Government Procurement Reform Act

Coverage, scope, and governing rules

Section 4 applies to procurement of Infrastructure Projects, Goods, and Consulting Services regardless of source of funds (local or foreign).
Section 4 covers procurement by all branches and instrumentalities of government, including government-owned and/or-controlled corporations and local government units, subject to Commonwealth Act No. 138.
Section 4 requires that any treaty or international or executive agreement affecting the subject matter of the Act to which the Philippine government is a signatory be observed.
Section 4 treats procurement as subject to the procurement principles in Section 3 and the detailed rules throughout the Act, including procurement planning, bidding, and award mechanics.

Procurement policy and core principles

Section 3 requires transparency in the procurement process and in the implementation of procurement contracts.
Section 3 requires competitiveness by extending equal opportunity to enable eligible and qualified private contracting parties to participate in public bidding.
Section 3 requires a streamlined procurement process that is simple, uniform, and adaptable to modern technology to ensure effective and efficient procurement.
Section 3 mandates a system of accountability: public officials involved in procurement and contract implementation, and private parties dealing with government, must be investigated and held liable when warranted by circumstances.
Section 3 requires public monitoring of procurement and contract implementation to ensure awards and performance strictly follow the Act and its implementing rules and regulations.

Key definitions used in procurement

Section 5 defines Approved Budget for the Contract (ABC) as the contract budget duly approved by the Head of the Procuring Entity, with different approving authorities depending on the procuring entity type:
- National Government Agencies: duly approved by the Head of the Procuring Entity under the General Appropriations Act and/or continuing appropriations.
- Government-Owned and/or Controlled Corporations, Government Financial Institutions and State Universities and Colleges: corporate budget approved by governing boards under E.O. No. 518, series of 1979.
- Local Government Units: budget approved by the respective Sanggunian.
Section 5 defines BAC as the Bids and Awards Committee established under Article V.
Section 5 defines Bidding Documents as documents issued by the Procuring Entity as the basis for bids and containing all information necessary to prepare a bid.
Section 5 defines Competitive Bidding as open participation by any interested party, consisting of the sequence of advertisement, pre-bid conference, eligibility screening, receipt and opening of bids, evaluation, post-qualification, and award; the specific mechanics are defined in the IRR.
Section 5 defines Consulting Services as services requiring adequate external technical and professional expertise beyond government capability, including advisory and review services, feasibility studies, design, construction supervision, management and related services, and other technical services or special studies.
Section 5 defines G-EPS as the Government Electronic Procurement System under Section 8.
Section 5 defines Goods broadly as items, supplies, materials, and general support services (excluding consulting services and infrastructure projects), including equipment, furniture, stationery, construction materials, repair and maintenance, and related/analogous services.
Section 5 defines GPPB as the Government Procurement Policy Board under Article XX.
Section 5 defines Head of the Procuring Entity based on the procuring entity type (head/authorized official, governing board/authorized official, or local chief executive), with a decentralized unit rule under the Provided clause.
Section 5 defines Infrastructure Projects by enumerating categories of construction and civil works, including roads/bridges, railways, airports, seaports, communication facilities, IT civil works components, irrigation, flood control and drainage, water supply, sanitation, sewerage, solid waste management systems, shore protection, energy/power and electrification facilities, and specified building types and related construction projects.
Section 5 defines IRR as implementing rules and regulations promulgated under Section 75.
Section 5 defines Portal and Procurement; Procurement includes acquisition of Goods, Consulting Services, and contracting for Infrastructure Projects and includes lease of goods and real estate, while real property procurement is governed by Republic Act No. 8974 and other applicable laws.

Standardization, planning, and electronic procurement

Section 6 requires standardization of procurement processes and forms insofar as practicable to systematize the process, avoid confusion, and ensure transparency.
Section 6 requires the GPPB to pursue generic procurement manuals and standard bidding forms, and states the use of issued forms is mandatory for all Procuring Entities.
Section 7 requires procurement to be within the Procuring Entity’s approved budget and to be meticulously and judiciously planned.
Section 7 requires that no government procurement be undertaken unless it is in accordance with the Procuring Entity’s Annual Procurement Plan, approved by the Head of the Procuring Entity and consistent with the approved yearly budget.
Section 7 requires Annual Procurement Plans to be formulated and revised only under IRR guidelines, and for Infrastructure Projects the plan must include engineering design and acquisition of right-of-way.
Section 8 requires use of information and communications technology in procurement.
Section 8 establishes a single portal as the primary source of information on all government procurement.
Section 8 makes G-EPS the primary and definitive source of information on government procurement.
Section 8 authorizes the GPPB to approve changes in the procurement process to adapt to modern technology, provided modifications remain consistent with Section 3.
Section 8 requires all Procuring Entities to use G-EPS for procurement of common supplies, in accordance with GPPB rules.
Section 8 allows agencies to hire service providers for electronic procurement of non-common use items, infrastructure projects, and consulting services, provided providers meet minimum requirements set by the GPPB.
Section 9 requires the G-EPS to ensure security, integrity, and confidentiality of documents submitted through the system.
Section 9 requires the G-EPS to include an audit trail for online transactions and to allow the Commission on Audit to verify system security and integrity at any time.

