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Latest Innovations on Government Procurement October 21, 2016 Latest Innovations on Government Procurement October 21, 2016

Over-achievers Over-achievers

Rule - followers Rule - followers

Creative Creative

Focused on Sex Focused on Sex

Overview • (Innovation in the Rules) • “Innovation” in our thinking • Innovation in Overview • (Innovation in the Rules) • “Innovation” in our thinking • Innovation in Services and Goods

BRIEFER ON PUBLIC PROCUREMENT BRIEFER ON PUBLIC PROCUREMENT

What is Public Procurement? A public contracting authority’s obtaining goods, public works (construction), and What is Public Procurement? A public contracting authority’s obtaining goods, public works (construction), and services for all levels of government (central, regional, and local) from a source outside the contracting authority.

Why Public Procurement Matters? • Public Procurement can play a key role in development Why Public Procurement Matters? • Public Procurement can play a key role in development – Can facilitate use of private sector for public ends – Can support goals for development of particular industries, groups, and regions • Public Procurement presents a major risk of corruption in virtually every country

Why Public Procurement Matters More Now • Growing, public sector relies more on purchases, Why Public Procurement Matters More Now • Growing, public sector relies more on purchases, especially of services, from private sector • Growing recognition of a link between procurement and corruption and between procurement and development

Public Procurement Objectives One of our prime objectives is to be a good steward Public Procurement Objectives One of our prime objectives is to be a good steward of public funds. That includes being professionally responsible for every purchase.

The Perennial Debate about How to Conduct Public Procurement THREE approaches to public procurement The Perennial Debate about How to Conduct Public Procurement THREE approaches to public procurement are often heard: The first approach, voiced by “Flexible Phil”: “Government should buy the same way that businesses buy!” This approach pushes for fewer rules, more flexibility, more use of negotiation, a focus on “value for money”, and faster purchasing

The second approach, voiced by “Cautious Cathy”: “Government Procurement is the spending of public The second approach, voiced by “Cautious Cathy”: “Government Procurement is the spending of public funds. We need to worry about corruption as well as waste and abuse. ” This approach pushes for more rules, less discretion, no negotiation, more transparency, a focus on low price, and more oversight.

The third approach, voiced by “Help-Our-Own Harry”: “Government Procurement is the spending of public The third approach, voiced by “Help-Our-Own Harry”: “Government Procurement is the spending of public funds. Those funds should be used to further our national policy goals. ” This approach pushes for domestic preferences, especially for domestic SMEs

So Who is Right? These three approaches are often in conflict Yet aren’t all So Who is Right? These three approaches are often in conflict Yet aren’t all three legitimate? Can a public procurement system disregard any of the three?

INNOVATION IN THE RULES INNOVATION IN THE RULES

Wait for Ex Dir Dennis Santiago Wait for Ex Dir Dennis Santiago

“INNOVATION” IN THINKING “INNOVATION” IN THINKING

Traditional approach to procurement Traditional approach to procurement

Strategic approach to procurement Strategic view of procurement function Strategic approach to procurement Strategic view of procurement function

An important issue that is often underestimated: Planning strategically each procurement An important issue that is often underestimated: Planning strategically each procurement

Planning is 70% PROCUREMENT PLANNING “Process of identifying which project needs can be best Planning is 70% PROCUREMENT PLANNING “Process of identifying which project needs can be best met by procuring products and services outside the project organization and should be accomplished during the project planning effort”

Section 7. 1 of IRR • • Within approved budget of procuring entity Judiciously Section 7. 1 of IRR • • Within approved budget of procuring entity Judiciously done Consistent with government fiscal measures Considered crucial to the efficient discharge of governmental functions – Required for the day-to-day operations – In pursuit of the principal mandate of the procuring entity

Section 7. 2 of IRR • No procurement unless in accordance with the Annual Section 7. 2 of IRR • No procurement unless in accordance with the Annual Procurement Plan (APP) • Approval of Head of Procuring Entity (HOPE) or designated second-ranking official

Procurement Planning • It is the government’s fiduciary responsibility: – Protect the taxpayer’s interest Procurement Planning • It is the government’s fiduciary responsibility: – Protect the taxpayer’s interest – Safeguard the resources allotted to each department

Procurement Planning • Procurement Planning ensures that the overall goal of a particular project Procurement Planning • Procurement Planning ensures that the overall goal of a particular project will be effectively and efficiently achieved. • Precludes occasions for unnecessary government purchases and circumventions of the prescribed procurement procedures

Strategic “High level” Approach What is the Mission and Vision What is the major Strategic “High level” Approach What is the Mission and Vision What is the major objective What has to be achieved What is necessary to overcome the challenge Can it be done another way How does it fit with agency’s outcome Who will be impacted & what are their expectations What are the time constraints What does success look like

