Updates on the Revised Implementing Rules and Regulations of R.A. 9184 Association of Government Accountants of the Philippines (AGAP) The Legend Palawan Puerto Princesa, Palawan 21 October 2011

What is Procurement?

What is Procurement? Procurement refers to the acquisition of goods, consulting services, and the contracting for infrastructure projects by procuring entity. (Sec. 5(aa), IRR, R.A. 9184) Procurement means the acquisition by any means of goods, construction or services. (UNCITRAL Model Law on Procurement)

What is Procurement? Acquisition means the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. (FAR, US)

What is Procurement? Procurement encompasses the whole process of acquiring property or services. It begins when an agency has identified a need and decided on its procurement requirement. Procurement continues through the processes of risk assessment, seeking and evaluating alternative solutions, contract award, delivery of and payment for the property or services and, where relevant, the ongoing management of a contract and consideration of options related to the contract. (CPG, 2008)

What is Procurement? Procurement we define as the whole of life-cycle process of acquisition of goods, services and works from third parties – beginning when a requirement is first defined and ending with the ultimate disposal of an asset or end of a service contract. (P. Gershon, OGC, UK)

What is Procurement? Value for Money – is the optimum combination of whole of life costs and quality to meet the customer’s requirements… (P. G.) It must be government’s policy that all public procurement, should be based on value for money, having due regard to propriety and regularity. (P.G.)

What is Procurement? LCC – Life Cycle Costing “Cost” should consider all costs throughout the life-cycle – acquisition cost, utility costs (energy/water consumption, maintenance), and disposal costs. “C to G” vis-à-vis “C to C”

What is Procurement? 5 Rights in Public Procurement: Right Source Right Quality – Satisfaction of End-User? Quality may refer to the overall relationship and integration of effects of performance, lifespan, integrity, durability, and conformity of the goods with the technical requirements of the project. Right Quantity – (J.I.T / Lean Procurement) Right Price Right Time/Delivery

Updates on the IRR

IRR Revisions Background Harmonization Address the Needs of PEs Alignment with International Best Practices Address the Needs of PEs Concerns raised by procuring entities, bidders and observers

IRR Revisions Scope and Application (Sec. 4) All domestically-funded procurement activities All foreign-funded procurement activities, unless otherwise stated in the treaty, international or executive agreement But procurement funded thru foreign grants are excluded

IRR Revisions Scope and Application (Sec. 4) GOP negotiating panels shall: Default position - use of the IRR or selection thru competitive bidding Explain in writing if treaty, international or executive agreement states otherwise Revised IRR defines treaty, international or executive agreements, foreign loans & grants

IRR Revisions Procurement Planning (Sec. 7) No procurement shall be undertaken unless it is in accordance with the approved APP End-user units shall prepare their PPMP which shall be submitted to the budget office Budget office shall evaluate and include in budget proposal for approval of HOPE Upon approval by HOPE, budget office shall furnish a copy of budget proposal and PPMP to BAC Secretariat

IRR Revisions Procurement Planning (Sec. 7) BAC Secretariat shall review and consolidate into the proposed APP Upon approval of GAA/corporate budget/ordinance, end-user shall revise/adjust PPMP and submit to BAC Secretariat BAC shall finalize modes of procurement under the proposed APP APP shall be approved by HOPE or 2nd ranking official designated by HOPE

IRR Revisions Bids and Awards Committee (Sec. 11) Alternate BAC member allowed: Same qualification and term as principal Attend meetings and receive honoraria Accountability limited to their acts and decisions Honoraria for BAC Secretariat subject to DBM Rules

IRR Revisions Observers (Sec. 13) Allows observers from cooperatives Requires 3 days’ prior written notice for invitation of observers Requires observers to inhibit in case of actual or potential conflict of interest Access to documents upon signing of a confidentiality agreement

IRR Revisions Advertising of Invitation to Bid (Sec. 21) IAEB to Invitation to Bid (goods and infra) or Request for Expression of Interest (consulting) Includes posting in the website prescribed by the foreign government/foreign or international financing institution, for foreign-funded procurement

IRR Revisions Pre-Bid Conference (Sec. 22) May be extended at least 30 cd before bid submission Method, nature and complexity of contract Encourage international participation At the option of procuring entity, only bidders who purchased bid documents are allowed to attend or ask questions

