INTRODUCTION -

______

Procurement is one of the most important aspects of the logistic

services in any organization, especially with the government. The
government created Republic Act No. 9184 (RA 9184) in its advocacy to
eradicate corruption, or to at least minimize it, as well as to standardize the
procurement process in all the governmental agencies and its
instrumentalities.

Procurement Process is used to describe the procedure for the supply

of equipment, materials and other resources required to carry out a
project/program. It usually involves sub-processes such as sourcing,
purchasing, monitoring, quality assurance and contract administration.

In most occasions, there is a tendency to fast–track the procurement

process to meet project/program schedule. Hence, those involve in the
procurement process are subjected to pressures given that they have to
carry it out efficiently and effectively.

Last September to November 2009, the pilot-testing of the DOH

Procurement Monitoring Process was successfully undertaken. Now with a
more comprehensive and result-oriented monitoring tool and process, the
DOH Procurement Service commits itself to continue its procurement
monitoring activities in all DOH procuring entities.

The objectives of the monitoring visit include the following:

1. To provide an avenue for collective and interactive resolution of

procurement issues/ concerns;

2. To identify key areas of development relative to the existing

procurement process; and
 3. To educate the procuring entities of the salient features of the
Revised Implementing Rules and Regulations.

Monitoring Site:

The National Kidney and Transplant Institute is a tertiary medical

specialty center formerly known as the National Kidney Foundation of the
Philippines (NKFP) created on January 16, 1981 by virtue of Presidential
Decree 1832 signed by then President Ferdinand E. Marcos. It was created
with a three-fold mission of service, training and research primarily for the
benefit of the Filipino people afflicted with kidney and allied diseases and in
pursuance of the policy of the state to secure the well-being of the people by
providing them with the specialized health and medical services.

The Institute is situated in a 58,899 square meter parcel of land

located along East Avenue, Quezon City, near the Quezon City Hall and is
accessible to all types of land transportation. NKTI is a three-story edifice
which can accommodate 250 patient beds. Presently, the Institute has an
actual bed capacity of 247 patient beds.
There are other government hospitals in the neighborhood namely the
Lung Center of the Philippines, East Avenue Medical Center, the Philippine
Heart Center, the Philippine Children Medical Center and East Avenue
Medical Center. Each hospital has its own field of specialization and NKTI is
presently the only government hospital specialized in renal diseases and
organ transplantation. It is the center for referral of kidney patients from
various regional hospitals nationwide and is recognized as the lead agency in
voluntary blood services.
THE MONITORING PROCESS___
________________________________________________________

The Monitoring Team needs information that would help them assess
the over-all procurement process and performance of the NKTI and to satisfy
the objectives as defined earlier in this report. Appropriate tools and various
methodologies were developed and used to come up with reliable and
accurate monitoring results.

A. TOOLS

The Procurement Monitoring Tools are vital instruments to gather

information as accurately as possible. However, there is a need to use
different tools to validate and minimize the errors as much as possible. The
tools used in this study are the following:

1. Agency Compliance Performance Indicator

Agency Compliance Performance Indicator (ACPI) shall be used as the

ultimate tool of the monitoring activity. It is a set of condition that enables
the Monitoring Team to identify the performance of an agency in the
procurement process. This instrument shall be used as a guide of the
Monitoring Team in presenting the results of monitoring.

2. Procurement Process Checklist

The Procurement Process Checklist is a tool to determine compliance

with the procurement process as prescribed in the IRR. It lists all the stages
of the procurement process in order to validate its implementation. It also
serves as a guide for the Monitoring Team in the conduct of the Focus Group
Discussion with the Procurement Unit.

3. Self-Administered Questionnaire
 The Self-Administered Questionnaire is provided to the members of the
BAC, the BAC Secretariat and TWG prior to the monitoring visit. This allows
them to identify the factors that affect their procurement functions. It also
provides the Monitoring Team an understanding of the working relationship
of the Procurement Unit with the other units/divisions of the organization.

4. Agency Procurement Report

The Agency Procurement Report is a tool to be used to determine the

agency’s performance relative to the time frame and procurement profile.
This tool will also support the ACPI.

B. METHODOLOGIES

Just like the monitoring tools, the methodology on how the monitoring
visit will be conducted is also critical. The use of appropriate methodologies
facilitates the efficiency and effectiveness of data gathering.

