Government Procurement Law

ATTY. IVAN YANNICK S. BAGAYAO CPA, MBA

Republic Act No. (R.A.) 9184, otherwise known as the “Government Procurement Reform Act,”

It is the policy of the state to promote good governance and its effort to adhere to the principles of transparency,
accountability, equity, efficiency, and economy in its procurement process. It is the policy of the Government of
the Philippines that procurement of Goods, Infrastructure Projects and Consulting Services shall be competitive
and transparent, and therefore shall undergo competitive bidding, except as provided in Rule XVI of this IRR
Governing Principles on Government Procurement :

a) Transparency in the procurement process and in the implementation of procurement contracts through wide dissemination
of bid opportunities and participation of pertinent non-government organizations.

b) Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to
participate in competitive bidding.

c) Streamlined procurement process that will uniformly apply to all government procurement. The procurement process
shall be simple and made adaptable to advances in modern technology in order to ensure an effective and efficient method.

d) System of accountability where both the public officials directly or indirectly involved in the procurement process as well
as in the implementation of procurement contracts and the private parties that deal with GoP are, when warranted by
circumstances, investigated and held liable for their actions relative thereto.

e) Public monitoring of the procurement process and the implementation of awarded contracts with the end in view of
guaranteeing that these contracts are awarded pursuant to the provisions of the Act and this IRR, and that all these contracts
are performed strictly according to specifications.
Scope and application:

1 This IRR shall apply to all procurement of any branch, agency, department, bureau, office, or instrumentality of the GoP,
including government-owned and/or -controlled corporations (GOCCs), government financial institutions (GFIs), state
universities and colleges (SUCs), and local government units (LGUs).

2 Any Treaty or International or Executive Agreement to which the GoP is a signatory affecting the subject matter of the
Act and this IRR shall be observed. In case of conflict between the terms of the Treaty or International or Executive
Agreement and this IRR, the former shall prevail.

3 Unless the Treaty or International or Executive Agreement expressly provides another or different procurement
procedures and guidelines, R.A. 9184 and this IRR shall apply to Foreign-funded Procurement of Goods, Infrastructure
Projects, and Consulting Services by the GoP.
This IRR shall not apply to the following activities:

a) Procurement of Goods, Infrastructure Projects and Consulting Services funded from Foreign Grants covered by R.A.
8182, as amended by R.A. 8555, entitled “An Act Excluding Official Development Assistance

b) Acquisition of real property which shall be governed by R.A. 107523 , entitled “An Act Facilitating the Acquisition of
Right-Of-Way Site or Location for National Government Infrastructure Projects,”

c) Public-Private sector infrastructure or development projects and other procurement covered by R.A. 6957, as
amended by R.A. 7718, entitled “An Act Authorizing the Financing, Construction, Operation and Maintenance of
Infrastructure Projects by the Private Sector, and for Other Purposes,”
The following are not procurement activities under R.A. 9184 and this IRR:

a) Direct financial or material assistance given to beneficiaries in accordance with the existing laws, rules and
regulations, and subject to the guidelines of the concerned agency;

b) Participation in local or foreign scholarships, trainings, continuing education, conferences, seminars or similar activities
that shall be governed by applicable COA, CSC, and DBM rules;

c) Lease of government-owned property as lessor for private use;

d) Hiring of Job Order Workers;

e) Joint Venture under the revised NEDA Guidelines (GOCC and Private Entities), and Joint Venture Agreements by LGU
with Private entities; and

f) Disposal of Property and Other Assets of the Government.

Definition of terms

Section 5. Definition of Terms For purposes of this IRR, the following terms or words and phrases shall mean or be
understood as follows:

a) Act. Refers to R.A. 9184, entitled “An Act Providing for the Modernization, Standardization and Regulation of the
Procurement Activities of the Government and for other Purposes,” otherwise known as the Government Procurement
Reform Act.

b) Approved Budget for the Contract (ABC). Refers to the budget for the contract duly approved by the HoPE, as provided
for in the General Appropriations Act (GAA), continuing, and automatic appropriations, in the case of national
government agencies (NGAs); the corporate budget for the contract approved by the governing board, pursuant to
Executive Order (E.O). No. 518, s. 1979, in the case of GOCCs and GFIs, and R.A. 8292 in the case of SUCs; the budget
approved by the Sanggunian through an appropriations ordinance in the case of LGUs. For multi-year contracts, for which
a Multi-Year Obligational Authority (MYOA) or an equivalent document is required, the ABC shall be that incorporated in
the project cost reflected in the MYOA or equivalent document. For Foreign-funded Procurement, the ABC refers to the
cost estimate prepared by the Procuring Entity and approved by the foreign government/foreign or international financing
institution as specified in the Treaty or International or Executive Agreement.
c) Bid. Refers to a signed offer or proposal to undertake a contract submitted by a bidder in response to and in
consonance with the requirements of the Bidding Documents. For purposes of, and throughout this IRR, the term
“Bid” shall be equivalent to and be used interchangeably with “Proposal” and “Tender.”

d) Bidder. Refers to a contractor, manufacturer, supplier, distributor and/or consultant who submits a bid in
response to the requirements of the Bidding Documents. (5.ea)

e) Bidding Documents. Refer to the documents issued by the Procuring Entity as the basis for bids, furnishing all
information necessary for a prospective bidder to prepare a bid for the Goods, Infrastructure Projects and/or
Consulting Services required by the Procuring Entity.

f) Bids and Awards Committee (BAC). Refers to the Committee established in accordance with Rule V of this IRR.
G.Procurement. Refers to the acquisition of goods, consulting services, and the contracting for infrastructure
projects by the Procuring Entity. In case of projects involving mixed procurements, the nature of the procurement,
i.e., Goods, Infrastructure Projects or Consulting Services, shall be determined based on the primary purpose of
the contract. 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 R.A. 10752 and other applicable laws, rules and regulations.
(a)

H. Procuring Entity. Refers to any branch, constitutional commission or office, agency, department, bureau,
office, or instrumentality of the GoP (NGA), including GOCC, GFI, SUC and LGU procuring goods,
infrastructure projects and consulting services.

