Milking Them Dry

December 26, 2007

 

“World Bank defers RP loan, probes graft”, headlines the Philippine Daily Inquirer issue dated November 20, 2007. “WB shelves $232-M loan to RP over corruption”, says the Philippine Star on the same day. Allegations of bid riggings and bids in excess of government estimates of road projects being undertaken by the DPWH apparently triggered the Bank’s action. If my memory serves me right, Vox Bikol, a little less than a decade ago and when Joe Obias was still editor of this Bicol weekly, the phrase “in every public works project is a crime” was bannered at the bottom of the front page of every issue. While I am not privy to the details as to why all of these came to be, l know that all of us have our own  inklings of what has been going on over the years. I was therefore surprised when the Presidential Anti-Graft Commission (PAGC) recently ranked DPWH as second best in fighting corruption among national government agencies. Maybe the “bosses” in DPWH Central Office in Manila have the best of intentions and are trying their best. But from the looks of it, I do not think much has changed in its field offices.

Let me just share my experience in the recent past. Last October 20, 2007, the Naga City Government Project Monitoring Committee (NCPMC) submitted its inspection and evaluation report on projects implemented by the DPWH  Engineering District 2 in the city. Spanning over six months, these projects were funded by regular allocations from DPWH and the pork barrel of Congressman Luis Villafuerte. Among the NCPMC’s findings were: 1) almost all of the projects were overpriced, ranging from 74% to 837%, when compared to similar projects implemented by the city government, 2) some of the projects reported to have been undertaken could not be located and 3) some projects were undertaken on privately owned properties. The average variance in unit cost for a comparable project undertaken by the city government was 261%. And worse, works on some of the projects were poorly done. While, historically, project costs of DPWH projects were higher than that of the city government of Naga, this time the differences in cost estimates were simply outrageous and scandalous. To think that some of these projects were implemented side by side or were contiguous with projects undertaken by the city almost during the same time period.

Off hand, the estimates were simply bloated. Despite several requests, the District Engineer refused to provide the NCPMC with a copy of the Programs of Work. Instead of taking to task the contractor who was billing the agency for a project that was completed a long time ago, it appeared that DPWH just allowed the contractor to do additional works to cover up the misdeed. No explanations were provided why the unit cost differences between work done by DPWH and the City Government of Naga were beyond the normal. Like the many other complaints on projects undertaken by DPWH, the Engineering District 2 simply stonewalled hoping that the complaints would just blow away — of course with a little help from the other entities involved in the inspection and audit of these projects. As of this writing, more than two months after the Regional Director of DPWH Region 5 has been notified, no action has been taken yet. Incidentally, the COA Regional Office and the NEDA RPMC were also notified.

It is no surprise then that old hands in the government construction business now say that the “Marcos years” were better. Then, the SOP (Standard Operating Procedure) was 10% — all in. They say that the standard now is at least a 30% SOP or more, depending on the kind of project being undertaken. (The SOP runs up to 50% for desilting and road regravelling projects. Some contractors alleged that around P1 Billion worth of desilting projects were undertaken in the Bicol Region prior to the May 2007 elections.) No wonder the estimates are bloated. No wonder it seems that no one sees nor hear any evil. It is now embedded in the system. “Everybody seems to be happy” except Juan de la Cruz.  Government infrastructure projects, in many instances, are being milked dry to the detriment of the public. No wonder why the pork barrel has always been controversial. 

There are quite a number of things that we can do. First, we can return to the old composition of the Bids & Awards Committee where an NGO representative seats as a regular member (and not as a mere observer under the current rules). Second, we can require that, instead of merely posting notices of bidding on the web, hard copies should also be posted in the church parish office and in other offices of institutions that are independent of government, where the project is to be implemented. Sanctions should be imposed on late postings and attempts to hide the notices from the public. Third, a range of unit costs should be prescribed by competent authorities working with the private sector for different types of projects taking into account the difficulty of implementing them. In addition, unit costs estimates of different government agencies should be regularly compared to encourage standardization. For instance, cost estimates of LGUs can be regularly compared to that of DPWH. (This can be readily done by the COA field offices in the different jurisdictions.) Collusion of bidders happen when there is a lot of excess fat on the cost estimate. Collusion of bidders will not be disadvantageous to the government if estimates only cover the real cost of the project and the profit that is due the contractor. Fourth, projects should be properly supervised by the concerned government agency to ensure that they are implemented according to the program of work. NGO and beneficiary/end-user monitoring should be encouraged. The experience in the province of Abra on project monitoring can serve as a good model. The third and fourth recommendations are most critical. An honest cost estimate coupled with proper prosecution will only allow the contractors to generate profits that rightfully are due them.  By and large, we have kept the cost down in Naga City because we have benchmarked cost estimates with that of the private sector. By and large, project prosecution conformed to the program of work because beneficiary/end-users are encouraged to monitor and are freely provided with all the information related to the project being undertaken. While deviances did occur on from time to time, they have always been kept in check because of a transparent system of managing project procurement and implementation.

Many contend that there is nothing much we can do. Over the years, it has grown to be systemic. Many attempts to clean it up have failed. There are essentially two ways of addressing the problem. First, which is almost next to impossible, is for the elected officials to keep their hands off public works projects. An unaccountable Congressman holds sway over projects within his jurisidiction. An elected local official similarly influences procurement in his turf. Public works has been a traditional source for election spending. Will they be willing to kill the goose that lays the golden egg? Second, is to make the procurement process truly transparent. At the moment, the Bids & Awards Committees and the others who have anything to do with project procurement and implementation, in many agencies and LGUs, have found a creative way of circumventing transparency rules. This is probably so because third party engagement is almost non-existent. The opportunity to reform public works procurement lies in getting more NGO/private sector/beneficiary participation. Procurement rules must therefore allow meaningful involvement of the non-government sector in the process of notification, pre-qualification, bidding and implementation. Reputable groups such as the local Chambers of Commerce and church based-organizations can be initially tapped to represent the private sector in the procurement process. Transparency rules are best implemented when groups with no personal interest in the proceedings are empowered to take part. By the way, the old procurement law allowed their participation. It can always be argued that the bidding processes now will be more contentious. It can be argued that, in time, these NGOs can be co-opted as well. But given the amount of public funds going down the drain, it might be worth the try. Any improvement in the public works procurement process is surely worth the trouble. In fact, we should be not only be concerned with the funds that are being wasted. The credibility of the government’s clean up effort begins here. By a single stroke, it will signal a change in all the 220 or so districts in the country.