Procurement reform in the Philippines: the impact of elite capture and informal bureaucracy

The purpose of the paper is to examine features and impact of recent reforms introduced by the Philippines government to deal with the longstanding shortcomings in its procurement system.

The research for the paper is based on reports by international organizations, official documents of the Philippines government, surveys by international and domestic organizations, interviews with relevant officials and media reports.

The findings show that the reforms have focused on fostering competition, increasing transparency, standardizing procedures, enhancing end‐product quality and contractor reliability, ensuring proper planning and budgeting, combatting corruption, and strengthening accountability. These reforms were intended to create a procurement system more in line with international best practices. However the paper shows that the impact has been less than promised. This is due to limitations of certain provisions of the reforms and weaknesses in both implementation and in the accountability of the procuring entities. A key factor in undermining the reforms is widespread corruption, which continues to affect many aspects of the procurement system. The article identifies two important and related reasons for such failings: elite capture of the government and bureaucracy by a powerful network of business leaders from well‐established landed families, who have close links with the political establishment; and second, a long‐established culture of informal influence in the Philippine state bureaucracy (what may be termed the informal bureaucracy), which has been used to maximum effect by the elite network of business leaders. As a result, this network has been able to influence the reforms to serve its own interests and ensure its continued dominance of the procurement market.

The value of the paper is to show how administrative reforms, no matter how well formulated they are, may be readily undermined in the process of implementation by elite groups able to influence government bureaucracy through an informal culture.