QuestionsQuestions (Acts No. 4240)
Under Section 61 of R.A. 9184 and Section 61.1 of the IRR-A, bid prices are considered fixed prices and are generally not subject to price escalation during contract implementation except under extraordinary circumstances, upon prior approval of the GPPB.
Under Section 61.2 of the IRR-A, the request for price escalation must be submitted by the concerned entity to the NEDA with the endorsement of the procuring entity.
It adopts guidelines on index-based contract pricing for POL procurement because the earlier contract price escalation rules lacked flexibility for the peculiar volatility of POL prices. It aligns with the framework on extraordinary circumstances under Resolution No. 07-2004.
It contemplates an event ordinarily happening or reasonably foreseeable but inevitable, and subsumes the volatility and precarious nature of petroleum, oil, and lubricant prices.
They govern the use of index-based pricing schemes, in accordance with Section 61 of R.A. 9184 and the IRR-A, for bulk procurement of POL requirements by national government agencies, GOCCs, GFIs, and LGUs when POL is a major operational requirement, typically with contract duration not exceeding one year.
Procurement of POL from retailers or dealers other than major suppliers, including those engaged in selling for ultimate consumption sold at pump prices, is not subject to the guidelines.
An event or series of events before or during contract implementation that gives rise to price movements in petroleum and its derivative products.
Use the WPP index for the products enumerated in Section 5.1, including premium/unleaded/regular gasoline, automotive diesel oil, Jet A-1, avgas, and specified lubricants such as AVOIL EE-100, MIL-H5606 (F/G Synthetic), DOT-3 hydraulic brake fluid, 2-stroke engine oils, ATF premium, gear oil, grease MP3, and other lube oils.
Use the Mean of Platts Singapore (MOPS) index for the products in Section 5.2, including industrial fuel oil, low sulfur fuel oil, and industrial diesel oil.
Bid prices are based on AWPP less the bidder’s discount (if any). Contract prices are the index rate at the actual order date less the percentage discount proposed by the Lowest Calculated Bidder, subject to the payment rules.
Bid prices are based on MOPS plus the bidder’s premium (if any). Contract prices are the index rate at the actual order date plus the percentage premium proposed by the Lowest Calculated Bidder.
For WPP-based procurement, it is the bidder with the highest discount. For MOPS-based procurement, it is the bidder with the lowest premium.
Reference shall be made to the AWPP or MOPS thirty (30) calendar days prior to the scheduled date for bid opening as advertised.
Payment is based on the AWPP less discounts or the MOPS plus premiums—whichever is appropriate—at the date the actual order is placed.
No. The guidelines state that the discounts or premium used as basis during evaluation and comparison shall not be changed during contract implementation.
After every order, the procuring entity must account for the amount actually payable based on the date of the Purchase Order/Requisition Request, determine allowable remaining volume for each POL product, and may adjust units/volume to conform to the remaining total contract price.
The actual price payable is based on the weighted average of the applicable index from the date the order is placed up to the agreed cut-off date for payments.
If the total contract price would have been consumed despite incomplete delivery, no further order and payments shall be made. This agreement must form part of the bidding documents.