I. Philippine Government Electronic Procurement System (PhilGEPS). Refers to the electronic System as provided
in Section 8 of this IRR. For purposes of, and throughout this IRR, the term “PhilGEPS” shall have the same
meaning as, and shall be used interchangeably with, “G-EPS” referred to in the Act.
J. Head of the Procuring Entity (HoPE). Refers to: (i) the head of the agency or body, or his duly authorized official,
for NGAs and the constitutional commissions or offices, and other branches of government; (ii) the governing board
or its duly authorized official, for GOCCs, GFIs and SUCs; or (iii) the local chief executive, for LGUs: Provided,
however, That in an agency, department, or office where the procurement is decentralized, the head of each
decentralized unit shall be considered as the HoPE, subject to the limitations and authority delegated by the head of
the agency, department, or office.

K) Goods. Refer to all items, supplies, materials and general support services, except Consulting Services and
infrastructure projects, which may be needed in the transaction of public businesses or in the pursuit of any
government undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for
construction, or personal property of any kind, including non-personal or contractual services, such as, the repair
and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or
analogous services, as well as procurement of materials and supplies provided by the Procuring Entity for such
services. The term “related” or “analogous services” shall include, but is not limited to, lease of office space, media
advertisements, health maintenance services, and other services essential to the operation of the Procuring Entity.
PROCEDURAL STEPS FOR THE PROCUREMENT OF GOODS AND SERVICES

STEP 1 ADVERTISE AND POST AN INVITATION TO APPLY FOR ELIGIBILITY AND TO BID

STEP 2 ISSUE THE BIDDING DOCUMENTS.

STEP 3 CALL A PRE-BID CONFERENCE AND, IF NECESSARY, ISSUE SUPPLEMENTAL/BID

BULLETINS

STEP 4 RECEIVE AND OPEN THE ELIGIBILITY AND BID ENVELOPES

STEP 5 EVALUATE THE BIDS

STEP 6 POST-QUALIFY

STEP 7 AWARD THE CONTRACT

STEP 8 HAVE THE CONTRACT SIGNED AND APPROVED AND ISSUE THE NOTICE TO PROCEED
What are Bidding Documents?

Bidding documents are documents issued by the Procuring Entity to provide prospective bidders all the
necessary information that they need to prepare their bids. (IRR-A Section 5 [f]) These clearly and adequately
define, among others:

1. The objectives, scope and expected outputs and/or results of the proposed contract;
2. The technical specifications of Goods to be procured;
3. Expected contract duration, the estimated quantity in the case of procurement of goods, delivery schedule
and/or time frame;
4. The obligations, duties and/or functions of the winning bidder; and
5. The minimum eligibility requirements of bidders, such as track record to be determined by the Head of the
Procuring Entity. (IRR-A Section 17.2)
Who shall participate in the preparation of the Bidding Documents?

The following must participate in the preparation of the bidding documents:

1. The BAC;
2. The TWG;
3. The end-user unit/PMO;
4. Consultants, if any; and
5. The BAC Secretariat / Procurement Unit.
What is a Pre-procurement Conference?

The pre-procurement conference is the forum where all officials involved in the procurement meet and discuss all aspects
of a specific procurement activity, which includes the technical specifications, the ABC, the applicability and
appropriateness of the recommended method of procurement and the related milestones, the bidding documents, and
availability of the pertinent budget release for the project.
Why is a Pre-procurement Conference necessary?

For projects involving an ABC amounting to more than Two Million Pesos (P 2 Million), a preprocurement
conference is conducted to determine the readiness of the Procuring Entity to procure goods and services in
terms of the legal, technical and financial requirements of the project. More specifically, it ensures that the
procurement will proceed in accordance with the PPMP and APP, confirms the availability of appropriations and
programmed budget for the contract, and reviews all relevant documents in relation to their adherence to the law.
(IRR-A Section 20)

Even when the ABC amounts to P 2 Million and below, the BAC is encouraged to conduct a pre-procurement
conference if the circumstances, like the complexity of the technical specifications, warrant the holding of such
conference before the Procuring Entity proceeds with the procurement.
 Invitation to bid

Competitive Bidding What is Competitive Bidding?

Competitive or Public Bidding is a method of procurement that is open to any interested and qualified party. All procurement
should be done through Public Bidding except as provided in Rule XVI of the IRR-A. (IRR-A Section 10) Competitive Bidding
consists of the following processes:
1. advertisement,
2. pre-bid conference,
3. receipt of eligibility documents and bids,
4. eligibility check, opening and examination of bids,
5. evaluation of bids,
6. post-qualification, and
7. award of contract. (IRR-A Section 5 [h])

A Procuring Entity should, therefore, see to it that its procurement program allows enough time to conduct such Public
Bidding. There are two (2) types of Competitive Bidding procedures: the Single-Stage and Two-Stage. The Single-Stage bidding
is the regular procedure used for competitive or public bidding while the two stage bidding is employed when the required
technical specifications/ requirements of the contract cannot be precisely defined in advance of bidding, or where the
problem of technically unequal bids is likely to occur.
Step 1 Advertise and Post an Invitation to Apply for Eligibility and to Bid

What is the Invitation to Apply for Eligibility and to Bid (IAEB)?