1. Core functions of the End-user unit in the organization 2. What is the 1. Core functions of the End-user unit in the organization 2. What is the issue to be solved 3. What is needed to solve the issue 4. Identified purpose/goals/MFOs 5. How does it fit into PE’s Strategic Plans 6. Current supply inventory 7. Other maintenance and operating needs

Identifying the correct need leads to better specification Identifying the correct need leads to better specification

Need = Specification The purpose of bid specifications is not solely to obtain the Need = Specification The purpose of bid specifications is not solely to obtain the least expensive items, but to purchase the desired quality at the most competitive price. Specifications should define the need; not necessarily the want.

Types of Specifications Technical – States the technical and physical characteristics or the procurement Types of Specifications Technical – States the technical and physical characteristics or the procurement for goods or services Performance – States required performance parameters and tolerances Functional – States the process, action, or activity by which the goods accomplish its intended functions

Which Specifications is Better The Contractor will construct a fuel tank using anti-corrosive stainless Which Specifications is Better The Contractor will construct a fuel tank using anti-corrosive stainless steel with the following metallurgical ratio; Carbon. 08% Manganese 2% - Phosphorus. 045% - Sulfur. 03% - Silicon. 75% - Chronium 20% - Nickel 12% - Nitrogen. 10% - Iron 74. 5% OR The fuel tank will be constructed using 304 Stainless Steel.

Actors in Public Procurement Planning End-User Budget Office Bids and Awards Committee (BAC) and Actors in Public Procurement Planning End-User Budget Office Bids and Awards Committee (BAC) and Secretariat Technical Working Group Approving Authority / HOPE

Who are your stakeholders? Involved Impacted Interested Who are your stakeholders? Involved Impacted Interested

Weak Stakeholder’s group power Strong Stakeholder influence and interest 2 Keep satisfied 1 Keep Weak Stakeholder’s group power Strong Stakeholder influence and interest 2 Keep satisfied 1 Keep Close 4 Minimal effort 3 Keep informed Low High Stakeholder group’s interest & aspirations

Other Stakeholders Citizen/Public Taxpayers Recipient of government services Government Officials End-user of goods & Other Stakeholders Citizen/Public Taxpayers Recipient of government services Government Officials End-user of goods & services Legislature (appropriators) Government ministers/bureaucracy Accountability organizations (courts/auditors) Civil Society Press/Media Interest Group (for example, small businesses) Private Sector (Companies/Contractors) Small and Large, domestic and Foreign Firms/Companies dependent on sales to Government (as opposed to purely commercial firms

Key Challenges: • Anti-change forces: – Inertia – but what you have/know – “Expert” Key Challenges: • Anti-change forces: – Inertia – but what you have/know – “Expert” preferences – they know what they want – Corruption – buy from friends, donors, or relatives – Tension between contracting office and others

Effects of poor planning • • • Failure Shortage of time Lack of coordination Effects of poor planning • • • Failure Shortage of time Lack of coordination Inadequate market research Specifications that are too demanding or not specific enough • Wrong ABC • Wrong item or service

Information is everywhere Industry Capability Network Market analyst Internet research Gather information form own Information is everywhere Industry Capability Network Market analyst Internet research Gather information form own organization Professional Bodies Own knowledge, previous experience Knowledge Industry bodies Other buyers from their experience suppliers Request for information

. INNOVATION IN SERVICES & GOODS . INNOVATION IN SERVICES & GOODS

Sustainable “Green” Public Procurement A purchase or process is “GREEN” if it: • Reduce Sustainable “Green” Public Procurement A purchase or process is “GREEN” if it: • Reduce waste or pressure on resources • Reduce energy and fuel use • Reduce harmful chemicals • Utilize products with recycle content

Sustainability • Meeting the needs of current generations without compromising the ability of future Sustainability • Meeting the needs of current generations without compromising the ability of future generations to meet their own needs. Reduce – Reuse - Recycle

Philippine Green Procurement: Executive Order 301 Establishing a Green Procurement programs for all department, Philippine Green Procurement: Executive Order 301 Establishing a Green Procurement programs for all department, bureaus, offices an agencies of the executive branch of government.

