1. Marilou Dones Reyes State Auditor V National Capital Region Local Government Sector Commission on Audit Navotas City Barangays August 6, 2011 Orientation on the Revised Implementing Rules and Regulations of RA 9184

2. Contract Implementation 2

3. 1. Section 4.3 of the Revised IRR of RA 9184  Single advance payment not to exceed 50% of the contract price for the ff. services:  Hotel and restaurant services  Use of conference/seminar and exhibit areas  Lease of office space 

4. 2. Section 4.4 of the revised IRR  Advance payment not to exceed 15% allowed to address contingencies arising from natural or man- made calamities in areas where “state of calamity” has been declared 3. Section 4.5 as amended by Memorandum Order No. 15 dated May, 2011, for goods other than those covered by conditions 1 and 2 above, 15% of the contract price shall be paid within 60 days from signing of contract and upon submission of a claim and an irrevocable letter of credit or bank guarantee

5.  Requirements:  Written request of the contractor  Submission of an irrevocable standby letter of credit of equivalent value from a commercial bank, bank guarantee, or surety bond  Amount not to exceed 15% of the contract price

6.  Once a month, contractor may submit a statement of work accomplished (SWA) or Progress billing together with request for progress payment  The procuring entity's representative evaluates the claim and certify the amount to be paid to the contractor as progress payment.  Progress payments subject to 10% retention money PROGRESS PAYMENT and RETENTION MONEY (INFRA)

7.  Conditions  Deducted until 50% of the works has been completed  If after 50%, work is satisfactory and on schedule, no additional retention is made, otherwise 10% shall be imposed PROGRESS PAYMENT and RETENTION MONEY (INFRA)

8.  Total retention money shall be due for release upon final acceptance of the works  Contractor may request substitution of the retention money for each progress billing with irrevocable standby LC, bank guarantee, or surety bonds callable on demand, of equivalent amount to the retention, posted in favor of the procuring entity  To cover uncorrected discovered defects and third party liability PROGRESS PAYMENT and RETENTION MONEY (INFRA)

9. TypePeriodForm Percentage of Contract Price Expendable 3 mos., unless earlier consumed Special bank guarantee or Retention money 10% Non- expendable 1 year Service None

10. Form of Warranty SecurityAmt of Warranty Security (% of Contract Price) a)Cash or LC from a Universal/Commercial Bank 5% b) Bank guarantee from Universal/Commercial Bank 10% c)Surety bond callable upon demand issued by GSIS or a surety/insurance company certified by the Insurance Comm. 30% W ARRANTY S ECURITY ( INFRA )

11.  Warranty Security – Infra (Sec. 62)  Warranty period vs. Warranty security period  Warranty security period reduced to 1 year from issuance of the Certificate of Final Acceptance  Liability per stage  From project construction to final acceptance  From project completion to final acceptance  From final acceptance to warranty security period W ARRANTY S ECURITY ( INFRA )

12. PLAN / BUDGET STARTACCEPT END End of W S COMPLETE BID Security WARRANTY Security PERFORMANCE Security 1 yr PRECON Period IMPLEMENTATION Period WARRANTY Period Defect / liability Period PROJECT CYCLE / MILESTONES CARI CARI Payments Payments - Advance - Progress - Final - Retention money

13.  Fails to perform obligations within specified schedule, inclusive of duly granted time extensions  Imposed for every day of delay until performance and acceptance  PE need not prove it incurred actual damages

14.  Amount is 1/10 of 1% of the cost of the unperformed portion for every day of delay  If sum of liquidated damages reaches 10% of the contract amount, PE shall automatically rescind the contract

15.  Allowed as long as stated in bid docs  Bid docs shall identify portions of the contract which may be subcontracted which shall not exceed the maximum percentage limitations  Goods – no limit  Infra – 50%  Subcontracting shall not relieve the principal from any liability or obligation  Subcontractor may be identified at any stage of the bidding process or during contract implementation S UB - CONTRACTING

16.  If subcontractor is disclose during bid submission, bidder shall include the required documents as part of the bid’s technical component.  Subcontractors must comply with the eligibility criteria and documentary requirements as specified by the PE in their bid docs  If sub-contractor is ineligible, sub-contracting shall be disallowed.  Proposed sub-contractor may be changed during contract implementation upon HOPE’s approval. S UB - CONTRACTING

