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Notes on Ra 9184 Government Procurement Reform Act

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26 views21 pages

Notes on Ra 9184 Government Procurement Reform Act

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Notes ON RA 9184 Government Procurement Reform Act

Business Law (Philippine School of Business Administration)

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NOTES ON REPUBLIC ACT NO. 9184

AN ACT PROVIDING FOR THE MODERNIZATION, STANDARDIZATION AND


REGULATION OF THE PROCUREMENT ACTIVITIES OF THE GOVERNMENT AND FOR
OTHER PURPOSES. (GOVERNMENT PROCUREMENT REFORM ACT)

I. General Principles of the law

SEC. 2. Declaration of Policy. - It is the declared policy of the State to promote the
ideals of good governance in all its branches, departments, agencies, subdivisions,
and instrumentalities, including government-owned and/or controlled corporations,
and local government units.

SEC. 3. Governing Principles on Government Procurement. - All procurement of the


national government, its departments, bureaus, offices and agencies, including
state universities and colleges, government-owned and/or controlled corporations,
government financial institutions and local government units, shall, in all cases, be
governed by these principles:

a) Transparency in the procurement process and in the


implementation of procurement contracts.

b) Competitiveness by extending equal opportunity to enable private


contracting parties who are eligible and qualified to participate in public
bidding.

c) Streamlined procurement process that will uniformly apply to all


government procurement. The procurement process shall be simple and
made adaptable to advances in modern technology in order to ensure an
effective and efficient method.

d) System of accountability where 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.

e) Public monitoring of the procurement process and the


implementation of awarded contracts with the end in view of guaranteeing
that these contracts are awarded pursuant to the provisions of this Act
and its implementing rules and regulations, and that all these contracts
are performed strictly according to specifications.

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II. Scope and Application of the law

SEC. 4. Scope and Application. - This Act shall apply to the Procurement of
Infrastructure Projects, Goods, and Consulting Services, regardless of source of
funds, whether local or foreign, by all branches and instrumentalities of
government, its departments, offices and agencies, including government-owned
and/or -controlled corporations and local government units, subject to the
provisions of Commonwealth Act No. 138.
Any treaty or international or executive agreement affecting the subject matter of
this Act to which the Philippine government is a signatory shall be observed.

III. DEFINITION OF TERMS

SEC. 5. Definition of Terms. - For purposes of this Act, the following terms or words
and phrases shall mean or be understood as follows:

(a) Approved Budget for the Contract (ABC) - refers to the budget for
the contract duly approved by the Head of the Procuring Entity, as
provided for in the General Appropriations Act and/or continuing
appropriations, in the case of National Government Agencies; the
Corporate Budget for the contract approved by the governing Boards,
pursuant to E.O. No. 518, series of 1979, in the case of Government-
Owned and/or Controlled Corporations, Government Financial
Institutions and State Universities and Colleges; and the Budget for the
contract approved by the respective Sanggunian, in the case of Local
Government Units.

(b) BAC - refers to the Bids and Awards Committee established in


accordance with Article V of this Act.

(c) Bidding Documents - refer to documents issued by the Procuring


Entity as the basis for Bids, furnishing all information necessary for a
prospective bidder to prepare a bid for the Goods, Infrastructure
Projects, and Consulting Services to be provided.

(d) Bid - refers to a signed offer or proposal submitted by a supplier,


manufacturer, distributor, contractor or consultant in response to the
Bidding Documents.

(e) Competitive Bidding - refers to 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

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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.

(f) 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.

(g) G-EPS - refers to the Government Electronic Procurement System


as provided in Section 8 of this Act.

(h) 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.

(i) GPPB - refers to the Government Procurement Policy Board


established in accordance with Article XX of this Act.

(j) Head of the Procuring Entity - refers to: (i ) the head of the
agency or his duly authorized official, for national government agencies;
(ii) the governing board or its duly authorized official, for government-
owned and/or controlled corporations; or (iii) the local chief executive,
for local government units. Provided, That in a department, office or
agency 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
department, office or agency.

(k) 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

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electrification facilities, national buildings, school buildings, hospital


buildings and other related construction projects of the government.

(l) IRR - refer to the implementing rules and regulations to be


promulgated in accordance with Section 75 this Act.

(m) Portal - refers to a website that aggregates a wide variety of


content for the purpose of attracting a large number of users.

