CebuSoft Takes a Position on Government Procurement Reform Act

The 4th Mindanao Information and Communications Technology Congress in General Santos City provided me with an opportunity to meet up, after some time, with Rene Sanapo of Cebu City GIS and Janette Toral of Digital Filipino. The day after the Congress, October 29, 2005, we got together for breakfast, courtesy of Leo Querubin of CrimsonLogic Philippines. One of the topics we've talked about is the Government Procurement Reform Act or more popularly referred to as Republic Act No. 9184.

Janette Toral wanted stakeholders in the information technology or IT sector to take a position on certain provisions of the law which inhibits wide participation or bids from a great cross-section of IT providers. She ask me if I can draft a position paper in behalf of the Cebu Software Development Industry Association or CebuSoft.

I naturally supported her position and did give my affirmative nod on the drafting of the position paper. Certain turn of events have forced us to come up with position paper since then. The Provincial Government of Cebu advertised an IT project worth PhP37 million and used the letter of RA 9184 as basis for their Bids and Awards Committee or BAC to start accepting bids from providers.

Michael Jurado, CebuSoft President, called me on a Saturday and ask me to start calling some of the CebuSoft members who might qualify to verify if they can actually participate. Of course Mike had already a distinct suspicion that nobody will qualify. He just wanted me to verify before he issues a position paper about the announced project and RA 9184 the next week.

Mike took exceptions to the provisions of the law because it seem to "disqualify" all providers in Cebu. Mike in exasperation emailed Senator Mar Roxas through Janette Toral a position paper. Rather than give you a brief glimpse of the position paper, I am reprinting the full text here.

Here's the full text of the CebuSoft President Mike Jurado's Position Paper on RA 9184:

Honorable Senator Mar Roxas,

IT SME’S AND GOVERNMENT

Nothing Personal just the crux of the Matter.

Selected Manila based IT companies/institutions have exclusive access to billions of e-government related projects and hardly any will trickle down to the already helpless local software development Industries.

Even in all local provincial/city LGU projects, not a single cent will go to the IT SME’s. Publicized "Invitation to bids" for such million peso projects should instead be entitled "Notice of Disqualification to Interested Local Bidders". Why publicize such an invitation when none of the readers will ever qualify? Answer-publication of such is simply to fulfill a requirement process. By virtue of the requirements publish, only selected big IT Companies based in Manila will qualify and non from Aparri to Jolo. What disqualifies the small IT SME’s ?

The Added new implementing guidelines provisions of the Law (R.A.#9184) on bidding that states that "Prospective bidders should have experience in undertaking a similar project within the last two years with an amount of at least 50% of the proposed project for bidding..." For a P30M project, one must have completed a P15M project the last two(2) years. How many from IT SME’s from Aparri to Jolo have done so? Answer: ZERO.

For projects of P5M and below, this provision is acceptably feasible for SME’s but for bigger amount projects, the SME’s are outright disqualified. Maybe disallowing projects as one big chunk over 5M be disallowed or broken up further if necessary to allow levelling.

And even if there is one who has had a P15M Project, his second hurdle is the word "similar", because the word "similar" when expounded and worded by the the BAC can come out different to what your perceived definition of "similar" is thus causing one to fail on this. The BAC, if they intend to, can play with words here to counter whatever "similar" project you present. Bare in mind that NGU’s/LGU’s are public organizations with "similar" structures as most private business enterprises with accounting and business processes to follow and they are unlikely to look at it this way, but look at similar LGU/NGU projects only favoring the selected big guys who just focus on such projects. "Similar" in technical parallelism should be the basis.

Lets dig deeper, Costwise, around 50% of the project components costs are "no brainer, just buy", "all imported" IT hardware/network appliance and software portions required of the project. The remaining 50% of the costs are the intangible technical IT tasks to be undertaken. Let’s break down further these intangible technical IT tasks at hand and spell those out further, and there is nothing in there that local software houses cannot do. Local software houses are truly capable of delivering the requirements. But NO, they have to be disqualified at the onset and make things smooth and easy for the annointed big ones. What else is new in this "realm of big government projects". IT projects will be the next wave of DPWH projects. Talk about helping SME’s and eliminating corruption.

