Frequently Asked Questions about RA 9184 and Procurement Methods for WB-assisted Projects
(As of 03-08-07)
1. What is procurement and why is it important in development? Procurement is the process of:
o identifying what is needed by Government
o determining who is the best person or organization to supply this need
o ensuring what is needed is delivered to the right place, at the right time, for the best price, and that
o all of this is done in a fair and open manner considering the principles of competition, economy and efficiency.
Public institutions which work for the common good procure in this way and so do you and I when we buy an appliance or a property, for example.
2. How do governments procure goods and services funded through official development assistance (ODA)?
The Philippines, being one of the member countries of the World Bank, is represented in the World Bank’s Board of Governors and the Board of Executive Directors. The Board of Executive Directors approves policies, including those related to procurement. All member-countries therefore follow the World Bank’s procurement policies and guidelines for World Bank-assisted projects. This ensures fairness and equal treatment for firms and individuals from all the eligible countries of the World Bank.
3. The procurement methods for WB-assisted projects vary. How is the procurement method determined?
The volume, size, nature of contracts, with due consideration to economy and efficiency, determine the procurement method to be applied to each contract. Worldwide, the most
common methods are International Competitive Bidding (ICB) and National Competitive Bidding (NCB). In the case of the Philippines, however, the most common method is NCB because the nature and scope of contracts are unlikely to attract international competition and the advantages of ICB are outweighed by the administrative or financial burden involved. Examples of these contracts are farm to market roads, school buildings, community hospitals and health centers.
The Government of the Philippines and the World Bank have agreed on the appropriate procurement methods for different types and amounts of contracts. For example, civil works contracts estimated to cost less than USD5 million and goods contracts estimated to cost less than USD1 million can be procured under NCB method. Selection of consultants for
contracts estimated to cost less than USD200,000 can be conducted through a shortlist comprised of all national firms. The country thresholds for NCB had increased to more than 100% due to improved public procurement system as indicated in August 2005 Country Procurement Assessment Report.
For specific projects, however, the ceiling and the procurement method are spelled out in the Loan Agreement or Grant Agreement for the project.
General Agreement between the Philippines and World Bank on Country Thresholds (Ceilings) and Procurement Method Country Threshold
per Contract
Procurement Category Procurement Method Over US$5 Million or
its current equivalent of Php248M
Over US$1 Million or its current equivalent of Php48M
Works (e.g., highways, power plants, large bridges, etc.) above Php248M per contract Goods (books, drugs,
equipment, etc. above Php48M per contract
International Competitive Bidding (ICB)
Over US$200K up to $5M or its current equivalent of Php248M Over US100K up to $1M or its current equivalent of Php48M
Works (e.g., school buildings, rural roads, health clinics, etc.)
Goods (books, drugs,
equipment below Php48M per contract
National Competitive Bidding (NCB)
RA 9184 Implementing Rules and Regulations (IRR-A) Frequently Asked Questions
There have been many changes in the procurement process as a result of RA 9184 and its associated IRR-A. Therefore, we thought it would be beneficial to publish the latest list of frequently asked questions from the sessions being conducted by Director Antonio Molano, Jr.
1. When was the effectivity of the IRR-A of R.A. 9184?
IRR-A of R.A. 9184 to effect last October 8, 2003, which means that all Locally Funded projects advertised/posted for Invitation to Apply for Eligibility and to Bid starting October 8, 2003 should now be following the IRR-A of R.A. 9184.
2. When was the effectivity for the mandatory use of the Standard Bidding Documents (SBDs) approved by
the Government Procurement Policy Board (GPPB)?
The SBDs for the procurement of Goods, Consulting Services and Civil Works as approved by the GPPB shall be mandatorilly used by all branches, agencies, departments, bureaus, offices, or instrumentalities of the Government, including government-owned and/or controlled corporations (GOCCs), government financial institutions (GFIs), state universities and colleges (SUCs), and local government units (LGUs) starting July 2005. 3. What are the sequential steps in the procurement of a civil works project?
The procurement of a civil works project starts with the conduct of the Pre-Procurement Conference by the Bids and Awards Committee, then followed by the Advertisement/Posting of the Invitation to Apply for Eligibility and to Bid (IAEB), then Eligibility Screening, Submission/Receipt of Bids, Bid Evaluation, Post-Qualification, and Award of contract.
4. Pre–procurement Conference is a new step, what is its importance?
A pre-procurement conference, which should be done prior to advertisement or posting, is important to determine the readiness of the procurement at hand, including among other aspects, confirmation of the availability of Right-of-Way (ROW), availability of appropriations and program budget for the contract, and adherence of bidding documents, technical plans, specifications, scope of work and other related matters to the general procurement guidelines. Here, the BAC shall ensure that the procurement is in accordance with the approved Project Procurement Management Plan (PPMP) and the approved Annual Procurement Plan (APP) of the Office. The conference will also serve as the venue for reviewing, modifying, agreeing on criteria for eligibility screening, bid evaluation to ensure their fairness, reasonableness and applicability to the procurement at hand. It will also serve as the venue for clarifying that the specifications and other terms in the bidding documents are minimum requirements. During the said conference, the BAC shall also reiterate and emphasize the importance of the confidentiality during the bid evaluation process.
