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Volume 1 — Guidelines on the Establishment of Procurement Systems and Organizations

2010

GENERIC PROCUREMENT MANUAL

VOLUME 1

Guidelines on the Establishment of Procurement Systems and Organizations

 

ABBREVIATIONS AND ACRONYMS

GENERAL PROVISIONS

      Legal Basis for the Procurement Manual

            Legal Reference

      Coverage, Scope, and Application

            Legal Reference

            Coverage

            Scope

            Application

      Principles of Government Procurement

            Legal Reference

            Transparency

            Competitiveness

            Streamlining and use of technology in procurement

            Accountability

            Public Monitoring

PROCUREMENT ORGANIZATIONS

      The Organizational Structure

            Legal Reference

            1.   The Procuring Entity and the Procurement Unit/Office

            2.   The Bids and Awards Committee (BAC)

            3.   BAC Members

            4.   The Technical Working Group (TWG)  

            5.   Observers

      Roles and Responsibilities

            Legal Reference

            1.   The Procuring Entity and the Procurement Unit/Office

            2.   The BAC 

            3.   The TWG

            4.   The Observers

      Conditions for Granting Honoraria

            Legal Reference

      Professionalization of Procurement Units, BAC, TWG 

            Legal Reference

PROCUREMENT PLANNING

      Procurement Planning — Procurement Planning and Budget Linkage

            Legal Reference

      Procurement Planning — Preparation of the Project Procurement Management
      Plan (PPMP)

            Legal Reference

            1.   The PPMP

            2.   Developing the Project Requirements

            3.   Writing the Technical Specifications, Scope of Work and Terms of Reference

            4.   Determining the Approved Budget for the Contract

            5.   Procurement Milestones

            6.   Method of Procurement

            7.   Format of the PPMP (prepared by the PMO/end-user unit)

      Procurement Planning — Preparation of the Annual Procurement Plan (APP)

            1.   The Annual Procurement Plan

            2.   Procurement Strategy 

            3.   Format of the APP

VARIOUS METHODS OF PROCUREMENT

      Competitive Bidding

            Legal Reference

      Alternative Methods of Procurement

            Legal Reference

            1.   Conditions for Use of Alternative Methods of Procurement

            2.   The Different Alternative Methods

PROCUREMENT BY ELECTRONIC MEANS AND THE PHILGEPS

      Procurement by Electronic Means and the Philippine Government Electronic
      Procurement System

            Legal Reference

            1.   The PhilGEPS

            2.   Features of the PhilGEPS

      Use of Procurement Service Providers

            Legal Reference

            Minimum Requirements for Service Providers

FOREIGN-ASSISTED PROJECTS

      Foreign-Assisted Projects

PENAL, CIVIL AND ADMINISTRATIVE LIABILITIES AND SANCTIONS

      Standard of Ethics

            Definition of Corrupt, Fraudulent, Collusive, and Coercive Practices

            Applicable penalty for fraud, misrepresentation and collusion

      Conflict of Interest

      Penal Liabilities and Sanctions

            Penal Liabilities of Public Officers

            Penal Sanctions for Public Officers

            Penal Liabilities of Private Individuals

            Penal Sanctions for Private Individuals

      Civil Liability

            Civil Liability in Case of Conviction

            Liquidated Damages

      Administrative Liabilities and Sanctions

            Administrative Liabilities

            Administrative Sanctions

      Blacklisting Guidelines

            Prohibition on blacklisted persons/entities to participate in the bidding of Government
            Projects/Contracts

            Sanctions and Grounds for Blacklisting

LEGAL ASSISTANCE AND INDEMNIFICATION

      General Conditions

            Free Legal Assistance

            Liability Insurance

            Medical Assistance

      Procedure for Granting Legal Assistance and Indemnification

CASE STUDIES

      Case Study: Procurement of Infrastructure Projects

            Analysis

      Case Study: Procurement of Consulting Services

            Analysis

ANNEX

GLOSSARY

ABBREVIATIONS AND ACRONYMS

ABC                                       Approved Budget for the Contract

ABM                                       Agency Budget Matrix

ADB                                       Asian Development Bank

AFP                                       Armed Forces of the Philippines

AFS                                       Audited Financial Statement

APP                                       Annual Procurement Plan

BAC                                       Bids and Awards Committee

BDS                                       Bid Data Sheet

BRS                                       Bureau of Research and Standards

BSP                                       Bangko Sentral ng Pilipinas

CAF                                       Certificate of Availability of Funds

CDA                                       Cooperatives Development Authority

CIAP                                      Construction Industry Authority of the Philippines

CIF                                        Cost, Insurance and Freight

CIP                                        Carriage and Insurance Paid to (named place of destination)

COA                                       Commission on Audit

COFILCO                               Confederation of Filipino Consulting Organizations

CPES                                     Contractors Performance Evaluation System

CPESIU                                  Contractors Performance Evaluation System Implementing Unit

CSO                                       Civic Society Organization

CSC                                       Civil Service Commission

DBCC                                     Development Budget Coordination Committee

DBM                                       Department of Budget and Management

DBM-PS/PS-DBM                    Department of Budget and Management-Procurement Service

DILG                                       Department of the Interior and Local Government

DND                                        Department of National Defense

DOST                                      Department of Science and Technology

DTI                                          Department of Trade and Industry

E.O.                                        Executive Order

ESAO                                      Engineering Supervision and Administration Overhead

EXW                                       Ex Works, Ex Factory or Off-the-Shelf

FAPs                                       Foreign-Assisted Projects

FMIS                                       Financial Management Information System

GAA                                        General Appropriations Act

GCC                                        General Conditions of Contract

GFI                                         Government Financial Institution

GOCC                                     Government-Owned or -Controlled Corporation

GOP                                        Government of the Philippines

GPPB                                      Government Procurement Policy Board

GPPB-TSO                              Government Procurement Policy Board — Technical Support Office

GPRA                                      Government Procurement Reform Act

HRB                                        Highest Rated Bid

HRRB                                      Highest Rated and Responsive Bid

IAEB                                       Invitation to Apply for Eligibility and to Bid

ICB                                         International Competitive Bidding

ICT                                          Information and Communications Technology

IFI                                           International Financing Institution

IPR                                          Intellectual Property Rights

ITB                                          Instructions to Bidders

ITR                                          Income Tax Return

JVA                                         Joint Venture Agreement

JBIC                                       Japan Bank for International Cooperation

LC                                          Letter of Credit

LCB                                        Local Competitive Bidding

LCB                                        Lowest Calculated Bid

LCRB                                      Lowest Calculated and Responsive Bid

LGU                                        Local Government Unit

LIB                                         Limited International Bidding

LOI                                         Letter of Intent

MOOE                                    Maintenance and Other Operating Expenses

NACAP                                  National Constructors Association of the Philippines

NCB                                       National Competitive Bidding

NFCC                                     Net Financial Contracting Capacity

NGA                                       National Government Agency

NGO                                       Non-Government Organization

NSO                                       National Statistics Office

NTP                                        Notice to Proceed

OS                                         Obligation Slip

PA                                          Professionals' Association

PAG-ASA                                Philippine Atmospheric, Geophysical and Astronomical Services Administration

PBDs                                      Philippine Bidding Documents

PCA                                       Philippine Constructors Association, Incorporated

PCAB                                     Philippine Contractors Accreditation Board

PCCI                                      Philippine Chamber of Commerce and Industry

PCAB                                     Philippine Contractors Accreditation Board

PERT/CPM                             Project Evaluation Review Technique/Critical Path Method

PhilGEPS/G-EPS                    Philippine Government Electronic Procurement System

PICE                                      Philippine Institute of Civil Engineers

PICPA                                    Philippine Institute of Certified Public Accountants

PMO                                       Project Management Office

PNP                                       Philippine National Police

PPA                                       Programs, Projects and Activities

PPMP                                    Project Procurement Management Plan

PRC                                      Professional Regulation Commission

PWI                                      Procurement Watch Incorporated

R.A.                                      Republic Act

R.A. 9184                              Republic Act No. 9184, otherwise known as the "Government Procurement Reform Act"

RIS                                       Requisition and Issuance Slip

RFP                                      Request for Proposal

RFQ                                      Request for Quotation

ROW                                     Right-of-Way

SARO                                    Special Allotment Release Order

SBD                                      Standard Bidding Documents

SCC                                      Special Conditions of Contract

SEC                                      Securities and Exchange Commission

SME                                      Small and Medium Enterprises

SOW                                     Scope of Work

SUC                                      State Universities and Colleges

SWA                                     Statement of Work Accomplished

TOR                                      Terms of Reference

TSO                                      Technical Support Office

TWG                                     Technical Working Group

UNDB                                    United Nations Development Business

VAT                                       Value-Added Tax

WB                                       The World Bank

WFP                                     Work and Financial Plan

SECTION 1.            General Provisions. —

Legal Basis for the Procurement Manual

Legal Reference

IRR-A Section 6 provides for the legal basis for this Procurement Manual.

The Government Procurement Manual was developed pursuant to R.A. 9184, otherwise known as the "Government Procurement Reform Act" and its IRR-A. The section provides for the development of generic procurement manuals and standard bidding forms that all Procuring Entities must use, once issued.

This Manual aims to standardize the procurement process, in effect preventing confusion, ensuring transparency, and enabling procuring entities to conform to the principles that govern all government procurement activities. However, whenever necessary to suit the particular needs of the Procuring Entity, it may be modified subject to the approval of the GPPB.

The GPPB will review this Manual periodically, and whenever necessary, ensure its applicability to existing conditions. Procuring Entities may submit to the GPPB its recommendations for specific revisions to the Manual. Any such revisions must be approved by the GPPB and must be consistent with existing procurement laws, rules, regulations, and policies.

In case of an inconsistency or conflict between this Manual and R.A. 9184 and/or its IRR-A, the latter shall govern.

Coverage, Scope, and Application

Legal Reference

IRR-A Sections 1, 4, and 5 provide the legal reference for the coverage, scope and application of the Procurement Manual.

Coverage

This Manual must be used for all procurement activities by the Government of the Philippines and all its branches and instrumentalities, as follows:

1.         the Legislative Branch and its instrumentalities; the Senate, the House of Representatives, and all the offices and committees under them;

2.         the Judiciary and its instrumentalities; the Supreme Court, the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the lower courts and all other bodies that form part of the Judiciary;

3.         the Office of the President proper as described by E.O. No. 292 or the 1987 Administrative Code of the Philippines; the Executive Office, the Common Staff Support System, and the Office of the Presidential Special Assistants/Advisers System;

4.         departments, bureaus, offices that form part of the Executive Branch; its regional and/or local offices;

5.         Constitutional Commissions or Offices, and all instrumentalities/offices under them;

6.         GOCCs and GFIs;

7.         SUCs;

8.         LGUs; and

9.         all other instrumentalities/agencies/offices/units of the Government.

Consistent with National Budgeting and Accounting practice, the above mentioned offices/instrumentalities of government may also be classified into the following and shall be referred to as such throughout this Manual:

1.         NGAs, which refer to items 1-5 above;

2.         GOCCs;

3.         GFIs;

4.         SUCs; and

5.         LGUs.

Scope

The provisions of R.A. 9184 shall apply to the procurement of goods, infrastructure projects, and consulting services, regardless of source of funds, whether local or foreign. However, procurements funded partly or fully by IFIs shall follow the procedures specified under the loan or grant agreement; provided that in the absence of such procurement guidelines, or if the guidelines provided are silent on specific procurement procedures, then the procurement processes and procedures provided in R.A. 9184 and its IRR-A will apply suppletorily.

In view of the above, and in due regard to the harmonization efforts among GOP, WB, ADB, and JBIC, this Manual will not only cover R.A. 9184 and its IRR-A, but the harmonized procedures found in the PBDs as well. Unless otherwise indicated herein, the manuals shall apply to foreign-assisted projects as well.

This Manual does not cover private sector infrastructure or development projects, such as the build-operate-transfer scheme and its variants. Likewise, this Manual does not cover the acquisition of right-of-way site or location for infrastructure projects, and the leasing out of government-owned buildings or spaces for private use.

For application of procurement methods needed to address peculiar situations, agencies are advised to consult the GPPB.

Application

The procurement procedures provided in this Manual shall apply to the following:

1.         Goods and Services;

2.         Infrastructure Projects; and

3.         Consulting Services.

This Manual shall be used together with the PBDs prescribed by the GPPB.

Principles of Government Procurement

Legal Reference

IRR-A Section 3 provides the legal reference for the principles of government procurement.

Government procurement shall be governed by the following principles:

Transparency

The procurement process and the implementation of procurement contracts must be transparent. Procuring entities must ensure the widest dissemination of bid opportunities and the participation of pertinent non-government organizations. Towards this end, posting in the Procuring Entity's website, in the PhilGEPS website, and in a conspicuous place within the premises of the Procuring Entity is required for all procurements. Moreover, in addition to the COA representative, the BAC of the Procuring Entity is required to invite observers coming from eligible and qualified PAs and NGOs to observe any or all stages of the procurement process. Finally, each procurement transaction must be properly documented and such records must be maintained and made available to proper parties.

Competitiveness

Public procurement must be competitive and, as a rule, be conducted through public bidding, except as otherwise provided for under the GPRA, its IRR-A and this Manual. A competitive bidding process treats bidders equitably and provides fair grounds for competition among themselves, thereby ensuring that no single bidder significantly influences the outcome of the bidding. Competition among proponents will urge them to offer more beneficial terms to the government. Hence, the alternative methods of procurement must only be resorted to when competitive bidding is not a feasible option, in accordance with the conditions laid down in R.A. 9184, its IRR-A and this Manual.

Streamlining and use of technology in procurement

A streamlined procurement process that will uniformly apply to all government procurement must be adopted. The procurement process must be simple and made adaptable to advances in modern technology in order to ensure an effective and efficient method. The GPPB conducts a periodic review of government procurement procedures, and whenever necessary, formulates and implements changes thereto.

Accountability

A system of accountability must be established. Thus, both the public officials directly or indirectly involved in the procurement process as well as in the implementation of procurement contracts, and the private parties that deal with government are, when warranted by circumstances, investigated and held liable for their actions relative thereto. In relation to this, the heads of the procuring entities are responsible for establishing and maintaining a transparent, effective, and efficient procurement system in their respective agencies. The responsibilities of each official involved in the procurement process must be clear and legally identifiable.

Public Monitoring

Public monitoring of the procurement process and the implementation of awarded contracts are provided for in R.A. 9184, with the end in view of guaranteeing that these contracts are awarded pursuant to the provisions of the R.A. 9184 and its IRR-A, and that all these contracts are performed strictly according to specifications. A system of reporting to the GPPB is provide for, while eligible and qualified CSOs such as NGOs, PAs, academic institutions, and religious groups are allowed to observe and monitor the procurement process and contract implementation.

To fully abide by these principles, Procuring Entities shall consistently follow the procedures prescribed in this Manual.

SECTION 2.            Procurement Organizations. —

The Organizational Structure

Legal Reference

IRR-A Sections 5(q), 11, 13, and 14 provide for the legal reference for the organizational structure.

1.         The Procuring Entity and the Procurement Unit/Office

a.         The Procuring Entity

A Procuring Entity shall be the central office, or, when duly authorized to procure independently, the regional office or any decentralized, local or lower level agency/bureau/office of an NGA, GOCC, GFI, SUC or LGU. However, the authority to procure independently of the central office must not be presumed, as the entire structure of the organization would have to be considered to determine whether or not such regional, decentralized, local or lower level agency/bureau/office is authorized to undertake procurement activities. Additionally, the existence of directives from the central office delegating such authority to procure to its regional, decentralized, and local or lower level agency/bureau/office would have to be determined.

b.         The Procurement Unit/Office and the BAC Secretariat

The Head of the Procuring Entity should create a permanent BAC Secretariat and, for this purpose, it has the discretion to create a new office or to merely designate an existing organic office to be the BAC Secretariat. With respect to the latter case the Head of the Procuring Entity may consider designating the existing Procurement Unit/Office as the BAC Secretariat, because this office is best equipped for the task. For this reason, in the absence of such Procurement Unit/Office, it is advisable for the Head of the Procuring Entity to create the same, not only to serve as the BAC Secretariat, but also to ensure continuity as well as professionalization of the procurement function.

The term "Procurement Unit" shall refer to the organic office of the Procuring Entity that carries out the procurement function.

In large Departments or Procuring Entities, this Office could be a Service or a Division, while in smaller organizations, the Procurement Unit/Office may be a Branch composed of a few personnel. The size of the Unit and the number of personnel are dictated by the volume of transactions done and the level of expertise required from the Procurement Officers.

The Head of the Procuring Entity should consider the following factors in selecting the personnel who will be assigned to the BAC Secretariat, among others:

i.          Integrity;

ii.         Procurement proficiency, as shown by experience and trainings attended;

iii.       Satisfactory completion in a certification program conducted by the GPPB-TSO or its accredited institutions, if any;

iv.        The appropriate Civil Service qualification standards;

v.         The appropriate rank of the head of the BAC Secretariat, which should be:

           At least a fifth ranking permanent employee, in Central/Head Offices of NGAs, GOCCs and GFIs, as well as SUCs and LGUs; or

           At least a third ranking permanent employee, in bureaus/regional offices and sub-regional/district offices; or

           A permanent official of the next lower rank, if the fifth or third ranking permanent employee is not available.

In designating members of the Procurement Unit/Office and the BAC Secretariat, the Head of the Procuring Entity must ensure that check and balance is maintained, and procurement personnel are not given assignments that may conflict with their designation as such.

The following guidelines may be considered by the Head of the Procuring Entity in organizing the Procurement Unit/Office:

i.          A Procuring Entity with a procurement budget exceeding THREE BILLION PESOS (P3B), whether procurement is centralized or decentralized, must have a "Procurement and Supply Chain Management Directorate" which will be headed by a Director III.

ii.         A Procuring Entity with a procurement budget exceeding ONE BILLION PESOS (P1B) but not more than THREE BILLION PESOS (P3B) must have a "Procurement and Supply Chain Management Division".

iii.       A Procuring Entity with a procurement budget below ONE BILLION PESOS (P1B) must have a "Procurement and Supply Chain Management Section".

iv.        The following organizational set-up may be adopted by the foregoing procurement organizations: (See Figure 1 and Tables I and II )

The positions indicated in Figure 1 shall be filled up using the "scrap and build" scheme, i.e., reclassification or transfer of filled itemized positions, or abolition of vacant itemized positions and reclassification of these positions into the above positions. If the latter scheme is adopted, the equivalent Personal Services requirement should not exceed the amount generated from the abolition of vacant positions.

In the Barangays, the Treasurer shall serve as the Head of the Procurement Unit/Office.

The Head of the Procuring Entity shall ensure that the Procurement Unit/Office will have a sufficient number of personnel who will provide secretariat support to the BAC and perform the other functions of the Procurement Unit/Office, as provided in this Manual. The said Unit shall be strengthened through continuing procurement training and education of the staff and deployment of additional personnel, if necessary.

2.         The Bids and Awards Committee (BAC)

The Head of the Procuring Entity must create a single BAC in the Head Office of the Procuring Entity. However, separate BACs may be created under any of the following conditions:

a.         The items to be procured are complex or specialized; or

b.         If, even after undergoing "jury duty", the single BAC cannot manage the procurement transactions as shown by delays beyond the allowable limits.

The separate BACs may be organized according to:

a.         geographical location of the PMO or end-user units of the Procuring Entity; or

b.         nature of procurement.

Thus, a Procuring Entity may have separate BACs in its regional or decentralized offices (when warranted according to the above conditions) and/or separate BACs in the central office to handle procurements of ICT resources, infrastructure projects, textbooks, and other specialized procurements.

However, the Head of the Procuring Entity must limit the creation of separate BACs in order to facilitate professionalization and harmonization of procedures and standards. If the reason for creating a separate BAC is due to complexity of the procurement, it may be unnecessary, considering that the rule that requires the designation of provisional members (technical and end-user unit representative) is already responsive to the requirement of having a separate BAC for procurements that are complex in nature.

3.         BAC Members

The Head of the Procuring Entity must designate the Members of the Bids and Awards Committee (BAC) in accordance with the following rules:

a.         Central/Head Offices of NGAs, GOCCs/GFIs, and SUC:

i.          The BAC must consist of at least five (5) members and not exceed seven (7). Of the five (5) members, three (3) must be regular members, and two (2) must be provisional members. Should the Head of the Procuring Entity desire to create a seven (7)-member BAC, he/she may designate two (2) additional regular members, or two (2) additional provisional members, or one (1) additional regular and provisional members.

The regular members are:

           An officer, who is at least a third-ranking permanent official of the Procuring Entity, who shall also be designated as the Chairman;

           An officer, who holds at least a fifth ranking permanent plantilla position, with knowledge, experience and/or expertise in procurement who, to the extent possible, represents the legal or administrative area of the Procuring Entity;

           An officer, who holds at least a fifth ranking permanent plantilla position, with knowledge, experience and/or expertise in procurement who, to the extent possible, represents the finance area of the Procuring Entity.

The provisional members are:

           An officer who has technical expertise relevant to the procurement at hand, who has knowledge, experience and/or expertise in procurement;

           A representative from the end user unit who has knowledge of procurement laws and procedures.

In designating the provisional members, the Head of the Procuring Entity shall consider the types of procurement normally undertaken by them, and identify the relevant technical experts. For example, in procuring janitorial services, the technical member should be an officer of the Building Maintenance Unit.

Provisional members will only participate in the deliberations of the BAC for procurements over which they have a direct interest. For example, in the procurement of computers, the technical member for ICT will participate in BAC deliberations together with the representative of the PMO/end-user unit.

It should be noted that the designation of an alternate BAC member is not provided for by R.A. 9184, and that BAC representatives are not counted for purposes of determining quorum.

ii.         The Chairman and Vice-Chairman must be regular members of the BAC.

iii.       The Head of the Procuring Entity is required to designate the BAC Chairman. Likewise, he is required to designate the Vice-Chairman from the remaining regular members.

iv.        The BAC members must be designated for a term of one (1) year only, reckoned from the date of designation. However, the Head of the Procuring Entity may renew such designation at his discretion.

It is noted that appointment to the BAC is in the nature of a designation, in addition to the regular duties of the subject official, and is not an appointment contemplated under the Civil Service rules.

In accordance with the thrust to professionalize the procurement organization, Heads of Procuring Entities are encouraged to re-appoint BAC members who have shown efficiency and probity in the performance of their duties.

v.         In case of resignation, retirement, separation, transfer, re-assignment, or removal of a BAC member, the Head of the Procuring Entity may designate a replacement, who shall be similarly qualified as the official replaced, and shall have the required ranking as provided for in R.A. 9184 and its IRR-A. The replacement shall serve for the unexpired term. In case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension.

vi.        The Head of the Procuring Entity may suspend or remove a member of the BAC for justifiable causes, including, but not limited to, violations of the provisions of the R.A. 9184 or its IRR-A.

vii.       The following officers of the Procuring Entity are disqualified from membership in the BAC:

           the Head of the Procuring Entity;

           the official who approves procurement transactions;

           the Chief Accountant/Head of the Accounting Department and his/her staff, unless the Accounting Department is the end-user unit, in which case the Chief Accountant, Head of the Accounting Department or his/her staff may be designated as an end-user member.

b.         For Bureaus/Regional Offices/Decentralized Units of NGAs, GOCCs, GFIs:

i.          The BAC must consist of at least five (5) members and not exceed seven (7). Of the five (5) members, three (3) must be regular members, and the two (2) must be provisional members. Should the Head of the Procuring Entity desire to create a seven (7)-member BAC, he/she may designate two (2) additional regular members, or two (2) additional provisional members, or one (1) additional regular and provisional members.

The regular members are:

           An officer, who is at least a third-ranking permanent official of the Procuring Entity, who shall be designated as the Chairman;

           An officer, who holds at least a third ranking permanent plantilla position, with knowledge, experience and/or expertise in procurement who represents the legal or administrative area of the Procuring Entity;

           An officer, who holds at least a third ranking permanent plantilla position, with knowledge, experience and/or expertise in procurement who represents the finance area of the Procuring Entity.

The provisional members are:

           An officer who has technical expertise relevant to the procurement at hand, and, to the extent possible, has knowledge, experience and/or expertise in procurement;

           A representative from the end user unit who has knowledge of procurement laws and procedures.

ii.         The Chairman and Vice-Chairman shall be regular members of the BAC.

iii.       The Head of the Procuring Entity shall designate the BAC Chairman, and may likewise designate the Vice-Chairman from the remaining regular members.

iv.        The BAC members shall be designated for a term of one (1) year only, reckoned from the date of designation. However, the Head of the Procuring Entity may renew such designation at his discretion.

It is noted that appointment to the BAC is in the nature of a designation, in addition to the regular duties of the subject official, and is not an appointment contemplated under the Civil Service rules.

In accordance with the thrust to professionalize the procurement organization, Heads of Procuring Entities are encouraged to re-appoint BAC members who have shown efficiency and probity in the performance of their duties.

v.         In case of resignation, retirement, separation, transfer, re-assignment, or removal of a BAC member, the Head of the Procuring Entity may designate a replacement, who shall be similarly qualified as the official replaced. The replacement shall serve for the unexpired term. In case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension.

vi.        The Head of the Procuring Entity may suspend or remove a member of the BAC for justifiable causes, including, but not limited to, violations of the provisions of the R.A. 9184 or its IRR-A.

vii.       The following officers of the Procuring Entity are disqualified from membership in the BAC:

           the Head of the Bureau/Regional Office/Decentralized Unit;

           the official who approves procurement transactions;

           the Chief Accountant/Head of the Accounting Unit and his/her staff, unless the Accounting Department is the end-user unit, in which case the Chief Accountant, Head of the Accounting Department or his/her staff may be designated as an end-user member.

c.         For LGUs

i.          For Provinces, Cities, Municipalities:

           The BAC shall consist of at least five (5) members and shall not exceed seven (7).

           The Local Chief Executive shall designate the members of the BAC, who should occupy plantilla positions of the Local Government concerned.

           All members designated by the Local Chief Executive are regular members except the end-user member who is considered as a provisional member.

           The officials from the regular offices under the Office of the Governor or Mayor, as the case may be, may be designated as members of the BAC. The offices that may be represented, are the following, among others:

Ö          the Office of the Administrator;

Ö          the Budget Office;

Ö          the Legal Office; and

Ö          the General Services Office.

           In case of municipalities which do not have an Office of the Administrator or a Legal Office, the Mayor shall designate a representative from the office/s performing the functions equivalent to that of the former.

It is a good practice to always have a legal officer or a lawyer, if available, in the BAC. He can provide the legal direction especially in procurements where contentious issues surface. Having a technical expert in the BAC is also helpful, and is thus recommended.

           In addition, the Local Chief Executive shall also designate to the BAC a representative of the end-user unit of the procurement at hand as a provisional member.

           The BAC members shall elect among themselves the Chairman and Vice-Chairman. The Chairman shall be at least a third ranking permanent official of the provincial/city/municipal government.

The IRR-A does not specify the rank of those who may be appointed as BAC members, although it mentions that the Chairman should be at least a third ranking permanent official. Considering the nature of BAC functions, the Local Chief Executive may choose to appoint officials of the local government who are holding positions of responsibility.

In GPPB Resolution No. 01-2004, dated March 10, 2004, for purposes of determining the rank in provinces, cities and municipalities, the first ranking permanent official shall be the governor or mayor, as the case may be; the second ranking permanent official shall be the vice-governor or vice-mayor, as the case may be; and the third ranking permanent official shall be the head of any of the regular offices under the Office of the Local Chief Executive: Provided, however, That the vice-mayor shall not be designated as member of the BAC as its office is not one of the regular offices under the Office of the Local Chief Executive.

           The BAC members shall be designated for a term of one (1) year only, reckoned from the date of designation. However, the Local Chief Executive may renew such designation at his discretion.

In accordance with the thrust to professionalize the procurement organization, Local Chief Executives are encouraged to extend the term of office or to re-appoint BAC members who have shown efficiency and probity in the performance of their duties.

           In case of resignation, retirement, separation, transfer, re-assignment, or removal of a BAC member, the Local Chief Executive may designate a replacement, who must be similarly qualified as the official replaced. If it is the Chairman, the Local Chief Executive must designate another third ranking permanent official of the provincial/city/municipal government, after which the BAC members shall immediately conduct an election to elect the new BAC Chairman. The replacement shall serve for the unexpired term. In case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension.

           The Local Chief Executive may suspend or remove a member of the BAC for justifiable causes, including, but not limited to, violations of the provisions of the R.A. 9184 or its IRR-A.

           The following officials are disqualified from membership in the BAC:

Ö          the Local Chief Executive and other elective officials of the province/city/municipality;

Ö          the official who approves procurement transactions;

Ö          the Chief Accountant or Head of the Provincial/City/Municipal Accounting Office and his/her staff, unless the Accounting Department is the end-user unit, in which case the Chief Accountant, Head of the Accounting Department or his/her staff may be designated as an end-user member.

d.         For Barangays:

i.          The Barangay Chairman shall designate at least five (5) but not more than seven (7) members of the BAC, from among the members of the Sangguniang Barangay. The designated BAC members shall elect among themselves the Chairman and Vice-Chairman.

ii.         The BAC members shall be appointed for a term of one (1) year only, reckoned from the date of appointment. However, the Punong Barangay may renew such appointment at his discretion.

In GPPB Resolution No. 01-2004, dated March 10, 2004, the BAC shall be composed of at least five (5), but not more than seven (7) regular members of the Sangguniang Barangay, except the Punong Barangay. The Punong Barangay, being the Local Chief Executive, shall designate the members of the BAC.

In accordance with the thrust to professionalize the procurement organization, Heads of Procuring Entities are encouraged to re-appoint BAC members who have shown efficiency and probity in the performance of their duties.

iii.       In case of resignation, retirement, separation, transfer, re-assignment, or removal of a BAC member, the Punong Barangay may designate a replacement, who shall be similarly qualified as the official replaced. The replacement shall serve for the unexpired term. In case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension.

iv.        The Punong Barangay may suspend or remove a member of the BAC for justifiable causes, including, but not limited to, violations of the provisions of the R.A. 9184 or its IRR-A and the Anti-Graft and Corrupt Practices Act.

v.         The following officials are disqualified from membership in the BAC:

           the Punong Barangay;

           the Barangay Treasurer;

           other appointive barangay officials.

4.         The Technical Working Group (TWG)

a.         The BAC may create a TWG from a pool of technical, financial and/or legal experts to assist in the procurement process.

b.         In creating the TWG, the BAC shall consider the expertise required based on the nature of the procurement.

It is recommended that the TWG should have as members, a representative or representatives of the end-user unit and experts in various disciplines who can handle the different aspects of the procurement at hand, namely, the technical, financial, legal and, in certain cases, the project management aspects. The presence of the end-user representative and the above-named experts will ensure that the bid documents properly reflect the requirements of the Procuring Entity, and the bids submitted will be rigorously evaluated.

c.         To be able to effectively study the requirements and evaluate the bids submitted, the BAC may create several TWGs to handle different procurements, for example:

           TWG for Infrastructure Projects, whose membership shall include experts in civil works like civil engineers, an architect, an accountant or finance expert to handle the financial aspect of the procurement, etc.;

           TWG for ICT Projects, whose membership shall include experts in ICT like a computer engineer, a systems analyst, a programmer, etc.; and

           The BAC may also create a TWG for a specific procurement, particularly if the procurement at hand is highly technical or is a major or priority project of the government.

d.         In highly meritorious cases, the Procuring Entity may also engage the services of consultants in accordance with the IRR-A and Volume 4 of this Manual, subject to the availability of funds, who will assist the TWG and the BAC on the procurement at hand. For this purpose, the Head of the Procuring Entity shall certify that the in-house experts cannot provide adequate technical, financial, legal or project or contract management advice related to the procurement. These consultants, however, shall only have an advisory capacity, and may not vote during deliberations.

5.         Observers

a.         Purpose of the Observers. To enhance the transparency of the process, the BAC is required to invite Observers who may attend and observe all stages of the procurement, especially:

i.          the pre-bid conference;

ii.         opening of bids;

iii.       bid evaluation;

iv.        post-qualification;

v.         contract award; and

vi.        special meetings of the BAC.

The Procuring Entity has the option to invite observers during the pre-procurement conference

b.         Who the Observers are. The BAC must invite three Observers, who shall be:

i.          a COA representative;

ii.         at least one (1) observer who shall come from a duly recognized private group in a sector or discipline relevant to the procurement at hand, for example:

           for infrastructure projects

Ö          National Constructors Associations duly recognized by the CIAP, such as, but not limited to, the PCA; and the NACAP; or

Ö          The PICE

           for goods

Ö          A specific relevant chamber-member of the PCCI.

           for consulting services

Ö          a project-related professional organization accredited or duly recognized by the PRC or the Supreme Court, such as, but not limited to, the PICE; and the PICPA; or

Ö          the COFILCO

iii.       at least one (1) observer who shall come from an NGO.

c.         Criteria for Observers from the Private Sector. In accordance with Section 13.2 of the IRR-A, the Observers coming from the private sector (e.g., organization of experts and NGOs) should belong to an organization duly registered with the SEC. Moreover, they should meet the following criteria:

i.          knowledge, experience or expertise in procurement or in the subject matter of the contract to be bid;

ii.         absence of direct or indirect financial interest in the contract to be bid out;

iii.       any other criteria that may be determined by the BAC (for example, the BAC in decentralized units may require that the Observers should be based in the area to ensure their attendance during the meetings.)

Roles and Responsibilities

Legal Reference

IRR-A Sections 12, 13 and 14 provide the legal reference for the roles and responsibilities.

1.         The Procuring Entity and the Procurement Unit/Office

a.         Responsibilities of the Head of the Procuring Entity. The Head of the Procuring Entity, or his duly authorized representative, shall have the following responsibilities in the procurement process:

i.          He/she must ensure that the APP is regularly prepared, reviewed and updated by the PMOs and end-user units, in accordance with the guidelines set forth herein. He/she must also approve the same, or delegate the approval authority to a second-ranking official. He/she must ensure that all procurements are in line with the APP.

ii.         He/she must establish the BAC and the BAC Secretariat in accordance with the guidelines previously discussed.

iii.       Upon submission by the BAC of the recommendation for award, the Head of the Procuring Entity or his/her representative must approve the same. He/she may, however, disapprove the recommendation but only on the basis of valid, reasonable and justifiable grounds to be expressed in writing, and furnished to the BAC.

iv.        He/she must ensure that the BAC and the BAC Secretariat gives utmost priority to BAC assignments over all other duties and responsibilities, until the requirements for the said assignments at hand are completed. (IRR-A Section 14.3)

v.         He/she must ensure that the staff of the Procurement Unit/Office and the members of the BAC, BAC Secretariat and TWG are given ample training on procurement and related matters, with the end in view of professionalizing the procurement organization of the Procuring Entity.

vi.        He/she must impose the necessary administrative sanctions on errant members of the BAC Secretariat/BAC/TWG, in accordance with Section 70 of the IRR-A.

vii.       He/she must ensure that the members of the BAC and the TWG shall receive their incentives.

Under Sections 37 and 38 of R.A. 9184, in cases where the Head of the Procuring Entity is required to approve specific contracts, he shall ensure that the same are approved within the time frame indicated in the IRR-A, that is, within 20 calendar days from receipt of the transmittal to his office. The BAC Secretariat, in coordination with the Internal Audit Unit of the agency, shall ensure that the contract is acted upon by the Head of the Procuring Entity within the reglementary period. Otherwise, such contracts, if not acted upon within the reglementary period, shall be deemed approved. In the case of GOCCs, the concerned board, or its duly authorized representative, shall act on the approval of the contract within 30 calendar days from receipt thereof together with all documentary requirements to perfect the said contract.

b.         Responsibilities of the Procurement Unit/Office and the BAC Secretariat. The Procurement Unit/Office of each Procuring Entity shall have the following responsibilities:

i.          It shall act as the BAC Secretariat. As such, it shall have the following responsibilities:

           Act as the main support unit of the BAC;

           Provide administrative support to the BAC and the TWG, if necessary;

           Organize and make all necessary arrangements for the BAC meetings as well as TWG meetings, if necessary;

           Attend BAC meetings as Secretary;

           Prepare Minutes of the BAC meetings;

           Take custody of procurement documents and be responsible for the sale and distribution of bidding documents to interested buyers;

The BAC Secretariat shall ensure that all procurements undertaken by the Procuring Entity are properly documented, to provide an audit trail of the procurement process.