The IAEB serves as the notice to the public and all interested parties of the procurement and bidding opportunities of
the Procuring Entity.

Why do you post an Invitation to Apply for Eligibility and to Bid?

It ensures transparency of the procurement process, widest possible dissemination to increase the number of prospective
bidders, and intensify competition for the procurement activity or project. Intensified competition, in turn, will ensure
that the government, in general, and the Procuring Entity, in particular, will get the best possible quality and cost for the
goods and services sought to be procured.
What does an Invitation to Apply for Eligibility and to Bid contain?

The IAEB must contain the following: (IRR-A Section 21.1)

1. The name of the contract to be bid, and a brief description of the goods to be procured;
2. A general statement on the criteria to be used by the Procuring Entity for:
a. The eligibility check;
b. The examination and evaluation of bids; and
c. Post-qualification;
3. The date, time and place of the deadline for: a. The submission and receipt of the eligibility requirements; b. The pre-bid
conference if any; c. The submission and receipt of bids; and d. The opening of bids;
4. The ABC;
5. The source of funding;
6. The period of availability of the bidding documents, the place where the bidding documents may be secured and, where
applicable, the price of the bidding documents;
7. The contract duration or delivery schedule;
8. The name, address, telephone number, facsimile number, e-mail and website addresses of the concerned Procuring Entity,
as well as its designated contact person; 9. The Reservation Clause, which is normally located at the bottom of the notice;
and
10. Such other necessary information deemed relevant by the Procuring Entity.
What is the Reservation Clause?

The Reservation Clause declares that the Procuring Entity reserves the right to reject any and all bids, to declare a failure of
bidding, or not to award the contract. (IRR-A Section 41)

In the case of Mata v. San Diego, G.R. No. L-30447 (March 21, 1975), the Supreme Court of the Philippines declared that a
bidder is bound by the reservation clause, and the said clause vests in the authority concerned the discretion to ascertain who
among the bidders is the lowest responsive bidder or the lowest and best bidder or most advantageous to the best interest of the
Government. As such, a bidder has no right or cause of action to compel the BAC or agency to award the contract to it. The
Court further stated that this requires inquiry, investigation, comparison, deliberation and decision – a quasi-judicial function
which, when honestly exercised, may not be reviewed by the courts.

A Procuring Entity should be prudent in the use of the reservation clause, because if the Head of the Procuring Entity abuses
his power to reject any and all bids, as provided by therein, with manifest preference to any bidder who is closely related to
him in accordance with IRR-A Section 47, or if it is proven that he exerted undue influence or undue pressure on any member
of the BAC or any officer or employee of the Procuring Entity to take such action, and the same favors or tends to favor a
particular bidder, he shall be meted with the penalties provided in IRR-A Section 65. (IRR-A Section 65.1.5)
Step 2 Issue the Bidding Documents

When should the bidding documents be made available to prospective bidders?

The bidding documents must be made available to the prospective bidders from the time the IAEB is advertised
until immediately before the deadline for submission of bids. (IRR-A Section 17.5) The Procuring Entity must
ensure that prospective bidders are given ample time to examine the bidding documents and to prepare their
respective bids.

A maximum period of thirty (30) calendar days from the date of advertisement and/or first day of posting of the
IAEB up to opening of bids is provided by Section 21.2.2 of the IRR-A, which means that there is a period of thirty
(30) calendar days for which the bidding documents are available for purchase.

The bidding documents are strictly confidential and shall not be divulged or released to any person prior to its
official release. It is advisable for a Procuring Entity to post an abstract or a summary of the bidding documents,
containing general information about the procurement at hand, in the PhilGEPS website, the website of the
Procuring Entity, and the website of its electronic procurement system service provider, if any
How are the Bidding Documents issued?

The BAC Secretariat issues the bidding documents to the prospective bidders that may wish to secure the said
documents, or, if it is for sale, to those prospective bidders that may wish to purchase the same. If the bidding
documents are sold, only those prospective bidders that have paid the amount required shall be issued bidding
documents, and bidders should be informed that the Procuring Entity will only accept bids from bidders that have
purchased the bidding documents from the office indicated in the IAEB. Prior to the issuance of the bidding
documents, prospective bidders may be required to show the official receipt as proof of payment. The BAC must
issue copies of the bidding documents to the Observers free of charge
Step 3 Call A Pre-Bid Conference and, if necessary, Issue Supplemental/Bid Bulletins

What is a Pre-bid Conference? The pre-bid conference is the initial forum where the Procuring Entity’s
representatives and the prospective bidders discuss the different aspects of the procurement at hand. The ground rules
that will govern the procurement are discussed during the conference. In particular, the participants discuss the legal,
technical and financial components of the contract to be bid. This is also an opportunity for the prospective bidders to
request for clarifications about the bidding documents. However, it should be noted that any statement made at the
pre-bid conference would not modify the terms of the bidding documents, unless such statement is specifically
identified in writing as an amendment of the documents and issued as a supplemental/bid bulletin. (IRR-A Section
22.4)
When do you hold a Pre-bid Conference?

