Open Contracting 'not a norm'

Big money for PH projects,
no access to all documents

THERE is no dearth of hard lessons in Philippine procurement. The PEA-Amari and Textbook Scams in the 1990s, the Fertilizer Fund Scam and the botched NBN-ZTE and North Rail deals in the 2000s, the Pork Barrel Scam in 2013, and the Dengvaxia controversy last year are just a few examples of why procurement, a major government undertaking, is fraught with big risks, too.

Apart from the obscene amounts involved in these contracts, an invariable frailty emerges: critical details about these projects became known to the public only after the deals had hit the headlines or public hearings in Congress.

In an open-contracting regime, citizens as end-users, businesses as contractors, journalists and civil society as watchdogs have access to information that could help them track a project from start to finish.

In the Philippines, however, open contracting is not the norm as yet despite a long history of transparency initiatives and innovative reforms launched and implemented to improve the integrity of procurement.

Enabling laws and disclosure mechanisms allow access to records but many important and longstanding issues linger. For instance, contracting data produced, maintained, and published by agencies are uneven and unrelated, making it difficult for citizens to track the procurement of goods and services from planning to implementation.

These are among the findings of PCIJ in its assessment of the availability and accessibility of documents and data produced and published along the contracting process – from planning to implementation – vis-à-vis the Open Contracting Data Standards (OCDS).

See Public Contracting in the Philippines: Breakthroughs and Barriers for the full report.

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OCDS is an open data standard created by the Open Contracting Partnership (OCP) for the publication of structured information in all stages of the contracting process. It was designed to support governments and organizations to increase contracting transparency and allow deeper analysis of contracting data by a wide range of users.

OCP emerged from a community of policy experts, leaders, and campaigners who believe that better open data and more community engagement can transform public goods and services. The Philippine government approved to support the OCP regime through Resolution No. 13-2012 that GPPB issued in 2012.

Case study: DPWH

As a case study, PCIJ assessed documents and data produced during the planning, tender, award, contract, and implementation of infrastructure projects delivered by the Department of Public Works and Highways (DPWH).

Next to the Department of Education, DPWH receives the second biggest budget annually. For 2018, DPWH was allotted P637.9 billion, reflecting a 40-percent increase from its P454.7 billion budget in 2017.

It made good sense to focus on DPWH as infrastructure development is a key economic driver. Too, many civil works projects have long been marred by corruption and inefficiency.

The research involved both paper and people trails. Documentary research and consultations with agencies, including GPPB-Technical Service Office, PhilGEPS, Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), Construction Industry Authority of the Philippines (CIAP), Philippine Contractors Accreditation Board (PCAB), and the Commission on Audit (COA), were done from July to December 2017.

Civil-society representatives with long experience in monitoring government contracts were also interviewed to guide the research.

The key findings of PCIJ’s research include:

1. Agencies do not publish all documents related to the procurement of infrastructure projects, making it difficult to track public-works contracts from planning to implementation.

Open Contracting standards involve the publication of at least 35 documents, and include the planning, tender, award, contract, and implementation of a project. Access and use of these records are supposed to aid civic and business users depending on their need, leading to improved accountability and redress by agencies or contractors by acting on the feedback received.

The research shows that while agencies involved in the procurement of public-works projects produce nearly all 35 documents, only 60 percent of these records are available at once.

Twenty-one of the 35 documents recommended for publication are either available online or can be obtained through a request within a considerable amount of time or within the 15-working-day period set in law. The rest are not uploaded online or could not be requested from agencies in a timely manner.

Of the five stages in the contracting chain, the middle segment – tender and award – results in more available records primarily because Republic Act No. 9184, also known as the Government Procurement Reform Act, and its implementing rules and regulations, require procuring entities, including the DPWH, to publish these records on PhilGEPS or the agency’s website.

As in all other procuring entities, records on the tender and award of DPWH civil-works projects are captured in PhilGEPS. Documents for the first and last stages of the contracting process – planning and implementation – may be obtained from DPWH.

Relevant agencies also perform specific roles in the contracting of infrastructure projects: PCAB for licenses; SEC and DTI as repositories of corporate and business records; CIAP for performance evaluation reports; GPPB as the alternative repository of contracting documents and overall body in charge of government procurement policy; and the COA for financial audit. Local government units likewise play a role particularly in the issuance of permits to contractors.

2. Although not fully aligned with the Open Contracting Data Standard, PhilGEPS publishes key documents and databases on bids and awards in an open, accessible, and timely manner.

Created to improve transparency in public procurement, PhilGEPS is the primary source of procurement information in government. The system serves as an online platform on the tender and award stages of the contracting process. All government agencies (buyers) and suppliers, including manufacturers, distributors, contractors, and consultants, are required to register and use PhilGEPS in the bidding and awarding of goods, civil works, and consulting services.

