1. How does this project impact on development in the Philippines? Transport is critical to the national economy of the Philippines and the efficiency of the road network in promoting growth is vital. But for many years, the network has suffered from congestion, poor condition of roads and bridges and inadequate connectivity. Recently the Government has made infrastructure a major priority and through the National Roads Improvement and Management Project (NRIMP), it aims to improve the operation of the national roads system through better organizational effectiveness and stronger financial management systems. The project aims to: deliver road projects more cost effectively and efficiently increase recovery of costs from road users so that there are funds available to maintain the roads into the future; and increase road user satisfaction.
Better roads mean people have more access to markets, get better prices for their produce and families can send their children to school on safer and more reliable roads. Better roads also attract more investment, which creates jobs and income for Filipinos. By modernizing the country’s road management through stronger business processes and reforming the institutions that finance and manage roads, everyone in the Philippines stands to benefit. 2. Any update on the Project after the World Bank's Board of Executive Directors postponed its decision in October 2007? Yesterday, the World Bank Board of Executive Directors approved the Second Roads Improvement and Management Project (NRIMP2), the second phase in the Government’s national roads improvement program. The project contains a battery of stringent anti-corruption measures which have been reviewed and strengthened further. It benefits from the lessons learned in Phase One and the issues raised by our internal investigation. In the first phase, the World Bank rejected two large road contracts in three successive rounds of bidding because of strong signs of collusion and excessive pricing. This led to an investigation by the Bank’s Department of Institutional Integrity that had the full support of Government. The anti-corruption measures in NRIMP2 take the results of the investigation of Phase 1 into account and include: Use of an Independent Procurement Evaluator (IPE) to improve the transparency and integrity of procurement processes. Further enhanced procurement controls to ensure the reliability of contract cost estimates, detect over-pricing through bid analysis, enhance supervision control over contract variations and disseminate complaints mechanism in bid documents. Strengthening internal controls and internal audit capacity in the Department of Public Works and Highways. Adoption of Enhanced Business Processes - With increased use of computerized business systems and enhanced processes for procurement and financial management, the efficiency of transaction processing will be improved and opportunities for interference reduced. Independent Oversight by Civil Society – A coalition of citizen and road user groups has been established, named “RoadWatch” (“Bantay Lansangan”), to strengthen the voice and influence of citizens in ensuring transparency and proper use of public funds for roads, and to counter corruption at high levels of government and society.
The Government has also adopted the Bank’s new sanctions guidelines on fraud and corruption, allowing us to combat a much wider scope of activities linked to fraud, collusion and obstruction of investigations. The Bank has applied sanctions in many countries in response to findings of corrupt behavior, and so far more than 340 firms have been blacklisted from doing business with Bank-financed projects. Their names are published on the World Bank’s website:
http://web.worldbank.org/external/default/main?theSitePK=84266&contentMDK=64069844&menuPK=116730&pagePK=64148989&piPK=64148984 3. What is the status right now of the investigation on the alleged bid-rigging in NRIMP1? The INT report has been referred to the Government as well as to the Bank's Evaluation and Suspension Officer, who is in the process of determining whether the report warrants the imposition of sanctions on the firms involved. 4. Can the Bank provide a copy of the investigation report? The Bank makes every effort to be transparent and has recently taken steps to increase the transparency of investigative findings based on the recommendations of the Volcker panel. (The Volcker Panel, an independent panel of experts headed by Paul Volcker, was asked by the World Bank in April 2007 to carry out a comprehensive review of the World Bank Group's Department of Institutional Integrity (INT) to assess how it can best contribute to the Bank's poverty reduction mission and to safeguard the institution from legal, fiduciary, and other risks.) The Bank is not able to disclose the redacted FIR at present, as doing so could compromise the integrity of the ongoing sanctions process. Once this process is complete, the Bank’s standard practice is to disclose publicly any sanctions imposed by the Bank’s Sanctions Board, as well as the investigative findings that led to the sanctions decision. 