Budget Secretary Benjamin E. Diokno today vehemently objected to the accusations of Rep. Rolando Andaya Jr published in the news that “contractors have already paid ‘commissions’ or ‘cash advances’ for P75 billion-worth of infrastructure projects included in the 2019 budget of the Department of Public Works and Highways (DPWH).”

Not Part of DBM Process

Diokno emphasized that the Department of Budget and Management (DBM) is only in charge of crafting and overseeing the budget process. “The DBM is not concerned with program and project implementation by agencies. It is not concerned with contractors. Nor is the DBM involved in the bidding process and awarding of contracts,” Diokno said.

Diokno added that the conduct of early procurement activities before the start of the Budget year was introduced to ensure the efficient and timely implementation of projects and the DBM has even sought to institutionalize early procurement as a best practice to meet global standards in government efficiency, as is the practice in many developed countries.

Early Procurement Started Under Andaya

Diokno also explained that the conduct of early procurement activities, short of award, is not new. It has been allowed since 2009, under the Arroyo administration with Andaya as Budget Secretary.

Diokno also emphasized, however, that in early procurement, the contract is not perfected until the General Appropriations Act (GAA) is passed.

The conduct of early procurement is guided by circulars to ensure agency compliance with the existing Procurement Law, its Implementing Rules and Regulations, and other pertinent rules and regulations.

“Early procurement was conceived to ensure the timely implementation of government projects, since agencies cite difficulties in procurement planning as cause for the delay in implementation,” Government Procurement Policy Board-Technical Service Office (GPPB-TSO) Executive Director Atty. Rowena Candice M. Ruiz added.

Under Circular 01-2009 issued by the GPPB in 2009 when Andaya was Budget Secretary, agencies can proceed with the procurement activities prior to the issuance of the Notice of Award using as basis the National Expenditure Program (NEP).

This early procurement policy was also restated in DBM Circular Letter 2010-9 which allows agencies to proceed with their procurement activities, short of award, upon the President’s approval of the NEP.

          Succeeding circulars on the matter were likewise issued to consider changes in budget policies such as the shift to the Annual Cash-Based Budgeting in 2019 and the new requirements of the 2018 Performance-Based Bonus as reflected in Circular Letter 2018-8 and Circular Letter 2018-12, respectively.  

Commissions are Illegal

Diokno also emphasized that early procurement does not, and should not, in any way include or involve any form of advance payments or commissions.

“I do not know what the practice was when Andaya was Budget Secretary but under our watch, advance payments of commissions are considered illegal. Such practices are not, and will not be condoned by the Duterte administration. If Andaya knows of such practices, and he clearly does, as he has been defending contractors, then he should name these personalities as they should be investigated. That is graft,” Diokno explained.

Diokno also noted that reputable contractors will not engage in the practice of giving cash advances.

Contractors’ Spokesman

“It seems Andaya has appointed himself spokesperson of these contractors who have already given commissions. Let me remind the congressman that giving commissions is very clearly graft. It is his duty to name the high profile government official he mentioned who advanced his own funds to a contractor because of expected commissions,” Diokno said.

“We urge Andaya to coordinate with the Office of the Ombudsman to investigate these serious allegations, because at the end of the day, this involves people’s money, the illegal use of which ought to hold concerned officials accountable,” GPPB-TSO Executive Director Ruiz added.

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Download: GPPB Circular 01-2009-Guidelines Clarifying the Procurement Activities which may be Undertaken Without an Issued Allotment

PR No. 2019-34