A pre-bid conference must be held for contracts with ABCs of at least One Million Pesos (P 1 Million). For contracts
with ABCs of less than P 1 million, pre-bid conferences may or may not be held at the discretion of the BAC. The BAC
may also decide to hold a pre-bid conference upon the written request of a prospective bidder. (IRR-A Section 22.1)

A pre-bid conference must be conducted at least twelve (12) calendar days before the deadline for the submission and
receipt of bids. (IRR-A Section 22.2) In addition to this, it is suggested that it not be held earlier than seven (7) calendar
days after the second newspaper advertisement or the last day of posting the IAEB.

If the pre-bid conference is held less than 12 calendar days before the deadline for the submission and receipt of bids,
that deadline should be moved to a later date. A supplemental/bid bulletin shall be issued for this reason. Note that these
periods are all within the maximum period of thirty (30) calendar days from the date of advertisement and/or first day of
posting of the IAEB up to the opening of bids, as provided under IRR-A Section 21.2.2 (i).
Who must attend the Pre-bid Conference?

The following shall attend the Pre-Bid Conference:

1. The BAC;
2. The BAC Secretariat/Procurement Unit;
3. The TWG members and consultants, if any;
4. The procuring unit/end-user unit;
5. The prospective bidders; and
6. The Observers. The attendance of the prospective bidders shall not be mandatory.
Step 4 Receive and Open the Eligibility and Bid Envelopes

What is an eligibility check?

It is a procedure to determine if a prospective bidder is eligible to participate in the bidding at hand. In

determining a prospective bidder’s eligibility, the BAC shall use non-discretionary “pass/fail” criteria, as stated
in the IAEB and the ITB. Essentially, this means that the absence, incompleteness or insufficiency of a
document shall make a prospective bidder ineligible to bid for the particular procurement.
Who may be eligible to participate in a public bidding for goods?

The following manufacturers, suppliers and/or distributors, service providers shall be eligible to participate in the
bidding for the supply of goods: (IRR-A Section 23.11.1.1)

1. Duly licensed Filipino citizens/sole proprietorships;

2. artnerships duly organized under the laws of the Philippines and of which at least sixty percent (60%) of the
interest belongs to citizens of the Philippines;
3. Corporations duly organized under the laws of the Philippines, and of which at least sixty percent (60%) of the
outstanding capital stock belongs to citizens of the Philippines;
4. Joint ventures of manufacturers, suppliers and/or distributors, i.e., a group of two (2) or more manufacturers,
suppliers and/or distributors that intend to be jointly and severally responsible or liable for a particular contract,
provided that: a. Filipino ownership or interest of the joint venture concerned must be at least sixty percent
(60%); and b. In determining the eligibility of the joint venture, the principle of “collective compliance” will be
applied to its members/principals in the sense that each of the entities of the joint venture must submit all of the
documents that are required to establish eligibility, although the non-compliance of one member/principal may
be compensated by the compliance of another member/principal;
5. Cooperatives duly registered with the CDA.
Why do we require that the bidder’s largest single contract be at least 50% of the ABC of the contract to be
bid?

We do this because we want to be assured that the prospective bidder has the technical and financial capability to
undertake the contract to be bid

1. The experience of having completed within the period specified in the IAEB concerned, a single contract that is
similar to the contract to be bid, and whose value, adjusted to current prices using the wholesale consumer price
index, must be at least fifty percent (50%) of the approved budget for the contract to be bid (IRR-A Section
23.11.1.2); and
2. Any of the following:
An NFCC that is at least equal to the approved budget for the contract to be bid, calculated as follows: NFCC =
[(Current assets minus current liabilities) (K)] minus the value of all outstanding projects under ongoing contracts,
including awarded contracts yet to be started.

Where: K =10 for a contract duration of one year or less, 15 for a contract duration of more than one year up to two
years, and 20 for a contract duration of more than two years
Step 5 Evaluate the Bids

What is the purpose of Bid Evaluation?

The purpose of bid evaluation is to determine the Lowest Calculated Bid (LCB). (IRR-A Section 32.1)

This is done by:

1. Establishing the correct calculated prices of the bids, through a detailed evaluation of the financial component of
the bids; and
2. Ranking of the total bid prices as so calculated from the lowest to the highest.

The bid with the lowest price shall be identified as the LCB.

When should the bids be evaluated?

The entire evaluation process for the bids for the procurement of goods must be completed in not more than seven (7)
calendar days from the deadline for receipt of proposals. (IRR-A Section 32.3) However, the BAC should exert effort
to complete the Bid Evaluation even before the lapse of the 15-day period, as this will expedite the procurement
process.
Who are the participants in the Bid Evaluation Process?

The following must participate in the bid evaluation process:

1. The BAC;
2. The TWG;
3. The BAC Secretariat/ Procurement Unit; and
4. The Observers.
How are bids evaluated?

1. After the preliminary examination of bids, the BAC, or through the TWG, shall immediately conduct a detailed evaluation
of all bids rated “passed,” using a nondiscretionary pass/fail criteria, as stated in the IAEB and the ITB, which shall
include a consideration of the following

2. Based on the detailed evaluation of bids, those that comply with the abovementioned requirements shall be ranked in the
ascending order of their total calculated bid prices, as evaluated and corrected for computational errors, discounts and
other modifications, to identify the LCB. Total calculated bid prices, as evaluated and corrected for computational errors,
discounts and other modifications, which exceed the ABC shall be disqualified. (IRR-A Sections 32.4.4)

3. After all bids have been received, opened, examined, evaluated and ranked, the BAC shall prepare the corresponding
Abstract of Bids. All members of the BAC shall sign the Abstract of Bids and attach thereto all the bids with their
corresponding Bid Securities and the minutes or proceedings of the bidding. (IRR-A Section 32.5) The Observers shall
also sign the Abstract of Bids if, in their independent observation, the bidding activity conducted by the BAC followed the
correct procedure indicated under R.A. 9184 and its IRR-A.