(n) Procurement - refers to 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 Republic Act No. 8974, entitled "An Act to Facilitate the
Acquisition of Right-of-Way Site or Location for National Government
Infrastructure Projects and for Other Purposes", and other applicable
laws, rules and regulations.

(o) Procuring Entity - refers to any branch, department, office,


agency, or instrumentality of the government, including state
universities and colleges, government-owned and/or -controlled
corporations, government financial institutions, and local government
units procuring Goods, Consulting Services and Infrastructure Projects.

IV. What is the GPPB?

SEC. 63. Organization and Functions. - A Government Procurement Policy


Board (GPPB) is hereby established to:
(a) protect national interest in all matters affecting public Procurement, having due
regard to the country's regional and international obligations;
(b) formulate and amend, whenever necessary, the IRR and the corresponding
standard forms for Procurement;
(c) ensure that Procuring Entities regularly conduct Procurement training programs
and prepare a Procurement operations manual for all offices and agencies of
government; and
(d) conduct an annual review of the effectiveness of this Act and recommend any
amendments thereto, as may be necessary.
…… xxxxxxxxxxxxxxx……..

In addition to the powers granted under this Act, the GPPB shall absorb all the
powers, functions and responsibilities of the Procurement Policy Board created
under Executive Order No. 359, series of 1989. All affected functions of the
Infrastructure Committee of the National Economic and Development Authority
Board are hereby transferred to the GPPB.

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SEC. 64. Membership. - The GPPB shall be composed of the Secretary of the
Department of Budget and Management, as Chairman, the Director-General of the
National Economic and Development Authority, as Alternate Chairman, with the
following as Members; the Secretaries of the Departments of Public Works and
Highways, Finance, Trade and Industry, Health, National Defense, Education,
Interior and Local Government, Science and Technology,
Transportation and Communications, and Energy, or their duly authorized
representatives and a representative from the private sector to be appointed by the
President upon the recommendation of the GPPB. The GPPB may invite a
representative from the Commission on Audit to serve as a resource person.

V. PROCUREMENT PROCEDURES

SEC. 6. Standardization of Procurement Process and Forms. - To systematize the


procurement process, avoid confusion and ensure transparency, the procurement
process, including the forms to be used, shall be standardized insofar as
practicable.
For this purpose, the GPPB shall pursue the development of generic procurement
manuals and standard bidding forms, the use of which once issued shall be
mandatory upon all Procuring Entities.

SEC. 7. Procurement Planning and Budgeting Linkage. - All procurement should


be within the approved budget of the Procuring Entity and should be
meticulously and judiciously planned by the Procuring Entity concerned.
Consistent with government fiscal discipline measures, only those considered
crucial to the efficient discharge of governmental functions shall be included in the
Annual Procurement Plan to be specified in the IRR.

SEC. 10. Competitive Bidding. - All Procurement shall be done through Competitive
Bidding, except as provided for in Article XVI of this Act. (Alternative Methods of
Procurement).

SEC. 11. The BAC and its Composition. - Each procuring entity shall establish a
single BAC for its procurement. The BAC shall have at least five (5) members,
but not more than seven (7) members. It shall be chaired by at least a third
ranking permanent official of the procuring entity other than its head, and its
composition shall be specified in the IRR. Alternatively, as may be deemed fit by
the head of the procuring entity, there may be separate BACs where the number
and complexity of the items to be procured shall so warrant. Similar BACs for
decentralized and lower level offices may be formed when deemed necessary by
the head of the procuring entity. The members of the BAC shall be designated by
the Head of Procuring Entity.
However, in no case shall the approving authority be a member of the BAC.

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Unless sooner removed for a cause, the members of the BAC shall have a fixed
term of one (1) year reckoned from the date of appointment, renewable at
the discretion of the Head of the Procuring Entity. In case of resignation,
retirement, separation, transfer, re-assignment, removal, the replacement shall
serve only for the unexpired term: Provided, That in case of leave or suspension,
the replacement shall serve only for the duration of the leave or suspension. For
justifiable causes, a member shall be suspended or removed by the Head of the
Procuring Entity.

