Updates on the Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184

Association of Government Accountants of the Philippines (AGAP)

AFPCOC, Camp Aguinaldo, EDSA Quezon City 14 June 2012

• Procurement • Concept of Project

(Reference: Mantel, Meredith, Shafer and Sutton, 2008)

▫ Project Plan • Procurement Planning • Procurement Rules Updates

What is Procurement?

What is Procurement?

•

Procurement

refers to the acquisition of goods, consulting services, and the contracting for infrastructure projects by procuring entity. (Sec. 5(aa), IRR, R.A. 9184) •

Procurement

means the acquisition by any means of goods, construction or services. (UNCITRAL Model Law on Procurement) 4

What is Procurement?

•

Acquisition

means the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. (FAR, US) 5

What is Procurement?

•

Procurement

encompasses the whole process of acquiring property or services. It begins when an agency has identified a need and decided on its procurement requirement. Procurement continues through the processes of risk assessment, seeking and evaluating alternative solutions, contract award, delivery of and payment for the property or services and, where relevant, the ongoing management of a contract and consideration of options related to the contract. (CPG, 2008) 6

What is Procurement?

•

Procurement

we define as the whole of life cycle process of acquisition of goods, services and works from third parties – beginning when a requirement is first defined and ending with the ultimate disposal of an asset or end of a service contract. (P. Gershon, UK) 7

What is Procurement?

•

Value for Money

– is the optimum combination of whole of life costs and quality to meet the customer’s requirements… (P. G.) • It must be government’s policy that all public procurement, should be based on value for money, having due regard to propriety and regularity. (P.G.) 8

What is Procurement?

•

LCC

– Life Cycle Costing •

“Cost”

should consider all costs throughout the life-cycle – acquisition cost, utility costs (energy/water consumption, maintenance), and disposal costs.

•

“C to G”

vis-à-vis

“C to C”

9

5 “Rights” in Public Procurement

Value for Money Source Time/ Delivery Quantity Procurement Price Quality

What is a Project?

What is a Project?

•

Project

- A temporary endeavor undertaken to create a unique product or service. (Project Management Institute, 2004) •

Project

▫ unique/specific/special ▫ identified output/deliverable ▫ specific due date/time

What is a Project?

• Project is

Multidisciplinary

▫ Project require contributions and inputs from people with varying knowledge, experience and expertise.

▫ Projects are complex endeavors consisting of interconnected elements and even requiring input from groups outside the project.

What is a Project?

• A Project needs a

Team

▫ Inputs from the team provide the appropriate approach, information, skills and knowledge needed to accomplish the overall task.

• Projects involve tensions.

Conflicts

▫ Factors attending each project present opposing ▫ Project needs, schedule, budget and specifications may conflict with one another.

What is a Project?

•

Projects and Conflicts

▫ Love and Marriage ▫ Horse and Carriage •

PROJECT

– is a temporary endeavor

undertaken to create a unique product or service. It is specific, timely, usually multidisciplinary, and always conflict ridden.

Procurement Planning

Philippine Procurement Paradigm

HOPE BAC BAC Sec Budget End User Assess Identify • Review studies • Consolidate into APP • Decide procurement method • Approve APP • Determine readiness • Post/Advertise opportunity • Open and evaluate bids • Post-qualify • Award and enter into contract Selection HOPE BAC TWG BAC Sec End User • Cost-benefit analysis • Feasibility study • Market study • PPMP • Oversee implementation • Inspect and accept deliveries • Release payment Implement N EEDS S ATISFACTION

Project Plan

•

Project Plan

▫ The primary function of a Project Plan is to serve as a Road Map of the route from project start to finish.

▫ The project plan should contain sufficient information about:        What should be done?

When should it be done?

What remains to be done?

What resources are needed?

Who are tasked to perform?

When the task will be completed?

What specifications the output should meet?

Project Plan

•

Elements of a Project Plan

1) Overview – contains a brief description of the project and deliverables, including a list of the major milestones or significant events in the project schedule; 2) Statement of Objectives – a detailed description of the project’s deliverables and outcomes. (link with project purpose); 3) General approach – the technical (procurement) and managerial approaches to the work to be performed are described; 4) Contractual aspects – provide a complete description of all agreements made with the client or any third party; 5) Schedules of Activities– provides an outline of all project schedules and milestones;

Project Plan

Elements of a Project Plan (cont’d …) 6) 7) 8) 9)

Resource requirements – include estimates of project expenses, both capital and operating expenses. The costs associated with each task are identified, e.g. overhead and fixed charges, this becomes the project budget.

Personnel – provides for person power requirements and the identification of the project work force Risk Management – identification of potential risks (game-changers and deal-breakers) and plan how to address them when they occur; and, Evaluation methods – involves the descriptions of all project evaluation procedures and standards. (should include procedures to ensure compliance with all requirements for monitoring, collecting and storing data on project performance.

Developing Project Requirements

a. Identify the

NEED

of the PMO or end-user unit ▫ ▫ What is the purpose of the procurement? What are the problem/s or needs that the project or procurement aims to address?

b. Identify the alternative solutions/products/services ▫ ▫ ▫ ▫ What alternative solutions to the problem/s or need/s are available in the market? What are the sources of these products and services?

What is the profile of the supply market? Are they easily obtainable? How much is the cost of each alternative?

Developing Project Requirements

c.

Compare the alternatives (consider qualitative and quantitative factors)

▫ Consider how the PMO or end-user unit would rate the various alternatives in terms of the following:     Value for money Risk assessment and management Government policies that have an impact on the project or procurement Other relevant factors that may be identified by the PMO or end user unit.

d.

Choose the Best Alternative - the one that is most beneficial to the Procuring Entity, and make the necessary recommendation to the HOPE/Head

.

Developing Project Requirements

“In developing the project requirements and

TS/SOW/TOR, the Procuring Entity may engage the services of technical experts, whether in house or consultants, to ensure that the requirements and the

particular procurement.”

