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PHILIPPINE ASSOCIATION OF GENERAL SERVICES OFFICERS (PAGSO) 7 TH Annual Convention Bacolod Pavilion Hotel, Bacolod City May 23-26, 2012.

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Presentation on theme: "PHILIPPINE ASSOCIATION OF GENERAL SERVICES OFFICERS (PAGSO) 7 TH Annual Convention Bacolod Pavilion Hotel, Bacolod City May 23-26, 2012."— Presentation transcript:

1 PHILIPPINE ASSOCIATION OF GENERAL SERVICES OFFICERS (PAGSO) 7 TH Annual Convention Bacolod Pavilion Hotel, Bacolod City May 23-26, 2012

2 Department of Budget and Management Government Procurement Policy Board Technical Support Office NON-POLICY MATTER OPINIONS (Updates)

3 BAC Composition I. NPM , NPM , NPM , NPM “Permanent” (Section 11, RA 9184) The term does not refer to whether the person holding the plantilla position is contractual, regular, or appointed; rather, this refers to whether the position exists within the organizational structure of the procuring entity or not. Therefore, a third ranking officer occupying a position, albeit in temporary capacity, is eligible to become the Chairman of the BAC for as long as the office he is currently occupying is an existing plantilla position. The same rule applies to the designation of alternate members.

4 BAC Composition II. NPM “Approving Authority” (Section , IRR) The prohibition stated in Section of the IRR is intended to avoid any conflict of interest between the person who takes part in a procurement activity and the one approving the resulting transactions. Consequently, such prohibition does not apply to approving authorities where this conflict of interest is not present.

5 Re-assignment of BAC member NPM The operations of the BAC will be hampered by the re-assignment of a member, whether provisional or regular, if such re-assignment results in the reduction of the BAC composition to less than five (5) members. It is imperative for the HOPE to immediately replace any vacant BAC position to maintain a valid constitution of the BAC and avoid a lull in its operation.

6 Indemnification for BAC Members NPM “finally adjudged” Under Section 73 of RA 9184, in relation to the indemnification package of BAC members, the judgment contemplated therein, is a final, non- appealable and executory judgment.

7 Legal Assistance and Indemnification Package The procuring entity shall, to the fullest extent permitted, indemnify a BAC member and/or any of its support staff who was or is a party to a pending or a completed action, suit or proceeding whether civil, criminal, or administrative in nature brought against him in the performance of his official functions as BAC member or support staff. (Section 4.1.1, Guidelines for Legal Assistance and Indemnification of Bids and Awards Committee and its Support Staff) The funds to be used for the grant of the free legal assistance, liability insurance, or medical assistance shall be taken from the agency’s annual appropriation, and augmented by other funds resulting from protest fees, sale of bidding documents, and other income-generating activities of the agency. (Section 6, Guidelines)

8 Technical Working Group for the Bids and Awards Committee NPM Members of the BAC – Technical Working Group need not come from the procuring agency itself, as Section 12.1 merely mentions that the members of the TWG come from a pool of technical, financial and/or legal experts. Nowhere is it mentioned that members of the TWG should exclusively belong to the procuring entity itself.

9 Advertising and Posting Requirements NPM Aside from the required advertisement in one (1) newspaper of general nationwide circulation and posting at any conspicuous place reserved for the purpose in the premises of the procuring entity, the Invitation to Bid/Request for Expression of Interest shall be posted continuously in the PhilGEPS website, the website of the procuring entity concerned, if available, and the website prescribed by the foreign government/foreign or international financing institution, if applicable, for seven (7) calendar days starting on date of advertisement. Non-compliance thereto is a material defect in the procurement process.

10 Supplemental/Bid Bulletin I.NPM Bid Opening and Supplemental/Bid Bulletin Postponing the opening of bids through the bid bulletin, without postponing the deadline for submission of bidding documents, is contrary to the bidding procedures prescribed by RA 9184 and its IRR. The opening of bids should be conducted within the same day as, and immediately after, the deadline for the submission and receipt of bids. While the BAC erred in changing the date for the opening of bid documents, nowhere is it stated in RA 9184 and its IRR that the re-scheduling of the opening of bids automatically results to the re-scheduling of the deadline for the submission of bids.

11 Supplemental/Bid Bulletin II.NPM Modification of Bidding Documents In instances where the procuring entity sees the need to introduce any modifications or amendments to the bidding documents, it may do so motu proprio through the issuance of a supplemental/bid bulletin pursuant to Section of the same IRR. Although the technical specifications were not discussed during the pre-bid conference, the procuring entity concerned is not precluded from requiring the same, provided the appropriate supplemental/bid bulletin is issued within the prescribed time frame.

12 Accreditation System for Bidders NPM The creation of an accreditation system is not in accordance with the mandate of the present procurement law because it contravenes the very basic principles of competitive bidding. The establishment of an accreditation system within the agency would limit the participation of bidders only to the accredited suppliers, to the exclusion and prejudice of the bidders in the market.

13 Attendance of Bidders or their Duly Authorized Representative During Bid Opening NPM The attendance of the bidders in the bid opening is optional. The proof of authorization is not necessary whenever a bidder’s representative, other than the one authorized in the Omnibus Sworn Statement, attends the bid opening.