SEC. 12. Functions of the BAC. –


The BAC shall have the following functions: advertise and/or post the invitation to
bid, conduct pre-procurement and pre-bid conferences, determine the eligibility of
prospective bidders, receive bids, conduct the evaluation of bids, undertake post-
qualification proceedings, recommend award of contracts to the Head of the
Procuring Entity or his duly authorized representative: Provided, that in the event
the Head of the Procuring Entity shall disapprove such recommendation, such
disapproval shall be based only on valid, reasonable and justifiable grounds to be
expressed in writing, copy furnished the BAC; recommend the imposition of
sanctions in accordance with Article XXIII, and perform such other related functions
as may be necessary, including the creation of a Technical Working Group from a
pool of technical, financial and/or legal experts to assist in the procurement
process.

In proper cases, the BAC shall also recommend to the Head of the Procuring Entity
the use of Alternative Methods of Procurement as provided for in Article XVI hereof.
The BAC shall be responsible for ensuring that the Procuring Entity abides by the
standards set forth by this Act and the IRR, and it shall 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. The contents and coverage of
this report shall be provided in the IRR.

VI. PREPARATION OF BIDDING DOCUMENTS

SEC. 17. Form and Contents of Bidding Documents. - The Bidding Documents
shall be prepared by the Procuring Entity following the standard forms and
manuals prescribed by the GPPB. The Bidding Documents shall include the
following:

(a) Approved Budget for the Contract; (ABC)

(b) Instructions to Bidders, including criteria for eligibility, bid evaluation and
post-qualification, as well as the date, time and place of the pre-bid
Conference (where applicable), submission of bids and opening of bids;

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(c) Terms of Reference;

(d) Eligibility Requirements;

(e) Plans and Technical Specifications;

(f) Form of Bid, Price Form, and List of Goods or Bill of Quantities;

(g) Delivery Time or Completion Schedule;

(h) Form and Amount of Bid Security;

(i) Form and Amount of Performance Security and Warranty; and,

(j) Form of Contract, and General and Special Conditions of Contract.

The Procuring Entity may require additional document requirements or


specifications necessary to complete the information required for the bidders to
prepare and submit their respective bids.

SEC. 18. Reference to Brand Names. - Specifications for the Procurement of Goods
shall be based on relevant characteristics and/or performance requirements.
Reference to brand names shall not be allowed.

SEC. 19. Access to Information. - In all stages of the preparation of the Bidding
Documents, the Procuring Entity shall ensure equal access to information. Prior to
their official release, no aspect of the Bidding Documents shall be divulged
or released to any prospective bidder or person having direct or indirect
interest in the project to be procured.

VII. INVITATION TO BID

SEC. 20. Pre-Procurement Conference. - Prior to the issuance of the Invitation to


Bid, the BAC is mandated to hold a pre-procurement conference on each
and every procurement, except those contracts below a certain level or amount
specified in the IRR, in which case, the holding of the same is optional.

The pre-procurement conference shall assess the readiness of the procurement in


terms of confirming the certification of availability of funds, as well as reviewing all
relevant documents in relation to their adherence to law. This shall be attended by
the BAC, the unit or officials who prepared the bidding documents and the draft
Invitation to Bid, as well as consultants hired by the agency concerned and the
representative of the end-user.

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SEC. 21. Advertising and Contents of the Invitation to Bid. - In line with the
principle of transparency and competitiveness, all Invitations to Bid for
contracts under competitive bidding shall be advertised by the Procuring
Entity in such manner and for such length of time as may be necessary
under the circumstances, in order to ensure the widest possible dissemination
thereof, such as, but not limited to, posting in the Procuring Entity's premises, in
newspapers of general circulation, the G-EPS and the website of the Procuring
Entity, if available. The details and mechanics of implementation shall be provided
in the IRR to be promulgated under this Act.

The Invitation to Bid shall contain, among others:

(a) A brief description of the subject matter of the Procurement;


(b) A general statement on the criteria to be used by the Procuring Entity for
the eligibility check, the short listing of prospective bidders, in the case of
the Procurement of Consulting Services, the examination and evaluation
of Bids, and post-qualification;

(c) The date, time and place of the deadline for the submission and receipt of
the eligibility requirements, the pre-bid conference if any, the submission
and receipt of bids, and the opening of bids;

(d) The Approved Budget for the Contract to be bid;

(e) The source of funds;

(f) The period of availability of the Bidding Documents, and the place where
these may be secured;

(g) The contract duration; and,

(h) Such other necessary information deemed relevant by the Procuring


Entity.