5. What is the formula for the Net Financial Contracting Capacity (NFCC)? If a contractor lacks the NFCC, what
other instruments can he use to comply with the financial requirement?
NFCC = [(Current assets minus current liabilities) (K)] minus the value of all outstanding projects under on-going contracts, including awarded contracts yet to be started. K is 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. The NFCC should at least be equal to the Approved Budget for the Contract (ABC).
If a contractor lacks the necessary NFCC, he can use either the Credit Line Commitment from a licensed bank or a Bank Deposit of at least 10% of the ABC, both dedicated for the project.
6. If a contractor became ineligible because his NFCC is less than the ABC, will the submission of a Credit Line
commitment from a licensed bank correct said deficiency to make him eligible?
No, we cannot allow the correction by submitting a Credit Line commitment because it would be tantamount to improvement of his eligibility documents.
Q: What is the difference between IRR-A and IRR-B? What is its scope with respect to procurement projects?
A: IRR-A applies only to fully domestically funded projects. It took effect October 8, 2003. IRR-B will apply to foreign-funded projects. However, for such projects, International Financing Institutions (IFI) procurement rules and regulations shall be used and the GPRA IRR-B, once issued, shall be applied suppletorily.
Q: What makes R.A. 9184 more transparent?
A: The agencies are now mandated to invite observers in all stages of procurement and observers may report factual anomalies to the proper officials. Also, all procurement opportunities of government are required to be posted in the Government Electronic Procurement System (G-EPS).
Q: What law should govern regarding projects conducted prior to the effectivity of the IRR?
A: The GPPB issued a resolution stating, among others, that prior to October 8, 2003, government agencies may still use prior procurement rules and procedures.
Q: In case an infrastructure project was implemented prior to the effectivity of RA 9184, which provisions will apply on termination of the contract and liquidated damages? A: Prior to the effectivity of IRR/RA 9184, (October 8, 2003), the provisions of PD 1594 and its
IRR will apply to contract termination and contract implementation II. BIDS AND AWARDS COMMITTEE
A. The BAC and its composition
Q: Can an officer who is in a plantilla position, but occupying a permanent co-terminus status be a member of the BAC?
A: As long as the position is permanent, even if the official be in a confidential or co-terminus with the appointing authority, he can still be a regular member of the BAC.
Q: What is the role of the head of the procuring entity in the deliberations of the BAC? A: The decision of the BAC is only recommendatory. It is the head of the procuring entity that
approves or disapproves the recommendation of the BAC. The BAC should make its own decisions independent of the Local Chief Executive.
Q: If a member of the BAC is suspended, will his replacement enjoy the full rights and privileges of the member suspended?
A: Section 11.2.4 of the Implementing Rules and Regulations (IRR) provides that in case of leave or suspension, the replacements, who are appointed through special orders, shall serve only for the duration of the leave or suspension.
Q: What qualifications should a BAC member have? Is it necessary that the BAC members be experts in the field concerning the contract to be bid?
A: The qualifications provided for under Section 11.2 shall be followed. The BAC may create a Technical Working Group (TWG) from a pool of technical, financial and/or legal experts to assist them in the procurement process.
Q: Why are accountants prohibited from being members of the BAC?
provisional members when they are the end-users. They cannot, however, be regular members.
Q: Is an end-user, who is not a regular member of the BAC, entitled to vote? A: Yes. They can vote on matters related to that particular procurement.
Q: If the end-user is already a regular member of the BAC, should this mean that it would be entitled to vote twice?
A: A unit cannot have two members in the BAC. In such case, the person should be considered as an end-user unit. It will give undue advantage to the end-user if this will be allowed, as they would have two voting privileges.
Q: Do provisional members need to constitute a quorum and are they required to vote? If yes, can their representatives assume their function during the deliberations?
A: In determining a quorum, the number of provisional members should also be considered. If provisional members are included, assuming that there are seven present, four of them must be present to constitute a quorum. It should also be noted that the Chairman or the Vice Chairman should be present.
A representative can sit and observe the proceedings. However, he cannot vote on matters which would require the BAC member’s decision. As a representative, he does not have voting powers when it comes to decisions of the BAC. There are only there to provide feedback to his principal.
Q: In lieu of the effectivity of the IRR, can the former PBAC be replaced?
A: The former Pre-qualification Bids and Awards Committee should be replaced with the Bids and Awards Committee which should meet the requirements set by the IRR/R.A. 9184. The same people may be assigned if they are qualified. However, if they are not qualified, the head of the procuring entity should issue a special order replacing those who do not meet the criteria.
B. Observers A. Non-government organization
Q: Can observers monitor the bidding process up to contract implementation? A: The law provides that the BAC shall, in all stages of the procurement process, invite
observers to sit in its proceedings. The law does not provide for any prohibition. It is a welcome initiative and it is up to the observer if it wants to monitor the contract implementation.
Q: Can the agency still proceed even if no observer is present in the proceeding?
A: The Bids and Awards Committee (BAC) shall invite observers at least two (2) days before the procurement stage to be monitored. The absence of the observer shall not nullify the BAC proceedings.
Q: Prior to R.A. 9184, Civil Society Organizations are members of the BAC and therefore part of the decision-making. Why are CSOs, under R.A. 9184, merely observers? A: This is for accountability purposes. This is to prevent suits against observers as members of
the BAC are sometimes sued. The observers do not take a direct part in the decision-making concerning the procurement.
