Earlier this week, Cong. Andaya alleged that PhP 50 Billion worth of public funds remain idle in the Procurement Service (PS) and Philippine International Trading Corporation (PITC) due to the revised Implementing Rules and Regulations (IRR) of the Procurement Law.


The IRR was revised prior to the Duterte administration by the Government Procurement Policy Board (GPPB) but was only approved in 2016, under the chairmanship of Budget Secretary Benjamin Diokno.


PS explained that “the PhP 17.4 Billion worth of funds is a cumulative amount from many years back, due to the lack of proper technical documentation from source agencies which delays the bidding process. This figure is not at all attributable to the revision of the procurement IRR during the start of the Duterte administration.”


Funds of about P17.4 B currently in PS as of end-2018 are accumulation of agency cash transfers prior to 2016.  The following data show that PS is on a negative cash flow every year since 2016:


This decreasing cash flow trend implies that less funds remain with the PS, as more projects are now being bidded out, and subsequently implemented by their respective implementing government agencies. This is a direct result of the introduction by Budget Secretary Diokno of a package of strategies to reform and rebrand PS and prevent unnecessary agency fund transfers. These strategies include the following:


a.   Instructions to the new PS management to discourage the practice of agencies to park unutilized agency funds in PS;


b.   Prohibiting agencies from transferring funds to PS during the 4thquarter of 2017 through the addition of Section 20 of the General Provisions of the 2017 General Appropriations Act to this effect;


c.    Shifting the transfer of agency funds to PS for NCUS procurement from a front end cash transfer upon signing of the Memorandum of Agreement (MOA) between PS and the agency on the procurement arrangement to a back end transfer when payments are already due and demandable;


d.   Initiating a new MOA template wherein agencies are responsible for payments of deliverables under live contracts. Under this template, agencies need not transfer cash to PS for said purpose; and


e.   The one-year validity of agency budgets policy and the shift to a cash basis budget policy, by design, will put a stop to the agency practice of parking unutilized funds to PS to avoid reversion of the same to the Bureau of Treasury.


f.    The procurement structures of agencies were also strengthened by DBM to enhance agency procurement capacities and enable them to conduct biddings on their own.


PS has likewise strengthened its management of procurement project portfolios by:


a.   Regular conduct of one-on-one agency fund reconciliations;


b.   Twice-a-year agency portfolio review to continuously clean the project inventory from those which has not moved for years and dormant/unutilized funds;


c.    Imposing strict deadlines to agencies in the submission of requirements without which procurement cannot be initiated such as Technical Specifications, Terms of Reference and Scope of Works.  These are procurement planning requirements which are the single biggest reason in procurement delays;


d.   More discriminatory acceptance of procurement projects to priority and big ticket projects of the administration for absorptive capacity considerations and align itself to the priorities of the Duterte Administration i.e. projects under the Build, Build, Build Program.


Furthermore, the concept of outsourcing procurement is not new. Outsourcing procurement was introduced in Philippine government procurement as early as October 2001 through Section 8 of Executive Order No. 40. This was again adopted when the first IRR of Republic Act No. 9184 (or the Government Procurement Reform Act) way back in 2003 and underwent several revisions throughout the years. Subsequent amendments to the IRR merely carried over this concept— Section 53.6 of the 2009 IRR was then transposed to Section 7.3.3(a) of the 2016 IRR.


On Project Monitoring Reports

There is no reason for PS to withhold information especially from COA,” PS explained.


PS clarified that the Procurement Monitoring Report (PMR) required by Commission on Audit (COA) was submitted to GPPB and posted in the PS website.  A copy of the screenshot of the PMR posted in the PS website was submitted to COA by the Internal Audit Division and was stamped received by COA on July 2, 2018. The COA Action Plan Monitoring Tool dated December 7, 2018 showed this particular COA requirement as “Implemented” under the columns “Results of COA Validation”.

Furthermore, PS reported that “a hard copy of the 2017 list of procurement projects of agencies has also been provided upon the COA’s verbal request.”


Contractuals authorized

There is no basis whatsoever to hold Secretary Diokno criminally liable for hiring contractuals to perform their duties at the PS, despite Cong. Andaya’s accusation of technical malversation.


PS Bids and Awards Committees (BACs) are independent units that make their own decisions/recommendations on bidding projects without interference from anyone.  Further, the BACs are made up of PS and agency procurement and technical personnel.  This membership mix in structure and composition is required by the Procurement Law to make it difficult for a single person to influence BAC decisions, even the head of the procuring entity.


Section 11.2 of the IRR of RA 9184 allows personnel occupying plantilla positions to be members of the BAC. The BACS of PS are contractuals occupying approved plantilla positions and is therefore compliant to the requirement of the Procurement Law on BAC membership.  All employees of the Procurement Service are mandated by law to be contractuals.


Specifically, Letter of Instruction (LOI) No. 755 dated October 18, 1978 which has the force and effect of law  mandates that the Procurement Service shall be staffed by persons on detail from agencies or by contractual personnel.  Specifically, the law mandates that PS “shall not have any permanent employees.”


Procurement Service is not the DBM

PS also reiterated that the “PS is an agency separate and distinct from the DBM”.


“By virtue of LOI 755, the PS is merely an attached agency to the DBM for purposes of administrative supervision. Hence, the DBM does not interfere with the bidding activities of the PS.



PR No. 2019-29



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