ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 45  May 2023 CPA Licensure Examination

RFBT-08
REGULATORY FRAMEWORK for BUSINESS TRANSACTIONS J. DOMINGO  N. SORIANO

GOVERNMENT PROCUREMENT LAW

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

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

SCOPE AND APPLICATION: This act shall apply to the:

1. Procurement of Infrastructure Projects
2. 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.

DEFINITION OF TERMS
Approved Budget for refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided
the Contract (ABC) 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
E.O.No.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.
BAC refers to the Bids and Awards Committee
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.
Bid refers to signed offer or proposal submitted by a supplier, manufacturer, distributor, contractor or
consultant in response to the Bidding Documents.
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.
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 – EPS refers to the Government Electronic Procurement System
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.
GPPB refers to the Government Procurement Policy Board
Head of the Procuring refers to:
Entity 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.
Infrastructure include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance
Projects 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.

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IRR refer to the implementing rules and regulations to be promulgated in accordance with this Act.
Portal refers to a website that aggregates a wide variety of content for the purpose of attracting a large
number of users.
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.
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.

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.

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.

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.

Contents: 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;
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.

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RECEIPT, OPENING AND SUBMISSION 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 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.

ELIGIBILITY REQUIREMENTS AND SHORT LISTING FOR CONSULTING SERVICES: The Eligibility of prospective bidders
for the Procurement of Consulting Services shall be determined 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.

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:
1. The technical components; and
2. The financial components

Subject to the following rules:

1. The bids’ components should be in separate sealed envelopes, and which shall be submitted simultaneously.
2. The bids shall be received by the BAC on such date, time and place specified in the invitation to bid.
3. 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.

The GPPB may prescribe innovative procedure for the submission, receipt and opening of bids through the G-EPS.

MODIFICATION 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.

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

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.

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.

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".

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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:
1. Experience
2. Performance
3. Quality or Personnel
4. Price and
5. 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 items:
1. Financial proposal submitted by the bidder
2. Terms of reference
3. Scope of services
4. Methodology and work program
5. Personnel to be assigned to job
6. Services/facilities/data to be provided by the Procuring Entity concerned, and
7. 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.

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

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:
1. The "Lowest Calculated Responsive Bid,” in the case of Goods and Infrastructure or
2. 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/Highest Rated Responsive Bid; or,
c. Whenever the bidder with the highest rated/lowest calculated responsive bid refuses, without justifiable cause to accept
the award of contract, as the case may be.

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 below.

SINGLE CALCULATED/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:
a. If after advertisement, only one prospective bidder submits a Letter of Intent and/or applies for eligibility check, and
meets the eligibility requirements or criteria, after which it submits a bid, which is found to be responsive to the
bidding requirements;
b. If after the advertisement, more than one prospective bidder applies for eligibility check, but only one bidder meets
the eligibility requirements or criteria, after which 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.

AWARD, IMPLEMENTATION AND TERMINATION OF THE CONTRACT

NOTICE AND EXECUTION OF AWARD: Within a period not exceeding fifteen (15) calendar days from the determination
and declaration by the BAC of the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid, and the recommendation
of the award, the Head of the Procuring Entity or his duly authorized representative shall approve or disapprove the
said recommendation.

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Notice of Award: 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.

Entering into the contract:

1. Within ten (10) calendar days from receipt of the Notice of Award, the Winning bidder shall formally enter into
contract with the Procuring Entity.
2. 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.
3. 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.

Notice to Proceed: 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, or a shorter period to be determined by the procuring entity
concerned. 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 above, the
contract concerned shall be deemed approved.

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

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 this Act.

RESERVATION CLAUSE: The Head of the Agency reserves the right to (1) reject any and all Bids, (2) declare a failure of
bidding, or (3) 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.

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.

SPLITTING OF GOVERNMENT CONTRACTS: Splitting of Government Contracts is not allowed. Splitting of Government
Contracts means the division or breaking up of government of the Philippine contracts into smaller quantities and
amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or
circumventing the requirements of law and its IRR, particularly the necessity of competitive bidding and the requirements
for the alternative methods of procurement.