Procuring entities, including the DPWH, submit bid and award notices, along with other relevant documents in PhilGEPS. PhilGEPS in turn creates record repositories and databases from the files provided by the agencies. To access these records in the system, citizens must sign up for an account with PhilGEPS.

PhilGEPS provides three sets of lists for users under a CSO account: Open Opportunities for open tenders, Former Opportunities for closed tenders, and Award Notices for awarded contracts. These lists may be viewed by category or by agency which posted the bid. Each bid or award opens to a new page that contains a summary of the bid or award along with the following documents: Bid Notices, Award Notices and supporting documents, and Contractor Records.

PhilGEPS also makes available the following databases on its website (no log-in required) or through an FOI request: Bids and Awards Notice Databases, List of Registered Suppliers, and Commonly-Used Goods.

3. Weak organization of files on agency websites leads to document/data dump.

Apart from provisions in the Government Procurement Reform Act that mandate agencies to publish project documents, another order, National Budget Circular No. 542, requires all agencies, including local government units, state universities and colleges, and government-owned and -controlled corporations, to post key records on their website.

More commonly known as the Transparency Seal circular, NBC No. 542 is the reason why agency websites carry a “Transparency” page, which contains an index of downloadable files. In essence, the required documents all relate to contracting as they cover projects and programs, and goods and services an agency needs to perform its mandate.

DPWH publishes nearly all the required documents in NBC No. 542. Although not complete, the records offer an opportunity to track a project from planning to implementation – that is, if one is patient enough to comb through web pages and web pages of documents and data.

DPWH records are not organized the same way PhilGEPS records are published. Documents related to the bidding or awarding of one project can be seen on the same page in PhilGEPS. DPWH meanwhile uploads files following the list provided in NBC No. 542, missing the opportunity to link documents and data along the contracting chain. As a result, parts of the website serve as a dumping ground for documents collected from various district engineering offices.

For example, the Civil Works page contains key documents such as the Abstract of Bids, Notice of Award, Notice to Proceed, Awarded Contracts, and Contract Agreement, in addition to the lists of Registered and Blacklisted Contractors. To track one project from bidding to contract, a user must check each section and scroll through multiple web pages to find the related documents.

The Awarded Contracts list, meanwhile, is presented in multiple web pages, making it difficult to see the entire data or sort through the list. A user must click on each web page to browse the entire list. No spreadsheet is uploaded on the website; the documents, except for the lists, are all in PDF format. By experience, spreadsheet copies may be obtained from DPWH through a public-records request.

4. The Data Privacy Act has prompted some agencies to limit access to information on businesses, including contractors.

At least two agencies – the Securities and Exchange Commission and the Philippine Contractors Accreditation Board – have started withholding contractor information, citing provisions in Republic Act No. 10173 or the Data Privacy Act of 2012.

Since the Data Privacy Act took effect, the SEC has suspended public access to its Reverse Search Module, a facility that can generate a list of corporate interests of individuals such as shareholdings and board seats in corporations. The Reverse Search Module is the counterpart of SEC’s i-View, which offers the inverse function allowing users to search for a company (instead of a name) and download the documents it has filed with SEC. Records include articles of incorporation, general information sheets, and annual financial statements.

The Reverse Search Module has been an important tool particularly among journalists investigating business interests and financial connections of public officials, electoral candidates, or persons involved in government deals. PCIJ, for instance, relied heavily of the Reverse Search Module to map the business interests of former President Joseph Estrada, his wife, children, and mistresses. The PCIJ series on Estrada’s unexplained wealth became bases for the impeachment charges filed against the former president.

But the SEC has since shifted its policy and disallowed public access to the Reverse Search Module until it could properly ascertain the effect of the law on the Commission in its custody of data and its processing through the RSM.

On Feb. 4, 2017, SEC Chairperson Teresita J. Herbosa sent a letter to Privacy Commissioner Raymund Liboro seeking a legal opinion on the matter. In its Advisory Opinion No. 2017-29 dated June 23, 2017, NPC stated that the “exemption from Data Privacy Act requirements afforded to personal data being processed by journalists may not be invoked by the latter when insisting that the reverse search module facility be made accessible to the public anew.”

NPC acknowledged that the law does provide for the non-applicability of the law on personal data processed for journalistic, artistic, literary, or research purposes. This exemption is made “in order to uphold freedom of speech, of expression, or of the press, subject to requirements of other applicable law or regulations.”

But the exemption, NPC said, is not absolute. It said, “It applies only to the data and not the entities involved in their processing (i.e., personal information controllers or personal information processors). Those entities remain to be subject to the requirements of the law, particularly those relating to the implementation of security measures.”

Yet in the case of PCIJ, the information being withheld did not contain anything on the entities involved in the processing of the data.