           Assist in managing the procurement process;

           Monitor procurement activities and milestones for proper reporting to relevant agencies and/or end-users, when required;

           Be the central depository of all procurement related information and continually update itself with the most current GPPB resolutions issuances, circulars and events, and downstream the same to all relevant officer, employees, and parties requiring information. For this purpose, all information released by the GPPB can be secured electronically from www.gppb.gov.ph;

           Prepare the APP from the consolidated PPMPs submitted by the various PMOs and end-user units of the Procuring Entity, to make them available for review as indicated in Section 7 of the IRR-A;

           Make arrangements for the pre-procurement and pre-bid conferences and bid openings;

           Act as the central channel of communications for the BAC with the end-users, PMOs, other units of the line agency, other government agencies, providers of goods, civil works and consulting services, and the general public;

           Assist the BAC in preparing drafts of BAC resolutions; and

           Provide utmost priority to BAC assignments over all other duties and responsibilities, until the requirements for the procurement at hand are completed (Jury Duty).

ii.         Based on inputs from the BAC and the TWG, it must prepare the procurement documents, i.e., purchase orders, job orders, contracts, and their attachments, for processing by the Budget, Accounting, Legal and Finance Offices, and routing to the signing and approving authorities. It must monitor the status of the procurements routed for approval, and cause the correction of any formal deficiencies in the said procurement documents to facilitate action on the part of the approving authorities.

iii.       It shall create, maintain and update the registry of suppliers, contractors, and consultants.

iv.        It shall create, maintain and update a price monitoring list, if one is maintained by the Procuring Entity.

v.         It shall manage and undertake procurements using the following alternative methods — Repeat order and shopping — upon prior resolution of the BAC and approval by the Head of the Procuring Entity.

vi.        It shall administer the PhilGEPS, as the counterpart of the service provider, if the Procuring Entity has outsourced the PhilGEPS for non-common use items. Depending on the Service Level Agreement covering the contract, such administration may be limited to registration of suppliers and other users, assigning access levels, and updating of data.

vii.       It shall transact with the PhilGEPS and PS-DBM in behalf of the Procuring Entity.

2.         The BAC

a.         Responsibilities of the BAC. The following shall be the responsibilities of the BAC:

i.          Recommend to the Head of the Procuring Entity the method of  procurement of the goods, services, infrastructure projects included in the APP, i.e. whether to use public bidding or any of the alternative methods of procurement.

ii.         Creation of the TWG, if necessary, from a pool of technical, financial and/or legal experts to assist in the procurement process.

iii.       Undertake the advertisement and/or posting of the invitation to bid.

iv.        Conduct pre-procurement and pre-bid conferences.

v.         Determine the eligibility of prospective bidders in accordance with the guidelines set forth in R.A. 9184 and its IRR-A.

vi.        Sole authority to receive and open bids.

vii.       Conduct the evaluation of bids with the assistance of the TWG.

viii.      Undertake post-qualification proceedings, with the assistance of the TWG.

ix.        Resolve motions for reconsideration filed by prospective bidders and other concerned parties with respect to the conduct of the bidding process.

x.         Recommend award of contracts to the Head of the Procuring Entity or a duly authorized second-ranking official.

xi.        Recommend the imposition of sanctions in accordance with Rule XXIII of the IRR-A.

xii.       Prepare a procurement monitoring report that shall be approved and submitted by the Head of the Procuring Entity to the GPPB on a semestral basis or whenever required.

xiii.     For each procurement transaction, accomplish a checklist showing its compliance with R.A. 9184, its IRR-A and this Manual. This will be submitted to the Head of the Procuring Entity and made a part of the transaction record.

xiv.      Invite the Observers required by law to be present during all stages of the procurement process, in accordance with the guidelines stipulated in R.A. 9184, its IRR-A and this Manual.

xv.       Furnish the Observers, upon the latter's request, with the following documents:

           Minutes of the proceedings of BAC meetings;

           Abstract of bids;

           Post-qualification summary report;

           APP and related PPMP; and

           Copies of "opened" proposals.

xvi.      Conduct due diligence review or verification of the qualifications of Observers.

In performing this due diligence review or verification of the qualifications of Observers, the BAC shall require the organization nominating the Observer to submit their Curriculum Vitae and proof of their technical expertise and procurement proficiency. The certifications/documents showing technical expertise and procurement proficiency should be issued by appropriate bodies and authenticated by the latter. Verification may be done by the BAC by inquiring with the bodies that issued the same.

xvii.     Give utmost priority to BAC assignments over all other duties and responsibilities, until the requirements for the procurement at hand are completed (Jury Duty).

xviii.    Perform such other related functions as may be necessary to the procurement process.

b.         Quorum

The majority (one-half of membership plus one) of the BAC members shall constitute a quorum, provided that the Chairman or the Vice-Chairman should be present in all meetings and deliberations. The Chairman or, in his absence, the Vice-Chairman shall preside over the meetings. The Presiding Officer shall vote only in case of a tie.

All BAC decisions should be embodied in resolutions signed by at least a majority of the members and the Chairman or Vice-Chairman thereof, as the case may be.

3.         The TWG

Responsibilities of the TWG. The TWG shall provide assistance to the BAC in terms of the technical, financial, legal and other aspects of the procurement at hand. It shall have the following responsibilities:

a.         Assist the BAC in the preparation of the bidding documents, ensuring that the same properly reflects the requirements of the Procuring Entity and that these conform to the standards set forth by R.A. 9184, its IRR-A and the PBDs prescribed by the GPPB.

b.         Assist the BAC in the conduct of eligibility screening of prospective bidders, and in the short listing of prospective bidders in case of biddings for consulting services.

c.         Assist the BAC in the evaluation of bids and prepare the accompanying reports for the BAC's consideration and approval.

d.         Assist the BAC in the conduct of post-qualification activities and prepare the post-qualification summary report for the BAC's approval.

e.         Assist the BAC and BAC Secretariat in preparing the resolution recommending award, with regard to the technical aspect, if necessary.

f.          Provide utmost priority to BAC assignments over all other duties and responsibilities, until the requirements for the procurement at hand are completed (Jury Duty).

4.         The Observers

Responsibilities of the Observers. The attendance of Observers ensures the transparency of the procurement process. They represent the public, the taxpayers who are interested in seeing to it that procurement laws are observed and irregularities are averted. The Observers shall have the following responsibilities:

a.         Preparation of the Procurement Observation Report either jointly or separately, indicating their observations made on the bidding activity conducted by the BAC.

In the said report, they shall indicate:

i.          An assessment of the extent of the BAC's compliance with the substantive and procedural requirements of R.A. 9184, its IRR-A and this Manual.

ii.         The areas of improvement in the BAC's proceedings.

In instances where the BAC has fully complied with R.A. 9184, its IRR-A and this Manual, the Observers shall prepare a Procurement Observation Report. When there are substantive or procedural irregularities in the procurement at hand, the Report shall provide therein details of the alleged irregularity.

The report shall be submitted to the Head of the Procuring Entity, and a copy thereof will be furnished the BAC Chairman, who shall forward it to the BAC Secretariat for inclusion in the procurement documents that will be submitted to the proper authorities for approval. This will be part of the official record of the bidding, and part of the audit trail. The Observer may also give a copy of the Report to the Office of the Ombudsman or the Resident Ombudsman and the COA Auditor of the Procuring Entity in any of the following instances:

i.          when the BAC has failed to follow the prescribed bidding procedures; or

ii.         for any justifiable and reasonable ground where the award of the contract will not redound to the benefit of the Government.

b.         For the purpose of preparing the report, the Observer may request for copies of the following documents from the BAC, which shall be promptly provided to the observer:

i.          Minutes of related proceedings of BAC meetings;

ii.         Abstract of bids;

iii.       Post-qualification summary report;

iv.        Pertinent portions of the APP and related PPMP; and

v.         Copies of "opened" proposals.

c.         The Observer must sign as witness in the Abstract of Bids if, in their independent observation, the bidding process was conducted in accordance with the procedures described in the IRR-A of R.A. 9184 and this Manual. If the BAC failed to correctly observe the proper procedure, the Observer must sign the Abstract of Bids, and must indicate in the Procurement Observation Report the procedural and/or substantive lapses of the BAC. This will enable the approving authority to be apprised of any irregularities in the bidding process, for consideration.

d.         The Observers shall sign as witness in the post-qualification summary report if, in their independent observation, the BAC followed the procedure described in the IRR-A of R.A. 9184 and this Manual, and that the Observer is amenable to the results of the post-qualification. If the Observer finds the post-qualification procedures irregular or the report does not match the actual findings, he shall so state in writing addressed to the BAC Chairman, and the same shall be attached to the Post-qualification Summary Report submitted to the approving authority. The Observer's written dissent will be part of the official record of the procurement.

The above described irregularities observed during the bidding process shall not delay the bidding, but should be resolved before contract award.

Conditions for Granting Honoraria

Legal Reference

IRR-A Section 15 provides the legal reference for the conditions for granting honoraria.

The Procuring Entity is authorized to grant honoraria to the members of the BAC and the TWG, provided:

1.         the amount so granted does not exceed twenty-five percent (25%) of their respective basic monthly salary;

2.         funds are available for the purpose; and

3.         the grant of honoraria conforms to the guidelines promulgated by the DBM.

Budget Circular No. 2004-5A issued by the DBM provides the guidelines on the grant of honoraria to government personnel involved in government procurement. Among others, this Circular provides the following:

1.         The chairs and members of the BAC and the TWG may be paid honoraria only for successfully completed procurement projects. In accordance with Section 7 of the IRR-A of R.A. 9184, a procurement project refers to the entire project identified, described, detailed, scheduled and budgeted for in the Project Procurement Management Plan prepared by the agency. Furthermore, a procurement project shall be considered successfully completed once the contract has been awarded to the winning bidder.

2.         The payment of honoraria shall be limited to procurement that involves competitive bidding. Competitive bidding activities are present only in:

a.         Open and competitive bidding;

b.         Limited source bidding;

c.         Negotiated procurement under Section 53 (a) of the IRR-A, where there has been failure of bidding for the second time; and

d.         Negotiated procurement under Section 53 (b) of the IRR-A following the procedures under Section 54.2 (b) thereof, whereby the Procuring Entity shall draw up a list of at least (3) suppliers or contractors which will be invited to submit bids.

Conversely, honoraria will not be paid when procurement is thru:

a.         Direct contracting;

b.         Repeat order;

c.         Shopping;

d.         Negotiated procurement under Section 53 (b) of the IRR-A following the procedures under Section 54.2 (d) thereof, whereby the Procuring Entity directly negotiates with previous supplier, contractor or consultant; or when the project is undertaken by administration or thru the AFP, in case of infrastructure projects; and

e.         Negotiated procurement under Section 53 (c) to (g) of the IRR-A.

3.         To be entitled to honoraria, personnel should be duly assigned as chair or member of the BAC or the TWG by the head of the department/agency concerned.

4.         The members of the BAC Secretariat who are performing the attendant functions in addition to their regular duties in other non-procurement units of the agency may likewise be paid honoraria at the same rate as the TWG chair and members, subject to the same regulations.

The members of the BAC Secretariat whose positions are in the Procurement Unit of the agency shall not be entitled to honoraria. The payment of overtime services may be allowed, subject to existing policy on the matter.

5.         In lieu of honoraria, the payment of overtime services may be allowed for the administrative staff, such as clerks, messengers and drivers supporting the BAC, the TWG and the Secretariat, for procurement activities rendered in excess of official working hours. The payment of overtime services shall be in accordance with the existing policy on the matter.

6.         Those who are receiving honoraria for their participation in procurement activities shall no longer be entitled to overtime pay for procurement-related services rendered in excess of official working hours.

7.         The amount necessary for the payment of the honoraria and overtime pay authorized herein shall be sourced only from the following:

a.         proceeds from sale of bid documents;

b.         fees from contractor/supplier registry;

c.         fees charged for copies of minutes of bid openings, BAC resolutions and

d.         other BAC documents;

e.         protest fees;

f.          liquidated damages; and

g.         proceeds from bid/performance security forfeiture.

8.         Pursuant to the DOF-DBM-COA Permanent Committee Resolution No. 2005-2 dated June 2005, all agencies are authorized to treat the collections from the sources identified above as trust receipts to be used exclusively for the payment of honoraria and overtime pay duly authorized. Agencies may utilize up to one hundred percent (100%) of the said collections for the payment of honoraria and overtime pay subject to the guidelines in the Budget Circular. Any excess in the amount collected shall be remitted by NGAs to the Bureau of the Treasury. In the case of GOCCs and LGUs, the same shall form part of their corporate or local government funds, respectively.

Also see GPPB Resolution 21-2005 on the Guidelines for Legal Assistance and Indemnification of BAC Members and its Support Staff, which provide the general conditions, procedures and funding source for free legal assistance, liability insurance and medical assistance.

Professionalization of Procurement Units, BAC, TWG

Legal Reference

IRR-A Section 16 provides the legal reference for the professionalization of procurement units, BAC and the TWG.

The GPPB, through its TSO, has established in cooperation with qualified organizations and institutions, a sustained training program to develop the capability of the BACs, BAC Secretariats, TWGs and the Procurement Units/Offices of the Procuring Entities, and professionalize the same. The professionalization program of the GPPB will address the continuing education needed to enhance the capacity and career path of procurement officers in government, including the development of plantilla positions for procurement officers.

It is the responsibility of the Head of the Procuring Entity to ensure that all officials and employees involved in the procurement process will avail of the procurement training conducted by the GPPB and other GPPB accredited bodies offering the different modules on procurement-related training. (See www.gppb.gov.ph for details) The Procuring Entities must also develop and implement their own in-house training programs in accordance with the guidelines and standards prescribed by the GPPB-TSO. For this purpose, they ought to include provisions for such training in their annual budget proposals submitted to the DBM and Congress.

Moreover, the Head of the Procuring Entity must regularly monitor the work quality of the procurement organization, through a review of the procurement monitoring reports regularly submitted by the BAC as mentioned previously in this Manual. Management meetings may likewise be conducted for this purpose.

In line with the standardization of the procurement procedures and the thrust towards strengthening the procurement function to increase operational efficiency and effectiveness, Heads of Procuring Entities must aim to consolidate or unify all procurement activities of the organization, whether locally funded or foreign-assisted, and whether pertaining to goods, infrastructure projects or consulting services, subject to the provision of Section 11.1 of the IRR-A, which allows for the creation of several BACs.

SECTION 3.            Procurement Planning. —

PROCUREMENT PLANNING — Procurement Planning and Budget Linkage

Legal Reference

IRR-A Section 7 provides the legal reference for procurement planning and budget linkage.

Planning is the "act or process of making or carrying out plans; specifically: the establishment of goals, policies, and procedures for a social or economic unit." (Merriam-Webster's Collegiate Dictionary, 2001) Plans could cover short-term, medium-term, or long-term periods. They could be small-scale or large-scale. But in all cases, a plan involves resource allocation and scheduling. This is particularly true for procurement planning, which is a critical component of a Procuring Entity's budget. Plans ensure that the overall goal of the particular project will be achieved effectively and efficiently. Through plans, a Procuring Entity is able to effectively manage and track procurement all the way to contract performance. As such, it allows managers to determine how to allocate limited cash and other appropriate resources under a given time line and identify choke-points, weaknesses, and delays in the entire activity that can be addressed or eliminated.

Every year, upon issuance of the Budget Call by the DBM, the Procuring Entity prepares the Agency Budget Proposal for the succeeding calendar year, taking into consideration the budget framework for that year. At this stage, the PMO, end-user units or the different operating units of the Procuring Entity prepare their respective WFP for their different PPA, using forms provided by the DBM as annexes to the Budget Call.

The Procuring Entity's Budget Proposal embodies the agency thrusts and the resources needed to produce the key services it delivers to the public. Procurement planning should be done within this budgetary context, reflecting the Procuring Entity's priorities and objectives for the budget period. Procurement Planning therefore involves two levels: the Agency's over-all strategic plan and the project and/or operational plans that contain the details of the manner in which the strategic plan will be carried out. In the context of budget preparation, the project and/or operational plans are reflected in the WFP for each PPA. The WFP contains the initial list of projects/requirements of each PMO/end-user unit and corresponding estimated budgetary requirement. The WFP is submitted by the PMOs or end-user units to the Procuring Entity's Budget Office on or about May of each year, to coincide with the submission of their respective budget proposals. These WFPs will be evaluated and, if warranted, included in the Procuring Entity's Budget Proposal. The WFPs will support the Budget Proposal submitted to DBM, and becomes basis for the proposed PPMP. The Budget Office shall furnish a copy of the WFPs and proposed PPMP to the BAC Secretariat for the consolidation of the initial list of items/projects for procurement into the proposed APP. All documents shall be approved by the Head of the Procuring Entity prior to any submission to other approving bodies.

As soon as the GAA becomes final, which is usually around November-December, the PMOs and end-user units must refine the proposed PPMP in accordance with the guidelines discussed below. Within fifteen (15) days from the date of issuance of the ABM during the first quarter of the fiscal year, the PMOs and end-user units shall finalize the PPMPs to reflect the budgetary allocation for their respective PPAs, as provided in the ABM. The final PPMPs shall be submitted to the BAC Secretariat for the finalization of the proposed Procuring Entity's APP which will then be submitted to the Head of the Procuring Entity for confirmation or approval.

Insofar as NGAs are concerned, the ABC referred to in R.A. 9184 and its IRR-A basically refers to the proposed budget for the project contained in the agency budget as reflected in the GAA or to be proposed in succeeding GAAs and approved by the Head of the Procuring Entity. Thus, NGAs may post and/or advertise procurement opportunities for projects proposed in the succeeding GAA even prior to its enactment but cannot award contracts until after the Certificate of Availability of Funds has been issued. (GPPB Resolution 011-2005 dated 26 May 2005) However, this procedure is recommended to be adopted only for high priority projects, as contained in the proposed APP, which are necessary to be implemented immediately upon the opening of the succeeding year.

PROCUREMENT PLANNING — Preparation of the Project Procurement Management Plan (PPMP)

Legal Reference

IRR-A Section 7 provides the legal reference for the preparation of the PPMP.

1.         The PPMP

A Project Procurement Management Plan or PPMP, which is a component of the Project Management Plan, deals primarily with:

a.         planning for the procurement of project requirements;

b.         bidding or procurement strategy;

c.         source selection;

d.         delivery and payment schedules;

e.         contract administration;

f.          contract termination; and

g.         other major milestones;

in an effort to obtain goods, infrastructure and services from suppliers, contractors and consultants.

The PPMP serves as a guide document in the procurement and contract implementation process, as well as a vital reference in procurement monitoring. Moreover, it serves as an important tool in resource and financial management, allowing the Procuring Entity the flexibility to optimize the utilization of scarce resources. Well-planned procurement will significantly minimize the practice of doing short-cuts to ensure that the Procuring Entity is able to purchase its requirements for the delivery of public services.

2.         Developing the Project Requirements

The development of the project requirements should be done during the preparation of the proposed PPMP. At this stage of the procurement planning process, the PMO or end-user unit must:

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?

The PMO or end-user unit should conduct the market research at this point, and gather as much information about the Goods, Services or expertise required. At the end of this activity, it should know the market or the industry well enough to make an informed choice.

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:

i.          Value for money

The concept of value for money is not restricted to price alone. In addition to costs, other considerations are non-cost factors like suitability or fitness to the purpose, quality, among others. In comparing costs, all relevant costs should be considered, e.g., acquisition costs, life-cycle costs (including maintenance and operating costs for goods and infrastructure, spare parts of goods, etc.).

ii.         Risk assessment and management

Some risks that may be identified are the obsolescence of equipment, the availability of support services, the capacity of contractors to implement the project, among others. It is recommended, especially for high-technology, complex, or high value procurement, that the PMO or end-user unit identifies the risks involved and come up with its own risk management plan. Or the bidders could be required to submit, as part of their technical document, a risk assessment and risk management plan.

iii.       Government policies that have an impact on the project or procurement

Are there any restrictions on the procurement contemplated? What relevant government policies should be considered in determining the goods or services that will be purchased?

iv.        Other relevant factors that may be identified by the PMO or end-user unit.

d.         Choose from among the alternatives the one that is most beneficial to the Procuring Entity, and make the necessary recommendation to the approving authority.

In developing the project requirements and TS/SOW/TOR, the Procuring Entity shall engage the services of technical experts, whether in-house or consultants, to ensure that the requirements and the TS/SOW/TOR are adequate to achieve the objectives of the particular procurement.

3.         Writing the Technical Specifications, Scope of Work and Terms of Reference

The Technical Specifications (for Procurement of Goods), Scope of Work (for Services and Infrastructure Projects) or Terms of Reference (for Consulting Services) is the document that provides the detailed description of the deliverables of the Supplier, Contractor or Consultant.

The Technical Specifications, Scope of Work and Terms of Reference are discussed in detail in Volumes 2, 3 and 4, respectively. The following guidelines are, however, considered helpful in writing the TS/SOW/TOR:

a.         Quality Assurance actually starts at this stage of the procurement cycle, considering that the deliverables are decided at this time. It is therefore important that all stakeholders are consulted, and the actual requirements of the PMO or end-user unit are determined and put in writing.

b.         If the procurement is complex, highly technical, or high value, and the Procuring Entity does not have sufficient technical proficiency, it would be prudent to engage the services of technical experts who will serve as consultants in the preparation of the TS/SOW/TOR. In engaging these consultants, the Procuring Entity shall follow the procedures for procurement of consulting services as laid down in Volume 4 of these Manuals. Moreover, care should be taken that possible conflict of interest is avoided; that is, the consultant/s engaged should not be connected with the prospective bidders/contractors, and are barred from being engaged by the latter for any purpose related to the procurement at hand.

c.         The description should be generic and flexible, not product-specific or seemingly tailored for a particular brand, product, contractor or consultant, unless the procurement involves products or services that have intellectual property rights attached to it, or are exclusively offered by a single source, and there are no suitable substitute products or services. If the procurement involves products or services that have intellectual property rights attached, or are exclusively offered by a single source without any suitable substitute, then the PMO or end-user unit must be able to satisfactorily justify the need for such a product or service.

d.         The description should be clear and unambiguous, to avoid confusion and to facilitate the evaluation process. It is noted that the TS/SOW/TOR is also the basis of the evaluation or, when applicable, the testing parameters.

e.         Considering that planning is done sometime before actual procurement and even farther from the date of actual delivery or project implementation, changes in technology or changes in the concerned industry or field of expertise should already be taken into account in writing the TS/SOW/TOR. This will allow the Procuring Entity to procure the latest products and/or services available in the market.

4.         Determining the Approved Budget for the Contract

The ABC refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the GAA and/or continuing appropriations, in the case of NGAs; the corporate budget for the contract approved by the governing board, pursuant to E.O. No. 518 series of 1979 in the case of GOCCs and GFIs, and R.A. 8292 in the case of SUCs; and the budget approved by the Sanggunian in the case of LGUs. (IRR-A Section 5)

The ABC, insofar as National Government Agencies are concerned, refers to the budget for the contract duly approved by the Head of the Procuring Entity which is contained in the Agency Budget as reflected in the GAA or to be proposed in succeeding GAAs. Thus, the ABC referred to in the R.A. 9184 and its IRR-A basically refers to the proposed budget for the project approved by the Head of the Procuring Entity based on the APP as consolidated from various PPMPs. (GPPB Resolution 011-2005 dated 26 May 2005)

In determining the ABC, the PMO or end-user unit has to consider several factors, namely: the appropriation for the project or procurement (whether taken from the current year's appropriations or continuing appropriations), the market price of the goods and/or services being procured, inflation and cost of money which are directly related to the procurement time table.

The determination of the ABC for each type of procurement (Goods, Infrastructure Projects and Consulting Services) is discussed in Volumes 2, 3 and 4.

5.         Procurement Milestones

The PPMP, like any plan, is not complete without including therein the schedule of significant activities. The procurement milestones referred to are the following: pre-procurement conference (if required or necessary), publication and/or posting of the IAEB, pre-bid conference, submission of eligibility requirements and LOI (for procurement of infrastructure projects and consulting services), submission of bids (for procurement of goods, submission of eligibility requirements and bids are done simultaneously), bid evaluation, determination of LCRB or HRRB, issuance of notice of award, contract execution and approval, issuance of notice to proceed, delivery dates or commencement of project implementation. For details on the specific activities for each type of procurement, please refer to Volumes 2 (for Goods), 3 (for Infrastructure Projects) and 4 (for Consulting Services). Each of these significant activities should be scheduled so as to provide the PMO or end-user unit with a guide in each procurement undertaken by the Procuring Entity. This will ensure that logistical support and other requirements of the Procuring Entity are promptly addressed, hence contributing to more efficient and effective delivery of public service.

The Procurement Milestones may be laid down in a Gantt chart similar to that shown in Section 4 (General Procurement Activities and Timelines) of this Volume.

6.         Method of Procurement

As a general rule, all procurement should be through public bidding. This is the policy of the GOP, as laid down in R.A. 9184. However, the law recognizes that certain unique circumstances require the use of other methods of procurement. The selection of the method of procurement is dependent on the presence or absence of specific conditions that justify the use of a particular method (e.g., if a product is patented, direct contracting is the preferred mode instead of public bidding). These are discussed in Section 5 (Various Methods of Procurement) of this Volume, and in Volumes 2, 3 and 4, when applicable to the type of procurement.

7.         Format of the PPMP (prepared by the PMO/end-user unit)

The PPMP shall contain the following information:

a.         The name of the project/procurement;

b.         General description of the project/procurement;

c.         The extent/size of contract scopes/packages;

(This refers to the general description of the lot to be included in a particular contract, i.e. the goods, infrastructure project or services, or a combination of any two or three of these types of procurement, including quantities where applicable.)

d.         The procurement methods to be adopted, and indicating if the procurement tasks are to be outsourced as provided in Section 53 (e) of the IRR-A;

e.         The time schedule for each procurement activity; and

f.          The ABC.

PROCUREMENT PLANNING — Preparation of the Annual Procurement Plan (APP)

1.         The Annual Procurement Plan

The APP is the document that consolidates the various PPMPs submitted by the various PMOs and end-user units within the Procuring Entity. It reflects the entirety of the procurement activities that will be undertaken by the Procuring Entity within the calendar year.

The APP is prepared by the BAC through the BAC Secretariat upon submission by the PMOs and end-user units of their respective PPMPs and finalized after the ABM has been approved by the DBM. The APP shall subsequently be re-submitted by the BAC for approval to the Head of the Procuring Entity or a second-ranking official designated by the Head of the Procuring Entity to act on his behalf.

In preparing the APP, the BAC shall take into consideration the following factors:

a.         The APP should include all procurement activities planned for the year. The approved APP shall be the basis for the Procuring Entity's procurement, and only those projects/procurement included therein shall be undertaken.

b.         The APP shall include only those procurements that are considered crucial to the efficient discharge of governmental functions. The IRR-A considers a procurement crucial to the efficient discharge of governmental functions if:

i.          it is required for the day-to-day operations of the Procuring Entity; or

ii.         it is in pursuit of the principal mandate of the Procuring Entity concerned.

c.         The APP shall include provisions for foreseeable emergencies based on historical records. The BAC, through the BAC Secretariat, shall include therein a lump sum to cover for these emergencies or contingencies, which amount shall not be more than four percent (4%) of the Procuring Entity's total appropriations for MOOE.

d.         Scheduling of procurement activities should be done in such a manner that the BAC and the other offices/units in the Procuring Entity that are involved in the procurement process are able to efficiently manage the conduct of procurement transactions. Moreover, it is paramount that project implementation timelines are met.

A review and updating of the individual PPMPs and the APP shall be done regularly, at least once every six months or as often as necessary. The review and updating of the PPMPs will be done by the PMOs and the end-user units. These units may avail of the services of technical experts to review the individual PPMPs. The updated PPMPs will then be submitted to the BAC Secretariat for subsequent inclusion in the updated APP. For flexibility and to encourage advance procurement actions, the APP and PMPP should also be based on proposed budget to allow for advance planning for the succeeding budget year.

The APPs of decentralized procuring entities would have to be submitted to the central office for information and monitoring purposes.

2.         Procurement Strategy

The procurement strategy refers to the approach that will be adopted by the BAC in the procurement of the goods, infrastructure projects and consulting services included in the APP.

In the review and consolidation of the PPMPs, the BAC will be able to determine the extent of diversity, quantities, quality, cost, the supply market, and other characteristics of the Procuring Entity's requirements for the year. The profile of the procurement is a major determinant in the choice of procurement strategy to be employed, as well as in the scheduling of procurement activities.

There may be common requirements for the various PPMPs. For example, three projects require the purchase of five (5) units of laptop computers for each project office, or a total of fifteen (15) laptop computers. Obviously, it will be more cost effective and efficient if the BAC will procure the 15 laptop computers in one bidding exercise and as one bid lot.

The individual PPMPs sometimes reflect a mix of procurement types, for example, an ICT project might involve the procurement of goods (e.g., workstations, network equipment and peripherals), procurement of civil works (e.g., the installation of cables might involve the repair of some offices and other related civil works) and procurement of consulting services (e.g., design and development of information systems). In similar cases, the BAC will have to exercise judgment in determining the bid lots and contract package. There are two approaches to this case — the project could be bid out as one package, or it could be divided into several bid lots (i.e. supply of hardware, supply and installation of cables, design and development of information systems, and repair of facilities). There are advantages and disadvantages to either approach, and the BAC, through the help of the TWG and the Secretariat, shall determine which is the best option for the Procuring Entity.

In IRR-A, Section 5 (p), in case of projects involving mixed procurements, the nature of the procurement, i.e. goods, infrastructure projects, or consulting services, shall be determined based on the primary purpose of the project. This is helpful in determining which type of procurement procedure to apply. However, there may be instances when the PMO, end-user unit or the Procuring Entity itself may have difficulty determining or agreeing upon the primary purpose. In these cases, ascertaining the component with the highest price may be useful as an indicator of purpose, though not necessarily as a determining factor. In the example given above, it seems that the purpose is actually to computerize the internal operations of the Procuring Entity; hence the single most important component of the project is the design and development of information systems. This being the case, the project could be bid out as a consulting service.

3.         Format of the APP

The BAC may prepare three APPs, one each for Goods, Infrastructure Projects, and Consulting Services or a consolidated APP for all procurement activities.

The APP shall contain the following information:

a.         Name of the project/procurement;

b.         PMO or end-user unit;

c.         General description of the project/procurement (general description of requirements and quantities, where applicable);

d.         The procurement methods to be adopted, and indicating if the procurement tasks are to be outsourced as provided in Section 53 (e) of the IRR-A;

e.         The time schedule for each procurement activity; and

f.          The ABC.

SECTION 4.            Various Methods of Procurement. —

Competitive Bidding

Legal Reference

IRR-A Section 10 provides the legal reference for competitive bidding.

All procurement shall be through competitive or public bidding, except as provided in Rule XVI of the IRR-A, which provides for the conditions for use of the alternative modes of procurement. This is so specified in Section 10, Article IV of R.A. 9184 and Section 10, Rule IV of its IRR-A. In keeping with this policy, Procuring Entities are enjoined to provide for sufficient lead time in its procurement program for the conduct of public bidding.

Competitive Bidding or Public Bidding is defined in R.A. 9184 and its IRR-A as follows:

"Refers to the method of procurement which is open to participation by any interested party and which consists of the following processes: advertisement, pre-bid conference, eligibility screening of prospective bidders, receipt and opening of bids, evaluation of bids, post-qualification, and award of contract, the specific requirements and mechanics of which shall be defined in the IRR to be promulgated under this Act."

Competitive bidding opens up the procurement opportunity to a greater number of suppliers or contractors who compete among themselves in providing the best goods or services to the Government for the best value. This enables the Government to obtain goods and services, infrastructure projects, and consulting services at lower prices and better terms, thus optimizing the use of scarce resources. In addition, it allows for greater transparency of the procurement process.

Competitive bidding is discussed in detail in Volumes 2, 3 and 4 of these Manuals.

It is conceded, however, that there are instances when resorting to any of the alternative modes of procurement is necessary.

Alternative Methods of Procurement

Legal Reference

IRR-A Sections 48 to 54 provide the legal reference for the alternative methods of procurement.

1.         Conditions for Use of Alternative Methods of Procurement

In highly exceptional cases provided for in Article XVI of R.A. 9184 and Rule XVI of its IRR-A, the Procuring Entity is allowed to resort to the alternative methods of procurement in order to promote economy and efficiency, subject to the following conditions:

a.         The BAC should recommend to the Head of the Procuring Entity the use of alternative methods of procurement in cases where public bidding is not feasible, to be indicated in the APP;

In cases where the original method of procurement specified in the APP is public bidding and conditions arise justifying the use of an alternative method of procurement after the APP is finalized, the APP may be amended. This can be done after a BAC Resolution recommending the use of the alternative method is approved by the Head of the Procuring Entity. The procedures are discussed in Volumes 2, 3, and 4.

Procuring Entities may charge small value purchases or over-the-counter purchases against petty cash funds provided that the procurement is within the allowable contingency. This is further discussed in Volume 2 of this Manual, in Section 2 (Part 2).

b.         The Head of the Procuring Entity or his duly authorized representative has given prior approval of the use of any of the alternative methods of procurement;

c.         The conditions surrounding the procurement at hand justify the use of any of the alternative methods of procurement, as provided for in Sections 48-54, Article XVI of R.A. 9184 and Sections 48-54, Rule XVI of its IRR-A.

2.         The Different Alternative Methods

a.         Limited Source Bidding, otherwise known as selective bidding, is a method of procurement of goods and consulting services that involves direct invitation to bid by the concerned entity of all pre-selected suppliers or consultants with known experience or proven capability on the requirements of the particular contract. The pre-selected suppliers or consultants shall be all those appearing in the list maintained by the relevant Government authority (e.g., Bureau of Food and Drugs for medicines, National Telecommunications Commission for telecommunication equipment, etc.) that has expertise and experience in the type of procurement concerned, which list should have been submitted to, maintained and updated with, the GPPB. For highly specialized goods and consulting services, where no such list is being maintained by a relevant Government authority, competitive bidding shall be conducted. It is noted that the purpose of the list is to regulate the quality of goods being offered and the qualifications of consultants in the particular field of expertise.

The particular conditions under which this alternative method of procurement may be used are outlined in Section 2, Part 2, Volume 2 (for procurement of goods, and Section 3, Part 2, Vol. 4 (for procurement of consulting services), of this Manual.

b.         Direct Contracting or single source procurement is a method of  procurement of goods that does not require elaborate bidding documents. The supplier is simply asked to submit a price quotation or a pro-forma invoice together with the conditions of sale. The offer may be accepted immediately or after some negotiations.

The particular conditions under which this alternative method of procurement may be used are outlined in Section 2, Part 2, Vol. 2 of this Manual.

c.         Repeat Order is a method of procurement of goods from the previous winning bidder, whenever there is a need to replenish goods procured under a contract previously awarded through Competitive Bidding.

The particular conditions under which this alternative method of procurement may be used are outlined in Section 2, Part 2, Vol. 2 of this Manual.

d.         Shopping is a method of procurement of goods whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf goods or ordinary/regular equipment to be procured directly from suppliers of known qualifications.

The particular conditions under which this alternative method of procurement may be used are outlined in Section 2, Part 2, Vol. 2 of this Manual.

e.         Negotiated procurement is a method of procurement of goods, infrastructure projects and consulting services, whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor, consultant or, where allowed, an individual consultant, only in the cases provided for in Section 53 of R.A. 9184 and Section 53, Rule XVI of its IRR.

The particular conditions under which this alternative method of procurement may be used are outlined in Section 2, Part 2, Vol. 2, Section 3, Part 2, Vol. 3 and Section 3, Part 2, Vol. 4 of this Manual.