SEC. 22. Pre-bid Conference. - At least one pre-bid conference shall be


conducted for each procurement, unless otherwise provided in the IRR.
Subject to the approval of the BAC, a pre-bid conference may also be conducted
upon the written request of any prospective bidder.

The pre-bid conference(s) shall be held within a reasonable period before the
deadline for receipt of bids to allow prospective bidders to adequately prepare their
bids, which shall be specified in the IRR.

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VIII. RECEIPT AND OPENING OF BIDS

SEC. 23. Eligibility Requirements for the Procurement of Goods and Infrastructure
Projects. - The BAC or, under special circumstances specified in the IRR, its duly
designated organic office shall determine the eligibility of prospective bidders for
the procurement of Goods and Infrastructure Projects, based on the bidders'
compliance with the eligibility requirements within the period set forth in the
Invitation to Bid.
The eligibility requirements shall provide for fair and equal access to all prospective
bidders. The documents submitted in satisfaction of the eligibility requirements
shall be made under oath by the prospective bidder or by his duly authorized
representative certifying to the correctness of the statements made and the
completeness and authenticity of the documents submitted.

A prospective bidder may be allowed to submit his eligibility requirements


electronically. However, said bidder shall later on certify under oath as to
correctness of the statements made and the completeness and authenticity of the
documents submitted.

SEC. 25. Submission and Receipt of Bids. - A bid shall have two (2)
components, namely the technical and financial components which should
be in separate sealed envelopes, and which shall be submitted
simultaneously. The bids shall be received by the BAC on such date, time and
place specified in the invitation to bid. The deadline for the receipt of bids shall be
fixed by the BAC, giving it sufficient time to complete the bidding process and
giving the prospective bidders sufficient time to study and prepare their bids. The
deadline shall also consider the urgency of the procurement involved.

Bids submitted after the deadline shall not be accepted.

SEC. 26 Modification and Withdrawal of Bids. - A bidder may modify his bid,
provided that this is done before the deadline for the receipt of bids. The
modification shall be submitted in a sealed envelope duly identified as a
modification of the original bid and stamped received by the BAC.

A bidder may, through a letter, withdraw his bid or express his intention not
to participate in the bidding before the deadline for the receipt of bids. In
such case, he shall no longer be allowed to submit another Bid for the same
contract either directly or indirectly.

SEC. 27. Bid Security. - All Bids shall be accompanied by a Bid security, which
shall serve as a guarantee that, after receipt of the Notice of Award, the
winning bidder shall enter into contract with the Procuring Entity within
the stipulated time and furnish the required performance security. The

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specific amounts and allowable forms of the Bid security shall be prescribed in the
IRR.

SEC. 28. Bid Validity. - Bids and Bid securities shall be valid for such reasonable
period of time indicated in the Bidding Documents. The duration for each
undertaking shall take into account the time involved in the process of Bid
evaluation and award of contract.

SEC. 29. Bid Opening. - The BAC shall publicly open all bids at the time, date,
and place specified in the bidding documents. The minutes of the bid opening
shall be made available to the public upon written request and payment of a
specified fee.

IX. BID EVALUATION

SEC. 30. Preliminary Examination of Bids. - Prior to Bid evaluation, the BAC shall
examine first the technical components of the bids using "pass/fail" criteria to
determine whether all required documents are present. Only bids that are
determined to contain all the bid requirements of the technical component
shall be considered for opening and evaluation of their financial
component.

SEC. 32. Bid for the Procurement of Goods and Infrastructure Projects. - For the
procurement of Goods and Infrastructure Projects, the BAC shall evaluate the
financial component of the bids. The bids that passed the preliminary examination
shall be ranked from lowest to highest in terms of their corresponding calculated
prices. The bid with the lowest calculated price shall be referred to as the
"Lowest Calculated Bid."

SEC. 33. Bid Evaluation of Short Listed Bidders for Consulting Services. - For the
Procurement of Consulting Services, the Bids of the short listed bidders shall
be evaluated and ranked using numerical ratings in accordance with the
evaluation criteria stated in the Bidding Documents, which shall include
factors such as, but not limited to, experience, performance, quality of personnel,
price and methodology. The Bids shall be ranked from highest to lowest in terms of
their corresponding calculated ratings. The Bid with the highest calculated
rating shall be the "Highest Rated Bid."

