Public Disclosure Authorized 2010/2011 Rapid Assessment of the Seal of Good Housekeeping and Performance Public Disclosure Authorized Challenge Fund Program October 2012 Public Disclosure Authorized Prepared by: CODE-NGO, LSIG, PhilDHRRA, and TAN Contract No. 7160831 Public Disclosure Authorized AAA on Institutionalizing Incentive Systems for Local Governance and Performance AusAID World Bank Development Trust Fund ACKNOWLEDGEMENTS This rapid assessment of the 2010 Performance Challenge Fund (PCF) Program and 2011 Seal of Good Housekeeping (SGH) Program of the Department of the Interior and Local Government (DILG) of the Philippines was prepared with support from the World Bank and the Australian Agency for International Development (AusAID) through the AusAID-World Bank Development Trust Fund. The Study Team conducted an evaluation of the implementation of local government subprojects financed through the 2010 PCF Program and an evaluation of the incentive effects of the 2011 PCF and SGH Program implemented nationwide. This rapid assessment was conducted by a consortium of civil society organizations led by the Caucus of Development NGO Networks (CODE-NGO), and which included the La Salle Institute of Governance (LSIG), the Philippine Partnership for the Development of Human Resources in Rural Areas (PhilDHRRA), and the Transparency and Accountability Network (TAN). This report was prepared by a Study Team composed of Sixto Donato C. Macasaet and Jose Antonio Pacapac (CODE-NGO); Jennifer Javier, Ivy Marian Panganiban, and Divina Luz Lopez (PhilDHRRA); Leslie Flores, Reylynne dela Paz, Maria Flora May Cerna, Jowil Mejia Plecerda, and Vincent Lazatin (TAN); and Ian Jayson Hecita, Monica Edralin, and Francisco Magno (LSIG). The Study Team also acknowledges Felix Deyta and Norte Sentro, Luisita Esmao and the Ugnayan ng mga Magsasaka sa Quezon (UGMA), Emilia Roslinda and the Participatory Research, Organization of Communities and Education towards Struggle for Self-reliance of Bohol (PROCESS-Bohol), Surigao Sur Organization for Human Development, Inc. (SSOFHDEV), Technology Outreach and Community Help Foundation, Inc. (TOUCH), Xavier Agricultural Extension Services (XAES), and Michelle Cleofas, for assisting in the conduct of the field research for this assessment. The Study Team would especially like to express its gratitude to the DILG for providing valuable insights and support for this study, including Austere Panadero (Undersecretary for Local Government), Manuel Gotis (Director, Bureau of Local Government Development), Anna Liza Bonagua (Assistant Director, Bureau of Local Government Development), Susita Bulawit (Chief, Local Administrative Development Division, Bureau of Local Government Development), and the Regional Directors and staff of the Regional Offices of Region I, Region IV-A, Region VI, Region VII, and Region X. The Study Team would also like to thank the Mayors, Governors, and staff of the following local governments for participating in and supporting this assessment: Alilem, Ilocos Sur; Santol, La Union; Balilihan, Bohol; Carrascal, Surigao del Sur; Catigbian, Bohol; Naawan, Misamis Oriental; Pitogo, Quezon; Quezon, Isabela; Saguday, Quirino; Tampilisan, Zamboanga del Norte; Laoac, Pangasinan; Balungao, Pangasinan; Magdalena, Laguna; Sta. Maria, Laguna; Anilao, Iloilo; San Dionisio, Iloilo; Talisay, Negros Occidental; Victorias, Negros Occidental; Siquijor; and Camiguin. The findings, interpretations, and conclusions expressed in this report are entirely those of the Study Team. They do not necessarily represent the views of AusAID or the International Bank for Reconstruction and Development/World Bank, its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Page 2 of 34 TABLE OF CONTENTS List of Acronyms .......................................................................................................................................... 4 Executive Summary ...................................................................................................................................... 5 Introduction ................................................................................................................................................... 8 Objectives of the Assessment ................................................................................................................... 8 Methodology and Limitations of the Study .............................................................................................. 8 Policy Issuances Supporting the 2010/11 SGH and PCF Programs ........................................................... 12 Study Findings on Objective 1: Evaluation of Subprojects of the 2010 PCF Program .............................. 