Paradigm Shift Going Green is not Specifications always more doesn’t have to be complex Paradigm Shift Going Green is not Specifications always more doesn’t have to be complex expensive Green Specification does not take longer time

“Imagine if trees gave off Wifi signals, we would be planting so many trees “Imagine if trees gave off Wifi signals, we would be planting so many trees and we’d probably save the planet too. Too bad they only produce the oxygen we breathe. ”

Possible New Common Use Supplies Items Status/Remarks 1. Airline tickets The training on the Possible New Common Use Supplies Items Status/Remarks 1. Airline tickets The training on the use of Philippine Airlines (PAL) Portal is ongoing and PS is currently negotiating with Cebu Pacific Air 2. Uninterruptible Power Supply the total CY 2015 requirement amounted to Php 252, 774, 957. 40 3. Drinking Water Conducted Market and feasibility study. PS-Phil. GEPS revised the proposal and change the size from 5 gallon to 500 ml bottled water. 4. Cloud as a Service ongoing negotiation with Amazon Web Services, Microsoft Azure, Globe and PLDT 5. Motor Vehicles Crafted Standard Specifications for SUV (Low-End, Mid Level and High end). 6. Road Signs the total CY 2015 requirement amounted to Php 615, 034, 717. 15 7. Solar Power Facility With ongoing negotiation with DOE and PNOC-RC to mainstream the use of Solar Power Facility following the model used by PS-Phil. GEPS. 8. Software (Antivirus, ) the total CY 2015 requirement amounted to Php 107, 438, 924. 70 for antivirus software only. 9. Cotton the total CY 2015 requirement amounted to Php 627, 706, 895. 71 10. Elastic Bandage the total CY 2015 requirement amounted to Php 325, 937, 220. 40 11. Bandwidth Invited Globe and PLDT for negotiations 51

1 Online Reservation/Ticketing Process Go PS-Phil. GEPS Travel Portal site 4 Sends confirmation of 1 Online Reservation/Ticketing Process Go PS-Phil. GEPS Travel Portal site 4 Sends confirmation of flight reservation thru email Agency Supply Officer 1. 9% discount for economy class reservation 2. 10% discount for business class reservation 3. waiver of ticketing/processing fee of P 250 4. free one rebooking (manually done) 5. access to VIP lounge by Heads of the Agencies (Sec, Usec, GOCC/SUC Presidents) - Still for Approval 6. Additional 10 kls. Baggage for VIPs - Still for Approval 7. Corporate credit line 2 Search and confirms flight and enter all the Flight details; contact info. Note: Registration is required prior to using the travel portal of PAL Process Flight details passenger info and payment (using corporate credit line) 3

Benefits 1. Easy access and fast reservation/purchase of ticket thru PS-Phil. GEPS Portal. 2. Benefits 1. Easy access and fast reservation/purchase of ticket thru PS-Phil. GEPS Portal. 2. Discount for Economy and Business Class from 8 -10% 3. Waived processing (Php 250) 4. Free 1 st Rebooking (manually done) 5. Access to VIP lounge by Heads of the Agencies (Sec, Usec, GOCC/SUC Presidents) 6. Additional 10 kls. baggage for VIPs 7. Corporate Credit Line

Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount for business class reservation 3. waiver of ticketing/processing fee of P 250 4. free one rebooking (manually done) 5. access to VIP lounge by Heads of the Agencies (Sec, Usec, GOCC/SUC Presidents) - Still for Approval 6. Additional 10 kls. Baggage for VIPs - Still for Approval 7. Corporate credit line

Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount for business class reservation 3. waiver of ticketing/processing fee of P 250 4. free one rebooking (manually done) 5. access to VIP lounge by Heads of the Agencies (Sec, Usec, GOCC/SUC Presidents) - Still for Approval 6. Additional 10 kls. Baggage for VIPs - Still for Approval 7. Corporate credit line

Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount Travel Portal Screen Shots 1. 9% discount for economy class reservation 2. 10% discount for business class reservation 3. waiver of ticketing/processing fee of P 250 4. free one rebooking (manually done) 5. access to VIP lounge by Heads of the Agencies (Sec, Usec, GOCC/SUC Presidents) - Still for Approval 6. Additional 10 kls. Baggage for VIPs - Still for Approval 7. Corporate credit line

ICT EQUIPMENT ICT EQUIPMENT

LAPTOP COMPUTER Model: ASUS Notebooks X 550 ZE SRP: Php 42, 827. 00 PS LAPTOP COMPUTER Model: ASUS Notebooks X 550 ZE SRP: Php 42, 827. 00 PS Price: Php 35, 180. 08 Savings: Per Unit: Php 7, 646. 92 Total: Php 114, 703, 800. 00

SYSTEMS INTEGRATION SYSTEMS INTEGRATION

Few lead Few lead

Many follow Many follow

Few Create Few Create

Many are Preoccupied Many are Preoccupied

“Never compete on prices, instead compete on services and innovation. ” “Never compete on prices, instead compete on services and innovation. ”

Maraming Salamat Po! Atty. Jose Tomas Syquia Maraming Salamat Po! Atty. Jose Tomas Syquia