THE DEPARTMENT of Public Works and Highways (DPWH) said on Wednesday that procurement law amendments must include measures against bids that are so low that they result in subpar infrastructure.
“We feel that abnormally low bids and unbalanced bids need to be addressed since there have been instances that we thought these would be advantageous to the government and translate to savings and cost-effectiveness, it turned out to be to the contrary,” Public Works Secretary Manuel M. Bonoan told the Senate finance committee, which was looking into proposals to amend procurement law.
Citing the Asian Development Bank and World Bank’s procurement guidelines, Mr. Bonoan said he was especially wary of bids that are significantly lower than the approved budget for the contract.
The Senate is discussing amendments that address delays in government projects, resulting in underspending and the negative impact on the economy.
Senate Bill No. 2466, written by Senator and finance committee head Juan Edgardo M. Angara, aims to establish a single electronic procurement portal to streamline the process. It also aims to analyze current procurement modes and manage their risks and shortcomings.
Mr. Bonoan also cited the issue of unbalanced bidding or frontloading, wherein bidders deliberately quote high unit prices for major items with the objective of reaping large early payments for the project.
“Using the frontloading scheme, the incentives for the contractor to complete the works are significantly reduced since the payments that it will receive in the later phases of the contract may be smaller than the actual cost,” he said in a letter addressed to Mr. Angara dated Feb. 27 and obtained by BusinessWorld on Wednesday.
Dennis S. Santiago, executive director of the Department of Budget and Management’s Procurement Service, said at the same hearing that improving government procurement is expected to boost worker production and economic growth.
He has proposed allowing the direct purchase of items from suppliers with acceptable track records and the direct purchase of goods used in research and development.
Mr. Angara has cited the need to fix problems with the lowest-bidder-wins system, which risks the delivery of subpar goods and services.
“The foregoing measures will have a huge impact on the procurement and implementation of government projects… by eliminating loopholes in the law that can be exploited by dishonest and shady contractors to the (detriment) of the government,” Mr. Bonoan said. — John Victor D. Ordoñez