4. The TWG, with the assistance of the BAC Secretariat, when directed by the BAC, should prepare the Evaluation Report,
containing the details of the evaluation conducted, preferably within three (3) calendar days from the date the evaluation
was concluded.
Step 6 Post-qualify:

What is Post-qualification?

Post-qualification is the process of verifying, validating and ascertaining all the statements made and documents
submitted by the bidder with the LCB, which includes ascertaining the said bidder’s compliance with the legal,
financial and technical requirements of the bid. If its eligibility documents had been validated and verified, and its
compliance with the legal, financial, and technical requirements of the bid had been ascertained, the bidder must be
declared the bidder with the “Lowest Calculated Responsive Bid” (LCRB). (IRR-A Section 34.)
What does Post-qualification entail?

Post-qualification involves the BAC verifying, validating and ascertaining that the bidder satisfies the following criteria:
(IRR-A Section 34.2)
1. Legal Requirements. The post-qualification process under this criterion involves the verification, validation and
ascertaining of the supplier’s claim that it is not included in any government “blacklist,” as well as all the licenses,
permits and other documents it submitted. The legal requirements refer to the Legal Documents submitted by the
bidder as part of the eligibility requirements, e.g., SEC registration, DTI business name registration, Mayor’s permit,
TIN, etc. The bidder’s status with regard to “blacklisting” may be verified by checking the Consolidated Blacklisting
Report issued by the GPPB, or the “blacklist” of any government agency.

2. Technical Requirements. Post-qualification under this criterion means that the BAC would have to validate, verify,
and ascertain the veracity of the documents submitted by a supplier to prove compliance of the goods and services
offered with the requirements of the contract and bidding documents.

3. Financial Requirements. Under this criterion, the BAC ought to verify, validate and ascertain the bid price proposal
of the bidder and, whenever applicable, its computation of the NFCC, the required bank commitment to provide a
credit line to the bidder, or the hold out on deposit status of the cash deposit certificate, in the amount specified and
over the period stipulated in the ITB. This is to ensure that the bidder can sustain the operating cash flow of the
transaction
What is the Timeline for the conduct of Post-qualification?
The post-qualification process must be conducted and completed within seven (7) calendar days from the
determination of the LCB. However, in the procurement of goods requiring elaborate testing (such as equipment
sourced from abroad) and other exceptional cases, the Head of the Procuring Entity may extend the post-
qualification period, but in no case should the aggregate period exceed thirty (30) calendar days

Who are involved in the conduct of Post-qualification?

The following Parties are involved in the conduct of post-qualification:

1. The BAC;
2. The TWG;
3. The BAC Secretariat / Procurement Unit; and
4. The eligible supplier/manufacturer, ranked starting from bidder with the LCB.
How is Post-qualification conducted?

The following steps are followed in the conduct of post-qualification:

1. The BAC/TWG verifies, validates, and ascertains the genuineness, validity and accuracy of the legal, technical and
financial documents submitted by the bidder with the LCB, using the non-discretionary criteria described above. In
verifying the information contained in such documents, the BAC/TWG may make inquiries with appropriate
government agencies and examine the original documents kept in the bidder’s place of business. The use of other
means for verification and validation of such documents may be resorted to by the BAC/TWG, such as the Internet and
other research methods that yield the same results.

2. The BAC/TWG conducts a site inspection of the bidder’s place of business and/or plant/factory, where applicable.

3. The BAC/TWG tests samples for compliance with specifications and performance levels, where applicable.

4. The BAC/TWG inquires about the bidder’s performance in relation with other contracts/transactions as indicated in its
eligibility statement (statement of on-going, completed or awarded contracts).
The following steps are followed in the conduct of post-qualification:

5. If the TWG conducts the post-qualification, it prepares a Post-qualification Report to be submitted to the BAC. The
Report shall contain, among others, the activities undertaken with regard to the post-qualification process, feedback
from inquiries conducted, and the results of any tests conducted by the TWG or an accredited government testing
center, where applicable.

6. The BAC reviews the Post-qualification Report submitted by the TWG.

7. The BAC determines whether the bidder with the LCB passes all the criteria for postqualification.

8. If the LCB passes the post-qualification, the BAC declares it as the LCRB.

9. After the BAC has determined the LCRB, the Secretariat, with the assistance of the TWG, if necessary, prepares the
BAC Resolution declaring the LCRB and the corresponding Notice to the said bidder informing it of its post-
qualification.
What happens if the bidder with the LCB fails Post-qualification?

1. If the bidder with the LCB fails to pass post qualification, the BAC shall immediately notify the said bidder in writing of
its post-disqualification and the grounds for it. The post-disqualified bidder shall have three (3) calendar days from receipt of
the said notification to request from the BAC, if it so wishes, a reconsideration of its decision.