14 Submission of Photocopy of Documentary Requirements NPM , NPM The IRR allows the submission of a copy of the original documents required, provided that the bidder certifies through the Omnibus Sworn Statement that the document submitted is an authentic copy of the original, that it is complete, and that the information and statements therein are true and correct. It must be stressed, however, that the authenticity of the submitted copy must be verified, validated, and ascertained by the procuring entity during the post-qualification as prescribed in Section 34 of the IRR of RA 9184.

15 Who may request for a copy of the Minutes of the Opening of Bids? NPM “The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee” (Section 29, RA 9184). Participants or non-participants to the bidding may be given a copy of the minutes of the opening of bids upon compliance with the conditions provided by law.

16 Additional Eligibility Requirements in Bidding Documents NPM Procuring entities are proscribed from requiring additional eligibility requirements. The list of minimum eligibility requirements under the Implementing Rules and Regulations (IRR) of Republic Act (RA) 9184 has been streamlined/simplified, such that only those requirements enumerated in Section 23.1, 24.1, and 25.1 of the IRR are necessary for purposes of determining bidder’s eligibility.

17 Eligibility Requirements for Joint Venture Agreements NPM The documents to be submitted and evaluated should be those of the actual Joint Venture (JV) partners. In case one of the JV partners is also a JV, only the technical experience/capability and financial standing attributable to the JV shall be considered, and should not include those of its individual member entities.

18 Counter-Offer/ Counter-Proposal NPM Strict compliance with the eligibility, technical and financial requirements enumerated in the bidding documents must be observed. Bidders are left with no option but to provide an offer that complies with all the requirements. Compliance must be certain and absolute, otherwise, it takes the form of a counter-offer which is not allowed under RA 9184 and its IRR.

19 Single Calculated and Responsive Bid I.NPM “most advantageous prevailing price for the Government” It is the the task of the procuring entity to ensure that in adopting an ABC, the contract cost or estimate must not be excessively high or unreasonably low to the detriment of government interest. It is not necessary to have many bidders in order to receive the most advantageous bid considering that any bid that is equal or lower than the ABC, and is technically and legally compliant, is deemed most advantageous to the Government.

20 Single Calculated and Responsive Bid II. NPM – Requiring a minimum number of bidders. Requiring a minimum number of bidders to participate in a public bidding is contrary to the mandate of Section 36 on Single Calculated/Rated and Responsive Bid (SCRB). The provision instructs a Procuring Entity to consider for award a bid submitted by the lone bidder if it successfully complied with and is responsive to bidding requirements. Hence, there is no need to have a minimum, so as long as the conditions under Section 36 are met.

21 Single Largest Completed Contract NPM The SLCC criterion is so required in order to ensure that the Government is contracting with an entity that has accomplished at least one project with a value no less than fifty percent (50%) of the contract to be bid. This eligibility requirement cannot be dispensed with. Ongoing contracts cannot substitute for the requirement of completed contracts of similar nature to the contract subject for bidding.

22 Nationality Preference NPM Although procuring entities are given leeway in formulating the specifications in the terms of reference, they cannot limit the origin of goods to their preferred countries of origin to the exclusion of other countries. Thus, procuring entities are precluded from requiring a specific country of origin as part of the technical specification for the project. Rather, the specifications shall be based on the performance requirements and recognized industry standards and not on the basis of country of origin.

23 No Contact Rule NPM The “no contact rule” under Sec applies only to those whose bids are being evaluated by the BAC after passing the preliminary examination of bids. On the other hand, a disqualified bidder may provide valid, reasonable and lawful information on matters pertaining to the bids being evaluated, provided that such bidder has no pending request for reconsideration or protest relative to his/her disqualification.

24 Audited Financial Statements NPM Financial statements audited by CPAs not accredited by the Board of Accountancy (BOA) cannot be considered for purposes of Sec. 23.1(a)(v) and Sec. 24.1(a)(v) of the IRR of RA Sections 26 and 28 of the IRR of RA 9298 (Phil. Accountancy Act of 2004) provides that no person shall engage in the practice of accountancy unless he/she is a CPA and possesses a certificate of accreditation from BOA.

25 Bid Security I.NPM Forfeiture Forfeiture of bid security grounded on non-compliance with the requirements under Sec of the IRR is mandatory and is not subject to the discretion of the procuring entity.

26 Bid Security II. NPM Acceptable Forms Bidders have the option to choose from any of the acceptable forms of bid security enumerated under the IRR of RA 9184, and procuring entities may not limit the allowable forms of bid security nor prohibit bidders from submitting any of the acceptable forms of bid security. The BAC may not likewise require the same through verbal instructions during pre-bid conference. After all, no changes or modifications to the bidding documents may take effect unless identified in writing and issued through a Supplemental/Bid Bulletin.

