Law Summary
Declaration of Policy
- Promotes good governance ideals across all government branches and entities.
Governing Principles of Procurement
- Transparency in procurement processes and contract implementation.
- Competitiveness providing equal opportunities for eligible private parties in public bidding.
- Streamlined, uniform procurement process adaptable to modern technology.
- Accountability of public officials and private parties involved in procurement.
- Public monitoring to ensure compliance with the law and contract specifications.
Scope and Application
- Applies to procurement of infrastructure projects, goods, and consulting services by all government branches, including government-owned or controlled corporations and local government units.
- Includes procurement regardless of funding source, local or foreign.
- Compliance with applicable treaties or international agreements is mandatory.
Definitions
- Approved Budget for the Contract (ABC): Budget duly approved by relevant authority depending on entity type.
- Bids and Awards Committee (BAC): Committee responsible for overseeing procurement.
- Bidding Documents: Basis for bids containing necessary information.
- Competitive Bidding: Open method with defined procedural steps.
- Consulting Services: Services requiring external technical/professional expertise.
- Government Electronic Procurement System (G-EPS): Primary online portal for procurement.
- Goods: Items, materials, services needed by government excluding infrastructure and consulting services.
- Head of Procuring Entity: Authorized officer overseeing procurement.
- Infrastructure Projects: Construction, repair, improvement of public structures and utilities.
- Procurement: Acquisition of goods, services, infrastructure contracts including leasing of goods and real estate.
- Procuring Entity: Any government entity engaged in procurement activity.
Standardization of Procurement Process and Forms
- GPPB mandated to develop uniform procurement manuals and forms which are mandatory upon issuance.
Procurement Planning
- Procurement must be within approved budgets and planned carefully.
- Annual Procurement Plan (APP) must be approved and consistent with the entity's budget.
- APP includes infrastructure design and acquisition of right-of-way.
Procurement by Electronic Means
- Use of ICT encouraged for transparency and efficiency.
- G-EPS serves as the primary source of procurement info and platform.
- Procuring Entities must use G-EPS for common supplies procurement.
- Security, integrity, confidentiality of electronic transactions ensured with audit trails and COA verification.
Competitive Bidding as Rule
- All procurement to be done through competitive bidding except as provided by law.
Bids and Awards Committee
- Each procuring entity shall establish a single BAC of 5 to 7 members chaired by a senior official.
- BAC handles advertisement, pre-bid conferences, bid receiving, evaluation, post-qualification, and contract award recommendations.
- BAC can create technical working groups for assistance.
- BAC submits semiannual monitoring reports to GPPB.
- Transparency enhanced by inviting observers including NGO and private sector representatives without conflict of interest.
- BAC is supported by a Secretariat.
- BAC members may receive honoraria capped at 25% of monthly salary.
- GPPB provides sustained training for professionalization of BAC and Secretariat.
Preparation of Bidding Documents
- Must follow standard forms prescribed by GPPB.
- Documents include ABC, Instructions to Bidders, Terms of Reference, eligibility requirements, plans, forms on bids, securities, contract terms, and additional information as needed.
- Brand name references disallowed; specifications based on characteristics and performance.
- Equal access to bidding information ensured; no premature disclosure.
Invitation to Bid
- Pre-procurement conference mandatory except for small contracts where optional.
- Invitation to Bid widely advertised to ensure broad dissemination via multiple channels including G-EPS.
- Invitation includes project description, eligibility criteria, schedule, budget, source of funds, bidding document availability, contract duration, and other relevant info.
- Pre-bid conferences held at least once to allow bidders preparation and clarify concerns.
Receipt and Opening of Bids
- Eligibility based on fair, equal criteria; may submit documents electronically but must certify under oath.
- Bids have technical and financial components in separate sealed envelopes.
- Bids received only up to fixed deadlines; late bids rejected.
- Bid modification allowed before deadline; withdrawal allowed but precludes further participation.
- Bid security required as guarantee for contract signing and performance security.
- Bid validity period set reasonably to allow evaluation and award.
- Public bid opening with minutes available on request.
Bid Evaluation
- Preliminary technical pass/fail check for completeness.