1. Self Administered Survey

The Self Administered Survey is done in order to gather information
directly from the procurement practitioners. This method is used to assess
the level of implementation of RA 9184 and its Implementing Rules and
Regulations. It is also useful in validating the responses of the BAC, BAC
Secretariat and TWG. It is given on the first day of the monitoring visit to
provide ample time to answer the questionnaire.
2. Review of Documents
The Monitoring Team does the review of documents of the completed
packages using the Agency Procurement Report.
3. Focus Group Discussion
For the Focus Group Discussion, the Monitoring Team uses the
Procurement Process Checklist to direct the flow of dialogue. The results of
Agency Procurement Report and some items in ACPI are also in the FGD.
RESULTS AND EVALUATION

After three days in NKTI, with the use of the tools and methods
designed for the monitoring activity, the Monitoring Team came up with an
assessment of the procurement process of the institution. The results are
presented through the use of the ACPI. Significant findings that are not
covered by the ACPI were classified under other findings.

The ACPI is a valuable tool composed of four pillars – namely (1)

Compliance with Legislative and Regulatory Framework, (2) Agency
Institutional, (3) Procurement Operations and Market Practices, and (4)
Integrity and Transparency of Procurement System. These pillars gauge the
performance and ultimately the adherence of a procuring entity with the
provisions of the RA 9184 and its Implementing Rules and Regulations.
Furthermore, under these pillars are indicators which effectively measure the
level of adherence of a DOH Procuring Entity.

AGENCY COMPLIANCE PERFORMANCE INDICATOR

Pillar 1: Compliance with Legislative and Regulatory Framework

INDICATOR 1. AGENCY COMPLIANCE WITH THE PROCUREMENT LAW

 Procurement (a) Ratio of contracts procured through
1 Through public bidding in terms of value with 75.75%
Competitive overall procurement contracts
Bidding
(b) Ratio of contracts procured through
public bidding in terms of volume with
overall procurement contracts

2 Procurement The APP does not

(a) Alternative methods are generally in
Through include the mode
the approved APP
Alternative of procurement.
Methods (b) Ratio of contracts procured through
alternative means in terms of value and 24.25%
with overall procurement contracts

(c) Ratio of contracts procured through

shopping in terms of value with overall 5.42%
procurement contracts

(d) Ratio of contracts procured through

Direct Contracting in terms of value 18.45%
with overall procurement contracts

(e) Ratio of contracts procured through

Limited Source Bidding in terms of
0.03%
value with overall procurement
contracts

(f) Ratio of contracts procured through

Negotiation in terms of value with 0.09%
overall procurement contracts

(g) Compliance with prerequisite Resolutions and

conditions for the use of alternative other requirements
 methods of procurement are available.

IBs are posted in

PhilGEPS,
conspicuous places
(a) All Invitation to Bid advertised and and the website.
Advertising
3 posted as mandated by law in terms of Advertisement in
Rules and
location and time frame newspapers, if
Time Limits
required, has been
done.

(b) Contract award results are posted

Notices of Award
as mandated by law for Public Bidding,
are posted in
Shopping, Small Value contracts,
PhilGEPS.
Limited Source Bidding and Negotiation
(a) Average number of bidders who
6
bought bidding documents
Rules on
4 (b) Number of bidders who downloaded
participation none
bid documents from PhilGeps website
(c) Average number of bidders who
5.03
submitted bids
(d) Average number of bidders declared
0.33
ineligible or disqualified
(e) Number of failed biddings 37
(f) Number of contracts awarded with
41
only one bidder participating

INDICATOR 2. AGENCY COMPLIANCE WITH IMPLEMENTING RULES AND

DOCUMENTATION
 APP includes the
following items:
1. Operating Room
/ Anesthesia
Supplies
2. Medical
Supplies
3. Hemodialysis
Supplies
4. Radiology
Supplies
5. Peritoneal
(a) APP is prepared for all types of
Dialysis Supplies
procurement and used as basis for
Procuremen 6. Office / IT/
5 annual procurement;
t Planning Printing
Activities 7. Pulmonary
Supplies
8. Dietary
9. Pharmaceuticals
10. Housekeeping
Supplies
11. Engineering
Supplies
12. Laboratory
Supplies

(b) Number of times APP has been

3
updated

(c) Ratio of actual procurement with

124%
the APP
Pillar 2: Agency Institutional Framework and Capacity

INDICATOR 3. EXISTENCE OF REQUIRED PROCUREMENT ORGANIZATIONS

BAC – 5 members
Presence of (a) Presence and number of BAC, TWG, TWG- 5 members
6
Procurement BAC Secretariat, as applicable Secretariat-3
Organizations members
(b) Ratio of number of successful
projects completed with number of 100%
meetings
(a) Presence of Procurement Unit Yes, Procurement
whether permanent or ad hoc Unit is permanent
Procurement
7 No. The BAC
Unit
(b) Procurement Unit functions as BAC Secretariat is
Secretariat separate from the
Procurement Unit