27 Validity of Bid Security after Issuance of Notice of Award NPM The validity of the bid security is material at the time of the issuance of the NOA since the validity of the bid security signifies that the bidder’s bid or offer still stands at the time the procuring entity awarded the contract. The validity of the bid or offer is vital because the NOA or the act of acceptance by the procuring entity will be rendered nugatory and ineffectual when there is no longer an “offer” to accept. If the NOA was issued and the winning bidder has submitted a performance security within the three-month period, the requirement that the bid security should remain valid no longer finds application considering that the act, i.e. the offer, which it guarantees has already been accepted.

28 Certification issued by the Insurance Commission NPM The certification which must be submitted together with the surety bond must: 1.unequivocally state that the surety or insurance company is specifically authorized to issue surety bonds callable on demand; 2.must be issued by the Insurance Commission; and, 3.must be project specific. (Sections 27 and 39, IRR)

29 Submission of Post-qualification Documents NPM I.Bidders are not precluded from submitting the post-qualification documents during the submission of bids. However, in case there is delay in the conduct of post-qualification, it is prudent for the Procuring Entity to request for the latest and current legal documents during post-qualification to ascertain, validate and verify the authenticity and currency of the documents and establish the eligibility and responsiveness of the bidder.

30 Submission of Post-qualification Documents NPM II.The BAC cannot require submission of the Original Articles of Incorporation (AIs). Section 29.2 (d) speaks of licenses and permits required by law and stated in the Bidding Documents. Clearly, AIs do not fall in either type of documents since this is a corporate document submitted to the Securities and Exchange Commission as part of the registration requirements. Accordingly, if the requirement is merely to aid the Procuring Entity or the BAC in verifying the eligibility documents submitted, the bidder may simply submit copies of the AOI that is material to the post-qualification proceedings being conducted.

31 Offenses and Penalties Contract Award NPM Awarding of contracts beyond the prescribed period of action may be recognized for justifiable causes. (Section 65.1 (b), RA 9184) Although the periods of action under RA 9184 and its IRR are mandatory in character, penal sanctions or liability will not set in against the concerned public officers provided that valid, reasonable, and justifiable causes exist to warrant a delay.

32 Surety Bond as Warranty Security NPM The acceptable forms of warranty security in the procurement of goods are limited to retention money and special bank guarantee (Section 62.1, IRR). Surety bond, as a form of warranty, is acceptable only in case of infrastructure projects. Thus, following the principle “expressio unius est exclusio alterius”, a surety bond cannot be considered an acceptable form of warranty security for the procurement of goods.

33 Extension of Contracts for General Support Services NPM Procuring entities are allowed to extend the duration or effectivity of an ongoing contract about to expire subject to the condition that the contract extension shall not exceed one (1) year. ( Section 4.1 GPPB Revised Guidelines on the Extension of Contracts for General Support Services)

34 Warranty Security for Consulting Services NPM Sec of the IRR, insofar as it requires the posting of warranty security, does not apply to the procurement of consulting services. Procuring entities can require in consultancy contracts that the consultants warrant or ensure that they shall be liable in case of structural defects/failures under Sec and/or pecuniary civil liability and damages.

35 Computation of Liquidated Damages and Net Amount of Retention Money NPM , NPM The amount of the liquidated damages shall be at least equal to one-tenth of one percent (0.1%) of the cost of the unperformed portion for every day of delay for the procurement of goods, infrastructure projects, and consulting services.(Section 68, IRR, RA 9184)

36 Blacklisting NPM In order to properly use the “Guidelines for Blacklisting of Manufacturers, Suppliers, Distributors and Consultants, as basis for Blacklisting”, the act committed should be of the same kind as those enumerated therein. Considering that the violation of the rules and procedure on the protest mechanism under RA 9184 and its IRR does not amount to an act tending to defeat the purpose of competitive bidding, the premature resort to judicial intervention will not be considered as a ground for blacklisting.

37 Availment of Track Record under a Newly Registered Business Name NPM A newly registered sole proprietorship may use the experience of another sole proprietorship owned by the same individual. If one of the sole proprietorships is blacklisted, such blacklisting will extend to all sole proprietorships owned by the same individual.

38 ALTERNATIVE METHODS 1. SHOPPING Exemption from Obtaining Three (3) Price Quotations NPM It is beyond the power of the GPPB to grant exemptions from Republic Act No and its Implementing Rules and Regulations as it does not have the power to legislate nor determine the coverage of the law. At most, the GPPB may only render contemporaneous construction of the provisions of the law pursuant to its quasi-legislative fiat, and issue rules and regulations pursuant to its rule-making power.

39 NEGOTIATED PROCUREMENT 2.Two Failed Biddings NPM There is nothing in the rules prohibiting bidders disqualified from previous failed biddings from participating in the same procurement activity, albeit conducted through Negotiated Procurement (Two Failed Biddings).

40 3. Emergency Cases NPM Competitive bidding is the primary mode of procurement. Exceptions are allowed only if there is prior approval of the Head of the Procuring Entity (HOPE) and whenever it is justified by the conditions as well as to promote economy and efficiency. Prior approval of the GPPB in order to resort to alternative methods is not required under RA 9184 and its IRR.