TS/SOW/TOR are adequate to achieve the objectives of the

Updates on the Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184

Association of Government Accountants of the Philippines (AGAP)

AFPCOC, Camp Aguinaldo, EDSA Quezon City 14 June 2012

Department of Budget and Management Government Procurement Policy Board Technical Support Office

NON-POLICY MATTER OPINIONS (Updates)

BAC Composition

I.

NPM 024-2011, NPM 034-2011, NPM 035-2011, NPM 28-2012 “Permanent” (Section 11, RA 9184)

The term does not refer to whether the person holding the plantilla position is contractual, regular, or appointed; rather, this refers to whether the position exists within the organizational structure of the procuring entity or not.

Therefore, a third ranking officer occupying a position, albeit in temporary capacity, is eligible to become the Chairman of the BAC for as long as the office he is currently occupying is an existing plantilla position.

The same rule applies to the designation of alternate members.

BAC Composition

II.

NPM 024-2011 “Approving Authority” (Section 11.2.5, IRR)

The prohibition stated in Section 11.2.5 of the IRR is intended to avoid any conflict of interest between the person who takes part in a procurement activity and the one approving the resulting transactions. Consequently, such prohibition does not apply to approving authorities where this conflict of interest is not present.

Re-assignment of BAC member

NPM 19-2012

The operations of the BAC will be hampered by the re-assignment of a member, whether provisional or regular, if such re-assignment results in the reduction of the BAC composition to less than five (5) members.

It is imperative for the HOPE to immediately replace any vacant BAC position to maintain a valid constitution of the BAC and avoid a lull in its operation.

Indemnification for BAC Members

NPM 044-2011 “finally adjudged”

BAC Under Section 73 of RA 9184, in relation to the indemnification package of members, the judgment contemplated therein, is a

final, non appealable and executory judgment .

Legal Assistance and Indemnification Package

The procuring entity shall, to the fullest extent permitted, indemnify a BAC member and/or any of its support staff who was or is a party to a pending or a completed action, suit or proceeding whether civil, criminal, or administrative in nature brought against him in the performance of his official functions as BAC member or support staff.

and its Support Staff) (Section 4.1.1, Guidelines for Legal Assistance and Indemnification of Bids and Awards Committee

The funds to be used for the grant of the free legal assistance, liability insurance, or medical assistance shall be taken from the agency’s annual appropriation, and augmented by other funds resulting from protest fees, sale of bidding documents, and other income-generating activities of the agency.

(Section 6, Guidelines)

Technical Working Group for the Bids and Awards Committee

NPM 26-2012

Members of the BAC – Technical Working Group need not come from the procuring agency itself, as Section 12.1 merely mentions that the members of the TWG come from a pool of technical, financial and/or legal experts. Nowhere is it mentioned that members of the TWG should exclusively belong to the procuring entity itself.

Advertising and Posting Requirements

NPM 032-2011

Aside from the required advertisement in one (1) newspaper of general nationwide circulation and posting at any conspicuous place reserved for the purpose in the premises of the procuring entity, the Invitation to Bid/Request for Expression of Interest shall be posted continuously in the PhilGEPS website, the website of the procuring entity concerned, if available, and the website prescribed by the foreign government/foreign or international financing institution, if applicable, for seven (7) calendar days starting on date of advertisement.

Non-compliance thereto is a material defect in the procurement process.

Supplemental/Bid Bulletin

I.

NPM 021-2011 - Bid Opening and Supplemental/Bid Bulletin

Postponing the opening of bids through the bid bulletin, without postponing the deadline for submission of bidding documents, is contrary to the bidding procedures prescribed by RA 9184 and its IRR.

The opening of bids should be conducted within the same day as, and immediately after, the deadline for the submission and receipt of bids.

While the BAC erred in changing the date for the opening of bid documents,

nowhere is it stated in RA 9184 and its IRR that the re-scheduling of the opening of bids automatically results to the re-scheduling of the deadline for the submission of bids.

Supplemental/Bid Bulletin

II. NPM 028-2011 - Modification of Bidding Documents

In instances where the procuring entity sees the need to introduce any modifications or amendments to the bidding documents, it may do so motu proprio through the issuance of a supplemental/bid bulletin pursuant to Section 22.5.2 of the same IRR.

Although the technical specifications were not discussed during the pre-bid conference, the procuring entity concerned is not precluded from requiring the same, provided the appropriate supplemental/bid bulletin is issued within the prescribed time frame.

Accreditation System for Bidders

NPM 033-2011

The creation of an accreditation system is not in accordance with the mandate of the present procurement law because

it contravenes the very basic principles of competitive bidding.

The establishment of an accreditation system within the agency would limit the participation of bidders only to the accredited suppliers, to the exclusion and prejudice of the bidders in the market.

Attendance of Bidders or their Duly Authorized Representative During Bid Opening

NPM 07-2012

The attendance of the bidders in the bid opening is optional. The proof of authorization is not necessary whenever a bidder’s representative, other than the one authorized in the Omnibus Sworn Statement, attends the bid opening.

Submission of Photocopy of Documentary Requirements

NPM 28-2011, NPM 09-2012

The IRR allows the submission of a copy of the original documents required, provided that the bidder certifies through the Omnibus Sworn Statement that the document submitted is an authentic copy of the original, that it is complete, and that the information and statements therein are true and correct.

It must IRR of RA 9184.

be stressed, however, that the authenticity of the submitted copy must be verified, validated, and ascertained by the procuring entity during the post-qualification as prescribed in Section 34 of the

Who may request for a copy of the Minutes of the Opening of Bids?

NPM 030-2011

“The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee” (

Section 29, RA 9184)

.

Participants or non-participants to the bidding may be given a copy of the minutes of the opening of bids upon compliance with the conditions provided by law.