INDICATOR 4. EXISTENCE OF AGENCY INSTITUTIONAL DEVELOPMENT

CAPACITY
PhilGEPs
(a) Agency registered with PhilGEPS Duly registered
Registration
8 (b) Percentage of bid opportunities
and Posting 100%
posted
of
(c) Percentage of contract award
Information 100%
information posted
System of
disseminating (a) Presence of website that provides
9 Website is
procurement minimum, up-to-date procurement
available
information information easily accessible at no cost
through
website
 Systems and
procedures
1
for (a) Availability and submission of
0
monitoring Procurement Monitoring Reports
and
analyzing
procurement
information
(a) Number of procurement staff
Sustainable
1 trained through national training Seven (7)
training
1 program with total number of
program for procurement staff
procurement (b) Presence of in-house training
Present (100%)
personnel program on procurement cascaded to
the lowest level
(c) Presence of budget for procurement
Available
training

Pillar 3: Procurement Practices and Market Operations

INDICATOR 5. EFFICIENCY OF AGENCY PROCUREMENT OPERATIONS AND
PRACTICES
1 Compliance Compliance with timeframes in the
2 with following activities:
(a) Posting of Invitation to
Established 27 Calendar Days
Bid/Advertisement
Procurement
(b) Issuance of Bid Documents 14 Calendar Days
Timeframes
(c) Conduct of Eligibility Check 13 Calendar Days

(d) Submission/Opening of Bids 1 Calendar Days

(e) Bid Evaluation

10 Calendar Days
(f) Post-qualification
(g) Issuance of Notice of Award 16 Calendar Days
 (h) Contract Signing and Approval 19 Calendar Days

(i) Issuance of Notice to Proceed 36 Calendar Days

(j) Posting of Invitation to Bid to
86 Days
Contract Award

INDICATOR 6. PRIVATE SECTOR PARTICIPATION IN AGENCY

PROCUREMENT
Sufficiency of
1
Bidders
3 Average number of eligible bidders
Participating 5
in Bidding
Processes
Participation Invites
of Civil Representatives
1 Society from COA, Internal
4 Organizations (a) Civil society organizations or Audit,
and professional associations are invited OMBUDSMAN,
Professional for every public bidding activity NAMFREL, CBCP,
Associations and DOH as
as BAC Observers
Observers

Pillar IV: Integrity and Transparency of Procurement System

INDICATOR 7. EFFECTIVENESS OF CONTROL AND AUDIT SYSTEMS

1 Existence of (a) Presence of Internal Control Unit as None

5 Internal prescribed
 (b) Conduct of regular audit of
Control and Not Applicable
procurement processes and
Audit Unit
transactions by Internal Audit Unit

(c) Review of Internal Audit Unit covers

Not Applicable
entire agency operations

INDICATOR 8. EFFICIENCY OF PROCUREMENT BLACKLISTING AND

COMPLAINTS MECHANISM
Use of (a) Number of bidders/contractors
Blacklisting None
1 blacklisted
Procedures
7 (b) Number of days to conduct
Capacity to Not applicable
blacklisting procedures
Handle
Less than 1% of
(a) Average number of Motions for
the total number
Reconsideration filed with the BAC
of bidders in 2009
The BAC convenes
1 (b) Action taken by the BAC on Motions whether to grant
8 Procurement for Reconsideration or deny the
Related
motions
Complaints
(c) Actual number of days to resolve
7 days
protests

Other Findings:

ACTUAL VALUE OF PROCUREMENT 885,760,532.01

TOTAL AMOUNT OF APP 719, 685, 604.12
RATIO OF ACTUAL PROCUREMENT
124%
OVER APP
 Based on the table above, the actual procurement exceeds the APP by 24%.
As pointed out in the ACPI (Pillar 1, Indicator 2) the APP includes only those
enumerated and does not include Civil Works (Infrastructure Projects) and
procurement of equipment. These projects amount to more or less 40% of the total
actual procurement. The APP does not include the mode of procurement and source
of fund. Although the APP was updated, three times for 2009, Supplemental PPMPs
were not issued.
Bid Evaluation Reports and Post-qualification Report are prepared only for
highly technical projects like infrastructure and equipment.
Reports/recommendations are in the form of a letter addressed to the BAC. The
reports/recommendation however, does not follow the prescribed form.
During the FGD, the Monitoring Team was informed that the BAC, during the
pre-procurement conference, orients the end-users on how to prepare their PPMPs.
The Head of Procuring Entity issues an order regarding the submissions of the
PPMPs.
The ABC is increased through the supplemental bid bulletins. There are
documents that were reviewed in which the ABC is not consistent in the
other documents of the same package.
BAC Secretariat had been provided an office to secure the safekeeping
of various procurement documents. However, due to the volume of the
documents and packages that the BAC Secretariat process, proper
safekeeping has become a concern.
It was also raised that manpower is also an issue. Three (3) members
including the Head of the Secretariat processed more than 190 packages
through public bidding for 2009.
The BAC Secretariat files the procurement package by their IAEB/IB
numbers. The documents are well maintained. The Procurement Unit files the
POs and it is organized by the number.
Notices to Proceed are present only for infrastructure projects and
services like janitorial and security services.
Purchase Orders (POs) include the mode of procurement being use for
each projects/items. However, some POs indicate two or more modes of
procurement. For instance, PO No. 0905-774/773 addressed to Zuellig,
procurement is through Open Canvass and Exclusive Distributorship. PO No.
0903-379 also awarded to Zuellig was procured through Negotiation, Direct
Contracting and Canvass. As explained, the items in the aforementioned POs
are included in the same Purchase Request and issued to a single supplier.
Such process had been adopted to simplify the issuance of POs.
The website http://www.nkti.gov.ph is available and accessible.
However, there is no web page assigned for the procurement opportunities
and milestones.
There are also instances where the Approved Budget of the Contract
(ABC) is increased through the issuance of supplemental bid bulletins just
before the opening of bids.

Conclusions and Recommendations

A. Conclusion

Based on the information gathered from the procurement monitoring,

the Monitoring Team determined that the NKTI substantially complied with
the provisions of RA 9184 and its Revised Implementing Rules and
Regulations on its procurement process. The ratio of seventy six (76%) and
twenty four (24%) of procurement through competitive bidding and other
alternative modes respectively, in terms of total contract prices, indicates
that competitive bidding was used as the main mode of procurement. Most
of the goods/services and infrastructure procured in 2009 was done through
public bidding which is advantageous to the interest of the agency. The
recommended threshold provided by the Government Procurement Policy
Board (GPPB) is 90% bidding to 10% alternative mode. NKTI has to improve
the ratio for public bidding to alternative mode which is 76:24 to meet the
recommended threshold provided by the GPPB in future procurements.
 The NKTI procurement process is within with the prescribed time
frame. The procurement process is efficient since, on an average, the
procurement process through public bidding is around 86 days, which is
within the latest allowable time of 124 days for goods and services.

However, there are various areas in the NKTI procurement process that
needs improvement and adequate attention. These are necessary for the
betterment of the procurement process and compliance with the
Government Procurement Reform Act.

The presence, completeness and consistency of the procurement

documents are one of the areas which should be looked into. Incomplete
procurement documents pertain to either the essential procurement
documents are not present or available or the lack of necessary entries such
as in the APP. Although, seldom did it occur, it is an indicator relative to the
compliance of the procuring entity with the prescribed rules and regulations.
Hence, the procurement process should be fully documented and the said
documents should be readily available. Also, posting of procurement
opportunities and awarded contracts in the PhilGEPs and NKTI website is
important because it facilitates competition and transparency. Certain
procurement documents like Notice to Proceed must be prepared and made
available to the winning bidders so that the statutory requirement is met and
better documentation is achieved.

The increase of ABC by the issuance of Supplemental Bid Bulletin is

one of the issues that need to be looked into. As a rule, the ABC may be
increased after the declaration of failure of bidding. The BAC shall conduct a
mandatory review and evaluation of the terms, conditions, and specifications
in the Bidding Documents, including its cost estimates. The ABC may then be
increased subject to required approvals. An option open for the BAC should
there be a need to increase the ABC is to cancel the bidding process with
grounds as prescribed by the law. The same procurement process shall be
observed using the new set of schedules. However, there is a need to update
the APP or issue a Supplemental APP.

B. Recommendations

It is recommended that the following actions and initiatives be

undertaken to improve the performance of the procurement activities of
NKTI:

1. Constant review of the law particularly the rules and

regulations as prescribed in the Revised IRR of RA 9184 also
known as the Government Procurement Reform Act.

Since all procurement activities for 2010 and beyond are

governed by the Revised IRR, it is fundamental for the procuring entity
to be familiar with the changes and apply the law with utmost care and
diligence.

