Read Part 1, Part 2, Part 3
(Fourth of six parts)
FORMER chairman of the Commission on Information and Communications Technology (CICT) Virgilio Peña had agreed that the lack of government capability in evaluating technology projects leads to problems in government procurement, especially those dealing with sophisticated projects in information and communications technology.
The Bureau of Internal Revenue (BIR), for one, has come out with its own procurement manual for information and communications technology procurement that aims to promote more transparency, provide a system of accountability, and allow public monitoring.
In a paper presented during the ICT for Development (ICT4D) forum of the Department of Science and Technology (DoST) and the CIO Forum Inc. -- an organization of government chief information officers, on July 26, 2007, Lilia Guillermo, BIR Deputy Commissioner, pointed out a common problem affecting ICT procurement in government.
She said: ?The ?most advantageous price to government? does not readily translate to lowest bidder in an IT (information technology) project. The approved budget for the contract (ABC) must take into consideration total cost of operations (TCO) rather than purely acquisition cost.?
There are ?other costs associated with IT projects that are incurred both during and after the project implementation period,? Guillermo said. It could be related to the installation of a new system, technical support, maintenance, and software upgrades, which is another contentious and hotly debated topic in government.
The acquisition cost plus the ?other costs? should be included in the total cost of operations. This ensures that ICT projects become ?sustainable throughout their intended life cycle,? she continued.
For ICT projects, bid evaluation should be based on the total cost and not just on the initial investment cost, she said.
According to the Government Procurement Reform Act (GPRA) or Republic Act 9184, government projects classified as ?goods and infrastructure? are awarded to bidders with the ?lowest calculated bid? following an evaluation. In other words, bids with the lowest price would win the contract.
Consulting services, however, follow the ?highest rated bid? rule, where contracts are eventually awarded to a supplier with the highest rating based on financial and other requirements.
ICT and government procurement
These two provisions in the current government procurement law are among the targets of criticisms by government and private sector.
One of the more basic issues identified is the classification of ICT based on broad definitions provided in the law.
In a paper, titled ?Issues on ICT Procurement in Government,? Ma. Esperanza Espino, chief information officer at the Bases Conversion Development Authority (BCDA), said, ?A significant part of the issues arising in IT procurement can be attributed to differences in opinion in terms of the nature of the items and services being procured. The predominance of proprietary products, after sales support and maintenance and licensing all combine to present a unique set of issues in the treatment of IT procurement.?
Espino also presented her paper during a roundtable discussion on government procurement by the ICT4D and the DoST.
Under the current government procurement law, the mode of procurement will depend on the nature of the items or services being procured.
Items or services falling classified as ?goods and infrastructure? follow the ?lowest-calculated? bid rule, which focuses on the lowest-priced bid, as stated by section 32 of the Republic Act 9184.
Consulting services or services, on other hand, follow the ?highest-rated bid? rule, which is determined after a financial and non-financial evaluation of bids, according to section 33 of Republic Act 9184.
?To start with a list of goods and activities considered as falling under IT procurement should be formulated and classified properly. This would make it easier to determine the appropriate treatment and mode of procurement for each item,? Espino suggested.
In short, procurement law should be able to distinguish the difference between buying a printer, computer keyboard, and other off-the-shelf IT supplies from purchasing or licensing software, said Espino.
Current government procurement rules require bidding the Internet connection every year.
She suggested that Internet service ?should be treated as a utility,? similar to telephone services and that it should be covered by a multi-year contracting to allow lower pricing.
Total cost of ownership
Another pertinent issue is the total cost of ownership (TCO) in ICT procurement.
In more complex ICT projects, cost will increase during and after the implementation period, Espino said.
She added: ?IT investment does not stop with the initial purchase cost. There are other costs associated with IT projects that are incurred both during and after the project implementation period, i.e., installation, technical support, maintenance, software upgrades, etc. These costs have to be included in the [terms of reference] for the project to be sustainable throughout its intended life cycle.?
She admitted that the principle of ?most advantageous price to government? does not translate to lowest bidder in a government ICT project.
Current guidelines in government procurement do not provide for a clear classification of ICT procurement.
Espino said that the current procurement law falls short of classifying more complex ICT projects, which usually involves a mix mode of procurement of goods, infrastructure and services.
In light of these issues, the government CIO suggested that government procurement policies in ICT should consider a template produced by the World Bank.
The World Bank template classified ICT procurement as ?simple or complex is based on an assessment using a set of parameters pertaining to who bears the risk, the amount and complexity of services included in the procurement.?
GPPB-TSO?s Executive Director Alvarez had acknowledged that the Government Procurement Reform Act was not designed to capture every unique procurement activities like those in ICT. But changing or amending the law is not the only solution to anomalies or irregularities in government procurement.
(To be continued)