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18. MODES OF PROCUREMENT ALTERNATIVE METHODS OF PROCUREMENT

19.  General Rule: Public Bidding  APP provides sufficient lead time for bidding  Resort to Alternative Methods allowed -  Highly exceptional cases  To promote economy and efficiency  Justified by conditions specified in IRR ALTERNATIVE METHODS

20.  Types of Alternative Methods  Limited Source Bidding  Direct Contracting  Repeat Order  Shopping  Negotiated Procurement ALTERNATIVE METHODS

21. LIMITED SOURCE BIDDING  Applicability:  Goods  Consulting services  Conditions:  Highly specialized types where only a few bidders are known to be available  Major plant components beneficial to limit bidding to known qualified bidders to maintain uniform quality and performance of the plant

22. LIMITED SOURCE BIDDING  List to be maintained by the relevant government authority  PE may be the relevant government authority  Should be submitted to the GPPB  Pre-selection based on capability and resources to perform the contract taking into account:  experience and past performance on similar contracts  capabilities with respect to personnel, equipment, and/or manufacturing facilities  financial position  Pre-selection procedure to be provided in GPMs

23. DIRECT CONTRACTING  Applicability:  Goods  Conditions:  Items of proprietary nature from proprietary source  Critical components from a specific supplier to hold a contractor to guarantee its project performance  Items sold by an exclusive manufacturer or dealer no other suppliers selling it at lower prices no suitable substitute can be obtained at more advantageous terms to the Government

24. REPEAT ORDER  Applicability:  Goods  Conditions: o Same or lower unit prices, provided that such prices are still the most advantageous to the GOP after price verification o No splitting of contracts o Availed of w/in 6 mos. from the contract effectivity date stated in the NTP arising from the original contract, except in cases duly approved by the GPPB o Not to exceed 25% of the quantity of each item o Original contract awarded through competitive bidding

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

26.  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) REPEAT ORDER

27. SHOPPING & SMALL VALUE  Applicability of Shopping [§§52.1(a) and (b)]:  Goods  Conditions [Shopping under §52.1(a)]: 1. There is an unforeseen contingency requiring immediate purchase 2. Amount does not exceed the threshold

28. SHOPPING & SMALL VALUE  Conditions [Shopping under §52.1(b)]: 1. Procurement of ordinary or regular office supplies and equipment not available in PS-DBM 2. Amount does not exceed the threshold

29.  Applicability of Small Value Procurement [§53.9]: ALL  Conditions: o Procurement does not fall under Shopping [§52] o Amount does not exceed the threshold SHOPPING & SMALL VALUE

30. ◦ Guidelines for the Implementation of Shopping and Small Value Procurement (Res. 09 – 2009, dated 17 Dec. 2009) General Guidelines:  Decision to resort to shopping/small value procurement done in context of APP  Splitting of contracts is strictly prohibited  After approval, BAC may delegate execution to the appropriate bureau, committee or support unit. SHOPPING & SMALL VALUE

32. ◦ Guidelines for the Implementation of Shopping and Small Value Procurement (Res. 09 – 2009, dated 17 Dec. 2009) Procedural Guidelines:  RFQ should indicate the following: a) Specification; b) Quantity; c) ABC; d) Terms and conditions of the item to be procured; and e) Manner by which price quotation must be submitted (i.e. open or sealed quotations) SHOPPING & SMALL VALUE

33. Procedural Guidelines  Information relating to examination, evaluation & comparison of quotations shall be kept confidential  Post RFQs for 7 cd in the following: a) website of PhilGEPS and procuring entity, and b) any conspicuous place ` Except:  When there is an unforeseen contingency requiring immediate purchase under Sec. 52.1(a)  RFQs with ABCs < PhP. 50,000 SHOPPING & SMALL VALUE

34. Procedural Guidelines:  Post awards in the following: a) website of PhilGEPS and procuring entity, if available, and b) any conspicuous place Except: RFQs with ABCs < PhP. 50,000 SHOPPING & SMALL VALUE

35. Procedural Guidelines:  Procuring entity must validate whether it is entering into a contract with a technically, legally and financially capable supplier, contractor or consultant by requiring the submission of relevant documents or through other means. SHOPPING & SMALL VALUE

36.  Format changes  Alignment with international best practices & addresses concerns raised by stakeholders  Clearer rules on Negotiated Procurement due to 2-Failed Biddings.  Recognized additional instances of Negotiated Procurement NEGOTIATED PROCUREMENT