2. The BAC shall evaluate the request for reconsideration, if any, using the same non-discretionary criteria, and shall issue its
final determination of the said request within seven (7) calendar days from receipt thereof. (IRRA Section 34.4) Similar to the
cases of bidders deemed to be ineligible and whose bids are rated “failed,” the bidder with the LCB who fails to pass post-
qualification may likewise file a protest with the payment of the corresponding fee in case the BAC denies its request for
reconsideration.

3. Immediately after the BAC has notified the first bidder of its post-disqualification, and notwithstanding any pending
request for reconsideration thereof, the BAC shall initiate and complete the same post-qualification process on the bidder
with the second LCB. If the second bidder passes the post-qualification, and provided that the request for reconsideration of
the first bidder has been denied, the BAC shall declare the second bidder as the bidder with the LCRB. The Head of the
Procuring Entity shall then award the contract to it. (IRR-A Section 34.5) If the second bidder, however, fails the post-
qualification, the procedure for post-qualification shall be repeated for the bidder with the next LCB, and so on until the
LCRB, is determined for award. (IRR-A Section 34.7)
What happens if all bidders fail Post-qualification?

If no bidder passes post-qualification, the BAC shall issue a Resolution declaring a failure of bidding. In such a
case, the BAC shall issue a Resolution declaring a failure of bidding. The BAC then reviews the terms and
conditions stated in the IAEB. If warranted, it changes any of the terms and conditions, including the quantities
or specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-bidding, in the
process formulating a new IAEB and posting and publishing this as required.
Step 7 Award the Contract

What is the rule on Contract Award?

The contract shall be awarded to the bidder with the LOWEST CALCULATED RESPONSIVE BID at its submitted
bid price or its calculated bid price, whichever is lower.15 (IRR-A Section 37.

1) The BAC shall issue a Resolution recommending to the Head of the Procuring Entity award of the contract to the
bidder with the LCRB at its submitted bid price or its calculated bid price, whichever is lower.

2) Prior to the expiration of the period of bid validity, the Procuring Entity should notify the successful bidder in
writing that its bid has been accepted, through a Notice of Award received personally or sent by registered mail or
electronically. It is important that, in case the Notice of Award is not received personally, its receipt must be
confirmed in writing within two (2) days by the successful bidder and submitted personally or sent by registered
mail or electronically to the Procuring Entity (this particular instruction must be included in the ITB so that the
bidder may be guided accordingly).
What is the Timeline for Contract Award? The Head of Procuring Entity or his duly authorized representative
should approve or disapprove the recommendation of award within seven (7) calendar days from the date of
determination and declaration by the BAC of the LCRB.
Who are involved in the Award of the Contract?

The following must participate in the activities related to the awarding of the Contract:

1. The Head of the Procuring Entity;

2. The BAC;
3. The Procurement Office;
4. The BAC Secretariat/ Procurement Unit;
5. The bidder who submitted the LCRB/SCRB;
What is the maximum period of time within which a contract can be awarded?

Contract award must be made within eighty (80) calendar days from the date of bid opening but not to exceed
the bid validity period as specified in the bidding documents. (IRR-A Section 37.2.2) If award cannot be made
within the said period, the bid validity period should be extended
What happens if the bidder being considered for award does not accept the award?

If the bidder refuses to accept the award within the bid validity period, the BAC shall forfeit the bid security of
the bidder and shall initiate the blacklisting proceedings in accordance with the Uniform Guidelines for
Blacklisting (GPPB Resolution No. 09- 2004).

Refusal to accept an award, without just cause or for the purpose of forcing the Procuring Entity to award the
contract to another bidder, if proven, is meted with a penalty of imprisonment of not less than six (6) years and
one (1) day by not more than fifteen (15) years. (IRR-A Section 65.3.4) Additional penalties of suspension for
one (1) year from participation in government procurement for the first offense, and suspension for two (2)
years for the second offense shall also be imposed on the bidder. (IRR-A Section 69.1)
Step 8 Have the Contract Signed and Approved and Issue the Notice to Proceed

When must the winning bidder and the Procuring Entity enter into a contract?

The winning bidder and the Procuring Entity must enter into a contract immediately after the former has
submitted the performance security and all other documentary requirements within the period specified in the
IRR-A. The parties must sign the contract within ten (10) calendar days from receipt by the winning bidder of
the Notice of Award. (IRR-A Section 37.3) The Chief Accountant or the Chief Budget Officer may sign the
contract as an instrumental witness thereto. The Procuring Entity signatory is encouraged to sign within the
same day as the signing of the bidder as there are penalties against delaying, without justifiable cause, the award
of the contract. (IRR-A Section 65.1) Moreover, it would be best for the winning bidder and the Head of the
Procuring Entity, or its appropriate signing authority, to sign/execute the contract together – provided that all
contract documents and requirements are complete – so that both may personally appear before a Notary Public.
What are the Timelines to be considered with respect to contract approval?

When, after contract signing, further approval of a higher authority is required, the approving authority for the
contract, or his duly authorized representative, shall be given a maximum of fifteen (15) calendar days from
receipt thereof, together with all documentary requirements to perfect the said contract, to approve or
disapprove it. In the case of GOCCs and GFIs, when further approval of the governing Board is required, the
said governing Board or its duly authorized representative has twenty-five (25) calendar days. (IRR-A Section
37.4)
When should the Procuring Entity issue the NTP?

The NTP must be issued together with a copy or copies of the approved contract to the successful bidder
within three (3) calendar days from the date of approval of the contract by the appropriate government
approving authority. (IRR-A Section 37.5)

When is a contract “effective”?