41 4. Adjacent or Contiguous NPM Section 53.4 of the IRR clearly states that it applies to infrastructure projects and consulting services. Said provision does not qualify or limit the term “consulting service” to those involving infrastructure projects. Hence, Negotiated Procurement (Adjacent or Contiguous) may be used to procure all types of consulting services as defined in Section 5(i) of the IRR.

42 5.Agency-to-Agency Agreements I.NPM , NPM , NPM In cases where procurement from another agency of the government is more efficient and economical, Negotiated Procurement (Agency-to-Agency) may be used. This rule allows a government entity to procure from another government entity without need of public bidding, subject to compliance with the prescribed conditions and procedures under existing rules and the guidelines on Agency-to-Agency Agreements.

43 Agency-to-Agency Agreements II. NPM The government entity to be engaged must have the mandate to deliver the required goods and services or to undertake the infrastructure project or consultancy required. In addition, it should have the necessary tools and equipment required for the project.

44 6.Procurement Agent NPM , NPM In the event that a BAC cannot be created for lack of qualified personnel, Section 53.6 of the IRR of RA 9184 gives procuring entities the option, as determined by the HOPE, (1) to request other government agencies to undertake such procurement for them; or (2) to engage procurement agents to assist them directly and/or train their staff in the management of procurement function.

45 7. Small Value Procurement NPM , NPM Small Value Procurement is allowed where the procurement does not fall under Shopping in Section 52 of the IRR, and the amount of the procurement must be within the threshold amount prescribed under Annex “H” of the IRR, subject to the procedural requirements under the Guidelines for Shopping and Small Value Procurement. However, if the goods to be purchased can be considered as “ordinary or regular office supplies” not available in the Procurement Service, then the alternative method of Shopping can be used subject to the prescribed thresholds and guidelines.

46 NEGOTIATED PROCUREMENT Exemption from Resort to Negotiated Procurement NPM , NPM Since the general rule is public bidding, the procuring entity is not precluded from applying such method regardless of the existence of conditions warranting the use of any of the alternative methods of procurement.

47 NEGOTIATED PROCUREMENT Resolution of the BAC – When necessary? NPM Section 53.2 of the IRR allows procuring entities to directly negotiate with a technically, legally and financially capable supplier or contractor in emergency cases, provided that the required conditions or instances are present. The determination of existence of these instances lies within the discretion of the procuring entity. Accordingly, if the project was not included in the APP of the procuring entity, then it is essential that a BAC resolution recommending the use of alternative method be made; and a supplemental APP or an amendment thereto be issued before proceeding with the procurement.

48 Infrastructure Projects by Administration NPM In case of Infrastructure Projects by Administration, the procuring entity acts as the contractor, hence, it is tasked to prepare the Program of Work, as provided under the Revised Guidelines for the Implementation of Infrastructure Projects by Administration. However, the cost of rental of construction equipment and tools to be used in the project should not form part of the Program of Work as it is a condition precedent that the procuring entity must own it.

49 Procurement of Security and Janitorial Services and Multi-Year Contracts I.NPM Coverage Section 2 of the Guidelines clearly indicates that it shall apply to all government agencies, without any distinction or qualification. Thus, following the well-recognized rule “ubi lex non distinguit, nec nos distinguire debemus”, the Guidelines also applies to GOCCs.

50 Procurement of Security and Janitorial Services and Multi-Year Contracts II. NPM – Applicability The Guidelines on the Procurement of Security and Janitorial Services, does not make any categorical pronouncement that multi-year contracts may be availed of only in the case of janitorial and security services contracts; rather, said Guidelines simply state that it shall be applicable to the procurement of janitorial and security services.

51 Procurement of Security Services NPM All private security agencies participating in the bidding for government contracts may offer different bid prices, provided that they do not go below the standard salaries and benefits and the mandated taxes in the minimum cost distribution formula. (Section 4, GPPB Circular ) Government agencies are likewise advised to require bidders to indicate in their financial proposal the itemized components of the minimum cost distribution formula to facilitate the evaluation of bids. (Section 5, GPPB Circular ) Hence, the requirement under Section 19 (a)(5) of the IRR of RA 5487, requiring private security agencies, to ensure that separation and retirement pay benefits due their security personnel are duly paid, cannot be omitted by procuring entities from the detailed cost breakdown of the financial bid form used for the procurement of security services.

52 PADPAO Rate NPM The Philippine Association of Detective and Protective Agency Operators (PADPAO) Rate includes three components – Total Amount to Guard and Government, Agency Fee and VAT. A Philippine Security Agency (PSA) bidding for government contracts may offer different bid prices below the PADPAO rate without being charged of cut-throat competition or violating the provisions of the IRR of RA 5487, provided that they do not go below the standard salaries and benefits for the guards and the mandated taxes in the minimum cost distribution formula in conformity with existing wage laws. Impliedly, the PSA can offer an amount lower than the PADPAO rate by reducing the agency fee covering operational and administrative expenses in computing for its bid price. The administrative cost or agency fee is included in the PADPAO rate.