After approval by the Head of the Procuring Entity of the Highest Rated Bid, the
BAC shall invite the bidder concerned for negotiation and/or clarification on the
following items: financial proposal submitted by the bidder, terms of reference,
scope of services, methodology and work program, personnel to be assigned to the
job, services/facilities/data to be provided by the Procuring Entity concerned, and
provisions of the contract.

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When negotiations with the first-in-rank bidder fails, the financial proposal
of the second rank bidder shall be opened for negotiations:

Provided, That the amount indicated in the financial envelope shall be made as the
basis for negotiations and the total contract amount shall not exceed the amount
indicated in the envelope and the ABC. Whenever necessary, the same process
shall be repeated until the bid is awarded to the winning bidder.

X. POST-QUALIFICATION

SEC. 34. Objective and Process of Post-qualification. - Post-qualification is the


stage where the bidder with the Lowest Calculated Bid, in the case of
Goods and Infrastructure Projects, or the Highest Rated Bid, in the case of
Consulting Services, undergoes verification and validation whether he has
passed all the requirements and conditions as specified in the Bidding
Documents.

If the bidder with the Lowest Calculated Bid or Highest Rated Bid passes all the
criteria for post qualification, his Bid shall be considered the "Lowest
Calculated Responsive Bid," in the case of Goods and Infrastructure or the
"Highest Rated Responsive Bid," in the case of Consulting Services.

However, if a bidder fails to meet any of the requirements or conditions, he shall be


"post-disqualified" and the BAC shall conduct the post-qualification on the bidder
with the second Lowest Calculated Bid or Highest Rated Bid. If the bidder with the
second Lowest Calculated Bid or Highest Rated Bid is post-disqualified, the same
procedure shall be repeated until the Lowest Calculated Responsive Bid or Highest
Rated Responsive Bid is finally determined.

In all cases, the contract shall be awarded only to the bidder with the
Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

SEC. 35. Failure of Bidding. - There shall be a failure of bidding if:

a) No bids are received;


b) No bid qualifies as the Lowest Calculated Responsive Bid or Highest Rated
Responsive Bid; or,
c) Whenever the bidder with the highest rated/lowest calculated responsive
bid refuses, without justifiable cause to accept the award of contract, as
the case may be.

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Under any of the above instances, the contract shall be re-advertised and
re-bid. The BAC shall observe the same process and set the new periods according
to the same rules followed during the first bidding.

After the second failed bidding, however, the BAC may resort to negotiated
procurement as provided for in Section 53 of this Act.

SEC. 36. Single Calculated/Rated and Responsive Bid Submission. - A single


calculated/rated and responsive bid shall be considered for award if it falls under
any of the following circumstances:

a) If after advertisement, only one prospective bidder submits a


Letter of Intent and/or applies for eligibility check, and meets the
eligibility requirements or criteria, after which it submits a bid, which is
found to be responsive to the bidding requirements;

b) If after the advertisement, more than one prospective bidder


applies for eligibility check, but only one bidder meets the eligibility
requirements or criteria, after which it submits a bid which is found
to be responsive to the bidding requirements; or

c) If after the eligibility check, more than one bidder meets the
eligibility requirements, but only one bidder submits a bid, and its
bid is found to be responsive to the bidding requirements.

In all instances, the Procuring Entity shall ensure that the ABC reflects the
most advantageous prevailing price for the Government.

XI. AWARD, IMPLEMENTATION AND TERMINATION


OF THE CONTRACT

SEC. 37. Notice and Execution of Award. - Within a period not exceeding
fifteen (15) calendar days from the determination and declaration by the
BAC of the Lowest Calculated Responsive Bid or Highest Rated Responsive
Bid, and the recommendation of the award, the Head of the Procuring Entity or his
duly authorized representative shall approve or disapprove the said
recommendation.

In case of approval, the Head of the Procuring Entity or his duly authorized
representative shall immediately issue the Notice of Award to the bidder with
the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

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Within ten (10) calendar days from receipt of the Notice of Award, the
winning bidder shall formally enter into contract with the Procuring Entity.
When further approval of higher authority is required, the approving authority for
the contract shall be given a maximum of twenty (20) calendar days to approve or
disapprove it.
In the case of government owned and/or controlled corporations, the concerned
board shall take action on the said recommendation within thirty (30) calendar days
from receipt thereof.