Competitive bidding, BAC structure, and bid stages

Section 10 requires all procurement to be conducted through Competitive Bidding, except where the Act provides otherwise in Article XVI.
Section 11 requires each Procuring Entity to establish a single BAC with at least five (5) and not more than seven (7) members.
Section 11 requires the BAC to be chaired by at least a third ranking permanent official of the procuring entity other than the head, and states the BAC composition must be specified in the IRR.
Section 11 states the Head of the Procuring Entity designates BAC members but approving authority shall not be a member of the BAC.
Section 11 provides BAC terms of one (1) year, renewable at the discretion of the Head of the Procuring Entity, and defines rules for replacement during resignation, retirement, separation, transfer, re-assignment, or removal; for justifiable causes, a member may be suspended or removed by the Head of the Procuring Entity.
Section 12 assigns BAC duties including: advertising/posting invitations to bid; conducting pre-procurement and pre-bid conferences; determining eligibility; receiving bids; evaluating bids; post-qualification; and recommending award to the Head of the Procuring Entity or duly authorized representative.
Section 12 requires written justification for any Head of Procuring Entity disapproval of the BAC recommendation.
Section 12 requires BAC sanctions recommendations under Article XXIII and requires BAC responsibility for ensuring compliance with standards and IRR.
Section 12 requires a procurement monitoring report approved by the Head and submitted to the GPPB on a semestral basis, with contents specified in the IRR.
Section 13 requires BAC to invite, in addition to Commission on Audit representative, at least two (2) observers in all stages: one (1) from a duly recognized private group in a relevant sector or discipline and one (1) from a non-government organization.
Section 13 requires observers to have no direct or indirect interest in the contract to be bid out, and to be registered with the Securities and Exchange Commission and meet IRR criteria.
Section 14 requires a BAC Secretariat to support BAC functions, created by the Head of the Procuring Entity or by designating an existing organic office.
Section 15 allows honoraria for BAC members not to exceed twenty five percent (25%) of their respective basic monthly salary, subject to availability of funds, with DBM issuing guidelines.
Section 16 requires the GPPB to establish a sustained training program and professionalize BAC, BAC Secretariat, and Technical Working Group members.
Section 17 requires Bidding Documents to be prepared using standard forms and manuals prescribed by the GPPB and to include enumerated items including ABC; instructions; Terms of Reference; eligibility requirements; plans and technical specifications; bid/price forms; delivery/completion schedule; bid security and performance/warranty forms; and contract forms and conditions.
Section 18 prohibits specifications for procurement of Goods from using brand names.
Section 19 requires equal access to information in all stages of preparing Bidding Documents and prohibits divulging or releasing any aspect of Bidding Documents prior to official release.
Section 20 mandates a pre-procurement conference prior to issuance of Invitation to Bid for each procurement, except where IRR prescribes contracts below certain levels/amounts where it is optional.
Section 20 requires the pre-procurement conference to assess readiness, confirm certification of availability of funds, and review documents for adherence to law, attended by BAC, drafters of bidding documents and draft invitation, consultants, and end-user representatives.
Section 21 requires Invitations to Bid to be advertised/post for sufficient duration to ensure widest dissemination, including options such as posting in the Procuring Entity’s premises, newspapers of general circulation, the G-EPS, and the Procuring Entity website.
Section 21 requires the Invitation to Bid to state, among others: description of subject matter; general eligibility/bid evaluation/post-qualification criteria; the deadline schedules and locations for submission and opening of bids; ABC; source of funds; availability of bidding documents and securing place; contract duration; and other relevant information.