53 Procurement of Printing Services (GPPB Resolution No ) NPM , NPM Despite the exclusion of GOCCs incorporated under BP 68 in the definition of Servicing Agency in GPPB Resolution , and the fact that APO is a GOCC incorporated under BP 68, APO is nevertheless allowed to be engaged as a Servicing Agency only for the printing of Accountable Forms and Sensitive high Quality/Volume Requirements by virtue of the recognition accorded to it by RA 9970 and RA as a Recognized Government Printer.

54 Request for Price Escalation NPM The burden of proving the occurrence of extraordinary circumstances that will allow for price escalation rests with the entity requesting for such escalation. NEDA shall only respond to such request after receiving the proof and the necessary documentation. Along this line, the review and approval process under Section 5 of the Guidelines provide that the HOPE shall endorse the request for price escalation to NEDA upon determination that such request is valid and justified.

55 THANK YOU Comments… Questions…

56 Survey of Supreme Court Decisions on Public Procurement

57 Section 4, R.A Abaya vs. Ebdane G.R. No , February 14, 2007 DBM-PS vs. Kolonwel Trading G.R. No , June 8, 2007 – Loan Agreement, through Exchange of Notes, executed by the President with an IFI is an “Executive Agreement” and must be observed pursuant to “pacta sunt servanda.”

58 Nature of Public Bidding National Power Corporation vs. Pinatubo Commercial, represented by Alfredo A. Dy G.R. No , March 26, 2010  The bidding process was not a “free-for-all” where any and all interested parties, qualified or not, could take part. RA 9184 categorically mandates that prospective bidders are subject to eligibility screening, and as earlier stated, bidding rules may specify other conditions or order that the bidding process be subjected to certain reservations or qualifications.  The competitiveness policy of a bidding process presupposes the eligibility and qualification of a contestant; otherwise, it defeats the principle that only “responsible” and “qualified” bidders can bid and be awarded government contracts. Our free enterprise system is not based on a market of pure and unadulterated competition where the State pursues a strict hands-off policy and follows the let-the-devil-devour-the-hindmost rule.

59 Technical Specifications COA vs. Link Worth Int’l., Inc. G.R. No March 13, 2009 – Procuring entity must verify, inspect and test whether the technical specifications comply with its requirements – It does not give occasion for procuring entity to arbitrarily exercise its discretion and brush aside the very requirements it specified

60 Determination of the Nature of the Subject Matter of Procurement Department of Foreign Affairs and Bangko Sentral ng Pilipinas vs. Hon. Franco T. Falcon and BCA International Corporation G.R. No September 1, 2010  The e-Passport Project cannot be considered as "engineering works or a service contract" or as "related and necessary activities" under Republic Act No which may not be enjoined.. Under Republic Act No. 8975, a "service contract" refers to "infrastructure contracts entered into by any department, office or agency of the national government with private entities and nongovernment organizations for services related or incidental to the functions and operations of the department, office or agency concerned."  Indeed, the reference to Section 30.4 of the IRR of Republic Act No (a provision specific to the procurement of goods) in the BSP’s request for interest and to bid confirms that the e-Passport Project is a procurement of goods and not an infrastructure project. Thus, within the context of Republic Act No – which is the governing law for the e- Passport Project – the said Project is not an infrastructure project that is protected from lower court issued injunctions under Republic Act No. 8975, which, to reiterate, has for its purpose the expeditious and efficient implementation and completion of government infrastructure projects.

61 Splitting of Contracts Balderbin v. Sandiganbayan G.R. Nos , March 22, 2007  A BAC member, aware of the splitting of transactions of accounts, proceeded with signing the Abstract of Bids claiming that the same was done in good faith and that he did not participate in said splitting of accounts.  The BAC member cannot claim good faith and avoid criminal liability. He knew of the splitting of contracts and the same cannot be ignored.  Supreme Court cited COA Circular No in defining and identifying forms of splitting of contracts. 61

62 Discretion to Accept or Reject A Bid Albay Accredited Constructors Association v. Ombudsman G.R. No , January 30, 2006 – The discretion to accept or reject a bid and award contracts is vested in the government agencies entrusted with that function. The discretion given to authorities to accept or reject a bid is of such wide latitude that courts will not interfere, unless it is apparent that it is exercised arbitrarily, or, used as a shield to a fraudulent award. 62

63 Effect of Reservation Clause National Power Corporation Vs. Philipp Brothers Oceanic, Inc. G.R. No November 20, 2001  NAPOCOR was not bound under any contract to approve PHIBRO's pre-qualification requirements.  Where the right to reject is so reserved, the lowest bid or any bid for that matter may be rejected on a mere technicality.  Where the government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown.  Verily, a reservation of the government of its right to reject any bid, generally vests in the authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.