Infrastructure Projects: for Infrastructure Projects to be implemented by phases, the Procuring Entity shall ensure that there is
a clear delineation of work for each phase, which must be usable and structurally sound.

GROUNDS FOR TERMINATION

A. Termination for Default

1. In contracts for Goods: The following are ground for termination of contract for default:
a. The Procuring Entity may terminate the contract when outside of force majeure, the Supplier fails to deliver or
perform any or all of the Goods within the period(s) specified in the contract, or within any extension thereof
granted by the Procuring Entity pursuant to a request made by the Supplier prior to the delay, and such failure
amounts to at least ten percent (10%) of the contract price;
b. The Procuring Entity may terminate the contract when, as a result of force majeure, the Supplier is unable to
deliver or perform any or all of the Goods, amounting to at least ten percent (10%) of the contract price, for a
period of not less than sixty (60) calendar days after receipt of the notice from the Procuring Entity stating that
the circumstance of force majeure is deemed to have ceased; or
c. The Procuring Entity shall terminate the contract when the Supplier fails to perform any other obligation under the
Contract.

2. In contracts for Infrastructure Projects: The Procuring Entity shall terminate a contract for default when any of the
following conditions attend its implementation:
a. Due to the Contractor’s fault and while the project is on-going, it has incurred negative slippage of fifteen percent
(15%) or more in accordance with Presidential Decree 1870;

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b. Due to the Contractor’s fault and after the contract time has expired, it has incurred a negative slippage of ten
percent (10%) or more in the completion of the work; or
c. The Contractor:
i. abandons the contract works, refuses or fails to comply with a valid instruction of the Procuring Entity or fails
to proceed expeditiously and without delay despite a written notice by the Procuring Entity;
ii. does not actually have on the project site the minimum essential equipment listed on the Bid necessary to
prosecute the Works in accordance with the approved work plan and equipment deployment schedule as
required for the project;
iii. does not execute the Works in accordance with the contract or persistently or flagrantly neglects to carry out
its obligations under the contract;
iv. neglects or refuses to remove materials or to perform a new work that has been rejected as defective or
unsuitable; or
v. sub-lets any part of the contract works without approval by the Procuring Entity.
3. In contracts for Consulting Services: the Procuring Entity shall terminate a contract for default when any of the
following conditions attend its implementation:
a. Outside of force majeure, the Consultant fails to deliver or perform the Outputs and Deliverables within the
period(s) specified in the contract, or within any extension thereof granted by the Procuring Entity pursuant to a
request made by the Consultant prior to the delay;
b. As a result of force majeure, the Consultant is unable to deliver or perform a material portion of the Outputs and
Deliverables for a period of not less than sixty (60) calendar days after the Consultant’s receipt of the notice from
the Procuring Entity stating that the circumstance of force majeure is deemed to have ceased; or
c. The Consultant fails to perform any other obligation under the contract.

B. Termination for Convenience: the Procuring Entity may terminate the Contract, in whole or in part, at any time for its
convenience. The Head of the Procuring Entity may terminate a contract for the convenience of the Government if he has
determined the existence of conditions that make Project Implementation economically, financially or technically impractical
and/or unnecessary, such as, but not limited to, fortuitous event(s) or changes in law and national government policies.

C. Termination for Insolvency: The Procuring Entity shall terminate the contract if the Supplier/Contractor/Consultant is
declared bankrupt or insolvent as determined with finality by a court of competent jurisdiction. In this event, termination
will be without compensation to the Supplier/Contractor/Consultant, provided that such termination will not prejudice or
affect any right of action or remedy which has accrued or will accrue thereafter to the Procuring Entity and/or the
Supplier/Contractor/Consultant.