Q: If observers are not part of the decision-making of the BAC, how come observers sign the Abstract of Bids?
A: Observers sign the Abstract of Bids only to attest that, in their opinion, the process is in accordance with the law.
Q: Can NGOs also observe the biddings of provincial projects funded out of the General Appropriations Act (GAA)?
A: There is no preference as to where the NGO should come from. The only mandate of the law is that the agency invites at least two observers, and that one should come from a NGO. Q: If the BAC will not invite observers, what are the legal remedies?
A: Section 13 of the IRR of R.A. 9184 clearly provides the mandate that the BAC shall invite observers to sit in their proceedings. BAC may incur administrative, civil and even criminal liability in case of non-compliance with this requirement.
Q: Are NGOs required to be registered with the Securities and Exchange Commission (SEC)?
A: Section 13.2 of the IRR of R.A. 9184 provides that the observers shall come from an organization duly registered with the SEC.
Q: Cebu City has more than 40 municipalities. Can an NGO, who is based in one municipality, be an observer in another municipality?
A: Yes. There is no provision prohibiting such. All that is mandated by law is that the agencies invite observers to sit in their proceedings. Observers may introduce themselves to these agencies and tell them that they’ve undergone training on public procurement.
However, it is suggested that the observers start in their own municipalities.
Q: It seems that the BAC observers are not given enough powers. Can amendments be made to strengthen the provisions on observers? If yes, who can lobby such action? A: Yes, proposed amendments may be brought to the attention of the GPPB. For the meantime,
the law is already binding and it is better if we follow it until such amendments are made. It should be noted that the draft provisions stated that the presence of observers be
mandatory. On the other hand, it was argued that it should not be mandatory as it is in the interest of the observers to be present in the bidding.
In addition to that, the provision that the observers be notified, in writing, at least 2 days before the bidding was advocated by PWI.
The minimal amount of authority given to the observers should not be a hindrance in the performance of the observers’ functions. Observers should work with what is given to them and in parallel to that, work for its strengthening.
Q: What are the observers’ defenses against whimsical and capricious exclusion of observers previously invited?
A: The observer may question the BAC on the said exclusion and ask them the ground for such. If there is no ground, then an issue may already be raised. There is nothing that bars the observer from filing a legal action to stop the practice of whimsical and capricious exclusion of observers. Also, observers can always file a report with the Office of the Ombudsman. Q: Are the observers the same through out the bidding process? Can we let others sit every
now and then?
A: Observers are entitled to monitor procurement proceedings in accordance with Section 13 of IRR/RA 9184. It is up to the agency whom they want to invite in their proceedings as long as they meet the minimum requirements, that is: knowledge, expertise in the procurement or in the subject matter of the contract to be bid, absence of direct or indirect interest in the contract to be bid and any other criteria as may be determined by the BAC.
Q: What is the impact of the participation of the CSOs in the bidding process? What did PWI learned from observing bidding activities?
A: The involvement of CSOs in the bidding procedures furthers the objective of the government to promote transparency in government procurement. PWI discovered that some BACs lack familiarity with the new procurement rules. Thus PWI seeks to reorient CSOs with the GPRA so that they would be able to point out the deviations in the procurement process, if there’s any, and report it to the Office of the Ombudsman when necessary.
Q: What is the extent of the role of observers?
A: The role of the observers is to help ensure transparency in the bidding process. They are non-voting members of the BAC in order to preserve and protect their independence.
Q: Some of the observers have experienced being invited by agencies to observe their biddings at midnight and even late hours. How can we avoid this situation?
A: Section 13.3 of the IRR/R.A. 9184 provides that the observers should receive the notice of invitation at least two (2) days before the stage of the procurement process which observers shall be invited. This is to avoid similar situations wherein the observers are not given enough time to prepare for the bidding activity after the receipt of the invitation.
Q: Section 13 of the Implementing Rules and Regulations (IRR) of Republic Act No. 9184 (RA 9184) requires that the observers should be registered with the Securities and Exchange Commission (SEC). However, cooperatives are not registered with the SEC but with the Cooperatives Development Authority (CDA). Does this mean that
cooperatives cannot observe bidding proceedings?
A: If the cooperative is not registered with the SEC, it is believed that the certification of
registration with the CDA will suffice. However, since there is a clear provision in the law as to SEC registration, this matter may be elevated to the GPPB as a proposed amendment to IRR-A.
Q: What is the extent of the participation of the CSOs in the bidding process?
A: The CSOs are purely observers of the proceedings of the BAC. However, observers are tasked to prepare a diagnostic report on what transpired during the bidding and submit it to the head of the procuring entity. If there’s any deviation from the prescribed procedures, the observer can submit a copy of the report to the Office of the Ombudsman.
Q: Can observers participate in the deliberations during the proceedings?
A: Yes. The observers can participate during the discussions. Some agencies even ask and encourage the participation of the observers. However, observers have no voting powers. Q: Can observers be entitled to honoraria?
A: The members of the BAC, the BAC Secretariat and the TWG are entitled to honoraria. The procuring entity is not required to give the observers honoraria to maintain the latter’s independence.