37. NEGOTIATED PROCUREMENT TWO FAILED BIDDINGS  Applicability: ALL  Conditions: 1. Two failed biddings 2. Mandatory review of the following: Minimum technical specifications ABC, which may be adjusted up to 20% from last bidding  Invite sufficient number to ensure competition

38.  Information communicated on an equal basis  Simultaneous negotiations  Submission of best and final offer on a specified date  Successful offer to be selected must meet minimum technical specification and does not exceed ABC  Observers shall be invited in all stages NEGOTIATED PROCUREMENT TWO FAILED BIDDINGS

39.  Applicability: ALL  Conditions:  Imminent danger to life or property during a state of calamity  When time is of the essence arising from natural or man-made calamities  Other causes where immediate action is necessary: To prevent damage to or loss of life or property To restore vital public services, infrastructure facilities, and other public utilities NEGOTIATED PROCUREMENT EMERGENCY CASES

40.  Negotiate with any supplier, contractor, or consultant with technical, legal, and financial capability  Supplier, contractor or consultant need not be within the locality where the emergency or calamity occurred or a previous supplier, contractor or consultant of the procuring entity concerned. NEGOTIATED PROCUREMENT EMERGENCY CASES

41.  Applicability: ALL  Conditions:  Rescinded or terminated contract  Immediate action is necessary: To prevent damage to or loss of life or property To restore vital public services, infrastructure facilities, and other public utilities NEGOTIATED PROCUREMENT TAKE – OVER OF CONTRACTS

42.  Negotiate starting with the 2 nd LCB/HRB at the bidder’s original bid price, then to the next if negotiation fails  If negotiation fails, invite a short list of at least 3 to submit bids and negotiate starting with the LCB or HRB NEGOTIATED PROCUREMENT TAKE – OVER OF CONTRACTS

43.  Applicability: Infra and Consulting  Conditions: o Subject contract is adjacent or contiguous to an on- going infra or consulting o Original contract is a result of competitive bidding o Subject contract has similar/related scopes of work o Within the contractor’s/consultant’s capacity o Same prices or lower unit prices as the original contract less mobilization cost NEGOTIATED PROCUREMENT ADJACENT OR CONTIGUOUS

44.  Applicability: Infra and Consulting  Conditions: (Cont.) o Amount does not exceed amount of the on-going project o No negative slippage o Negotiations commenced before expiry of original contract NEGOTIATED PROCUREMENT ADJACENT OR CONTIGUOUS

45.  Applicability: ALL I mplementing Guidelines on Agency-to-Agency Agreements (GPPB Res. 18-2007, dated 31 May 2007)  General Conditions: o Cost-benefit analysis indicating A-to-A is more efficient and economical o A-to-A does not exceed 25% of PE ’ s total budget for each category (goods, infra, consulting) NEGOTIATED PROCUREMENT AGENCY TO AGENCY

46. Implementing Guidelines on Agency-to-Agency Agreements (GPPB Res. 18-2007, dated 31 May 2007)  General Conditions: (Cont.) o Servicing agency has mandate to undertake the project o Servicing agency owns or has access to necessary tools required for the project o Procuring Agency may require Servicing Agency to post a performance and/or warranty security NEGOTIATED PROCUREMENT AGENCY TO AGENCY

47. Implementing Guidelines on Agency-to-Agency Agreements (GPPB Res. 18-2007, dated 31 May 2007)  General Conditions: (Cont.) o All procurement to be undertaken by the Servicing Agency shall continue to be governed by R.A. 9184 and its IRR o Pertinent rules on budget, audit and accounting rules shall governed all projects undertaken through Agency-to-Agency NEGOTIATED PROCUREMENT AGENCY TO AGENCY

48. Implementing Guidelines on Agency-to-Agency Agreements (GPPB Res. 18-2007, dated 31 May 2007)  General Conditions: (Cont.) o In case of infrastructure projects: a) have a track record of having completed or supervised a project by administration or by contract, similar to and with a cost of at least 50% of the project at hand; and, b) does not directly or indirectly engage private contractors NEGOTIATED PROCUREMENT AGENCY TO AGENCY

50.  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? NEGOTIATED PROCUREMENT AGENCY TO AGENCY

51.  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. NEGOTIATED PROCUREMENT AGENCY TO AGENCY

52.  Applicability: ALL  Condition: HOPE has determined that PE does not have procurement proficiency or capability to undertake a particular procurement NEGOTIATED PROCUREMENT PROCUREMENT AGENTS