SECTION 5.            Procurement by Electronic Means and the PhilGEPS. —

Procurement by Electronic Means and the Philippine Government Electronic Procurement System

Legal Reference

IRR-A Section 8 provides the legal reference for the procurement by electronic means and the PhilGEPS.

1.         The PhilGEPS 1

Consistent with the policies of transparency and streamlining of the procurement process, and to achieve efficiency, ICT shall be utilized in the conduct of government procurement. A two-pronged approach has been adopted to achieve this:

a.         institutionalization of the PhilGEPS, which will be used for procurement of common-use items and as repository of all Government procurement information; and

b.         use or engagement of electronic procurement service providers by the individual Procuring Entities for procurement of non-common use items.

The PS-DBM manages the PhilGEPS under the supervision of the GPPB. The PhilGEPS serves as the single portal and primary source of information on all government procurement.

All Procuring Entities shall utilize the PhilGEPS, through its Electronic Catalogue facility, for the procurement of common-use supplies. Moreover, all IAEB, notices of award, and all other procurement-related notices shall be posted in the PhilGEPS, regardless of the method of procurement used by the Procuring Entity.

The GPPB shall issue the necessary procedural guidelines covering procurement through the PhilGEPS.

2.         Features of the PhilGEPS

a.         Electronic Bulletin Board

The PhilGEPS shall have a centralized electronic bulletin board.

Procuring Entities are required to post the following in the PhilGEPS Electronic Bulletin Board:

i.          IAEB for competitive bidding and notices of other procurement opportunities using the alternative methods of procurement;

ii.         Supplemental/Bid bulletins;

iii.       Contract awards, the corresponding Notices of award, including the reasons for award of contract;

iv.        Results of bidding and related information; and

v.         Other notices, announcements, information for interested parties.

Failure to post a procurement opportunity will render the resulting contract null and void.

Failure to post a Notice of Award shall render the erring government official/s administratively liable in accordance with R.A. 6713 and other pertinent laws, rules and regulations, and appropriate sanctions shall be imposed.

Posting of notices and other transactions with the PhilGEPS shall be done through duly authorized personnel of the Procuring Entity. In accordance with Section 8.2.3 of the IRR-A, the Procuring Entity shall be required to designate its personnel who will be authorized to transact with the PhilGEPS. The internal procedures of PhilGEPS require that a Procuring Entity shall have at least one (1) but not more than two (2) such authorized personnel. For purposes of consistency with the prescribed procurement procedures, the Procuring Entity shall designate such personnel who is a member of the BAC Secretariat or assigned to the Procurement Unit/Office. (Please refer also to Section 3, Volume 2 of this Manual for the procedures for transacting with the PS-DBM.)

Posting of the IAEB shall follow the guidelines in Section 21 of the IRR-A, Section 2, Part 1, Vol. 2, Section 3, Part 1, Vol. 3, and Section 3, Part 1, Vol. 4 of this Manual.

b.         Registry of Manufacturers, Suppliers, Distributors, Contractors and Consultants

The PhilGEPS shall have a centralized electronic database of all manufacturers, suppliers, distributors, contractors and consultants registered under the system.

Registration shall entail the submission of the requirements specified by the PS-DBM. Details of the requirements may be obtained from the PS-DBM website (procurementservice.org), or the PhilGEPS website (procurementservice.net). Submission of these requirements may be done online at the PhilGEPS website or physically at the PhilGEPS office. Registration shall be effective for one year and may be renewed, provided that the manufacturer, supplier, distributor, contractor or consultant concerned maintains its registration current and updated at least once a year, or more frequently when needed.

Manufacturers, suppliers, distributors, contractors and consultants applying for registration must also indicate their account number with a bank duly licensed by the BSP to facilitate payment as well as the posting of bid and performance security, when applicable.

The PhilGEPS shall deny registration to or exclude from the registry any party that is found to have willfully misrepresented any of the information provided in the application for registration or who is in the "blacklist" of the Government or any of its procuring entities from participating in any of its procurement opportunities.

A manufacturer, supplier, distributor, contractor or consultant applying for registration shall be required to provide an e-mail address to which all communications from the BAC and the Procuring Entity shall be sent. The e-mail address provided shall be considered as such applicant's information system for purposes of reckoning the date of sending or receipt of electronic messages or documents.

Once the PhilGEPS allows electronic bid submission and other online transactions requiring digital signatures, registered manufacturers, suppliers, distributors, contractors and consultants shall secure a digital certificate from the appropriate certification authority to be able to participate in the procurement activities of the PhilGEPS.

Registration with the PhilGEPS is not tantamount to a finding of eligibility, nor is it a guaranty that a manufacturer, supplier, distributor, contractor or consultant may participate in a public bidding without first being determined to be eligible for that particular public bidding.

c.         Electronic Catalogue

The PhilGEPS features a centralized electronic catalogue of common and non-common use goods, supplies, materials and equipment.

Procuring Entities are required to procure common-use goods, supplies, materials and equipment from the PS-DBM through the Electronic Catalogue in the PhilGEPS. Once the PhilGEPS is fully operational, the procedures for transacting with the PhilGEPS shall be provided for in detail in the websites of the PhilGEPS (procurementservice.net) and the PS-DBM (procurementservice.org).

The Electronic Catalogue may also feature non-common use items that may be procured directly and without public bidding by procuring entities from suppliers: Provided, however, That for an item to be carried in the Electronic Catalogue for this purpose, the supplier thereof must have been determined as the Lowest Calculated Responsive Bidder in a previous bidding conducted by PS-DBM or by a Procuring Entity for PS-DBM: Provided, further, That such item will be featured in the Electronic Catalogue for a maximum period of six (6) months unless another supplier offers a price lower by at least five percent (5%) and such supplier is determined by the Procuring Entity that conducted the previous bidding to meet the eligibility and bidding requirements for the item, in which case the item from the latter supplier will be that featured in the Electronic Catalogue for the remainder of the six (6)-month period.

Procuring entities without internet access may avail of the PhilGEPS Public Access Terminals which shall be installed at DBM-designated locations in the provinces and in Metro Manila.

d.         Additional Features

The PhilGEPS will also feature the following:

i.          A Virtual Store that will enable the ordering of common-use and non-common use items online called a virtual store. This virtual store shall be open only to registered Procuring Entities and may not be accessed by suppliers.

ii.         An Electronic Payment function that will allow the system to manage the generation of purchase orders and the payment of bids processed through the system. The focus of this feature is to facilitate the electronic transfer of funds from PS-DBM to and from Procuring Entities and suppliers, and from Procuring Entities to suppliers for bids managed directly by the Procuring Entity. This system will:

           Generate purchase orders from a bid notice, award notice or contract;

           Support approval process for purchase orders before any payment or fund transfer is processed;

           Have a process to submit request for payment upon delivery of goods and/or services and the completion of the approval process; and

           Have the ability to interface with the designated bank of the Procuring Entity and suppliers to support the electronic transfer of funds.

iii.       An Electronic Bid Submission that will support the implementation of e-Bid submission processes, which includes creation of electronic bid forms, creation of bid box, delivery of bid submissions, notification to supplier of receipt of bids, bid receiving and electronic bid evaluation. This facility will cover all types of procurement for goods, infrastructure projects and consulting services.

iv.        Other features that may be developed in the future under the policy guidance of the GPPB.

The PhilGEPS will also feature a Virtual Store, Electronic Payment, Electronic Bid Submission, and such other features that may be developed in the future. Procedures for the use of these features will be published once these become operational.

Use of Procurement Service Providers

Legal Reference

IRR-A Section 8 provides the legal reference for the use of procurement service providers.

Procuring Entities may hire service providers who will provide electronic procurement systems and/or services for the procurement of non-common use supplies, infrastructure projects and consulting services. The Procuring Entity shall conduct a public bidding for this service.

Minimum Requirements for Service Providers

Electronic procurement service providers must meet the following minimum requirements to qualify as a service provider to a Procuring Entity:

1.         the system must comply with the provisions of R.A. 9184, its IRR-A, R.A. 8792 (Electronic Commerce Act);

2.         the system must be linked to the PhilGEPS, particularly with regard to the posting of all bid opportunities and awards;

3.         the system must allow parallel manual submission of bids to the Procuring Entity;

4.         the system must ensure that the BAC shall have complete control of the bidding process, and that the BAC's sole authority to open bids is strictly observed;

5.         the system must be virus-resilient and the infrastructure must provide sufficient security which is at least equivalent to that employed by the PhilGEPS, such as, but not limited to, firewall and encryption devices;

6.         must provide for use of electronic signatures and other current electronic authentication devices;

7.         the service provider must have sufficient redundant back-up facilities;

8.         the system must have provisions for linkage to the Procuring Entity's Financial Management Information System, Logistics Management System, and other internal information systems that may interact with the procurement process; and

9.         Electronic payment facilities, if used, shall comply with all laws, rules and regulations issued by the Government.

The GPPB shall determine and certify compliance with the above requirements. However, it may delegate this task to technically capable agencies/offices of the Government. For this purpose, it shall issue the necessary Guidelines.

SECTION 6.            Foreign-Assisted Projects. —

Foreign-Assisted Projects

R.A. 9184 adopts international best practices in public procurement processes, and institutionalizes the need for a procurement manual, standard bidding documents and forms. With this, the next logical step is the harmonization of the GOP's procurement rules and those of the major and most active IFIs in the country. This activity was already initiated with ADB, JBIC and the World Bank, through the issuance of harmonized standard bidding documents and applicable procedures. It should be noted that these harmonized standard bidding documents only affect the procurement guidelines of the aforementioned IFIs for national or local competitive bidding procedures, and that ICB procedures would have to use the standard documents of the IFI concerned. Appendix ___ shows the major procurement harmonization points normally captured in the loan or grant agreement.

The harmonization of ICB procedures is currently on-going among the IFIs, and this would naturally be a continuing process. In any case, even if procurement harmonization in the Philippines began on the level of national/local competitive bidding procedures, the entire activity also opened the doors for the possible harmonization of ICB procedures. Since the IFIs' guidelines focus primarily on procurement procedures, evaluation and review processes, this leaves much room for readily adopting the provisions of R.A. 9184 and its IRR-A, except those rules that are not acceptable to the IFIs which are normally identified in the loan or grant agreement, the bidding documents or appropriately addressed in these Manuals. These pertain to the following areas:

1.         The review procedures of the IFI concerned, including thresholds for prior review, if any

2.         Thresholds for national/local competitive bidding

3.         The posting of the ABC as the ceiling of bid prices

4.         The timelines for the preparation of bids

5.         The allowance of pre-qualification for complex or large projects

6.         Eligibility criteria, which includes the participation of foreign bidders

7.         Currency requirements

8.         Domestic and provincial preferences

9.         For ADB and JBIC funded projects, the country eligibility requirement shall be followed

SECTION 7.            Penal, Civil and Administrative Liabilities and Sanctions. —

Standard of Ethics

Definition of Corrupt, Fraudulent, Collusive, and Coercive Practices

Procuring entities and bidders, manufacturers, suppliers or distributors are required to observe the highest standard of ethics during the procurement and execution of contract. Bidders determined to have committed corrupt, fraudulent, collusive and coercive practices by the government will not be eligible to bid in its projects. 2 For this purpose:

1.         "Corrupt practice" means behavior on the part of officials in the public or private sectors by which they improperly and unlawfully enrich themselves, others, or induce others to do so, by misusing the position in which they are placed, and it includes the offering, giving, receiving, or soliciting of anything of value to influence the action of any such official in the procurement process or in contracting execution; entering, on behalf of the government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.

2.         "Fraudulent practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Procuring Entity, and includes collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the Procuring Entity of the benefits of free and open competition.

3.         "Collusive practice" means a scheme or arrangement between two (2) or more bidders, with or without the knowledge of the Procuring Entity, designed to establish bid prices at artificial, non-competitive levels.

4.         "Coercive practice" means harming or threatening to harm, directly or indirectly, persons, or their property to influence their participation in a procurement process, or affect the execution of a contract.

The pertinent provisions of the Anti-Graft and Corrupt Practices Act, or R.A. 3019, shall also be applied in determining the existence of "corrupt or fraudulent practice".

Applicable penalty for fraud, misrepresentation and collusion

If a bidder is found to have committed an act that constitutes fraud or misrepresentation or to have colluded with others for the purpose of influencing the outcome of the bidding, it will be disqualified by the BAC, its bid security will be forfeited, and, upon conviction, it will suffer the penalty of imprisonment of not less than six (6) and one (1) day and not more than fifteen (15) years. (IRR-A Section 65.2) Likewise, it will suffer the administrative penalties of suspension for one (1) year from participation in government procurement for the first offense, and suspension for two (2) years for the second offense. (IRR-A Section 69.1)

Conflict of Interest

A bidder that has a conflict of interest shall be disqualified to participate in the procurement at hand. A Bidder would be considered as having a conflict of interest with another bidder in any of the events described in paragraphs 1 through 3 below and a general conflict of interest in any of the circumstances set out in paragraphs 4 through 6 below:

1.         If the bidder is a corporation or a partnership and it has officers, directors, controlling shareholders, partners or members in common with another bidder; or if the bidder is an individual or a sole proprietorship and he is the proprietor of another bidder, or an officer, director or a controlling shareholder of another bidder; or if the bidder is a joint venture and it or any of its members has officers, directors, controlling shareholders or members in common with another bidder, or any of its members is a bidder;

2.         A bidder receives or has received any direct or indirect subsidy from another bidder;

3.         A bidder has the same legal representative as any other bidder for purposes of the bidding at hand.

4.         A bidder has a relationship directly or through common third parties, that puts them in a position to have access to information about or influence on the bid of another bidder, or influence the decisions of the Procuring Entity regarding the bidding process. This will include a firm or an organization that lends, or temporarily seconds, its personnel to firms or organizations which are engaged in consulting services for the preparation related to procurement for or implementation of the project, if the personnel would be involved in any capacity on the same project;

5.         A bidder submits more than one bid in the bidding process. However, this does not limit the participation of subcontractors in more than one bid; or

6.         A bidder who participated as a consultant in the preparation of the design or technical specifications of the goods and related services that are the subject of the bid.

In accordance with Section 47 of the IRR-A, the bidder should not be related to the Head of the Procuring Entity by consanguinity or affinity up to the third civil degree or any of the Procuring Entity's officers or employees having direct access to information that may substantially affect the result of the bidding, such as, but not limited to, the members of the BAC, the members of the TWG, the BAC Secretariat, the members of the PMO, and the designers of the project. This prohibition shall apply to the following persons:

1.         If the bidder is an individual or a sole proprietorship, to the bidder himself;

2.         If the bidder is a partnership, to all its officers and members;

3.         If the bidder is a corporation, to all its officers, directors and controlling stockholders; and

4.         If the bidder is a joint venture, items 1 through 3 above shall correspondingly apply to each of the members of the said joint venture, as may be appropriate.

To establish the non-existence of the above relationship, and to bind the Bidders to its representation relating to the foregoing, all bids must be accompanied by a Disclosure Affidavit of the bidder to that effect. (IRR-A Sections 47 and 25.3.C.8)

Penal Liabilities and Sanctions

Penal Liabilities of Public Officers

Without prejudice to the provisions of R.A. 3019 and other penal laws, public officers who commit any of the following acts shall be criminally liable:

1.         Opening any sealed Bid including but not limited to Bids that may have been submitted through the electronic system and any and all documents required to be sealed or divulging their contents, prior to the appointed time for the public opening of Bids or other documents.

2.         Delaying, without justifiable cause, the screening for eligibility, opening of bids, evaluation and post evaluation of bids, and awarding of contracts beyond the prescribed periods of action provided for in the IRR-A.

3.         Unduly influencing or exerting undue pressure on any member of the BAC or any officer or employee of the Procuring Entity to take a particular action which favors, or tends to favor a particular bidder.

4.         Splitting of contracts which exceed procedural purchase limits to avoid competitive bidding or to circumvent the limits of approving or procurement authority.

5.         Abuse by the Head of the Procuring Entity of his power to reject any and all bids as mentioned under Section 41 of R.A. 9184 and its IRR-A, with manifest preference to any bidder who is closely related to him in accordance with Section 47 of R.A. 9184 and its IRR-A.

When any of the foregoing acts is done in collusion with a private individual, the private individual shall likewise be liable for the offense.

Penal Sanctions for Public Officers

Without prejudice to the provisions of R.A. 3019 and other penal laws, public officers who commit any of the above acts shall, upon conviction, suffer the penalty of imprisonment of not less than six (6) years and one (1) day, but not more than fifteen (15) years. In addition, the public officer shall also suffer the penalty of temporary disqualification from public office, while any private individual found to have colluded with him shall be permanently disqualified from transacting business with the government.

The above penalties and offenses shall cover all types of procurement whether done manually or electronically.

When the bidder is a juridical entity, criminal liability and the accessory penalties shall be imposed on its directors, officers or employees who actually commit any of the foregoing acts. If a person previously held liable or found guilty under the provisions of R.A. 9184 and its IRR-A has a controlling interest in a prospective bidder-entity the said bidder-entity shall be disqualified to participate in any procurement activity being conducted by the Government.

Penal Liabilities of Private Individuals

Private individuals who commit any of the following acts, shall be criminally liable:

1.         When two or more bidders agree and submit different bids as bona fide, bidders, all the while knowing that the bid(s) of one or more of them was so much higher than the other that the latter could not be honestly accepted and that the contract will surely be awarded to the pre-arranged lowest bid.

2.         When a bidder maliciously submits different bids through two or more persons, corporations, partnerships or any other business entity in which he has an interest to create the appearance of competition that does not in fact exist so as to be adjudged as the winning bidder.

3.         When two or more bidders enter into an agreement which calls upon one or more of them to refrain from bidding for procurement contracts, or which requires one or more of them to withdraw Bids already submitted, in order to secure an undue advantage to any one of them.

4.         When a bidder, by himself or in connivance with others, employs schemes which tend to restrain the natural rivalry of the parties or operates to stifle or suppress competition and thus produce a result disadvantageous to the public.

5.         Submitting eligibility requirements of whatever kind and nature that contain false information or falsified documents calculated to influence the outcome of the eligibility screening process or conceal such information in the eligibility requirements when the information will lead to a declaration of ineligibility from participating in public bidding.

6.         Submitting Bidding Documents of whatever kind and nature that contain false information or falsified documents or conceal such information in the Bidding Documents, in order to influence the outcome of the public bidding.

7.         Participating in a public bidding using the name of another or allow another to use one's name for the purpose of participating in a public bidding.

8.         Withdrawing a Bid, after it shall have qualified as the Lowest Calculated Bid/Highest Rated Bid, or refuse to accept an award, without just cause or for the purpose of forcing the Procuring Entity to award the contract to another bidder. This shall include the non-submission within the prescribed time, or delaying the submission of requirements such as, but not limited to, performance security, preparatory to the final award of the contract.

When any of the foregoing acts is done in conspiracy with a public officer, the public officer shall likewise be liable for the offense.

Penal Sanctions for Private Individuals

Private individuals who commit any of the above acts, and any public officer conspiring with them shall, upon conviction, suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than fifteen (15) years. In addition, the public officer involved shall also suffer the penalty of temporary or perpetual disqualification from public office and the private individual shall be permanently disqualified from transacting business with the Government.

The above penalties and offenses shall cover all types of procurement whether done manually or electronically.

When the bidder is a juridical entity, criminal liability and the accessory penalties shall be imposed on its directors, officers or employees who actually commit any of the foregoing acts. If a person previously held liable or found guilty under the provisions of R.A. 9184 and its IRR-A has a controlling interest in a prospective bidder-entity the said bidder-entity shall be disqualified to participate in any procurement activity being conducted by the Government.

Civil Liability

Civil Liability in Case of Conviction

Without prejudice to administrative sanctions that may be imposed in proper cases, a conviction under R.A. 9184 and its IRR-A or R.A. 3019 shall carry with it civil liability, which may either consist of restitution for the damage done or the forfeiture in favor of the government of any unwarranted benefit derived from the act or acts in question or both, at the discretion of the courts.

Liquidated Damages

All contracts executed in accordance with R.A. 9184 and its IRR-A shall contain a provision on liquidated damages which shall be payable in case of breach thereof. For the procurement of goods and consulting services, the amount of the liquidated damages shall be at least equal to one-tenth of one percent (0.1%) of the cost of the unperformed portion for every day of delay. For the procurement of infrastructure projects, the amount of the liquidated damages shall be in accordance with Annex "E" of IRR-A, R.A. 9184. Once the cumulative amount of liquidated damages reaches ten percent (10%) of the amount of the contract, the Procuring Entity shall rescind the contract, without prejudice to other courses of action and remedies open to it.

Administrative Liabilities and Sanctions

Administrative Liabilities

The following violations shall warrant administrative sanctions:

1.         Submission of eligibility requirements containing false information or falsified documents.

2.         Submission of bids that contain false information or falsified documents, or the concealment of such information in the bids in order to influence the outcome of eligibility screening or any other stage of the public bidding.

3.         Allowing the use of one's name, or using the name of another for purposes of public bidding.

4.         Withdrawal of a bid, or refusal to accept an award, or enter into contract with the Government without justifiable cause, after he had been adjudged as having submitted the LCRB or HRRB.

5.         Refusal or failure to post the required performance security within the prescribed time.

6.         Termination of the contract due to the default of the bidder.

7.         Refusal to clarify or validate in writing its Bid during post-qualification within a period of seven (7) calendar days from receipt of the request for clarification.

8.         Any documented unsolicited attempt by a bidder to unduly influence the outcome of the bidding in his favor.

9.         All other acts that tend to defeat the purpose of the competitive bidding, such as an eligible contractor not buying bid documents, and contractors habitually withdrawing from bidding or submitting letters of non-participation for at least three (3) times within a year, except for valid reasons.

Administrative Sanctions

Without prejudice to the imposition of criminal sanctions or the effects of civil liability, the Head of the Procuring Entity shall impose on bidders or prospective bidders, the administrative penalty of suspension for one (1) year for the first offense, and suspension of two (2) years for the second offense from participating in the public bidding process, as well as disqualification from further participating in the public bidding being undertaken by the Procuring Entity concerned, where applicable, for any of the above violations. In addition to the penalty of suspension, the Bid Security or the Performance Security posted by the concerned bidder or prospective bidder shall also be forfeited.

The Head of the Procuring Entity may delegate to the BAC the authority to impose the administrative penalties.

The Head of the Procuring Entity may preventively suspend any member of the TWG, the BAC Secretariat, or the BAC if there are strong reasons or prima facie evidence showing that the officials or employees concerned are guilty of committing any of the acts constituting criminal or civil liability, or for dishonesty as defined by the Civil Service Laws. For uniformed personnel of the AFP, the substantive and procedural due process under its justice system shall be applied. In all cases, due process as mandated by the Constitution and Civil Service laws, rules and regulations, shall be strictly observed.

Lifting of preventive suspension pending administrative investigation, as well as removal of administrative penalties and disabilities shall be in accordance with the provisions of Sections 52 and 53, Chapter 6, Subtitle A (Civil Service Commission), Title I, Book V of Executive Order No. 292, otherwise known as the Administrative Code of 1987.

Blacklisting Guidelines

GPPB Resolution 09-2004 provides the guidelines that govern the blacklisting of manufacturers, suppliers, distributors, contractors and consultants involved in government procurement for offenses or violations committed during competitive bidding and contract implementation, in accordance with Section 69.4 of IRR-A, R.A. 9184.

Prohibition on blacklisted persons/entities to participate in the bidding of Government Projects/Contracts

A person/entity that is blacklisted by a Procuring Entity and/or included in the GPPB Consolidated Blacklisting Report shall not be allowed to participate in the bidding of all government projects during the period of disqualification unless it is delisted.

A joint venture or consortium which is blacklisted or which has blacklisted member/s and/or partner/s as well as a person/entity who is a member of a blacklisted joint venture or consortium are, likewise, not allowed to participate in any government procurement during the period of disqualification.

In the case of corporations, a single stockholder, together with his/her relatives up to the third civil degree of consanguinity or affinity, and their assignees, holding at least twenty percent (20%) of the shares therein, its chairman and president, shall be blacklisted after they have been determined to hold the same controlling interest in a previously blacklisted corporation or in two corporations which have been blacklisted; the corporations of which they are part shall also be blacklisted.

Sanctions and Grounds for Blacklisting

During the competitive bidding stage, pursuant to Section 69 of R.A. 9184, the Procuring Entity shall impose on bidders or prospective bidders the penalty of suspension for one (1) year for the first offense, suspension for two (2) years for the second offense from participating in the public bidding process, without prejudice to the imposition of additional administrative sanctions as the internal rules of the agency may provide and/or further criminal prosecution, as provided by applicable laws, for the following violations:

1.         Submission of eligibility requirements containing false information or falsified documents.

2.         Submission of bids that contain false information or falsified documents, or the concealment of such information in the bids in order to influence the outcome of eligibility screening or any other stage of the public bidding.

3.         Unauthorized use of one's name, or using the name of the name of another for purpose of public bidding.

4.         Withdrawal of a bid, or refusal to accept an award, or enter into contract with the government without justifiable cause, after he had been adjudged as having submitted the LCRB or HRRB.

5.         Refusal or failure to post the required performance security within the prescribed time.

6.         Refusal to clarify or validate in writing its Bid during post qualification within a period of seven (7) calendar days from receipt of the request for clarification.

7.         Any documented unsolicited attempt by a bidder to unduly influence the outcome of the bidding in his favor.

8.         All other acts that tend to defeat the purpose of the competitive bidding, such as but not limited to: an eligible contractor not buying bid documents or not complying with the requirements during bid evaluation, and contractors habitually withdrawing from bidding or submitting letters of non-participation for at least three (3) times within a year, except for valid reasons.

In addition to the penalty of suspension, the bid security posted by the concerned bidder or prospective bidder shall also be forfeited.

During Contract Implementation Stage, pursuant to Section 69 (6) of R.A. 9184 and without prejudice to the imposition of additional administrative sanctions as the internal rules of the agency may provide and/or further criminal prosecution as provided by applicable laws, the Procuring Entity shall impose on contractors after the termination of the contract the penalty of suspension for one (1) year for the first offense, suspension for two (2) years for the second offense from participating in the public bidding process, for violations committed during the contract implementation stage, which include but not limited to the following:

1.         Failure of the contractor, due solely to his fault or negligence, to mobilize and start work or performance within the specified period in the NTP;

2.         Failure by the contractor to fully and faithfully comply with its contractual obligations without valid cause, or failure by the contractor to comply with any written lawful instruction of the Procuring Entity or its representative(s) pursuant to the implementation of the contract. For the procurement of infrastructure projects or consultancy contracts, lawful instructions include but are not limited to the following:

a.         Employment of competent technical personnel, competent engineers and/or work supervisors;

b.         Provision of warning signs and barricades in accordance with approved plans and specifications and contract provisions;

c.         Stockpiling in proper places of all materials and removal from the project site of waste and excess materials, including broken pavement and excavated debris in accordance with approved plans and specifications and contract provisions;

d.         Deployment of committed equipment, facilities, support staff and manpower; and

e.         Renewal of the effectivity dates of the performance security after its expiration during the course of contract implementation.

3.         Assignment and subcontracting of the contract or any part thereof or substitution of key personnel named in the proposal without prior written approval by the Procuring Entity.

4.         For the procurement of goods, unsatisfactory progress in the delivery of the goods by the manufacturer, supplier or distributor arising from his fault or negligence and/or unsatisfactory or inferior quality of goods, as may be provided in the contract;

5.         For the procurement of consulting services, poor performance by the consultant of his services arising from his fault or negligence. Any of the following acts by the consultant shall be construed as poor performance:

a.         Defective design resulting in substantial corrective works in design and/or construction;

b.         Failure to deliver critical outputs due to consultant's fault or negligence; and

c.         Specifying materials which are inappropriate, substandard, or way above acceptable standards.

d.         Allowing defective workmanship or works by the contractor being supervised by the consultant.

6.         For the procurement of infrastructure projects, poor performance by the contractor or unsatisfactory quality and/or progress of work arising from his fault or negligence as reflected in the Constructor's Performance Evaluation System rating sheet. In the absence of the CPES rating sheet, the existing performance monitoring system of the Procuring Entity shall be applied. Any of the following acts by the constructor shall be construed as poor performance:

a.         Negative slippage of fifteen percent (15%) and above within the critical path of the project due entirely to the fault or negligence of the contractor; and

b.         Quality of materials and workmanship not complying with the approved specifications arising from the contractor's fault or negligence.

7.         Willful or deliberate abandonment or non-performance of the project or contract by the contractor resulting to substantial breach thereof without lawful and/or just cause.

In addition to the penalty of suspension, the performance security posted by the contractor shall also be forfeited.

SECTION 8.            Legal Assistance and Indemnification. —

General Conditions

Pursuant to and in accordance with Section 73 of R.A. 9184 and its IRR-A, the GPPB issued the Guidelines on Legal Assistance and Indemnification of BAC Members and its Support Staff 3 for the following purposes:

1.         To prescribe the rule and procedures in granting legal assistance and indemnification of the BAC members and BAC Support Staff. 4

2.         To ensure that the mandate to insulate government procurement personnel from the unnecessary loss, damage or injury arising from the lawful exercise of their functions is implemented in accordance with the provisions of R.A. 9184.

3.         To establish the legal parameters for the effective implementation of the legal assistance and indemnification provided for BAC members and BAC Support Staff.

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. Protest fees, proceeds from the sale of bidding documents, and any other additional funds derived from other income-generating activities of the agency may be used to augment the funds.

Free Legal Assistance

In order for a member of the BAC or its Support Staff to avail of the free legal assistance, the following considerations must be met:

1.         The procuring entity shall, to the fullest extent permitted by the, indemnify a BAC member and/or any of the BAC Support Staff who was or is a party to a pending or 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 as BAC Support Staff.

2.         The BAC member or BAC Support Staff concerned must have engaged the services of a private lawyer or external counsel.

3.         The BAC member or BAC Support Staff must have not been adjudged as guilty of gross negligence, misconduct, or grave abuse of discretion.

4.         The free legal assistance shall cover actual cost of suit and attorney's fees. The attorney representing the BAC member or BAC Support Staff shall be entitled to a maximum of Five Thousand Pesos (Php5,000.00) per appearance which shall be paid by the procuring entity.

5.         The free legal assistance shall not cover:

a.         Any action or suit initiated by a BAC member or BAC Support Staff in his personal capacity or in behalf of the procuring entity, unless such action, proceeding, or claim was authorized by the head of the procuring entity or the approving authority therein; or

b.         Any action or suit initiated by the Government against the BAC members or BAC Support Staff.

6.         The BAC member or BAC Support Staff shall be entitled to actual, moral, and exemplary damages when awarded by the court. Likewise, the attorney representing the BAC member or BAC Support Staff shall be entitled to attorney's fees awarded by the court.

Liability Insurance

Following are the general conditions pertaining to the liability insurance for members of the BAC and the BAC Support Staff:

1.         The procuring entity shall have the responsibility to procure and maintain adequate liability insurance for and in behalf of its BAC members or BAC Support Staff.

2.         The liability insurance policy shall cover only those liabilities asserted against the public official and incurred by him in his capacity as such BAC members or BAC Support Staff as the case may be.

3.         In order to avail of the liability insurance, the BAC members or BAC Support Staff should not be adjudged in such action or proceeding to be guilty of gross negligence, misconduct, or grave abuse of discretion or guilty of any other complaint or charges.

4.         In the event of settlement or compromise, indemnification shall be confined only to matters covered by the settlement, and to which the procuring entity had been advised by counsel that the person to be indemnified have not committed gross negligence, misconduct, or grave abuse of discretion in the performance of their duties and functions.

5.         The insurer shall pay for the loss arising from the claim or suit made against the BAC members or BAC Support Staff during the policy period where they serve in such capacity. For this purpose, the term "loss" shall include judgments, expenses for settlement or compromise, as well as all reasonable fees and other expenses incurred by such persons in connection with any administrative, civil, or criminal action, suit or proceeding to which they may be or have been made a party by reason of the lawful performance of their official functions and duties in such capacity.

Medical Assistance

Medical assistance should be provided to BAC members and BAC Support Staff for injuries/disabilities incurred in the lawful performance of their official functions and duties. The medical assistance consists of indemnification for medicines, laboratory and hospitalization expenses and granted to the claimant as a matter of right and subject to the conditions mandated by law.

Following are the general considerations pertaining to the medical assistance:

1.         The claimant(s) should be entitled to indemnification for any injury or disability resulting from the performance of their official functions as defined by law and without any contributory negligence on their part; provided that they exercised due diligence to prevent harm or injury to themselves.

2.         The claimant(s) or his/her relatives must notify the head of the procuring entity within seven (7) calendar days from the occurrence of the injury or disability.

3.         The amount claimed shall not exceed the actual amount incurred, substantiated by receipts and other supporting documents. Indemnification shall only be made upon presentation of the proof of payment in connection with the injury or disability suffered.

Procedure for Granting Legal Assistance and Indemnification

The claimant(s) should file their respective claim(s) for legal assistance, liability insurance, or medical assistance as the case may be, with the head of the procuring entity; and shall secure the approval of the latter on the terms and conditions of the engagement of counsel.

The head of the procuring entity should be given at least fifteen (15) to thirty (30) calendar days to examine, review, verify and validate the authenticity of the documents presented by the claimant.

Upon finding that all the requirements have been duly complied with and that all the necessary documents submitted are genuine, it should then order the processing of the claims and the subsequent release of funds for the approved claims.

Any expenses incurred in advance by the claimant arising from the performance of his official functions in such capacity shall be subject to reimbursement upon submission of the necessary documents and approval thereof by the head of the procuring entity.

If the BAC member or its support staff is found to be not guilty for gross negligence, misconduct, or grave abuse of discretion, he shall liquidate his cash advances by presenting receipts of payment and other necessary documents. On the other hand, if the BAC member or its support staff is found to be guilty for gross negligence, misconduct, or grave abuse of discretion, he shall pay the cash advances made through salary deductions or reimbursement.

SECTION 9.            Case Studies. —

Case Study: Procurement of Infrastructure Projects

A concrete road project with an ABC of P10.0 million was advertised for bidding. Twenty (20) contractors expressed interest in the project by submitting a LOI on or before the deadline specified in the IAEB. On the day of the Eligibility Check/Screening, only ten (10) were found to be eligible.

On or before the day of Bid Opening, all of the ten (10) eligible contractors submitted a bid. All their technical envelopes were rated "passed" during the preliminary examination of bids. Further, their financial envelopes were likewise complying. After reading all the financial bids, Contractor A, which submitted a bid of P8.5 million, was declared the bidder with the LCB. The second lowest bid was P9.1 million, submitted by Contractor B.

During the Bid Evaluation, the bid of Contractor A was corrected for arithmetical errors. The re-calculated bid of Contractor A went up to P9.0 million.

During the Post-Qualification, Contractor B wrote the BAC Chairman and informed him that Contractor A has an on-going project with outstanding works of about P40.0 million. This project was apparently not taken into consideration in Contractor A's submitted calculation of its NFCC, a requirement for eligibility.

The BAC called the attention of Contractor A on the matter of the deficient NFCC. In reply, Contractor A posted a credit line in an amount which is more than enough to cover for the difference between its real NFCC and the ABC. The bid of Contractor A seemed to be responsive, especially since it has all the required personnel and equipment needed for the project, and has done all its previous projects satisfactorily with no negative slippage at all. Further, there is political pressure on the BAC to award the contract to Contractor A as it is being endorsed by the Congressman in the locality of the project.

In comparison, the bidder with the second lowest bid, Contractor B, has completed all its previous projects satisfactorily, suffering only a negative slippage of — 12%. Further, its legal, technical and financial requirements would have passed the Post-Qualification. The BAC is wary of it though as its owner is the first cousin of the BAC Chairman.

The BAC will meet to deliberate on the award of the project.

Analysis:

The BAC should award the project to Contractor B, not to Contractor A, primarily because: (a) Contractor A is not eligible in the first place; and (b) Contractor B submitted the lowest bid among all the others who have been found eligible.