Q: Can a person who is a government employee, but also a member of an NGO, be an observer?
A: Yes. A person who is a government employee but also a member of an NGO can be an observer as long as he is representing the NGO and that the NGO meets the requirements provided for under Section 13 of the IRR/R.A. 9184. However, he cannot represent the NGO if it is observing a bidding activity in his government agency to avoid possible conflict of interest.
Q: Will the proceeding be invalidated if the observer abstains to sign in the Abstract of Bids?
A: The proceedings will not be invalidated even if the observer abstains to sign the Abstract of Bids. However, the bidder shall indicate in the diagnostic report the reason(s) why it did not sign the Abstract of Bids and submit it to the proper officials.
Q: What is the protection available for BAC observers in case there is danger as to her life and liberty because of its reports submitted to the Office of the Ombudsman?
A: The witness-protection program of the government will be available to those whose lives or liberty are endangered because of the reports submitted to the Office of the Ombudsman Q: How do we qualify as an observer? Who chooses the observers?
A: Section 13.2 of the IRR/R.A. 9184 provides that the observers shall come from an
organization duly registered with the SEC and should meet the following criteria: knowledge, experience or expertise in procurement or in the subject matter of the contract to be bid; absence of direct or indirect interest in the contract to be bid out; and any other criteria that may be determined by the BAC. In all stages of the procurement process, it is the BAC that chooses the observers.
Q: What is the rationale behind the Civil Society Organizations (CSOs) and private sector being merely an observer in the bidding activities when previous laws allow them to participate in the deliberations and are entitled to vote?
A: This is to strengthen the role of an observer as an independent body who objectively monitors the bidding activities. The observers are tasked to prepare a diagnostic report on what
transpired during the bidding and submit it to the head of the procuring entity. If there’s any deviation from the prescribed procedures, the observer can even submit a copy of the report to the Office of the Ombudsman.
Q: If the members of the BAC are not qualified, do vigilant groups have a right to question the qualification and/or composition of the BAC?
A: The vigilant group may write the head of the procuring entity to suggest that only qualified officials be assigned to the BAC.
Q: As the seats as observers are limited, what role can CSOs who do not act as observers in the bidding activities play?
A: CSOs should encourage other CSOs to observe in the bidding activities. CSOs should introduce themselves to agencies stating that the IRR/R.A. 9184 mandates the government agency to invite observers in all the stages of the procurement process. They should present themselves and say that they are a CSO who has knowledge on the procurement process. Q: Can observers participate in the deliberations of the BAC?
A: The role of the observers in the bidding process is to monitor whether or not the agency is following the prescribed procurement rules and procedures. They are encouraged to
participate in the deliberations if the topic falls under their expertise, except perhaps during bid evaluation.
Q: Who will oversee as to the implementation of the projects?
A: There are certain non-government organizations that monitors contract implementation namely Philippine Chambers of Commerce and Industry (PCCI), Volunteers and Crime and Corruption (VACC), Government Watch (G-Watch), Concerned Citizens of Abra for Good Governance (CCAGG), and Philippine Governance Forum (PGF), to name a few.
Q: Is there a minimum amount required before an observer would be invited to sit in the BAC proceeding?
A: Section 13 of the IRR/RA 9184 provides that the BAC shall, in all stages of the procurement process, invite, in addition to the representative of the COA, at least two (2) observers to sit in its proceedings. There is no minimum amount required.
Q: Why are observers not entitled to honoraria?
A: Observers are discouraged from receiving honoraria in order to protect their independence and integrity. This is to strengthen their roles as oversight in the bidding activity.
Q: How will the observers know that there is corruption taking place in the LGUs? A: Deviations from the prescribed bidding procedure, or if the agency goes beyond what is
required by the law, may be indicators of corruption.
Q: Can the reports prepared by the observers be forwarded to the media?
A: It is encouraged that the observers exhaust all efforts first before divulging the information to the media. We must respect the process of due process. Observers may submit their reports to the Office of the Ombudsman and the Office of the Ombudsman will act on it if they find merit in the compliant.
B. Commission on Audit
Q: Commission on Audit (COA) Circular 2003-004 prohibits membership of accountants in the BAC. How do we reconcile this as the IRR of R.A. 9184 provides that one of the regular members shall come from the financial area?
A: The GPPB already resolved this issue stating that all those members composing the financial department, except the Chief Accountant and those under its office, may be designated as BAC members.
A: In some agencies, COA representatives opt not to participate because they do not want their presence to be misconstrued as meddling with the decision of the BAC. They simply say that they will provide their comments during the post-audit. In other agencies, some COA
representative share their comments with the observers, like PWI, for them to voice out such comments
C. BAC Secretariat
Q: Is there a set of rules that will determine the composition of the BAC Secretariat? A: The intention of the IRR is to have a permanent BAC Secretariat and it is the head of the
procuring entity that determines its composition. If there is an existing BAC Secretariat, then it would have to be re-organized or some people would have to be reassigned.
D. Honoraria to BAC Members
Q: What is the rule regarding the honoraria to BAC members?
A: Under the GPRA, the procuring entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. In the IRR, such honoraria were extended to the Technical Working Group. In the guidelines issued by the DBM, it was extended further to the BAC Secretariat, if there work is on an Adhoc basis. If the work performed purely involves BAC Secretariat matter, then they are not qualified to receive honoraria.
