Key Takeaways from the Government Procurement Act (Part III)

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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

 

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AT A GLANCE:

Under Article VI, Section 26 of the Government Procurement Act, the Procuring Entity shall adopt any of the following modes of procurement consistent with the fit-for-purpose procurement approach:

1. Competitive Bidding;
2. Limited Source Bidding;
3. Competitive Dialogue;
4. Unsolicited Offer with Bid Matching;
5. Direct Contracting;
6. Direct Acquisition;
7. Repeat Order;
8. Small Value Procurement;
9. Negotiated Procurement;
10. Direct Sales; and 
11. Direct Procurement for Science, Technology and Innovation

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Competitive Bidding

A mode of procurement which is open to participation by any eligible bidder and which consists of the following processes:

1. Publication;
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.

 

Notwithstanding the applicability of the other modes of procurement, the Procuring Entity may adopt competitive bidding in its procurement activity.

 

Limited Source Bidding

A mode of procurement that involves direct invitation to bid by the Procuring Entity to a set of pre-selected suppliers or consultants with known experience and proven capability relative to the requirements of a particular contract.

 

Limited source bidding may only be resorted to in any of the following conditions:

1.  Procurement of highly specialized types of Goods and Consulting Services which are known to be obtainable only from a limited number of sources;
2. 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; or 
3. Procurement of highly specialized Infrastructure Projects involving and affecting national security.

 

Competitive Dialogue

A mode of procurement that employs a two-stage bidding process where the Procuring Entity invites suppliers, manufacturers, distributors, contractors, consultants, and service providers to a dialogue to propose solutions to address its needs and requirements.

 

Upon submission of their initial technical proposals, without price tenders, eligible bidders shall be engaged in a dialogue to finalize the project requirements. Bidders shall then submit their technical and financial proposals which shall be subject to the bid evaluation and post-qualification processes prescribed under this Act. Competitive dialogue may be resorted to if any of the following conditions are present:

1. The procurement includes innovative design or solutions involving procurement of complex purchases such as, but not limited to, sophisticated products, intellectual services, or major information and communications technology projects;
2. The contract requires prior negotiations with the suppliers, manufacturers, distributors, contractors, consultants, and service providers because of specific circumstances related to the nature, complexity, legal and financial issues, or risk attached to the procurement; or 
3. The technical specifications cannot be sufficiently established or precisely defined by the Procuring Entity. 

 

Unsolicited Offer with Bid Marching

A mode of procurement wherein the Procuring Entity may consider unsolicited offers on a negotiated basis for Goods and Consulting Services: Provided, That the following conditions are met:

1. The procurement involves a new concept or technology as determined by the Head of the Procuring Entity (HoPE); and 
2. The Procuring Entity has invited comparative or competitive bids. 

 

The contract shall be awarded to the original offeror if: 

1. No comparative or competitive bid is received within the period prescribed in the IRR;
2. The bids submitted by the comparative offerors failed at bid opening; or
3. The original offeror matched or submits a lower price proposal against the comparative or competitive bid.

 

For purposes of this mode of procurement, and when the new concept or technology is acceptable, the Procuring Entity may secure funds from the available sources, subject to government budgeting, accounting, and auditing rules.

 

Direct Contracting

A mode of procurement wherein the supplier is required to submit a price quotation or a pro-formal invoice together with the conditions of sale, which may be accepted immediately or after some negotiations. It may only be resorted to in any of the following conditions:

1. When the goods are of proprietary nature, which can be obtained only from the proprietary source, or when patents, trade secrets, and copyrights prohibit others from manufacturing the same item;
2. 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 the contract; or
3. When it is 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.

 

Direct Acquisition

A mode of procurement wherein, subject to compliance with the identified legal, technical, and financial requirements, a Procuring Entity may procure directly from any known and reputable source, its required non-Common-Use Supplies and Equipment (CSE) and CSEs not available in the PS-DBM and services with an Approved Budget for the Contract (ABC) not exceeding PHP 200,000.00. The threshold amount can be adjusted as may be deemed appropriate by the GPPB to reflect changes in economic conditions and for other justifiable reasons. 

 

Repeat Order

A mode of procurement wherein the Procuring Entity may procure Goods from the previous winning bidder whenever there arises a need to replenish the Goods procured under a contract previously awarded through bidding. Repeat order shall be subject to the post qualification process prescribed in the bidding documents and all of the following conditions:

1. The unit price must be equal to or lower than that provided in the original contract;
2. Except in special circumstances as may be 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 
3. The repeat order shall not exceed 25% of the quantity of each item in the original contract.