Contractor A is not eligible. While the eligibility requirements it submitted passed the Eligibility Check, information that the BAC gathered during Post-Qualification shows that Contractor A misrepresented itself by not reporting its on-going project, whose outstanding works would have a negative impact on its NFCC.

IRR-A Section 23.4 says: "Notwithstanding the eligibility of a prospective bidder, the Procuring Entity concerned reserves the right to review its qualification at any stage of the procurement process if it has reasonable grounds to believe that a misrepresentation has been made by the said prospective bidder, or that there has been a change in the prospective bidder's capability to undertake the project from the time it submitted its eligibility requirements. Should such review uncover any misrepresentation made in the eligibility requirements, statements or documents, or any changes in the situation of the prospective bidder which will affect the capability of the bidder to undertake the project so that it fails the preset eligibility criteria, the Procuring Entity shall consider the said prospective bidder as ineligible and shall disqualify it from submitting a bid or from obtaining an award or contract."

Further, even if Contractor A posted a credit line enough to compensate for the difference in its NFCC and the project's ABC; in the first place, the BAC should not have accepted the credit line as this is tantamount to an improvement in the qualification/bid of Contractor A. Corollary to this, it should be noted that the eligibility requirement from a bidder as proof of its capacity to absorb additional obligations in connection with the contract and to finance its implementation and completion is a choice among the NFCC, a credit line, or a cash deposit certificate, not a combination of the three.

In fact, Contractor A should be penalized in accordance with IRR-A Section 65.3 for submitting false information. This section penalizes the act of submitting eligibility requirements of whatever kind and nature that contain false information or falsified documents calculated to influence the outcome of the eligibility screening process or conceal such information in the eligibility requirements when the information will lead to a declaration of ineligibility from participating in public bidding.

If proven to be guilty of the above, the bidder may be penalized with imprisonment of not less than six (6) years and one (1) day, but not more than fifteen (15) years.

At this point, the BAC should have disqualified Contractor A despite: (a) its apparent capability to undertake the contract as is shown by its other submitted requirements such as lists of personnel and equipment and its good track record; (b) its bid being the lowest; and (c) its closeness to the Congressman, which does not have a bearing on the bidding process.

It must be clear in the minds of the BAC that the reason for having an Eligibility Check/Screening prior to the submission of Bids is to allow the BAC to sift among the many interested bidders and deal only with those that are eligible, based on some pre-set criteria. Thus, if a bidder is not eligible, the BAC should not think twice about disqualifying it even if it appears to be capable based on its technical and/or financial envelopes. The advantage of having this step-by-step procedure is that it minimizes discretion of the BAC and saves/protects it from having to face dilemmas of this sort.

In view of the foregoing, the BAC would have to award the contract to the bidder which submitted the second lowest bid among all the others who have been found eligible, i.e. Contractor B. While this contractor has had a negative slippage of —12% in his other projects, the eligibility requirement on track record only requires that the negative slippage, if any, be not more than — 15%. Further, while the owner of Contractor B is a first cousin of the BAC Chairman, it is still not in violation of IRR-A Section 47, because the prohibition refers to the participation of bidders related to the members of the BAC within the third civil degree. A first cousin falls within the fourth civil degree.

Case Study: Procurement of Consulting Services

A government agency wanted to engage the services of a consultant for the detailed engineering of its ICT building. During the pre-procurement conference, it was agreed upon by the BAC and other participants that the use of the quality-based evaluation procedure would be recommended in the selection of consultants. The head of agency approved the use of said evaluation procedure.

The project, which has an approved budget of P6,500,000, was advertised on 01 and 07 November 2003 in a newspaper of nationwide general circulation, the agency's website, the PhilGEPS, and a conspicuous place in the agency's premises. Fifteen (15) firms responded by submitting their LOI and eligibility documents on or before the deadline specified in the IAEB.

During the eligibility check conducted by the BAC on 24 November 2003, the BAC declared eight (8) firms as ineligible for failing to pass all the eligibility requirements. The 8 ineligible firms received their notice of ineligibility before the meeting adjourned. The seven (7) other firms were declared by the BAC as eligible for shortlisting. One of the 8 ineligible firms, Company X, filed a request for reconsideration with the BAC on 02 December 2003. After an assessment of the justification provided by the said ineligible bidder, the BAC decided on 05 December 2003 to grant its request for reconsideration and declared Company X as eligible.

After evaluating the eligibility documents submitted by the 8 eligible bidders based on the criteria specified in the IAEB, the BAC determined the ratings of the 8 bidders as follows:

1)     Company A         -      90.5 points
2)     Company B         -      85.5 points
3)     Company C         -      75.5 points
4)     Company D         -      69.5 points
5)     Company E         -      69.0 points
6)     Company F         -      68.5 points
7)     Company G         -      51.5 points
8)     Company X         -      49.5 points

The BAC deliberated on the number of firms to be included in the shortlist, and agreed to have a shortlist of six (6) firms. All 6 firms were informed of their inclusion in the shortlist through a letter dated 22 December 2003 and signed by the BAC Chairman. The RFP was forwarded to the 6 firms on 23 December 2003 stating, among others, the place and deadline for the submission of the technical and financial proposals.

A pre-bid conference was scheduled on 13 January 2004, while the deadline for submission of technical and financial proposals was set on 23 January 2004, 10:00 a.m., at the Conference Room, 3rd floor of the agency's building.

The BAC specified that the attendance of the 6 firms in the pre-bid conference is mandatory, and that failure to attend would be considered a ground for disqualification. All 6 firms attended the pre-bid conference and the minutes of the pre-bid conference were issued to the 6 bidders on 16 January 2004.

Five of the six firms submitted their technical and financial proposals on or before the 23 January 2004, 10:00 a.m. deadline, at the 3rd floor Conference Room. The sixth firm (Company F) arrived at the 3rd floor Conference Room at 10:03 a.m. and insisted that its technical and financial proposals be accepted as they were in the building at 9:57 a.m., as recorded in the security guard's logbook. The BAC decided to accept the technical and financial proposals of Company F.

The BAC started opening the technical envelopes of the six firms at the time indicated in the RFP to determine the presence of the required technical documents. All the firms, except Company F, submitted all the required technical documents. Company F was declared disqualified by the BAC for failure to pass all the technical requirements. After agreeing with the declaration of the BAC on its disqualification, Company F accepted its financial proposal that was returned unopened by the BAC.

Prior to the detailed evaluation of the technical documents submitted by the five technically complying firms, the BAC deliberated on the sub-criteria and the corresponding weights. To more appropriately consider the requirements of the project, the general criteria were further subdivided. Based on the approved criteria, the BAC rated the five firms, resulting in the following rankings:

1)     Company A         -      88.5 points
2)     Company B         -      81.5 points
3)     Company C         -      71.5 points
4)     Company D         -      68.0 points
5)     Company E         -      65.5 points

The BAC sent a letter to Company A dated 16 February 2004, informing the firm that it submitted the highest rated bid, and thus inviting it for contract and financial negotiations on 19 February 2004 at 9:00 a.m. The authorized representative of Company A met with the BAC and discussed, among others, its financial proposal. Upon opening of the financial proposal of Company A, the submitted bid price was read as P6,800,000, exceeding the ABC by P300,000. The BAC checked the calculation of company A and it determined the correct bid price to be P6,550,000, still exceeding the ABC by P50,000. Company A offered a discount of P50,000 so that the cost of its financial proposal would not exceed the ABC. Satisfied with the high technical score obtained by Company A, the BAC accepted the discount offered.

Negotiations were successfully completed on 20 February 2004. Company A was considered to have submitted the highest rated and responsive bid after its successful post-qualification on 27 February 2004.

The BAC will deliberate on the award of contract. What steps, if any, are not consistent with the provisions of the IRR-A relating to the procurement of consulting services?

Analysis:

1.         While the IAEB was advertised twice in a newspaper of general nationwide circulation, Section 21.2.1.a of the IRR-A provides that there should be a minimum period of six (6) days in between publications. The BAC had a shorter period of five (5) days for disseminating the procurement opportunity for consulting services.

2.         The request for reconsideration by Company X, which was declared by the BAC to be ineligible, should not have been favorably considered by the BAC as it was filed eight (8) days after it received the notice of ineligibility. Section 24.13 provides that prospective bidders "found ineligible have seven (7) calendar days upon written notice . . .  within which to file a request for reconsideration with the BAC."

3.         During the pre-procurement conference, the BAC should have already determined the number of shortlist of consultants, as provided in Section 24.15.2. The Section further provides that "(s)hould less than the required number apply for eligibility and shortlisting, pass the eligibility check, and/or pass the minimum score required in the shortlisting, the BAC shall consider the same." Determining the number of shortlist and the minimum score during actual shortlisting gives the BAC the opportunity to have a lesser or larger number of shortlist, from three (3) to seven (7), to favor a preferred firm.

4.         The BAC is a recommendatory body. It should have obtained the approval of the Head of the Procuring Entity for its recommended shortlist before inviting all the firms in the shortlist to submit proposals, as provided in Section 24.15.4.

5.         Section 22.2 provides that attendance to the pre-bid conference should not be mandatory, and should be conducted at least twelve (12) days before the deadline for the submission and receipt of bids. Conducting it ten (10) days before the deadline may not give the shortlisted bidders enough time to revise their proposals if these were affected by agreements reached during the pre-bid conference. To be binding on both parties, any agreements reached during the pre-bid conference should be stated in writing and issued as a Supplemental/Bid Bulletin.

6.         The technical and financial proposals of Company F should not have been accepted by the BAC as these were submitted at the designated place, which is the 3rd floor Conference Room of the agency's building and not just any place, beyond the deadline. Section 25.2 provides that "(b)ids submitted after the deadline should not be accepted by the BAC."

7.         The evaluation criteria for the technical proposals should also have been agreed upon by the BAC during the pre-procurement conference. Although the BAC has not yet started evaluating the technical proposals when it finalized the evaluation criteria and could claim that they did not skew the criteria to favor a particular bidder, a losing bidder can exploit the situation and complain otherwise.

8.         When the BAC calculated the cost of the financial proposal of Company A and determined that it exceeded the ABC, it should have disqualified Company A at this point as Section 31 provides that the ABC shall be the upper limit or ceiling for acceptable bid prices. The discount offered by Company A should not have been accepted as this is tantamount to an improvement of its bid. Since Company A should have been disqualified, Company B should be invited by the BAC for negotiations as it has the second highest technical score. If negotiations and post-qualification were successful, Company B would be determined to have submitted the Highest Rated and Responsive Bid, and recommended for award of contract.

ANNEX

Glossary

Abstract of Bids — The corresponding document prepared by the BAC after all bids have been received, opened, examined, evaluated and ranked.

Abstract of Bidding Documents — A summary containing general information on the procurement at hand that is posted in the PhilGEPS.

Advance payment — Refers to any payment made prior to the delivery and acceptance of Goods, Works, or Consulting Services.

Amendment to Order — Refers to any change within the general scope of the contract, in any of the following aspects: drawings, design or specifications of the Goods; the method of shipment or packing; the place of delivery; scope of work or services to be rendered; the place of performance of the services; additional items needed and necessary for the protection of the Goods procured, which were not included in the original contract; or any other change affecting the specifications or scope of work of the Goods and/or services to be procured.

Approved Budget for the Contract — The budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act (GAA) and/or continuing appropriations, in the case of national government agencies (NGAs); the corporate budget for the contract approved by the governing board, pursuant to Executive Order No. 518, series of 1979 ("E.O. 518"), in the case of GOCCs and GFIs, and Republic Act No. 8292 in the case of SUCs; and the budget approved by the Sanggunian in the case of LGUs.

BAC — The Bids and Awards Committee, established in accordance with Rule V of the IRR-A of R.A. 9184.

Bid — A signed offer or proposal to undertake a contract submitted by a bidder in response to and in consonance with the requirements of the bidding documents. Also referred to as Proposal and Tender, particularly when referring to the procurement of consulting services.

Bid Evaluation — The process of determining the Bidder with the Lowest Calculated Bid (LCB) or the Highest Rated Bid (HRB).

Bid Opening Date — The date specified in the IAEB for the opening of bids.

Bid Security — Cash, check, bank draft, letter of credit, bank guarantee, surety bond or a foreign government guarantee that serves as a guarantee that the successful bidder shall not default on his offer, and shall enter into contract with the Procuring Entity and furnish the performance security.

Bid Validity — A reasonable period determined by the Head of the Procuring Entity concerned, but in no case shall exceed one hundred twenty (120) calendar days from the date of the opening of bids, wherein a Bid Security is considered valid.

Bidder — An individual or entity that submits a bid. The term includes anyone acting on behalf of the individual or other entity that submits a bid, such as agents, employees, and representatives. More specifically, a contractor, manufacturer, supplier, distributor and/or consultant competing for the award of a contract in any government procurement. See Eligible bidder, Prospective bidder.

Bidding Documents. — The documents issued by the Procuring Entity as the bases for bids, furnishing all information necessary for a prospective bidder to prepare a bid for the infrastructure projects, goods and/or consulting services required by the Procuring Entity.

Blacklisting — To place on, or as if on, a list of persons or organizations that have incurred disapproval or suspicion or are to be boycotted or otherwise penalized.

Brand Name — A trade name or product name, which identifies a product as having been made by a particular manufacturer.

Calculated bid price — The price of a bid, after taking into account minor arithmetical corrections to consider computational errors, omissions and discounts, if allowed.

Civil Works — See Infrastructure Projects.

Collusion — An agreement between two or more persons, to commit acts to accomplish a fraudulent or deceitful purpose.

Common-Use Supplies — Goods, materials and equipment that are repetitively used in the day-to-day operations of procuring entities in the performance of their functions, which are included in the Price List of the Procurement Service (PS) of the Department of Budget and Management (DBM).

Competitiveness — A principle in Government procurement that allows broad participation by eligible and qualified suppliers, contractors, consultants to put forward offers for a project.

Competitive Bidding — A method of procurement which is open to participation by any interested party and which consists of the following processes: advertisement, pre-bid conference, eligibility screening of prospective bidders, receipt and opening of bids, evaluation of bids, post-qualification, and award of contract. Also referred to as Public Bidding.

Communication costs — mail and fax costs, plus cost of advertising, meetings, internet/web posting, and other costs incurred for the dissemination of information about the bidding.

Conference Notice — A formal written communication sent to the participants of the conference (such as the Pre-procurement, Pre-bid and Post-Award Conference) informing them when and where the conference will be held.

Conflict of Interest — Refers to a clash between public interest and the private pecuniary interest of the individual concerned (Black's Law Dictionary, 5th ed.)

Consulting Services — Refer to services for Infrastructure Projects and other types of projects or activities of the Government requiring adequate external technical and professional expertise that are beyond the capability and/or capacity of the Government to undertake such as, but not limited to: (i) advisory and review services; (ii) pre-investment or feasibility studies; (iii) design; (iv) construction supervision; (v) management and related services; and (vi) other technical services or special studies. (IRR-A Section 5[i])

Consolidated Blacklisting Report — A report issued by the GPPB that contains a list of people and/or organizations that are barred from participating in any Government procurement project.

Consulting Services — Services for Infrastructure Projects and other types of projects or activities of the Government requiring adequate external technical and professional expertise that are beyond the capability and/or capacity of the Government to undertake such as, but not limited to: (i) advisory and review services; (ii) pre-investment or feasibility studies; (iii) design; (iv) construction supervision; (v) management and related services; and (vi) other technical services or special studies.

Contract Completion — Project sign-off or acceptance of the project/goods by the end-user.

Contract Implementation — The execution of a contract, covering the following milestones: effectivity of the contract; contractor's performance of his contractual obligations; Procuring Entity's performance of its contractual obligations, as specified in the Contract; final acceptance or project sign-off; all other related activities; and payment by the Procuring Entity.

Contractor — One who undertakes to perform a work or service, or supply goods for a public or private entity.

Contract Termination — Ending of a contract prior to its completion.

Corrupt practice — the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the procurement process or in contract execution. Compare fraudulent practice.

Cost Recovery Component — Direct and indirect costs accounted for in determining the price of Bidding Documents to be sold to interested suppliers/contractors.

Demand Regulation Component — a positive (+) or negative (-) unit amount allocated to the bidding activity for the purpose of regulating the participation of bidders

Development Cost — Costs incurred in developing the original content of the documents, designs, plans and specifications. The design cost may be excluded if the same is to be included in the capitalized cost of the project which is to be recovered from the usage of the completed project facility.

Direct Contracting — An alternative method of procurement of goods that does not require elaborate bidding documents. The supplier is simply asked to submit a price quotation or a pro-forma invoice together with the conditions of sale. The offer may be accepted immediately or after some negotiations. Also referred to as Single Source Procurement.

Direct Costs — Costs directly incurred such as development, reproduction, and communication costs allocated to the bidding activity. See Communication Cost, Development Cost, Reproduction Cost. Compare Indirect Costs.

Disclosure — The act of disclosing, uncovering, or revealing.

Disqualification — The act of barring a bidder from further participation in the procurement at hand, even if, in some instances, it has initially been declared eligible or post-qualified.

Domestic Bid — Any offer of unmanufactured articles, materials, or supplies of the growth or production of the Philippines, or manufactured articles, materials or supplies manufactured or to be manufactured in the Philippines, substantially from articles, materials or supplies of the growth, production or manufacture, as the case may be, of the Philippines.

Eligible Bidder — A contractor, manufacturer, supplier, distributor or consultant who meets all the eligibility requirements issued by the Procuring Entity.

Eligibility — Refers to the status of a Bidder in relation to its legal, technical and financial competence to comply with the requirements of the contract to be bid, as shown by eligibility documents submitted to and checked by the BAC.

Eligibility Check — The process of determining the compliance of Prospective Bidders with the eligibility requirements prescribed, using a non-discretionary, "pass/fail" criteria.

Eligibility Screening — see Eligibility Check.

Financial Bid — One of two components comprising a bid, the other being the Technical Bid.

Force Majeure — see Fortuitous events.

Foreign Bid — Any offer of articles, materials or supplies not manufactured or to be manufactured in the Philippines, substantially from articles, materials or supplies of the growth, production, or manufacture, as the case may be, of the Philippines.

Foreign Supplier — A supplier who is not a local supplier.

Fortuitous events — An event which could not be foreseen, or which though foreseen, was inevitable. (Art. 1174, Civil Code)

Fraudulent practice — Misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Procuring Entity. Compare corrupt practice.

Goods — Refer to all items, supplies, materials and general support services, except consulting services and infrastructure projects, which may be needed in the transaction of public businesses or in the pursuit of any government undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for construction, or personal property of any kind, including non-personal or contractual services such as the repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or analogous services, as well as procurement of materials and supplies provided by the Procuring Entity for such services. The term "related" or "analogous services" shall include, but not be limited to, lease or purchase of office space, media advertisements, health maintenance services, and other services essential to the operation of the Procuring Entity. (IRR-A Section 5[k])

Head of the Procuring Entity — (i) the head of the agency or body, or his duly authorized official, for NGAs and the constitutional commissions or offices, and branches of government; (ii) the governing board or its duly authorized official, for GOCCs, GFIs and SUCs; or (iii) the local chief executive, for LGUs: Provided, however, that in an agency, department, or office where the procurement is decentralized, the Head of each decentralized unit shall be considered as the Head of the Procuring Entity subject to the limitations and authority delegated by the head of the agency, department, or office.

IAEB — Invitation to Apply for Eligibility and to Bid. This serves as the notice to the public and all interested parties of the procurement opportunity.

Incidental Services — services ancillary to the supply of the Goods, such as transportation and insurance; installation, commissioning, provision of technical assistance, training, and other such obligations of the Supplier covered under the contract, RFP, TOR, and/or bidding documents.

Indirect Costs — Costs indirectly incurred such as overhead, supervision, and administrative costs allocated to the bidding activity. Compare Direct Costs.

Ineligible Bidder — A contractor, manufacturer, supplier, distributor or consultant who fails to meet any or all of the eligibility requirements issued by the Procuring Entity.

Infrastructure Projects — Include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and bridges, railways, airports, seaports, communication facilities, civil works components of information technology projects, irrigation, flood control and drainage, water supply, sanitation, sewerage and solid waste management systems, shore protection, energy/power and electrification facilities, national buildings, school buildings, hospital buildings, and other related construction projects of the government. (IRR-A Section 5[n]) Also referred to as civil works.

Inspection — Examination and/or testing of merchandise to determine whether it has been received in the proper quantity and condition, and to verify that it conforms to the applicable specifications.

Latent Defect — A defect that is not apparent to the buyer by reasonable observation. A latent defect is "hidden" or one that is not immediately determinable.

Limited Source Bidding – An alternative method of procurement for Goods and Consulting Services that involves direct invitation to bid by the concerned Procuring Entity from a set of pre-selected suppliers or consultants with known experience and proven capability on the requirements of the particular contract.

Liquidated Damages — Damages agreed upon by the parties to a contract, to be paid in case of breach thereof.

Motion for Reconsideration — In procurement, it is an application made to the BAC for the purpose of obtaining a rule or order setting aside a previous decision.

Negotiated Procurement – An alternative method of procurement of goods, infrastructure projects and consulting services, whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.

Notice of Award — The document issued by the Head of the Procuring Entity to the bidder to whom the contract is awarded.

Notice of Eligibility — The document issued by the BAC to the eligible bidder/s formally informing the same that he/she/they met the eligibility requirements issued by the Procuring Entity.

Notice of Ineligibility — The document issued by the BAC to the bidder/s who failed to meet any or all of the eligibility requirements issued by the Procuring Entity.

Notice of Post-qualification — The document issued by the BAC to the bidder with LCB whose bid is found responsive.

Notice of Post-disqualification — The document issued by the BAC to the bidder with LCB whose bid is found non-responsive.

Notice to Proceed — The document issued by the Head of the Procuring Entity to the winning bidder to proceed with the implementation of the contract.

Observer — One who is invited to attend and observe all stages of the procurement, especially: the pre-bid conference; opening of bids; bid evaluation; post-qualification; contract award; and special meetings of the BAC.

Patent Defect — A defect that is apparent to the buyer on normal observation. An apparent or obvious defect.

Performance Security — A security posted by the winning bidder to guarantee the faithful performance by the same of its obligations under the contract prepared in accordance with the bidding documents.

Portal — A website that integrates a wide variety of contents for the purpose of attracting and aggregating multiple users together in a central virtual space.

Post-qualification — The process of validating and verifying the documents, information and statements made in the Eligibility Documents by the Bidder who submitted the Lowest Calculated Bid, as well as ascertaining the said Bidder's compliance with the legal, financial and technical requirements of the bid.

Post-qualification Report — The report prepared by the TWG containing the findings/results of the post-qualification conducted on the bidder with the LCB or HRB, as the case may be.

Pre-bid Conference — is the forum where the Procuring Entity's representatives and the Prospective Bidders discuss the different aspects of the procurement at hand.

Pre-procurement Conference — is the forum called by the BAC for procurements undertaken through public bidding, where all officials involved in the procurement meet and discuss all aspects of the transaction, including the technical specifications, the Approved Budget for the Contract (ABC), the applicability and appropriateness of the recommended method of procurement and the related milestones, the bidding documents, availability of the pertinent budget release for the project/contract, among others.

Procurement — The acquisition of Goods, Consulting Services, and the contracting for Infrastructure Projects by the Procuring Entity. Procurement shall also include the lease of goods and real estate. With respect to real property, its procurement shall be governed by the provisions of R.A. 8974 and other applicable laws, rules and regulations.

Procurement Observation Report — The report submitted by the Observer to the Head of the Procuring Entity, based on the procurement checklist.

Procurement Unit — Refers to the organic office of the Procuring Entity that carries out the procurement function.

Procuring Entity — Any branch, constitutional commission or office, agency, department, bureau, office, or instrumentality of the Government, including GOCC, GFI, SUC and LGU procuring Goods, Consulting Services and Infrastructure Projects.

Project Management Office – The unit/office/department of the Procuring Entity that is primarily responsible for implementing and managing a project.

Proposal — See Bid.

Protest — A formal declaration made by a person interested or concerned in some act to be done, or already performed, whereby he expresses his dissent or disapproval, or affirms the act against his will. The object of such declaration is usually to save some right which would be lost to him if his implied anent * could be made nil, * or to exonerate himself from some responsibility which would attach to him unless he expressly negatived his assent. (Black's Law Dictionary, 5th Ed.)

Provincial bidder — A contractor who participates in the bidding of provincial priority programs and infrastructure projects as defined in Section 44 of the IRR-A of R.A. 9184, and whose principal office is within the same province.

Public Bidding — See Competitive Bidding.

Public Monitoring — A principle in Government procurement. . .

Repeat Order — An alternative method of procurement of goods from the previous winning bidder, whenever there is a need to replenish goods procured under a contract previously awarded through Competitive Bidding.

Reproduction cost — labor, supplies and equipment rental costs incurred in the reproduction of the documents.

Request for Clarification — A written request submitted by the bidder to the BAC, asking the latter to clarify a particular provision of the Bidding Documents.

Request for Proposal — A written request for proposals concerning goods or services the government intends to acquire by means of Competitive Bidding. The solicitation document used in Competitive Bidding. The procedure allows changes to be made after other proposals are opened and contemplates that the nature of the proposals and/or prices offered will be negotiated prior to award.

Shopping — An alternative method of procurement of goods whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf goods or ordinary/regular equipment to be procured directly from suppliers of known qualifications.

Single source procurement — See Direct Contracting.

Spare parts — Refer to extra components, equipment, tools, instruments or parts of machinery or apparatus that replace the ones that are damaged or worn out.

Specification — A description of what the purchaser requires and what a bidder must offer.

Splitting of Contracts — The act of dividing or breaking up government contracts into smaller quantities and amounts. It also is the act of dividing contract implementation into artificial phases or sub-contracts. Both actions are for the purpose of evading or circumventing the requirements of law and this IRR-A, especially the necessity of public bidding and the requirements for the alternative methods of procurement. (IRR-A Section 54.1)

Standard — The established and fixed measure used in assessing quality or performance.

Subcontractor — One who takes a specific part of the work undertaken by the principal contractor. (Black's Law Dictionary, 5th Ed.)

Submitted bid price — The bid price as indicated in the financial proposal submitted by the bidder.

Supplemental/Bid bulletin — A notice issued by the Procuring Entity to Prospective Bidders with respect to any clarifications or modifications in the Bidding Documents, including those affecting the technical specifications, eligibility requirements, procurement schedule, and other similar matters.

Technical Bid — One of two components comprising a bid, the other being Financial Bid.

Tender — See Bid.

Two-Stage Competitive Bidding — Bidding process divided into two stages. In the first stage, bidders submit only the technical bids. In the second stage, when the technical specifications have already been well defined, the regular procedure for public bidding is followed. This may be employed for the procurement of Goods where, due to the nature of the requirements of the project, the required technical specifications/requirements of the contract cannot be precisely defined in advance of bidding, or where the problem of technically unequal bids is likely to occur.

Warranty — An undertaking by the supplier, manufacturer or distributor to guarantee that it will correct any manufacturing defects of the goods procured by the government.

Footnotes

  1.       In case of FAPs, e-procurement should be consistent with the requirements of the IFI concerned.

  2.       A firm declared ineligible by an IFI for engaging in corrupt, fraudulent, collusive and/or coercive practice/s, shall be ineligible to be awarded an IFI-financed contract during the period of time determined by the IFI concerned.

  3.       Approved and adopted by GPPB through its Resolution 021-2005, dated 07 October 2005, published at the Official Gazette on 09 January 2006.

  4.       Refers to the members of the BAC Secretariat and the Technical Working Group duly designated by the procuring entity pursuant to the provisions of Rule V of the IRR-A of R.A. 9184.

 

Volume 2 — Manual of Procedures for the Procurement of Goods and Services

 

VOLUME 2

Manual of Procedures for the Procurement of Goods and Services

 

ABBREVIATIONS AND ACRONYMS

INTRODUCTION

      Scope of Volume 2

PREPARING FOR THE PROCUREMENT OF GOODS AND SERVICES

      Preparing for the Procurement of Goods and Services

      Procurement Planning

            What are the factors to be considered in planning for the procurement of Goods?

            What are "Technical Specifications"?

            What are the considerations in setting the technical specifications of the goods to be procured?

            What is the "Approved Budget for the Contract" or the ABC?

            What are the factors that should be considered in determining the ABC?

      Preparing the Bidding Documents

            What are Bidding Documents?

            What are the contents of Bidding Documents?

            In addition to properly crafted Bidding Documents, what other practices may a Procuring Entity observe to ensure a successful procurement?

            Who shall participate in the preparation of the Bidding Documents?

            When should you prepare the Bidding Documents?

            What various types and sizes of contracts may be provided in the Bidding Documents?

            Methodology: How are the Bidding Documents prepared?

            What is a Bid Security?

            What are the forms of Bid Security and the corresponding amounts required?

            Who determines the form of the Bid Security to be submitted by bidders?

            What is the period of validity of Bids and the corresponding Bid Security?

            In what currency shall the Bid Security be denominated?

            What happens if a bidder does not submit a Bid Security?

            When should Bid Securities be returned to the bidders?

            What is a Performance Security? 

            When shall the Performance Security be posted by the Bidder with the LCRB?

            What are the forms of Performance Security and the corresponding amounts required?

            Who determines the form of the Performance Security to be submitted by winning bidder?

            In case of amendments in the contract price, will there be a corresponding change in the amount of the Performance Security?

            When may the Performance Security be released?

            Who are the parties involved in the posting of the Performance Security?

            Methodology: How is the Performance Security posted?

      Conduct of the Pre-Procurement Conference

            What is a Pre-procurement Conference? 

            Why is a Pre-procurement Conference necessary? 

            When do you conduct a Pre-procurement Conference?

            Who calls for a Pre-procurement Conference?

            Who are the participants of a Pre-procurement Conference?

            What should a Pre-procurement Conference achieve?

THE PROCUREMENT SERVICE OF THE DEPARTMENT OF BUDGET AND MANAGEMENT AND THE PHILIPPINE GOVERNMENT ELECTRONIC PROCUREMENT SYSTEM

      The PS-DBM and the PhilGEPS

            What is the mandate of the PS-DBM?

            What is the policy of the Government with respect to the use of the PhilGEPS for the procurement of goods?

            What present features of the PhilGEPS and the PS-DBM website are of special relevance to the
            procurement of goods?

            Methodology: How does a Procuring Entity procure through the PS-DBM?

INSTRUCTIONS ON THE PROCEDURAL STEPS FOR THE PROCUREMENT OF GOODS AND SERVICES

      Competitive Bidding

            What is Competitive Bidding?

      Step 1       Advertise and Post an Invitation to Apply for Eligibility and to  Bid

            What is the Invitation to Apply for Eligibility and to Bid (IAEB)?

            Why do you post an Invitation to Apply for Eligibility and to Bid?

            What does an Invitation to Apply for Eligibility and to Bid contain?

            When, where, and for how long do you post an Invitation to Apply for Eligibility and to Bid?

            Which unit shall ensure that the advertising/posting requirements of the IAEB are complied with?

            Methodology: How are IAEBs advertised and posted?

      Step 2       Issue the Bidding Documents

            When should the bidding documents be made available to prospective bidders?

            How much must prospective bidders pay for the Bidding Documents?

            Methodology: How are the Bidding Documents issued?

            What are the responsibilities of a prospective bidder with regard to the Bidding Documents?

      Step 3       Call a Pre-Bid Conference and, if Necessary, Issue Supplemental/Bid Bulletins

            What is a Pre-bid Conference?

            When do you hold a Pre-bid Conference?

            Who must attend the Pre-bid Conference?

            How should the participants conduct themselves during the Pre-bid Conference and other
            stages of the procurement process?

            Methodology: How is the Pre-bid Conference conducted?

            What happens if there is a need for clarification or interpretation on the Bidding Documents after the Pre-bid Conference had been held?

            Who are involved in the Issuance of the Supplemental/Bid Bulletin?

            Methodology: How is a Supplemental/Bid Bulletin issued?

      Step 4       Receive and Open the Eligibility and Bid Envelopes

            Who may be eligible to participate in a public bidding for goods?

            Are foreign suppliers allowed to bid?

            When is a prospective bidder eligible to bid?

            What are the minimum eligibility requirements?

            What is the purpose of requiring an NFCC, a credit line or a certificate of a Holdout on Cash Deposit that is equal to the ABC?

            What are the eligibility requirements of a prospective foreign bidder?

            How and when must the Eligibility Envelope be submitted?

            What happens if a bidder fails to submit its eligibility envelope and bid on the date, time and place indicated in the IAEB?

            When should the eligibility envelope be opened?

            What is a Bid?

            What are the contents of the Technical Proposal?

            What are the contents of the Financial Proposal?

            When should Bids be submitted?

            Who are the parties involved in the receipt and opening of eligibility envelopes and bids?

            Methodology: How are the eligibility and bid envelopes opened?

            What happens if only one bidder submits its eligibility and bid envelopes?

            What can a prospective bidder do if it is found ineligible or declared non-compliant with the technical or financial requirements?

            What happens if questions/doubts have been raised about the eligibility of a prospective bidder after it had been declared as eligible?

            What happens if only one bidder is declared eligible?

            What is disqualification?

            Other than a declaration of ineligibility, is there another way by which a manufacturer, supplier or distributor may be disqualified from bidding?

            What happens if no prospective bidder is declared eligible?

            What happens if only one bidder passes the Preliminary Examination of Bids?

            What happens if a bidder fails to comply with the Technical and Financial requirements of the Bid?

            Can a bidder withdraw its bid?

      Step 5       Evaluate the Bids

            What is the purpose of Bid Evaluation?

            When should the bids be evaluated?

            Who are the participants in the Bid Evaluation Process?

            Methodology: How are bids evaluated?

            Are there special privileges for cooperatives in the supply of goods to government entities?

            What may be done if all prospective bidders are unable to comply with the requirement
            of having a single contract whose value is at least fifty percent (50%) of the ABC of the project to be bid?

            What happens if a bidder does not accept the arithmetical corrections done by the BAC on its bid?

            What happens if no bid complies with all bid requirements?

            How shall Domestic Preference be applied during bid evaluation?

            How is the right to match undertaken in bidding of provincial projects?

            What rules govern the lease of Computers, Communications, Information and  Other Equipment?

      Step 6       Post-Qualify

            What is Post-qualification?

            What does Post-qualification entail?

            What is the Timeline for the conduct of Post-qualification?

            Who are involved in the conduct of Post-qualification?

            Methodology: How is Post-qualification conducted?

            What happens if the bidder with the LCB fails Post-qualification?

            What happens if all bidders fail Post-qualification?

            When may the Procuring Entity exercise its right to reject bids, declare a failure of bidding, or not award the contract?

      Step 7       Award the Contract

            What is the rule on Contract Award?

            What is the Timeline for Contract Award?

            Who are involved in the Award of the Contract?

            Methodology: How is a contract awarded?

      Step 8       Have the Contract Signed and Approved and Issue the Notice to Proceed

            When must the winning bidder and the Procuring Entity enter into a contract?

            What are the Timelines to be considered with respect to contract approval?

            When should the Procuring Entity issue the NTP?

            When is a contract "effective"?

            Who are the Parties involved in Contract Signing and Approval and Issuance of the NTP?

            What documents form part of the contract?

            Methodology:

            What are the rules governing the review and approval of government contracts?

            What happens if the bidder with the LCRB or SCRB refuses or is unable, through its own fault, to post the performance security and sign the contract within the prescribed period?

            What happens if the failure of the bidder with the LCRB or SCRB to sign the contract within the prescribed period is not its own doing?

      Two-Stage Competitive Bidding

            What is Two-Stage Competitive Bidding?

            What are the instances when a Procuring Entity may employ the Two-Stage Competitive Bidding Procedure?

            What is the timeline for the conduct of a Two-Stage Competitive Bidding?

            Who are involved in the Two-Stage Competitive Bidding Process?

            Methodology: How is the Two-Stage Competitive Bidding process conducted?

            What happens if no prospective bidder submits a Letter of Intent?

