Question & AnswerQ&A (GPPB Resolution NO. 020-2005)
All bid prices shall be considered as fixed prices and shall not be subject to price escalation during contract implementation, except under extraordinary circumstances approved by NEDA and GPPB.
They apply to procurement of goods involving foreign denominated bids, contract prices in foreign and local currencies, and payments made through Letters of Credit.
To address issues arising from foreign exchange fluctuations and the use of Letters of Credit in government procurement, ensuring fair pricing and minimizing risks related to foreign currency changes.
Contracts shall be denominated and paid in Philippine currency unless the procuring entity agrees to settle obligations in another currency under the set guidelines.
A provisional sum must be included as a separate item in the Schedule of Requirements and Special Conditions of Contract to cover possible increases in expenditure due to foreign exchange fluctuations and expenses from opening Letters of Credit.
The provisional sum shall not exceed ten percent (10%) of the Approved Budget for the Contract (ABC).
It is based on the foreign-denominated portion of the bid converted to Philippine pesos at the exchange rate prevailing on the date of the LC opening. Adjustments using the provisional sum may be applied depending on whether the peso equivalent is higher or lower than the contract price.
All charges for opening the LC and incidental expenses are for the account of the supplier and must be stated in the bidding documents.
Bids in foreign currency shall be converted to Philippine pesos at the exchange rate prevailing on the day of the bid opening for evaluation and comparison purposes.
The foreign bid amount shall be converted into Philippine peso based on the exchange rate on the date of bid opening to determine the contract price.