Section 22 requires at least one pre-bid conference for each procurement unless otherwise provided in the IRR, and allows additional pre-bid conferences upon written request of any prospective bidder subject to BAC approval.
Section 23 requires BAC (or its designated organic office under IRR special circumstances) to determine eligibility for Goods and Infrastructure Projects based on compliance with eligibility requirements in the Invitation to Bid period.
Section 23 requires eligibility documents to be made under oath by the prospective bidder or authorized representative certifying correctness, completeness, and authenticity; it allows electronic submission of eligibility requirements with later oath certification.
Section 24 governs Consulting Services eligibility and short listing, requiring sworn oath certifications, fair and equal access, and evaluation using numerical ratings on short listing requirements to form a short list for submission of bids.
Section 25 requires bids to have two components: technical and financial components in separate sealed envelopes, submitted simultaneously; BAC receives bids at date/time/place in the Invitation to Bid; deadline is set by BAC balancing process and bidder preparation time, and bids submitted after deadline are not accepted.
Section 25 requires GPPB to prescribe innovative procedures for submission/receipt/opening through the G-EPS.
Section 26 allows modification of bids if done before deadline for receipt of bids through a sealed envelope marked as a modification, and allows withdrawal of bids through a letter before deadline with effect that bidder cannot submit another bid for the same contract directly or indirectly.
Section 27 requires all bids to be accompanied by bid security guaranteeing that after Notice of Award, the winning bidder will enter into contract within stipulated time and furnish required performance security; IRR prescribes amounts and allowable forms.
Section 28 requires bid validity for a reasonable period indicated in the Bidding Documents, considering time for bid evaluation and award.
Section 29 requires public opening of all bids at specified time/date/place; bid opening minutes must be made available to the public upon written request and payment of a specified fee.
Section 30 requires BAC preliminary examination of technical components using pass/fail criteria to ensure required documents are present; only technically compliant bids move to opening and financial evaluation.
Section 31 requires ABC to be the upper ceiling for bid prices; bid prices exceeding the ceiling are disqualified outright; there is no lower limit for the award amount.
Section 32 requires evaluation of financial components for Goods and Infrastructure Projects, ranking bids from lowest to highest based on calculated prices; the lowest calculated price is the “Lowest Calculated Bid.”
Section 33 requires consulting service bids of short listed bidders to be evaluated and ranked using numerical ratings based on criteria in the Bidding Documents; ranking is highest to lowest rating, and the highest calculated rating is the “Highest Rated Bid.”
Section 33 requires BAC, after Head approval of Highest Rated Bid, to invite the bidder for negotiation/clarification on enumerated items including financial proposal, Terms of Reference, scope, methodology and work program, personnel, services/facilities/data, and contract provisions; if negotiations fail, financial proposals for the next bidder are opened for negotiations following the envelope-based limit and ABC, repeating until award.
Section 34 defines post-qualification and requires verification/validation of the Lowest Calculated Bid or Highest Rated Bid against requirements and conditions in Bidding Documents; award is made only to the final Lowest Calculated Responsive Bid (Goods/Infrastructure) or Highest Rated Responsive Bid (Consulting Services), after successive post-qualification where bids are post-disqualified.
Section 35 defines failure of bidding where no bids are received, no bid qualifies as responsive, or the highest rated/lowest calculated responsive bidder refuses without justifiable cause to accept award; it requires re-advertising and re-bidding and, after a second failed bidding, allows negotiated procurement under Section 53.
Section 36 allows award to a single calculated/rated and responsive bid under specified circumstances while requiring the Procuring Entity to ensure the ABC reflects the most advantageous prevailing price for the government.

