Document Code: ASD-PPP

SBDMC, INC.
Revision Code: 08 Page 1 of 12

Issue Date:

PROCEDURE FOR PURCHASING PROCESS

Prepared By: Reviewed By: Approved By:

DAISY P. NUCUM Atty. GINA B. OROZCO WILLY WANG

Manager, Administrative BAC Chairperson/QMR Corporate President
Services Department

Table of Contents

1 INTRODUCTION AND RATIONALE 2

2 GOVERNING PRINCIPLES 2

3. RESPONSIBILITY FOR IMPLEMENTATION 2

4 SCOPE OF THIS PROCEDURE 2-3

5 BASES FOR PURCHASES/PROCUREMENT 3

6 CATEGORIES AND LIMITATIONS OF PURCHASES AND PROCUREMENT 3-7

6.1 Small Purchases
6.2 Repetitive Purchases
6.3 Sole Source Purchases
6.4 Emergency Purchases
6.5 Competitive Purchases

7 WAIVER OF OR EXEMPTION FROM BIDDING 7

8 PAYMENT POLICY 7-8

9 RECEIPT AND ACCEPTANCE 8

10 PURCHASE OF SUPPLY NEEDS 8-9

11 SUPPLIER EVALUATION 9-10

11.1 Parameters for Evaluation
11.2 Acceptance Rating

12 SELECTION OF SERVICE PROVIDER/CONTRACTOR 10-11

12.1 Prequalification Criteria
12.2 Criteria for Evaluation of Bids

13. FLOWCHART (Attachment)

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 Document Code: ASD-PPP
SBDMC, INC.
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Issue Date:

PROCEDURE FOR PURCHASING PROCESS

1. Introduction and Rationale

This procedure describes the methods of procurement, canvassing and its related activities. The
Company deemed it necessary to document these activities related to the procurement system
to support the necessary needs of external/internal clients for stronger customer relationship
management and for the continuous improvement of the quality management system.

This procedure describes the methods of planning, sourcing and selection of

suppliers/contractors, inspection and acceptance of all incoming quality materials, evaluation
and accreditation with the set systems and standards. Procurement is the purchasing of
supplies, services, and materials for use in the service process of the Company.

2. Governing Principles

● To give first consideration to the best interests of the Company

● To strive to obtain the maximum ultimate value for each expenditure
● To decline personal gifts or gratuities offered in relation to the performance of duties
● To grant all competitive bidders equal consideration, to regard each transaction on its own
merits to foster and promote fair, ethical and legal practices.

3. Responsibility for Implementation

● The Administrative Services Department (ASD), under the guidance of and subject to review
process of Bids and Awards Committee (BAC) when appropriate, and in coordination with
the functional units/departments, shall implement the policies and procedures outlined in
this document.

● BAC shall ensure that all procurement limitations and controls are strictly observed and
implemented.

The BAC consists of the In-House Attorney as Chairperson, the Finance and Accounting
Manager and ASD Manager as regular members. BAC may from time to time invite any
department head/manager to join as ad hoc member. If the department of a BAC member,
whether regular or ad hoc, is the proponent of the project or procurement subject of the
bidding, he/she will have no voting power in the event BAC needs to decide on any matter
by vote.

4. Scope of this Procedure

The scope of this procedure covers all activities that provide evidence of compliance to the
standard operating procedure for procurement. These may include activities and records of:

a. Procurement of various categories of purchases

b. Inter-Office Report (IOR)
c. Stock Requisition Form

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SBDMC, INC.
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PROCEDURE FOR PURCHASING PROCESS

d. Purchase/Procurement Order (PO) Form

e. Canvassing forms
f. Invitation to Bid/Request for Quotation
g. Tender Documents
h. Summary/Result of Canvass
i. Records provided by suppliers such as proposals
j. Incoming Material control methods
k. Other records including accomplished forms and reports related to purchasing,
canvassing and procurement activities.

5. Bases of Purchases and Procurement

The bases of procurements and purchases of Company shall include but is not limited to
workplan/objectives prepared during the budget process conducted annually. Each department
and unit of the Company is tasked to prepare and submit their procurement needs based on
their strategic quality plans and projects which are all aligned to the corporate goals and
programs of the Company. All purchases and procurement shall make use of the Inter-Office
Report (IOR) form and follow its standard operating procedure, except for small
purchases/procurement, as defined in this procedure.

