MANILA, Philippines—The interagency body overseeing public procurement is amenable to giving priority to local products to support Philippine industries as long as supply is assured to avoid delaying projects.
In a resolution, the Cabinet-level Government Procurement Policy Board (GPPB)—chaired by acting Budget Secretary Tina Rose Marie Canda—said “any policy adopting domestic or local preference should be weighed against the overarching principle of competition in government procurement as this directly affects economic efficiency, consumer welfare, and an overall favorable business climate.”
“Thus, domestic or local preference policy should be strategic, focusing on local industries that can sufficiently provide governmental requirements,” the GPPB said.
During the implementation of the Bayanihan to Recover as One Act or Bayanihan 2 Law in 2020, the government put in place a domestic preference policy when sourcing goods for COVID-19 response. However, domestic preference also meant adhering to an antiquated rule requiring competitive bidding for local suppliers.
The Procurement Service of the Department of Budget and Management (PS-DBM), for instance, had been limited by the rule that would award a supply contract to the lowest local bidder—through a domestic bidder (DoBid) certificate of preference—only if its bid was not more than 15 percent of a foreign supplier’s.
DoBid certificates were being issued by the Department of Trade and Industry’s Competitiveness Bureau (DTI-CB) to certify that the products forming part of a bid were substantially composed of articles, materials or supplies which had been grown, produced or manufactured locally, the PS-DBM said last year.
As of mid-2021, the number of DoBid certificates issued by the DTI to qualified suppliers more than tripled to 101 from 31 in October 2020, during Bayanihan 2’s implementation, the GPPB noted.
The GPPB added that more homegrown manufacturers were now qualified—from ammunition, food, garments, machines, medical devices and medical sector.
However, the GPPB cautioned that “even by limiting preferential treatment in favor of goods with domestic preference certificates, there is no assurance that a bidder with such certificate will ultimately join government bidding.”
“If the DTI’s proposal to limit bidding opportunities among domestic or locally produced goods is to be adopted and the government will be mandated to procure only local or domestic goods (in effect, those with DoBid certificates), then procuring entities will have to limit the participation of bidders with domestic preference at the outset, excluding all others,” the GPPB said.
“This means that [the PS-DBM and agencies] can only hope that bidders with domestic preference actually submit their bid come opening date. If no such bidder joins, procuring entities will have to repost and re-bid their procurement project,” the GPPB warned.
“It cannot be simplistically argued that procuring entities can just as easily ask other bidders to submit their bid if no bidder with a DoBid certificate joins the bidding as you need to provide them sufficient time to prepare their bids,” it said.
“Moreover, prospective bidders will not just wait around and see nor invest time and money for a procurement project they are not eligible to join,” it added.
“The resulting inevitable delay should no bidder with domestic preference join government bidding brings to fore the need to balance both interests. Thus, the existing domestic preference rule may be recalibrated such that preferential treatment is afforded to bidders of goods with a DoBid certificate,” according to the GPPB.
The GPPB also urged setting a “definite or limited period” in procurement preference for local products.
“The specific duration should be based on the study of the DTI on the period needed to jumpstart local economic recovery,” the GPPB said.
“This should factor in the incubation period for a product vis-à-vis the needs of the government as well as the momentum for local economic recovery,” it said.
“This is particularly true for local companies that shifted their manufacturing upon the encouragement of the DTI. It may be that a longer period is needed for the development of a particular local industry before the same can contribute to local economic recovery,” the GPPB explained.
TSB