Exclusive: Inside the Philippines Procurement Service

Buying books was a leisurely affair. You'd amble down to your local store and comb the shelves - hoping they had what you wanted. Then Amazon arrived and blew everything up.

The choice was bigger; the process was faster; the prices were lower. The same change has happened in the Philippines Government.

Ten years ago, a digital platform transformed the way the public sector does business. Now it’s set to change once again. GovInsider caught up with Jose Tomas Syquia, Executive Director of the Philippines Procurement Service, to find out more.

Bye bye buying delays

In 2006, the Procurement Service launched PhilGEPS, its digital procurement system. “It handles all public biddings of all government institutions from the national level to the local level,” he says. That’s around 45,000 organizations. The site has three key features that help prevent corruption, boost small businesses, and get the government a better deal. First, it’s a level playing field for every business wanting to get work from the government.

“You may be in Manila and you can view an opportunity that is open in Bohol,” he notes. It stops favored companies from winning contracts without open competition.

Previously, these opportunities would just be posted in a newspaper. Businesses would have to be hunting for opportunities to spot them, and some would miss out as a result.

The second feature prevents this. It gives out automatic notifications of relevant opportunities: business owners will get an SMS when the government posts something that they can bid for.

“Instead of looking through 45,000 agencies, it is posted and you know there is an opportunity,” Syquia says.

Third, it lets business sell their goods and services online. This function is still somewhat limited, Syquia explains. “I would call it manual-matic. It’s online bidding in the sense that I can see the bid opportunities,” he says.

However, you still have to print out a bid document, fill it out, scan it, and upload it into the system. One of the most useful functions of the system is its data, which allows agencies to compare prices and deals gained by other units. “Agencies can benchmark their pricing and see what other agencies bid,” he says.

“It’s breaking at the seams.”

But PhilGEPS wasn’t built to handle the amount of data that runs through it.

“The infrastructure is very old: when we built it, we were only thinking of 70 concurrent users, we’re now running at 1,000 – so it’s breaking at the seams”.

Hello upgrades

Upgrades are necessary to handle the current workload. They also want to allow full electronic bidding.

“That would mean a total overhaul of the programming,” Syquia says.

And they want to put even more data through the system. They are mirroring the Korean Government, which connects its procurement system to its public finance system. This allows money to be tracked throughout the system, from budgeting to purchasing. These upgrades are not going smoothly. The government's contractors started work on the project two years ago.

“It was supposed to be completed last December and is very late. We’re now hoping that it’ll be completed by July.”

The company underestimated the complexity of the Philippines system, Syqiua says. “It’s not only procurement, it’s a complete system that’s able to link with public finances and tie into the contract management system.” However, the company is liable for overrun costs.

Under government rules, “if it gets delayed, we don’t pay you anymore, so the amount that we have to pay them is less every day,” he says. “But that is secondary, we want it to be built on time.”

The system costs around 124m pesos (US$2.6m), while the public finance system it’s connecting with costs around 480m pesos (US$10m), Syqia confirms.

Changes in approach?

The tech overhaul is only part of the change underway in the Procurement Service. Just as important is a change of approach. Cloud computing means that officials don’t now need to buy individual storage systems. Instead, they can rent software and storage when they need it.

“The Bureau of Internal Revenue only needs bandwidth and storage when it’s tax season. They call us to make it available for two to three months,” he says.

Previously, the agency would still have to purchase this for one year, but Syquia’s team has taken a new approach. They negotiated with Microsoft to get the lowest price and purchase it centrally on behalf of agencies. Negotiations with other suppliers are currently underway, including AWS and Oracle. This means a change of approach for Syqiua’s team.

“For so many years all that we have been buying has been the traditional goods: paper, tables and chairs, so it’s a mindset shift,” he says. “That’s the challenge.”

But cloud is just starting to make headway in the Philippines Government, and is likely to grow substantially over the coming years. PhilGEPS is already an Amazon for Government, but – like everyone else – they need to continually adapt their approach.

With cloud computing, most people aren’t buying tech, they’re merely renting it for a while. That means that PhilGEPS is less a bookstore, and more a library. Just a little less dusty.