6. Categories and Limitations of Purchases and Procurement

6.1 Small Purchases/Procurement

This involves the procurement of goods/services whose actual or potential accumulated or

single value is below Three Thousand Pesos (PhP 3,000.00) or its US dollar ($) equivalent,
such as, but not limited to, consumable materials, spare parts, and low voltage accessories.

● Purchase of goods/services shall not be artificially divided so as to falsely constitute

a small purchase.

● The prices should be fair, reasonable, and at par with the standard market rate
without sacrificing industry quality standards.

● Small purchases/procurement may be initiated and requested by any department

subject to approval of the department manager/head.

● Purchased items shall have proper receipt of ASD for recording and inventory
purposes.

6.2. Repetitive Purchases

This involves purchases intended to fill repetitive/regular needs for small quantities of goods or
services which are required on a continuing basis (“blanket purchases”) - may be made without
securing competitive quotations if the prices are considered to be fair and reasonable:

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● ASD or the department with need for supply or services shall initiate an Inter-Office
Report (IOR) which shall contain a recommendation to source blanket purchases
from a pre-selected supplier/provider for a maximum period of six (6) months.

● A “Request for Quotation Form” shall be used in soliciting competitive quotations to

select the supplier/service provider that will offer the best prices and will agree to
maintain such prices fixed for at least six (6) months.

● Proposals/quotations shall be sealed and submitted to the Bids and Awards

Committee (BAC) or ASD upon proper delegation by BAC.

● Award will be made by the BAC or ASD to the lowest responsive and responsible
supplier/service provider. When the BAC issues the award, it is in effect, certifying
that the “Price is fair and reasonable”.

● The BAC may order an evaluation of all blanket purchases to determine whether the
items will continue to be procured from the same supplier for the succeeding six
months.

6.3 Sole Source Purchases/Procurement

This involves purchases of goods/services that are available from a single supplier only on
account of the unique design, performance or specifications required which should be
supported by a valid certification from the authorized supplier or distributor. It must be
emphasized that specifications which restrict competition for goods or services that could
otherwise be obtained through the competitive bidding process cannot be deemed as a sole
source purchase. The procurement personnel or department concerned shall be required to
sufficiently justify to the satisfaction of the BAC, the use of sole source purchase method.

Sole Source Purchases/Procurement shall have the following limitations and controls:

● The procurement personnel or department concerned shall initiate an Inter-Office

Report (IOR) which shall contain an explanation, among others, as to why no other
potential supplier will be suitable or acceptable to meet the need given the existing
circumstance.

● The Inter-Officer Report (IOR) shall be supported with documents such as company
profile and contact details of the supplier and a valid certification on its being an
exclusive manufacturer/distributor/service provider.

● In case of reasonable doubt, competitive quotations shall be ordered by the BAC.

6.4. Emergency Purchases/Procurement

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PROCEDURE FOR PURCHASING PROCESS

The existence of an emergency condition must create an immediate and serious need for the
goods or services that cannot be met through normal purchasing methods, lack of time, and
absence of such goods or services seriously threatens the operations of the Company, the

preservation or protection of Company property or the Subic Bay Gateway Park, or the health or
safety of any person.

Emergency Purchase/Procurement shall have the following limitations and controls:

● ASD or the department concerned shall initiate an urgent Inter-Office Report (IOR)
stating, among others the justification for emergency/urgent purchase or
procurement.

● If the processing and approval of the IOR would further delay the procurement,
ASD may immediately prepare the Purchase Order. The purchase shall be validated
by the IOR.

6.5 Competitive Purchase/Procurement

This involves purchases of goods/services based upon formal and competitive

bids/proposals/quotations and a pre-determined price estimate and selection criteria:

● Those whose accumulated/single value is above PhP3,000.00;

● Those which are highly technical, large-scale or complex in nature;
● Those which are available from multiple sources of suppliers/contractors; and
● Those which by their nature allow factors other than price to be considered in the
determination of award.

