Opinions and Legal Insights

Government Procurement (RA 9184): An Overview

Republic Act 9184, also known as the Government Procurement Act covers all procurement of Infrastructure Projects, Goods, and Consulting Services, regardless of source of funds, whether local or foreign, by all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or -controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138

Procurement refers to the acquisition of Goods, Consulting Services, and the contracting for Infrastructure Projects by the Procuring Entity. Procurement shall also include the lease of goods and real estate. With respect to real property, its procurement shall be governed by the provisions of Republic Act No. 8974, entitled “An Act to Facilitate the Acquisition of Right-of-Way Site or Location for National Government Infrastructure Projects and for Other Purposes”, and other applicable laws, rules and regulations.

Under the said law, all Procurement shall be done through competitive bidding except in cases where alternative modes of procurement are allowed. 

Competitive Biddingrefers to a method of procurement which is open to participation by any interested party and which consists of the following processes:

1.    Advertisement;

2.    Pre-bid conference;

3.    Eligibility screening of prospective bidders;

4.    Receipt and opening of bids;

5.    Evaluation of bids;

6.    Post-qualification and

7.    Award of contract

Alternative Methods of Procurement:

1.    Limited Source Bidding (also known as Selective Bidding) – a method of Procurement that involves direct invitation to bid by the Procuring Entity from a set of preselected suppliers or consultants with known experience and proven capability relative to the requirements of a particular contract;

Limited Source Bidding may be resorted to only in any of the following conditions:

(a) Procurement of highly specialized types of Goods and Consulting Services which are known to be obtainable only from a limited number of sources; or

(b) Procurement of major plant components where it is deemed advantageous to limit the bidding to known eligible bidders in order to maintain an optimum and uniform level of quality and performance of the plant as a whole.

2.    Direct Contracting (also known as Single Source Procurement)– a method of Procurement that does not require elaborate Bidding Documents because the supplier is simply asked to submit a price quotation or a pro-forma invoice together with the conditions of sale, which offer may be accepted immediately or after some negotiations;

Direct Contracting may be resorted to only in any of the following conditions:

(a) Procurement of Goods of proprietary nature, which can be obtained only from the proprietary source, i.e. when patents, trade secrets and copyrights prohibit others from manufacturing the same item;

(b) When the Procurement of critical components from a specific manufacturer, supplier or distributor is a condition precedent to hold a contractor to guarantee its project performance, in accordance with the provisions of his contract; or,

(c) Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the Government.

3.    Repeat Order – a method of Procurement that involves a direct Procurement of Goods from the previous winning bidder, whenever there is a need to replenish Goods procured under a contract previously awarded through Competitive Bidding;

When provided for in the Annual Procurement Plan, Repeat Order may be allowed wherein the Procuring Entity directly procures Goods from the previous winning bidder whenever there arises a need to replenish goods procured under a contract previously awarded through Competitive Bidding, subject to post-qualification process prescribed in the Bidding Documents and provided all the following conditions are present:

(a) The unit price must be equal to or lower than that provided in the original contract;

(b) The repeat order does not result in splitting of requisitions or purchase orders;

(c) Except in special circumstances defined in the IRR, the repeat order shall be availed of only within six (6) months from the date of the Notice to Proceed arising from the original contract; and,

(d) The repeat order shall not exceed twenty-five percent (25%) of the quantity of each item of the original contract.

4.    Shopping – a method of Procurement whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf Goods or ordinary/regular equipment to be procured directly from suppliers of known qualification; or

Shopping may be resorted to under any of the following instances:

(a) When there is an unforeseen contingency requiring immediate purchase: Provided, however, That the amount shall not exceed Fifty Thousand Pesos (P50,000); or

(b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding Two Hundred Fifty Thousand Pesos (P250,000): Provided, however, That the Procurement does not result in Splitting of Contracts: Provided, further, That at least three (3) price quotations from bona fide suppliers shall be obtained. The above amounts shall be subject to a periodic review by the GPPB. For this purpose, the GPPB shall be authorized to increase or decrease the said amount in order to reflect changes in economic conditions and for other justifiable reasons.

5.    Negotiated Procurement – shall only be allowed under the following cases:

a.   In cases of two failed biddings;

b.    In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities;

c.    Take-over of contracts, which have been rescinded or terminated for causes provided for in the contract and existing laws, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities;

d.   Where the subject contract is adjacent or contiguous to an on-going infrastructure project, as defined in the Implementing Rules and Regulations; Provided, however, That the original contract is the result of a Competitive Bidding; the subject contract to be negotiated has similar or related scopes of work; it is within the contracting capacity of the contractor; the contractor uses the same prices or lower unit prices as in the original contract less mobilization cost; the amount involved does not exceed the amount of the ongoing project; and, the contractor has no negative slippage: Provided, further, That negotiations for the procurement are commenced before the expiry of the original contract. Whenever applicable, this principle shall also govern consultancy contracts, where the consultants have unique experience and expertise to deliver the required service; or

e.    Subject to the guidelines specified in the Implementing Rules and Regulations, purchases of Goods from another agency of the Government, such as the Procurement Service of the DBM, which is tasked with a centralized procurement of commonly used Goods for the government in accordance with Letters of Instruction No. 755 and Executive Order No. 359, series of 1989.

The Alternative Method of Procurement may be resorted only to highly exceptional cases, to promote economy and efficiency, and justified by conditions specified in the law and its Implementing Rules and Regulations.

In all instances, the Procuring Entity shall ensure that the most advantageous price for the Government is obtained.

For further information on Government Procurement, please refer to Government Procurement Policy Board at www. gppb.gov.ph.

References:

1.           Republic Act 9184;

2.           Implementing Rules and Regulations of RA 9184

Last Updated: 30 June 2015