17 Summary of Findings ............................................................................................................................. 17 Detailed Findings .................................................................................................................................... 18 Study Findings on Objective 2: Evaluation of Incentive Effects of the 2011 SGH/PCF Program ............. 26 Summary of Findings ............................................................................................................................. 26 Detailed Findings ................................................................................................................................... 26 Recommendations ....................................................................................................................................... 31 List of Annexes Annex A. Assessment Tools for LGU Projects Annex B. Guide Questions for Key Informant Interviews Annex C. List of Actual Documents gathered for Objective 1 Desk Review Annex D. Inventory of existing project assessment tools Annex E. Accomplished On-site Project Evaluation tools Annex F. Field Reports Annex G. PCF Program Process Flow Annex H. Selection process of LGUs for 2011 SGH case studies Annex I. Survey Form for Local Chief Executives Annex J. Case Study Narratives Page 3 of 34 LIST OF ACRONYMS Annual Investment Plan AIP Bids and Awards Committee BAC Bureau of Local Government Development BLGD Bureau of Local Government Supervision BLGS Caucus of Development NGO Networks CODE-NGO Civil Society Organization CSO Climate Change Adaptation CCA Central Office CO Commission on Audit COA Department of Budget and Management DBM Department of the Interior and Local Government DILG Department Order DO Disaster Risk Reduction DRR Financial Management Service FMS Full Disclosure Policy FDP Government Procurement Reform Act GPRA Internal Audit Service IAS La Salle Institute of Governance LSIG Local Chief Executive LCE Local Development Council LDC Local Economic Development LED Local Government Unit LGU Memorandum Circular MC Memorandum of Agreement MOA Millennium Development Goals MDG Municipal Local Government Operations Officer MLGOO Office of Project Development Services OPDS Office of Public Affairs OPA Performance Challenge Fund PCF Philippine Partnership for the Development of Human Resources in Rural Areas PhilDHRRA Priority Development Assistance Fund PDAF Provincial Local Government Officer PLGOO Regional Office RO Regional Performance Challenge Fund Management Team RPCFMT Seal of Good Housekeeping SGH Transparency and Accountability Network TAN Page 4 of 34 EXECUTIVE SUMMARY On October 2011 to March 2012, the Caucus of Development NGO Networks (CODE-NGO), La Salle Institute of Governance (LSIG), Philippine Partnership for the Development of Human Resources in Rural Areas (PhilDHRRA), and Transparency and Accountability Network (TAN) undertook a Rapid Assessment of the Seal of Good Housekeeping (SGH) and Performance Challenge Fund (PCF) Programs of the Department of the Interior and Local Government (DILG). This assessment aims to support the DILG in strengthening the design and implementation of the SGH and PCF programs in subsequent years. The assessment has the following specific objectives: 1. Evaluate the project implementation of the Local Government Unit (LGU) subprojects that were co-financed through the 2010 PCF Program; and 2. Evaluate the incentive effects of the 2011 PCF Program on LGU behavior including a review of the processes undertaken by the DILG in developing the SGH criteria and the subsequent LGU assessment implemented by DILG to recognize LGUs in 2011. Evaluation of 2010 PCF Subproject Implementation For the first objective, the general approach was to assess the 2010 subprojects based on timeliness, cost efficiency, quality, and responsiveness. To achieve this, desk review and on-site subproject evaluation were conducted. On compliance by LGUs with the PCF proposal requirements, almost all guidelines and requirements were followed by all LGUs. As required by the PCF guidelines, all the subprojects were aligned with national priorities and Annual Investment Plans (AIPs). The subprojects were also found to be responsive to the needs of the municipality. The study indicates however that the DILG did not follow a major guideline in two instances when it approved ineligible subprojects for PCF funding. In terms of LGU implementation of PCF subprojects, only two-thirds of the awarded subprojects in 2010 had been completed as of January 2012. All completed subprojects evaluated on-site were implemented according to proposals and almost all LGUs complied with the 20 percent LGU counterpart