INSTRUCTIONS ON THE PROCEDURAL STEPS FOR THE PROCUREMENT OF GOODS AND SERVICES

      The Alternative Methods for the Procurement of Goods and Services

            What is the rule on the use of alternative methods of procurement?

      Limited Source Bidding

            What is Limited Source Bidding?

            When shall Limited Source Bidding be allowed?

            Who will be invited to bid?

            Who are involved in conducting the Limited Source Bidding?

            Methodology: How is procurement through the Limited Source Bidding method conducted?

            Are bid and performance securities required for this method of procurement?

      Direct Contracting

            What is Direct Contracting?

            When shall Direct Contracting be allowed?

            How can Direct Contracting be justified?

            Who are involved in procurement through Direct Contracting?

            Methodology: How is Direct Contracting conducted?

            Should a Procuring Entity require a performance security under this method of procurement?

      Repeat Order

            What is Repeat Order?

            When is Repeat Order Allowed?

            Who are involved in procurement through Repeat Order?

            Methodology: How is procurement through Repeat Order done?

            Should a Procuring Entity require a performance security under this procurement method?

      Shopping

            What is Shopping?

            When is Shopping allowed?

            Who are involved in the conduct of procurement through Shopping?

            Methodology: How is procurement through the Shopping method done?

            Are performance securities still required for procurements through the Shopping method?

      Negotiated Procurement

            What is Negotiated Procurement?

            When is Negotiated Procurement allowed for the procurement of goods?

            Who are the parties involved in Negotiated Procurement?

            Methodology: How is Negotiated Procurement undertaken?

            Are bid and performance securities required for purchases made through Negotiated Procurement? 

GUIDELINES ON CONTRACT IMPLEMENTATION FOR THE PROCUREMENT OF GOODS AND SERVICES

      Contract Implementation for the Procurement of Goods and Services

            Legal Reference

            What is covered by Contract Implementation?

            When shall a contract be deemed effective?

      Warranty

            Legal Reference

            What is the purpose of a Warranty?

            What is the Warranty requirement for Goods?

            When shall Goods be considered defective?

            Are there instances where partial release or reduction of the required warranty may be done by the Procuring Entity?

      Amendment to Order

            What is an Amendment to Order?

            When can the Procuring Entity issue an Amendment to Order?

            Are corresponding adjustments in contract price and/or delivery schedules allowed?

            What rules shall govern price adjustments due to Amendment to Order?

            Who are involved in the issuance of an Amendment to Order?

            Methodology: How is an Amendment to Order issued?

            Can a supplier proceed with the work under an Amendment to Order even if such Amendment to Order has not yet been approved?

      Suspension of Delivery

            Legal Reference

            What are the grounds for suspension of delivery or contract implementation?

            Are corresponding adjustments in contract price and/or delivery schedule allowed?

            When shall the Supplier/Manufacturer/Distributor resume delivery and/or contract implementation?

            Who are the parties involved in the issuance of a Suspension Order?

            Methodology: How is a Suspension Order issued?

      Delays in Delivery and Liquidated Damages

            Legal Reference

            What is the rule on the applicable period for the delivery of goods or performance of services?

            What are Liquidated Damages?

            What are the grounds for the imposition of Liquidated Damages?

            What is the amount of Liquidated Damages that may be imposed upon the supplier?

            Methodology: How are Liquidated Damages imposed?

      Other Rules and Guidelines

            Legal Reference

            Incidental Services

            Spare Parts

            Purchaser's Responsibilities

            Prices

            Payment

            Taxes and Duties

            Subcontracts

            Standards

            Packaging

            Insurance

            Transportation

            Inspection and Tests

            Intellectual Property Rights

            Limitations of Liability

            Termination for Default

            Termination for Insolvency

            Termination for Convenience

            Assignment

            Blacklisting

GENERAL PROCUREMENT ACTIVITIES AND TIMELINES

      General Procurement Activities and Timeline for Goods

 

ABBREVIATIONS AND ACRONYMS

ABC                               Approved Budget for the Contract

ADB                               Asian Development Bank

AFP                                Armed Forces of the Philippines

APP                               Annual Procurement Plan

APR                               Agency Procurement Request

BAC                               Bids and Awards Committee

BDA                               Battle Dress Attire

BDS                               Bid Data Sheet

BFAD                            Bureau of Food and Drugs

BIR                                Bureau of Internal Revenue

BOC                               Bureau of Customs

BSP                                Bangko Sentral ng Pilipinas

CDA                               Cooperatives Development Authority

CAF                               Certificate of Availability of Funds

CFR                               Cost and Freight

CIF                                 Cost, Insurance and Freight

CIP                                 Carriage and Insurance Paid To (named place
                                       of destination)

COA                               Commission on Audit

CPT                                Carriage Paid To (named place of destination)

DBM                              Department of Budget and Management

DBM-PS/PS-DBM           Department of Budget and Management-Procurement Service

DDP                               Delivered Duty Paid (named place of destination)

DFA                               Department of Foreign Affairs

DOH                               Department of Health

DOJ                               Department of Justice

DTI                                 Department of Trade and Industry

DV                                 Disbursement Voucher

EFPS                             Electronic Filing and Payment System

E.O.                               Executive Order

EXW                              Ex Works, Ex Factory or Off-the-shelf

FAP                               Foreign-Assisted Project

FCA                               Free Carrier (named place)

FED                               Firearms and Explosives Division

FOB                               Free on Board

GAA                               General Appropriations Act

GCC                              General Conditions of Contract

GFI                                Government Financial Institution

GOCC                            Government-owned and/or -controlled corporation

GOP                              Government of the Philippines

GPPB                            Government Procurement Policy Board

GPPB-TSO                     GPPB-Technical Support Office

GPRA                            Government Procurement Reform Act (R.A. 9184)

IAEB                              Invitation to Apply for Eligibility and to Bid

ICB                                International Competitive Bidding

IFI                                  International Financing Institution

IPR                                Intellectual Property Rights

IRR                                Implementing Rules and Regulations

IRR-A                            Implementing Rules and Regulations Part A of R.A. 9184

ITB                                Instructions to Bidders

JBIC                              Japan Bank for International Cooperation

JVA                                Joint Venture Agreement

LBP                               Land Bank of the Philippines

LC                                 Letter of Credit

LCB                               Lowest Calculated Bid

LCRB                             Lowest Calculated Responsive Bid (this shall have the same meaning as Lowest Evaluated and Responsive Bid [LERB] for IFIs)

LGU                               Local Government Unit

LOI                                Letter of Instructions

MDS                              Modified Disbursement Scheme

NCA                               Notice of Cash Allocation

NEDA                            National Economic and Development Authority

NFCC                            Net Financial Contracting Capacity

NGA                              National Government Agency

NGO                              Non-Government Organization

NTC                               National Telecommunications Commission

NTP                               Notice to Proceed

OS                                 Obligation Slip

PA                                 Philippine Army

PBDs                             Philippine Bidding Documents

P.D.                               Presidential Decree

PMO                              Project Management Office

PNP                               Philippine National Police

PPMP                            Project Procurement Management Plan

PhilGEPS/G-EPS            Philippine Government Electronic Procurement System

PWI                               Procurement Watch Inc.

R.A.                               Republic Act

R.A. 9184                       Republic Act No. 9184, otherwise known as the "Government Procurement Reform Act"

RIS                                Requisition and Issuance Slip

SARO                            Special Allotment Release Order

SBDs                             Standard Bidding Documents

SCC                              Special Conditions of Contract

SCRB                            Single Calculated and Responsive Bid

SEC                              Securities and Exchange Commission

SMEs                            Small and Medium Enterprises

SOW                             Scope of Work

SPA                               Special Power of Attorney

SUCs                             State Universities and Colleges

TWG                              Technical Working Group

UNDB                             United Nations Development Business

WB                                The World Bank

SECTION 1.            Introduction. —

Scope of Volume 2

This Manual seeks to provide its users with clear, concise, and accurate information on the public procurement of goods and services, by discussing the steps that need to be taken to effect such procurement in the manner prescribed by R.A. 9184, otherwise known as the "Government Procurement Reform Act," and its IRR-A. It also discusses important issues that may confront government officials in all stages of goods and services procurement, from the preparation of bid documents, to the actual bidding activity, monitoring of contract implementation and the final payment to the supplier.

This Manual focuses on public procurement of goods. The procedures are harmonized to a large extent with the IFIs and bi-lateral agencies lending to the Philippines. There are however policies which are specific to a particular lending agency or grantor and the document highlights the main differences. It should however be noted that the loan, credit or grant agreement with the relevant IFIs and/or bilaterals and their respective Guidelines will be the overriding factors governing the foreign-assisted projects.

GOODS and SERVICES refer to all items, supplies, materials and general support services, except consulting services and infrastructure projects, which may be needed in the transaction of public businesses or in the pursuit of any government undertaking, project or activity. The term refers to, among other subjects, equipment, furniture, stationery, materials for construction, or personal property of any kind, including non-personal or contractual services such as the repair and maintenance of equipment and furniture. It also refers to trucking, hauling, janitorial, security, and related or analogous services (e.g. rental of venues and facilities, catering services, attendance to trainings and seminars, short term services not considered as consulting services), as well as procurement of materials and supplies provided by the Procuring Entity for such services. The term "related" or "analogous services" shall include, but not be limited to, lease or purchase of office space, media advertisements, health maintenance services, and other services essential to the operation of the Procuring Entity. (IRR-A Section 5[k])

SECTION 2.            Preparing for the Procurement of Goods and Services. —

Preparing for the Procurement of Goods and Services

Volume I of this Manual contains an extensive discussion of Procurement Planning as a general concern for all kinds of government procurement, while this Section mainly focuses on concerns that are particular to the procurement of goods and services. As such, it is advisable for the reader to refer to the pertinent discussions in Volume I before and during the reading of this Section.

Preparing makes for higher efficiency and efficacy. It enables the procurement officials concerned to anticipate the onset of events and, as a consequence, better calibrate their response to them. Having a better appreciation of forthcoming events gives these officials the opportunity to test a range of possible courses of action, choose the best and most feasible of these, and identify measures to put them into action. Ultimately, it would enable them to determine the best manner by which such measures are to be implemented, ensuring that their individual and collective impacts are optimized at the least cost.

Preparing for procurement basically involves three (3) activities: procurement planning, preparation of the bidding documents, and the conduct of the pre-procurement conference. Procurement planning entails ensuring that plans for procurement are linked to budgets, preparing the PPMP and consolidating all PPMPs into the APP. Formulating the PPMP involves identifying the procurement project requirements, writing the technical specifications, determining the ABC, identifying the schedule of milestone activities, and determining the method of procurement.

The PPMP is then transformed into the bidding documents, which ought to contain all the information a prospective bidder needs to prepare its bid. Therefore, in preparing the bidding documents, one has to ensure that these accurately and comprehensively reflect the main elements of the PPMP. One also has to make sure that the documents are of the kind and form prescribed by the IRR-A and this Manual.

The pre-procurement conference is the forum where all officials of the Procuring Entity involved in the project meet to discuss all aspects of the said project to determine the readiness of the Procuring Entity to undertake the procurement. The conference focuses on the technical specifications, the ABC, the appropriateness and applicability of the recommended method of procurement, and the availability of pertinent budget releases, among others.

Procurement Planning

Planning of the procurement of goods and services shall be in accordance with the principles of government procurement as provided for under Section 3 Volume I of this Manual.

What are the factors to be considered in planning for the procurement of Goods?

The PMO or the end-user unit should consider the following factors which have an impact on contract packaging, the procurement method to be used, and other components of Procurement Planning as discussed in Volume 1 of these Manuals:

1.         Nature of the Goods to be Procured. Goods may be classified into different categories, such as:

a.         common-use supplies;

b.         inventory items;

c.         non-common use supplies (which may include equipment or supplies that are project-specific); or

d.         services.

"Common-use supplies" as defined in the IRR-A as those goods, materials, and equipment that are repetitively used in the day-to-day operations of procuring entities in the performance of their functions. For the purpose of the IRR-A, common-use supplies shall be those included in the Price List of the PS-DBM. (IRR-A Section 5 [g]) Common-use supplies should be procured from the PS-DBM on a quarterly basis.

"Inventory items" include common-use supplies, goods, materials and equipment that are not in the Price List of the PS-DBM but are regularly used and kept on stock by the Procuring Entity. Inventory items that are not "common-use supplies" may be procured from commercial sources, or suppliers other than the PS-DBM. The bulk purchase of these goods may be a good strategy to lower costs and achieve administrative efficiency. Likewise, it is a good practice to monitor the consumption of these items and identify when re-orders are necessary to ensure "round-the-clock" availability and to avoid over-the-counter purchases or purchases using petty cash funds.

 

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On using the PS-DBM for procurement

The Procuring Entity must consider the services of the PS-DBM in the procurement of all kinds of supplies. This will free it from the tediousness of attending to recurring transactions, and provide greater time for the procurement of high value, highly specialized requirements for its more significant projects.

"Non-common use supplies" are those goods, materials, and equipment that are neither "common-use supplies" nor "inventory items", and may include those goods, materials and equipment that are required by the Procuring Entity for a specific project only. Since these are not used regularly, and may even be highly specialized, these may be procured individually. There may be cases, however, when the APP will reveal that similar items are required for different projects, and in order to minimize costs, these may be procured under a single contract. For goods that are available off-the-shelf and are of relatively low value, shopping may be resorted to, provided the conditions for the use of this alternative mode of procurement are present.

"Services" refer to general support services, except consulting services and infrastructure projects, which may be needed in support of the transaction of public businesses or in the pursuit of any government undertaking, project or activity. These include non-personal or contractual services such as the repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security and related or analogous services (e.g. rental of venues and facilities, catering services, attendance to trainings and seminars, short term services not considered as consulting services). The terms "related services" or "analogous services" shall include, but not be limited to, lease or purchase of office space, media advertisements, health maintenance services, and other services essential to the operation of the Procuring Entity.

2.         Availability of the Goods or Services in the Market. The identification of the mode of procurement is sometimes dependent on the supply market. The procurement unit or office should, therefore, study the supply market to determine the availability of the goods. Goods that are universally available should be procured through public bidding. However, there are instances wherein alternative modes of procurement may be applicable.

Goods that are available seasonally, or those that are to be manufactured specially for the Procuring Entity only upon its order, would require more intensive planning in terms of timelines for procurement, taking into consideration manufacturing leadtime.

3.       Obsolescence, operation, and maintenance of equipment/non-consumable Goods. In buying equipment, the Procuring Entity has to consider the operation and maintenance requirements of the goods to be procured. These refer to the availability and cost of spare parts in the local market, the skills required in operating and maintaining the equipment, and similar considerations. For example, if spare parts and maintenance services are not available locally, or, if available, are very expensive, the Procuring Entity may consider buying, instead, the substitute or equivalent product. It should be noted, however, that spare parts must be available locally. On the other hand, if the items being procured are high-technology items, or are highly specialized (e.g., fighter jets) and cannot be satisfactorily substituted by other products, the Procuring Entity may consider including the supply of spare parts, consumables and/or maintenance services for a specified period of time, as part of the contract package.

 

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On Ordering Agreements

Under GPPB Resolution No. 06-2005, ordering agreements may be resorted to in situations where the procuring entity intends to procure non-inventory parts necessary to maintain the operational effectiveness of existing major equipment. The requirement thereof, although identified, becomes necessary only upon the happening of a fortuitous event. For this reason, the quantity and the exact time of need for said parts cannot be accurately pre-determined. Therefore, for reasons of economy, keeping in stock of said parts for possible future use or by procuring them for inventory would be disadvantageous to the government. This excludes parts required for routine maintenance, the volume and delivery time being determinable at an earlier period.

Obsolescence could also be a factor in deciding whether to lease or to buy equipment. It may be more economical for the Procuring Entity to consider the leases of equipment that are easily rendered obsolete, like IT equipment. (Please refer to the last paragraph on bid evaluation on this Manual)

The Procuring Entity shall also take into consideration the warranty requirements for goods under Section 62.1 of IRR-A.

What are "Technical Specifications"?

The term "technical specifications" refers to the physical description of the goods or services, as well as the Procuring Entity's requirements in terms of the functional, performance, environmental interface and design standard requirements to be met by the goods to be manufactured or supplied, or the services to be rendered. The technical specifications must include the testing parameters for goods, when such testing is required in the contract.

"Functional description" is the description of the functions for which the Goods are to be utilized. For example, a ballpen is expected to write 1.5 km of straight, continuous lines.

"Performance description" refers to the manner that the Goods are required to perform the functions expected of them. For example, a ballpen that writes at 1.5km should do so continuously and smoothly, without skipping, and with the color of the ink being consistent.

"Environmental interface" refers to the environment in which the required functions are performed at the desired level. For example, a ballpen should write continuously for 1.5km on pad paper or bond paper, but not necessarily on wood or on a white board.

"Design" refers to the technical design or drawing of the goods being procured. A design standard is particularly useful in cases where the goods procured are specially manufactured for the Procuring Entity. For example, in procuring BDA for the PA, there is a specific pattern of color and shade that the BDA should follow.

What are the considerations in setting the technical specifications of the goods to be procured?

In determining the technical specifications of the goods it will procure, the PMO or end-user unit must consider the objectives of the project or the procurement at hand, and identify the standards that should be met by the goods in terms of function, performance, environmental interface and/or design. It must also conduct a market survey that will include a study of the available products or services, industry developments or standards, product or service standards specified by the authorized government entity like the Bureau of Product Standards, ISO9000 or similar local or international bodies. As a rule, Philippine standards, as specified by the Bureau of Product Standards, must be followed. For products where there are no specified Philippine standards, the standards of the country of origin or other international body may be considered. Product brochures, technical publications, industry newsletters, the industry itself, as well as the Internet, are good sources of product information. The conduct of a comparative study of the options available in the market and their relevance to the requirements of the Project is highly recommended.

In-house experts who are part of the TWG or the PMO must likewise be tapped to provide technical advice. If there are no in-house experts available to provide advice on highly technical Goods, the Procuring Entity may hire consultants to assist it in developing the technical specifications for the procurement at hand.

It is important to note that the use of brand names is prohibited by the IRR-A. Specifications for the procurement of goods shall be based on relevant characteristics and/or performance requirements. Hence, a generic description of the product or service must be used. 1

What is the "Approved Budget for the Contract" or the ABC?

The ABC is the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in:

1.         The GAA and/or continuing appropriations, in the case of NGAs;

2.         The corporate budget for the contract approved by the governing board, pursuant to E.O. No. 518, series of 1979, in the case of GOCCs and GFIs; and R.A. No. 8292, in the case of SUCs; or

3.         The budget approved by the Sanggunian in the case of LGUs.

Thus, the ABC referred to in R.A. 9184 and its IRR-A basically refers to the proposed budget for the project approved by the Head of the Procuring Entity based on the APP as consolidated from various PPMPs. 2

What are the factors that should be considered in determining the ABC?

In determining the ABC, the PMO or end-user unit, with the assistance of the TWG (when necessary), must consider the different cost components, namely:

1.         The cost or market price of the product or service itself;

2.         Incidental expenses like freight, insurance, taxes, installation costs, training costs, if necessary, and cost of inspection;

3.         The cost of money, to account for government agencies usually buying on credit terms;

4.         Inflationary factor, since the planning phase is usually done one year ahead of the actual procurement date;

5.         Quantities, considering that buying in bulk usually means lower unit prices; and

6.         The supply of spare parts and/or maintenance services, if these are part of the contract package.

If the project or contract has a foreign component, it is also best to include a currency valuation adjustment factor, in order to address foreign exchange rate fluctuations between the planning phase and the actual procurement date. To determine the factor to be used, the PMO or end-user unit may request for guidance from the BSP, or refer to BSP forecasts, if available.

If the sum of the different cost components is lower than the appropriation for the procurement, then the ABC should be equal to the sum of the cost components. If the resulting sum is higher than the appropriation, it is advisable to review the technical specifications and the computation of the ABC. In any case, the ABC should not exceed the appropriation.

In case of adjustment of ABC due to failure of bidding, GPPB Resolution 07-2005 provides that the ABC may be adjusted upwards only under the following conditions:

1.         There has been failure of bidding for the second time due to all bids submitted exceeding the ABC or no bids have been submitted, or failure in the negotiated procurement after two failed biddings; and

2.         There has been previous modification of the terms, conditions and specifications of the project based on Section 35 of the IRR-A, except when the project is indivisible, where the technical component is an integral part of the whole that cannot be reduced, and it constitutes the minimum requirement of the Procuring Entity for which there are no substitutes.

GPPB Resolution 07-2005 further states that the ABC may be adjusted downwards if there is a need to reflect actual market prices and/or scope of work or suit actual field conditions of the project. Upon adjustment of ABC, the Procuring Entity must conduct re-bidding with re-advertisement/posting. Any succeeding adjustment of the ABC shall be in accordance with these guidelines.

Preparing the Bidding Documents

What are Bidding Documents?

Bidding documents are documents issued by the Procuring Entity to provide prospective bidders all the necessary information that they need to prepare their bids. (IRR-A Section 5 [f]) These clearly and adequately define, among others:

1.         The objectives, scope and expected outputs and/or results of the proposed contract;

2.         The technical specifications of Goods to be procured;

3.         Expected contract duration, the estimated quantity in the case of procurement of goods, delivery schedule and/or time frame;

4.         The obligations, duties and/or functions of the winning bidder; and

5.         The minimum eligibility requirements of bidders, such as track record to be determined by the Head of the Procuring Entity. (IRR-A Section 17.2)

What are the contents of Bidding Documents?

The Philippine Bidding Documents (PBDs) contain the following: 3

1.         Invitation to Apply for Eligibility and to Bid (IAEB);

2.         Instructions to Bidders (ITB);

3.         Bid Data Sheet (BDS);

4.         General Conditions of Contract (GCC);

5.         Special Conditions of Contract (SCC);

6.         Schedule of Requirements;

7.         Technical Specifications of the Goods and Services to be procured; and

8.         Sample Forms as annexed in the PBDs.

The specifications and other terms in the bidding documents shall reflect minimum requirements. A bidder may, therefore, be allowed to submit a superior offer. However, in the evaluation of the bids, no premium or bonus must be given as a result of this superior offer. (IRR-A Section 17.4) This rule is based on the nature of the procedure used to evaluate the technical proposals — a "pass/fail" method — such that the presence or absence of the technical requirements is the sole basis for determining technical compliance. After having established compliance with the technical specifications, the next factor to consider would then be the price or financial bid.

In addition to properly crafted Bidding Documents, what other practices may a Procuring Entity observe to ensure a successful procurement?

1.         All prospective bidders should be provided the same information, and should be assured of equal opportunities to obtain additional information on a timely basis.

2.         Procuring entities should provide reasonable access to project sites for visits by prospective bidders.

3.         For complex supply contracts, particularly for those requiring refurbishing existing equipment, a pre-bid conference may be arranged whereby potential bidders may meet with the Procuring Entity's representatives to seek clarifications (in person or online). Minutes of the conference should be provided to all prospective bidders (in hard copy or sent electronically).

4.         Any additional information, clarification, correction of errors, or modifications of bidding documents should be sent to each recipient of the original bidding documents in sufficient time before the deadline for receipt of bids to enable bidders to take appropriate actions. If necessary, the deadline should be extended.

Who shall participate in the preparation of the Bidding Documents?

The following must participate in the preparation of the bidding documents:

1.         The BAC;

2.         The TWG;

3.         The end-user unit/PMO;

4.         Consultants, if any; and

5.         The BAC Secretariat/Procurement Unit.

When should you prepare the Bidding Documents?

The bidding documents must be prepared in time for presentation at the pre-procurement conference. After the conference, and before the advertisement and/or posting of the IAEB, it should be ascertained that these documents will be ready and available for issuance to prospective bidders on the day the IAEB is first advertised.

What various types and sizes of contracts may be provided in the Bidding Documents?

The bidding documents should clearly state the type of contract to be entered into and contain the proposed contract provisions appropriate therefore. The most common types of contracts provide for payments on the basis of a lump sum, unit price, or combinations thereof. 4

The size and scope of individual contracts will depend on the magnitude, nature, and location of the project, for example:

1.         For projects requiring a variety of goods and works, separate contracts may be awarded for the supply and/or installation of different items of equipment and plant ("plant" refers to installed equipment, as in a production facility) and for the works.

2.         For a project requiring similar but separate items of equipment or works, bids may be invited under alternative contract options that would attract the interest of both small and large firms, which could be allowed, at their option, to bid for individual contracts (slices/items) or for a group of similar contracts (package). All bids and combinations of bids should be received by the same deadline and opened and evaluated simultaneously so as to determine the bid or combination of bids offering the lowest calculated cost to the Procuring Entity.

Methodology: How are the Bidding Documents prepared?

The BAC Secretariat/TWG, with the assistance of consultants (if any) and the end-user unit/PMO, prepares the bidding documents following the standard forms and manuals prescribed by the GPPB (IRR-A Section 17.1). The bidding documents must contain the following information:

1.         ABC and source of funds;

2.         Date, time and place of the pre-bid conference (where applicable), submission of bids and opening of bids;

3.         Eligibility requirements;

4.    ITB, including criteria for eligibility, bid evaluation and post-qualification, submission of bids, and opening of bids;

5.    Scope of Work (SOW), for services;

6.    Technical Specifications, which must not contain any reference to brand names;

TIPS: Let's make doing things easier

To monitor the issuance of bidding documents, the BAC may label or number copies of such documents, i.e., "Copy No. 1, 2, 3, etc." or "Copy for Observer", "Copy for BAC Member No. 1". The Secretariat may choose a numbering or labeling system that is appropriate for the Procuring Entity.

7.         Form of Bid, Price Form, and List of Goods or Bill of Quantities;

8.         Delivery Time or Completion Schedule;

9.         Form, amount and validity period of Bid Security;

10.       Form and amount of Performance Security and Warranty; and

11.       Form of Contract, GCC and SCC.

The Procuring Entity may require additional document requirements or specifications, where applicable and necessary for prospective bidders to prepare their respective bids. The bidding documents, as amended, shall subsequently form an integral part of the contract. (IRR-A Section 17.3) Statements not made in writing at any stage of the bidding process shall not modify the bidding documents.

What is a Bid Security?

A bid security is a guarantee that the successful bidder will:

1.         Not default on its offer, and

2.         Enter into contract with the Procuring Entity within ten (10) calendar days, or less as indicated in the ITB, from receipt of the Notice of Award, and furnish the performance security provided for in Section 39 of the Act and its IRR-A. (IRR-A Section 27.1)

A bid security must be submitted with every bid. It must be operative on the date of bid opening, and payable to the Procuring Entity.

What are the forms of Bid Security and the corresponding amounts required?

The bid security shall be in any of the following forms, with the corresponding required amount: 5 (IRR-A Section 27.2)

             FORM OF BID SECURITY                                            MINIMUM AMOUNT

 

a.   Cash, certified check, cashier's check/manager's                     1% of ABC
      check, bank draft; or

b.   Irrevocable letter of credit issued by a reputable                         1% of ABC
      commercial bank or in the case of an irrevocable
      letter of credit issued by a foreign bank, the same
      shall be confirmed or authenticated by a reputable
      local bank; or

c.   Bank guarantee confirmed by a reputable local bank                   1 1/2% of ABC
      or in the case of a foreign bidder, bonded by a
      foreign bank; or

d.   Surety bond callable upon demand issued by a                           2 1/2% of ABC
      reputable surety or insurance company; or

e.   Any combination of the foregoing forms; or                                 The total amount shall not be less than 2 1/2% of the ABC

f.    Foreign government guarantee as provided in an                        100% of ABC
      executive, bilateral or multilateral agreement, as
      may be required by the Head of the Procuring Entity

      concerned.

For purposes of determining the amount of the bid security in biddings with lots or items, whereby a bidder submits a bid for more than one lot or item, the bid security shall be based upon the sum of the ABC for each of the lots or items for which bids are submitted.

Who determines the form of the Bid Security to be submitted by bidders?

The Procuring Entity must specify in the bidding documents the preferred forms of bid security and the respective amounts thereof. The bidder must choose which among the preferred forms it shall submit.

The Procuring Entity is encouraged to give preference to those forms of bid securities that are both easier to call and more accessible to suppliers, such as managers' checks, cashiers' checks, irrevocable letters of credit or bank guarantees.

What is the period of validity of Bids and the corresponding Bid Security?

Bids and bid securities must be valid for a reasonable period of time as determined by the Head of the Procuring Entity. This time period must be indicated in the bidding documents, but in no case should it exceed one hundred twenty (120) calendar days from the date of the opening of bids. (IRR-A Section 28) The recommended norm for bid validity is ninety (90) calendar days with the corresponding bid security valid for one hundred twenty (120) calendar days to provide reasonable time (thirty (30) calendar days) for the Procuring Entity to act if the security is to be called.

Should it become necessary to extend the validity of the bids and the bid securities, the Procuring Entity should request in writing all those who submitted bids for such extension before the expiry date thereof. Bidders shall have the right to refuse to grant such extension without forfeiting their bid securities. The bid security of bidders who refuse to grant the Procuring Entity's request for an extension of the validity of their respective bid securities will have these securities returned to them. (IRR-A Section 37.2.2) However, they are deemed to have waived their right to further participate in the bidding.

In what currency shall the Bid Security be denominated?

The bid security must be denominated in Philippine currency (IRR-A Section 27.3), except that foreign bidders which are allowed to submit foreign currency denominated bids may also submit bid securities that are denominated in a freely convertible currency allowed or specified in the bidding documents.

What happens if a bidder does not submit a Bid Security?

Its bid will be rejected.

When should Bid Securities be returned to the bidders?

No bid securities shall be returned to bidders after the opening of bids and before contract signing, except to those that failed to comply with any of the requirements submitted in the technical envelope of the bids. Without prejudice to the provisions of the law allowing forfeiture of bid securities, bid securities shall be returned only after the bidder with the LCRB has signed the contract and furnished the performance security, but in no case later than the expiration of the bid security validity period indicated in the ITB. (IRR-A Section 27.4)

What is a Performance Security?

A performance security is a guarantee that the winning bidder will faithfully perform its obligations under the contract prepared in accordance with the bidding documents. (IRR-A Section 39.1) It must be posted in favor of the Procuring Entity, and will be forfeited in the latter's favor in the event it is established that the winning bidder is in default in any of its obligations under the contract. (IRR-A Section 39.2)

When shall the Performance Security be posted by the Bidder with the LCRB?

Within a maximum period of ten (10) calendar days from the receipt of the Notice of Award from the Procuring Entity, and in all cases upon the signing of the contract, the successful bidder should furnish the Procuring Entity with the performance security in accordance with the Conditions of Contract, and in the Form prescribed in the Bidding Documents. (IRR-A Section 39.1) The performance security forms part of the contract. (IRR-A Section 37.2.3) (Please refer to Step 6, Post-Qualify for further discussions on the LCRB.)

What are the forms of Performance Security and the corresponding amounts required?

The performance security must be in any of the following or a combination of forms with the corresponding required amounts: 6

         FORM OF PERFORMANCE SECURITY                                  MINIMUM AMOUNT

 

a.   Cash, certified check, cashier's/manager's check, bank                 5% of contract price
      draft; or

b.   Irrevocable letter of credit issued by a reputable                               5% of contract price
      commercial bank or in the case of an irrevocable letter
      of credit issued by a foreign bank, the same shall be
      confirmed or authenticated by a reputable local bank;
      or

c.   Bank guarantee confirmed by a reputable local bank or                10% of contract price
      in the case of a foreign winning bidder, bonded by a
      foreign bank; or

d.   Surety bond callable upon demand issued by any                          30% of contract price
      reputable surety or insurance company; or

e.   Any combination of the foregoing forms; or                                  The total amount shall not be less than 30% of the Contract Price

f.    A foreign government guarantee as provided in an                        100% of contract price
     
executive, bilateral or multilateral agreement, as may
      be required by the Head of the Procuring Entity
      concerned.

Who determines the form of the Performance Security to be submitted by winning bidder?

The Procuring Entity must specify in the bidding documents the preferred forms of performance security and the respective amounts thereof. The winning bidder must choose which among the preferred forms it shall submit.

In case of amendments in the contract price, will there be a corresponding change in the amount of the Performance Security?

Yes. The winning bidder shall post an additional performance security following the schedule above to cover any cumulative increase of more than ten percent (10%) over the original value of the contract as a result of amendments to order. (Section 1.4 Annex "D" of IRR-A as amended by Section 1.4 M.O. 176, s. 2005) The percentages in the schedule above must be applied to increases in the original value of the contract. The winning bidder must also cause the extension of the validity of the performance security to cover approved contract time extensions.

If the contract value is reduced because part of the goods or services under the contract had already been delivered or completed, and accepted by the government, the Procuring Entity shall allow a proportional reduction in the original performance security. However, this proportional reduction in the value of the performance security is allowed only when the contract allows for partial deliveries or performance. Moreover, the reductions must be more than ten percent (10%), and the aggregate of such reductions must not be more than fifty percent (50%) of the original performance security. (IRR-A Section 39.6)

When may the Performance Security be released?

Subject to the conditions of the contract, the Procuring Entity may release the performance security to the winning bidder after the issuance of the Certificate of Acceptance of the goods, provided that there are no claims filed against the contract awardee or the surety company. However, it must ensure that the performance security is replaced by a warranty covering the defects liability period in accordance with IRR-A Section 62.

Who are the parties involved in the posting of the Performance Security?

The bidder with the LCRB, the Procuring Entity and the issuer of the security, e.g., the banking/financial institution or the insurance company, are all involved in the posting of the performance security.

Methodology: How is the Performance Security posted?

The following steps are followed in the posting of the performance security:

1.         The bidder with the LCRB posts a performance security. In so doing, it must comply with the following conditions:

a.         The performance security must be executed in the form prescribed by the Procuring Entity in the ITB; and

b.         The performance security must at least be co-terminus with the period of completion of the contract.

2.         The procurement unit/office accepts the performance security and indicates such posting and acceptance by attaching the appropriate form to the contract.

Conduct of the Pre-Procurement Conference

What is a Pre-procurement Conference?

The pre-procurement conference is the forum where all officials involved in the procurement meet and discuss all aspects of a specific procurement activity, which includes the technical specifications, the ABC, the applicability and appropriateness of the recommended method of procurement and the related milestones, the bidding documents, and availability of the pertinent budget release for the project.

Why is a Pre-procurement Conference necessary?

For projects involving an ABC amounting to more than Two Million Pesos (P2 Million), a pre-procurement conference is conducted to determine the readiness of the Procuring Entity to procure goods and services in terms of the legal, technical and financial requirements of the project. More specifically, it ensures that the procurement will proceed in accordance with the PPMP and APP, confirms the availability of appropriations and programmed budget for the contract, and reviews all relevant documents in relation to their adherence to the law. (IRR-A Section 20)

Even when the ABC amounts to P2 Million and below, the BAC is encouraged to conduct a pre-procurement conference if the circumstances, like the complexity of the technical specifications, warrant the holding of such conference before the Procuring Entity proceeds with the procurement.

When do you conduct a Pre-procurement Conference?

The pre-procurement conference must be conducted prior to the advertisement or issuance of the IAEB. (IRR-A Section 20.1) At least seven (7) calendar days prior to publication or issuance of the IAEB would be an advisable timeframe for the pre-procurement conference, to give the technical staff sufficient time to incorporate the necessary changes, amendments or revisions thereto.

Who calls for a Pre-procurement Conference?

The BAC calls for a pre-procurement conference.

Who are the participants of a Pre-procurement Conference?

The participants of the pre-procurement conference are:

1.         The BAC;

2.         The BAC Secretariat/Procuring Unit;

3.         Representatives of the PMO or end-user unit/s;

4.         The members of the TWG/s and consultants hired by the Procuring Entity who prepared the technical specifications, TORs, bidding documents and the draft advertisement, as the case may be, for the procurement at hand;

5.         Officials who reviewed the above-enumerated documents prior to final approval, if any; and

6.         Other officials concerned, as may be required.

What should a Pre-procurement Conference achieve?

A pre-procurement conference should: (IRR-A Section 20.1)

1.  Ensure that the procurement is in accordance with the PPMP and APP.

2.  Determine the availability of the appropriations and programmed budget for the contract;

How's that again?