Award, contract actions, and procurement timelines

Section 37 requires that within fifteen (15) calendar days from BAC determination and recommendation of the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid, the Head of the Procuring Entity approves or disapproves the recommendation.
Section 37 requires immediate issuance of the Notice of Award upon approval.
Section 37 requires winning bidder to enter into contract within ten (10) calendar days from receipt of Notice of Award.
Section 37 provides when further approval by a higher authority is required, approving authority has up to twenty (20) calendar days to approve or disapprove.
Section 37 requires government-owned and/or-controlled corporations’ boards to act within thirty (30) calendar days from receipt.
Section 37 requires issuance of Notice to Proceed not later than seven (7) calendar days from the date of contract approval by the appropriate authority.
Section 37 states notices under contract terms become effective only at the time of receipt by the contractor.
Section 38 requires that from opening of bids up to award, procurement process shall not exceed three (3) months, or a shorter period set by the Procuring Entity.
Section 38 requires completion of different procurement activities within reasonable periods specified in the IRR.
Section 38 provides deemed approval if the Head (or authorized representative, or concerned board for GOCCs) fails to act within periods specified.
Section 39 requires posting of performance security prior to contract signing in the form and amount specified in the Bidding Documents.
Section 40 requires BAC disqualification and post-qualification for next-ranked responsive bid when the winning bidder fails/refuses/is unable to enter contract for justifiable causes or fails to post performance security within the Bidding Documents period.
Section 40 provides that if failure is due to performance security non-posting, bid security is forfeited without prejudice to sanctions under Article XXIII.
Section 41 authorizes the Head to reject any and all bids, declare failure of bidding, or not award when:
- There is prima facie evidence of collusion involving appropriate public officers/employees, BAC and bidders, bidders among themselves, or a bidder and a third party, including acts tending to restrict, suppress, or nullify competition;
- The BAC failed to follow prescribed bidding procedures; or
- There is any justifiable and reasonable ground where award will not redound to benefit of the government as defined in the IRR.
Section 42 requires IRR rules and guidelines for contract implementation and termination, including standard general and special conditions for contracts.

Domestic/foreign, provincial priority, lease contracts

Section 43 allows Goods to be obtained from domestic or foreign sources consistent with international treaty obligations, with procurement open to all eligible suppliers, manufacturers, and distributors.
Section 43 authorizes Procuring Entity preference for domestically-produced goods meeting specified or desired quality when needed for availability, efficiency, and timely delivery.
Section 44 requires public bidding and Act procurement processes for priority programs and infrastructure projects funded out of the annual General Appropriations Act intended for implementation within the province.
Section 44 subsumes Engineering District civil works projects (subject to consultation with concerned Members of Congress) within “provincial projects.”
Section 45 provides a matching privilege for contractors bidding provincial priority programs and infrastructure projects:
- Within five (5) years from effectivity, a contractor whose principal office is within the same province who submits the lowest bid among provincial bidders that is higher than the lowest bid by a contractor with principal office outside the province shall be granted the privilege to match the outside-provincial lowest bid.
Section 45 requires release of funds for said projects to be published in a local newspaper with widest circulation and on the DBM website, with mechanisms spelled out in the IRR.
Section 46 makes lease contracts for construction and office equipment—including computers and IT equipment—subject to the same public bidding and processes under the Act.

Disclosure of relations and bid disqualification

Section 47 requires bidding documents to include a sworn affidavit that the bidder (or any officer of the corporation) is not related by consanguinity or affinity up to the third civil degree to the Head of the Procuring Entity.
Section 47 provides that failure to comply is a ground for automatic disqualification of the bid in consonance with Section 30.

Alternative procurement methods

Section 48 allows Alternative Methods of Procurement subject to prior approval of the Head (or authorized representative) and when justified by conditions in the Act, ensuring the government obtains the most advantageous price.
Section 48 lists alternative methods: Limited Source Bidding (Selective Bidding), Direct Contracting (Single Source Procurement), Repeat Order, Shopping, and Negotiated Procurement.
Section 49 allows Limited Source Bidding only for: highly specialized types of Goods and consulting services obtainable only from limited sources, or major plant components where limiting bidding to known eligible bidders preserves optimum and uniform quality and performance.
Section 50 allows Direct Contracting only for: proprietary goods obtainable only from a proprietary source (patents/trade secrets/copyrights prevent others), critical components from a specific manufacturer/supplier/distributor needed as a condition precedent to guarantee performance, or goods sold by an exclusive dealer/manufacturer without lower-price sub-dealers and with no suitable substitute at more advantageous terms to government.
Section 51 allows Repeat Order when provided in the Annual Procurement Plan and when all conditions are present, including:
- Unit price equal to or lower than the original contract;
- No splitting of requisitions or purchase orders;
- Availment only within six (6) months from the Notice to Proceed of the original contract, except special IRR circumstances;
- Repeat order does not exceed twenty five percent (25%) of the quantity of each item of the original contract.
Section 52 allows Shopping under:
- Unforeseen contingency requiring immediate purchase, with amount not exceeding Fifty thousand pesos (P50,000); or
- Procurement of ordinary/regular office supplies and equipment not available in the Procurement Service, with amount not exceeding Two hundred fifty thousand pesos (P250.000) (note punctuation as stated).
Section 52 requires in Shopping that procurement does not result in splitting of contracts and that at least three (3) price quotations from bona fide suppliers are obtained.
Section 52 requires amounts be subject to periodic review by the GPPB, which may increase or decrease the amounts to reflect economic changes and other justifiable reasons.
Section 53 allows Negotiated Procurement only in specified situations, including:
- Cases of two (2) failed biddings under Section 35;
- Imminent danger to life or property during a state of calamity or when time is of the essence due to natural or man-made calamities or other causes requiring immediate action to prevent damage/loss or restore vital public services and infrastructure/utilities;
- Take-over of rescinded or terminated contracts where immediate action is necessary to prevent damage/loss or restore vital public services and infrastructure/utilities;
- Contracts adjacent or contiguous to an ongoing infrastructure project where the original contract resulted from Competitive Bidding, scope is similar/related, within contractor contracting capacity, same or lower unit prices as original less mobilization cost, and the negotiated amount does not exceed the ongoing project amount, with no negative slippage; negotiations must be commenced before expiry of the original contract, and the principle may also govern consultancy contracts with unique experience and expertise;
- Purchases of Goods from another government agency such as the DBM Procurement Service tasked with centralized procurement of commonly used Goods under Letters of Instruction No. 755 and Executive Order No. 359, series of 1989.
Section 54 requires the IRR to specify the specific terms and conditions, limitations, and restrictions for each alternative method.