Additional Eligibility Requirements in Bidding Documents

NPM 21-2012

Procuring Republic Act entities (RA) are 9184 proscribed from requiring additional eligibility requirements. The list of minimum eligibility requirements under the Implementing Rules and Regulations (IRR) of has been streamlined/simplified, determining bidder’s such eligibility.

that only those requirements enumerated in Section 23.1, 24.1, and 25.1 of the IRR are necessary for purposes of

Eligibility Requirements for Joint Venture Agreements

NPM 24-2012

The documents to be submitted and evaluated should be those of the actual Joint Venture (JV) partners. In case one of the JV partners is also a JV, only the technical experience/capability and financial standing attributable to the JV shall be considered, and should not include those of its individual member entities.

Counter-Offer/ Counter-Proposal

NPM 29-2012

Strict compliance with the eligibility, technical and financial requirements enumerated in the bidding documents must be observed. Bidders are left with no option but to provide an offer that complies with all the requirements. Compliance must be certain and absolute, otherwise, it takes the form of a counter-offer which is not allowed under RA 9184 and its IRR.

Single Calculated and Responsive Bid

I. NPM 022-2011 “most advantageous prevailing price for the Government”

It is the the task of the procuring entity to ensure that in adopting an ABC, the contract cost or estimate must not be excessively high or unreasonably low to the detriment of government interest.

It is not necessary to have many bidders in order to receive the most advantageous bid considering that any bid that is equal or lower than the ABC, and is technically and legally compliant, is deemed most advantageous to the Government.

Single Calculated and Responsive Bid

II. NPM 038-2011 – Requiring a minimum number of bidders.

Requiring a minimum number of bidders to participate in a public bidding is contrary to the mandate of Section 36 on Single Calculated/Rated and Responsive Bid (SCRB). The provision instructs a Procuring Entity to consider for award a bid submitted by the lone bidder if it successfully complied with and is responsive to bidding requirements. Hence, there is no need to have a minimum, so as long as the conditions under Section 36 are met.

Single Largest Completed Contract

NPM 20-2012

The SLCC criterion is so required in order to ensure that the Government is contracting with an entity that has accomplished at least one project with a value no less than fifty percent (50%) of the contract to be bid. This eligibility requirement cannot be dispensed with.

Ongoing contracts cannot substitute for the requirement of completed contracts of similar nature to the contract subject for bidding.

Nationality Preference

NPM 15-2012

Although procuring entities are given leeway in formulating the specifications in the terms of reference, they cannot limit the origin of goods to their preferred countries of origin to the exclusion of other countries.

Thus, procuring entities are precluded from requiring a specific country of origin as part of the technical specification for the project. Rather, the specifications shall be based on the performance requirements and recognized industry standards and not on the basis of country of origin.

No Contact Rule

NPM 03-2012

bids.

The “no contact rule” under Sec. 32.1 applies only to those whose bids are being evaluated by the BAC after passing the preliminary examination of On the other hand, a disqualified bidder may provide valid, reasonable and lawful information on matters pertaining to the bids being evaluated, provided that such bidder has no pending request for reconsideration or protest relative to his/her disqualification.

Audited Financial Statements

NPM 12-2012

Financial statements audited by CPAs not accredited by the Board of Accountancy (BOA) cannot 9184.

be considered for purposes of Sec.

23.1(a)(v) and Sec. 24.1(a)(v) of the IRR of RA Sections 26 and 28 of the IRR of RA 9298 (Phil. Accountancy Act of 2004) provides that no person shall engage in the practice of accountancy unless he/she is a CPA and possesses a certificate of accreditation from BOA.

Bid Security

I.

NPM 23-2011 Forfeiture

on Forfeiture of bid security grounded requirements under Sec. 34.2 of the IRR is mandatory and is not subject to the discretion of the procuring entity.

non-compliance with the

Bid Security

II.

NPM 043-2011 Acceptable Forms

Bidders have the option to choose from any of the acceptable forms of bid security enumerated under the IRR of RA 9184, and procuring entities may not limit the allowable forms of bid security nor prohibit bidders from submitting any of the acceptable forms of bid security.

The BAC may not likewise require the same through verbal instructions during pre-bid conference. After all, no changes or modifications to the bidding documents may take effect unless identified in writing and issued through a Supplemental/Bid Bulletin.

Validity of Bid Security after Issuance of Notice of Award

NPM 18-2012

The validity of the bid security is material at the time of the issuance of the NOA since the validity of the bid security signifies that the “offer” to accept.

bidder’s bid or offer still stands at the time the procuring entity awarded the contract.

The validity of the bid or offer is vital because the NOA or the act of acceptance by the procuring entity will be rendered nugatory and ineffectual when there is no longer an If the NOA was issued and the winning bidder has submitted a performance security within the three-month period, the requirement that the bid security should remain valid no longer finds application considering that the act, i.e.

the offer, which it guarantees has already been accepted.

Certification issued by the Insurance Commission

NPM 17-2012

The certification which must together with the surety bond must: be submitted 1. unequivocally state that the surety or insurance company is specifically authorized to issue surety bonds callable on demand; 2. must be issued by the Insurance Commission; and, 3. must be project specific. (

Sections 27 and 39, IRR)

Submission of Post-qualification Documents

NPM 09-2012

I.

the Bidders are not precluded from submitting post-qualification documents during the submission of bids.

However, in case there is delay in the conduct of post-qualification, it is prudent for the Procuring Entity to request for the latest and current legal documents during post-qualification to ascertain, validate and verify the authenticity and currency of the documents and establish the eligibility and responsiveness of the bidder.

Submission of Post-qualification Documents

NPM 09-2012

II.

The BAC cannot require submission of the Original Articles of Incorporation (AIs). Section 29.2 (d) speaks of licenses and permits required by law and stated in the Bidding Documents. Clearly, AIs do not fall in either type of documents since this is a corporate document submitted to the Securities and Exchange Commission as part of the registration requirements.

Accordingly, if the requirement is merely to aid the Procuring Entity or the BAC in verifying the eligibility documents submitted, the bidder may simply submit copies of the AOI that is material to the post-qualification proceedings being conducted.

Offenses and Penalties Contract Award

NPM 10-2012

Awarding of contracts beyond the prescribed period of action may be recognized for justifiable causes.

