Procurement reform to restore public trust

When government awards billions of pesos in procurement contracts, what happens next may result in taxpayers' money spent honestly and efficiently, or wasted in rigged bids, padded costs, and sham projects that drain public coffers.

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Government spending through procurement lies at the heart of governance. The procurement process determines who builds the nation's roads and bridges, supplies hospitals and schools, equips offices, delivers public services, etc.

The World Bank has identified corruption in public procurement as one of the highest impact areas of mis-governance. Globally, governments spend an average of 13 percent to 20 percent of GDP on public procurement. Of that, estimates suggest that between 10 percent to 25 percent of the value of contracts can be lost to corruption — through bribes, overpricing, kickbacks, or use of conduits.

But in the Philippines, the cost of corruption may be higher than the global average, with persistent reports in the past indicating that no less than 40 percent of the contract amount can be pocketed. If P100 billion is spent, for instance, a staggering P40 billion is simply drained off, enriching the corrupt and their cohorts, while leaving taxpayers shortchanged.

The need for reforms overhauling the government procurement system, therefore, is imperative. When procurement is efficient and honest, public funds are spent wisely and maximized. If it is corrupt and opaque, the staggering losses continue to mount and accountability collapses.

“Procurement is the second biggest item and a very important part of the budget, it has to be efficient and economical,”