9-10 JUNE 2003
At DepEd, A Cleanup at the Top but Corruption in Field Offices


The PCIJ has prepared, in time for the opening of the school year, a two-part story on textbooks. The good news is that reforms at the national level as well as a massive infusion of foreign funds have resulted in many more textbooks being sent to public schools. When schools officially open on Monday, public-school students at the lower grade levels can expect to have one book each in three of five core subjects.

The bad news is that at the DepEd field offices, corruption remains pervasive, with illicit commissions accounting for as much as 55 percent of a contract for books or supplementary learning materials. The PCIJ's Yvonne T. Chua, who has been writing about textbook procurements and corruption in education since the late 1990s, also found corruption involving local officials mayors and governors who co-chair local school boards that allocate some of their funds for book purchases.

The report looks both at the good news and the bad news in textbook procurement. It cites the DepEd for doing what no other government agency has so far done: a massive overhaul of its procurements system. The department has imposed stringent bidding requirements for suppliers and mobilized NGOs to monitor deliveries. It shows that with a determined leadership and civil-society participation, there can be progress in the fight against corruption. But the battle continues in other fronts.

At Payatas-A Elementary School, a huge delivery of new textbooks, including this one for Grade 1, arrived last March, just as the school year was ending. [PCIJ photo]

At Payatas-A Elementary School, a huge delivery of new textbooks, including this one for Grade 1, arrived last March, just as the school year was ending. [PCIJ photo]

IN 2001, the school board of Quezon City bought 57,100 copies of Resty Umali's "Tayo'y Mag-awitan sa Koro." The cost: P4.1 million, at a time when the city was still suffering from a shortage of textbooks in at least 14 subjects.

The supplementary text on music was not even in the Department of Education's (DepEd) catalog of approved titles and was not listed in the annual procurement plan for the year. The purchase also violated procedures: a supplementary annual procurement plan to cover it was submitted only a day after the books were accepted.

According to the Commission on Audit (COA), the books were not used at all because the principals deemed it not suited for grade-school students.

For decades, the public school system has been suffering from a shortage of books. The problem was not only a shortage of funds but the massive corruption and inefficiency that have characterized government textbook procurements since the 1970s.

The good news is that since 1999, DepEd secretaries have implemented reforms in textbook procurements so that most of the 17.3 million public school students who will start trekking to school when classes officially open today can expect to have one book each in at least three core subjects in the lower grade levels.

Only five years ago, one textbook was being shared by every six pupils in grade school and by every eight students in high school. Today, because of stringent bidding procedures at the national level and a massive infusion of foreign funds, the DepEd hopes that by the end of the school year, all students will each have a textbook in all five core subjects.

But problems remain at the local level. The Quezon City experience illustrates that despite far-reaching reforms, the government's textbook procurement program still has major kinks. Although there has been a cleanup at the top, textbook publishers interviewed for this report say that corruption remains pervasive in many of the DepEd's 150 schools divisions (a division handles anywhere from 50 to 700 schools) and the local school boards that fall directly under mayors or governors.

In interviews, publishers and agents revealed that bribery is still the norm in the awarding of contracts for textbooks to schools divisions and to local school boards. Just like before, payoffs and perks (including overseas trips for school officials), not real need, are the prime considerations in the purchase of textbooks for public schools.

One textbook agent even says, "Our lives depend on the superintendents or the mayors. If you're not close to them and you have nothing to give, they're not going to get their books from you."

To be sure, payoffs more commonly called "SOP" or "tapon" (throwaway) in government no longer add up to the scandalous 60 to 65 percent of contracts when publishers were still selling their goods to legislators, who in the past used pork-barrel funds for the purchases.

But the amounts remain hefty: from 15 to 30 percent for textbooks and from 40 to 55 percent for supplementary materials, publishers and agents say. (Supplementary materials include books, reference materials, charts, maps, videos and other things that are supposed to enrich a child's learning.)

One textbook agent says the superintendent's "SOP"is 10 to 15 percent of the contract, while the supply officer, accountant, administrative officer and auditor get five percent each. "The rest," she says, "is liberally distributed to all the others."

These can only dampen the enthusiasm of even the most reform-minded official at the DepEd, which has been garnering accolades for the success of its revamped textbook procurement program. No other government agency has undergone such a massive overhaul of its procurement processes, which now includes NGO monitoring of purchases.

