Law Summary
Performance Security Requirements
- Section 39.1 of the IRR of RA 9184 requires winning bidders to post performance security before contract signing to guarantee faithful contract performance.
Warranty Security Requirements
- Section 62 of the IRR mandates warranty security from contract awardees for procurement of goods and infrastructure projects to ensure compliance with warranty obligations.
Existing Provisions on Performance and Warranty Securities (Section 54.5 IRR)
- Performance and warranty securities are required for contracts through alternative procurement methods except for:
- Shopping (Section 52)
- Certain Negotiated Procurement cases (Sections 53.2 emergency, 53.9 small value, 53.10 lease of real property, 53.13 UN agencies).
Exclusion of Agency-to-Agency and Community Participation Modalities
- Agency-to-Agency (Section 53.5) and Community Participation (Section 53.12) under Negotiated Procurement were not originally exempted from performance and warranty security posting.
Guidelines on Agency-to-Agency Agreements
- Prior guidelines allowed Procuring Agencies to require servicing agencies to post performance and warranty securities.
- Servicing agencies must have legal mandate to perform required work, ensuring ability to execute contracts.
Community Participation Modality Considerations
- Local communities benefit directly and have vested interest in project completion and sustainability.
- Communities may lack financial capacity to post performance and warranty securities.
Rationale for Exemption
- Exemption sought to address the financial incapacity of communities and the assurance of servicing agencies' legal mandate in Agency-to-Agency.
Inter-Agency Technical Working Group (IATWG) Review and Recommendation
- IATWG recommended amendment to include Agency-to-Agency and Community Participation modalities as exempt from security requirements in its 9th meeting on July 13, 2012.
GPPB Adoption of IATWG Recommendation
- In its 7th regular meeting, GPPB adopted the recommendation to amend Section 54.5 IRR and Guidelines on Agency-to-Agency Agreements to include these exemptions.
Amendments to Section 54.5 of the IRR
- Performance and warranty securities must be posted for alternative procurement contracts except for:
- Shopping (Section 52)
- Negotiated Procurement under Sections 53.2, 53.5 (Agency-to-Agency), 53.9, 53.10, 53.12 (Community Participation), and 53.13.
Amendments to Guidelines on Agency-to-Agency Agreements
- Deleted provisions allowing Procuring Agency to require performance and warranty securities from servicing agency (Sections 5(c) and 6(e)).
- Renumbering of certain sections for consistency.
Effectivity and Approval
- Resolution effective immediately as of July 27, 2012.
- Signed and approved by various Department representatives and Private Sector representative, underscoring inter-agency consensus.
This resolution clarifies and streamlines procurement security requirements by specifically exempting Agency-to-Agency and Community Participation modalities from performance and warranty security postings to promote inclusiveness and recognize operational realities in government procurement.