53.  Actions available: Request other GOP agencies to undertake such procurement for them Recruit and hire consultants or procurement agents to assist them directly and/or train their staff in the management of the procurement function NEGOTIATED PROCUREMENT PROCUREMENT AGENTS

54.  Applicability: Consulting Services  Conditions: o Individual consultant o Primary consideration for hiring the individual is trust and confidence NEGOTIATED PROCUREMENT HIGHLY TECHNICAL CONSULTANTS

55. o Work involves: o Highly technical or proprietary o Primarily confidential or policy determining o Term is, at the most, 6 months, renewable at the option of the appointing HOPE, but in no case to exceed the term of the latter NEGOTIATED PROCUREMENT HIGHLY TECHNICAL CONSULTANTS

56.  Applicability: Goods (Real estate and Venue)  Conditions: o Cost-benefit analysis indicating leasing privately- owned real estate or venue is more efficient and economical o APP reflect the proposed lease o Selection to follow the guidelines (GPPB Resolution 08-2009) NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

57.  Conditions:  Eligibility documents need not be submitted, but PE must validate whether lessor is technically, legally, and financially capable through other means  Lease contracts costing > PhP50,000 should be posted in the PhilGEPS NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

58. Implementing Guidelines for Lease of Privately-Owned Real Estate and Venue (Res. No. 08 – 2009, dated November 2009) Guiding Principles:  More preferred to lease from government  Meticulous selection of location taking into consideration the ff:  Need for prudence and economy in government service  Suitability of area (level of security/nature of event) NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

59. Implementing Guidelines for Lease of Privately- Owned Real Estate and Venue (Cont.) Guiding Principles:  Rental Rates should be :  Reasonable (Lessor gets an equitable return of capital or investment. of what the Lessee gets in terms of accommodation, facility, amenities, and convenience)  Within prevailing market prices NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

60. Implementing Guidelines for Lease of Privately- Owned Real Estate and Venue (Cont.) Guiding Principles:  Objectives and purpose of the lease contract do not constitute an unnecessary, excessive, extravagant, or unconscionable expenditure. NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

61. Implementing Guidelines for Lease of Privately-Owned Real Estate and Venue (Cont.) Procedural Requirements:  Conduct of a cost-benefit analysis  Select location  End-user’s recommendation, justifications, prevailing rates of lease/rent within vicinity  Set ABC  Midpoint of range based on prevailing lease rates NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

62. Implementing Guidelines for Lease of Privately- Owned Real Estate and Venue (Cont.) Procedural Requirements:  Update APP, if necessary  Delegate (or not) selection of lessor to a bureau, committee or support unit duly authorized by the BAC NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

63. Implementing Guidelines for Lease of Privately- Owned Real Estate and Venue (Cont.) Procedural Requirements:  Eligibility documents need not be submitted. Validate whether Lessor is technically, legally and financially capable through other means.  Post award Except lease contracts amounting < Php. 50,000 NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

64. Implementing Guidelines for Lease of Privately- Owned Real Estate and Venue (Cont.) Specific Requirements for Venue:  Technical specifications shall be prepared by considering rating factors provided under Appendix C (availability, location & site condition, venue & neighborhood data)  At least 3 quotations shall be obtained within the vicinity of the selected location. NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

65. Implementing Guidelines for Lease of Privately-Owned Real Estate and Venue (Cont.) Specific Requirements for Venue:  Award of contract shall be given to the lessor having the LCRB; Compliance rating with technical specifications may be conducted through ocular inspection, interviews, or other forms of due diligence. NEGOTIATED PROCUREMENT LEASE OF REAL PROPERTY/VENUE

66.  Applicability: ALL  Condition: o Appropriation law or ordinance earmarks an amount to be contracted to NGOs  PE may opt to conduct public bidding or negotiated procurement for the selection of NGO, subject to the rules provided in the guidelines (GPPB Resolution 12-2007) NEGOTIATED PROCUREMENT NGO PARTICIPATION

67.  Applicability: ALL  Conditions: o In the interest of project sustainability or to achieve certain specific social objectives o PE to propose procedures, specifications, and contract packaging for GPPB approval NEGOTIATED PROCUREMENT COMMUNITY PARTICIPATION

68.  Applicability: ALL  Conditions: o Procure from UN Agencies o Small quantities of off-the-shelf goods, primarily in the fields of education and health o Specialized products where the number of suppliers is limited (e.g., vaccines or drugs) NEGOTIATED PROCUREMENT UN AGENCIES

