DBM's Procurement IRR Meeting Shall Be an Exercise in Albinism Genetics

Last December 28, 2005, Janette Toral of DigitalFilipino sent an email to Michael Jurado, CebuSoft President, the response of the Department of Budget Management or DBM to the CebuSoft position paper sent to the office of Senator Mar Roxas regarding Republic Act No. 9184 otherwise known as the "Government Procurement Reform Act". Incidentally, Janette keeps her ear on the ground about government ICT initiatives through her involvement with the Office of Senator Mar Roxas and other government agencies.

The response of DBM as quoted by Janette is as follows:

"On the concern of the Cebu Software Association on the RA 9184 IRR-A provisions Section 23.11.1 i.e., Eligibility criteria for the procurement of goods requiring "prospective bidders to have experience in undertaking a similar project within the last two years with an amount of at least 50% of the proposed project for the bidding", this issue is pending discussion at the Government Procurement Policy Board (GPPB). We have been informed that this issue on the single largest contract will be included in the agenda for the next GPPB meeting. It appears that the Inter-Agency Technical Working Group (TWG) is considering three (3) options to amend the Implementing Rules and Regulations provisions on the single largest contract in lieu of the existing requirement: a) the prospective bidder should have completed at least three similar contracts and the aggregate contract amounts should be equivalent to at least fifty percent (50%) of the approved budget for the contract of the project to be bid; b) the largest of these similar contracts must be equivalent to at least twenty-five percent (25%) of the project to be bid; and c) the business/company of the prospective bidder willing to participate in the bidding has been in existence and must have a track record of supplying the item or similar item subject of the public bidding at least three (3) consecutive years prior to the advertisement and/or posting of the Invitation to Apply for Eligibility and to Bid (IAEB)."

Earlier, I published a blog, "CebuSoft Takes a Position on Government Procurement Reform Act ", on the position that Michael Jurado of CebuSoft took on RA 9184.

Personally, being in the frontlines of managing government accounts in ICT projects in the past, the issue is really not much the size of the project, the equity of prospective bidders or the value of the bidded project, the issue really is in the manageability of the bidding and project. These are the two areas in the procurement and acquisition in government where there is little precedence in excellence or successful completion. The only consistent track record of government in multi-billion projects anywhere is that huge sums of money will change hand and a new elephant is always born and it is always an Albino!

If this Inter-Agency Technical Working Group (TWG) is truly intent of finishing projects that actually works, they should break up the project into manageable components:

• Bidding Management
• Project Management
• Hardware Configuration and Installation
• Network Configuration and Setup
• Hardware Maintenance
• Software Design, Development and Deployment
• Software Installation and Deployment
• Software Maintenance
• System Integration
• System/Project Documentation
• Network Security
• Data Management and Security
• Migration Services
• Post-Handover Assessment

The reason for breaking the projects up is to take advantage of highly specialized expertise and the best of breed systems, and at the same time provide local players the opportunity to bid for products and services where they excel regardless of their size.

The logic of having different service providers for Bidding Management, Project Management and Post-Handover Assessment is that three distinct expertise and service providers will ensure the project is actually completed according to specification and a system of check-and-balance is built into the management and post-project assessment of the whole project. But the most compelling reason is that nobody in government has both the expertise, integrity and credibility to deliver any of the three almost with absolute certainty. You can bet the whole Philippines' future on that.

Another mechanism to guarantee completion of projects is for large participating bidders with no local presence to have a local partner and select and appoint from among local service providers. The Original Equipment Manufacturer or OEM shall train these local partner to support all the service requirement of the client agency during the project implementation and after the handover. The agency must include a provision or clause in the service contract that such a service provider shall guarantee support even after warranty provisions have expired with a pre-agreed schedule of fees applied for specific services.

The clause must also include that in the event the bidder fails to complete or defaults in the delivery of the project and its post-handover support, it shall allow the local partner to use proprietary mechanisms of support and license this local partner to deliver OEM services and products to the agency which shall be to the account of the winning bidder. In the 1980s to the 1990s, we use to refer to this type of support as a Third Party Support Agreement. It was specifically designed to break the monopoly of OEMs with proprietary technology and to avoid the scenario of government being hostage by a single service provider. It also rationalizes the schedule of fees for after-sales support and maintenance.

I would like to believe that we should give the GPPB the benefit of the doubt but I would be very dishonest. Historically, very few benefit from these types of biddings and I have doubts if ICT biddings will be any different. Like always it will end up with only few large players, it will not be completed according to specification (assuming it ever gets finished and delivered), and almost certainly will not benefit the public nor the agency it is supposed to serve.

ICT projects will be a new wave of GPRA-inspired genetic experiments in creating Albinos from another specie of elephants.