); cost of 2-room building at P 0.39M is 38% lower; cost of asphalt overlay at P 372/sq.m is 47% lower • Generic medicine procurements are 19% to 70% lower than those purchased by other LGUs (and an average of 62% lower than DTI-PITC branded medicine) • Supplies are up to 33% lower than those procured by other LGUs • City government able to acquire an X-ray machine, bulldozer and dump trucks for 59%, 16% and 28% less than the original quoted price, respectively

7. Salient Points City Mechanisms & Processes • Nothing new in procurement rules and procedures; Naga continues to follow national government guidelines • Present system already has the built-in mechanisms to ensure that: • the procurement process is fair • Government is able to take advantage of the services of the best provider at the lowest possible cost The Difference: Naga has tried to make the system work for government

8. Making the System Work - Focus City Mechanisms & Processes • Building an Enabling Environment • Improving Transparency • Encouraging Participation by Qualified Entities in the Selection Process • Lowering the Cost of Doing Business with Government

9. Enabling Environment City Mechanisms & Processes • Deals with nurturing a culture that values innovativeness, accountability, adherence to standards of honesty in government transactions • Function of leadership – demonstrating commitment to qualities and standards expected from the rank-and-file • Includes a mechanism that ensures that the desired culture takes root

10. Enabling Environment City Mechanisms & Processes Enabling Mechanism – The Productivity Improvement Program • Aims to transform government personnel from being process- to results-oriented • Initially focused on improving and setting standards for service delivery • Performance Pledge – a “contract of deliverables” against which constituents availing services may hold an office or person accountable • Evolved into a mechanism for setting cost standards, as well • Fosters consciousness of each office’s per unit standard cost for each service delivered • Benchmark City Hall vis-à-vis the private sector

11. Improving Transparency City Mechanisms & Processes • Ensures wider participation of qualified service providers • Provides a control mechanism to ensure that the system works • Makes government more accountable • Provides a feedback mechanism to allow government to further source lower-priced goods and services

12. Improving Transparency City Mechanisms & Processes Measures Adopted • Wider Dissemination of Notices of Bids • Notices disseminated through radio and television, aside from posting on boards and newspaper circulation • Posting on the Naga City Citizen’s Board • Notices sent to all accredited bidders

13. Improving Transparency City Mechanisms & Processes Measures Adopted • NGO Participation • NGO representative to the PBAC is selected by the Naga City People’s Council (NCPC) • NCPC is a highly-independent organization • Composed of all business, non-government and people’s organizations • Created through the People Empowerment Ordinance of the City of Naga • Has the following powers: • Appoints representatives to local special bodies • Observes, votes and participates in the conceptualization, implementation and evaluation of programs • Proposes legislation and participates at the committee level of the Sanggunian • Acts as the people’s representative in the exercise of their rights to information and access to official documents

14. Improving Transparency City Mechanisms & Processes Measures Adopted • I-Governance • Seeks to enhance involvement by individual citizens in governance • Demonstrates everything that the city would like to attain in terms of improving transparency • I in i-governance stands for: • Inclusive governancewhich seeks to embrace, rather than exclude, individuals, peoples and sectors in running government • Information opennessthat demonstrates that information is power, and truly empowering when placed at the hand of the citizens • Interactive engagementwhich puts premium on information exchange through continuing dialog between authority and constituency • Innovative managementthat is committed to a culture of excellence sustained by creativity and innovations

15. Improving Transparency City Mechanisms & Processes Measures Adopted • I-Governance – has a website component (www.naga.gov.ph) that shows: • City budget and finances • Notices and outcomes of bids, auctions and public offerings • Outcomes: • Inputs on further reducing the cost of running government • Greater participation of service providers • Inputs on costs and other suppliers offering lower-priced products and services • Even lower bid prices as the site provides information on the quotations of previous winning bidders

16. Improving Transparency City Mechanisms & Processes I-Governance – Website Samples

17. Participation by Qualified Entities City Mechanisms & Processes • Participation by individuals and NGOs, who have better expertise and information, in various phases of the procurement process • Examples: • PICE representative in the PBAC Technical Committee • Provides inputs on how the private sector will undertake a civil works project • Points out items that do not need to be included in the Program of Work • NCPC and DTI handled bids for catering during the Palarong Pambansa • Have worked with the sector; and knew how they operated and how much their services cost • Private sector (such as the Metro Naga Chamber) representative in the committee evaluating bids for the Central Bus Terminal • As businessmen, are in a better position to evaluate the financial and technical bids of fellow entrepreneurs

18. Lowering the Cost of Doing Business City Mechanisms & Processes • Red tape addressed by • Productivity Improvement Program • I-Governance Program • Prompt payment of obligations