Congress told to scrap ‘lowest bidder’ rule in gov’t procurement law

By John Victor D. Ordonez, Reporter

LAWMAKERS should buck the “lowest bidder policy” while considering changes to the country’s Procurement Act to ensure that the government does not get short-changed by contractors, economists said at the weekend.

Awarding contracts to the lowest bidder is not always wise and could bar the state from getting state-of-the-art equipment, they added.

“The lowest bidder policy must be reviewed because this is not proven to be effective in addressing our needs,”  Oikonomia Advisory & Research, Inc. President and Chief Economist John Paolo R. Rivera said in a Viber message.

“It oftentimes results in redoing tasks over and over again because of poor quality. The expected outcomes are not really delivered,” he added.

The Philippine Senate is set to continue debates on Senate Bill No. 2593 which seeks to amend the Government Procurement Act, when it resumes sessions on April 29.

The measure, one of President Ferdinand R. Marcos, Jr.’s priority bills, aims to streamline the procurement process to 27 days from 120 days.

It also proposes to establish a single electronic procurement portal and allow agencies to buy equipment from electronic marketplaces. 

The House of Representatives passed its version of the measure on third and final reading last year.

Mr. Rivera said streamlined procurement would deter agencies from settling for the lowest bidder and getting delivery of subpar goods.

“This bill would lead to greater transparency, efficiency and a level playing field that would also reduce costs for the government through efforts to boost digitization and automation,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

House Senior Deputy Speaker and Pampanga Rep. Aurelio D. Gonzales, Jr. has said the new procurement law would be passed in time for the President’s state of the nation address in July.

In February, the Department of Budget and Management (DBM) proposed allowing government agencies to directly buy goods from suppliers with an acceptable track record.

The method can only be pursued if a previous contract was awarded through competitive bidding and if the supplier agrees to the terms of the procurement contract, Dennis S. Santiago, executive director of the DBM Procurement Service (PS-DBM), said in a letter to the Senate finance committee in February.

“We have really introduced a lot of measures that would open up and give more flexibility in government contracting… especially with the use of fit-for-purpose procurement or proportionality,” he told senators.

Last month, business groups asked Congress to revisit the domestic-supplier preference rules in the proposed New Government Procurement Act, saying the practice could weaken competition due to a smaller pool of potential suppliers.

The bill requires the government to prioritize Philippine products and services in procurement. 

“An overly rigid focus on domestic preference in government procurement sets the country two steps back,” according to a March 22 statement signed by the Foundation for Economic Freedom, the Japanese, American, Korean and European chambers of commerce, and the Makati Business Club.

“Competitive bidding on both accounts of cost and quality would help the government acquire supplies that are state-of-the art and are within the budgetary allocation,” Mr. Rivera said.