D. Termination for Unlawful Acts: the Procuring Entity may terminate the contract in case it is determined prima facie that
the Supplier/Contractor/Consultant has engaged, before or during the implementation of the contract, in unlawful deeds
and behaviors relative to contract acquisition and implementation. Unlawful acts include, but are not limited to, the
following:
a. Corrupt, fraudulent, collusive and coercive practices;
b. Drawing up or using forged documents;
c. Using adulterated materials, means or methods, or engaging in production contrary to rules of science or the trade;
and
d. Any other act analogous to the foregoing.

E. Termination by Contractor/Consultant
1. In contracts for Infrastructure Projects: the Contractor may terminate its contract with the Procuring Entity if the works
are completely stopped for a continuous period of at least sixty (60) calendar days through no fault of its own, due to
any of the following reasons:
a. Failure of the Procuring Entity to deliver, within a reasonable time, supplies, materials, right-of-way, or other items
it is obligated to furnish under the terms of the contract; or
b. The prosecution of the work is disrupted by the adverse peace and order situation, as certified by the Armed
Forces of the Philippines Provincial Commander and approved by the Secretary of National Defense.
2. In contracts for Consulting Services: the Consultant may terminate its agreement with the Procuring Entity if the latter
is in material breach of its obligations pursuant to the contract and has not remedied the same within sixty (60)
calendar days following its receipt of the Consultant’s notice specifying such breach.

DISCLOSURE OF RELATIONS

DISCLOSURE OF RELATIONS: In addition to the proposed contents of the Invitation to Bid as mentioned above, 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 and shall
therefore not be considered for opening and evaluation of financial component.

ALTERNATIVE METHODS OF PROCUREMENT

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

A. LIMITED SOURCE BIDDING, otherwise known as SELECTIVE BIDDING

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

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

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b. Procurement of major plant components where it is deemed advantageous to limit the bidding to known eligible
bidders in order to maintain an optimum and uniform level of quality and performance of the plant as a whole.

B. DIRECT CONTRACTING, otherwise known as SINGLE SOURCE PROCUREMENT

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

Direct Contracting may be resorted to only in any of the following conditions:

a. Procurement of Goods of propriety nature, which can be obtained only from the propriety source, i.e. when patents,
trade secrets and copyrights prohibit others from manufacturing the same items;
b. When the Procurement of critical components from a specific manufacturer, supplier, or distributor is a
condition precedent to hold a contractor to guarantee its project performance, in accordance with the provisions his
contract; or,
c. Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers selling at lower prices and for
which no suitable substitute can be obtained at more advantageous terms to the government.

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.

When provided for in the Annual Procurement Plan, Repeat Order may be allowed wherein the Procuring Entity directly
procures Goods from the previous winning bidder whenever there arises a need to replenish goods procured under
a contract previously awarded through Competitive Bidding, subject to post-qualification process prescribed in the
Bidding Documents and provided all the following conditions are present:
a. The unit price must be equal to or lower than that provided in the original contract;
b. The repeat order does not result in splitting of requisitions or purchase orders;
c. Except in special circumstances defined in the IRR the repeat order shall be availed of only within six (6) months
from the date of the Notice to Proceed arising from the original contract; and,
d. The repeat order shall not exceed twenty-five percent (25%) of the quantity of each item of the original
contract.

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.

Shopping may be resorted to under any of the following instances:

a. When there is an unforeseen contingency requiring immediate purchase, the amount shall not exceed the
following:
i. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P200,000

ii. For LGUs, in accordance with the following schedule:

DOF Classification of Maximum Amount (in Philippine Peso)

LGUs Province City Municipality
1st Class 200,000 200,000 100,000
2nd Class 200,000 200,000 100,000
3rd Class 200,000 160,000 100,000
4th Class 160,000 120,000 100,000
5th Class 120,000 100,000 100,000
6th Class 100,000 100,000 100,000

b. Procurement of ordinary or regular office supplies and equipment not available in the DBM-PS, in the amount
not to exceed the following:
i. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P1,000,000.
ii. For LGUs, in accordance with the following schedule:

DOF Classification Maximum Amount (in Philippine Peso)

of LGUs Province City Municipality
1st Class 1,000,000 1,000,000 200,000
2nd Class 1,000,000 1,000,000 200,000
3rd Class 1,000,000 800,000 200,000
4th Class 800,000 600,000 100,000
5th Class 600,000 400,000 100,000
6th Class 400,000 200,000 100,000
In the case of barangays, Fifty Thousand Pesos (₱50,000)

The phrase “ordinary or regular office supplies” shall be understood to include those supplies, commodities, or materials
which are necessary in the transaction of official businesses, and consumed in the day-to-day operations. However, office
supplies shall not include services such as repair and maintenance of equipment and furniture, as well as trucking, hauling,
janitorial, security, and related or analogous services.

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.

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Negotiated Procurement shall be allowed only in the following instances:
a. In case of two (2) failed biddings;
b. In case of imminent danger to life or property during a state of calamity, or when time is of the essence
arising from natural or man-made calamities or other causes where immediate action is necessary to prevent
damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities;
c. Take-over of contracts, which have been rescinded or terminated for causes provided for in the contract and existing
laws, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public
services, infrastructure facilities and other public utilities;
d. Where the subject contract is adjacent or contiguous to an on-going infrastructure project, as defined in the
IRR, subject to the following:
i. The original contract is the result of a Competitive Bidding;
ii. The subject contract to be negotiated has similar or related scopes of work;
iii. It is within the contracting capacity of the contractor;
iv. The contractor uses the same prices or lower unit prices as in the original contract less mobilization cost;
v. The amount involved does not exceed the amount of the ongoing project; and,
vi. The contractor has no negative slippage.

Provided, that negotiations for the procurement are commenced before the expiry of the original contract. Wherever
applicable, the principle shall also govern consultancy contract, where the consultants have unique experience and
expertise to deliver the required service; or,
e. Subject to the guidelines specified in the IRR, purchases of Goods from another agency of the government, such
as the Procurement Service of the DBM, which is tasked with a centralized procurement of commonly used Goods for
the government in accordance with Letters of Instruction No. 755 and Executive Order No. 359, series of 1989.
f. Scientific, Scholarly or Artistic Work, Exclusive Technology and Media Services. Where Goods, Infrastructure
Projects and Consulting Services can be contracted to a particular supplier, contractor or consultant and as determined
by the HoPE, for any of the following:
1. The requirement is for:
a. Work of art; commissioned work or services of an artist for a specific artist skill (e.g., Singer, poet, writer,
painter, sculptor, etc.);
b. Scientific, academic, scholarly work or research, or legal services;
c. Highly-specialized life-saving medical equipment, as certified by the Department of Health (DOH);
d. Scientific, technical, economic, business, trade or legal journal, magazine, paper, subscription, or other
exclusive statistical publications and references; or
e. Media documentation, advertisement, or announcement through television, radio, newspaper, internet, and
other communication media.

Due to the nature of the information to be disseminated, alongside principles of transparency, efficiency and
economy, award to more than one (1) supplier may be made by the Procuring Entity.

2. The construction or installation of an infrastructure facility where the material, equipment, or technology under a
proprietary right can only be obtained from the same contractor.

g. Highly Technical Consultants. In the case of individual consultants hired to do work that is (i) highly technical or
proprietary; or (ii) primarily confidential or policy determining, where trust and confidence are the primary
consideration for the hiring of the consultant: Provided, however, That the term of the individual consultants shall, at
the most, be on a six month basis, renewable at the option of the appointing HoPE, but in no case shall exceed the
term of the latter.
h. Defense Cooperation Agreement; Defense Inventory-Based Items-The DND may directly negotiate with an agency
or instrumentality of another country with which the Philippines has entered into a defense cooperation agreement or
otherwise maintains diplomatic relations when the procurement involves major defense equipment or material and/or
defense-related consultancy services
i. Small Value Procurement: Procurement of (a) goods not covered by Shopping under (b) infrastructure projects, and
(c) consulting services, where the amount involved does not exceed the following threshold:

1. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P1,000,000.
2. For LGUs, in accordance with the following schedule:

DOF Classification Maximum Amount (in Philippine Peso)

of LGUs Province City Municipality
1st Class 1,000,000 1,000,000 200,000
2nd Class 1,000,000 1,000,000 200,000
3rd Class 1,000,000 800,000 200,000
4th Class 800,000 600,000 100,000
5th Class 600,000 400,000 100,000
6th Class 400,000 200,000 100,000
In the case of barangays, Fifty Thousand Pesos (₱ 50,000)

j. Lease of Real Property and Venue for official use

k. NGO Participation: When an appropriation law or ordinance earmarks an amount to be specifically contracted out to
Non-Governmental Organizations (NGOs), the Procuring Entity may enter into a Memorandum of Agreement with an
NGO
l. Community Participation: Where, in the interest of project sustainability or to achieve certain specific social
objectives, it is desirable in selected projects, or its components, to call for participation of local communities in the
delivery of goods, including non-consulting services, and simple infrastructure projects, subject to the Community
Participation Procurement Manual (CPPM) issued by the GPPB
m. United Nations Agencies, International Organizations or International Financing Institutions - Procurement
from specialized agencies of the United Nations, International Organizations or International Financing Institutions
n. Direct Retail Purchase of Petroleum Fuel, Oil and Lubricant (POL) Products and Airline Tickets.

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GOVERNMENT PROCUREMENT LAW RFBT-08
1. The Government Procurement Act applies to the procurement of the following, except:
A. Infrastructure projects
B. Goods
C. Consulting services
D. None of the choices is an exception

2. First Statement: Specifications for the Procurement of Goods shall be based on relevant characteristics and/or
performance requirements.
Second Statement: Reference to brand names shall be preferred.
A. Both statements are correct
B. Both statements are incorrect
C. Only the first statement is correct
D. Only the second statement is correct

3. First Statement: A bidder may modify his bid even after the deadline for the receipt of bids.
Second Statement: 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. Both statements are correct
B. Both statements are incorrect
C. Only the first statement is correct
D. Only the second statement is correct

4. In the examination of the technical components:

A. A Pass/Fail criterion is used
B. The bids are ranked from highest to lowest
C. The bids are ranked from lowest to highest
D. Any of the choices

5. In the procurement of Consultation Services, the bidder with the Highest Rated Bid shall be invited for negotiations. If
negotiations fail, the second rank bidder shall be invited for negotiations. This process shall be repeated:
A. Upto three times until the bid is awarded to the winning bidder
B. Upto five times until the bid is awarded to the winning bidder
C. Upto ten times until the bid is awarded to the winning bidder
D. Until the bid is awarded to the winning bidder

6. After Bid Evaluation, the next step in the Competitive Bidding Process will be:
A. Invitation to Bid
B. Pre-Bid Conference
C. Post-Qualification
D. Posting of the Performance Bond

7. The stage where the bidder with the Lowest Calculated Bid or the Highest Rated Bid undergoes verification and
validation whether he passed all the requirements and conditions as specified in the Bidding Documents.
A. Bid Evaluation
B. Post Qualification
C. Award of the Contract
D. Posting of the Performance Bond

8. Negotiated Procurement may be resorted to after how many failed biddings?

A. One
B. Two
C. Three
D. Five

9. The procurement process from the opening of bids up to the award of contract generally shall not exceed:
A. 1 month
B. 3 months
C. 6 months
D. 12 months

10. In contracts for Consulting Services, the Consultant may terminate its agreement with the Procuring Entity if the latter
is in material breach of its obligations pursuant to the contract and has not remedied the same within ____ days
following its receipt of the Consultant’s notice specifying such breach.
A. 30 calendar days
B. 30 working days
C. 60 calendar days
D. 60 working days

1. D 6. C
2. C 7. B
3. D 8. B
4. A 9. B
5. D 10. C

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