Salient Features of Government

Procurement Law (RA 9184)

Salient Features of Government

Procurement Law (RA 9184)

This act shall be known as the "Government Procurement Reform Act."

Approved: January 10, 2003

1. INTRODUCTION

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.

Source: Section 2

2. GENERAL PRINCIPLES

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 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

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implementing rules and regulations, and that all these contracts are
performed strictly according to specifications.

Source: Section 3

3. SCOPE AND APPLICATION

This act shall apply to the Procurement of Infrastructure Projects, Goods and
Consulting Services, regardless of source of funds, whether local of 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 signatory shall be observed.

Source: Section 4

4. DEFINITION OF TERMS

(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 National Government Agencies; the Corporate Budget for the
contract approved by the governing Boards, pursuant to [Link].518,
series of 1979, in the case of 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 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 consist of the following
processes: advertisement, pre-bid conference, eligibility screening of bids,
evaluations 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.

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(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 experts 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 the 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 or such services.

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

in accordance with Article X 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 faci9lities, civil
works components of information technology projects, irrigation, flood
control and drainage, water supply, sanitation, sewerage and solid waste
management systems, shore protection, energy/power and electrification
facilities, national buildings, school buildings 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 of this Act.

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(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 of 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.

Source: Section 5

5. PROCUREMENT PROCEDURES

A. Preparation of Bidding Documents

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;

(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;
(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.

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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.

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 on any prospective bidder or having direct or indirect
interest in the project to be procured.

Source: Sections 17-19

B. Invitation to Bid

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 and the draft Invitation to Bid, as
well as consultants hired by the agency concerned and the representative of
the end -user.

Advertising and Contents of the Invitation to Bid. - In line with the principle of
transparency and competitiveness, all Invitations to Bid 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 deadlines 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;

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(e) The source of funds;

(f) The period of availability of the Bidding Documents, and the place
where these may be secured and;
(g) The contract duration; and
(h) Such other necessary information deemed relevant by the Procuring
Entity.

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 the bids to allow prospective bidders to adequately
prepare their bids, which shall be specified in the IRR.

Source: Sections 20-22

C. Receipt and Opening of Bids

Eligibility Requirements for the Procurement of Goods and Infrastructure

Projects. - The BAC or, under special circumstances specified in 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 summit his eligibility requirement s

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.

Eligibility requirements and Short Listing for Consulting Services. - The

Eligibility of prospective bidders for the Procurement of Consulting Services
shall be determine by their compliance with the eligibility requirements
prescribed for the competitive Bidding concerned, within the period stated in
the Invitation to bid. The eligibility requirements shall provide for fair and
equal access to all prospective bidders. The prospective bidder shall certify
under oath as to the correctness of the statements made, and the
completeness and authenticity of the documents submitted.

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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.

The eligible prospective bidders shall then be evaluated using numerical

ratings on the basis of the short-listing requirements prescribed for the
Competitive Bidding concerned, within the period stated in the Invitation to
Bid to determine the short list of bidders who shall be allowed to submit their
respective bids.

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
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.

Notwithstanding the provisions of this Section and Section 26 of this Act, the
GPPB may prescribe innovative procedure for the submission, receipt and
opening of bids through the G-EPS.

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 or the same
contract either directly or indirectly.

Bid Security. - All Bids shall be accompanied by a Bid security, which shall
serve as guarantee that, after receipt of the Notice of Award, the winning
bidders shall enter into contract with the Procuring Entity within the
stipulated time and furnish the required performance security. The specific
amounts and allowable forms of the Bid security shall be prescribed in the
IRR.

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.

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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.

Source: Sections 23-29

D. Bid Evaluation

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.

Ceiling for Bid Prices. - The ABC shall be the upper limit or ceiling for the Bid
prices. Bid prices that exceed this ceiling shall be disqualified outright from
further participating in the bidding. There shall be no lower limit to the
amount of the award.

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 price shall be referred to as the "Lowest Calculated
Bid".

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 or
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 approved 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 item: financial proposal submitted by the bidder, terms of reference,
scope of services, methodology and work program, personnel to be assigned
to job, services/facilities/data to be provided by the Procuring Entity
concerned, and provisions of the contract. When negotiations with first-in-
rank bidder fails, the financial proposal of the second rank bidder shall
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.

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Whenever necessary, the same process shall be repeated until the bid
awarded to the winning bidder.

Source: Sections 30-33

E. Post-Qualification

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 Calculate 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.

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,
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.

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.

Single Calculate/Rated and Responsive Bid Submission. - A single

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

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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 bide, 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 in 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.

Source: Sections 34-36

F. Award, Implementation, and Termination of the Contract

Notice and Executive 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.

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 contracts 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.

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,

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or a sho0rter 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.

Performing Security. - Prior to the signing of the contract, the winning bidder
shall, as a measure of guarantee for the faithful performance of an
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.

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. 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.

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Contract Implementation and Termination. - The rules and guidelines for the
implementation and termination of contracts awarded pursuant to the
provisions of this Act shall be prescribed in the IRR. The rules and guidelines
shall include standard general and special conditions for contracts.

Source: Sections 37-42

6. 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 in 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 Section30
of this Act.
Source: Section 47
7. ALTERNATIVE METHODS OF PROCUREMENT

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 voice 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 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

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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.

Source: Section 48

ALL COPYRIGHTS RESERVED

Atty. Yaslani B. Bantuas, CPA

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