IRR Revisions Eligibility Requirements (Secs. 23 & 24) Reduced to 5-6 documents Others to be submitted during – Post-qualification Prior to Award of Contract

IRR Revisions Submission and Receipt of Bids (Sec. 25) Two-Envelope System (Eligibility requirements included in the Technical Proposal) Documentary requirements trimmed down Project related documents lumped into one document In Infrastructure Projects, Technical (incl. eligibility requirements) and Financial Proposals will now be submitted at the same time

IRR Highlights Bid & Performance Securities (Secs. 27 & 39) Deleted certified check from acceptable forms In general, bank issued securities must be issued by a universal/commercial bank However, in biddings conducted by LGUs, securities may be issued by banks certified by BSP as authorized to issue said instruments Surety Bonds must be accompanied by certification from Insurance Commission that issuer is authorized to issue such security

Form of Bid and Performance Security Amt of Performance Security IRR Revisions Form of Bid and Performance Security Amt of Bid Security (% = ABC) Amt of Performance Security (% = Contract Price) Cash, cashier’s/manager’s check (issued by Universal/Commercial Bank 2% 5% (Goods & Consulting) 10% (Infra) Bank guarantee/draft or irrevocable LC Surety bond callable upon demand 5% 30% Combination of the foregoing Proportionate to share of form with respect to the total amount of security

IRR Revisions Bid & Performance Securities (Secs. 27 & 39) Bidder has option to choose among acceptable forms of security Procuring entity may not limit options available to bidders

IRR Revisions No Contact Rule (Sec. 32) BAC, thru Secretariat, may request for clarification of bid as long as it is in writing Bidder’s response to the BAC’s inquiry must also be in writing 25 25

IRR Revisions Post-qualification (Sec. 34) 3 cd from notice of LCB, submit the ff: Tax clearance Latest income and business tax returns Certificate of PhilGEPS registration Other appropriate licenses and permits required by law and stated in the Bidding Documents. Failure to submit on time / dubious veracity = forfeiture of Bid Security / disqualification for award

IRR Revisions Notice of Award (Sec. 37) Conditioned on the following: If joint venture, submission of JVA Posting of Performance Security Signing of Contract If required, approvals by higher authority

IRR Revisions Disclosure of Relations (Sec. 47) Relatives within the 3rd civil degree of the following shall be disqualified: Head of the procuring entity Members of the BAC, Secretariat and TWG Head of the end-user unit or project management office Project consultants

IRR Revisions Alternative Methods of Procurement (Secs. 48 to 53) Alignment with international best practices Recognized additional instances of Negotiated Procurement (e.g., procurement from UN Agencies, Community Participation) Increase in shopping/small value procurement thresholds

IRR Revisions Alternative Methods of Procurement (Secs. 48 to 53) Address concerns raised by stakeholders Clearer rules on negotiated procurement due to 2-failed bidding – submission of BAFO Increase in thresholds Lease of venue Distinguishes Agency-to- Agency Agreements from Procurement Agents Shopping clarified – Only 52.1(b) needs 3 quotations.

IRR Revisions Effectivity Transitory 2 September 2009 30 days from publication in the Official Gazette (3 August 2009) Transitory When was Invitation to Bid/Request for Expression of Interest published?

GPPB Issuances GPPB Resolution No. 08-2009 (Implementing Guidelines for Lease of Privately-owned Real Estate and Venue) GPPB Resolution No. 09-2009 (Guidelines for Shopping and Small-Value Procurement)

GPPB Issuances GPPB Resolution No. 05-2010 (Approving the Guidelines on the Procurement of Printing Services) GPPB Resolution No. 06-2010 (Approving and Adopting the 4th Edition of the Philippine Bidding Documents for Goods and Infrastructure Projects (As Harmonized with Development Partners) and Consulting Services)

GPPB Issuances GPPB Resolution No. 04-2011 (Approving Amendments to the Guidelines on the Procurement of Printing Services) GPPB Resolution No. 05-2011 (Approving the Pre-selection Procedure in the conduct of Limited Source Bidding under Section 49 of Republic Act 9184 and its Revised Implementing Rules and Regulations)

Non-Policy Matter Opinions

Repeat Order NPM No. 03-2010 What stage in the procurement process can repeat order be considered to be within the reglamentary period of 6 mos. as provided under Section 51 (c) of the of the revised IRR) of RA 9184?