2. Enhance the knowledge and skills of procurement practitioners

through procurement trainings and seminars.

Coordinate with the GPPB and with the DOH Procurement Service
if there are trainings and seminars to be conducted especially
regarding procurement process and to determine availability of
interactive and proactive programs for the members of the BAC,
Secretariat and TWG.

It is also recommended to have a designated staff to constantly

check for any updates such as GPPB resolutions, circulars and
guidelines.
3. Develop a long-term improvement plan

Recognizing the strengths to develop, maintain and maximize,

opportunities to grab, potentials to realize, weaknesses to overcome,
and risks to minimize are very good bases of improvement plans of any
organization. The best people to know these things are the people
within the organization. With this knowledge, it is easier to come up
with a plan, strategies and contingencies.

4. Development of a better record-keeping system to facilitate

easy reference of procurement documents

Plan and create a checklist of all documents needed for all of the
procurements as well as the timelines of the process, both for bidding
and other alternative modes. File it as to per package for public
bidding and per transaction or package for other modes (i.e. shopping,
direct contracting, etc.).

Keeping records in digital form brings a range of benefits

including improved service delivery through faster access to accurate
business information and cost savings as a result of reduction in the
quantities of paper stored. Also, create digital or soft copies of each
particular document so as it would be easier to change and
reformulate as necessary based on the information that would be
required.

5. Develop strategies to maximize the output of the personnel

 Rotation of duties is one way of maximizing the output of the
personnel. All the staff should be able to do the tasks that can be
designated to anyone of them. Therefore, if a certain member is
unavailable, in emergency situations, another staff can perform the
tasks without incurring delay in the performance or delivery. This
could serve as a preparation for the proposed professionalization of the
members of the BAC, Secretariat and TWG.

6. Strict application and justification of alternative methods of

procurement

NKTI should see to it that resort to any of the alternative

methods of procurement is justified by the circumstances and are
within the thresholds established in accordance with the law.

7. Public Bidding as a general rule

NKTI should favor public bidding in its procurement undertaking

and avoid resorting to alternative methods of procurement that are not
properly justified.

8. Additional personnel for the BAC Secretariat

Due to the voluminous number of procurement documents and

processes that the BAC Secretariat handles, it is quite difficult to
maintain the quality standards needed for the procurement processes.
All of the documents are being prepared by the Secretariat’s three-
man team. These documents are vital for the whole process. The
additional personnel is not just to assist the Secretariat in the
 performance of their duties but also to maintain standard of quality
and efficiency.

The Head of the Procuring Entity (HOPE) can designate personnel

from other departments (e.g. the Procurement Division or Supply
Section) to permanently or temporarily assist the Secretariat in the
preparation of documents and the performance of relevant processes.

9. Possible Transfer of the office of the BAC Secretariat

There is also a concern regarding the office of the BAC

Secretariat. The office is small and most of the time crammed up with
documents that sacrifice the comfort of both the staff and guests
coming and going to the office.

A change of location to a larger space is recommended not only

for comfort but also for the proper safekeeping of documents. It is
known that these documents are critical and the Secretariat is
responsible for their security. It is also advisable to have the BAC office
within the same area of the Procurement Division and/or Supply Office
for easier access of relevant documents and information.

10. Strengthen the Procurement Planning.

It is noted in the discussions earlier that NKTI’s procurement

planning was one of its best points. The BAC informs/orients the end-
user units on how to prepare the PPMPs. It is recommended to include
orientations on the procurement process for better understanding. This
is also a good venue to resolve issues between the BAC and the end-
users.

11. The APP should be organized and should follow the prescribed
format.
 The APP is the basic and most important document in the whole
procurement process. As a general rule, no items shall be procured if it
is not included in the APP except through the issuance of the
Supplemental Procurement Plan (SPP) approved by the HOPE.
Indicating the modes of procurement and the sources of funds is
important not only as it is prescribed by law but also it makes the
procurement process easier. If alternative modes are already included
in the APP, there is no need to create resolutions to resort to other
modes of procurement. As prescribed, alternative modes of
procurement is 10% of the total value of the APP.

12. Include information regarding the Procurement in the

NKTI Website.

The website of NKTI is very informative, however, there is no

information regarding procurement. Posting of bid opportunities and
other procurement related information could help increase bidders’
participation and subsequently increase the chances of getting the
most advantageous contract for the agency.

13. Establish Price Monitoring Systems

It is also recommended that price monitoring be established that

will help advance procurement. It will be a good source/reference in
determining the appropriate ABC because it can provide realistic,
reliable, and updated unit costs.