III. PREPARATION OF BID DOCUMENTS A. Bidding Documents
Q: Can a bidder, who did not pass the eligibility process, purchase the bidding documents and submit bids?
A: No. Although the bidder may purchase bidding documents, he cannot submit them because he has already been declared by the BAC to be ineligible to participate in the bidding. Q: Whose responsibility is it to ensure that uniform bidding documents are issued? A: As the contents of the bidding documents are discussed during the pre-bid conference, it is
the BAC who is responsible for the release of a uniform bidding documents. However, as the BAC Secretariat provides administrative support to the BAC, all documents will be in their safekeeping
Q: If an agency has a project to be bid, is the agency expected to have prepared the bidding documents before the bidding process is conducted?
A: Ideally yes. As early as pre-procurement conference, the bidding documents are already items for discussions and clarifications. It is therefore assumed that the bidding documents should be ready even before the bidding proper itself.
A. Reference to Brand Names
Q: Should reference to brand names still not be allowed even if such brand name provides for a lower cost and/or better quality?
A: Section 18 of the IRR provides that specifications for the procurement of goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed even if the cost is lower. The specifications should be properly prepared by the agency in order to get the desired quality and avoid obtaining materials of inferior quality.
IV. INVITATION TO BID A. Pre-Procurement Conference
avoid getting results of poor quality?
A: The end-user unit comes up with the minimum specifications for the project. By prescribing the minimum requirements for the project, the agency is assured that all bids which meet the requirements have the desired quality. A bidder who submits a higher type or a better quality will not get additional points for doing so.
B. Advertising the Invitation to Bid
Q: Is the advertisement in the G-EPS indispensable?
A: Yes. It is required that the Invitation to Apply for Eligibility and to Bid be posted in the G-EPS, regardless of the type of procurement and the Approved Budget for the Contract. Q: Can advertisement be dispensed with in cases of direct contracting?
A: For alternative methods of procurement, only the advertisement in the newspaper may be dispensed with. It should still be posted in the G-EPS, in the website of the procuring entity, if any, and in a conspicuous place in the premises of the procuring entity.
Q: The IRR states that the advertisement should be in a newspaper of general nationwide circulation. Do we still have to go to Manila just to comply with this requirement? A: There is no need to go to Manila as newspaper companies may have branches in other
leading cities. Further, the BAC must remember the cost thresholds in effect that contracts costing P2M or less for the procurement of goods and P5M and below for the procurement of infrastructure projects are not required to be advertised in the newspaper.
Q: Should the advertisement in the newspaper, in website of the procuring entity, in website of the service provider, in the G-EPS, and at conspicuous place be
simultaneously done?
A: Yes. The advertisement in the newspaper, in website of the procuring entity, in website of the service provider, in the G-EPS, and at conspicuous place should be undertaken
simultaneously. C. Pre-Bid Conference
Q: Why is it not mandatory for the prospective bidders to attend the pre-bid conference? A: Some bidders, especially those who have experienced dealing with the government agency
prior to the bidding of the project, feel that they already know the bidding procedures
undertaken by the agency. They therefore feel that they will not gain anything from attending the pre-bid conference. They will lose, though, the opportunity to request for clarification on issues and specifications that pertain to the project to be bid.
V. RECEIPT AND OPENING OF BIDS A. Eligibility Requirements
Q: Is there a restriction on the part of Medium and Large Category contractors that will prohibit them from participating in small-scale projects? Because if there is none, new contractors would continuously be displaced in participating in projects.
A: : In Presidential Decree No. 1594, there was exclusivity of small projects to small
contractors. However, such provision was amended in 1995, wherein the exclusivity of small projects to small contractors is no longer allowed. The small contractors should have already graduated form being a small contractor. Further, new and/or small contractors are not expected to be displaced by larger contractors as the latter are expected to have larger overhead cost. This makes small projects unattractive to them.
Q: Section 23.6 provides that a bidder should submit a letter authorizing the BAC or its duly authorized representative/s to verify any or all of the documents submitted for the eligibility check. Does this letter allow the BAC to verify only Class “A” documents? A: The intention of the law is to allow the BAC to verify both Class “A” and Class “B”
A. Credit Line
Q: What should be the validity period of a credit line?
A: The credit line should be valid for the duration of the contract.
Q: If the Net Financial Contracting Capacity (NFCC) is sufficient, is there a need to submit a commitment from a licensed bank?
A: Section 23.11.1.3 and 23.11.2.5 of the IRR requires a prospective bidder to present, as part of the eligibility requirements, a commitment from a licensed bank to extend to it a credit line if awarded the contract to be bid, or a cash deposit certificate, in an amount not lower than that set by the procuring entity, which shall be equal to ten percent (10%) of the ABC, or must have an NFCC at least equal to the ABC. It is in the alternative. If NFCC is sufficient, there is no more need to submit such commitment.
Q: If a commitment from a licensed bank to extend to it a credit line is submitted already in the eligibility check, is it required to be submitted again as part of the technical proposal, as provided for in Section 25.3.B.11?