The current developments can make one possibly conclude that some provisions or implementing guidelines were craftly created so as to conceal a discrete devious objective - create a cartel for cornering all big e-government projects to a few anointed companies. Companies capable of discretely giving bigger business or sales incentives.

Poor Provincial IT SME wannabe’s because no matter how qualified or experienced they are, the bad news for them is that none of the millions of Pesos from this juicy Marketing channel, a big brother supposedly, will ever trickle down into their pockets to help their business grow and hire more local IT Talents from the localities and proliferate IT to the grassroots. Here, Government money is not at all helping local industry but deprives them of it. The local talents can just savor the view of the millions of pesos as published and wishfully thinking if only they can qualify. "Sorry, it’s the law" BAC (Bids and Award Committee) will simply tell them. What a convenient excuse.

Another irony is that the leading government agencies spearheading such local projects do not really care about the predicament of their own stagnated local software development houses. In fact, they look at them as too small and risky
to deal with. Something like they just seem to underestimate their own kind and so they "seemingly" put their trust to the distant "more experience, high ticketed" big guys from Manila.

Local Software houses need more business channels to survive and taking away the billions of e-government market channel away from them in such a devious and subtle manner is the other side of government’s double-bladed talk -announcing to prioritize ICT and killing the industry silently at the same time, while at it, enriching "posing government businessmen" in the process too.

Suggestions: all IT related government projects must be temporarily stopped and its rational reviewed thoroughly again by all stakeholders for the following reasons:

1. ICT is the most technical of all endeavors and the BAC that awards project do not have the technical ICT expertise to properly rationalize the technical issues at hand. There is too much Vendor Specific preferencing and unnecessary horse-trading and with no consideration to helping local serious SME industry players at all, or society in effect.

2. Some implementing guidelines must be reviewed and revised to allow levelling of the playing fields. These Laws are designed to outright disqualify SME ICT companies with naturally lowered resources even though with equal intellectual capability to deliver the deliverables when given the chance.

3. If an inventory assessment of all e-government projects, both national and local, is conducted today, my technical sense tells me that majority have failed and so much peoples money have already been wasted. Please, let’s not treat government IT projects the likes of a fast-tracked DPWH road construction projects.

4. The common practice of timing the fund release of big projects at close to year end should be viewed with suspicion and require the institution of a more vigilant scrutiny/project details/bidding audit procedures from an independent body for projects like this.

If nothing is done, the milking of government coffers will continue unabated, the more our ingenuous intellectual IT talents from the grassroots are left to neglect resulting to a bigger diaspora of IT workers, at an increasing rate as Nurses today. The IT diaspora is now happening in our midst and maybe it is more convenient for National Government to just sit back and just watch the trend increase because of the projected increased dollar inflow. Talk about double jeopardy.

Government is therefore unwittingly killing the growth of the local software industry in the process, and in essence our intellectual capability to increasingly produce our own Filipino brand of software products and services, as well as the simple wish of living in one’s own country to earn a decent living.

India became a world power on IT because government purposely directed their funds to help their grass root industry players grow. In our country, the funds are being used up by the so called e-governance projects with "absolutely no consideration" to the "tax paying" grass root local industry players at all. Can we demand some change here?

I pray that honesty, integrity, concern, and love of country will not become history in this only country of ours.

Thank you for your kind attention.

Mike Jurado, November 15,2005
President, Cebu Software Development Industry Association, Inc (CEBUSOFT)

End of text from the CebuSoft Position Paper.

The Philippine Software Industry Association or PSIA in the national capital region have picked up the position paper and requested a full-text from Mike Jurado. They will also issue their own position on the law.

To date, I am still getting some of those providers including those outside the ICT sector to take positions on RA 9184. I will be writing a blog about RA 9184 and provide you a link to a copy of the law so you can make a comment yourself.

If you want to take a position please email me at:

virgilioparalisan@lycos.com

Please provide me a means to contact you more so if you represent an association with members already providing or delivering services to any local government or national agency.

Until my next blog!