A "fair" evaluation criteria means such as are applicable to all similar goods offered in the market, and are not tailor-fit or customized for a particular product/service or brand.

3.         Determine the state of readiness of the pertinent budget release (e.g., ABM or SARO);

4.         Review, modify and agree on the criteria for eligibility screening, and ensure that the said criteria are fair, reasonable, and that they are of the "pass/fail" type and are written in such manner; (IRR-A Section 20.1.3)

5.         Review, modify and agree on the criteria for the evaluation of bids/proposals, and ensure that the said criteria are fair, reasonable and applicable to the procurement at hand;

6. Review, modify and agree on the acceptable minimum specifications and other terms in the bidding documents;

 

Let's make doing things easier

If a Procuring Entity has to procure similar goods or services, although through different public bidding activities, it may opt to hold just one pre-procurement conference to simplify or shorten the process.

7.         Review the PPMP, including the milestones and the method of procurement for the procurement at hand;

8.         Reiterate and emphasize the "no contact rule" during the bid evaluation process, and the applicable sanctions and penalties, as well as agree on measures to ensure compliance with the foregoing. (Please refer Step 5, Evaluate Bids for a discussion on the "no contact rule".); and

9.         Ensure that the requirements of the goods and services to be procured are in accordance with the ABC.

SECTION 3.            The Procurement Service of the Department of Budget and Management and the Philippine Government Electronic Procurement System. —

The PS-DBM and the PhilGEPS

What is the mandate of the PS-DBM?

The PS-DBM was created under LOI No. 755 (Relative to the Establishment of an Integrated Procurement System for the National Government and its Instrumentalities) with the following functions, among others:

1.         Identify those supplies, materials, and such other items, including equipment and construction materials, which can be economically purchased through central procurement and which it shall cover within its scope of activity;

2.         Determine the technical specifications of items that it will procure for agencies of the Government;

3.         Identify the sources of supply which are able to offer the best prices, terms and other conditions for the items procured by government; and

4.         Purchase, warehouse and distribute items for resale to agencies of government, including GOCCs.

Moreover, it is mandated under the GPRA to administer the Government Electronic Procurement System or the G-EPS.

All procuring entities are directed to purchase common-use supplies from the PS-DBM.

What is the policy of the Government with respect to the use of the PhilGEPS for the procurement of goods?

To promote transparency and efficiency, information and communications technology shall be utilized in the conduct of procurement procedures. Accordingly, there shall be a single portal that shall serve as the primary source of information on government procurement. The PhilGEPS shall serve as the primary and definitive source of information on government procurement. For this purpose, the Electronic Procurement System established in accordance with Executive Order No. 322, s. 2000 and Executive Order No. 40, s. 2001 shall be continued to be managed by the PS-DBM under the supervision of the GPPB, as the PhilGEPS in accordance with the IRR-A.

All procuring entities are required to use the PhilGEPS in all its procurement of common-use supplies. For the procurement of non-common use items, procuring entities may hire service providers through competitive bidding to undertake their electronic procurement. (Refer to the GPPB Circular 01-2005)

To fully comply with the requirement under Section 8.2.1 (a) of the IRR-A, and to promote transparency and efficiency in government procurement, all notices of awards of contract, and other related information must be posted in the bulletin board of the PhilGEPS website, being the single portal of information on all government procurement activities, in addition to the posting in the website of the Procuring Entity concerned, if available.

What present features of the PhilGEPS and the PS-DBM website are of special relevance to the procurement of goods?

As discussed in Volume 1 Section 6, the existing PhilGEPS has two features that are of special relevance to the procurement of goods, namely: (i) notification feature which includes the posting of IAEBs and other notices, as well as the matching of procurement opportunities with the appropriate supplier; and (ii) the registry of suppliers.

Additionally, the DBM-PS website (www.procurementservice.org) contains an electronic catalogue of common-use supplies that can be bought from the PS-DBM. This catalogue includes the descriptions of the items, current prices, stock positions, and other relevant information. Although this information is available online, purchasing is currently still done manually.

Methodology: How does a Procuring Entity procure through the PS-DBM?

The following steps are undertaken in the procurement, by a Procuring Entity, of goods through the PS-DBM:

1.         The Procuring Entity transacts with the PS-DBM through its duly authorized personnel, designated in accordance with the following guidelines:

TIPS: Let's make doing things easier

The Procuring Entity should institute the appropriate systems and procedures between the Procurement Officer and the Supply Officer in order that coordination between them with regard to their transaction with the PS-DBM would be optimal. This essentially means that documents and information are passed on from the Procurement Officer to the Supply Officer, who takes over the procurement function upon delivery, inspection, and acceptance of the procured goods.

a.  For purposes of coordinating with the PS-DBM and the PhilGEPS regarding the procurement of common-use supplies, a Procurement Officer who is also a member of the BAC Secretariat shall serve as the liaison officer;

b.         For purposes of coordinating with the PS-DBM regarding the delivery of goods and technical inspection thereof, the Supply Officer shall liaise with the former;

2.         The Procurement Officer registers with the PhilGEPS and he/she is issued a Certification, a user-name and a system-generated password. (Note: Procedures covering the various activities that require coordination with the PhilGEPS are indicated in the appropriate Sections of this Manual. Reference may also be made to Volume 1)

3.         For the procurement of common-use supplies, the procurement unit or office obtains from the PS-DBM its latest Price List of Common-Use Supplies. It then prepares the APR where it will indicate the description, quantity and price of the goods it will procure.

4.         The APR is submitted to the appropriate official of the Procuring Entity for approval, and to the Chief Accountant for certification of availability of funds.

5.         Upon its approval and the certification of funds for it, the APR is forwarded to the Finance Office for the preparation of the corresponding DV and MDS check payable to PS-DBM. The same shall go through the regular approval process for similar documents.

6.         The approved APR, together with the MDS check, is submitted to PS-DBM for appropriate action. (Note: The internal procedures of the PS-DBM are embodied in their Operations Manual. Reference thereto may be made.)

7. Once the PS-DBM indicates to the procurement unit or office the schedule of delivery and inspection, the latter immediately informs the appropriate Supply Officer and turn over the necessary documents to him (APR and technical descriptions of the goods procured, if any).

8. The Supply Officer coordinates with the Technical Inspection and Acceptance Committee for the technical inspection of the goods procured and the subsequent acceptance by the said Committee.

 

Let's make doing things easier

The Procuring Entity may wish to consider authorizing the DBM to withhold a certain amount of its budget for the procurement of common-use supplies from the PS-DBM. In doing so, it is spared of preparing the DV and MDS check. Its Procurement Officer, instead, shall indicate in the APR that appropriate funds have been deposited with the PS-DBM to cover the cost of the supplies being procured.

 

SECTION 4.            Instructions on the Procedural Steps for the Procurement of Goods and Services. —

PART ONE

Competitive Bidding

Competitive Bidding

What is Competitive Bidding?

Competitive or Public Bidding is a method of procurement that is open to any interested and qualified party. All procurement should be done through Public Bidding except as provided in Rule XVI of the IRR-A. (IRR-A Section 10)

Competitive Bidding consists of the following processes: advertisement, pre-bid conference, receipt of eligibility documents and bids, eligibility check, opening and examination of bids, evaluation of bids, post-qualification, and award of contract. (IRR-A Section 5 [h]) A Procuring Entity should, therefore, see to it that its procurement program allows enough time to conduct such Public Bidding.

There are two (2) types of Competitive Bidding procedures: the Single-Stage and Two-Stage. The Single-Stage bidding is the regular procedure used for competitive or public bidding while the two stage bidding is employed when the required technical specifications/requirements of the contract cannot be precisely defined in advance of bidding, or where the problem of technically unequal bids is likely to occur.

The steps of the Single-Stage Bidding procedure will first be discussed in this section, to be followed by those of the Two-Stage Bidding procedure.

Single-Stage Competitive Bidding

Step 1          Advertise and Post an Invitation to Apply for Eligibility and to Bid

What is the Invitation to Apply for Eligibility and to Bid (IAEB)?

The IAEB serves as the notice to the public and all interested parties of the procurement and bidding opportunities of the Procuring Entity.

Why do you post an Invitation to Apply for Eligibility and to Bid?

It ensures transparency of the procurement process, widest possible dissemination to increase the number of prospective bidders, and intensify competition for the procurement activity or project. Intensified competition, in turn, will ensure that the government, in general, and the Procuring Entity, in particular, will get the best possible quality and cost for the goods and services sought to be procured.

What does an Invitation to Apply for Eligibility and to Bid contain?

The IAEB must contain the following: (IRR-A Section 21.1)

1.         The name of the contract to be bid, and a brief description of the goods to be procured;

2.         A general statement on the criteria to be used by the Procuring Entity for:

a.         The eligibility check;

b.         The examination and evaluation of bids; and

c.         Post-qualification;

3.         The date, time and place of the deadline for:

a.         The submission and receipt of the eligibility requirements;

b.         The pre-bid conference if any;

c.         The submission and receipt of bids; and

d.         The opening of bids;

4.         The ABC;

5.         The source of funding;

6.         The period of availability of the bidding documents, the place where the bidding documents may be secured and, where applicable, the price of the bidding documents;

7.         The contract duration or delivery schedule;

8.         The name, address, telephone number, facsimile number, e-mail and website addresses of the concerned Procuring Entity, as well as its designated contact person;

9.         The Reservation Clause, which is normally located at the bottom of the notice; and

10.       Such other necessary information deemed relevant by the Procuring Entity.

The invitation should provide information that enables potential bidders to decide whether to participate. As such, apart from the above essential items, the IAEB should also indicate any important bid evaluation criteria (for example, the application of a margin of preference in bid evaluation) or qualification requirement (for example, a requirement for a minimum level of experience in manufacturing a similar type of product for which the invitation is issued).

The deadline for the submission of bids indicated in the IAEB should be no later than thirty (30) calendar days from the date of advertisement and/or first day of posting.

When, where, and for how long do you post an Invitation to Apply for Eligibility and to Bid?

The IAEB for procurements or projects with ABCs of more than Two Million Pesos (P2 Million) must be advertised and posted as follows: (IRR-A Section 21.2.1)

1.         Advertised at least once in one (1) newspaper of general nationwide circulation which has been regularly published for at least two (2) years before the date of issue of the advertisement (advisably from the 7th calendar day after the pre-procurement conference, but if during the pre-procurement conference the BAC finds that it is not prepared to undertake the bidding procedure, it should not hesitate to consider moving back the advertisement/posting thereof to allow more time to perfect the same);

2.         Continuously on the website of the Procuring Entity concerned, if available, the website of the Procuring Entity's service provider, if any, as provided in IRR-A Section 8, and the PhilGEPS for seven (7) calendar days starting on date of advertisement, if applicable; and

3.         At any conspicuous place reserved for this purpose in the premises of the Procuring Entity concerned, as certified by the head of the BAC Secretariat of the Procuring Entity concerned, for seven (7) calendar days, if applicable.

For projects with ABCs of P2 Million and below, the IAEB should be posted: (IRR-A Section 21.2.3)

1.         Continuously on the website of the Procuring Entity concerned, if available, the website of the Procuring Entity's service provider, if any, as provided in IRR-A Section 8, and the PhilGEPS for seven (7) calendar days starting on date of advertisement, if applicable; and

2.         At any conspicuous place reserved for this purpose in the premises of the Procuring Entity concerned, as certified by the head of the BAC Secretariat of the Procuring Entity concerned, for seven (7) calendar days, if applicable.

For provincial projects, as described in Section 44 of the IRR-A, or programs funded out of the GAA for implementation within the province, in addition to the above advertisement and posting requirements, the IAEB may be advertised in a local newspaper with the widest circulation for the same prescribed period.

Which unit shall ensure that the advertising/posting requirements of the IAEB are complied with?

The BAC is responsible for ensuring that the IAEB is advertised and posted in accordance with law.

Methodology: How are IAEBs advertised and posted?

The following steps are followed in the advertising and posting of IAEBs: 7

1.         For public bidding of contracts with an ABC costing more than Two Million Pesos (P2 Million)

a.         The BAC Secretariat prepares the draft IAEB for review/approval of the BAC.

b.         The BAC approves the contents of the IAEB during the pre-procurement conference.

c.         The BAC Secretariat posts the IAEB in any conspicuous place reserved for this purpose in the premises of the Procuring Entity for the duration required; and this fact will be certified to by the head of the Secretariat.

d.         The BAC Secretariat advertises the IAEB in a newspaper for the duration required, as prescribed above. For priority programs and projects funded out of the annual GAA, which are intended for implementation within the province, the IAEB may also be advertised in a local newspaper for the same duration as above.

e.         The BAC Secretariat, through its member who is authorized to transact with the PhilGEPS, posts the IAEB in the following websites: the PhilGEPS, that of the Procuring Entity, and the Procuring Entity's e-procurement service provider, if any, for the duration required.

2.         For public bidding of contracts with an ABC costing Two Million Pesos (P2 Million) and below, and for alternative methods of procurement (Please refer to Section 4, Part 2, for the discussion on Alternative Methods of Procurement):

a.         The BAC Secretariat prepares the draft IAEB for review/approval of the BAC.

b.         The BAC approves the contents of the IAEB.

c.         The BAC Secretariat performs steps (c) and (e) in Item No. 1 above.

What is the Reservation Clause?

The Reservation Clause declares that the Procuring Entity reserves the right to reject any and all bids, to declare a failure of bidding, or not to award the contract. (IRR-A Section 41)

In the case of Mata v. San Diego, G.R. No. L-30447 (March 21, 1975), the Supreme Court of the Philippines declared that a bidder is bound by the reservation clause, and the said clause vests in the authority concerned the discretion to ascertain who among the bidders is the lowest responsive bidder or the lowest and best bidder or most advantageous to the best interest of the Government. As such, a bidder has no right or cause of action to compel the BAC or agency to award the contract to it. The Court further stated that this requires inquiry, investigation, comparison, deliberation and decision — a quasi-judicial function which, when honestly exercised, may not be reviewed by the courts. It should be noted, however, that R.A. 9184 Section 41, has placed some limiting qualifiers on the possible contents of the Reservation Clause.

A Procuring Entity should be prudent in the use of the reservation clause, because if the Head of the Procuring Entity abuses his power to reject any and all bids, as provided by therein, with manifest preference to any bidder who is closely related to him in accordance with IRR-A Section 47, or if it is proven that he exerted undue influence or undue pressure on any member of the BAC or any officer or employee of the Procuring Entity to take such action, and the same favors or tends to favor a particular bidder, he shall be meted with the penalties provided in IRR-A Section 65. (IRR-A Section 65.1.5)

Step 2          Issue the Bidding Documents

When should the bidding documents be made available to prospective bidders?

The bidding documents must be made available to the prospective bidders from the time the IAEB is advertised until immediately before the deadline for submission of bids. (IRR-A Section 17.5) The Procuring Entity must ensure that prospective bidders are given ample time to examine the bidding documents and to prepare their respective bids. A maximum period of thirty (30) calendar days from the date of advertisement and/or first day of posting of the IAEB up to opening of bids is provided by Section 21.2.2 of the IRR-A, which means that there is a period of thirty (30) calendar days for which the bidding documents are available for purchase.

The bidding documents are strictly confidential and shall not be divulged or released to any person prior to its official release. It is advisable for a Procuring Entity to post an abstract or a summary of the bidding documents, containing general information about the procurement at hand, in the PhilGEPS website, the website of the Procuring Entity, and the website of its electronic procurement system service provider, if any. This abstract may then be viewed even by non-registered users of the PhilGEPS or of the other websites mentioned.

How much must prospective bidders pay for the Bidding Documents?

The BAC must consider the cost recovery component in determining the price which interested suppliers would have to pay for the bidding documents to ensure that the same would not have an effect of discouraging competition.

The cost recovery component may include the following:

1.         Direct costs, which includes:

a.         Development costs, which are incurred in developing the original content of the documents, designs, plans and specifications. However, the design cost may be excluded if it is to be included in the capitalized cost of the project, or the project cost, which is to be recovered from the use of the completed project facility;

b.         Reproduction costs, which are labor, supplies and equipment rental costs incurred in the reproduction of the documents; and

c.         Communication costs, which include mail and fax costs, plus costs of advertising, meetings, internet/web posting, and other costs incurred for the dissemination of information about the bidding.

2.         Indirect costs, such as overhead, supervision, and administrative costs, allocated to the bidding activity. This may include the costs of paying honoraria to the officers and personnel of the Procuring Entity who are entitled thereto under the law. Under Budget Circular No. 2004-5A, dated October 7, 2005, the chairs and members of the BAC and the TWG may be paid honoraria for successfully completed procurement projects, subject to the rates provided therein; and, for this reason, agencies are allowed to retain one hundred percent (100%) of their collections from the sale of bidding documents, among others, to be used exclusively for the payment of such honoraria or overtime pay, provided that the same shall not exceed twenty-five percent (25%) of the basic monthly salary of the officer or personnel entitled thereto. (Note that Budget Circular No. 2004-5A was issued in accordance with Section 15 of R.A. 9184)

In practice, cost recovery entails getting the sum of Direct and Indirect Costs and dividing the total by the expected number of prospective bidders who will purchase the bidding documents. This number is an estimate derived from the initial survey of the industry conducted by the procurement office/unit. The BAC is discouraged from using the cost of bidding documents to limit the number of bidders. If the procurement involves a fairly large acquisition of goods of a particular complexity, and project implementation requires a higher level of size or capacity on the part of the supplier, it would be more advisable for the BAC to allow the project requirements to naturally limit competition among capable suppliers, by summarizing the qualification requirements in the IAEB and detailing these in the bidding documents, rather than for the BAC to unilaterally increase the price of the bidding documents and hope that this price discourages competition. As such, if the BAC wants to encourage the participation of as many bidders as possible to create competition, it should consider charging a lower price for the bidding documents, keeping in mind that this price should be sufficient to recover the above-enumerated costs.

Methodology: How are the Bidding Documents issued?

The BAC Secretariat issues the bidding documents to the prospective bidders that may wish to secure the said documents, or, if it is for sale, to those prospective bidders that may wish to purchase the same. If the bidding documents are sold, only those prospective bidders that have paid the amount required shall be issued bidding documents, and bidders should be informed that the Procuring Entity will only accept bids from bidders that have purchased the bidding documents from the office indicated in the IAEB. Prior to the issuance of the bidding documents, prospective bidders may be required to show the official receipt as proof of payment.

The BAC must issue copies of the bidding documents to the Observers free of charge.

What are the responsibilities of a prospective bidder with regard to the Bidding Documents?

A prospective bidder must be responsible for having: (IRR-A Section 17.7.1)

1.         Taken steps to carefully examine all of the bidding documents;

2.         Acknowledged all conditions, local or otherwise, affecting the implementation of the contract;

3.         Made an estimate of the facilities available and needed for the contract to be bid, if any; and

4.         Complied with his responsibility as provided for under Section 22.5.1, which provides that it shall be the responsibility of all those who have properly secured the bidding documents to inquire and secure supplemental/bid bulletins that may be issued by the BAC.

Failure to observe any of the above responsibilities shall be at the risk of the prospective or eligible bidder concerned. For this purpose, one of the contents of the Technical proposal would have to be a sworn statement executed by the bidder attesting to these responsibilities.

The Procuring Entity shall not be responsible for any erroneous interpretation or conclusions by the prospective or eligible bidders of the data it furnished. (IRR-A Section 17.7.3)

Moreover, the bidders are deemed to have become familiar with all existing Philippine laws, decrees, ordinances, acts and regulations that may affect the contract in any way. However, if the contract is affected by new laws, ordinances, regulations or other acts of government promulgated after the date of the bidding, a contract price adjustment shall be made or appropriate relief shall be applied on a no loss-no gain basis, provided such is not covered by the contract provisions on price adjustment. (IRR-A Section 17.7.4)

Step 3          Call A Pre-Bid Conference and, if necessary, Issue Supplemental/Bid Bulletins

What is a Pre-bid Conference?

The pre-bid conference is the initial forum where the Procuring Entity's representatives and the prospective bidders discuss the different aspects of the procurement at hand.

The ground rules that will govern the procurement are discussed during the conference. In particular, the participants discuss the legal, technical and financial components of the contract to be bid. This is also an opportunity for the prospective bidders to request for clarifications about the bidding documents. However, it should be noted that any statement made at the pre-bid conference would not modify the terms of the bidding documents, unless such statement is specifically identified in writing as an amendment of the documents and issued as a supplemental/bid bulletin. (IRR-A Section 22.4)

It is important that responsible and knowledgeable officials attend the conference. The persons who actually formulated the scope of work, plans and technical specifications for the project should be present and among those representing the Procuring Entity. Prospective bidders, on the other hand, should be encouraged to send representatives who are legally and technically knowledgeable about the requirements of the procurement at hand. It is also important that the prospective bidders are given ample time to review the bidding documents prior to the pre-bid conference.

When do you hold a Pre-bid Conference?

A pre-bid conference must be held for contracts with ABCs of at least One Million Pesos (P1 Million). For contracts with ABCs of less than P1 million, pre-bid conferences may or may not be held at the discretion of the BAC. The BAC may also decide to hold a pre-bid conference upon the written request of a prospective bidder. (IRR-A Section 22.1)

A pre-bid conference must be conducted at least twelve (12) calendar days before the deadline for the submission and receipt of bids. (IRR-A Section 22.2) In addition to this, it is suggested that it not be held earlier than seven (7) calendar days after the second newspaper advertisement or the last day of posting the IAEB. If the pre-bid conference is held less than 12 calendar days before the deadline for the submission and receipt of bids, that deadline should be moved to a later date. A supplemental/bid bulletin shall be issued for this reason. Note that these periods are all within the maximum period of thirty (30) calendar days from the date of advertisement and/or first day of posting of the IAEB up to the opening of bids, as provided under IRR-A Section 21.2.2 (i).

Who must attend the Pre-bid Conference?

The following shall attend the Pre-Bid Conference:

1.         The BAC;

2.         The BAC Secretariat/Procurement Unit;

3.         The TWG members and consultants, if any;

4.         The procuring unit/end-user unit;

5.         The prospective bidders; and

6.         The Observers.

The attendance of the prospective bidders shall not be mandatory.

How should the participants conduct themselves during the Pre-bid Conference and other stages of the procurement process?

The BAC, BAC Secretariat, TWG, and other officials involved in procurement are expected to act in an impartial, courteous and professional manner in all their dealings and interactions with the bidders during all stages of the procurement. The bidders' representatives are likewise enjoined to adopt the same professional manner in their dealings with the Procuring Entity's officials. Communications between the parties must, as much as possible, be made in writing, except during the pre-bid conference when verbal clarifications may be allowed — keeping in mind, however, that any statement made at the pre-bid conference would not modify the terms of the bidding documents, unless such statement is specifically identified in writing as an amendment of the documents and issued as a supplemental/bid bulletin.

Methodology: How is the Pre-bid Conference conducted?

The manner by which the pre-bid conference is conducted depends on the discretion of the BAC. However, several events need to take place in the conference, namely:

1.         The presentation by the BAC of the eligibility requirements as well as the technical and financial components of the contract to be bid, the evaluation procedure, evaluation criteria, and possible causes of failure of the bidding.

2.         The BAC chairperson shall also discuss the requirements in the ITB, the replies to the bidders' queries about the requirements, specifications and other conditions of the project, the bid evaluation of all bidders and post-qualification evaluation of the lowest calculated bidder. Emphasis should also be given to the warranty requirement of the project and the different offenses and penalties provided for in IRR-A of R.A. 9184.

 

TIPS: Let's make doing things easier

The BAC must initiate discussions on contentious issues, most especially if the participating prospective bidders have no ready questions. It is probable that there are issues that may not be apparent in the bidding documents but are known to the representatives of the Procuring Entity. If these issues are brought out and openly discussed, prospective bidders will be able to prepare responsive bids, thus avoiding situations that may give rise to a failure of bidding due to lack of bids received or failure of bids to comply with all the bid requirements. This would also help prevent the birth contentious issues during the bidding itself.

3.         The recording by the BAC Secretariat of minutes of the pre-bid conference, and its availability to all participants not later than three (3) calendar days after the pre-bid conference. (IRR-A Section 22.3)

What happens if there is a need for clarification or interpretation on the Bidding Documents after the Pre-bid Conference had been held?

Requests for clarification(s) on any part of the bidding documents or for an interpretation may be made by prospective bidders provided that these are in writing and are submitted to the BAC at least ten (10) calendar days before the deadline for the submission and receipt of bids. In this case, the BAC shall issue its response by issuing a supplemental/bid bulletin, to be made available to all those who have properly secured the bidding documents at least seven (7) calendar days before the deadline for the submission and receipt of bids. (IRR-A Section 22.5.1)

The Procuring Entity may, at its own initiative, also issue supplemental/bid bulletins for purposes of clarifying or modifying any provision of the bidding documents not later than seven (7) calendar days before the deadline for the submission and receipt of bids. Any modification to the bidding documents must be identified as an "AMENDMENT." (IRR-A Section 22.5.2)

The BAC should also post the supplemental/bid bulletin on the website of the Procuring Entity concerned, if available, the website of its electronic procurement system provider, if any, and on the PhilGEPS, within the same timetable. It will be the prospective bidders' responsibility to ask for, and secure, these bulletins, however BAC should ensure that all prospective bidders receive the bid bulletins.

A supplemental/bid bulletin must contain a brief but comprehensive and accurate summary of the issue or issues that it wishes to address. If it was a prospective bidder that raised the issue addressed by the bulletin, then it ought to contain a summary of that bidder's request for clarification and/or interpretation, without identifying the bidder.

Bidders who have submitted bids before a supplemental/bid bulletin is issued have to be informed in writing and allowed to modify or withdraw their respective bids. (IRR-A Section 22.5.2)

Who are involved in the Issuance of the Supplemental/Bid Bulletin?

The following are involved in the issuance of the supplemental/bid bulletin:

1.         The BAC;

2.         The BAC Secretariat/Procurement Unit;

3.         The TWG members; and

4.         The prospective bidders.

Methodology: How is a Supplemental/Bid Bulletin issued?

If the supplemental/bid bulletin is being issued upon the initiative of the BAC, the following steps are followed:

1.         The BAC Secretariat and/or the TWG draft the supplemental/bid bulletin for approval by the BAC.

2.         The BAC approves the supplemental/bid bulletin and the BAC chairperson signs it.

3.         The BAC Secretariat sends copies of the supplemental/bid bulletin to all prospective bidders who have properly secured or purchased the bidding documents, within the period prescribed above.

4.         The BAC Secretariat posts the supplemental/bid bulletin in the PhilGEPS, the website of the Procuring Entity and that of the latter's electronic procurement system provider, if any, within the same period prescribed in number (3) above.

If the supplemental/bid bulletin is being issued in response to a request for clarification submitted by a prospective bidder, on the other hand, the process goes as follows:

1.         The prospective bidder submits to the BAC, through the BAC Secretariat, a written request for clarification, within the period prescribed above.

2.         The BAC directs the BAC Secretariat and/or TWG to study the request for clarification.

3.         The TWG, BAC and BAC Secretariat perform the steps undertaken in the issuance of the supplemental/bid bulletin issued at the initiative of the BAC.

Step 4          Receive and Open the Eligibility and Bid Envelopes

What is an eligibility check?

It is a procedure to determine if a prospective bidder is eligible to participate in the bidding at hand. In determining a prospective bidder's eligibility, the BAC shall use non-discretionary "pass/fail" criteria, as stated in the IAEB and the ITB. Essentially, this means that the absence, incompleteness or insufficiency of a document shall make a prospective bidder ineligible to bid for the particular procurement. 8 (IRR-A Section 23.2)

Who may be eligible to participate in a public bidding for goods? 9

The following manufacturers, suppliers and/or distributors, service providers shall be eligible to participate in the bidding for the supply of goods: (IRR-A Section 23.11.1.1)

1.         Duly licensed Filipino citizens/sole proprietorships;

2.         Partnerships duly organized under the laws of the Philippines and of which at least sixty percent (60%) of the interest belongs to citizens of the Philippines;

3.         Corporations duly organized under the laws of the Philippines, and of which at least sixty percent (60%) of the outstanding capital stock belongs to citizens of the Philippines;

4.         Joint ventures of manufacturers, suppliers and/or distributors, i.e., a group of two (2) or more manufacturers, suppliers and/or distributors that intend to be jointly and severally responsible or liable for a particular contract, provided that: 10

a.         Filipino ownership or interest of the joint venture concerned must be at least sixty percent (60%); and

b.         In determining the eligibility of the joint venture, the principle of  "collective compliance" will be applied to its members/principals in the sense that each of the entities of the joint venture must submit all of the documents that are required to establish eligibility, although the non-compliance of one member/principal may be compensated by the compliance of another member/principal;

Why is that?

Why do we require that the bidder's largest single contract be at least 50% of the ABC of the contract to be bid?

We do this because we want to be assured that the prospective bidder has the technical and financial capability to undertake the contract to be bid.

5.         Cooperatives duly registered with the CDA.

All of these entities must have:

1.         The experience of having completed within the period specified in the IAEB concerned, a single contract that is similar to the contract to be bid, and whose value, adjusted to current prices using the wholesale consumer price index, must be at least fifty percent (50%) of the approved budget for the contract to be bid (IRR-A Section 23.11.1.2); and

2.         Any of the following:

An NFCC that is at least equal to the approved budget for the contract to be bid, calculated as follows:

NFCC = [(Current assets minus current liabilities) (K)] minus the value of all outstanding projects under ongoing contracts, including awarded contracts yet to be started.

Where:

K = 10 for a contract duration of one year or less, 15 for a contract duration of more than one year up to two years, and 20 for a contract duration of more than two years.

or

A commitment from a licensed bank to extend to it a credit line if awarded the contract to be bid — such commitment being specific to the contract to be bid;

What do we mean?

When is a contract "similar" to another?

A contract is similar to the contract to be bid if it involves goods or related services of the same nature and complexity as those which are the subject of the public bidding concerned; for example, if it has the same major categories of goods, such as computers and network equipment.

or

a hold out on cash deposits issued by a licensed bank, which shall also be specific to the contract to be bid, and which must be in an amount not lower than that set by the Procuring Entity in the Bidding Documents, which shall be at least equal to ten percent (10%) of the ABC of the contract to be bid.

Are foreign suppliers allowed to bid?

Foreign suppliers, manufacturers, and/or distributors may be invited to participate in the bidding for the procurement of goods, when:

1.         The goods are not available from domestic sources at the prescribed minimum specifications of the appropriate government authority and/or ABC of the Procuring Entity, as certified by the Head of the Procuring Entity, confirmed by the DTI. (IRR-A Section 23.11.1)

Under GPPB Resolution 18-2005, goods are not available from Local Suppliers when, at any time before advertisement for their procurement, it is determined that no Local Supplier is capable to supply the required goods to the Government, in which case, foreign suppliers, manufacturers and/or distributors may be invited to participate in the bidding. Therefore, the Head of the Procuring Entity or his duly authorized representative shall certify that, after diligent market research conducted by the Procuring Entity, the goods sought to be procured are not available from Local Suppliers. In addition, when applicable, the Procuring Entity shall secure a certification from the appropriate Government regulatory body, such as, but not limited to, the Bureau of Product Standards of the DTI for electrical products, mechanical/building & construction materials, chemicals, foods and other consumer products, and the BFAD of the DOH for drugs, medicine, and other related medical devices, that based on its available records, the goods sought to be procured are not available from Local Suppliers.

If despite the availability of the goods sought to be procured, no local supplier is interested to participate in the procurement process, the Head of the Procuring Entity shall certify that it has advertised the same for public bidding and shall make a statement that no local supplier participated in the bidding and that the same is due to reasons not attributable to the Procuring Entity. For purposes of inviting foreign suppliers, the bidding requirements and conditions, as advertised, shall not be modified or changed. Otherwise, modifications and/or changes in the requirements and conditions of the bidding shall disallow the Procuring Entity to resort to invitation of foreign bidders.

The procurement of unavailable goods must be through competitive or public bidding unless conditions prescribed under R.A. 9184 and its IRR-A warrant resort to alternative methods of procurement.

2.         There is a need to prevent situations that defeat competition or restrain trade. (IRR-A Section 23.11.1)

Under Section 6.1 of GPPB Resolution 18-2005, in cases where the Procuring Entity intends to procure goods from an exclusive local manufacturer, supplier, distributor, or dealer through direct contracting under Section 50 (c) of the IRR-A, when said method is recommended by the BAC and approved by the Head of the Procuring Entity, and reflected in the approved Annual Procurement Plan, it shall, before commencing any negotiations with a local supplier, post through the website of the Procuring Entity, if any, and in the PhilGEPS, an invitation to foreign manufacturers to submit a manifestation of its intention to participate. Should any foreign manufacturer submit such manifestation within the period prescribed in the invitation, the Procuring Entity shall commence the conduct of public bidding. If no foreign manufacturer submits such manifestation within the said period, the Procuring Entity may proceed with the intended procurement through direct contracting with the said exclusive local manufacturer, supplier, distributor, or dealer.

3.         The foreign citizen/entity who/that wishes to participate in the procurement of goods is able to prove that the laws, rules and regulations of his/its country of origin grants reciprocal rights and privileges to Filipino citizens with respect to the procurement of goods by his/its own government. (R.A. 5183)

A bidder shall be deemed to have the nationality of a country if the bidder is a citizen or is constituted, or incorporated, and operates in conformity with the provisions of the laws of that country.

This criterion shall also apply to the determination of the nationality of proposed subcontractors or suppliers for any part of the contract, including related services.

Under Section 7.2 of GPPB Resolution 18-2005, the Procuring Entity shall confirm from the DFA countries with which the Philippines enjoys reciprocal rights on matters of eligibility of its nationals in public procurement abroad. If the country of the prospective foreign bidder is not in the list, the Procuring Entity shall require from the said bidder the submission of a sworn statement that the country of which he is a citizen or in which the corporation or partnership is organized and registered grants reciprocal rights or privileges to Filipino citizens, corporations or associations, citing its country's relevant laws.

The sworn statements mentioned above shall be validated during post-qualification of bidders.

4.         When provided for under any treaty or international or executive agreement. 11

When is a prospective bidder eligible to bid?

A prospective bidder is eligible to bid for the procurement of goods if it complies with the eligibility requirements prescribed for the competitive bidding, within the period stated in the invitation to bid. The eligibility requirements shall provide for fair and equal access to all prospective bidders.

As procuring entities and the bidders, manufacturers, suppliers or distributors are required to observe the highest standard of ethics during the procurement and execution of contract, bidders should not be under a declaration of ineligibility for corrupt, fraudulent, collusive and coercive practices by the government.

What are the minimum eligibility requirements?

Section 23.6 of the IRR-A requires bidders to submit the following eligibility requirements contained in a separate envelope, to be submitted together with the technical and financial bid envelopes, to wit:

1.         Class "A" Documents

a.         Legal Documents

i.          DTI business name registration in the case of Single Proprietorships; or SEC registration certificate, in the case of Partnerships or Corporations; or CDA Registration, in the case of cooperatives;

ii.         Valid and current Mayor's permit/municipal license, if applicable;

iii.       BIR Registration Certification, which contains the Taxpayer's Identification Number;

iv.        Statement of the prospective bidder that it is not "blacklisted" or barred from bidding by the government or any of its agencies, offices, corporations or LGUs, and that it is not included in the Consolidated Blacklisting Report issued by the GPPB, once released in accordance with the guidelines to be issued by the GPPB as provided in Section 69.4 of the IRR-A;

v.         Tax Clearance Certificate issued by the BIR Main Office and Income or Business Tax Returns filed through the EFPS (E.O. 398, s. 2005), if applicable;

vi.        Other appropriate licenses as may be required by the Procuring Entity concerned.

b.         Technical Documents

A statement of the prospective bidder of all its ongoing and completed government and private contracts within the period specified in the IAEB, including contracts awarded but not yet started, if any. This statement must include the following information for each of the contracts:

i.          Whether the contract is ongoing, completed or awarded but not yet started within the relevant period;

ii.         The name of the contract;

iii.       The date of the contract;

iv.        The kinds of goods sold;

v.         The amount of contract and value of outstanding contracts;

vi.        The date of delivery;

vii.       The end user's acceptance, for completed contracts;

viii.      A specification whether the prospective bidder is a manufacturer, supplier or distributor, or service provider; and

ix.        Whether the contract is similar or not in nature and complexity with the contract to be bid.

c.         Financial Documents

i.          The prospective bidder's audited financial statements, stamped "received" by the BIR or its duly accredited and authorized institutions, for the immediately preceding calendar year, showing, among others, the prospective bidder's total and current assets and liabilities;

ii.         The prospective bidder's computation of its NFCC which shall be computed using the formula prescribed in Sec. 23.11.1.3 of the IRR-A; and,

iii. If its NFCC is not sufficient to comply with the requirements in Sec. 23.11.1.3 of the IRR-A:

  A commitment from a licensed bank to extend to it a credit line if awarded the contract to be bid, such commitment being specific to the contract to be bid; or

A certificate of hold out on cash deposit, in an amount not lower than that set by the Procuring Entity in the Bidding Documents, which shall be at least equal to ten percent (10%) of the ABC.