A: If the bidder previously submitted such commitment as part of the eligibility requirement, the said document will suffice. However if in the eligibility check, the computation of the
bidder’s NFCC is given instead, a commitment from a licensed bank to extend to it a credit line if awarded the contract to be bid, or a cash deposit certificate, in an amount not lower than that set by the procuring entity, which shall be equal to ten percent (10%) of the ABC, shall still be required.
Q: How would the bank commitment act as guaranty when there is no provision in the IRR that the bank commitment should be specific to a certain project?
A: The IRR provides that a commitment from a licensed bank to extend to the bidder a credit line if awarded the contract to be bid, shall be submitted. In this light, the bank commitment really refers to the contract because such credit line will be given only if awarded the contract.
B. Black Listing
Q: If a bidder is blacklisted in one government agency, is he blacklisted in the entire government?
A: Yes. A bidder who is blacklisted by an agency and is included in the GPPB Consolidated Blacklisting Report shall not be allowed to participate in the bidding of all government projects during the period of suspension/disqualification.
Q: Who can blacklist a bidder?
A: An agency may blacklist bidders. The names of such shall be submitted to the Government Procurement Policy Board (GPPB). These names would be consolidated and posted in the G-EPS.
C. Nationality Requirement
Q: What is the nationality requirement for corporations for the procurement of infrastructure projects?
A: Only corporations duly organized under the laws of the Philippines, and of which at least seventy-five percent (75%) of the outstanding capital stock belongs to citizens of the Philippines shall be allowed to participate in the bidding for infrastructure projects. C. Subcontracting
Q: Is subcontracting allowed?
A: Subcontracting is allowed. However, names of these subcontractors would have to be listed in the bidding documents to be submitted by the bidder. These subcontractors have to be eligible to perform the contract. Further, any subcontracting activity should have prior approval of implementing agency.
B. Submission and Receipt of Bids
Q: Is the government allowed to accept an item that is offered free to the government? A: The government is allowed to accept an item that is offered free as it is advantageous to the
government. However, the bidder must meet all the requirements of the agency.
Q: Does the BAC consider the duration of the project? Suppose the required duration of the agency is 45 calendar days. The lowest bidder’s duration is 65 calendar days while the second lowest has a duration of 50 calendar days. Which is more advantageous? A: Both exceeded the requirement of the agency. Under the GPRA and its IRR, both bidders
should be disqualified for submitting non-complying bids.
Q: We have missed two items in the Bill of Quantities distributed to contractors and the lowest bidder conformed to work on two items, without additional cost. Is this situation allowed?
A: It is allowed. In fact, it is advantageous to the government.
Q: In case a bidder wishes to offer a discount to the government, where should this discount be placed?
A: Discounts should be submitted together with the financial proposal, Otherwise, if it will be submitted when the bids are already opened then it would amount to an improvement of the bid.
C. Modification and Withdrawal of Bids
Q: is it allowed to modify or withdraw bids before they are opened?
A: The bidder may have justifiable reasons for them to withdraw or modify their bids. The law allows them to do so provided that this is done before the deadline for the submission and receipt of bids and following certain procedures.
D. Bid Security
Q: When can a bidder withdraw its bid security?
A: Section 27.4 of the IRR/R.A. 9184 provides that no bid securities shall be returned to bidders after the opening of bids and before contract signing, except those that failed to comply with any of the requirements to be submitted in the first bid envelope.
VI. BID EVALUATION
Q: Regarding the prohibition of talking to bidders, is this true for all types of
conversation? What if the BAC happens to be talking about other matters and not about the project?
A: Section 32.3 of the IRR/RA 9184 states that the members of the BAC, including its staff and personnel, as well as the Secretariat, are prohibited from making or accepting any kind of communication with any bidder regarding the evaluation of bids until the issuance of Notice of Award. The confidentiality clause applies to matters relating to the bids.
VII. POST-QUALIFICATION A. Failure of Bidding
Q: What will happen if a failure of bidding occurs?
A: Section 35 of the IRR of R.A. 9184 provides that the BAC shall conduct a re-bidding with advertisement and/or posting.
Q: In case there is a failure of bidding, can the agency procure by administration?
A: The IRR-A provides that an agency can undertake the works by administration only if there is imminent danger to life or property or when time is of the essence or when immediate
action is necessary to restore vital public services.
Q: In case a failure of bidding is declared, will the bidder be required to submit new documents or will the documents previously submitted suffice?
A: For agencies who keep a record of their contractors, the bidders may no longer submit Class “A” documents as it pertains to the bidder and such record should be updated. However, for agencies that have no registry of their suppliers, the bidders would have to re-submit all the documents pertaining to the bid.
B. Single Calculated/Rated and Responsive Bid Q: May the BAC consider a lone bidder for award?
A: For efficiency purposes, a Single Calculated Responsive Bid shall be considered for award if it falls under the circumstances provided for by law. This is to avoid delay in the procurement process.
Q: How can we be sure that there is really just a Single Calculated/Rated Responsive Bid? A: An observer of the Bids and Awards Committee (BAC) would know if there’s only one
bidder as this would be apparent as the bidding activities are conducted especially if the observer is invited in all stages of the procurement process.
Also, one could look at the Abstract of Bids which is a summary of the bid prices, bid security amount, rankings of bidders, etc. The observer will sign the Abstract of Bids if there is no deviation from procurement rules and regulations. Further, the records of the BAC, including the Abstract of Bids, are also available to the public.
