Question & AnswerQ&A (Act No. 3291)
The Guidelines set forth rules and procedures for government agencies in entering into contracts for lease of privately-owned real estate for official use, assisting in determining the reasonableness of rental rates prior to lease contracts, pursuant to Section 53(i) of the IRR-A of RA 9184.
The Guidelines apply to national government, its branches, constitutional offices, departments, bureaus, offices and agencies, including state universities and colleges, government-owned or controlled corporations, government financial institutions, and local government units. They do not apply to lease of government properties for private use.
Depreciation refers to the decrease in the value of real estate due to ordinary wear and tear brought about by its use.
It is the method of comparing price quotations obtained against the prevailing market rate of lease contracts within the vicinity of the selected location to determine reasonableness.
The two methods are: (1) Computation based on Observed Depreciation and (2) Computation based on Straight Line Depreciation both involving formulas using reproduction cost, depreciation rate, capitalization rate, and factor value.
The BAC evaluates the end user unit's recommendation, approves the mode of procurement, prepares and finalizes the draft contract and technical specifications, invites prospective lessors to submit quotations, opens and evaluates bids, and recommends award to the head of the procuring entity.
Negotiated procurement can be resorted to under Section 53(i) of the IRR-A of RA 9184 when leasing office space if there is no publicly-owned real estate available or a cost-benefit analysis shows it is more favorable to the government.
Rental rates and additional expenses such as association dues if shouldered by the procuring entity shall not exceed the Approved Budget for the Contract (ABC).
Factor Value rates locations and site conditions, neighborhood data, structural condition, functionality, facilities, and other requirements including free services and facilities offered by the lessor.
The BAC shall declare failure of negotiated procurement and conduct a public bidding or another negotiated procurement process based on BAC's recommendation.