Press Release
October 15, 2007



Senator Mar Roxas today picked the minds of the country's procurement experts in seeking reforms that would prevent another debacle similar to the government's contract with ZTE Corp. of China for a National Broadband Network (NBN).

The consultations today brought to light several options and measures to take in order to strengthen the policies and processes of government involving procurement and the evaluation of big-ticket projects.

"We've seen that in contemporary history, we get into trouble when we go outside of that principle of price challenge and competitive bidding. Therefore, our solution is to find a way such that there is some sort of review if we go out of that process," he said.

"In instances such as NBN-ZTE, which is outside the normal procurement process, how do we subject that to some sort of scrutiny other than what is there right now? Because what is there right now has been so clearly seen as inadequate, if not incompetent," he added.

Roxas also pointed out the need to clarify how projectswhether funded by government money or by foreign aidare prioritized according to national interest and not be "lender-driven," as in the case of NBN-ZTE. He also underscored the crucial role of the National Economic and Development Authority (NEDA), particularly the Investment Coordinating Committee, in the prioritization of projects.

Unfortunately, "I'm very disturbed that there seems to be an abandonment of this check and balance role. The custodian of the longer-term prioritization process always has historically been NEDA-ICC," he said.

Those in attendance yesterday were former Socioeconomic Planning Sec. Felipe Medalla, former Budget Secretaries Benjamin Diokno and Emilia Boncodin and Prof. Raul Fabella of Procurement Watch. Those who attended from the government are NEDA Deputy Director General Rolando Tungpalan and Government Procurement Policy Board Executive Director Ruby Alvarez.

Diokno however warned against amending the Government Procurement Reform Act (RA 9184)touted as one of the best in the worldwith the present political dynamic, as this might weaken rather than strengthen the law.

"The new procurement law is comprehensive and the rules are transparent, the opportunities for corruption have been significantly curtailed Some corrupt vested interests are waiting eagerly for any opportunity to water down the present procurement law," he said.


Medalla suggested that the Official Development Assistance Law (Republic Act 8182, as amended by RA 8555) be reformed in order to require projects that do not go through bidding to go through the scrutiny and approval of Congress. "Anything that does not have competition should be naturally suspect," he said.

Medalla added that new realities also have to be taken into accountin particular, high foreign reservesin how the law should define what is ODA.

Boncodin said the issue boils down to a basic decision of government on determining which projects to prioritize and how to fund these. She added that the situation at present has changed, particularly, that gross income reserves have peaked to a high of $30 billion from $12 billion when she was Budget Secretary and when the country was in a fiscal crisis.

"It was easy to conceive at that time that we need to encourage foreign funding of projects. Now, are we still encouraging foreign funding?" she said.

"The basic decision here is, do you want to enter into that project knowing that you've waived your domestic laws? So how is the best way to finance? The moment you have entered into an agreement with a government with their own procurement rules, you have bound yourself under the rules of that government" she added.

Fabella raised a problematic new policy of the executive branch, that is to transfer the power to approve projects from the NEDA ICC to the line agencies. He said NEDA-ICC is in the best position to compare projects proposed by the line agencies, and is in the best position to avoid problems similar to ZTE.

Medalla stressed that the NEDA ought to be the country's last line of defenseeven against the Presidentand ensure that projections of high return by the line agencies for their pet projects are scrutinized.

"Who will have a sharp pencil to say, 'I don't agree with your analysis?' But if the President likes the project very much, the pencils become less sharp and the calculators become less accurate it's unimaginable that something like this [ZTE-NBN] can proceed without the active support of the President," Medalla said.

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