(Section 65.1 (b), RA 9184)

Although the periods of action under RA 9184 and its IRR are mandatory in character, penal sanctions or liability will not set in against the concerned public officers provided that valid, reasonable, and justifiable causes exist to warrant a delay.

Surety Bond as Warranty Security

NPM 29-2011

The acceptable forms of warranty security in the procurement of goods are limited to retention money and special bank guarantee (Section 62.1, IRR).

Surety bond, as a form of warranty, is acceptable only in case of infrastructure projects. Thus, following the principle “expressio unius est exclusio alterius”, a surety bond cannot be considered an acceptable form of warranty security for the procurement of goods.

Extension of Contracts for General Support Services

NPM 031-2011

Procuring entities are allowed to extend the duration or effectivity of an ongoing contract about to expire subject to the condition that the contract extension shall not exceed one (1) year.

for General Support Services) ( Section 4.1 GPPB Revised Guidelines on the Extension of Contracts

Warranty Security for Consulting Services

NPM 11-2012

Sec. 62.2 of the IRR, insofar as it requires the posting of warranty security, does not apply to the procurement of consulting services.

Procuring entities can require in consultancy contracts that the consultants warrant or ensure that they shall be liable in case of structural defects/failures under Sec.

62.2.3.1

and/or pecuniary civil liability and damages.

Computation of Liquidated Damages and Net Amount of Retention Money

NPM 01-2012, NPM 25-2012

The amount of the liquidated damages shall be at least equal to one-tenth of one percent (

delay 0.1%

infrastructure )

of the cost of the unperformed portion for every day of

for the procurement of goods, projects, and consulting services.

(Section 68, IRR, RA 9184)

Blacklisting

NPM 33-2012

In order to properly use the basis for Blacklisting”, “Guidelines for Blacklisting of Manufacturers, Suppliers, Distributors and Consultants, as the act committed should be of the same kind as those enumerated therein. Considering that the violation of the rules and procedure on the protest mechanism under RA 9184 and its IRR does not amount to an act tending to defeat the purpose of competitive bidding, the premature resort to judicial intervention will not be considered as a ground for blacklisting.

Availment of Track Record under a Newly Registered Business Name

NPM 37-2011

A newly registered sole proprietorship may use the experience of another sole proprietorship owned by the same individual.

If sole one of the proprietorships sole owned proprietorships blacklisted, such blacklisting will extend to all by the is same individual.

ALTERNATIVE METHODS

1. SHOPPING

Exemption from Obtaining Three (3) Price Quotations

NPM 25-2011

It is beyond the power of the GPPB to grant exemptions from Republic Act No.

9184 and its Implementing Rules and Regulations

as it does not have the power to legislate nor determine the coverage of the law. At most, the GPPB may only render contemporaneous construction of the provisions of the law pursuant to its quasi-legislative fiat, and issue rules and regulations pursuant to its rule-making power.

NEGOTIATED PROCUREMENT 2. Two Failed Biddings

NPM 41-2011

There is nothing in the rules prohibiting bidders disqualified from previous failed biddings from participating in the same procurement activity, albeit conducted through Negotiated Procurement (Two Failed Biddings).

3. Emergency Cases

NPM 045-2011

Competitive bidding is the primary mode of procurement. Exceptions are allowed only if there is prior approval of the Head of the Procuring Entity (HOPE) and whenever it is justified by the conditions as well as to promote economy and efficiency.

Prior approval of the GPPB in order to resort to alternative methods is not required under RA 9184 and its IRR.

4. Adjacent or Contiguous

NPM 22-2012

Section 53.4 of the IRR clearly states that it applies to infrastructure projects and consulting services. Said provision does not qualify or limit the term “consulting service” to those involving infrastructure projects.

Hence, Procurement (Adjacent or Contiguous) may be used to procure all types of consulting services as defined in Section 5(i) of the IRR.

Negotiated

5.

Agency-to-Agency Agreements

I.

NPM 26-2011, NPM 16-2012, NPM 30-2012

In cases where procurement from another agency of the government is more efficient and economical, Negotiated Procurement (Agency-to-Agency) may be used. This rule allows a government entity to procure from another government entity without need of public bidding, subject to compliance with the prescribed conditions and procedures under existing rules and the guidelines on Agency-to-Agency Agreements.

Agency-to-Agency Agreements

II.

NPM 04-2012

The government entity to be engaged must have the mandate to deliver the required goods and services or to undertake the infrastructure project or consultancy required. In addition, it should have the necessary tools and equipment required for the project.

6

.

Procurement Agent NPM 34-2011, NPM 30-2012

In the event that a BAC cannot be created for lack of qualified personnel, Section 53.6 of the IRR of RA 9184 gives procuring entities the option, as determined by the HOPE, (1) to request other government agencies to undertake such procurement for them; or (2) to engage procurement agents to assist them directly and/or train their staff in the management of procurement function.

7. Small Value Procurement

NPM 36-2011, NPM 34-2012

Small Value Procurement is allowed where the procurement does not fall under Shopping in Section 52 of the IRR, and the amount of the procurement must be within the threshold amount prescribed under Annex “H” of the IRR, subject to the procedural requirements under the Guidelines for Shopping and Small Value Procurement.

However, if the goods to be purchased can be considered as “ordinary or regular office supplies” not available in the Procurement Service, then the alternative method of Shopping can be used subject to the prescribed thresholds and guidelines.

NEGOTIATED PROCUREMENT Exemption from Resort to Negotiated Procurement

NPM 05-2012, NPM 14-2012

Since the general rule is public bidding, the procuring entity is not precluded from applying such method regardless of the existence of conditions warranting the use of any of the alternative methods of procurement.

NEGOTIATED PROCUREMENT Resolution of the BAC – When necessary?

NPM 027-2011

Section 53.2 of the IRR allows procuring entities to directly negotiate with a technically, legally and financially capable supplier or contractor in emergency cases, provided that the required conditions or instances are present. The determination of existence of these instances lies within the discretion of the procuring entity.