Q: When there is only one prospective bidder, is it considered a failure of bidding? A: No, a single calculated/rated and responsive bid shall be considered for award if:
a) After advertisement, only one prospective bidder submits an LOI and/or applies for eligibility check and it meets the eligibility requirements or criteria, after which it submits a bid which is found to be responsive to the bidding requirements;
b) After advertisement, more than one prospective bidder submits an LOI and/or applies for eligibility check, in accordance with the provisions of this IRR-A, 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) 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.
VIII. AWARD, IMPLEMENTATION AND TERMINATION OF THE CONTRACT A. Delay
Q: Section 38 of the IRR of R.A. 9184 provides that the procurement process from the opening of bids up to the award of contract shall not exceed three (3) months. Is this period mandatory? What happens if the agency goes beyond the said period and incurs delay? Are there any administrative or civil liabilities on the part of the government? A: Yes, it is a mandatory provision. In case of non-compliance, there are different effects as to
the public officer concerned and the bidding itself. As to the public officer concerned, R.A. 9184 does not provide for any administrative sanction. On the other hand, he may be subjected to the internal administrative procedures as may be determined by the head of the procuring entity. Depending upon the circumstances of the case, such public officer may be held criminally liable for unjustified delay. It should be established that the delay is
unjustified. As to the procedure itself, under the Civil Code of the Philippines, the particular activity shall be null and void. The Commission on Audit, on post-audit, may determine the justification of the circumstances. If the delay is unjustified, COA can declare it null and void
and shall disapprove any disbursement for the contract.
Q: What is the guarantee that the government will pay on time? Is there any sanction for the government if they don’t pay on time?
A: In case after complete documentations and after a prescribed period of time, the contractor is still not paid, the contractors could suspend their work. This suspension of work usually results to time extension so as not to prejudice the contractor. Any form of cash outlay is currently being studied by the government.
Q: When the law talks of delivery time, does it speak of calendar or working days?
A: if the provision does not specify if it is calendar or working day, it is presumed to be referring to calendar day.
B. Defects
Q: What happens if the contractor is no longer available during the time that the contractor is found to be in defect of his project? Can this matter be brought to the court?
A: During the warranty period, the contractor is liable for structural defects and/or failure if the defect is due to improper construction and use of substandard material. The court however, will have to determine who is liable. If the contractor can no longer be found, such defects will be fixed by the implementing agency and the court will determine from whom such agency may get reimbursement. The law provides for garnishment proceedings as a remedy. If the defect is due to normal wear and tear, the contractor will not be liable.
Q: What happens if there is a defect in the construction of the project?
A: The Government shall undertake the necessary restoration or reconstruction works and shall be entitled to full reimbursement by the parties found to be liable, of expenses incurred therein upon demand, without prejudice to the filing of appropriate administrative, civil, and/or criminal charges against the responsible persons as well as the forfeiture of warranty securities posted in favor of the Government.
C. Notice to Proceed
Q: Who will issue notice to commence work or the Notice to Proceed (NTP)?
A: The procuring entity will issue the NTP. For some agencies, they consider the level of the contract amount; the higher the cost, the higher the level of official issuing the NTP. In DPWH, it is the implementing office that issues the Notice of Award if it is within their authority, normally, it is the Undersecretary or the Assistant Secretary in charge of its operations who issues such notice.
D. Multi-Awarding
Q: How do we eliminate price manipulations by suppliers?
A: It is very difficult to prove that there is manipulation by suppliers. In case of multi-awarding, as long as the suppliers offer a price, which is lower than the ABC for the project, then the agency is not losing anything.
IX. BIDDING OF PROVINCIAL PROJECTS Q: Who is a provincial bidder?
A: A provincial bidder is a contractor who participates in the bidding of provincial priority programs and infrastructure projects, whose principal office is within the same province. The location of the principal office is determined from the information provided in the bidder’s articles of incorporation.
Q: What are the two views regarding provincial bidders given the opportunity to match Lowest Calculated Bid of a bidder with a principal office outside the said province?
A: The first view is that the provincial bidder would be given the opportunity to grow in their respective provinces. The second view is that it is too simplistic and in the long run will defeat competition because the provincial bidders would be confined in their own province, since other provinces will also have its own provincial bidders to give priority to.
Q: Is the right given to a provincial bidder to match the bid of a non-provincial bidder available only for GAA funded projects? If yes, then the bidders from the locality may have difficulty in winning over bidders from outside the locality.
A: The law provides that it is applicable to GAA funded projects. However, since the principle of leveling the playing field may also apply to LGU projects, this may then be recommended as a proposed amendment to the law or to its IRR.
X. DISCLOSURE OF RELATIONS
Q: Will the contract be considered void if it was awarded to a bidder who failed to disclose that he is a relative within the third civil degree of consanguinity or affinity of the head of the procuring entity, and the knowledge of such relation came only after the award of the contract?
A: Such situation will not void the contract. However, the official will be held criminally and administratively liable if he knows that such bidder was his relative within third civil degree of consanguinity and affinity.