6.5.1 For Purchases/Procurement above PhP3,0000 up to PhP50,000

● ASD shall request a minimum of three (3) quotations from qualified sources of
supply/services.

● A “Request for Quotation Form” shall be used for these purchases.

● If prices are solicited by telephone, the suppliers shall be requested to furnish

written evidence of their quotation or through email.

● The completed Quotation Tabulation Form shall be attached to the Inter-Office

Report (IOR) initiated by ASD and shall be routed to the Bids and Awards Committee
(BAC) members.

● BAC may verify the reasonableness of the price if any doubt would arise based on
comparison with previous price or personal knowledge of the items involved.

● The BAC shall recommend to award the purchase to the lowest responsive and
responsive bidder, subject to final approval of the Corporate President.

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● Procurement under this category shall be documented by PO or simplified work
authorization as may be determined by BAC Chairperson.

6.5.2 For Purchases/Procurement above PhP50,000 up to PhP200,000

● Upon approval of the IOR, ASD or department concerned shall solicit or invite at
least five (5) contractors to ensure receipt of at least three (3) proposals/bids. An
“Invitation for Sealed Quotation/Proposal Form” shall be used with instruction that
sealed quotation/proposal shall be submitted directly to the Bids and Award
Committee (BAC).

● Other than physical delivery, sealed quotation/proposal may be done in the following
manner: if by email, the supplier shall be advised to email its quotation/proposal
directly to BAC Chairperson; if through facsimile, the supplier shall advise the BAC
Chairperson or her designated representative on the time of its sending to ensure
that only BAC could retrieve the said facsimile.

● BAC shall open the bids/proposals and may delegate to the procurement personnel
or department concerned the preparation of evaluation report through an IOR and
the notice of award.

● The IOR shall be forwarded to BAC members for review/verification of the evaluation
and recommendation of winning bidder for approval of the Corporate President .

● Procurement under this category shall be documented by a work authorization.

● For purchase of goods, ASD shall prepare the Purchase Order (PO) which should
embody the important terms and conditions of the purchase and duly conformed to
by the supplier.

6.5.3 For Purchases/procurement above PhP 200,000 up to PhP300,000

● Upon approval of the Inter-Office Report (IOR) requesting the

purchase/procurement of goods/services, ASDl or the department concerned shall
endorse the same to BAC for solicitation of bids/invitation to bid. The procurement
personnel or department concerned may assist BAC find suppliers or contractors for
a particular bidding however BAC shall have the final decision on
contractors/suppliers to be invited.

● BAC shall issue an “Invitation to Bid” with instruction that the sealed bid shall be
submitted directly to BAC.

● For procurement up to PhP200,000, BAC may delegate the evaluation of bids and
issuance of notice of award to ASD or department concerned.

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● The evaluation report prepared by ASD or department concerned shall be forwarded
to BAC for its review and recommendation for final approval of the Corporate
President.

● Procurement under this category shall be governed by a work authorization.

6.5.4 For Purchases/procurement above PhP 300,000.00

● Upon approval of the Inter-Office Report (IOR) requesting the

purchase/procurement of goods/services, ASD or the department concerned shall
endorse the same to BAC for solicitation of bids/invitation to bid. ASD or department
concerned may assist BAC find suppliers or contractors however, BAC shall have the
final decision on contractors/suppliers to be invited.

● For projects with budgeted/estimated costs above Php1 Million pre-qualification

process using pre-determined criteria shall be mandatory.

● BAC shall issue Invitation to Bid to pre-qualified service providers, if applicable, with
instruction that the Tender Documents shall be used in submitting the bids.

● BAC shall receive the sealed bids, evaluates the same based on a set of pre-
determined criteria, makes recommendations for the Corporate President’s approval
and issues the notice of award.

● For projects with costs above PhP1M, bidding fee/bond will be mandatory to deter
contractors from withdrawing from the project after the award.

● Purchases/procurements under this category shall be governed by a full contract.

7 Waiver Of or Exemption From Bidding

The Corporate President may, on justifiable grounds, waive or exempt from bidding certain
purchase or procurement.