Accordingly, if the project was not included in the APP of the procuring entity, then it is essential that a BAC resolution recommending the use of alternative method be made; and a supplemental APP or an amendment thereto be issued before proceeding with the procurement.

Infrastructure Projects by Administration

NPM 32-2012

In case of Infrastructure Projects by Administration, the procuring entity acts as the contractor, hence, it is tasked to prepare the Program of Work, as provided under the Revised Guidelines for the Implementation of Infrastructure Projects by Administration.

However, the cost of rental of construction equipment and tools to be used in the project should not form part of the Program of Work as it is a condition precedent that the procuring entity must own it.

Procurement of Security and Janitorial Services and Multi-Year Contracts

I.

NPM 040-2011 Coverage

Section 2 of the Guidelines clearly indicates that it shall apply to all government agencies, the well-recognized rule without any distinction or qualification. Thus, following

“ubi lex non distinguit, nec nos distinguire debemus”

Guidelines also applies to GOCCs.

, the

Procurement of Security and Janitorial Services and Multi-Year Contracts

II.

NPM 08-2012 – Applicability

The Security and Janitorial Services, does not make any categorical Guidelines on pronouncement the Procurement that of multi-year contracts may be availed of only in the case of janitorial and security services contracts; rather, said Guidelines simply state that it shall be applicable to the procurement of janitorial and security services.

Procurement of Security Services

NPM 042-2011

All private security agencies participating in the bidding for government contracts may offer different bid prices, provided that they do not go below the standard salaries and benefits and the mandated taxes in the minimum cost distribution formula.

(Section 4, GPPB Circular 02-2006)

Government agencies are likewise advised to require bidders to indicate in their financial proposal the itemized components of the minimum cost distribution formula to facilitate the evaluation of bids.

(Section 5, GPPB Circular 02-2006)

Hence, the requirement under Section 19 (a)(5) of the IRR of RA 5487, requiring private security agencies, to ensure that separation and

retirement pay benefits due their security personnel are duly paid, cannot be omitted by procuring entities from the detailed cost breakdown of the financial bid form

used for the procurement of security services.

PADPAO Rate

NPM 13-2012

The

Philippine Association of Detective Protective Agency Operators (PADPAO) Rate and

includes three components – Total Amount to Guard and Government, Agency Fee and VAT.

A Philippine Security Agency (PSA) bidding for government contracts may offer different bid prices below the PADPAO rate without being charged of cut-throat competition or violating the provisions of the IRR of RA 5487, provided that they do not go below the standard salaries and benefits for the guards and the mandated taxes in the minimum cost distribution formula in conformity with existing wage laws.

Impliedly, the PSA can offer an amount lower than the PADPAO rate by reducing the agency fee covering operational and administrative expenses in computing for its bid price.

The administrative cost or agency fee is included in the PADPAO rate.

Procurement of Printing Services

(GPPB Resolution No. 05-2010)

NPM 046-2011, NPM 047-2011

Despite the exclusion of GOCCs incorporated under BP 68 in the definition of Servicing Agency in GPPB Resolution 05-2010, and the fact that APO is a GOCC incorporated under BP 68, APO is nevertheless allowed to be engaged as a Servicing Agency only for the printing of Accountable Forms and Sensitive high Quality/Volume Requirements by virtue of the recognition accorded to it by RA 9970 and RA 10147 as a Recognized Government Printer.

Request for Price Escalation

NPM 02-2012

The burden of proving the occurrence of extraordinary circumstances that will allow for price escalation rests with the entity requesting for such escalation.

NEDA shall only respond to such request after receiving the proof and the necessary documentation.

Along this line, the review and approval process under Section 5 of the Guidelines provide that the HOPE shall endorse the request for price escalation to NEDA upon determination that such request is valid and justified.

THANK YOU

Comments… Questions…

Survey of Supreme Court Decisions on Public Procurement

Section 4, R.A. 9184

•

Abaya vs. Ebdane

G.R. No. 167919 , February 14, 2007 •

DBM-PS vs. Kolonwel Trading

G.R. No. 17560, June 8, 2007 – Loan Agreement, through Exchange of Notes, executed by the President with an IFI is an “Executive Agreement” and must be observed pursuant to “pacta sunt servanda.”

Nature of Public Bidding

National Power Corporation vs. Pinatubo Commercial, represented by Alfredo A. Dy

G.R. No. 176006, March 26, 2010  The bidding process was not a “free-for-all” where any and all interested parties, qualified or not, could take part. RA 9184 categorically mandates that prospective bidders are subject to eligibility screening, and as earlier stated, bidding rules may specify other conditions or order that the bidding process be subjected to certain reservations or qualifications.

 The competitiveness policy of a bidding process presupposes the eligibility and qualification of a contestant; otherwise, it defeats the principle that only “responsible” and “qualified” bidders can bid and be awarded government contracts. Our free enterprise system is not based on a market of pure and unadulterated competition where the State pursues a strict hands-off policy and follows the let-the-devil-devour-the-hindmost rule.

Technical Specifications

•

COA vs. Link Worth Int’l., Inc.

G.R. No. 182559 March 13, 2009

– Procuring entity must verify, inspect and test whether the technical specifications comply with its requirements – It does not give occasion for procuring entity to arbitrarily exercise its discretion and brush aside the very requirements it specified

Determination of the Nature of the Subject Matter of Procurement

Department of Foreign Affairs and Bangko Sentral ng Pilipinas vs. Hon. Franco T. Falcon and BCA International Corporation

G.R. No. 176657 September 1, 2010  The e-Passport Project cannot be considered as "engineering works or a service contract" or as "related and necessary activities" under Republic Act No. 8975 which may not be enjoined.. Under Republic Act No. 8975, a "service contract" refers to "infrastructure contracts entered into by any department, office or agency of the national government with private entities and nongovernment organizations for services related or incidental to the functions and operations of the department, office or agency concerned."  Indeed, the reference to Section 30.4 of the IRR of Republic Act No. 9184 (a provision specific to the procurement of goods) in the BSP’s request for interest and to bid confirms that the e-Passport Project is a procurement of goods and not an infrastructure project.