Protest and court review system

Section 55 allows protests on BAC decisions in all stages of procurement to be filed with the Head of the Procuring Entity by filing a verified position paper and paying a non-refundable protest fee; the IRR specifies fee amount and protest periods and resolution periods.
Section 56 requires strict resolution of protests based on BAC records.
Section 56 provides that up to an amount specified in the IRR, Head of Procuring Entity decisions are final.
Section 57 prohibits any protest from staying or delaying the bidding process.
Section 57 requires protests to be resolved before any award is made.
Section 58 allows court action only after completion of the Article XVII protest process; cases filed in violation of the process are dismissed for lack of jurisdiction.
Section 58 grants regional trial court jurisdiction over final decisions of the Head of the Procuring Entity and directs that court actions follow Rule 65 of the 1997 Rules of Civil Procedure.
Section 58 preserves the operation of any law conferring on the Supreme Court sole jurisdiction to issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government.

Arbitration and appeals for contract disputes

Section 59 requires disputes arising from implementation of a contract covered by the Act to be submitted to arbitration in the Philippines under Republic Act No. 876 (“Arbitration Law”).
Section 59 requires disputes within the competence of the Construction Industry Arbitration Commission to be referred thereto.
Section 59 requires that arbitration process be incorporated as a contract provision executed pursuant to the Act.
Section 59 allows parties by mutual written agreement to resort to alternative dispute resolution modes.
Section 60 provides that the arbitral award and decisions under Section 59 are appealable via a petition for review to the Court of Appeals, raising pure questions of law, governed by the Rules of Court.

Contract prices and warranty obligations

Section 61 provides that bid prices for the awarded scope of work are fixed prices and are not subject to price escalation during implementation except under extraordinary circumstances upon prior approval of the GPPB.
Section 61 defines extraordinary circumstances as events determined by the National Economic and Development Authority in accordance with the Civil Code of the Philippines, upon recommendation of the Procuring Entity.
Section 62 requires a warranty for Goods to assure correction of manufacturing defects for a specific time after performance, with the warranty period set in the IRR.
Section 62 states the warranty obligation must be covered by either:
- retention money in an amount equivalent to a percentage of every progress payment, or
- a special bank guarantee equivalent to a percentage of the total contract price,
  with release only after the warranty period lapses if goods are free from defects and contract conditions are fully met.
Section 62 requires contractors for infrastructure projects to assume full responsibility for the contract work from time construction commenced up to a reasonable period defined in the IRR after final acceptance by the government, and to be responsible for any damage except those occasioned by force majeure.
Section 62 requires the contractor to be fully responsible for safety, protection, security, and convenience of personnel, third parties, and the public, and for the works, equipment, installation and the like affected by construction.
Section 62 requires infrastructure contractors to put up warranty security in the form of cash, bank guarantee, letter of credit, Government Service Insurance System bond, or callable surety bond.
Section 62 requires repair of defects or damage at contractor’s own expense caused by inferior quality materials within ninety (90) days from the date the Head of the Procuring Entity issues an order to undertake repair.
Section 62 provides that if the contractor fails or refuses to comply, the government undertakes the repair and is entitled to full reimbursement upon demand.
Section 62 imposes perpetual disqualification from participating in public bidding on any contractor who fails to comply with the required repair obligation and subjects the contractor’s property to attachment or garnishment to recover