Let's make things easier

To facilitate eligibility checking, the BAC of a Procuring Entity may maintain a file of the foregoing Class "A" documents submitted by manufacturers, suppliers and distributors. When such file is required by the Procuring Entity, a manufacturer, supplier or distributor who wishes to participate in a public bidding for non-common Goods should maintain this file current and updated at least once a year, or more frequently when needed. A manufacturer, supplier or distributor who maintains a current and updated file of his Class "A" documents will be issued a certification by the BAC to that effect, which certification may be submitted to the Procuring Entity concerned in lieu of the foregoing Class "A" documents. (IRR-A Section 23.6.1)

2.         Class "B" Documents

a.         Valid JVA, if the prospective bidder is a joint venture, with the agreement containing a statement on who the joint venture has constituted and appointed as the lawful attorney-in-fact to sign the contract, if awarded the project, and on which among the members/principals is the lead representative of the joint venture.

All members of the joint venture should submit all the Class "A" eligibility documents. All members of the joint venture should comply with all the legal eligibility requirements, but compliance by one of the joint venture members with the technical and financial requirements will suffice.

b.         Letter authorizing the Head of the Procuring Entity or his duly authorized representative/s to verify any or all of the documents submitted for the eligibility check.

3.         Other Eligibility Documents

A certification, under oath, executed by the prospective bidder or its duly authorized representative, that each of the documents submitted in satisfaction of the eligibility requirements is an authentic and original copy, or a true and faithful reproduction or copy of the original, complete, and that all statements and information provided therein are true and correct. (IRR-A Section 23.8)

The BAC may require the bidder's authorized representative to initial every page of the documents it submits as originals. The purpose of this exercise is to ensure that the documents reviewed by the BAC are authentic, and to protect the BAC from any insinuation of tampering with the said documents.

What is the purpose of requiring an NFCC, a credit line or a certificate of a Hold-out on Cash Deposit that is equal to the ABC?

The NFCC, a credit line and a certificate of a hold-out on cash deposit establish the bidder's liquidity, its capacity to absorb the additional obligations in connection with the contract to be bid and to finance its implementation/completion. Compliance with this eligibility requirement may be done on the alternative, such that submission of any of the three is acceptable for purposes of determining a bidder's eligibility.

What are the eligibility requirements of a prospective foreign bidder?

Foreign manufacturers, suppliers and distributors, when allowed to bid under the circumstances mentioned in IRR-A Sec. 23.11.1 and R.A. 5183, must submit the same eligibility requirements as domestic entities. However, the legal documents and the audited financial statements under the Class "A" documents may be substituted by the appropriate equivalent documents issued by the country of the foreign manufacturer, supplier or distributor. (IRR-A Section 23.7) These documents must be duly acknowledged and authenticated by the Philippine consulate located in that country.

How and when must the Eligibility Envelope be submitted?

The Eligibility envelope must be submitted together with the Technical and Financial bid envelopes, enclosed in an outer sealed envelope or any such appropriate container, to the BAC on or before the deadline specified in the IAEB. Eligibility requirements submitted after the deadline should not be accepted by the BAC. For purposes of synchronizing the time, the BAC may identify an official timepiece that will be referred to for purposes of determining timely submission. The official timepiece must be indicated in the bidding documents and announced during the pre-bid conference, to ensure that all prospective bidders are aware of this information.

A prospective bidder which had submitted Class "A" documents, and was issued a Certificate of Registration by the Procuring Entity may submit the following:

1.         A certification from the BAC of the Procuring Entity that it has a complete set of updated Class "A" documents on file with the BAC;

2.         Its Class "B" documents; and

3.         Its certification under oath that each of the documents submitted in satisfaction of the eligibility requirements is an authentic and original copy or a true and faithful reproduction or copy of the original, complete and that all statements and information provided therein are true and correct.

What happens if a bidder fails to submit its eligibility envelope and bid on the date, time and place indicated in the IAEB?

Any eligibility envelope, technical bid or financial bid submitted after the deadline for submission and receipt of bids prescribed by the Procuring Entity shall be declared "Late" and shall not be accepted by the BAC.

When should the eligibility envelope be opened?

The eligibility envelope should be opened and an eligibility check conducted by the BAC on the day of the bid opening, but prior to the opening of the bid envelopes. After opening the eligibility envelopes of the bidders, the technical bid envelopes of bidders who were declared eligible should then be opened. Thereafter, the financial bid envelopes of bidders who were declared as technically complying should be opened. These activities are held on the day of the bid opening, as stipulated in the bidding documents.

What is a Bid?

A Bid refers to a signed offer or proposal to undertake a contract submitted by a bidder in response to, and in consonance with, the requirements stated in the bidding documents. "Bid" is also equivalent to and may be used interchangeably with "Proposal" and "Tender". A Bid has two components, the Technical Proposal or the Technical Bid, and the Financial Proposal or the Financial Bid. The Technical and Financial Bids must each be contained in separate sealed bid envelopes.

What are the contents of the Technical Proposal?

The Technical Proposal should contain, at the minimum, the following technical information/documents:

1.         The Bid Security as to form, amount and validity period;

2.         Authority of the signatory, which must be contained in a Board Resolution if the bidder is a corporation or a cooperative, a Joint Venture Resolution if the same is a Joint Venture, a Partnership Resolution if the bidder is a Partnership, or a Special Power of Attorney (SPA) issued by the General Manager or Proprietor if the bidder is a sole proprietor;

3.         Production/delivery schedule;

4.         Manpower requirements;

5.         After-sales service/parts, if applicable;

6.         Technical specifications;

7.         Commitment from a licensed bank to extend to the bidder a credit line if awarded the contract to be bid, or a hold out on cash deposit, in an amount not lower than that set by the Procuring Entity in the Bidding Documents, which shall be at least equal to ten percent (10%) of the ABC, provided that if the bidder previously submitted this document as an eligibility requirement, the said previously submitted document shall suffice;

8.         Certificate from the bidder under oath of its compliance with existing labor laws and standards, in the case of procurement of services;

9.         A sworn affidavit of compliance with the Disclosure Provision under Section 47 of R.A. 9184 and its IRR-A in relation to other provisions of R.A. 3019;

10.       A sworn statement attesting to the responsibilities mentioned in Section 17.7.1, particularly that the bidder has taken steps to carefully examine all of the bidding documents, has acknowledged all conditions, local or otherwise, affecting the implementation of the contract, has made an estimate of the facilities available and needed for the contract to be bid, and has complied with its responsibility of inquiring and securing all supplemental/bid bulletins issued by the BAC; and

11.       Other documents/materials as stated in the Instructions to Bidders.

What are the contents of the Financial Proposal?

The Financial Proposal shall contain the following financial information/documents, at the least:

1.         The financial proposal submission sheet, which includes the bid prices and the bill of quantities for procurement of goods, or scope of work for procurement of services, and the applicable price schedules; and

2.         The recurring and the maintenance costs, if applicable. (Please refer to Section 2 on Procurement Planning, for guidelines in the preparation of the Technical Specifications and other requirements.)

When should Bids be submitted?

Bids should be submitted on or before the specified time and date of the deadline for submission of bids, as stated in the IAEB, and within thirty (30) calendar days from date of advertisement and/or first day of posting the IAEB. (IRR-A Section 21.2.2 [i]) Bids submitted after the specified deadline shall not be received or accepted by the BAC. (IRR-A Section 25.2)

Who are the parties involved in the receipt and opening of eligibility envelopes and bids?

The following parties are involved in this process:

1.         The BAC;

2.         The TWG;

3.         The BAC Secretariat/Procurement Unit;

4.         The bidders; and

5.         The Observers.

Methodology: How are the eligibility and bid envelopes opened? 12

1.         The BAC shall receive the Eligibility, Technical and Financial envelopes at the time, date and place specified in the bidding documents. Upon receipt of these envelopes, the BAC Secretariat must stamp the face of the outer envelope as "RECEIVED," indicating thereon the date and time of receipt, and have the stamp countersigned by an authorized representative.

2.         The BAC shall open in public the Eligibility envelopes on the same day as the bid opening. (IRR-A Section 23.1) The BAC shall read in public the contents of the Eligibility envelopes, and shall examine each prospective bidder's eligibility requirements or statements. It shall record the presence or absence of the required eligibility requirements in a Checklist.

TIPS: Let's improve transparency

The BAC may request the prospective bidders to identify an individual who shall act as a third party witness and countercheck the eligibility documents being examined by the BAC. This is especially important if there are no observers present during the Bid Opening.

Alternatively, the BAC may use any device (i.e., document camera, opaque projector, etc.) that will enable all attendees to view the document being examined

3.         The BAC shall declare prospective bidders as either "eligible" or "ineligible", based on the findings in number 2 above, and inform them accordingly. The Eligibility envelopes shall likewise be marked as such, and these markings shall be countersigned by the BAC chairperson or his duly designated authority. (IRR-A Section 23.2) The BAC may prepare a pro-forma Notice of Eligibility and a Notice of Ineligibility, which will be duly accomplished by the BAC Secretariat and signed by the BAC members present during the Eligibility Check. In case a prospective bidder is declared ineligible, the Notice of Ineligibility shall state the reason for such ineligibility. The Notice will be received officially by the Bidder's authorized representative. Those found ineligible have seven (7) calendar days upon written notice or, if present at the time of opening of eligibility requirements, upon verbal notification, within which to file a request for reconsideration with the BAC.

4.         The BAC shall inquire from ineligible bidders who are present during the Eligibility Check whether or not they intend to file a request for reconsideration; if they signify their intention to do so, the BAC shall keep the Eligibility envelopes containing the eligibility requirements and re-seal the same in the presence of all the participants. These shall be deposited in the Bid Box or any other secured place or location, together with the Technical and Financial envelopes, ensuring that the latter documents remain sealed and unopened. (IRR-A Sec. 23.3) If an ineligible bidder does not signify its intention to file a motion for reconsideration during the Eligibility Check, considering that it may decide to exercise its right to file one during the mandated seven (7) calendar day period therefor, it would be advisable for the BAC to place its own seal over the Technical and Financial Bid envelopes of the said ineligible bidder — which BAC seal shall be over the existing seal of the ineligible bidder — to ensure that no tampering of these documents may be committed while in possession of the ineligible bidder before re-submission. In any case, with or without any indication on the part of the prospective bidder of its intention to file a request for reconsideration, it would be advisable for the BAC to hold on to the Eligibility envelopes containing the eligibility requirements, duly re-sealed and deposited, including the technical and financial bid envelopes, until the expiration of the period for filing a request for reconsideration, to ensure the integrity of these documents; unless if the said prospective bidder waives its right to file a request for reconsideration.

5.         The BAC shall return the Eligibility, Technical and Financial Bid envelopes of a prospective bidder if it is declared "ineligible" and it does not signify its intention to file a request for reconsideration or expressly waives its right to file a motion for reconsideration. In the case of the latter, such waiver shall be made in writing to be executed by the authorized representative of the ineligible bidder. The BAC must decide on a request for reconsideration within seven (7) calendar days form receipt thereof.

6.         The BAC shall proceed with the opening of the Technical envelopes (Technical Proposals) of eligible bidders, and the Preliminary Examination of Bids, to determine each bidder's compliance with the documents that are required to be submitted for the technical component of the bid. The opening shall also be done in public, following the same procedure as the Eligibility Check. The BAC shall check the submitted technical documents of each bidder against a Checklist of required technical documents to ascertain if they are all present in the first bid envelope, using non-discretionary "pass/fail" criteria. (IRR-A Section 30.1)

7.         In case one or more of the above-required documents in the Technical Bid envelope is missing, incomplete or patently insufficient, the bid shall be declared as "failed" and immediately returned to the bidder concerned, together with the unopened financial envelope. A bidder determined as "failed" has seven (7) calendar days upon written notice or, if present at the time of bid opening, upon verbal notification, within which to file a request for a reconsideration with the BAC. (IRR-A Section 30.3) The BAC shall follow the procedures provided for under Nos. 4 and 5 above, with respect to the Technical and Financial Bid envelopes.

8. Immediately after determining compliance with the requirements in the first envelope, the BAC shall open the second bid envelope (Financial Proposals) of each remaining technically complying bidder whose submitted technical requirements were rated "passed." The second envelope of each technically complying bidder shall be opened on the same day. The BAC shall determine whether one or more of the requirements of the Financial Bid is missing, incomplete or patently insufficient, and if the submitted total bid price exceeds the ABC. If the Financial Bid is complete, the BAC shall rate it "passed" and shall proceed with the evaluation of the Bid. Only bids that are determined to contain all the bid requirements for both Technical and Financial components shall be rated "passed" and shall be considered for evaluation and comparison. (IRR-A Sections 30.2)

 

 

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When is a document deemed "complete" and "sufficient"?

For a document, to be deemed "complete" and "sufficient", it must be complete on its face, that is, it contains all the information required, and must comply with the requirements set out in the bidding documents. For example, a Mayor's Permit should be current, and submission of an expired Mayor's Permit is deemed a "non-submission". Another example of an insufficient submission is a Bid Security in an amount below the requirement.

            Bids that exceed the ABC will automatically be disqualified. In the case of foreign currency denominated bids, where allowed by the law and rules, the same shall be converted to Philippine currency based on the exchange rate prevailing on the day of the bid opening. The BSP reference rate as of the date of the bid opening shall be used.

9.         All members of the BAC or their duly authorized representatives and the Observers who are present during bid opening, shall initial every page of the original copies of all bids received and opened. (IRR-A Sections 29)

10.       The BAC Secretariat shall record the proceedings using a tape recorder, or a video recorder or any device that may facilitate the recording. The minutes of the bid opening should be prepared within three (3) calendar days after the bid opening date, so that copies thereof could immediately be sent to the BAC members, Observers, bidders and other interested parties. Copies of the minutes shall also be made available to the public upon written request and payment of a specified fee to recover cost of materials.

What happens if only one bidder submits its eligibility and bid envelopes?

Even if only one bidder submits its eligibility and bid envelopes, the bidding process continues. If the bidder is declared eligible and its bid is found to be responsive to the bidding requirements, its bid will be declared as a SCRB and considered for contract award. (IRR-A Section 36)

What can a prospective bidder do if it is found ineligible or declared non-compliant with the technical or financial requirements?

A prospective bidder that was absent during the opening of the bids and was found ineligible or was declared failed has three (3) calendar days from receipt of the Notice of Ineligibility/Failure, within which to file a written request for reconsideration before the BAC. If the prospective bidder was present during bid opening and was duly notified (a verbal notification will suffice in this case) of its ineligibility/failure, it also has three (3) calendar days upon such notice within which to file a written request for reconsideration. Seven (7) calendar days after it receives a letter requesting for reconsideration, the BAC should resolve such request. In the meantime, it will hold on to the Eligibility, Technical and Financial envelopes of the prospective bidder until the request for reconsideration is resolved. In so doing, it can request the prospective bidder to clarify its eligibility documents, if necessary. (IRR-A Section 23.3) The BAC may return the Eligibility, Technical and Financial envelopes if the prospective bidder is declared "ineligible" and expressly waives his right to file a request for reconsideration. Such waiver shall be made in writing, to be executed by the authorized representative of the ineligible bidder.

How's that again?

What shall the position paper contain?

The verified position paper shall contain the following information:

1.         The name of bidder;

2.         The office address of the bidder;

3.         The name of project/contract;

4.         The implementing office/agency or procuring entity;

5.         A brief statement of facts;

6.         The issue to be resolved; and

7.         Such other matters and information pertinent and relevant to the proper resolution of the protest.

The position paper is verified by an affidavit that the affiant has read and understood the contents thereof and that the allegations therein are true and correct of his personal knowledge or based on authentic records. An unverified position paper shall be considered unsigned, produces no legal effect, and results to the outright dismissal of the protest. (IRR-A Section 55.2)

If its request for reconsideration is denied, the ineligible bidder may protest the decision in writing with the Head of the Procuring Entity within seven (7) calendar days from receipt of the resolution. A protest may be made by filing a verified position paper with the Head of the Procuring Entity concerned, accompanied by the payment of a non-refundable protest fee. The non-refundable protest fee shall be in an amount equivalent to no less than one percent (1%) of the ABC. (IRR-A Section 55.1)

The protests shall be resolved strictly based on records of the BAC. The Head of the Procuring Entity shall resolve a protest within seven (7) calendar days from receipt thereof. Subject to the provisions of existing laws on the authority of Department Secretaries and the heads of agencies, branches, constitutional commissions or instrumentalities of the Government to approve contracts, the decisions of the Head of the Procuring Entity concerned shall be final up to the limit of his contract approving authority. With respect to LGUs, the decision of the local chief executive shall be final. (IRR-A Section 56)

What happens if questions/doubts have been raised about the eligibility of a prospective bidder after it had been declared as eligible?

Notwithstanding the eligibility of a prospective bidder, the Procuring Entity concerned reserves the right to review its qualifications at any stage of the procurement process if it has reasonable grounds to believe that a misrepresentation has been made by the said prospective bidder, or that there has been a change in the prospective bidder's capability to undertake the project from the time it submitted its eligibility requirements. Should such review uncover any misrepresentation made in the eligibility requirements, statements or documents, or any changes in the situation of the prospective bidder which will affect the capability of the bidder to undertake the project so that it fails the preset eligibility criteria, the Procuring Entity shall consider the said prospective bidder as ineligible and shall disqualify it from submitting a bid or from obtaining an award or contract. (IRR-A Section 23.4) A prospective bidder found guilty of false information faces imprisonment of not less than six (6) years and one (1) day but not more than 15 years. (IRR-A Section 65.3)

What happens if only one bidder is declared eligible?

The procurement process also proceeds with the Preliminary Examination of Bids. Again, if the eligible bidder submits a bid that is found to be responsive to the bidding requirements, its bid shall be declared as a SCRB and considered for contract award. (IRR-A Section 36)

What is disqualification?

Disqualification is a distinct concept from ineligibility and post-disqualification. When a Bidder is disqualified, it is barred from further participating in the procurement at hand, even if, in some instances, it has initially been declared eligible. Even if a Bidder is Post-qualified, if after such Post-qualification, the Procuring Entity has found grounds for disqualification, the latter may declare such Bidder disqualified, hence, the Procuring Entity shall not award the contract to the former.

Other than a declaration of ineligibility, is there another way by which a manufacturer, supplier or distributor may be disqualified from bidding?

Aside from those who are not eligible to bid for the procurement of goods, a bidder that has a conflict of interest shall be disqualified to participate in the procurement at hand. A Bidder would be considered as having a conflict of interest with another bidder in any of the events described in paragraphs 1 through 3 below and a general conflict of interest in any of the circumstances set out in paragraphs 4 through 6 below:

1.         If the bidder is a corporation or a partnership and it has officers, directors, controlling shareholders, partners or members in common with another bidder; or if the bidder is an individual or a sole proprietorship and he is the proprietor of another bidder, or an officer, director or a controlling shareholder of another bidder; or if the bidder is a joint venture and it or any of its members has officers, directors, controlling shareholders or members in common with another bidder, or any of its members is a bidder;

2.         A bidder receives or has received any direct or indirect subsidy from another bidder;

3.         A bidder has the same legal representative as any other bidder for purposes of the bidding at hand.

4.         A bidder has a relationship directly or through common third parties, that puts them in a position to have access to information about or influence on the bid of another bidder, or influence the decisions of the Procuring Entity regarding the bidding process. This will include a firm or an organization that lends, or temporarily seconds, its personnel to firms or organizations which are engaged in consulting services for the preparation related to procurement for or implementation of the project, if the personnel would be involved in any capacity on the same project;

5.         A bidder submits more than one bid in the bidding process. However, this does not limit the participation of subcontractors in more than one bid; or

6.         A bidder who participated as a consultant in the preparation of the design or technical specifications of the goods and related services that are the subject of the bid.

In accordance with Section 47 of the IRR-A, the bidder should not be related to the Head of the Procuring Entity by consanguinity or affinity up to the third civil degree or any of the Procuring Entity's officers or employees having direct access to information that may substantially affect the result of the bidding, such as, but not limited to, the members of the BAC, the members of the TWG, the BAC Secretariat, the members of the PMO, and the designers of the project. This prohibition shall apply to the following persons:

1.         If the bidder is an individual or a sole proprietorship, to the bidder himself;

2.         If the bidder is a partnership, to all its officers and members;

3.         If the bidder is a corporation, to all its officers, directors and controlling stockholders; and

4.         If the bidder is a joint venture, items 1 through 3 above shall correspondingly apply to each of the members of the said joint venture, as may be appropriate.

To establish the non-existence of the above relationship, and to bind the Bidders to its representation relating to the foregoing, all bids must be accompanied by a Disclosure Affidavit of the bidder to that effect. (IRR-A Section 47 and Section 25.3.A.9)

May a bidder file a Motion for Reconsideration of the BAC's decision declaring another bidder eligible?

Yes. Pursuant to Section 23.3 of the IRR-A.

What happens if no prospective bidder is declared eligible?

If no prospective bidder is found to be eligible, the BAC should declare the bidding a failure. In such a case, the BAC shall issue a Resolution declaring a failure of bidding. The BAC then reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the terms and conditions, including the quantities or specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-bidding, in the process formulating a new IAEB and posting and publishing this as required. (IRR-A Section 35) All bidders that have initially responded to the IAEB in the first bidding shall be allowed to submit new bids.

If the original estimate is found to be inadequate on reassessment to meet the objectives of the project, it may be necessary to reduce the scope of the project.

Should a second failure of bidding occur and the Procuring Entity finds that there is a need to evaluate the responsiveness of the ABC, and so decides to revise the ABC accordingly, the Procuring Entity should conduct another public bidding with re-advertisement and/or posting. Alternatively, the Procuring Entity may enter into a negotiated procurement with a legally, technically, and financially capable supplier (IRR-A Sections 35.3 and 53). However, if the Procuring Entity resorts to negotiated procurement, the terms, conditions, and specifications of the project as well as the ABC must be maintained.

What happens if only one bidder passes the Preliminary Examination of Bids?

The procurement process also proceeds with the subsequent step of Bid Evaluation. Again, if the eligible bidder submits a bid that is found to be responsive to the bidding requirements, its bid shall be declared as a SCRB and considered for contract award. (IRR-A Section 36)

What happens if a bidder fails to comply with the Technical and Financial requirements of the Bid?

The bidder that fails to comply with any of the Technical or Financial requirements of the Bid will be disqualified by the BAC. Similar to ineligible bidders, it may file a written request for reconsideration within three (3) calendar days from the receipt of the communication regarding its bid's deficiency. (IRR-A Section 30.3)

Can a bidder withdraw its bid?

Yes, a bidder may, through a Letter of Withdrawal, withdraw its bid, before the deadline for the receipt of bids. A bidder may also express its intention not to participate in the bidding through a letter which should reach and be stamped received by the BAC before the deadline for the receipt of bids. A bidder that withdraws its bid shall not be permitted to submit another bid, directly or indirectly, for the same contract. It should be noted however that the act of habitually withdrawing from bidding or submitting letter of non-participation for at least three (3) times within a year is a ground for the position of administrative penalties, except when done for a valid reason.

The bidder that withdraws its bid beyond the deadline for the submission of bids will forfeit its bid security, as well as the imposition of any applicable administrative, civil and/or criminal sanction prescribed in R.A. 9184 and its IRR-A.

Step 5 Evaluate the Bids

What is the purpose of Bid Evaluation?

The purpose of bid evaluation is to determine the Lowest Calculated Bid (LCB). (IRR-A Section 32.1) This is done by:

1.         Establishing the correct calculated prices of the bids, through a detailed evaluation of the financial component of the bids; and

2.         Ranking of the total bid prices as so calculated from the lowest to the highest. The bid with the lowest price shall be identified as the LCB.

When should the bids be evaluated?

The entire evaluation process for the bids for the procurement of goods must be completed in not more than seven (7) calendar days from the deadline for receipt of proposals. (IRR-A Section 32.3) However, the BAC should exert effort to complete the Bid Evaluation even before the lapse of the 15-day period, as this will expedite the procurement process.

Who are the participants in the Bid Evaluation Process?

The following must participate in the bid evaluation process:

1.         The BAC;

2.         The TWG;

3.         The BAC Secretariat/Procurement Unit; and

4.         The Observers.

Methodology: How are bids evaluated? 13

1.         After the preliminary examination of bids, the BAC, or through the TWG, shall immediately conduct a detailed evaluation of all bids rated "passed," using a non-discretionary pass/fail criteria, as stated in the IAEB and the ITB, which shall include a consideration of the following: (IRR-A Section 32.4.1)

a.         The bid must be complete. Unless the ITB specifically allow partial bids, bids not addressing or providing all of the required items in the bidding documents including, where applicable, those requirements pertaining to the civil works components of Goods procured, shall be considered non-responsive and, thus, automatically disqualified. In this regard, where a required item is provided, but no price is indicated, the same shall be considered as non-responsive, but specifying a "0" (zero) for the said item would mean that it is being offered for free to the Government.

b.         Minor arithmetical corrections to consider computational errors, omissions and discounts, if allowed in the bidding documents, to enable proper comparison of all eligible bids. Any adjustment shall be calculated in monetary terms to determine the calculated prices. (IRR-A Section 32.4.1 [b]) For evaluation purposes, in allowed instances, the bid must be converted into Philippine currency based on the exchange rate prevailing on the day of the bid opening. (IRR-A Section 61.1) The BSP reference rate as of the date of the bid opening shall be used.

c.         In the evaluation of bids, all bids shall be evaluated on an equal footing to ensure fair and competitive bid evaluation. For this purpose, all bidders shall be required to include the cost of all taxes, such as, but not limited to, value added tax (VAT), income tax, local taxes, and other fiscal levies and duties which shall be itemized in the bid form and reflected in the detailed estimates. Such bids, including said taxes, shall be the basis for bid evaluation and comparison. (IRR-A Sections 32.4.2) Moreover, applicable custom duties, as well as other costs of acquisition such as freight, insurance, and bank charges, must be incorporated in the bid.

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On clarifications during bid evaluation (the "no-contact" rule)

During the bid evaluation stage, the BAC, BAC Secretariat and the TWG shall not entertain clarifications from Bidders, neither shall they initiate communication with the Bidders, regarding the evaluation of the bids. There are two reasons for this rule:

1.         There is no need for clarifications of technical issues since the evaluation is focused on arithmetical computations which are determined from the face of the bid itself; and

2.         Communications with the Bidders might lead to possible collusion or the Bidder might try to influence the outcome of the bidding process.

d.         In case of discrepancies between: (a) bid prices in figures and in words, the latter shall prevail; (b) total prices and unit prices, the latter shall prevail; (c) unit cost in the detailed estimate and unit cost in the bill of quantities, the latter shall prevail. (IRR-A Sections 32.4.3)

2.         Based on the detailed evaluation of bids, those that comply with the abovementioned requirements shall be ranked in the ascending order of their total calculated bid prices, as evaluated and corrected for computational errors, discounts and other modifications, to identify the LCB. Total calculated bid prices, as evaluated and corrected for computational errors, discounts and other modifications, which exceed the ABC shall be disqualified. (IRR-A Sections 32.4.4)

3.         After all bids have been received, opened, examined, evaluated and ranked, the BAC shall prepare the corresponding Abstract of Bids. All members of the BAC shall sign the Abstract of Bids and attach thereto all the bids with their corresponding Bid Securities and the minutes or proceedings of the bidding. (IRR-A Section 32.5) The Observers shall also sign the Abstract of Bids if, in their independent observation, the bidding activity conducted by the BAC followed the correct procedure indicated under R.A. 9184 and its IRR-A. The Abstract of Bids shall contain the following:

a.         Name of the contract and its location, if applicable;

b.         Time, date and place of bid opening; and

c.         Names of bidders and their corresponding calculated bid prices arranged from lowest to highest, the amount of bid security and the name of the issuing entity.

4.         The TWG, with the assistance of the BAC Secretariat, when directed by the BAC, should prepare the Evaluation Report, containing the details of the evaluation conducted, preferably within three (3) calendar days from the date the evaluation was concluded.

Are there special privileges for cooperatives in the supply of goods to government entities?

Yes. Under the Cooperative Code of the Philippines, or Republic Act No. 6938, cooperatives have preferential right to supply government institutions and agencies with rice, corn and other grains, fish and other marine products, meats, eggs, milk, vegetables, tobacco and other agricultural commodities produced by their own members.

Moreover, there is a recurring provision in the GAA which mandates the Government to procure at least ten percent (10%) of its total purchases from duly registered cooperatives and another ten per cent (10%) from SMEs.

What may be done if all prospective bidders are unable to comply with the requirement of having a single contract whose value is at least fifty percent (50%) of the ABC of the project to be bid?

If all prospective bidders are unable to comply with the requirement of having a single contract whose value is at least fifty percent (50%) of the ABC of the contract to be bid, the Procuring Entity may have to review the packaging of the project or procurement concerned, taking into account the technical and financial capabilities and experience in the domestic and international market, as well as the most logical and practical approach/scope of work to complete a project. However, the Procuring Entity must ensure that this will not result to a splitting of contracts that is committed for the purpose of evading or circumventing the requirements of law and existing rules and regulations.

In the alternative, the Procuring Entity may instead require prospective bidders to have at least three (3) similar completed contracts the aggregate of which should be equivalent to at least fifty percent (50%) of the ABC of the project to be bid; the largest of these similar contracts must be equivalent to at least twenty-five percent (25%) of the ABC of the project to be bid; and the business/company of the prospective bidder willing to participate in the bidding has been in existence for at least three (3) consecutive years prior to the advertisement and/or posting of the IAEB. Furthermore, when the item/good to be procured is novel or its procurement is otherwise unprecedented or is unusual, and compliance to the requirement on a largest single similar contract is impracticable, the prospective bidder will only have to comply with the above-mentioned required period for the existence of a business/company. This scheme may also be applied when requiring a single contract that is at least fifty percent (50%) of the ABC will likely result to a monopoly that will defeat the purpose of public bidding. (GPPB Resolution 007-2006, dated 20 January 2006)

The procuring entity can clarify in the bidding documents the similar projects that can be considered in the bidding, which projects or contracts must have been completed within the period specified in the IAEB. All other conditions of the contract must be the same as provided for in the bidding documents. 14

What happens if a bidder does not accept the arithmetical corrections done by the BAC on its bid?

The BAC must disqualify the bid and forfeit the bid security of the bidder.

What happens if no bid complies with all bid requirements?

If no bid complies with all bid requirements, the BAC should declare the bidding a failure. In such a case the BAC shall issue a Resolution declaring a failure of bidding. The BAC then reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the terms and conditions, including the quantities or specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-bidding, in the process formulating a new IAEB and posting and publishing this as required. (IRR-A Section 35) All bidders that have initially responded to the IAEB in the first bidding shall be allowed to submit new bids.

If the original estimate is found to be inadequate on reassessment to meet the objectives of the project, it may be necessary to reduce the scope of the project.

Should a second failure of bidding occur and the Procuring Entity finds that there is a need to evaluate the responsiveness of the ABC, and so decides to revise the ABC accordingly, the Procuring Entity should conduct another public bidding with re-advertisement and/or posting. Alternatively, the Procuring Entity may enter into a negotiated procurement with a legally, technically, and financially capable supplier (IRR-A Sections 35.3 and 53). However, if the Procuring Entity resorts to negotiated procurement, the terms, conditions, and specifications of the project as well as the ABC must be maintained.

How shall Domestic Preference be applied during bid evaluation?

A Procuring Entity shall apply domestic preference in the procurement of goods as long as it complies with the provisions of IRR-A and R.A. 5183, and this shall be expressly mentioned in the bidding documents.

In applying domestic preference, the Procuring Entity shall be guided by the provisions of C.A. No. 138, to wit:

1.      When the LCB including taxes and customs duties, is a "foreign bid" as defined in C.A. No. 138 (see definition below), the award shall be made to the bidder who submitted the lowest "domestic bid", provided that:

a.         the domestic bid is not more than fifteen per centum (15%) in excess of the LCB. (Section 3 [e] C.A. No. 138); and

b.         the bidder who submitted the lowest domestic bid must pass the post-qualification.

An illustrative case is as follows: Foreign Bidder A submitted a bid of P15M which was declared as the LCB. Domestic preference was specified in the bidding documents. The lowest Domestic Bidder B submitted a bid of P16.5M, which is 10% in excess of the LCB. If Bidder B is post-qualified, and the items offered pass the necessary quality assurance tests, it shall be awarded the contract. However, if it is post-disqualified, or if the goods it offered do not meet the standard of quality specified in the Bidding Documents, the award shall be made to Bidder A.

An illustrative case is as follows: Foreign Bidder A submitted a bid of P15M which was declared as the LCB. Domestic preference was specified in the bidding documents. The lowest Domestic Bidder B submitted a bid of P17.4M, which is 16% in excess of the LCB. If Bidder A is post-qualified, and the items offered pass the necessary quality assurance tests, it shall be awarded the contract, despite the domestic preference.

A "foreign bid" means any offer of articles, materials or supplies not manufactured or to be manufactured in the Philippines, substantially from articles, materials or supplies of the growth, production, or manufacture, as the case may be, of the Philippines. (Section 2[d], C.A. No. 138) Conversely, a "domestic bid" means any offer of unmanufactured articles, materials, or supplies of the growth or production of the Philippines, or manufactured articles, materials or supplies manufactured or to be manufactured in the Philippines, substantially from articles, materials or supplies of the growth, production or manufacture, as the case may be, of the Philippines. (Section 2[c] C.A. No. 138) In US jurisprudence, the term "substantially" was construed to mean "more than 75%." Thus, even if a product is manufactured in the Philippines, it may not be considered within the ambit of the preference if its raw materials are not substantially sourced from the Philippines.

2.         When several bidders participate in a public bidding for the supply of articles, materials and equipment for a Procuring Entity, including public buildings or public works, and the LCB is submitted by one other than a "domestic entity" (see definition below), the award should be made to the domestic entity making the lowest bid, provided that:

a.         the bid of the domestic entity is not more than 15% in excess of the LCB; and

b.         the same domestic entity must pass the post-qualification.

A "domestic entity" means any citizen of the Philippines habitually established in business and engaged in the manufacture or sale of the merchandise covered by his bid, or any corporate body or commercial company duly organized and registered under the laws of the Philippines of whose capital 75% is owned by citizens of the Philippines, or both. (Section 2[b] C.A. No. 138) Applying C.A. No. 138, in the case of Asbestos Integrated Manufacturing, Inc. v. Metropolitan Waterworks and Sewerage System (G.R. No. L-45515. October 29, 1987), the term "domestic entity" was interpreted to mean citizens of the Philippines or corporate bodies or commercial companies, duly organized and registered under the laws of the Philippines, 75% of whose capital is owned by citizens of the Philippines, and who are habitually established in business engaged in the manufacture or sale of merchandise covered by their bid.

3.         In the case of FAPs or procurement undertaken by virtue of international treaties or agreements, when there is no provision disallowing the application of domestic preference, in compliance with R.A. 9184 Section 43, the preference in item (a) above for domestically-produced and manufactured goods, supplies and materials that meet the specified or desired quality may further be allowed in the interest of:

a.         Availability, that is, the domestically-produced goods are more readily available in the market, like off-the-shelf items;

b.         Efficiency; and

c.         Timely delivery of goods.