Thus, within the context of Republic Act No. 9184 – which is the governing law for the e Passport Project – the said Project is not an infrastructure project that is protected from lower court issued injunctions under Republic Act No. 8975, which, to reiterate, has for its purpose the expeditious and efficient implementation and completion of government infrastructure projects.

Splitting of Contracts

•

Balderbin v. Sandiganbayan

G.R. Nos. 144950-71, March 22, 2007  A BAC member, aware of the splitting of transactions of accounts, proceeded with signing the Abstract of Bids claiming that the same was done in good faith and that he did not participate in said splitting of accounts.

 The BAC member cannot claim good faith and avoid criminal liability. He knew of the splitting of contracts and the same cannot be ignored.

 Supreme Court cited COA Circular No. 76-41 in defining and identifying forms of splitting of contracts.

84

Discretion to Accept or Reject A Bid

•

Albay Accredited Constructors Association v. Ombudsman

G.R. No. 13351, January 30, 2006

– The discretion to accept or reject a bid and award contracts is vested in the government agencies entrusted with that function. The discretion given to authorities to accept or reject a bid is of such wide latitude that courts will not interfere, unless it is apparent that it is exercised arbitrarily, or, used as a shield to a fraudulent award.

85

Effect of Reservation Clause

National Power Corporation Vs. Philipp Brothers Oceanic, Inc.

G.R. No. 126204 November 20, 2001  NAPOCOR was not bound under any contract to approve PHIBRO's pre-qualification requirements.

 Where the right to reject is so reserved, the lowest bid or any bid for that matter may be rejected on a mere technicality.  Where the government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown.  Verily, a reservation of the government of its right to reject any bid, generally vests in the authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.

COA’s Presence in Public Bidding

•

Villanueva v. COA

G.R. No. 151987. March 18, 2005 – Upon the agency that called for the bidding, therefore, rests the burden of ensuring that the process undertaken is above-board and that the outcome thereof is most advantageous to the government. The presence of the

COA representative, as witness or observer, on the other hand, is fundamental only to the extent of guaranteeing documentary integrity and transparency in the bidding process.

87

Perfection of Contract

The Insular Life Assurance Company, Ltd. Vs. Asset Builders Corporation,

G.R. No. 147410 February 5, 2004 – The effect of giving the Notice of Award … would have been the perfection of the contract. No such acceptance was communicated to respondent; therefore, no consent was given. Without that express manifestation, as required by the terms of its proposal, there was no contract. 88

Importance of Bid Security

The Insular Life Assurance Company, Ltd. Vs. Asset Builders Corporation

G.R. No. 147410 February 5, 2004 The "bid bond is an indispensable requirement for the validation of a bid proposal. This requisite ensures the good faith of

bidders and binds them to enter into a contract with the owner,

should their proposal be accepted. One who submits a bid not only signifies assent to the terms and conditions of a proposal, but impliedly binds oneself to them, if and when the bid is considered.

The Invitation to Bidders even provided that incomplete proposals might be sufficient cause for their rejection. If mere insufficiency of a

bond required of a bidder is a ground for rejection, a fortiori, all the

more so is the total want thereof.

Honoraria

•

Sison vs. Tablang

G.R. No. 177011, June 5, 2009 – Section 15 of R.A. 9184 authorizing grant of honoraria is not self-executing. It still needs an implementing guideline. – Honorarium is something given not as a matter of obligation but in appreciation for services rendered. Section 15 uses the word “may”.

NOTE: DBM Circ. No. 2004-5A, as amended by DBM Circ. 2007-3

Protest

•

Phil. Pharmawealth, Inc. v. Phil. Children’s Medical Center BAC, et. al.

GR No. 167806 26 June 2006

• The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate administrative authorities to accord them the prior opportunity to decide controversies within their competence before the same may be elevated to the courts of justice for review.

• Protest Mechanism under R.A. 9184 and its IRR must be observed.

91

Protest

•

LRA v.

Lanting

GR No.181735

Security

July, 20, 2010 • protest fee.

and Watchman Agency

Sec. 55 of RA 9184, the Government Procurement Reform Act, sets three requirements that must be met by a party desiring to protest the decision of the Bids and Awards Committee (BAC): (1) the protest must be in writing, in the form of a verified position paper; (2) the protest must be submitted to the head of the procuring entity; and (3) the payment of a non-refundable • Respondent’s letter of November 19, 2004 to the LRA Chair of the BAC-Procurement of Goods, Services and Materials (BAC PGSM) cannot be considered as the protest required under sec.

55 of RA 9184 as it was not verified and the protest fee was not

paid.

Protest

•

DBM-PS vs. Kolonwel Trading

G.R. No. 17560, June 8, 2007 – Three elements of a Protest: • In writing, in the form of a verified position paper • Submitted to the head of the procuring entity • Payment of a non-refundable protest fee – Protest mechanism applies to foreign-funded projects

Protest

•

First United Constructors Corp. vs. Poro Point Management Corp.

G.R. No. 178799, January 19, 2009 – Petitioner violated doctrine of judicial hierarchy in directly filing its petition for Certiorari before the Supreme Court • One must first invoke special and important reasons

Negotiated

Procurement: Delay in the Use of Funds

Nava vs. Palattao

G.R. No. 16021 August 28, 2006  The head of the procuring entity persuaded his 7 Schools Division Superintendents to ignore Circular No. 85-55 (public bidding). As allegedly time was of the essence in making the purchases and if not done before the calendar year 1990, the funds allotted will revert back to the general fund.

 There was no showing of any immediate and compelling justification for dispensing with the requirement of public bidding. Unsubstantiated reasoning that a public bidding would unnecessarily delay the purchase is unacceptable.

