The flow of pork

IMPLEMENTING THE Priority Development Assistance Fund (PDAF) takes a long and layered process because it is a lump-sum item, which means that its purpose has yet to be identified during the budget year.

By the time it reaches its intended beneficiaries, a project funded by PDAF or pork barrel would have gone through at least three lawmakers, two members of the cabinet, or a governor, a mayor, or a nongovernment organization (NGO). Of course that’s assuming the intended beneficiaries get anything at all.

Using PDAF supposedly starts with citizens and the identification of their needs, and ends with the same citizens benefiting from goods and services delivered by the fund. But when several agencies, local government units, government corporations, and even private institutions have a hand in the pork barrel system, following the money trail can be a little tricky.

In a June 2012 interview, Budget and Management Secretary Florencio ‘Butch’ B. Abad walked PCIJ through the process of identification, implementation, and reporting of projects to be funded by PDAF. To prepare this report on the pork-barrel process, PCIJ also relied on previous interviews with Secretary Corazon ‘Dinky’ Soliman of the Department of Social Welfare and Development (DSWD) and Alexis Sevidal, head of Accounts Servicing and Asset Management Group of the National Livelihood Development Corporation (NLDC). In addition, PCIJ went through budget documents, as well as consulted a presentation made by Dr. Romulo Emmanuel M. Miral Jr., director general of the Congressional Planning and Budget Bureau of the House of Representatives, in a PCIJ training-seminar held in June 2013.

Project identification

  • Upon the approval of the General Appropriations Act (GAA) or the national budget, the President, through the Department of Budget and Management (DBM), decides on the schedule of fund releases, i.e., number of tranches, amount per tranche, and the dates of release of the PDAF and other congressional allocations.

    A total of P70 million a year is allocated for each district and party-list representative. House members may spend a maximum of P30 million on “soft” or education, health, and other social services projects and the remaining P40 million on “hard” or infrastructure projects.

    Senators meanwhile may spend P100 million on soft projects and another P100 million for hard projects for a total of P200 million a year.

    Abad said DBM gives the go-signal for lawmakers to submit their list of projects. Normally, he said, “(lawmakers) go home and talk to their constituents and they come back with the list.”

  • Legislators then prepare their lists of projects in accordance with the qualified project menu spelled out in the GAA. For example, the 2013 GAA lists at least seven types of programs and projects that can be funded by PDAF: education, health, livelihood, social services, peace and order and security, arts and culture, and public infrastructure projects.

    The GAA also provides a list of agencies designated to implement each type of project. For instance, health programs must be implemented by hospitals managed by the Department of Health, the Philippine General Hospital (PGH), and local government units (LGUs). Programs on social services meanwhile are under DSWD and LGUs.

    Moreover, the GAA requires legislators to identify projects and designate beneficiaries that match the priority list and standards prepared by each implementing agency. Legislators are also required to give preference to projects located in the fourth- to sixth-class municipalities or indigents under the DSWD’s National Household Targeting System for Poverty Reduction.

Project proposal review

  • The lists of projects are then submitted to the House Committee on Appropriations for congressmen or the Senate Committee on Finance for senators. The list of projects must include specific details such as the nature or description of the project, project location, fund requirement or project cost, and implementing agency, among others.

    The legislators’ lists are then jointly endorsed to DBM by the chairperson of the House Committee on Appropriations and the Speaker of the House, in the case of the House of Representatives. For the Senate, the chairperson of the Senate Committee on Finance and the Senate President make the endorsement.

  • Project proposals undergo a second review at the DBM, which Abad described as “stricter” than the initial review done in the committees. The Budget and Management Bureau G of the Department reviews and evaluates the legislators’ lists to check if these comply with the project menu and requirements set in the GAA.

    This stage usually takes time because some project proposals lack specific information, according to Abad. For instance, he said, legislators who wish to implement a scholarship program must include details such as the recipient school, minimum grade required to stay within the program, and scholarship policy.

    Abad also observed that “pautakan” or the creative phrasing of projects tend to consume time in the review phase. For example, he said that some lawmakers, who intend to put up basketball courts, which are not allowed, would use the term “palay drying facility.” Abad noted wryly, “It works both ways, actually.”

    While “creative” projects do not make up the majority of the lists received by DBM, Abad said some lawmakers really do insist on these. “It’s really a battle between trying to have as much discretion on pet projects that are marginally within the menu and then it becomes a matter of interpretation,” he said.