XI. ALTERNATIVE METHODS OF PROCURMENT
Q: The law mandates agencies to procure common used supplies and materials in the Procurement Service (PS). Will it constitute a violation of the law if the agency or LGU procure from a supplier, which offers the item at a lower cost than what the PS has? A: In the case of LGIs, which are far from Manila, if they could buy their items at a lower price
than what it prescribed in the PS, then it is justified. Moreover, a supplier that can offer a lower cost than what is prescribed by the PS is encouraged to participate in the bidding conducted by the PS for that particular item.
Q: On negotiated contracts for LGUs, even if all requirements are satisfied, will it continue to get the approval of the Sangguniang Panlalawigan/ Panglungsod or will the approval of the procuring entity suffice?
A: The IRR/RA 9184 states that the prior approval of the procuring entity will suffice. However, if there is a resolution of the LGU that it will also require the prior approval of their
Sanggunian, then it must be complied with.
During discussions with the Philippine League of Local Budget Officers, it was clarified that local projects which were already approved by the Sanggunian do not have to pass through the Sanggunian anymore.
Q: As negotiated procurements may open the possibility of corruption in procurement process, how can we prevent it?
A: Negotiated procurements may be conducted subject to prior approval of the head of the procuring entity or his duly authorized representative, and whenever justified by conditions provided for in the IRR/R.A. 9184. Only newspaper advertisement is dispensed with. It should still be posted at conspicuous places, at the website of the procuring entity and at the Government Electronic Procurement System (G-EPS). Negotiated procurements should be resulted to only in cases provided for in Section 53 of the IRR/R.A. 9184.
Q: Is procurement by administration still available in the GPRA?
A: Yes. Section 53(b) of the Implementing Rules and Regulations (IRR) of the GPRA states, “ In the case of infrastructure projects, the procuring entity has the option to undertake the project through negotiated procurement or by administration or in high risk areas, through the AFP”. However, it is subject to conditions enumerated in Section 54 of the IRR
XII. CONTRACT PRICES AND WARRANTIES Q: Are price adjustments allowed?
A: Section 61.2 of the IRR/R.A. 9184 provides that any request for price escalation under extraordinary circumstances shall be submitted by the concerned entity to the National Economic and Development Authority (NEDA) with the endorsement of the procuring entity. The burden of proving the occurrence of extraordinary circumstances that will allow for price escalation shall rest with the entity requesting for such escalation. NEDA shall only respond to such request after receiving the proof and the necessary documentation.
XIII. OFFENSES AND PENALTIES
Q: Is the Local Chief Executive the only person to be prosecuted in case the city does not adopt the GPRA?
A: It will depend on the violation. If the activity is solely within the main function of the BAC or its secretariat, they will be liable. It such actions does not require the intervention of the Local Chief Executive, then the corresponding official shall be liable. But if there is abuse of authority by disqualifying the lowest bidder to favor a bidder closely related to him or unduly influencing the members of the BAC to favor or to give preference to a particular bidder, then the Local Chief executive will be liable.
Q: Will there be any penalty if the bidding timelines are not followed and it results to delay?
A: The head of the procuring entity may declare a failure of bidding if the BAC is found to have failed in following the prescribed bidding procedures, including the timelines. There is also a provision found in the annex of the IRR/R.A. 9184 regarding delay in contract
implementation. However, provisions on such will be more clear and detailed once the procurement manuals are released.
Q: If anomalies happened during the term of an official, yet it was discovered only after he vacated the position, can he still be held liable?
A: Yes he is still liable. The fact that he is no longer in the BAC does not exempt him from criminal and civil liabilities.
Q: Section 65.2.4 of the IRR of R.A. 9184 provides that a bidder may be criminally liable when, by himself or in connivance with others, he employs schemes which defeat competition. How can you prove connivance?
A: Connivance will enter into the concept of conspiracy wherein the act of one is the act of all. It is a matter of intent. Intent is the act committed in order to perpetrate the crime. Each and every element should be proven. However, in criminal law, intent is very hard to prove. Documentary pieces of circumstantial and corroborative evidence shall be gathered and presented to the court.
XIV. INDEMNIFICATION OF BAC MEMBERS
Q: When is the indemnification package available to the BAC, BAC Secretariat and Technical Working Group (TWG) members?
A: These packages are available to them only if they perform functions pursuant to their office as such and provided further that the said official is not liable for gross negligence,
misconduct, or grave abuse of discretion or otherwise held liable or guilty of the complaints or charges.
XV. POLICIES
do we file our complaint?
A: Complains should be filed with the Office of the Ombudsman. Q: Is there a possibility to shift from post-audit to pre-audit?
A: One of the objectives of the GPRA is to speed up the procurement process. Since pre-audit usually takes much more time, shifting back to pre-audit is not favored.
Q: Will the LGUs be faulted if the BAC observes the bidding procedure even if the
contract amount is not within the cost thresholds as provided for in the IRR/RA 9184? For example, a project costing less than two million pesos for procurement of goods? A: Competitive bidding is encouraged for all types of procurement. The IRR/RA 9184 does not
provide for a minimum contract amount that will require public bidding. If the contract amount is small, then the procuring entity may opt to use an alternative method of procurement whenever applicable, as long as the procuring entity follows the conditions provided for under IRR/RA 9184
Q: When the law talks of delivery time, does it speak of calendar or working days?
A: if the provision does not specify if it is calendar or working day, it is presumed to be referring to calendar day.
