Public procurement serves as a crucial mechanism through which governments fulfill their obligation to provide public goods and services. However, its potential extends far beyond the mere acquisition of products and services. Public procurement can act as a powerful policy tool enabling governments to drive economic, environmental, and social objectives simultaneously.
Recently, the 19th Congress enacted Republic Act No. 12009, or the New Government Procurement Act (NGPA), which represents a significant shift in how public procurement is approached in the country. This legislation is noteworthy for the opportunities it creates for microenterprises, social enterprises, cooperatives, and startups which have historically not maximized the opportunities available to them, especially in accessing government contracts.
Public procurement, the process by which government agencies acquire goods, services, and infrastructure, is fundamental to the functioning of any government. Traditionally, the focus of procurement has been on ensuring that goods and services are obtained efficiently, at the best possible price, and in a transparent and fair manner. However, in recent years, there has been a growing recognition that procurement can also be leveraged to achieve broader policy objectives, such as promoting economic development, fostering innovation, and advancing social and environmental goals (Organisation for Economic Co-operation and Development [OECD], 2015).
MSMEs and social enterprises stand to benefit from this shift in perspective. These enterprises often comprise the vast majority of businesses. In the Philippines, micro enterprises account for 94.6% of all registered enterprises (Philippine Statistics Authority, 2021). Despite their critical role in the economy, micro enterprises have traditionally been underrepresented in government procurement. Common constraints faced by these enterprises, such as lack of access to finance and limited human resources, hinder their ability to comply with administrative and substantive requirements, discouraging them from competing for government contracts (Beck & Demirguc-Kunt, 2006; OECD, 2018).
Republic Act No. 12009 introduces significant reforms to public procurement in the country, embedding principles of sustainability, inclusivity, and support for domestic industries. The NGPA aligns procurement practices with national development goals while ensuring that government purchases benefit society at large. This approach is particularly vital in a developing economy like the Philippines, where government procurement represents a substantial portion of public expenditure and, therefore, has a significant impact on the market dynamics and growth potential of local enterprises.
Sustainable Public Procurement
Articles XII and XIII of the NGPA outline the framework for sustainable public procurement, inclusive programs for marginalized sectors, and a strong preference for local products and services. These provisions create an enabling environment where micro and social enterprises, cooperatives, and other vulnerable groups can thrive in the procurement process.
Article XII of the NGPA focuses on Sustainable Public Procurement (SPP) and sets the stage for the integration of environmental considerations into the procurement process. Section 72 of the law mandates that all procuring entities establish a sustainable public procurement program, ensuring that government purchases not only meet organizational needs but also benefit society and the economy, all while reducing environmental impact. This represents a shift in procurement philosophy—from simply acquiring goods and services to ensuring that these purchases contribute positively to the environment and society.
The strategic planning of procurement processes must now consider environmental impact, as outlined in Section 73, which emphasizes the use of green public procurement (GPP) strategies. GPP requires procuring entities to prioritize goods, infrastructure projects, and consulting services that have a reduced environmental footprint over their lifecycle. This strategy aligns with the Philippines’ commitment to climate action and disaster resilience. By incorporating green practices and criteria into procurement projects, the government aims to encourage suppliers to adopt more sustainable production methods, ultimately creating a ripple effect across industries. This shift towards sustainability is in line with global trends and reflects the growing recognition that public procurement can be a powerful tool for driving environmental policy objectives (Halonen, 2021).
The law ensures that sustainability is given priority during the evaluation of bids. Section 73 also stipulates that green specifications of products, materials, or structures must carry greater weight in the procurement process. The integration of green public procurement is not expected to occur overnight; rather, it will be implemented in phases, allowing both government agencies and green product suppliers time to adapt.
Moreover, Section 74 tasks the Department of Trade and Industry (DTI) with developing a cost-efficient validation and certification program for green products. This program is expected to attract investments in green technologies and products. The development of a local green market is essential to ensure the availability of sustainable alternatives that meet the government’s green procurement goals. This initiative is crucial in building a robust green economy in the Philippines, where the demand for environmentally friendly products is still emerging.
Inclusive Procurement Program
The NGPA’s commitment to inclusivity is bolstered in Section 75, which establishes an Inclusive Procurement Program aimed at providing equal opportunities to vulnerable and marginalized sectors, as well as microenterprises, social enterprises, and startups. These entities are actively encouraged to participate in government procurement, with special consideration given to inclusivity in programs involving gender and ethnic equity, poverty reduction, and adherence to fundamental labor standards.
The inclusive procurement program seeks to empower underrepresented groups by promoting their participation in procurement activities. It ensures that procurement projects benefit entities that contribute to social equity. By including marginalized groups, the law fosters a procurement ecosystem that reflects the diversity and aspirations of the Filipino people. This focus on inclusivity is particularly important in our country where there is significant socioeconomic disparities, and many businesses and individuals have traditionally been excluded from mainstream economic opportunities.