Allied Supreme Court Decisions

People of the Philippines vs. Sandiganbayan G.R. Nos. 162748-50 March 28, 2006 Facts: The BAC awarded a bidder an infrastructure project despite knowledge that the bidder (a construction firm) was not qualified for not being accredited by the Philippine Contractor’s Accreditation Board (PCAB). Hence, BAC members were accused of violating RA 3019 for “knowingly approving or granting a license of any person not qualified for or not legally entitled to such license”.

• • Issue: Whether or not a BOT project proponent needs to register with and be accredited by the PCAB Whether or not a MOA under the BOT scheme is valid without public bidding

People of the Philippines vs. Sandiganbayan G.R. Nos. 162748-50 March 28, 2006 Ruling: A BOT project proponent is not a contractor to undertake actual construction for the project and thus it need not register with and be accredited by the PCAB.

The requirement of public bidding, as well as the process and procedures thereof, mandated by the BOT law do not apply to unsolicited proposals for projects. Projects to be implemented under unsolicited proposals need not comply with the requirements, process and procedures of public bidding.

Macalintal vs. COMELEC G.R. No. 157013 July 10, 2003 Facts: Congress enacted R.A. 9189 (The Overseas Absentee Voting Act of 2003). The petitioner Macalintal questions, among others, the constitutionality Section 19 of R.A. 9189 which provides for the creation of a Joint Congressional Oversight Committee with the power to review, revise, amend and approve the implementing rules and regulations promulgated by the COMELEC. He contends that R.A. 9189 intrudes into the independence of the COMELEC which, as a constitutional body, is not under the control of either the executive nor the legislative departments of government; that only the COMELEC itself can promulgate rules and regulations which may be changed or revised only by the majority of its members.

Macalintal vs. COMELEC G.R. No. 157013 July 10, 2003 Issue: Whether or not Section 19 of R.A. 9189 is constitutional?

Ruling: The Commission on Elections is a constitutional body. It is intended to play a distinct and important part in our scheme of government. In the discharge of its functions, it should not be hampered with restrictions that would be fully warranted in the case of a less responsible organization.

The Commission may err, so may this court also.

By vesting itself with the powers to approve, review, amend, and revise the IRR for The Overseas Absentee Voting Act of 2003, Congress

went beyond the scope of its constitutional authority. Congress trampled upon the constitutional mandate of independence of the COMELEC.

Under such a situation, the Court is left with no option but to withdraw from its usual reticence in declaring a provision of law unconstitutional.

G & S Transport Corporation Vs. Court of Appeals, G.R. No. 120287 May 28, 2002 Facts: MIAA initiated proceedings for public bidding to choose two (2) concessionaires of the coupon taxi services at the NAIA. Five (5) firms pre-qualified to join the bidding including petitioner G & S and respondents Two Thousand (2000) Transport Corporation (2000 TRANSPORT) and Nissan Car Lease Philippines, Inc. (NISSAN), after complying with the terms of reference, the instructions to bidders and the invitation to bid.

MIAA selected 2000 TRANSPORT and NISSAN as the winning bidders and issued in their favor the respective notice of awards of the coupon taxi service concession.

G & S Transport Corporation Vs. Court of Appeals, G.R. No. 120287 May 28, 2002 Issue: Whether or not permanent injunction to bar the award of the concession to 2000 Transport and Nissan is proper?

Ruling: - Indeed the determination of the winning bidders should be left to the sound judgment of the MIAA which is the agency in the best position to evaluate the proposals and to decide which bid would most complement the NAIA's services.

The Terms of Reference for Coupon Taxi Service Concession observed, "[t]he professional transport service plays a very important role in enhancing and maintaining a good image of the country that will speak of trust, honesty, efficiency and modernity." - In this regard only the most advantageous bids would be selected on the basis of the best bid offer in relation to the bidders' existing facilities, financial standing, organizational set-up, relevant experience, quality, capability and kind of services offered.

Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla G. R. No. 151992 September 18, 2002 Facts: Pursuant to RA 8189 or the Voters Registration Act of 1996, COMELEC promulgated Resolution No. 00-0315 on the VRIS Project. PHOTOKINA won the public bidding conducted for the project for the bid amount of P6.588

billion pesos. Both parties proceeded to formalize the contract. However, the budget appropriated for the modernization project under RA 8760 was only P1 billion and actual available funds under the CAF was only P1.2

billion. The contract was not executed because former Chairman Demetriou objected to the contract. Her successor, Chairman Benipayo, scrapped the project.

Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla G. R. No. 151992 September 18, 2002 Issue: Whether or not the contract between PHOTOKINA and COMELEC is valid and binding upon the unqualified acceptance of the bid?

Ruling: There is no way that a government agency could enter into a contract with a bidder whose accepted bid was way beyond the amount appropriated by law for the project. The BAC should have rejected the bid for being excessive or should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is null and void.

Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No. 115221 March 17, 2000 Facts: Bohol Agricultural College purchased chemicals priced at P10,633.00 from JDS Traders, which was one of the three suppliers requested by the College for quotations. Accused Froilan of the JDS Traders signed a certification stamped on the purchase order that he will refund the difference if the prices are found to be overpriced. Three years after, COA demanded the settlement from Froilan of a refund of the amount found to have been overpriced, P5,233.17. Notwithstanding the refund made by Froilan, an information for violation of Sec 3(g) of RA 3019 was filed against him.

Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No. 115221 March 17, 2000

Issue: Whether or not Froilan was guilty of causing damage to the government in terms of overpricing when he guaranteed the refund of whatever overprice the COA will find later on?

Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No. 115221 March 17, 2000 Ruling: Conspiracy in this case could not have existed in the criminal act of causing damage to the government in terms of overpricing the goods bought by the latter from petitioner when, in reality, petitioner gave his guarantee to refund whatever overpricing the Commission on Audit will find out later on. It was not disputed that when the COA found an overprice in the amount of P5,232.87 and sought a refund thereof, petitioner, true to his promise, did actually make a refund.