64 COA’s Presence in Public Bidding Villanueva v. COA G.R. No March 18, 2005 – Upon the agency that called for the bidding, therefore, rests the burden of ensuring that the process undertaken is above-board and that the outcome thereof is most advantageous to the government. The presence of the COA representative, as witness or observer, on the other hand, is fundamental only to the extent of guaranteeing documentary integrity and transparency in the bidding process. 64

65 Perfection of Contract The Insular Life Assurance Company, Ltd. Vs. Asset Builders Corporation, G.R. No February 5, 2004 – The effect of giving the Notice of Award … would have been the perfection of the contract. No such acceptance was communicated to respondent; therefore, no consent was given. Without that express manifestation, as required by the terms of its proposal, there was no contract. 65

66 Importance of Bid Security The Insular Life Assurance Company, Ltd. Vs. Asset Builders Corporation G.R. No February 5, 2004 The "bid bond is an indispensable requirement for the validation of a bid proposal. This requisite ensures the good faith of bidders and binds them to enter into a contract with the owner, should their proposal be accepted. One who submits a bid not only signifies assent to the terms and conditions of a proposal, but impliedly binds oneself to them, if and when the bid is considered. The Invitation to Bidders even provided that incomplete proposals might be sufficient cause for their rejection. If mere insufficiency of a bond required of a bidder is a ground for rejection, a fortiori, all the more so is the total want thereof.

67 Honoraria Sison vs. Tablang G.R. No , June 5, 2009 – Section 15 of R.A authorizing grant of honoraria is not self-executing. It still needs an implementing guideline. – Honorarium is something given not as a matter of obligation but in appreciation for services rendered. Section 15 uses the word “may”. NOTE: DBM Circ. No A, as amended by DBM Circ

68 Protest Phil. Pharmawealth, Inc. v. Phil. Children’s Medical Center BAC, et. al. GR No June 2006 The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate administrative authorities to accord them the prior opportunity to decide controversies within their competence before the same may be elevated to the courts of justice for review. Protest Mechanism under R.A and its IRR must be observed. 68

69 Protest LRA v. Lanting Security and Watchman Agency GR No July, 20, 2010 Sec. 55 of RA 9184, the Government Procurement Reform Act, sets three requirements that must be met by a party desiring to protest the decision of the Bids and Awards Committee (BAC): (1) the protest must be in writing, in the form of a verified position paper; (2) the protest must be submitted to the head of the procuring entity; and (3) the payment of a non-refundable protest fee. Respondent’s letter of November 19, 2004 to the LRA Chair of the BAC-Procurement of Goods, Services and Materials (BAC- PGSM) cannot be considered as the protest required under sec. 55 of RA 9184 as it was not verified and the protest fee was not paid.

70 Protest DBM-PS vs. Kolonwel Trading G.R. No , June 8, 2007 – Three elements of a Protest: In writing, in the form of a verified position paper Submitted to the head of the procuring entity Payment of a non-refundable protest fee – Protest mechanism applies to foreign-funded projects

71 Protest First United Constructors Corp. vs. Poro Point Management Corp. G.R. No , January 19, 2009 – Petitioner violated doctrine of judicial hierarchy in directly filing its petition for Certiorari before the Supreme Court One must first invoke special and important reasons

72 Negotiated Procurement: Delay in the Use of Funds Nava vs. Palattao G.R. No August 28, 2006  The head of the procuring entity persuaded his 7 Schools Division Superintendents to ignore Circular No (public bidding). As allegedly time was of the essence in making the purchases and if not done before the calendar year 1990, the funds allotted will revert back to the general fund.  There was no showing of any immediate and compelling justification for dispensing with the requirement of public bidding. Unsubstantiated reasoning that a public bidding would unnecessarily delay the purchase is unacceptable.

73 Allied Supreme Court Decisions

74 People of the Philippines vs. Sandiganbayan G.R. Nos March 28, 2006 Facts: The BAC awarded a bidder an infrastructure project despite knowledge that the bidder (a construction firm) was not qualified for not being accredited by the Philippine Contractor’s Accreditation Board (PCAB). Hence, BAC members were accused of violating RA 3019 for “knowingly approving or granting a license of any person not qualified for or not legally entitled to such license”. Issue: Whether or not a BOT project proponent needs to register with and be accredited by the PCAB Whether or not a MOA under the BOT scheme is valid without public bidding

75 People of the Philippines vs. Sandiganbayan G.R. Nos March 28, 2006 Ruling: A BOT project proponent is not a contractor to undertake actual construction for the project and thus it need not register with and be accredited by the PCAB. The requirement of public bidding, as well as the process and procedures thereof, mandated by the BOT law do not apply to unsolicited proposals for projects. Projects to be implemented under unsolicited proposals need not comply with the requirements, process and procedures of public bidding.

76 Macalintal vs. COMELEC G.R. No July 10, 2003 Facts: Congress enacted R.A (The Overseas Absentee Voting Act of 2003). The petitioner Macalintal questions, among others, the constitutionality Section 19 of R.A which provides for the creation of a Joint Congressional Oversight Committee with the power to review, revise, amend and approve the implementing rules and regulations promulgated by the COMELEC. He contends that R.A intrudes into the independence of the COMELEC which, as a constitutional body, is not under the control of either the executive nor the legislative departments of government; that only the COMELEC itself can promulgate rules and regulations which may be changed or revised only by the majority of its members.