Section 75 directs the Government Procurement Policy Board (GPPB) to develop policies that promote competition while incorporating social considerations, such as gender-responsive approaches, into procurement planning, selection criteria, and contract performance. The GPPB, as the central body that sets strategic direction and policy decisions regarding all matters affecting public procurement, is tasked with leading the country’s efforts in advancing public procurement reforms in accordance with the law (Article XIX, Section 91). This approach mirrors international best practices, where procurement systems are increasingly being designed to address not only economic efficiency but also social and environmental objectives (World Bank, 2015).
Supporting Vulnerable Groups
To further support the participation of vulnerable groups, Section 76 mandates the creation of a registry of entities from sectors such as farmers, fisherfolk, persons with disabilities, solo parents, microenterprises, social enterprises, cooperatives, and startups, including spin-offs and other entities engaged in science, technology, and innovation activities. This registry will ensure that these groups have direct access to procurement opportunities, while the GPPB will develop enhanced support options, such as relief measures and alternative types of assistance, as outlined in Section 77.
Recognizing the unique challenges these sectors face, the law acknowledges the need to relax certain requirements to accommodate them and ensure their participation in public procurement. Although the specifics of how this will be achieved are still dependent on the crafting of the law’s implementing rules and regulations, Section 77 empowers the GPPB to develop strategies that reduce barriers to entry and promote the involvement of these sectors in public procurement. This approach is particularly important because it mirrors best practices like those in the World Bank Procurement Framework 2016, which also emphasizes simplifying procedures and building capacity to help smaller firms compete more effectively. By reducing administrative burdens and providing tailored support, the NGPA aims to ensure that these vulnerable groups can play a substantial role in development projects, particularly in developing countries, thereby contributing to local economic growth (World Bank, 2015).
Balancing Priorities in Domestic and Foreign Procurement
Article XIII of the NGPA addresses the balance between domestic and foreign procurement, with a clear preference for local products and services. Section 79 affirms that procuring entities should prioritize Philippine products and services in the procurement process. This emphasis on domestic preference is further reinforced by another recent enactment, Republic Act No. 11981, also known as the Tatak Pinoy (Proudly Filipino) Act, which underscores the government’s commitment to supporting local industries.
In line with the NGPA’s goal to strengthen domestic industries, local bidders will receive a margin of preference over foreign suppliers. If a domestic bid is no more than twenty-five percent (25%) higher than the lowest foreign bid, the procuring entity is required to award the contract to the domestic bidder. This policy promotes the use of local raw materials, ingredients, and supplies, ensuring that government procurement supports the growth of Filipino businesses and industries.
The margin of preference is subject to periodic review by the GPPB to ensure its relevance in light of changing economic conditions. However, Section 79 also provides for exceptions in cases where domestic production is insufficient, unavailable, or if the desired quality is not met. In such situations, foreign goods may be procured. This balanced approach ensures that while domestic industries are supported, the procurement process remains flexible enough to meet the diverse needs of government agencies.
Public Procurement as a Strategic Tool for National Development
The provisions of the New Government Procurement Act champion sustainability, inclusivity, and the growth of local industries. By emphasizing sustainable public procurement, the NGPA integrates global environmental standards into its procurement practices, thereby encouraging green innovation and contributing to climate resilience. The law’s Inclusive Procurement Program is designed to open doors for marginalized sectors, ensuring that micro and social enterprises, cooperatives, and startups have equal access to government procurement opportunities, fostering social equity and diversity in public projects. Additionally, the strong preference for local goods and services highlights the law’s commitment to nurturing domestic industries and promoting Filipino entrepreneurship.
The revision to the procurement law is not merely a framework for acquiring goods and services; it is a strategic instrument for driving broader societal and economic advancements. The law envisions a procurement system that not only enhances efficiency and transparency but also aligns with the nation’s goals for sustainable development and social inclusion.
As the NGPA is implemented, it will be essential for all stakeholders—government agencies, private sector participants, and civil society—to collaborate closely in realizing its full potential. Continuous capacity building, transparent processes, and adaptive strategies will be key to ensuring that the law’s objectives are met. The NGPA represents a significant opportunity to engage with the government in ways that were previously challenging. For micro and social enterprises, cooperatives, and startups, the NGPA offers a pathway to greater participation in public procurement, ensuring that the benefits of government spending are felt across all sectors of society. Through this law, the Philippines takes a significant step toward building a more equitable, sustainable, and prosperous future. -XXX-
References:
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Halonen, M. (2021). Green public procurement – Bridging the gap between environmental science and policy. Environmental Policy Group.
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OECD (2018). SMEs in public procurement: Practices and strategies for shared benefits. OECD Public Governance Reviews. https://www.oecd.org/publications/smes-in-public-procurement-9789264307476-en.htm
Organisation for Economic Co-operation and Development (OECD). (n.d.). Public procurement. https://www.oecd.org/en/topics/policy-issues/public-procurement.html
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Republic of the Philippines, Congress. (2024, July 20). Republic Act No. 12009 – The New Government Procurement Act. Official Gazette. https://www.officialgazette.gov.ph/2024/07/20/republic-act-no-12009/
World Bank. (2015). The new procurement framework and regulations for projects after July 1, 2016 [Phase II Board Paper]. https://wbnpf.procurementinet.org/sites/default/files/Board-Paper-phase-ii-the-new-procurement-framework.pdf