Unless otherwise specified in the contract, a contract is effective upon receipt of the NTP. If an effectivity
date is provided in the NTP by the Procuring Entity concerned, all notices called for by the terms of the
approved contract shall be effective only from such effectivity date, but such effectivity date should not be
later than seven (7) calendar days from the issuance of the NT
Who are the Parties involved in Contract Signing and Approval and Issuance of the NTP?

The following parties are involved in the signing and approval of the contract, and in the issuance of
the NTP:

1. The BAC Secretariat/Procurement Unit/Office;

2. The Head of the Procuring Entity;
3. The winning bidder; and
4. End-user;
What happens if the bidder with the LCRB or SCRB refuses or is unable, through its own fault, to post the
performance security and sign the contract within the prescribed period?

If the bidder with the LCRB or SCRB (as defined in Step 4, Receive and Open Eligibility Envelopes and Bids)
refuses to, or is unable, through its own fault, to post the performance security and sign the contract within the
prescribed period:

1. Its bid security is forfeited;

2. It is disqualified from further participating in the bidding at hand;
3. Upon conviction, the relevant officers or individuals will suffer the penalty of imprisonment of not less than six
(6) and one (1) day and not more than fifteen (15) years; and
4. Upon determination of administrative liability, it will suffer the administrative penalties of suspension for one (1)
year from participation in government procurement for the first offense, and suspension for two (2) years for the
second offense. This is without prejudice to the blacklisting proceedings undertaken in accordance with the Uniform
Guidelines for Blacklisting (GPPB Resolution 09-2004).
Two-Stage Competitive Bidding What is Two-Stage Competitive Bidding?

The Two-Stage Competitive Bidding is one where the bidding process is divided in two (2) stages.

1. The first stage involves the issuance by the Procuring Entity of bidding documents with technical specifications that
are not yet well defined and merely in the form of performance criteria, and the submission by the bidders of their
respective Letters of Intent, eligibility requirements, if needed, and initial Technical Proposals without price. This
allows the Procuring Entity to receive inputs from the eligible bidders whose Technical Proposals meet the minimum
performance standards (a meeting/discussion may be held with these bidders), for purposes of drawing up the final
revised technical specifications/requirements of the contract.

2. The second stage involves the release of the well-defined technical specifications by the Procuring Entity, followed
by the conduct of the regular procedure for public bidding with all the bidders identified during the first stage, who
shall then be required to submit their respective rexvised Technical Proposals including their Financial Proposals.
(IRR-A Section 30.4)
Alternative methods of procurement

The Alternative Methods for the Procurement of Goods and Services

What is the rule on the use of alternative methods of procurement?

Generally, procurement should be through competitive bidding. In preparing the APP, the Procuring Entity must ensure
that there is sufficient time to undertake competitive bidding. However, the law allows the use of alternative methods of
procurement in some exceptional instances, provided:

1. There is prior approval of the Head of the Procuring Entity on the use of alternative methods of procurement, as
recommended by the BAC; and
2. The conditions required by law for the use of alternative methods are present.
 In resorting to any of the alternative methods of procurement, the Procuring Entity must ensure that the method
chosen promotes economy and efficiency, and that the most advantageous price for the government is obtained. For
the procurement of goods, the following alternative methods of procurement may be resorted to:

1. Limited Source Bidding

2. Direct Contracting
3. Repeat Order
4. Shopping
5. Negotiated Procurement
ALTERNATIVE METHODS OF PROCUREMENT:

1. LIMITED SOURCE BIDDING, otherwise known as SELECTIVE BIDDING, is a method of procurement of

goods and consulting services that involves the issuance of a direct invitation to bid by the concerned Procuring
Entity to a set of pre-selected suppliers or consultants with known experience and proven capability on the
requirements of the particular contract. (IRRA Section 49)

When shall Limited Source Bidding be allowed?

Limited Source Bidding may be employed by a Procuring Entity under any of the following conditions:
1. If only a few suppliers of the goods to be procured are known to be available, such that resorting to public
bidding method will not likely result in any additional suppliers participating in the bidding. An example is the
procurement of highly specialized types of Goods like sophisticated defense equipment (e.g., fighter planes,
Battleships, complex air navigation systems, or coal); or

1. In the procurement of major plant components where it is deemed advantageous to limit the bidding to known
qualified bidders in order to maintain uniform quality and performance of the plant as a whole.
ALTERNATIVE METHODS OF PROCUREMENT:

Direct Contracting What is Direct Contracting?

DIRECT CONTRACTING or SINGLE SOURCE PROCUREMENT is a method of procurement of Goods that does not
require elaborate bidding documents. The supplier is simply asked to submit a price quotation or a pro-forma invoice together
with the conditions of sale. The offer may be accepted immediately or after some negotiations. (IRR-A Section 50)

When shall Direct Contracting be allowed?

Direct Contracting may be resorted to by a Procuring Entity under any of the following conditions:
1. Procurement of items 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. This is applicable when the goods or services
being procured are covered by a patent, trade secret or copyright duly acquired under the law.
2. When the procurement of critical plant 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 its contract.
3. Those sold by an exclusive dealer or manufacturer that 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.
How can Direct Contracting be justified?

To justify the need to procure through the Direct Contracting method, the BAC should conduct a survey of the
industry and determine the supply source. This survey should confirm the exclusivity of the source of goods or
services to be procured. In all cases where Direct Contracting is contemplated, the survey must be conducted prior
to the commencement of the procurement process. Moreover, the Procuring Entity must justify the necessity for
an item that may only be procured through Direct Contracting, and it must be able to prove that there is no
suitable substitute in the market that can be obtained at more advantageous terms.
Repeat Order What is Repeat Order?