This schoolyear, the country's 40,000 public elementary and high schools can again expect to benefit from the new textbooks that have been purchased through the World Bank-funded Social Expenditures Management Program (SEMP) and the Third Elementary Education Project (TEEP) and the ADB-supported Secondary Education Development and Improvement Project (SEDIP).

Changes in the procurement system have also pushed textbook prices down by 40 percent: from P60 to P80 to the current P25 to P36.

Through the first phase of SEMP alone, the DepEd bought a whopping 42 million elementary and high school books worth P1.6 billion, and which are now printed on better-quality paper. An impressed World Bank has released another $43 million to the DepEd, this time to buy 50 million textbooks. The bidding for more than half of those books is over, and deliveries will start later this month.

Publishers who have both won and lost in the international competitive biddings conducted by the DepEd central office concede that rules are so rigorous-DepEd, for one, is required to submit winning bids to the World Bank for its review and await a "no objection letter" from the bank before awarding the contracts-that there is practically no chance to corrupt the process.

"Bantay na bantay (It's very well-guarded)," a representative of a Makati-based publishing house says of the DepEd's centralized procurement, which came under intense scrutiny after the 1999 P3 million-bribery attempt by textbook agent Mary Ann Maslog at the Department of Budget and Management.

But the DepEd is hard-pressed monitoring what its field offices are buying. Since 2000, schools divisions and autonomous high schools have acquired even greater discretion over the money the national government releases for their maintenance, operating and other expenses (MOOE). Local governments also buy textbooks using either the Special Education Fund (SEF) or General Fund, both of which are beyond the control of the DepEd.

Now that the maintenance and operating funds are no longer coursed through DepEd regional offices, the power of regional directors over textbook purchases has been clipped. Instead, discretion over purchases for districts and elementary schools now lies chiefly with division superintendents.

In fact, most division offices spend the MOOE of elementary schools and deliver the goods and services directly to the schools. "Divisions don't have to get the go-signal from the regional and central offices to buy books, as long as they keep within their signing authority," a Quezon City-based publisher says. "They just check if they having savings from their MOOE, and there usually is at the end of the month."

In 2000, two orders from the education department on the purchase of textbooks and supplementary materials -DECS Order No. 35 and No. 78-further empowered superintendents. The orders contain the lists of approved textbooks, teacher's manuals and supplementary and reference materials from which DepEd field offices, including division offices, could buy using savings from their maintenance funds and the special education or local school board funds.

The orders specifically restrict field purchases to titles that appear in the two lists and from DepEd-accredited suppliers. Field offices are to buy according to specific requests from principals, observe the price ceilings, which include delivery costs, and give priority to purchase of basic texts. They were also told to negotiate for discounts from suppliers for large-volume purchases.

The orders allow field offices to choose the titles themselves, thus setting aside the need for public biddings. But a freelance textbook agent says this also means that nearly all the books are bought from exclusive distributors, making it easier to justify why one supplier is favored over another. The local school board is co-chaired by the governor or mayor and the division superintendent or district supervisor.

The sums available in schools divisions and in local government funds for textbooks and other instructional materials are nowhere in the league of the billion-peso purchases the central office makes every year. But they are pretty substantial.

As of 2001, the SEF, raised from proceeds of the additional 1-percent real property tax to support the local school boards, stood at P8.5 billion. One third of this went to the operating funds of public schools, including the purchase of instructional materials. Local governments also dip into their General Fund to assist public schools.

Textbook agents and publishers say many schools divisions save as much as P1 million to P5 million every quarter from their operating funds. They then use these savings for textbooks and supplementary materials. Records show that the Quezon City schools division used more than P7 million of its savings for this purpose between May and December 2002.

If spent wisely and in coordination with the DepEd central office, the money at the disposal of the schools divisions and local governments could have helped the government achieve the 1:1 textbook-to-pupil ratio not only in the core subjects, but in other subjects as well, where shortages have at times resulted in 27 children sharing one textbook.

Newly delivered textbooks are stacked side by side with old ones returned by students. Storage of books are a major problem at Payatas-A Elementary School. [PCIJ photo]

Newly delivered textbooks are stacked side by side with old ones returned by students. Storage of books are a major problem at Payatas-A Elementary School. [PCIJ photo]
But the payoffs and other perks that publishers dangle, or division or local officials demand, have emboldened school officials to disregard DepEd orders on textbook purchases and worsen the textbook situation.

