Law Summary
Governing Principles of Procurement
- Transparency throughout the procurement and contract implementation
- Competitive bidding with equal opportunity for qualified private parties
- Streamlined and uniform procurement procedures, adaptable to modern technology
- System of accountability for public officials and private entities involved
- Public monitoring of procurement and contract performance
Scope and Applicability
- Applies to procurement of infrastructure, goods, and consulting services regardless of funding source
- Covers all government branches, agencies, state universities, government-owned corporations, financial institutions, and local government units
- Observance of relevant treaties and international agreements
Important Definitions
- ABC: Approved Budget for the Contract per agency type
- BAC: Bids and Awards Committee
- Competitive Bidding: Open process including advertisement, eligibility screening, bid receipt, evaluation, post-qualification, and contract award
- Consulting Services: Technical/professional services requiring outside expertise
- G-EPS: Government Electronic Procurement System
- Goods: Items, supplies, materials, and support services excluding consulting and infrastructure projects
- Infrastructure Projects: Construction and related government projects
- Procuring Entity: Any government agency authorized to procure
Standardization of Procedures and Forms
- GPPB to develop and mandate uniform bidding forms and manuals
Procurement Planning and Budgeting
- All procurement must be included in the Annual Procurement Plan
- Plan must align with the approved budget and be approved by head of the procuring entity
- Engineering designs and right-of-way acquisitions included in infrastructure procurement plans
Procurement by Electronic Means
- Use of ICT to enhance transparency and efficiency
- Establishment of a single government procurement portal via G-EPS
- All procurements of common supplies mandated through G-EPS
- Non-common procurements may engage qualified service providers
- G-EPS ensures security, confidentiality, and audit trail
Competitive Bidding as the Default Method
- All procurement to proceed via competitive bidding except in specific exceptions
Bids and Awards Committee (BAC)
- Single BAC per procuring entity with 5-7 members chaired by a senior official
- Members appointed for one-year terms
- BAC conducts bidding, eligibility screening, evaluation, recommends awards, sanctions, and reports
- Invitation of observers from recognized private groups and NGOs for transparency
- Secretariat assists BAC operations
- BAC members eligible for honoraria subject to DBM guidelines
- GPPB to conduct capacity-building and professionalization programs for BAC personnel
Preparation of Bidding Documents
- Must follow GPPB-prescribed standard forms
- Includes budget, instructions, terms of reference, eligibility, specifications, forms, delivery and security requirements
- No reference to brand names allowed in goods specifications
- Equal access to information ensured; no premature disclosure
Invitation to Bid and Pre-Procurement Conference
- Conduct pre-procurement conference to assess funding availability and document compliance
- Invitations widely disseminated through posting, newspapers, G-EPS, and websites
- Invitation contains project description, evaluation criteria, schedule, budget, contract duration, and other essential info
- Mandatory pre-bid conference with option for additional ones upon request
Eligibility, Submission and Opening of Bids
- Eligibility screening based on documented compliance
- Submission of separate sealed technical and financial bids simultaneously
- Deadlines strictly enforced; late or incomplete bids rejected
- Bid modifications and withdrawals allowed only before deadline, with consequences for withdrawal
- Bid security required as guarantee
- Bid validity period must allow procurement process
- Public bid opening with accessible minutes
Bid Evaluation
- Preliminary examination using pass/fail criteria on technical documents
- Bids exceeding ABC disqualified outright
- Goods and infrastructure bids ranked lowest to highest price; lowest calculated bid selected
- Consulting services bids evaluated by numerical ratings; highest rated bid selected
- Negotiations permitted with first- and second-ranked bidders in consulting services
Post-Qualification
- Verification of qualifications and compliance by the lowest calculated or highest rated bidder
- Post-disqualification leads to evaluation of next bidder
- Contract awarded only to the lowest/highest qualified bidder
Failure of Bidding
- Occurs if no bids received, no qualified lowest/highest bid, or refusal to accept award
- Contract re-advertised and re-bid
- After two failures, negotiated procurement may be used
Award and Contract Execution
- Head of procuring entity has 15 days to approve/disapprove recommendation
- Notice of award issued immediately upon approval
- Contract signing within 10 calendar days post notice
- Notice to proceed issued within 7 days of contract approval
- Contract implementation and termination rules to be outlined in IRR
Performance Security
- Winning bidder to post performance security prior to contract signing
- Failure to enter contract or post security leads to disqualification and forfeiture of bid security
Reservation of Rights
- Right to reject all bids or declare failure for justifiable reasons including collusion, irregularities, or non-beneficial awards
Domestic and Foreign Procurement
- Procurement open to both domestic and foreign suppliers; preference may be given to local products that meet quality standards
Provincial Projects and Bidders
- Provincial projects covered under the Act
- Preference to provincial contractors to match lowest outside bid within 5 years of effectivity
Leasing of Equipment
- Lease contracts for computers, communications, and office equipment subjected to same procurement rules
Disclosure of Relations
- Bidders to submit sworn affidavit disclosing relationship up to third civil degree to head of procuring entity
- Non-compliance grounds for automatic disqualification
Alternative Methods of Procurement
- Includes Limited Source Bidding, Direct Contracting, Repeat Order, Shopping, and Negotiated Procurement
- Conditions and limitations apply, including emergencies, failed biddings, proprietary goods, and immediate requirements
Protest Mechanism
- Protests against BAC decisions filed in writing with non-refundable fee
- Resolutions based on BAC records; decisions of Head of Procuring Entity generally final
- Bidding process continues despite protests; courts only after administrative process exhausted
Settlement of Disputes
- Disputes governed by Philippine Arbitration Law
- Construction disputes resolved by Construction Industry Arbitration Commission
- Decisions appealable by petition for review to Court of Appeals on questions of law
Contract Prices and Warranties
- Bid prices fixed; no escalation except under extraordinary approved circumstances
- Warranty required to cover defects and contractor responsibilities
- Retention or bank guarantees held until warranty period ends
- Contractors responsible for repairs due to inferior materials or defects with penalties for non-compliance including perpetual disqualification
Government Procurement Policy Board (GPPB)
- Established to protect national interest in procurement
- Duties include formulating IRR, conducting training, reviewing effectiveness, and recommending amendments
- Composed of key government secretaries and a private sector representative
- Supported by technical staff
Penal Provisions
- Strict penalties including imprisonment of 6 years and 1 day to 15 years for tampering, delays, undue influence, contract splitting, collusion, false submissions, bid rigging, and other violations
- Penalties include disqualification from public office and transacting with government
Civil Liability
- Conviction under this Act or anti-graft law entails civil liability such as restitution or forfeiture
- Contracts to include liquidated damages provisions
Administrative Sanctions
- Suspension from bidding for up to two years for various violations
- Forfeiture of bid and performance securities
- Preventive suspension of BAC members or secretariat on valid grounds
Legal Assistance and Indemnification of BAC Members
- Authorized to engage private lawyers upon suit filings
- GPPB to provide indemnification, legal support, liability insurance, and medical assistance unless gross negligence or misconduct proven
Final Provisions
- Joint Congressional Oversight Committee created for five years
- GPPB to promulgate IRR within 60 days and standard forms within 30 days after IRR approval
- Repeal of various prior procurement-related laws and orders
- Severability and effectivity clauses provided