The Procuring Entity shall issue the Notice to Proceed to the winning bidder not
later than seven (7) calendar days from the date of approval of the contract by the
appropriate authority. All notices called for by the terms of the contract shall be
effective only at the time of receipt thereof by the contractor.

SEC. 38. Period of Action on Procurement Activities. - The procurement process


from the opening of bids up to the award of contract shall not exceed three (3)
months, or a shorter period to be determined by the procuring entity concerned.
Without prejudice to the provisions of the preceding section, the different
procurement activities shall be completed within reasonable periods to be specified
in the IRR.
If no action on the contract is taken by the head of the procuring entity, or by his
duly authorized representative, or by the concerned board, in the case of
government owned and/or controlled corporations, within the periods specified in
the preceding paragraph, the contract concerned shall be deemed approved.

SEC. 39. Performance Security. - Prior to the signing of the contract, the winning
bidder shall, as a measure of guarantee for the faithful performance of and
compliance with his obligations under the contract prepared in accordance with the
Bidding Documents, be required to post a performance security in such form
and amount as specified in the Bidding Documents.

SEC. 40. Failure to Enter into Contract and Post Performance Security. - If, for
justifiable causes, the bidder with the Lowest Calculated Responsive Bid or Highest
Rated Responsive Bid fails, refuses or is otherwise unable to enter into contract
with the Procuring Entity, or if the bidder fails to post the required performance
security within the period stipulated in the Bidding Documents, the BAC shall
disqualify the said bidder and shall undertake post-qualification for the
next-ranked Lowest Calculated Bid or Highest Rated Bid. This procedure shall
be repeated until an award is made. However, if no award is possible, the contract
shall be subjected to a new bidding.

In the case of a failure to post the required performance security, the bid security
shall be forfeited without prejudice to the imposition of sanctions prescribed
under Article XXIII.

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SEC. 41. Reservation Clause. - The Head of the Agency reserves the right to
reject any and all Bids, declare a failure of bidding, or not award the contract in
the following situations:

a) 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 if the collusion is 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;

b) If the BAC is found to have failed in following the prescribed bidding procedures;
or

c) For any justifiable and reasonable ground where the award of the contract will
not redound to the benefit of the government as defined in the IRR.

XII. DOMESTIC AND FOREIGN PROCUREMENT

SEC. 43. Procurement of Domestic and Foreign Goods. - Consistent with the
country's obligations under international treaties or agreements, Goods may be
obtained from domestic or foreign sources and the procurement thereof shall be
open to all eligible suppliers, manufacturers and distributors. However, in the
interest of availability, efficiency and timely delivery of Goods, the Procuring Entity
may give preference to the purchase of domestically produced and manufactured
goods, supplies and materials that meet the specified or desired quality.

XIII. BIDDING OF PROVINCIAL PROJECTS

SEC. 44. Bidding of Provincial Projects. - Priority programs and infrastructure


projects funded out of the annual General Appropriations Act which are intended for
implementation within the province shall be subject to the same public bidding and
to the procurement processes prescribed under this Act. For purposes of this
Article, Engineering District civil works projects, subject to consultation with the
concerned Members of Congress, are included and subsumed in the term
"provincial projects" and shall be governed by this Section and Section 45 hereof.

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XIV. LEASE OF COMPUTERS, COMMUNICATIONS,


INFORMATION AND OTHER EQUIPMENT

SEC. 46. Lease Contracts. - Lease of construction and office equipment, including
computers, communication and information technology equipment are subject to
the same public bidding and to the processes prescribed under this Act.

XV. DISCLOSURE OF RELATIONS

SEC. 47. Disclosure of Relations. - In addition to the proposed contents of the


Invitation to Bid as mentioned under Section 21 of this Act, all bidding
documents shall be accompanied by a sworn affidavit of the bidder that he
or she or any officer of their corporation is not related to the Head of the
Procuring Entity by consanguinity or affinity up to the third civil degree.
Failure to comply with the aforementioned provision shall be a ground for the
automatic disqualification of the bid in consonance with Section 30 of this Act.