The textbook agent, for instance, says many publishers almost always shoulder the expenses of division officials when they travel to Manila and even sponsor trips abroad. A teacher-leader who visited a division office in a northern Metro Manila city also recalls how a publisher was openly badgering the superintendent and other officials to decide which country they wanted to visit in summer so she could buy their tickets.

"The superintendent was rather embarrassed because I have known him for years," says the teacher. "He took me aside and explained sheepishly what the trip was for."

Because of the freebies that various publishers offer, some division superintendents have found it convenient to split their textbook fund among several suppliers. "The more suppliers, the more perks," says the agent.

The Quezon City-based publisher, who currently supplies 10 schools divisions nationwide, says payoffs for contracts with schools divisions are normally given when payment is collected.

"Isang bagsak lang (It's a one-time thing)," he says, explaining that he or his representative would hand the money to the superintendent, usually in the division office. It is understood that the superintendent would take care of the "distribution" down the line. In the past, some suppliers had to go from unit to unit in a field office giving out brown envelopes of grease money.

The publisher says supplementary materials actually form the bulk of his contracts, even in areas that still suffer a shortage of basic textbooks. The arrangement suits him and the superintendent fine.

While he has to fork over a bigger "SOP" as much as 45 percent in direct sales and 55 percent in sales brokered by freelance agents his costs are lower than selling a basic textbook. He points out that supplementary materials are priced about 30 to 40 percent more than textbooks and need not be printed on paper weighing 54 gsm, which is now required of textbooks. Some supplementary materials also include textbooks that had been rejected by the DepEd for use in public schools.

Publishers say that local governments demand 10 to 20 percent just for the local chief executive. The textbook agent notes that since there are more people to deal with SEF-supported purchases-the local government and the schools division the SOP tends to fall on the high side.

As a result, the COA has documented numerous examples of irrational and irregular purchases of textbooks and supplementary materials. In 2001, the DepEd posted the biggest audit suspensions, totaling P6.9 billion or a quarter of all audit suspensions. These transactions, involving 694 DepEd units, were suspended for various reasons, including purchases of textbooks from selected or favored publishers.

Local governments are notorious for violating textbook-procurement guidelines. COA says that in Makati, the only city in the country with a 1:1 textbook-to-pupil ratio in all subjects, the mayor and schools superintendent disregarded DepEd directives to negotiate for discounts on P223 million worth of books bought in 2000 and 2001.

That meant lost savings of some P18.3 million. Griped the commission: "By the magnitude of the transactions and volume of the amount involved, it is incredible that seasoned managers would pass up on an industry practice availed of even by...mere students."

COA said that the same suppliers that Makati dealt with gave 20- to 30-percent discounts to the Romblon schools division and a public high school in Abra, which bought fewer books than Makati.

Marikina, too, did not ask for a discount when it bought P6.8 million worth of textbooks in the same years. One of the textbook suppliers happened to be Marikina's own DepEd district supervisor: Carmelita Palabay of J.C. Palabay Enterprises. It was ironic, said COA, that Palabay gave the neighboring Pasig schools division a two-percent discount for an order far smaller than Marikina's.

Valenzuela, meanwhile, bought in 2000 and 2001 millions of pesos of books from three non-accredited DepEd suppliers-IFS Trading, Caryl Merchandise and Gloria Pili, all represented by same person-who had submitted falsified documents, including fake authorization letters from legitimate publishers, to the local government. Some of the books were overpriced by 100 percent, said COA.

Caloocan and Quezon City were singled out by COA for their habit of buying supplementary materials even when they lacked basic textbooks in a number of subjects. The two cities were fond as well of buying books that exceeded the quantity in their annual procurement program or were different from those indicated in the plan.

Caloocan's annual procurement program for 2000, for example, provided for the purchase of five textbook titles worth about P1 million. When the year closed, it had bought 18 titles worth P7.3 million. Only two of these titles were listed in the procurement plan. Even then, these were bought at an excess of 7,500 copies each. All the other titles were supplementary materials.

Top DepEd officials say that so long as textbook buying in the field remains like this, there cannot be any decentralization of the bulk procurement now being done at the central office. Says Undersecretary Juan Miguel Luz: "If you decentralize it at this point, you'll only decentralize incompetence and corruption."

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See also

Up to 65% of Textbook Funds
Goes to Bribes

Corruption in DECS Culture


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