REPEAT ORDER, is a method of 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. The
procurement should be covered by the contingency provided for in the APP. (IRR-A Section 51)

Repeat Orders from the previous winning bidder may be resorted to by the Procuring Entity only in cases where
the procured item is clearly superior to the other bids.

This superiority must exist, not only in the price quoted but also in equipment reliability, availability of spare
parts, after-sales service and delivery period, among others. The bid should not have been so closely contested,
such that if a bidding would be conducted again, the previous winning bidder would still have a high probability
of winning.
When is Repeat Order Allowed?

Repeat Order may be resorted to by a Procuring Entity if the following conditions are satisfied:
1. The original contract must have been procured through competitive bidding.

2. Contract prices of the repeat order must be the same as or lower than those in the original contract, provided
that such prices are still the most advantageous to the government after price verification;

3. The repeat order will not result in splitting of contracts, requisitions or purchase orders, as provided for in
Section 54.1 of the IRR-A; 4. Except in cases duly approved by the GPPB, the repeat order shall be availed of
only within six (6) months from the date of the NTP arising from the original contract; and 5. The repeat order
should not exceed twenty-five percent (25%) of the quantity of each item in the original contract, and must be
part of the contingency provided for in the APP.
Shopping What is Shopping?

SHOPPING is a method of procurement of goods 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 qualifications. (IRR-A Section 52) Inherent in this definition are
the following requisites:
1. The goods to be procured are readily available off-the-shelf items or ordinary/regular equipment; and
2. The suppliers from whom the goods are procured are of “known qualifications.”
When is Shopping allowed?

Shopping shall be employed only in any of the following cases:

1. When there is an unforeseen contingency requiring the immediate purchase of goods. However, the
amount must not exceed Fifty Thousand Pesos (Php50,000.00) per transaction, and the aggregate
amount of such purchases must not exceed the maximum allowed by the GAA.

1. When ordinary or regular office supplies and equipment not available in the PS-DBM needs to be
procured, the price of such purchase not exceeding Two Hundred Fifty Thousand Pesos
(Php250,000.00). However, it must be ensured that the procurement does not result in splitting of
contracts, as provided in Section 54.1 of the IRR-A. At least three (3) price quotations from bona fide
suppliers must likewise be obtained. (IRR-A Section 52 [b])
What is “splitting of contract”?

Splitting of contracts is the act of dividing or breaking up government contracts into smaller quantities and
amounts. It also is the act of dividing contract implementation into artificial phases or sub-contracts. Both
actions are for the purpose of evading or circumventing the requirements of law and the IRR-A of R.A. 9184,
especially the necessity of public bidding and the requirements for the alternative methods of procurement.
(IRR-A Section 54.1) If the procuring entity is found to have resorted to this mechanism to subvert the law,
those responsible for this act shall suffer the penalty of imprisonment of not less than six (6) years and one (1)
day, but not more than fifteen (15) years. This penalty is without prejudice to the imposition of other sanctions
provided for in RA 3019 and other penal laws. (IRR-A Section
Negotiated Procurement

What is Negotiated Procurement?

NEGOTIATED PROCUREMENT is a method of procurement of Goods whereby the Procuring Entity directly
negotiates a contract with a technically, legally and financially capable supplier. (IRR-A Section 53)

The latter portion of the above definition indicates the advisability for the existence of a registry of suppliers
maintained and updated by the Procuring Entity. Moreover, particularly in the cases of emergency procurement,
the suppliers from whom goods are procured should be in good standing, and have not committed any breach
of contract (e.g., short deliveries, unreasonable delays in delivery of goods, delivery of defective goods, or
similar acts) in previous transactions with the Procuring Entity or other government entity. It is the responsibility
of the Procuring Entity, through the procurement office, to monitor contract implementation as well as
constantly coordinate with the GPPB-TSO for updates on blacklisted suppliers.
When is Negotiated Procurement allowed for the procurement of goods?

For the procurement of goods, negotiated procurement is employed only in any of the following cases:

1. Where there has been failure of public bidding for the second time provided in Section 35 of R.A. 9184;

2. In case of imminent danger to life or property during a state of calamity, or when time is of the essence
arising from actual 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;
3. If the Procuring Entity is purchasing goods from another agency of the government, such as the PS-DBM; or if
it lacks the proficiency or capability to undertake a particular procurement, as determined by the Head of the
Procuring Entity, and requests another government agency to undertake such procurement activity or hires
consultants or procuring agents to assist it directly and/or train its staff in the management of the procurement
function;

4. Upon prior approval by the President of the Philippines, when the procurement involved major defense
equipment for use by the AFP and the Secretary of National Defense has determined that the interests of the
country shall be protected by negotiating directly with an agency or instrumentality of another country with
which the Philippines has entered into a defense cooperation agreement or otherwise maintains diplomatic
relations. It should be noted that the negotiation should be with a public agency or instrumentality of a foreign
country, not directly with any foreign supplier or manufacturer. As such, for this type of procurement, it is
necessary for the contract to be covered by a foreign government guarantee equivalent to 100% of the contract
price; or

5. Where the procurement does not fall under Shopping in Section 52(a) of the IRR-A and amounts to Fifty
Thousand Pesos (P50,000.00) and below, provided that the procurement does not result in splitting of contracts.
THE END!