- ABC sets upper price limit; bids exceeding disqualified.
- For goods and infrastructure, lowest calculated bid wins.
- For consulting, bids evaluated and ranked numerically; highest rated bid wins after negotiation.
Post-Qualification
- Verification of Lowest Calculated Responsive or Highest Rated Responsive Bid to confirm compliance with requirements.
- If failure, next lowest or highest bid evaluated until a qualified bidder is found.
- Failure of bidding declared if no bids received, no compliant bids, or refusal without cause to accept award; contract readvertised and rebid.
- Single bid considered only if it meets specific conditions ensuring competitiveness and price advantage.
Award, Implementation and Termination of Contract
- Award must be approved within 15 days and notified to winning bidder.
- Contract signing within 10 days of award receipt.
- Notice to Proceed issued within 7 days of approval.
- Procurement process from bid opening to award should not exceed 3 months.
- Performance security required before contract signing as guarantee of faithful performance.
- Failure to enter contract or post security results in disqualification and moving to next bidder.
- Head of agency may reject bids or declare failure for valid reasons including collusion or procedural failures.
- Contract implementation and termination governed by IRR.
Domestic and Foreign Procurement
- Procurement open to domestic and foreign suppliers subject to international commitments.
- Procurement may prioritize domestic goods for availability and timely delivery.
Bidding of Provincial Projects
- Provincial projects funded by General Appropriations Act subject to same bidding processes.
- Contractors from the same province who are second lowest bidders may be allowed to match lowest outside bids within five years of law enactment.
Lease of Equipment
- Lease of construction and office equipment subject to public bidding.
Disclosure of Relations
- Bidders must disclose whether related to head of procuring entity up to third degree by consanguinity or affinity.
- Failure leads to automatic bid disqualification.
Alternative Methods of Procurement
- Includes Limited Source Bidding, Direct Contracting, Repeat Order, Shopping, and Negotiated Procurement with conditions and prior approval.
- Limited Source Bidding for specialized goods/services or major plant components.
- Direct Contracting for proprietary goods or exclusive dealers.
- Repeat Order limited to replenishing previous contract supplies within specified limits.
- Shopping allowed for low-value, emergency, or unavailable supplies with minimum price quotations.
- Negotiated Procurement allowed after two failed biddings, emergencies, contract takeovers, contiguous contracts, and purchases from certain government agencies.
Protest Mechanism
- Protests to BAC decisions filed with the head of procuring entity in writing with protest fee.
- Resolutions based on BAC records; decisions of head of procuring entity may be final below certain amounts.
- Protests do not delay bidding process; must be resolved before award.
- Court action only after administrative protests exhausted; courts have jurisdiction over final administrative decisions.
Settlement of Disputes
- Disputes under contracts submitted to arbitration under Republic Act No. 876.
- Construction Industry Arbitration Commission resolves applicable disputes.
- Parties may agree to other dispute resolution modes.
- Awards appealable only on questions of law to Court of Appeals.
Contract Prices and Warranties
- Bid prices considered fixed and not subject to escalation except extraordinary circumstances with GPPB approval.
- Warranty required for goods and infrastructure to cover defects and damages, secured by retention or bank guarantee.
- Contractor responsible for safety and repair of defective works within 90 days after order.
- Failure to comply leads to perpetual disqualification and reimbursement by contractor.
Government Procurement Policy Board (GPPB)
- Established to protect national interests in procurement policy.
- Formulates/amends Implementing Rules and Regulations (IRR), standard forms, and promotes procurement training.
- Reviews effectiveness of the Act annually and recommends amendments.
- Composed of Secretaries of key departments and private sector representative appointed by President.
Penal Clause
- Penalties include imprisonment from 6 years and 1 day to 15 years for offenses such as: unauthorized opening of bids, delaying procurement procedures, undue influence, contract splitting, collusion, and falsification.
- Private individuals conspire with public officers equally liable.
- Administrative and disqualification penalties also apply.
Jurisdiction
- Courts appropriate to offenses exercise jurisdiction per applicable laws.
Civil Liability
- Conviction includes civil liability for restitution or forfeiture of illicit gains.
- Contracts include liquidated damages provisions for breaches.