8 Payment Policy

The following are the payment policy and its controls:

● For first transaction or purchase with a “new supplier”, NO ADVANCE PAYMENT will be
given. Transaction will be Cash on Delivery (COD).

● For regular supplier or service contractor, if advance payment is required, a maximum of

30% down payment is allowable.

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● Credit line of 15 days to 30 days with regular suppliers should be maintained.

● For direct importation, SBDMC may choose to open a “Letter of Credit” (L/C). Letter of
Credit is a document issued mostly by a financial institution which usually provides an
irrevocable payment undertaking. It is being used nowadays primarily in international trade
transactions of significant value, for deals between a supplier in a foreign country and a
wholesaler customer in another country.

● For construction contracts and certain maintenance and/or repair contracts, no down
payment shall be released without the contractor’s submission of cash bond, bank
guarantee or post-dated check equivalent to the amount of downpayment.

● Terms of payment for construction, maintenance and/or repair contracts shall always
require ten percent (10%) Retention Money as warranty security. The Bids and Award
Committee (BAC) may recommend replacement of Retention Money with
Warranty/Guaranty Bond issued by a reputable insurance company included in the top 20
ranking of the Insurance Commission.

● BAC may recommend waiver of performance and warranty bonds when justified by the
nature, urgency and amount of the project or work.

9 Receipt and Acceptance

The following are the policy and controls for receipt and acceptance:

● Before accepting any delivery of the purchased items, ASD shall inspect all goods based on
the approved Purchase Order (PO)/contract. ASD shall ensure that the item actually
delivered matched the specifications provided in the PO/contract, otherwise, they should not
receive the items.

● If the goods entail technical knowledge and testing requirements, ASD shall request a
representative from the requesting department (normally the process-owner) to inspect and
subject to testing the goods delivered.

● ASD shall prepare the Receiving Report (RR) and forward the original copy to the Finance
and Accounting Department (FAD) together with the delivery receipt and/or invoice and the
Purchase Order (PO) pink copy/contract.

● ASD shall keep all goods and items in a secured storage room. ASD will act as the stock
custodian of goods received.

● For procurement of services, the department in-charge, normally the process-owner, and
the Bids and Award Committee (BAC) representative shall conduct inspection of the work
accomplished prior to final payment. The department concerned shall issue a certificate of
completion for this purpose.

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● ASD or requesting department shall ensure that items received or services procured are
covered by the necessary warranty against material defects and/or poor workmanship.

10 Purchase of Supply Needs

ASD, subject to BAC controls in proper cases, shall be primarily in-charge of the purchasing
needs of the Company. The basis of all procurements and purchases are the documents,
records and specifications stated in the approved budget of respective departments/units,
except on those falling in the category of emergency purchase/procurement, as approved by

the Corporate President. Technically, all requests for purchase shall be based on the approved
budget of the Company using specified forms (i.e. Inter-Office Report or Stock Request Form)
and shall follow the procedures set forth in this document.

10.1 Employee/department concerned prepares the request, based on the approved

budget of the Company, using the Stock Request Form (SRF) or the Inter-Office
Report (IOR). All data and information needed are presented in the SRF or IOR for
approval of the Department Manager and/or Corporate President. If the request is
not budgeted, the department/employee concerned indicates this in the SRF or
IOR and justifies why there is a need to request said supplies/materials.

10.2 The SRF or IOR is presented to the Department Manager and FAD Manager (if
covered by approved budget) for review/verification then to ASD for clearance or
recommendation for approval of the Corporate President.

10.3 Upon approval, the SRF or IOR is sent to ASD as the department responsible for the
provision and/or custody/stock keeping of supplies.

10.4 If the requested item(s) are unavailable per stock inventory, ASD proceeds with the
purchase according to this policy.

10.5 ASD shall retain the SRF which should reflect employee’s/department’s receipt of
item(s) requested, for inventory and record purposes. Accordingly, ASD makes the
necessary changes in the Stock Inventory information to record the latest
transaction/release of supply(ies).