5. What are the names of the firms being considered for debarment? The Bank’s internal sanctions process is confidential, as firms and individuals are considered innocent until the Bank’s Sanctions Board has reviewed the evidence and made a final decision on the case. Bank management has taken the decision that we will publish the sanctions that are the final results of fraud and corruption investigations in a timely, consistent, and fair fashion, balanced by the need to respect due process and not to compromise ongoing investigations and legal processes. This is consistent with the practice used by other international organizations. To date, the Bank has blacklisted more than 340 companies which have been found to have engaged in wrongdoing under other Bank-financed contracts. 6. What other contracts do these companies have with the Bank? Just as we cannot disclose the names of any potential respondents in a sanctions case, we also are unable to discuss what work any of these firms might be performing for us. That said, with 340 firms blacklisted, the Bank has a strong track record that shows we will hold accountable any firms found to have engaged in wrongdoing under a Bank-financed contract. Contracts (with prior review) financed under Bank projects, and procurement plans for new or ongoing projects, are disclosed on the operations procurement pages of the Bank’s website. 7. What are the steps in the sanctions process? Referral of the case to the Bank’s Evaluation and Suspension Officer (EO); If warranted, possible temporary suspension by the EO and issuance of a Notice of Sanctions Proceedings to the firm or individual alleged to have engaged in the sanctionable offense, with a recommended sanction; If the firm or individual does not contest the allegations, the recommended sanction is imposed; If the firm or individual does contest the allegations or the recommended sanction, the case is referred to the World Bank’s Sanctions Board, and the temporary suspension stays in force until the case is finally decided; The Bank's Sanctions Board reviews the submissions from all parties and may hold a hearing on the matter, where parties may present evidence before any sanction is imposed; If the Sanctions Board determines that a sanction is merited, imposition of the sanction.
8. What does a temporary suspension mean - does the Bank halt immediately all work underway with these companies? No, temporary suspensions and/or debarments only affect current and future Bank contracting opportunities. Work on any contracts already awarded would continue. In addition, unlike debarments, which are made public on the Bank’s website and announced in a press release, temporary suspensions remain confidential and are only disclosed to the firm involved. 9. Given that the sanctions process is still not complete, how will you ensure the firms already cited for corruption are not able to bid on phase 2? Based on the findings of the NRIMP1 investigation, procurement under NRIMP2 will be subjected to an even higher level of scrutiny and due diligence. Any company that is suspended by the Bank’s Evaluation and Suspension Officer will not be eligible to participate in procurement of the NRIMP2 civil works, and the procurement schedule makes allowance for the firms to be notified of suspensions. 10. Is the Bank still planning to use the Philippines system of a bid ceiling for the project? Our approach has been to adopt Philippine rules for local bidding and World Bank rules for international competitive bidding. Both sets of rules are based on the same principles of maximizing transparency and competition. For national competitive bidding under the project, a bid ceiling as per Philippines rules will apply, if certain conditions are met. After discussion with our Board and the Government, we have decided to continue with the Bank’s international competitive bidding system, and not apply bid ceilings in that case. We are confident that the risk of collusive behavior has been much reduced through enhanced procurement review methods being used by government, the involvement of independent procurement evaluation and the Bank's own strong supervision. The project will include stronger attention to cost estimation and bid prices, especially in cases where there is consistent evidence of collusion, to ensure that the road works will be built at competitive and realistic prices and give the road-using public good value for the money they spend in motor vehicle user charges and fuel taxes. On balance, we felt the ICB system would be more effective in controlling prices and collusion over the long term. At the recent Philippines Development Forum in March 2008, we agreed with the Government’s proposal to have a broader dialogue on how Philippines procurement law and procurement rules for international funders like the World Bank can be better harmonized. We also welcome President Arroyo’s Administrative Order No. 210 issued on November 22, 2007, to harness government, civil society, and sectoral groups for transparency in the procurement process. Furthermore, we look forward to the results of the review of road projects, particularly those under NRIMP Phase 1, by the Presidential Management Staff and the Budget Department, that was ordered by the President in November 2007. (end)
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