When the government is amply protected in a procurement transaction, the contract is not grossly Commission on Audit will find out later on.

and manifestly disadvantageous to it. Conspiracy could not exist in the criminal act of causing damage to the government in terms of overpricing the goods bought by the government from a private entity when the latter gave its guarantee to refund whatever overpricing the

Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto, G.R. No. 143684 July 31, 2000 Facts: The City Government of Legazpi City invited bidders to participate in the development and construction of the Legazpi City Public Market. The project was awarded to Liberty Commercial Center.

A renewable 50-year contract of lease with Liberty was entered into by the city government. Liberty will construct a public market on the property of the government and thereafter pay the latter P5.5 million annually for the lease of the property. Transfer of ownership of the public market will be transferred to the city government at the end of the 50-year lease.

Complaint was filed against respondents before the Office of the Ombudsman on violations of Sec. 3(e), (g) and (j) of Republic Act No. 3019, which was dismissed.

Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto, G.R. No. 143684 July 31, 2000 • •

Issues: Whether or not the lease transaction falls under the BOT law or RA 9184?

Whether or not the payment of rent on an annual basis is prejudicial to the government?

Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto G.R. No. 143684 July 31, 2000 Ruling: The requirements under R.A. 6957 on approval from the ICC of NEDA Board refer to transaction under the build-operate-transfer scheme of the government and not to contract involving lease of property just like the one involved in the instant case.All the elements of a contract of lease are present in the transaction.(A transaction that would now fall under general procurement law or RA 9184, comment ours)There is a subject matter, the use of the property of the Legazpi City; a cause or consideration which is the amount of rental that shall be paid by the LCC; and consent among the parties. The mere provision in the contract that the building shall belong to the city government of Legazpi at the termination of the contract will not be sufficient to classify the transaction under the BOT scheme. This kind of provision is ordinary in long-term lease agreement.

The option given to LCC to pay rent on a monthly basis (instead on an annual basis) is not prejudicial to the government. Whether the rent is paid monthly or annually would result in the same thing – the receipt by the government of the same sum of money. Mere reference made in the contract that the amount of rent shall be such amount annually does not necessarily mean that payment should be made in an annual basis.

ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL G.R. No. L-21352 November 29, 1966

Facts: During the rebidding conducted by the Committee on Bids (composed of City Mayor, Treasurer and Auditor), it was alleged that the Mayor was represented by someone else. There was contention that the Committee on Bids was illegally convened as the law does not allow substitution.

ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL G.R. No. L-21352 November 29, 1966 Issue: Whether or not there can be valid substitution in the Committee on Bids.

Ruling: Well established is the principle that judicial or quasi judicial powers may not be delegated. In the absence of constitutional or statutory authority, an administrative officer may not alienate or surrender his discretionary power or power's which require exercise of judgment, or deputize another for him with respect thereto. For, when a public official is granted discretionary power, it is so be presumed that so much is reposed on his integrity, ability, acumen, judgment.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No. 161081 May 10, 2005 Facts: The Governor issued a memorandum to approve purchase orders in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan. The Vice Governor, and head of presiding officer of the Sangguniang Panlalawigan, claims that he is the one authorized to approve the purchase orders invoking the principle of separation of powers between the executive and legislative branches of government. The Governor on the other hand, insists on the application of the last clause in Section 344 (Local Government Code) which states that the approval of the disbursement by the local chief executive is required whenever local funds are disbursed.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No. 161081 May 10, 2005

Issue: Whether or not the Governor (as local chief executive) is authorized to approve purchase orders issued in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No. 161081 May 10, 2005 Ruling: The Supreme Court held that it is the Vice Governor who has such authority. Under Rep. Act No. 7160, local legislative power for the province is exercised by the Sangguniang Panlalawigan and the Vice-Governor is its presiding officer. Being vested with legislative powers, the Sangguniang Panlalawigan enacts ordinances, resolutions and appropriates funds for the general welfare of the province in accordance with the provisions of Rep.

Act No. 7160.

RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No. 161081 May 10, 2005 • Since it is the Vice-Governor who approves disbursement vouchers and approves the payment for the procurement of the supplies, materials and equipment needed for the operation of the Sangguniang Panlalawigan, then he also has the authority to

approve the purchase orders to cause the delivery of the said

supplies, materials or equipment.

• Indeed, the authority granted to the Vice-Governor to sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the Sangguniang Panlalawigan as well as to approve disbursement vouchers relating thereto is greater and includes the authority to approve purchase orders for the procurement of the supplies, materials and equipment necessary for the operation of the Sangguniang Panlalawigan.

Quisumbing v. Garcia, G.R. 175527, December 8, 2008

• Sec. 22(c) of R.A. No. 7160 provides: • Sec. 22. Corporate Powers.—(a) Every local government unit, as a corporation, shall have the following powers: (c) Unless otherwise provided in this Code, no contract

may be entered into by the local chief executive in behalf of the local government unit without prior authorization by

the Sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.

• As it clearly appears from the foregoing provision [Sec. 22(c)], prior authorization by the sanggunian concerned is required before the local chief executive may enter into contracts on behalf of the local government unit. • The requirement was deliberately added as a measure of check and balance, to temper the authority of the local chief executive, and in recognition of the fact that the corporate powers of the local government unit are wielded as much by its chief executive as by its council.

• And so, to give life to the obvious intendment of the law and to avoid a construction which would render Sec. 22(c) of R.A. No. 7160 meaningless, disbursement, as used in Sec. 346, should be understood to pertain to payments for statutory and contractual obligations which the sanggunian has already authorized thru ordinances enacting the annual budget and are therefore already subsisting obligations of the local government unit. Contracts, as used in Sec. 22(c) on the other hand, are those which bind the local government unit to new obligations, with their corresponding terms and conditions, for which the local chief executive needs prior authority from the sanggunian.

THANK YOU…

Atty. Dennis S. Santiago

Executive Director III Comments, Questions?

   Telephone/Fax: (+632) 900-6741 to 44

Website:

http://www.gppb.gov.ph

Email:

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