The Reverse Search document sought by the PCIJ — which it had used for earlier reports — contains the name of the person being searched, his/her birthdate, and nationality, the name of company related to him, its SEC Registration No., relationship to the company whether stockholder, incorporator, or board member, reference, and as of date. These details could be subject for discussion to identify which are considered personal information, but the SEC decided to withhold all the information by suspending the use of the Reverse Search Module.

The NPC, in agreement with SEC, also said that journalists may still secure information they require through corporate documents that continue to be available to the public via the SEC i-View and SEC Express System.

SEC i-View and SEC Express System, however, are not capable of generating the same information drawn up using the Reverse Search Module. SEC i-View and SEC Express System work only if the user already knows the company name. The Reverse Search Module meanwhile answers this particular question: Which companies are related to an individual?

As to date, only government agencies, including co-regulators, legislators, and law enforcement agencies are allowed to access the system upon their submission of a letter-request.

Apart from discontinuing access to the Reverse Search Module, SEC also issued Memorandum Circular (MC) No. 1.6, which modifies the General Information Sheet (GIS) and Notification Update Forms with the goal of keeping Tax Identification Number (TIN) and address details from public view.

In the revised GIS, the TINs and residential addresses of the members of the board, officers and stockholders of domestic corporations, and the resident agent and officers of foreign corporations are to be indicated in a separate sheet, which will not be uploaded to the SEC i-View.

NPC, in its advisory opinion, said that it makes sense to share or provide such information to tax authorities and other regulators, whenever necessary, because policies that require its collection are anchored on the need to improve the government’s monitoring mechanism for tax law compliance. But NPC maintained that “there is little reason, if any, to make such item available to everyone else, via the SEC’s online and offline platforms, sans the consent of the person it pertains to.”

In effect, the TINs and addresses of stockholders, directors, and officers of companies will no longer be seen in the new GIS form.

Such information had been useful to journalists in verifying the business interests and financial connections of public officials, electoral candidates, or persons involved in government deals. These details can be matched with information available in other public records to verify the identity of the subject of the report.

Meanwhile, PCAB is no longer providing access to copies of contractor licenses to requestors. This used to be available up until the first quarter of 2017 for a fee. But PCAB is maintaining public access to its database of registered and blacklisted contractors.

According to a PCAB official, a copy of the license can be released only to the business owner. The license is printed on a security paper, which might be easily falsified, the official said.

As of the research period, PCAB was crafting its implementing rules and regulations for the Data Privacy Act. The PCAB rules would detail what information could be or could not be disclosed to the public.

5. Agencies are either creating new or upgrading their information-management systems, offering an opportunity to standardize, link, and publish more contracting data.

Nearly all agencies covered in the research are either creating new or upgrading their internal information-management systems. While agencies need to prioritize updating their internal systems, this could offer an opportunity for such bodies to standardize data, explore linking up data following OCDS, create more databases, and publish these on their websites.

Linking of data is supported by Section 8.5 of R.A. No. 9184’s Implementing Rules and Regulations, which provides that all procuring entities already maintaining an electronic registry shall integrate the same with that of the PhilGEPS.

See full report for list of information-management systems per agency covered in the report.

6. Record access, matched with awareness and practice of open contracting processes, is essential for citizens to be able to utilize contracting data and participate meaningfully in procurement.

Civil-society organizations have worked closely with DPWH and other agencies for decades to make procurement processes more transparent, efficient, and responsive to people’s needs.

One of the shared goals of both the government and civil society is to promote procurement literacy, in addition to providing understandable contracting data for citizens.

The Affiliated Network for Social Accountability in East Asia and the Pacific (ANSA-EAP), for instance, worked with university professors to integrate procurement literacy in their classes.

“What we did was convince several professors to integrate the teaching of open contracting in their classes,” ANSA-EAP Executive Director Redempto Parafina said. “We integrated and connected it to their courses, to political science, to journalism, to public administration.”

For Parafina, improving the quality of contracting data is not just about the technical format of the available information, but also about how much is available and how it is processed and packaged in a way that is accessible to citizens.

“For us, we take the perspective of the ordinary people because social accountability is with the constituency,” he said. “If we can produce the same output using Excel file format and JSON format in the front end, we do not care what we use for as long as we can still report [to citizens].”

Meanwhile, for Rechie Tugawin of Government Watch (G-Watch), the more pressing concern is access to and appreciation of procurement data at the local level.

“We have to give more emphasis on the local level, in the barangays, that may seem small but concerns those in the grassroots because it directly affects them – if they have access to data, if they have connectivity issues in accessing information platforms,” Tugawin said. — With reporting and research by Vino Lucero, and research by Aura Marie Dagcutan and Czarina Medina-Guce, PCIJ, January 2018

The Open Contracting report was done by PCIJ with support from Hivos and Article 19.