4.         In the case of FAPs undertaken through IFI funding, at the request of the Procuring Entity, and under conditions to be agreed under the loan agreement and set forth in the bidding documents, a margin of preference may be provided in the evaluation of bids for:

a.         Goods manufactured in the country of the Procuring Entity when comparing bids offering such goods with those offering goods manufactured abroad; and

b.         Works in member countries below a specified threshold of Gross National Product per capita, when comparing bids from eligible domestic contractors with those from foreign firms.

5.         Where preference for domestically manufactured goods or for domestic contractors is allowed, the methods and stages set forth in the loan agreement should be followed.

How is the right to match undertaken in bidding of provincial projects?

1.         Provincial Projects

The rules on public bidding and procurement processes prescribed in R.A. 9184, its IRR-A and this Manual, shall apply to priority programs and infrastructure projects funded out of the GAA for implementation within the province. These projects are referred to as "provincial projects". "Provincial projects" are Engineering District infrastructure projects and priority programs fully funded by the Government and identified in consultation with the concerned members of Congress.

2.         Matching of Bids by Provincial Bidders

A provincial bidder is a contractor whose principal office is within the province where a provincial priority program or infrastructure project, defined in the immediately preceding paragraph, is being implemented.

In the bidding of such provincial projects, a provincial bidder is given the privilege to match the LCB of a bidder who is not a provincial bidder. In implementing this rule, the following shall be observed:

a.         The subject bidding is done within five (5) years from the effectivity of R.A. 9184, or not later than January 26, 2007.

b.         The provincial bidder who is given the privilege to match the LCB submits the lowest bid among the provincial bidders, although it is higher than the LCB.

c.         The said provincial bidder shall exercise the privilege to match the LCB within forty-eight (48) hours from receipt of the notice from the BAC to match the LCB.

d.         Matching shall be made in writing, through appropriate adjustments in the unit bid prices without changing the Scope of Work and work items prescribed by the Procuring Entity in the bidding documents.

e.         If the provincial bidder is able to match the LCB within the prescribed period and he passes the post-qualification, the contract will be awarded to him. However, if he fails to match the LCB or to pass the post-qualification, the contract will be awarded to the bidder who originally obtained the LCB.

f.          This privilege granted to provincial contractors shall not apply to:

i.          contracts the coverage of which includes more than one (1) province;

ii.         procurement of consulting services;

iii.       projects for implementation within Metro Manila.

3.         Publication and Posting of Provincial Projects

The release of funds for provincial projects should be published by the Procuring Entity in accordance with the following requirements:

a.         It shall be published in a local newspaper with the widest circulation in the region during the same period as the advertisement/posting of the IAEB;

b.         It shall be posted at any conspicuous place reserved for the purpose in the premises of the Procuring Entity during the same period as the advertisement/posting of the IAEB; and

"Conspicuous place" shall mean any place in the premises of the Procuring Entity that is accessible to the general public and reserved for the purpose of posting/publishing announcements and/or notices for dissemination to the public.

c.         It shall be posted in the website of the DBM and the PhilGEPS during the same period as the advertisement/posting of the IAEB.

What rules govern the lease of Computers, Communications, Information and Other Equipment?

Contracts for lease of construction and office equipment, including computers, communication and information technology equipment, are subject to the same public bidding and procurement procedures as prescribed in R.A. 9184, its IRR-A and this Volume 2. (Please refer also to Joint Memorandum Circular No. 2002-01 issued by the National Computer Center and the DBM, which provides the policies, rules and regulations on lease of IT equipment. Also, reference may be made to Department Order No. 188 (dated September 28, 1999) and Department Order No. 219 (dated August 14, 2003), issued by the Department of Public Works and Highways, governing the lease of construction equipment.)

Step 6          Post-qualify

What is Post-qualification?

Post-qualification is the process of verifying, validating and ascertaining all the statements made and documents submitted by the bidder with the LCB, which includes ascertaining the said bidder's compliance with the legal, financial and technical requirements of the bid.

If its eligibility documents had been validated and verified, and its compliance with the legal, financial, and technical requirements of the bid had been ascertained, the bidder must be declared the bidder with the "Lowest Calculated Responsive Bid" (LCRB). (IRR-A Section 34.1)

What does Post-qualification entail?

How’s that again?

The eligibility check does not ascertain the validity and genuineness of the eligibility documents submitted by the bidders. Neither does it determine the veracity of the claims made by the bidders in their financial and technical proposals.

The post-qualification process, on the other hand, does.

Post-qualification involves the BAC verifying, validating and ascertaining that the bidder satisfies the following criteria: (IRR-A Section 34.2)

1.         Legal Requirements. The post-qualification process under this criterion involves the verification, validation and ascertaining of the supplier's claim that it is not included in any government "blacklist," as well as all the licenses, permits and other documents it submitted. The legal requirements refer to the Legal Documents submitted by the bidder as part of the eligibility requirements, e.g., SEC registration, DTI business name registration, Mayor's permit, TIN, etc. The bidder's status with regard to "blacklisting" may be verified by checking the Consolidated Blacklisting Report issued by the GPPB, or the "blacklist" of any government agency.

2.         Technical Requirements. Post-qualification under this criterion means that the BAC would have to validate, verify, and ascertain the veracity of the documents submitted by a supplier to prove compliance of the goods and services offered with the requirements of the contract and bidding documents. This involves the following processes:

a.         Verification and validation of the bidder's stated competence and experience;

b.         Verification and/or inspection and testing of the goods/products, after-sales and/or maintenance capabilities, in applicable cases; or inspection of the plant/factory of a manufacturer, to determine production capacity; and

c.         Ascertainment of the authenticity and sufficiency of the Bid Security as to type, amount, form and wording, and validity period.

3.         Financial Requirements. Under this criterion, the BAC ought to verify, validate and ascertain the bid price proposal of the bidder and, whenever applicable, its computation of the NFCC, the required bank commitment to provide a credit line to the bidder, or the hold out on deposit status of the cash deposit certificate, in the amount specified and over the period stipulated in the ITB. This is to ensure that the bidder can sustain the operating cash flow of the transaction.

What is the Timeline for the conduct of Post-qualification?

The post-qualification process must be conducted and completed within seven (7) calendar days from the determination of the LCB. However, in the procurement of goods requiring elaborate testing (such as equipment sourced from abroad) and other exceptional cases, the Head of the Procuring Entity may extend the post-qualification period, but in no case should the aggregate period exceed thirty (30) calendar days. (IRR-A Section 34.1)

Who are involved in the conduct of Post-qualification?

The following Parties are involved in the conduct of post-qualification:

1.         The BAC;

2.         The TWG;

3.         The BAC Secretariat/Procurement Unit; and

4.         The eligible supplier/manufacturer, ranked starting from bidder with the LCB.

Methodology: How is Post-qualification conducted?

The following steps are followed in the conduct of post-qualification:

1.         The BAC/TWG verifies, validates, and ascertains the genuineness, validity and accuracy of the legal, technical and financial documents submitted by the bidder with the LCB, using the non-discretionary criteria described above.

In verifying the information contained in such documents, the BAC/TWG may make inquiries with appropriate government agencies and examine the original documents kept in the bidder's place of business. The use of other means for verification and validation of such documents may be resorted to by the BAC/TWG, such as the Internet and other research methods that yield the same results.

2.         The BAC/TWG conducts a site inspection of the bidder's place of business and/or plant/factory, where applicable.

3.         The BAC/TWG tests samples for compliance with specifications and performance levels, where applicable.

4.         The BAC/TWG inquires about the bidder's performance in relation with other contracts/transactions as indicated in its eligibility statement (statement of on-going, completed or awarded contracts).

5.         If the TWG conducts the post-qualification, it prepares a Post-qualification Report to be submitted to the BAC. The Report shall contain, among others, the activities undertaken with regard to the post-qualification process, feedback from inquiries conducted, and the results of any tests conducted by the TWG or an accredited government testing center, where applicable.

6.         The BAC reviews the Post-qualification Report submitted by the TWG.

7.         The BAC determines whether the bidder with the LCB passes all the criteria for post-qualification.

8.         If the LCB passes the post-qualification, the BAC declares it as the LCRB.

9.         After the BAC has determined the LCRB, the Secretariat, with the assistance of the TWG, if necessary, prepares the BAC Resolution declaring the LCRB and the corresponding Notice to the said bidder informing it of its post-qualification.

What happens if the bidder with the LCB fails Post-qualification?

If the bidder with the LCB fails to pass post qualification, the BAC shall immediately notify the said bidder in writing of its post-disqualification and the grounds for it. The post-disqualified bidder shall have three (3) calendar days from receipt of the said notification to request from the BAC, if it so wishes, a reconsideration of its decision. The BAC shall evaluate the request for reconsideration, if any, using the same non-discretionary criteria, and shall issue its final determination of the said request within seven (7) calendar days from receipt thereof. (IRR-A Section 34.4) Similar to the cases of bidders deemed to be ineligible and whose bids are rated "failed," the bidder with the LCB who fails to pass post-qualification may likewise file a protest with the payment of the corresponding fee in case the BAC denies its request for reconsideration. (Please refer to Step 4, Receive and Open Eligibility Envelopes and Bids for further discussions on filing a protest.)

Immediately after the BAC has notified the first bidder of its post-disqualification, and notwithstanding any pending request for reconsideration thereof, the BAC shall initiate and complete the same post-qualification process on the bidder with the second LCB. If the second bidder passes the post-qualification, and provided that the request for reconsideration of the first bidder has been denied, the BAC shall declare the second bidder as the bidder with the LCRB. The Head of the Procuring Entity shall then award the contract to it. (IRR-A Section 34.5)

If the second bidder, however, fails the post-qualification, the procedure for post-qualification shall be repeated for the bidder with the next LCB, and so on until the LCRB, is determined for award. (IRR-A Section 34.7)

What happens if all bidders fail Post-qualification?

If no bidder passes post-qualification, the BAC shall issue a Resolution declaring a failure of bidding. In such a case, the BAC shall issue a Resolution declaring a failure of bidding. The BAC then reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the terms and conditions, including the quantities or specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-bidding, in the process formulating a new IAEB and posting and publishing this as required. (IRR-A Section 35) All bidders that have initially responded to the IAEB in the first bidding shall be allowed to submit new bids.

If the original estimate is found to be inadequate on reassessment to meet the objectives of the project, it may be necessary to reduce the scope of the project.

Should a second failure of bidding occur and the Procuring Entity finds that there is a need to evaluate the responsiveness of the ABC, and so decides to revise the ABC accordingly, the Procuring Entity should conduct another public bidding with re-advertisement and/or posting. Alternatively, the Procuring Entity may enter into a negotiated procurement with a legally, technically, and financially capable supplier (IRR-A Sections 35.3 and 53). However, if the Procuring Entity resorts to negotiated procurement, the terms, conditions, and specifications of the project as well as the ABC must be maintained.

When may the Procuring Entity exercise its right to reject bids, declare a failure of bidding, or not award the contract?

The Procuring Entity may exercise the right to reject any and all bids, to declare a failure of bidding, or not to award the contract in any of the following situations (IRR-A Section 41.1):

1.         If there is prima facie evidence of collusion between appropriate public officers or employees of the Procuring Entity, or between the BAC and any of the bidders, or between or among the bidders themselves, or between a bidder and a third party, including any act which restricts, suppresses or nullifies or tends to restrict, suppress or nullify competition;

2.         If the BAC is found to have failed in following the prescribed bidding procedures, for which the applicable sanctions shall be applied to the erring officers, as provided in IRR-A Section 65; or

3.         For any justifiable and reasonable ground where the award of the contract will not redound to the benefit of the government as follows:

a.         If the physical and economic conditions have significantly changed so as to render the project no longer economically, financially or technically feasible as determined by the Head of the Procuring Entity;

b. If the project is no longer necessary as determined by the Head of the Procuring Entity; and

 

How's that again?

What are the instances where the BAC is considered to have failed in following the prescribed procedures?

The following are some instances where the BAC is deemed to have failed to follow prescribed procedures:

1.         Prescribing an insufficient number of days in the advertisement and/or posting of the IAEB;

2.         Exceeding the required periods for eligibility screening, bid evaluation, post-qualification for each lowest calculated bidder or for awarding the contract without justifiable cause;

3.         Conducting the pre-bid conference or issuing the bidding documents in less than the required number of days before deadline for the submission and opening of bids;

4.         Requiring the bidder to submit additional documents which is tantamount to improving his bidding documents; and

5.         Allowing a bidder to become eligible or pass the post-qualification with incomplete documents.

c.         If the source of funds for the project has been withheld or reduced through no fault of the Procuring Entity.

Step 7          Award the Contract

What is the rule on Contract Award?

The contract shall be awarded to the bidder with the LOWEST CALCULATED RESPONSIVE BID at its submitted bid price or its calculated bid price, whichever is lower. [xxii]15 (IRR-A Section 37.1)

The BAC shall issue a Resolution recommending to the Head of the Procuring Entity award of the contract to the bidder with the LCRB at its submitted bid price or its calculated bid price, whichever is lower.

Prior to the expiration of the period of bid validity, the Procuring Entity should notify the successful bidder in writing that its bid has been accepted, through a Notice of Award received personally or sent by registered mail or electronically. It is important that, in case the Notice of Award is not received personally, its receipt must be confirmed in writing within two (2) days by the successful bidder and submitted personally or sent by registered mail or electronically to the Procuring Entity (this particular instruction must be included in the ITB so that the bidder may be guided accordingly).

What is the Timeline for Contract Award?

The Head of Procuring Entity or his duly authorized representative should approve or disapprove the recommendation of award within seven (7) calendar days from the date of determination and declaration by the BAC of the LCRB. In the case of GOCCs and GFIs, the governing Board has a period of fifteen (15) calendar days to approve or disapprove the said recommendation. (IRR-A Section 37.2)

The Notice of Award shall be given to the bidder with the LCRB immediately after approval of the recommendation. Simultaneously, a copy of the Notice shall be furnished to all losing bidders, and posted in the website of the PhilGEPS, as well as the websites of the Procuring Entity and its electronic procurement service provider, if any.

How's that again?

What is the maximum period of time within which a contract can be awarded?

Contract award must be made within eighty (80) calendar days from the date of bid opening but not to exceed the bid validity period as specified in the bidding documents. (IRR-A Section 37.2.2) If award cannot be made within the said period, the bid validity period should be extended. (Please refer to Step on Preparing the Bidding Documents for the discussion on extension of the bid validity period.)

Who are involved in the Award of the Contract?

The following must participate in the activities related to the awarding of the Contract:

1.         The Head of the Procuring Entity;

2.         The BAC;

3.         The Procurement Office;

4.         The BAC Secretariat/Procurement Unit;

5.         The bidder who submitted the LCRB/SCRB; and

6.         The Observers.

Methodology: How is a contract awarded?

The following steps are followed in the awarding of a contract:

1.         The BAC Secretariat consolidates all the documents and/or records of the proceedings of the BAC with regard to the procurement at hand, and attaches the same to the BAC Resolution.

2.         The BAC Secretariat drafts the BAC Resolution recommending award.

3.         The BAC approves and signs the Resolution Recommending Award, and transmits the same to the Head of the Procuring Entity.

4.         The Head of the Procuring Entity, or his/her duly authorized representative, acts on the recommendation for award within seven (7) calendar days from the date of determination and declaration by the BAC of the LCRB/SCRB. In the case of GOCCs and GFIs, the governing Board shall have fifteen (15) calendar days within which to approve the recommendation for award.

5.         In case of approval of the recommendation, the Head of the Procuring Entity, through the procurement unit/office, issues the Notice of Award to the bidder with the LCRB/SCRB, while the BAC accordingly notifies the losing bidders. In case of a disapproval of the recommendation of award, the Head of the Procuring Entity shall state the reason(s) for disapproval and instruct the BAC on the subsequent steps to be adopted.

6.         The bidder with the LCRB/SCRB accepts the Notice of Award.

What happens if the bidder being considered for award does not accept the award?

If the bidder refuses to accept the award within the bid validity period, the BAC shall forfeit the bid security of the bidder and shall initiate the blacklisting proceedings in accordance with the Uniform Guidelines for Blacklisting (GPPB Resolution No. 09-2004). It then initiates and completes the post-qualification of the bidder with the second lowest calculated bid. If found qualified, the said bidder shall be awarded the contract. This procedure is repeated until the LCRB is determined. Should all eligible bidders fail post-qualification, the BAC must declare the bidding a failure.

Refusal to accept an award, without just cause or for the purpose of forcing the Procuring Entity to award the contract to another bidder, if proven, is meted with a penalty of imprisonment of not less than six (6) years and one (1) day by not more than fifteen (15) years. (IRR-A Section 65.3.4) Additional penalties of suspension for one (1) year from participation in government procurement for the first offense, and suspension for two (2) years for the second offense shall also be imposed on the bidder. (IRR-A Section 69.1)

Step 8          Have the Contract Signed and Approved and Issue the Notice to Proceed

When must the winning bidder and the Procuring Entity enter into a contract?

The winning bidder and the Procuring Entity must enter into a contract immediately after the former has submitted the performance security and all other documentary requirements within the period specified in the IRR-A. The parties must sign the contract within ten (10) calendar days from receipt by the winning bidder of the Notice of Award. (IRR-A Section 37.3)

The Chief Accountant or the Chief Budget Officer may sign the contract as an instrumental witness thereto.

The Procuring Entity signatory is encouraged to sign within the same day as the signing of the bidder as there are penalties against delaying, without justifiable cause, the award of the contract. (IRR-A Section 65.1) Moreover, it would be best for the winning bidder and the Head of the Procuring Entity, or its appropriate signing authority, to sign/execute the contract together — provided that all contract documents and requirements are complete — so that both may personally appear before a Notary Public.

What are the Timelines to be considered with respect to contract approval?

When, after contract signing, further approval of a higher authority is required, the approving authority for the contract, or his duly authorized representative, shall be given a maximum of fifteen (15) calendar days from receipt thereof, together with all documentary requirements to perfect the said contract, to approve or disapprove it. In the case of GOCCs and GFIs, when further approval of the governing Board is required, the said governing Board or its duly authorized representative has twenty-five (25) calendar days. (IRR-A Section 37.4)

When should the Procuring Entity issue the NTP?

The NTP must be issued together with a copy or copies of the approved contract to the successful bidder within three (3) calendar days from the date of approval of the contract by the appropriate government approving authority. (IRR-A Section 37.5)

When is a contract "effective"?

Unless otherwise specified in the contract, a contract is effective upon receipt of the NTP. If an effectivity date is provided in the NTP by the Procuring Entity concerned, all notices called for by the terms of the approved contract shall be effective only from such effectivity date, but such effectivity date should not be later than seven (7) calendar days from the issuance of the NTP. (IRR-A Section 37.5)

Who are the Parties involved in Contract Signing and Approval and Issuance of the NTP?

The following parties are involved in the signing and approval of the contract, and in the issuance of the NTP:

1.         The BAC Secretariat/Procurement Unit/Office;

2.         The Head of the Procuring Entity;

3.         The winning bidder; and

4.         End-user;

What documents form part of the contract?

The contract shall include the following:

1.         The Contract Agreement;

2.         Conditions of the contract (General and Specific);

TIPS: Let's make doing things easier

In most procuring entities, particularly the bureaus or lower-level offices of national government agencies (NGAs) or centrally managed GOCCs or GFIs, the contract signatory is a different official from the approving authority. For example, a bureau director may only be authorized to approve contracts up to P50M. Contracts exceeding the said amount are brought up to the Secretary for approval. Different procuring entities have different levels of delegated authority, but the principle is essentially the same — the higher the contract amount, the higher is the level of the approving authority. In cases like this, the contract is considered approved upon the approval of such higher authority. The existence of this policy is the usual cause of delays in procurement transactions.

Section 38 of R.A. 9184 and Section 38.2 of its IRR-A are designed to remove this cause for delay. These provisions mandate that if further approval of a higher authority within or outside the procuring entity (other than the President of the Philippines) is required, and that authority does not take any action on the contract within the prescribed period, the contract concerned is deemed approved.

Only contracts that are duly signed by the appropriate signatory, but require further approval, are covered by this rule, because an unsigned contract is a mere piece of paper and cannot be the basis of a government liability.

 

3.         Technical Specifications of Goods or Scope of Work for services;

4.         IAEB;

5.         Bidding documents;

6.         Addenda and/or Supplemental/Bid Bulletins, if any;

7.         Bid form including all the documents/statements contained in the winning bidder's two bidding envelopes, as annexes;

8.         Eligibility requirements, documents and/or statements;

9.         Performance Security;

10.       Credit Line issued by a licensed bank in accordance with the provisions of the IRR-A, if applicable;

11.       Notice of Award of Contract and winning bidder's "Conforme" thereto; and

12.       Other contract documents that may be required by existing laws and/or the Procuring Entity concerned.

Methodology:

1.         The winning bidder submits all the documentary requirements, including the performance security, and signs the contract.

2.         The procurement unit/office transmits the contract and its attachments to the budget office (for issuance of the OS) and the Chief Accountant (for issuance of the CAF)

3.         The procurement unit/office transmits the contract documents to the Head of the Procuring Entity or appropriate signing authority for signature, together with the following documents:

a.         Duly approved delivery schedule and cost estimates or the PPMP;

b.         OS;

c.         CAF;

d.         Abstract of Bids;

e.         Resolution of the BAC recommending award;

f.          Approval of award by the appropriate approving authority; and

g.         Other pertinent documents that may be required by existing laws and/or the Procuring Entity concerned.

4.         After signing, if the contract needs the approval of a higher authority — such as, for bureaus, the Department Secretary, when required — the procurement unit/office transmits the contract and related documents to the approving authority or his authorized representative for approval.

5.         The approving authority or his authorized representative acts on the contract within fifteen (15) calendar days, or twenty-five (25) calendar days for GOCCs and GFIs, from receipt thereof.

6.         If further approval is required (e.g. approval of the Office of the President), or a review by another government body is necessary (e.g., NEDA or DOJ review), the Head of the Procuring Entity transmits the contract documents to the appropriate approving authority or reviewing body. The periods indicated above for approval of contracts still apply, except if the approving authority is the Office of the President.

7.         The Head of the Procuring Entity or his/her duly authorized representative issues the NTP within three (3) calendar days from the date of the approval of the contract.

What are the rules governing the review and approval of government contracts?

Executive Order 423, s. 2005, prescribes the rules and regulations on the review and approval of government contracts. Essentially, E.O. 423 provides that, except for government contracts required by law to be acted upon and/or approved by the President, the Head of the Procuring Entity shall have full authority to give final approval and/or enter into all government contracts of his respective government agency, awarded through public bidding, regardless of amount. Provided, that the Head of the Procuring Entity certifies under oath that the contract has been entered into in faithful compliance with all applicable laws and regulations. The Head of a Procuring Entity may also delegate in writing this full authority to give final approval and/or enter into government contracts awarded through public bidding as circumstances may warrant (i.e. to decentralization of procurement in a government agency), subject to such limitations as he may impose. For procurement undertaken through any of the alternative methods allowed by law, where the government contract involves an amount less than P500 Million, except where action or approval of the President is required, the Head of the Procuring Entity shall have full authority to give final approval and/or enter into such contract, provided that the Department Secretary concerned certifies under oath that the contract has been entered into in faithful compliance with all applicable laws and regulations. He may delegate in writing this authority, as circumstances may warrant (i.e. to decentralize procurement), subject to such limitations as he may impose.

Where the Head of the Procuring Entity has made a determination that a Government contract, including Government contracts required by law to be acted upon and/or approved by the President, involving an amount of at least P500 Million falls under any of the exceptions from public bidding allowed by law, the Head of the Procuring Entity shall, before proceeding with the alternative methods of procurement provided by law and applicable rules and regulations, obtain the following requirements:

1.         An opinion from the GPPB that said Government contract falls within the exceptions from public bidding; and

2.         Approval from the Director-General of NEDA to proceed with a specific alternative method of procurement under the exceptional cases provided by law and applicable rules and regulations.

Except for Government contracts required by law to be acted upon and/or approved by the President, the Head of the Procuring Entity, after obtaining the foregoing requirements, shall have full contracts of their his respective agency, entered into through alternative methods of procurement allowed by law. Provided, that the head of the procurement entity certifies under oath that the contract has been entered into in faithful compliance with all applicable laws and regulations.

What happens if the bidder with the LCRB or SCRB refuses or is unable, through its own fault, to post the performance security and sign the contract within the prescribed period?

If the bidder with the LCRB or SCRB (as defined in Step 4, Receive and Open Eligibility Envelopes and Bids) refuses to, or is unable, through its own fault, to post the performance security and sign the contract within the prescribed period:

1.         Its bid security is forfeited;

2.         It is disqualified from further participating in the bidding at hand;

3.         Upon conviction, the relevant officers or individuals will suffer the penalty of imprisonment of not less than six (6) and one (1) day and not more than fifteen (15) years; and

4.         Upon determination of administrative liability, it will suffer the administrative penalties of suspension for one (1) year from participation in government procurement for the first offense, and suspension for two (2) years for the second offense. This is without prejudice to the blacklisting proceedings undertaken in accordance with the Uniform Guidelines for Blacklisting (GPPB Resolution 09-2004).

For its part, the BAC must initiate and complete the post-qualification of the bidder with the second LCB. This procedure must be repeated until the LCRB is determined for award. If no bidder passes post-qualification, the BAC declares the bidding a failure and conducts a re-bidding with re-posting and re-advertisement. Should there be another failure of bidding after the conduct of the re-bidding, the Procuring Entity may enter into a negotiated procurement. (IRR-A Section 40.2)

If the bidder that fails to post the performance security and sign the contract happens to be one with the SCRB, the BAC must declare the bidding a failure. It then conducts a re-bidding with re-posting and re-advertisement. Should there be another failure of bidding after the conduct of the re-bidding, the Procuring Entity may enter into a negotiated procurement. (IRR-A Section 40.3)

The BAC shall initiate the process of blacklisting. The Uniform Guidelines for Blacklisting of manufacturers, suppliers, distributors, and contractors shall be used.

What happens if the failure of the bidder with the LCRB or SCRB to sign the contract within the prescribed period is not its own doing?

If the failure of the bidder with the LCRB or SCRB to sign the contract within the prescribed period is not due to its fault, the sanctions mentioned above shall not be imposed. (IRR-A Section 40.1)

Two-Stage Competitive Bidding

What is Two-Stage Competitive Bidding?

The Two-Stage Competitive Bidding is one where the bidding process is divided in two (2) stages. The first stage involves the issuance by the Procuring Entity of bidding documents with technical specifications that are not yet well defined and merely in the form of performance criteria, and the submission by the bidders of their respective Letters of Intent, eligibility requirements, if needed, and initial Technical Proposals without price. This allows  the Procuring Entity to receive inputs from the eligible bidders whose Technical Proposals meet the minimum performance standards (a meeting/discussion may be held with these bidders), for purposes of drawing up the final revised technical specifications/requirements of the contract. The second stage involves the release of the well-defined technical specifications by the Procuring Entity, followed by the conduct of the regular procedure for public bidding with all the bidders identified during the first stage, who shall then be required to submit their respective revised Technical Proposals including their Financial Proposals. (IRR-A Section 30.4)

What are the instances when a Procuring Entity may employ the Two-Stage Competitive Bidding Procedure?

The Two-Stage Competitive Bidding Procedure may be employed for the procurement of goods when:

1.         Due to the nature of the project requirements (e.g. complex information and communications technology), the required technical specifications/requirements of the contract cannot be precisely defined in advance of bidding, or it may be undesirable or impractical to prepare complete technical specifications in advance.

Procuring entities may consider it undesirable or impractical to compare complete technical specifications in advance under any of the following circumstances:

a.         In the case of turnkey contracts;

b.         Contracts for large complex facilities;

c.         Complex information and communication technology; or

d.         Works of a special nature.

2.         The problem of technically unequal bids is likely to occur.

The purpose of the bidding procedure is to come up with well-defined, standardized technical specifications, with inputs from all stakeholders, including the bidders themselves.

What is the timeline for the conduct of a Two-Stage Competitive Bidding?

The timeline for the conduct of a Two-Stage Competitive Bidding will depend on several variables:

1.         The Project Timelines as defined by the PMO or end-user unit;

2.         The technical complexity of the Project; and

3.         The time required for drawing up the final technical specifications.

These variables, however, affect only the first stage of the bidding, as well as the drawing up of the final technical specifications. Thus, while the timelines for the first stage may not be definite, the second stage shall follow the timelines prescribed for the regular competitive bidding procedure. In setting the timelines, the Procuring Entity should ensure that the time periods involved are reasonable and that there is no undue delay of the entire procurement procedure and project implementation.

Who are involved in the Two-Stage Competitive Bidding Process?

The following are involved in the Two-Stage Competitive Bidding process:

1.         The PMO or end-user unit;

2.         The TWG;

3.         The BAC;

4.         The BAC Secretariat; and

5.         The Observers.

Methodology: How is the Two-Stage Competitive Bidding process conducted?

The general process for a two-stage bidding is as follows:

1.         In the first stage, bidders are first invited to submit technical offers (plus other bid requirements) without prices, on the basis of a conceptual design or performance specifications which lay down the minimum operating and performance requirements.

2.         Each of the unpriced technical bids shall then be discussed between the bidder concerned and the Procuring Entity and its consultants, if any, for the purpose of providing for technical and commercial clarifications and adjustments, and in order to agree on an acceptable technical standard for all bids.

3.         At the second stage, the bidding documents will then be amended, but in revising the said bidding documents, the Procuring Entity would have to respect the confidentiality of the bidders' technical proposals used in the first stage, consistent with requirements of transparency and intellectual property rights. After the discussions, the bidders shall be given an opportunity to revise or adjust their proposals to conform to the standards agreed upon. The bidders shall also be invited to submit price proposals and these shall be evaluated.

The following specific steps are followed in the conduct of the Two-Stage Bidding process:

1.         The TWG, with the assistance of the PMO or end-user unit, prepares the bidding documents in accordance with the usual procedures. However, the technical specifications shall only be in the form of performance criteria, i.e. the technical specifications shall contain functional descriptions of the goods, or expected output for services, without specifying the details thereof.

2.         If necessary, the BAC calls a Pre-Procurement Conference, following the procedures set forth in Step 1 of competitive Bidding.

3.         The BAC issues the Bidding Documents which contain, in addition to the items prescribed for competitive bidding, a request for the prospective bidders to submit the following:

a.         Letter of Intent;

b.         Eligibility requirements, if needed; and

c.         Initial Technical Proposals only (no price tenders).

4.         The BAC, with the assistance of the TWG, conducts the Eligibility Check, as conducted in a Single-Stage Competitive Bidding procedure, and proceeds with the determination of the eligible and ineligible bidders.

5. The TWG evaluates the technical merits of the proposals received from eligible bidders vis-à-vis the required performance standards, and determines the proposals that meet the minimum standards.

 

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On the drawing up of the final technical specifications under the Two-Stage Competitive Bidding procedure

In drawing up the final technical specifications, the TWG and BAC should ensure that the PMO/end-user unit is properly consulted, and has agreed to the said specifications.

6.         The TWG and BAC meet/discuss with the eligible bidders whose Technical Proposals meet the minimum required standards stipulated in the bidding documents. The purpose of this meeting is to draw up the final revised technical specifications/requirements of the contract.

7.         Once the final revised technical specifications are completed and duly approved by the BAC, copies of the same shall be provided to all eligible bidders that met the minimum technical standards. The latter are then required to submit their revised Technical Proposals, including their Financial Proposals in two (2) separate sealed envelopes, at a specified deadline, after which time no more bids shall be received.

8.         The BAC proceeds with the bid evaluation, post-qualification, award of contract and contract signing in accordance with the procedure and timelines prescribed for competitive bidding.

What happens if no prospective bidder submits a Letter of Intent?

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How does the ABC affect a bidder under a Two-Stage Competitive Bidding procedure?

The approved budget for the contract under bidding shall be the upper limit or ceiling for acceptable bid prices. If a bid price, as evaluated and calculated in accordance with this IRR-A, is higher than the approved budget for the contract under bidding, the bidder submitting the same shall be automatically disqualified. There shall be no lower limit or floor on the amount of the award.

If no prospective bidder submits a Letter of Intent, the BAC shall issue a Resolution declaring the bidding a failure. In such a case, the BAC shall issue a Resolution declaring a failure of bidding. The BAC then reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the terms and conditions, including the quantities or specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-bidding, in the process formulating a new IAEB and posting and publishing this as required. (IRR-A Section 35) All bidders that have initially responded to the IAEB in the first bidding shall be allowed to submit new bids.

If the original estimate is found to be inadequate on reassessment to meet the objectives of the project, it is may be necessary to reduce the scope of the project (or adjust the ABC should there be a second failure of bidding).

Should a second failure of bidding occur and the Procuring Entity finds that there is a need to evaluate the responsiveness of the ABC, and so decides to revise the ABC accordingly, the Procuring Entity should conduct another public bidding with re-advertisement and/or posting. Alternatively, the Procuring Entity may enter into a negotiated procurement with a legally, technically, and financially capable supplier. (IRR-A Sections 35.3 and 53) However, if the Procuring Entity resorts to negotiated procurement, the terms, conditions, and specifications of the project as well as the ABC must be maintained.

SECTION 4.            Instructions on the Procedural Steps for the Procurement of Goods and Services. —

PART TWO

Alternative Methods of Procurement

The Alternative Methods for the Procurement of Goods and Services

What is the rule on the use of alternative methods of procurement?

Generally, procurement should be through competitive bidding. In preparing the APP, the Procuring Entity must ensure that there is sufficient time to undertake competitive bidding. However, the law allows the use of alternative methods of procurement in some exceptional instances, provided:

1.         There is prior approval of the Head of the Procuring Entity on the use of alternative methods of procurement, as recommended by the BAC; and

2.         The conditions required by law for the use of alternative methods are present.

In resorting to any of the alternative methods of procurement, the Procuring Entity must ensure that the method chosen promotes economy and efficiency, and that the most advantageous price for the government is obtained. 16

For the procurement of goods, the following alternative methods of procurement may be resorted to:

1.         Limited Source Bidding

2.         Direct Contracting

3.         Repeat Order

4.         Shopping

5.         Negotiated Procurement

Limited Source Bidding

What is Limited Source Bidding?

LIMITED SOURCE BIDDING, otherwise known as SELECTIVE BIDDING, is a method of procurement of goods and consulting services that involves the issuance of a direct invitation to bid by the concerned Procuring Entity to a set of pre-selected suppliers or consultants with known experience and proven capability on the requirements of the particular contract. (IRR-A Section 49)

When shall Limited Source Bidding be allowed?

Limited Source Bidding may be employed by a Procuring Entity under any of the following conditions:

1.         If only a few suppliers of the goods to be procured are known to be available, such that resorting to public bidding method will not likely result in any additional suppliers participating in the bidding. An example is the procurement of highly specialized types of Goods like sophisticated defense equipment (e.g., fighter planes, Battleships, complex air navigation systems, or coal); or

2.         In the procurement of major plant components where it is deemed advantageous to limit the bidding to known qualified bidders in order to maintain uniform quality and performance of the plant as a whole.

Who will be invited to bid?

In choosing the Bidders, the Procuring Entity shall consider only those suppliers appearing in a list maintained by the relevant government authority that has expertise in the type of procurement concerned. This list should have been submitted to, maintained and updated with the GPPB and posted in the PhilGEPS. (IRR-A Section 49) In the absence of a relevant government authority, the Procuring Entity has to resort to open competitive bidding in its selection of a supplier. Examples of relevant government authorities are the NTC for telecommunications equipment, the FED of the PNP for firearms and ammunition, and the Bureau of Food and Drug for drugs.

Who are involved in conducting the Limited Source Bidding?

The following are involved in the conduct of limited source bidding for the procurement of goods:

1.         The Head of the Procuring Entity;

2.         The BAC;

3.         The TWG;

4.         The BAC Secretariat/Procurement Unit;