77 Macalintal vs. COMELEC G.R. No July 10, 2003 Issue: Whether or not Section 19 of R.A is constitutional? Ruling: The Commission on Elections is a constitutional body. It is intended to play a distinct and important part in our scheme of government. In the discharge of its functions, it should not be hampered with restrictions that would be fully warranted in the case of a less responsible organization. The Commission may err, so may this court also. By vesting itself with the powers to approve, review, amend, and revise the IRR for The Overseas Absentee Voting Act of 2003, Congress went beyond the scope of its constitutional authority. Congress trampled upon the constitutional mandate of independence of the COMELEC. Under such a situation, the Court is left with no option but to withdraw from its usual reticence in declaring a provision of law unconstitutional.

78 G & S Transport Corporation Vs. Court of Appeals, G.R. No May 28, 2002 Facts: MIAA initiated proceedings for public bidding to choose two (2) concessionaires of the coupon taxi services at the NAIA. Five (5) firms pre-qualified to join the bidding including petitioner G & S and respondents Two Thousand (2000) Transport Corporation (2000 TRANSPORT) and Nissan Car Lease Philippines, Inc. (NISSAN), after complying with the terms of reference, the instructions to bidders and the invitation to bid. MIAA selected 2000 TRANSPORT and NISSAN as the winning bidders and issued in their favor the respective notice of awards of the coupon taxi service concession.

79 G & S Transport Corporation Vs. Court of Appeals, G.R. No May 28, 2002 Issue: Whether or not permanent injunction to bar the award of the concession to 2000 Transport and Nissan is proper? Ruling: - Indeed the determination of the winning bidders should be left to the sound judgment of the MIAA which is the agency in the best position to evaluate the proposals and to decide which bid would most complement the NAIA's services. The Terms of Reference for Coupon Taxi Service Concession observed, "[t]he professional transport service plays a very important role in enhancing and maintaining a good image of the country that will speak of trust, honesty, efficiency and modernity." - In this regard only the most advantageous bids would be selected on the basis of the best bid offer in relation to the bidders' existing facilities, financial standing, organizational set-up, relevant experience, quality, capability and kind of services offered.

80 Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla G. R. No September 18, 2002 Facts: Pursuant to RA 8189 or the Voters Registration Act of 1996, COMELEC promulgated Resolution No on the VRIS Project. PHOTOKINA won the public bidding conducted for the project for the bid amount of P6.588 billion pesos. Both parties proceeded to formalize the contract. However, the budget appropriated for the modernization project under RA 8760 was only P1 billion and actual available funds under the CAF was only P1.2 billion. The contract was not executed because former Chairman Demetriou objected to the contract. Her successor, Chairman Benipayo, scrapped the project.

81 Commission on Elections Vs. Judge Ma. Luisa Quijano-Padilla G. R. No September 18, 2002 Issue: Whether or not the contract between PHOTOKINA and COMELEC is valid and binding upon the unqualified acceptance of the bid? Ruling: There is no way that a government agency could enter into a contract with a bidder whose accepted bid was way beyond the amount appropriated by law for the project. The BAC should have rejected the bid for being excessive or should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is null and void.

82 Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No March 17, 2000 Facts: Bohol Agricultural College purchased chemicals priced at P10, from JDS Traders, which was one of the three suppliers requested by the College for quotations. Accused Froilan of the JDS Traders signed a certification stamped on the purchase order that he will refund the difference if the prices are found to be overpriced. Three years after, COA demanded the settlement from Froilan of a refund of the amount found to have been overpriced, P5, Notwithstanding the refund made by Froilan, an information for violation of Sec 3(g) of RA 3019 was filed against him.

83 Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No March 17, 2000 Issue: Whether or not Froilan was guilty of causing damage to the government in terms of overpricing when he guaranteed the refund of whatever overprice the COA will find later on?

84 Julius G. Froilan vs. The Honorable Sandiganbayan G.R. No March 17, 2000 Ruling: Conspiracy in this case could not have existed in the criminal act of causing damage to the government in terms of overpricing the goods bought by the latter from petitioner when, in reality, petitioner gave his guarantee to refund whatever overpricing the Commission on Audit will find out later on. It was not disputed that when the COA found an overprice in the amount of P5, and sought a refund thereof, petitioner, true to his promise, did actually make a refund. When the government is amply protected in a procurement transaction, the contract is not grossly and manifestly disadvantageous to it. Conspiracy could not exist in the criminal act of causing damage to the government in terms of overpricing the goods bought by the government from a private entity when the latter gave its guarantee to refund whatever overpricing the Commission on Audit will find out later on.

85 Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto, G.R. No July 31, 2000 Facts: The City Government of Legazpi City invited bidders to participate in the development and construction of the Legazpi City Public Market. The project was awarded to Liberty Commercial Center. A renewable 50-year contract of lease with Liberty was entered into by the city government. Liberty will construct a public market on the property of the government and thereafter pay the latter P5.5 million annually for the lease of the property. Transfer of ownership of the public market will be transferred to the city government at the end of the 50-year lease. Complaint was filed against respondents before the Office of the Ombudsman on violations of Sec. 3(e), (g) and (j) of Republic Act No. 3019, which was dismissed.

86 Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto, G.R. No July 31, 2000 Issues: Whether or not the lease transaction falls under the BOT law or RA 9184? Whether or not the payment of rent on an annual basis is prejudicial to the government?