XVI. ALTERNATIVE METHODS OF PROCUREMENT

SEC. 48. Alternative Methods. - Subject to the prior approval of the Head of the
Procuring Entity or his duly authorized representative, and whenever justified by
the conditions provided in this Act, the Procuring Entity may, in order to promote
economy and efficiency, resort to any of the following alternative methods of
Procurement:

a) Limited Source Bidding, otherwise known as Selective Bidding - a


method of Procurement that involves direct invitation to bid by the
Procuring Entity from a set of pre-selected suppliers or consultants with
known experience and proven capability relative to the requirements of
a particular contract;

b) Direct Contracting, otherwise known as Single Source


Procurement - a method of Procurement that does not require elaborate
Bidding Documents because the supplier is simply asked to submit a
price quotation or a pro-forma invoice together with the conditions of
sale, which offer may be accepted immediately or after some
negotiations;

c) Repeat Order - a method of Procurement that involves a direct


Procurement of Goods from the previous winning bidder, whenever

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there is a need to replenish Goods procured under a contract previously


awarded through Competitive Bidding;

d) Shopping - a method of Procurement 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 qualification; or

e) Negotiated Procurement - a method of Procurement that may be


resorted under the extraordinary circumstances provided for in Section
53 of this Act and other instances that shall be specified in the IRR,
whereby the Procuring Entity directly negotiates a contract with a
technically, legally and financially capable supplier, contractor or
consultant.

In all instances, the Procuring Entity shall ensure that the most
advantageous price for the Government is obtained.

SEC. 49. Limited Source Bidding. - Limited Source Bidding may be resorted to only
in any of the following conditions:
a) Procurement of highly specialized types of Goods and Consulting
Services which are known to be obtainable only from a limited number
of sources; or

b) Procurement of major plant components where it is deemed


advantageous to limit the bidding to known eligible bidders in order to
maintain an optimum and uniform level of quality and performance of
the plant as a whole.

SEC. 50. Direct Contracting. - Direct Contracting may be resorted to only in any of
the following conditions:

a) Procurement of Goods of proprietary nature, which can be


obtained only from the proprietary source, i.e. when patents, trade
secrets and copyrights prohibit others from manufacturing the same
item;

b) When the Procurement of critical components from a specific


manufacturer, supplier or distributor is a condition precedent to hold a
contractor to guarantee its project performance, in accordance with the
provisions of his contract; or,

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c) Those sold by an exclusive dealer or manufacturer, which does


not have sub-dealers selling at lower prices and for which no suitable
substitute can be obtained at more advantageous terms to the
Government.

SEC. 51. Repeat Order. - When provided for in the Annual Procurement Plan,
Repeat Order may be allowed wherein the Procuring Entity directly procures Goods
from the previous winning bidder whenever there arises a need to replenish goods
procured under a contract previously awarded through Competitive Bidding, subject
to post-qualification process prescribed in the Bidding Documents and provided all
the following conditions are present:

a) The unit price must be equal to or lower than that provided in the
original contract;

b) The repeat order does not result in splitting of requisitions or purchase


orders;

c) Except in special circumstances defined in the IRR, the repeat order


shall be availed of only within six (6) months from the date of the
Notice to Proceed arising from the original contract; and,

d) The repeat order shall not exceed twenty-five percent (25%) of the
quantity of each item of the original contract.

SEC. 52. Shopping. - Shopping may be resorted to under any of the following
instances:
a) When there is an unforeseen contingency requiring immediate purchase:
Provided, however, That the amount shall not exceed Fifty Thousand Pesos
(P50,000); or
b) Procurement of ordinary or regular office supplies and equipment not available in
the Procurement Service involving an amount not exceeding Two Hundred Fifty
Thousand Pesos (P250,000): Provided, however, That the Procurement does not
result in Splitting of Contracts: Provided, further,That at least three (3) price
quotations from bona fide suppliers shall be obtained.

The above amounts shall be subject to a periodic review by the GPPB. For this
purpose, the GPPB shall be authorized to increase or decrease the said amount in
order to reflect changes in economic conditions and for other justifiable reasons.