Repeat Order NPM No. 03-2010 The reckoning period for computing the 6 mo. period is the effectivity date of the contract as stated in the Notice to Proceed (NTP) – Sec. 51, IRR of R.A. 9184. The contract effectivity date, as provided in the NTP, shall not be later than 7 cd from its issuance (Sec. 37.4.1 of the IRR)

Agency-to-Agency Agreements NPM No. 04-2010 Can a GOCC having its own charter, directly engage its wholly-owned subsidiary created under the Corporation Code under Section 53.5 [Negotiated Procurement (Agency-to-Agency Agreement)] of the revised IRR) of RA 9184?

Agency-to-Agency Agreements NPM No. 04-2010 As a general rule, GOCCs formed under the Corporation Code cannot enter into Agency-to-Agency Agreements Except when a parent-subsidiary relationship exists between the 2 GOCCs. As long as the parent GOCC owns directly or indirectly more than half of the voting power of its subsidiary, then it may directly engage the services of said subsidiary.

Post-qualification Requirement NPM No. 06-2010 Whether all the requirements under Section 34.2 of the IRR would have to be submitted by all the parties to a joint venture, for purposes of post-qualification, viz: Tax clearance; Latest income and business tax returns; PhilGEPS registration certificate; and Other appropriate licenses and permits required by law and stated in the bidding documents.

Post-qualification Requirement NPM No. 06-2010 The principle that all the parties to a joint venture were required to submit all legal requirements provided under the previous IRR-A is still applicable under the revised IRR. All the parties to a joint venture must still submit all the legal documents, regardless of the time/stage when these documents are required to be submitted.

Post-qualification Requirement NPM No. 06-2010 The documents enumerated under Section 34.2 of the revised IRR would have to be complied with not only by one but by all the parties to a joint venture for purposes of passing the post-qualification.

Surety Bonds as Bid and Performance Securities NPM No. 13 & 24-2010 What is the correct form of certification that should accompany the surety bond which is submitted as a bid or performance security?

Surety Bonds as Bid and Performance Securities NPM No. 13 & 24-2010 The certification which must be submitted must : Unequivocally state that the surety /insurance company is specifically authorized to issue surety bonds callable on demand, and Issued by the Insurance Commission

Bidding Documents NPM No. 14-2010 Whether a procuring entity may set a deadline for the availability of bid documents at a date earlier than the deadline for the submission and receipt of bids?

Bidding Documents NPM No. 14-2010 No. Sec. 17.3 of the revised IRR of RA 9184 mandates the BAC to make available the bid docs from the time the invitation to bid is first advertised/posted until the deadline for the submission and receipt of bids.

Bidding Documents NPM No. 14-2010 Whether a procuring entity may be allowed to partially upload bidding documents in its website and the PhilGEPS considering the large sizes of the files and the high degree of security and discretion which BSP infrastructure projects require?

Bidding Documents NPM No. 14-2010 No. Pursuant to Sec. 17.5 of the IRR, it is mandatory for procuring entities to post all its bidding documents on both its website and the PhilGEPS.

Survey of Supreme Court Decisions on Public Procurement

Section 4, R.A. 9184 Abaya vs. Ebdane 14 February 2007 DBM-PS vs. Kolonwel Trading 8 June 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.”

Protest Phil. Pharmawealth, Inc. v. Phil. Children’s Medical Center BAC, et. al. 26 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. 9184 and its IRR must be observed.

Protest DBM-PS vs. Kolonwel Trading 8 June 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

Protest First United Constructors Corp. vs. Poro Point Management Corp. 19 June 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

Technical Specifications COA vs. Link Worth Int., Inc. 13 March 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

Honoraria Sison vs. Tablang 5 June 2009 Section 15 of R.A. 9184 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”.

Splitting of Contracts Balderbin v. Sandiganbayan 22 March 2007 - Supreme Court cited COA Circular No. 76-41 in defining and identifying forms of splitting of contracts.

Discretion to Accept or Reject A Bid Albay Accredited Constructors Association v. Ombudsman 30 January 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.

COA’s Presence in Public Bidding Villanueva v. COA 18 March 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.

Perfection of Contract Insular life Assurance Co., Ltd. v. Asset Builders Corp. 5 February 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.

Thank you Comments, questions? Telephone/Fax: (+632) 900-6741 to 44 Website: http://www.gppb.gov.ph Email: gppb@gppb.gov.ph