11 Supplier/Service Provider Evaluation

Procurement is one of the elementary processes that drive the realization of a product. Aside
from controlling the purchase processes, the Company is required to evaluate the performances
of its suppliers/service providers (SPs) in order to decide whether an improvement is needed.
The principles are as follows:

● The Company shall evaluate and select the suppliers/SPs according to their ability to
supply goods/provide services.
● The Company shall determine the criteria for evaluation of supplier/SP's ability to deliver
goods or services.

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● The evaluation will determine the status and quality of the supplier/SP’s performances.
● A re-evaluation shall be performed according to determined criteria after a period of
time.

11.1 Parameters for Evaluation

● The quality of the goods or services (25%) - Are the supplied

services/materials of good or poor quality?
● Delivery/execution on schedule(s) (15%) - Does the supplier/SP delivers
the materials/executes work on time, at the right time and place?

● Credibility (10%) – The supplier must be credible and of good standing record
to the business community. Do the goods arrive to their destiny peacefully
according to defined requirements/work performed according to specifications?
● Lead time (5%) – Time between the planning and completion of a project
and/or placement of a purchase order is highly considered and important to the
supplier.
● Meeting other customers' requirements (5%) – Aside from other customer
requirements, is the supplier/SP available to perform the transportation needs
whenever it is required or according to prior defined requirements.
● Financial strength (10%) – Known for its financial capability in business
community. Good bank reputation.
● Innovation (10%) – The capability to present state of the art or high-value
products/services regularly.

● ISO Certified company (15%)* – An ISO certified supplier/SP, particularly

ISO 9001, is a good sign that the supplier/SP is a quality company and is a
customer focused supplier/SP.
● Other parameters (5%) – Long standing good business relationship, common
practice to give gifts, discounts, credit line, among others.

TOTAL: 100%

* Non-ISO certified entities may still be considered by SBDMC if they strongly meet
other criteria or requirements and alternative evidence would show that they really
have good track record or are publicly known to be reputable.

11.2 Acceptance Rating

SCORE CODE DESCRIPTION

90- 100 EE � Exceeds � Performance well exceeds expectations

Expectations and is consistently outstanding.
80– 89
AA � Above Average � Performance is consistently beyond
expectations
60-79 AV

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� Average � Performance fulfills expectations.
40-59
NI � Needs � Performance does not consistently meet
Improvement expectations.

0-39 � Unsatisfactory � Performance is consistently below

UN expectations. Deficiencies should be
addressed as noted in the performance
appraisal.

SBDMC shall select or maintain in its pool the suppliers/SPs that have attained average rating
(60-79) and above.

BAC/ASD shall maintain records of the suppliers/ service providers and their evaluation which
shall be updated from time to time. In order to monitor the suppliers/SPs BAC/ASD conduct
evaluation at least once a year.

12. Selection of Service Provider/Contractor

For procurements which are subject of competitive bidding, the selection and evaluation
processes shall be supported respectively by a pre-determined set of criteria.

12.1. Pre-Qualification Criteria

Qualifications (20%)
*Possesses the necessary qualifications and permits
Experience (25%)
Experience in past or present projects of similar size, complexity and technical specialty
comparable to project under consideration
Equipment/Logistics and Manpower Capability (25%)
Capability to provide the necessary manpower, equipment/materials
Financial Capability (30%)
Total : 100%

12.2. Criteria for Evaluation of Bids

Qualification and Experience (35%)

Possesses the necessary licenses and permits-7%
Financial capability to perform the services-12%
No. of existing clients-8%
Years of experience as service provider-8%
Equipment and Logistics Capability (20%)
Capability to provide the necessary tools, equipment, etc. -8%
Can dispatch service logistics needed to effectively discharge duties-7%
Availability of other gadgets and equipment when needed-5%

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Proposal, Assessment and Recommendation (30%)
Proposal or methodology for effective provision of services-10%
Capability to provide quality personnel-10%
Value-added services-10%
Price (15%)
Total : (100%)

* In accordance with Subic Bay Metropolitan Authority’s (SBMA’s) policy, suppliers/SPs with
SBMA accreditation shall be preferred. However, in the event of unavailability of suitable
supplier/SPs which could hamper the company’s operations/processes, non-SBMA
accredited supplier/SPs can be considered provided they possess other relevant
government licenses/permits.

13. FLOWCHART (Attached)

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