SEC. 53. Negotiated Procurement. - Negotiated Procurement shall be allowed only


in the following instances:

a) In cases of two failed biddings, as provided in Section 35 hereof;

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b) In case of imminent danger to life or property during a state of


calamity, or when time is of the essence arising from natural or
man-made calamities or other causes where immediate action is
necessary to prevent damage to or loss of life or property, or to
restore vital public services, infrastructure facilities and other public
utilities;

c) Take-over of contracts, which have been rescinded or terminated for


causes provided for in the contract and existing laws, where
immediate action is necessary to prevent damage to or loss of life or
property, or to restore vital public services, infrastructure facilities
and other public utilities;

d) Where the subject contract is adjacent or contiguous to an on-going


infrastructure project, as defined in the IRR: Provided, however,
That the original contract is the result of a Competitive Bidding; the
subject contract to be negotiated has similar or related scopes of
work; it is within the contracting capacity of the contractor; the
contractor uses the same prices or lower unit prices as in the
original contract less mobilization cost; the amount involved does
not exceed the amount of the ongoing project; and, the contractor
has no negative slippage: Provided, further, That negotiations for
the procurement are commenced before the expiry of the original
contract. Whenever applicable, this principle shall also govern
consultancy contracts, where the consultants have unique
experience and expertise to deliver the required service; or,

e) Subject to the guidelines specified in the IRR, purchases of Goods


from another agency of the Government, such as the Procurement
Service of the DBM, which is tasked with a centralized procurement
of commonly used Goods for the government in accordance with
Letters of Instruction No. 755 and Executive Order No. 359, series of
1989.

XVII. PROTEST MECHANISM

SEC. 55. Protests on Decisions of the BAC. - Decisions of the BAC in all stages of
procurement may be protested to the head of the procuring entity and shall
be in writing. Decisions of the BAC may be protested by filing a verified position
paper and paying a non-refundable protest fee. The amount of the protest fee and
the periods during which the protests may be filed and resolved shall be specified in
the IRR.

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XVIII. SETTLEMENT OF DISPUTES

SEC. 59. Arbitration. - Any and all disputes arising from the implementation of a
contract covered by this Act shall be submitted to arbitration in the Philippines
according to the provisions of Republic Act No. 876, otherwise known as the
"Arbitration Law": Provided, however, That, disputes that are within the
competence of the Construction Industry Arbitration Commission to resolve shall be
referred thereto.
The process of arbitration shall be incorporated as a provision in the
contract that will be executed pursuant to the provisions of this Act: Provided,
That by mutual agreement, the parties may agree in writing to resort to alternative
modes of dispute resolution.

XIX. CONTRACT PRICES AND WARRANTIES

SEC. 61. Contract Prices. - For the given scope of work in the contract as
awarded, all bid prices shall be considered as fixed prices, and therefore
not subject to price escalation during contract implementation, except under
extraordinary circumstances and upon prior approval of the GPPB

SEC. 62. Warranty. –

(a) For the procurement of Goods, in order to assure that manufacturing defects
shall be corrected by the supplier, manufacturer, or distributor, as the case may be,
for a specific time after performance of the contract, a warranty shall be
required from the contract awardee for such period of time as may be
provided in the IRR, the obligation for which shall be covered by either
retention money in the amount equivalent to a percentage of every
progress payment, or a special bank guarantee equivalent to a percentage
of the total contract price, to be provided in the IRR. The said amounts shall
only be released after the lapse of the warranty period, provided that the Goods
supplied are free from defects and all the conditions imposed under the contract
have been fully met.

(b) For the procurement of infrastructure projects, the contractor shall


assume full responsibility for the contract work from the time project
construction commenced up to a reasonable period as defined in the IRR
taking into consideration the scale and coverage of the project from its final
acceptance by the government and shall be held responsible for any damage
or construction of works except those occasioned by force majeure. The
contractor shall be fully responsible for the safety, protection, security, and

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convenience of his personnel, third parties, and the public at large, as well as
the works, equipment, installation and the like to be affected by his
construction work and shall be required to put up a warranty security in the
form of cash, bank guarantee, letter of credit, Government Service Insurance
System bond, or callable surety bond.

The contractor shall undertake the repair works, at his own expense, of
any defect or damage to the infrastructure projects on account of the use
of materials of inferior quality within ninety (90) days from the time the
Head of the Procuring Entity has issued an order to undertake repair. In
case of failure or refusal to comply with this mandate, the government shall
undertake such repair works and shall be entitled to full reimbursement of
expenses incurred therein upon demand.

Any contractor who fails to comply with the preceding paragraph shall
suffer perpetual disqualification from participating in any public bidding
and his property or properties shall be subject to attachment or
garnishment proceedings to recover the costs. All payables of government
in his favor shall be offset to recover the costs.

XX. PENAL CLAUSE, CIVIL LIABILITY

AND ADMINISTRATIVE SANCTIONS

See Sections 65 – 71

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