69. Other Terms and Conditions:  Most advantageous price for government should be obtained (Sec. 48.1)  Splitting of contracts strictly prohibited (Sec. 54.1) ALTERNATIVE METHODS

70. Other Terms and Conditions:  Posting NOT necessary, except: Shopping [Sec. 52.1 (a)] Shopping [Sec. 52.1(b)] Except: PhP. 50,000 and below Small Value Procurement [Sec. 53.9] Except: PhP. 50,000 and below Two Failed Biddings [Sec. 53.1] Lease of Real Property [Sec. 53.10], if > PhP50,000 NGO Participation ALTERNATIVE METHODS

71.  ALL awards should be posted, except Shopping and Small Value Procurement with an ABC of PhP50,000 and below Lease Contracts with an ABC of PhP50,000 and below  Bid security NOT necessary, except in Limited Source Bidding ALTERNATIVE METHODS

72.  Performance and warranty securities necessary, except: Shopping [Sec. 52] Emergency Cases [Sec. 53.2] Small Value Procurement [Sec. 53.9] Lease of Real Property [Sec. 53.10] Procurement from UN agencies [Sec. 53.13] ALTERNATIVE METHODS

73.  Applicability: Infrastructure Projects Guidelines for the Implementation of Infrastructure Projects By Administration(GPPB Resolution 18- 2006, as amended by GPPB Resolution No. 07 – 2009)  Conditions: o Implementing Agency (IA) must have a track record of having completed or supervised a project by admin or by contract, similar to and with a cost of at least 50% of the project at hand, and BY ADMINISTRATION

74.  Applicability: Infrastructure Projects Guidelines for the Implementation of Infrastructure Projects By Administration(GPPB Resolution 18-2006, as amended by GPPB Resolution No. 07 – 2009)  Conditions: o IA owns or has access from other government agencies to necessary tools and construction equipment required for the project o Included in the APP BY ADMINISTRATION

75.  Applicability: Infrastructure Projects Guidelines for the Implementation of Infrastructure Projects By Administration(GPPB Resolution 18-2006, as amended by GPPB Resolution No. 07 – 2009)  Conditions: o No contractor shall be used directly or indirectly o Procurement of tools and construction equipment shall be subject to the rules under R.A. 9184 and its IRR (public bidding) BY ADMINISTRATION

76.  Applicability: Infrastructure Projects Guidelines for the Implementation of Infrastructure Projects By Administration(GPPB Resolution 18-2006, as amended by GPPB Resolution No. 07 – 2009)  Conditions: o Warranty security shall be required for projects implemented by LGUs and funded by NGAs o Labor component may be undertaken in-house, job order or pakyaw contracting BY ADMINISTRATION

77.  Increase in thresholds in the 2009 & 2010 GAA  Any project costing < PhP. 20,000,000.00 may be undertaken by administration or force account BY ADMINISTRATION

78.  Increase in thresholds in the 2009 & 2010 GAA  Project costing > PhP. 20,000,000.00 should obtain:  Authority from the DPWH Secretary  PhP20,000,000.00 - PhP50,000,000.00  Authority from the President of the Philippines, upon the DPWH Secretary’s favorable recommendation  > PhP50,000,000.00 BY ADMINISTRATION

79.  Labor Component 1. It may be undertaken: a. In-house * If the workers are employees or personnel occupying regular plantilla positions b. Job-order * Governed by relevant CSC and COA rules BY ADMINISTRATION

80.  Labor Component c. Pakyaw Contracts * Drawn from the vicinity of the project, or Pakyaw Labor Groups belonging to various barangay Associations contiguous to the project site BY ADMINISTRATION

81.  Labor Component c. Pakyaw Contracts * Unskilled labor – Barangay * Semi-skilled labor - Municipality, preferably within the barangay * Skilled labor – province, preferably within the municipality/barangay. BY ADMINISTRATION

82.  Labor Component c. Pakyaw Contracts *Formation of Pakyaw Groups should actively involve the Barangay leaders & the community. * Project Facilitator shall be appointed BY ADMINISTRATION

83.  Labor Component c. Pakyaw Contracts * Pakyaw workers should be formed into groups of workers based on the lump sum works * Pakyaw labor contract shall be awarded through competitive selection with at least 3 Pakyaw Groups participating. BY ADMINISTRATION