87 Rodolfo Madrid, Jr. vs. Hon. Aniano A. Desierto G.R. No July 31, 2000 Ruling: The requirements under R.A on approval from the ICC of NEDA Board refer to transaction under the build-operate-transfer scheme of the government and not to contract involving lease of property just like the one involved in the instant case.All the elements of a contract of lease are present in the transaction.(A transaction that would now fall under general procurement law or RA 9184, comment ours)There is a subject matter, the use of the property of the Legazpi City; a cause or consideration which is the amount of rental that shall be paid by the LCC; and consent among the parties. The mere provision in the contract that the building shall belong to the city government of Legazpi at the termination of the contract will not be sufficient to classify the transaction under the BOT scheme. This kind of provision is ordinary in long-term lease agreement. The option given to LCC to pay rent on a monthly basis (instead on an annual basis) is not prejudicial to the government. Whether the rent is paid monthly or annually would result in the same thing – the receipt by the government of the same sum of money. Mere reference made in the contract that the amount of rent shall be such amount annually does not necessarily mean that payment should be made in an annual basis.

88 ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL G.R. No. L November 29, 1966 Facts: During the rebidding conducted by the Committee on Bids (composed of City Mayor, Treasurer and Auditor), it was alleged that the Mayor was represented by someone else. There was contention that the Committee on Bids was illegally convened as the law does not allow substitution.

89 ANTONIO J. VILLEGAS vs. THE AUDITOR GENERAL G.R. No. L November 29, 1966 Issue: Whether or not there can be valid substitution in the Committee on Bids. Ruling: Well established is the principle that judicial or quasi- judicial powers may not be delegated. In the absence of constitutional or statutory authority, an administrative officer may not alienate or surrender his discretionary power or power's which require exercise of judgment, or deputize another for him with respect thereto. For, when a public official is granted discretionary power, it is so be presumed that so much is reposed on his integrity, ability, acumen, judgment.

90 RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No May 10, 2005 Facts: The Governor issued a memorandum to approve purchase orders in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan. The Vice- Governor, and head of presiding officer of the Sangguniang Panlalawigan, claims that he is the one authorized to approve the purchase orders invoking the principle of separation of powers between the executive and legislative branches of government. The Governor on the other hand, insists on the application of the last clause in Section 344 (Local Government Code) which states that the approval of the disbursement by the local chief executive is required whenever local funds are disbursed.

91 RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No May 10, 2005 Issue: Whether or not the Governor (as local chief executive) is authorized to approve purchase orders issued in connection with the procurement of supplies, materials, equipment, including fuel, repairs and maintenance of the Sangguniang Panlalawigan.

92 RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No May 10, 2005 Ruling: The Supreme Court held that it is the Vice- Governor who has such authority. Under Rep. Act No. 7160, local legislative power for the province is exercised by the Sangguniang Panlalawigan and the Vice-Governor is its presiding officer. Being vested with legislative powers, the Sangguniang Panlalawigan enacts ordinances, resolutions and appropriates funds for the general welfare of the province in accordance with the provisions of Rep. Act No

93 RAMON M. ATIENZA, vs. JOSE T. VILLAROSA G.R. No May 10, 2005 Since it is the Vice-Governor who approves disbursement vouchers and approves the payment for the procurement of the supplies, materials and equipment needed for the operation of the Sangguniang Panlalawigan, then he also has the authority to approve the purchase orders to cause the delivery of the said supplies, materials or equipment. Indeed, the authority granted to the Vice-Governor to sign all warrants drawn on the provincial treasury for all expenditures appropriated for the operation of the Sangguniang Panlalawigan as well as to approve disbursement vouchers relating thereto is greater and includes the authority to approve purchase orders for the procurement of the supplies, materials and equipment necessary for the operation of the Sangguniang Panlalawigan.

94 Quisumbing v. Garcia, G.R , December 8, 2008 Sec. 22(c) of R.A. No provides: Sec. 22. Corporate Powers.—(a) Every local government unit, as a corporation, shall have the following powers: (c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the local government unit without prior authorization by the Sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.

95 As it clearly appears from the foregoing provision [Sec. 22(c)], prior authorization by the sanggunian concerned is required before the local chief executive may enter into contracts on behalf of the local government unit. The requirement was deliberately added as a measure of check and balance, to temper the authority of the local chief executive, and in recognition of the fact that the corporate powers of the local government unit are wielded as much by its chief executive as by its council.

96 And so, to give life to the obvious intendment of the law and to avoid a construction which would render Sec. 22(c) of R.A. No meaningless, disbursement, as used in Sec. 346, should be understood to pertain to payments for statutory and contractual obligations which the sanggunian has already authorized thru ordinances enacting the annual budget and are therefore already subsisting obligations of the local government unit. Contracts, as used in Sec. 22(c) on the other hand, are those which bind the local government unit to new obligations, with their corresponding terms and conditions, for which the local chief executive needs prior authority from the sanggunian.

97 THANK YOU… Atty. Dennis S. Santiago Executive Director III Comments, Questions? Telephone/Fax: (+632) to 44 Website:

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