Release of funds

  • When a project proposal meets the necessary requirements, the DBM Secretary then issues the Special Allotment Release Order (SARO), a document that obligates funds for a project to its implementing agency.

    Copies of the SARO are also given to the DBM Budget Technical Services, DBM Budget and Management Bureaus, DBM Regional Office, and the Commission on Audit (COA). A notification letter is sent to the legislator concerned as well.

    Strictly speaking, Abad said, legislators can only identify a project and allocate a certain amount for it, but it is the implementing agency that takes care of project execution.

  • Cash allocations are subsequently released based on the national government cash program and percentage of project completion. (See NLDC discussion below)

    A Notice of Cash Allocation (NCA) is sent to the government depository bank, and an Advice of Notice of Cash Allocation Issued (ANCAI) to the implementing agency, signalling that the agency can already pay its obligation with its contractor or supplier. The legislator concerned also receives a copy of the ANCAI.

  • Funds are released directly to implementing agencies as identified in the PDAF project menu. In the case of LGUs, funds are released to the DBM as fund administrator. For government-owned and/or controlled corporations (GOCCs), funds are released to the Bureau of the Treasury (BTr).

Project implementation

  • Only national government agencies, LGUs, and GOCCs identified in the GAA are allowed to implement PDAF-funded projects.
  • Implementing agencies may engage with a contractor or a supplier depending on the goods and services that need to be delivered. In this case, procurement process must comply with the provisions of Republic Act No. 9184 or the Government Procurement Reform Act and its implementing rules and regulations.
  • Implementing agencies may also engage with NGOs to execute social welfare or livelihood programs or projects. PCIJ was unable to confirm how this stage unfolds in agencies other than DSWD and NLDC, however. For DSWD and NLDC, though:

    In the case of DSWD, a legislator identifies a project and endorses it to DSWD. The department would then invite NGOs to submit proposals to implement the project. But DSWD’s Soliman told PCIJ in 2012 that legislators often insist on a particular NGO to be awarded their PDAF. (See PCIJ story: Bogus, favored NGOs fail to account for P770-M pork)

    In the case of the National Livelihood Development Corporation (NLDC), which used to be a PDAF implementing agency, the legislator identified the NGO implementing his/her project. In 2011, NLDC was delisted in the GAA as one of the implementing agencies of livelihood projects under PDAF. Alexis Sevidal of the NLDC said that the agency’s delisting from the 2011 GAA was considered a relief and a positive response on the NLDC’s previous appeals to the DBM to exclude it from being assigned as implementing agency. This was because “NLDC’s work had been mistaken for dole-outs,” said Sevidal.

    When NLDC was still implementing PDAF projects, an NGO would submit a project proposal, work and financial plan, budgetary requirements, and endorsement letter from the legislator to NLDC. (See Flow Chart)

    NLDC would then evaluate and validate the documents. Upon approval of the proposal, the legislator, NGO, and NLDC would sign a tripartite memorandum of agreement, which would trigger the release of funds. (See sample MOA)

    Upon release of the SARO and NCA, the Bureau of the Treasury would notify NLDC of the fund transfer. The first tranche or 30 percent of the total fund allotted would then be released to the NGO so it could start implementing the project. (Funds were released in three tranches, 30-percent, 50-percent, and 20-percent, respectively. Succeeding tranches were only released once the previous tranche has been fully liquidated.)

    The legislator would oversee the project’s implementation; NLDC acted as witness upon the lawmaker’s request. The NGO would then prepare a progress report. Once the legislator validates the report, he or she would then issue a certificate of inspection and acceptance and endorse the project’s next phase with authority to release next tranche.

    NLDC would also evaluate the documents submitted by the NGO and prepare its own evaluation report. If all goes well, the next tranche will be released and the next phase of the project will continue.

    The same procedure would take place for the final tranche to be released and the project to be completed.

Reporting requirements

  • The GAA requires the DBM and respective heads of implementing agencies to ensure that the following information are posted on their respective websites: all releases and realignments; priority list, standard and design submitted to Congress; projects identified and names of proponent legislator; names of project beneficiaries and/or recipients; any authorized realignment; status of project implementation; and program/project evaluation and/or assessment reports.
  • LGUs are also required to post PDAF releases in at least three publicly accessible and conspicuous places consistent with the provision of the Local Government Code of 1991. PDAF details may be published as well in a newspaper of general circulation in the concerned LGU’s territorial jurisdiction pursuant to the full disclosure policy of the Department of the Interior and Local Government. — With additional research by Rowena F. Caronan and Che de los Reyes, PCIJ, July 2013