 

Small Value Procurement

A mode of procurement whereby the Procuring Entity requests for the submission of at least three (3) price quotations for goods not available in the PS-DBM, Infrastructure Projects, and Consulting Services. The receipt of one (1) quotation is sufficient to proceed with the evaluation of bidders: Provided, That the amount and adjustments as may be deemed appropriate by the GPPB,

 

In the case of LGUs, the GPPB is authorized to adjust the threshold amount based on the LGU income classification.

 

Negotiated Procurement

Negotiated procurement shall be allowed only in the following instances:

1. Two Failed Biddings
2. Emergency Cases
3. Take-Over of Contracts
4. Adjacent or Contiguous
5. Agency-to-Agency
6. Scientific, Scholarly or Artistic Work, Exclusive Technology and Media Services, Where Goods, Infrastructure Projects and Consulting Services can be contracted to a particular supplier, contractor or consultant and as determined by the HoPE
7. Highly Technical Consultants
8. Defense Cooperation Agreements and Inventory-Based Items
9. Lease of Real Property and Venue.
10. NGO Participation
11. Community Participation
12. UN Agencies, International Organizations or International Financing Institutions
13. Direct Retail Purchase of Petroleum Fuel, Oil and Lubricant (POL) Products, electronic charging devices, and Online Subscriptions

 

Direct Sales

A mode of procurement of non-CSEs where a Procuring Entity directly purchases from a supplier that has satisfactorily delivered non-CSEs to another government agency under a completed contract. Direct sales may only be resorted to when all of the following conditions are met:

1. The procurement contract by the original government agency that procured the non-CSEs was awarded through bidding;
2. The government agency that originally procured the non-CSEs has inspected and accepted the same, and has issued a certification that the supplier has satisfactorily performed its obligations under the contract;
3. The procurement for the same non-CSEs by the Procuring Entity shall only be initiated once within six (6) months from the acceptance of the non-CSEs by the original government-agency;
4. The contract to be executed between the Procuring Entity and the supplier must be within the amount of the contract executed with the original government agency, and that the supplier must offer the non-CSEs to the Procuring Entity at the same or lower unit price offered to the original government agency; and
5. The supplier agreed to the terms offered by the Procuring Entity and remains legally, technically, and financially capable to undertake the contract with the Procuring Entity.

 

Direct Procurement for Science, Technology, and Innovation

A mode of procurement where the Procuring Entity may procure the following goods and service directly from a legally, technically and financially capable manufacturer or supplier, or from a qualified startup business:

1. Supplies, materials, equipment, and related services to be used actually, exclusively, and directly in the conduct of research and development projects or activities;
2. Goods which include products of a commissioned task by a Procuring Entity which were processed, developed, and manufactured in satisfaction of its needs and requirements; and
3. Other goods analogous to the foregoing.

 

Video Recording of All Procurement-Related Conferences for Competitive Bidding

To enhance the transparency of the procurement process, the Procuring Entity shall keep a video recording of all procurement-related conferences for Competitive Bidding, which includes pre-procurement conference, pre-bid conference, bid opening, and other meetings of the Bids and Awards Committee (BAC). All procurement-related conferences for Competitive Bidding shall not commence without a video recording initiated by the BAC. The Procuring Entity shall also livestream the preliminary examination and the opening of the bids to the public on its website, social media account, or any other form of livestreaming services.

 

The mandatory video recording shall only apply to the procurement of Goods costing above PHP 10,000,000.00, Infrastructure Projects costing above PHP 20,000,000.00, and Consulting Services costing above PHP 5,000,000.00 using competitive bidding as the mode of procurement.

 

The Procuring Entity shall ensure that copies of the video recording shall be stored for not less than five (5) years and shall be made available to the public upon request and payment of a fee.

 

When national security is involved, the HoPE shall decide whether or not to video record all procurement related conferences, taking into consideration the nature, classification, sensitivity, and confidentiality, thereof.

 

Prohibition on Splitting of Government Contracts

In using any of the modes of procurement under this Act, the Procuring Entity shall ensure that this does not result in splitting of government contracts, which involves dividing or breaking up of contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or subcontracts for the purpose of evading or circumventing the requirements of this Act and its IRR: Provided, That the procurement per unit, by lot or package, is allowed subject to the available budget, required quantity, product availability, delivery sites, geographical location and market capacity.

 

Procurement of CSE

All NGAs, GOCCs, GFIs, SUCs, and LGUs shall comply and only procure their CSE from PS-DBM, subject to its availability. In case of unavailability of stock or for purposes of efficiency, practically, and/or economic viability. Procuring entities may procure their CSEs from other sources, subject to guidelines to be issued by the GPPB.

 

Due to the efficiency and economy of bulk purchasing, the PS-DBM may deal directly with manufacturers or exclusive distributors subject to legal, technical, and financial requirements, ensuring that products are obtained from reliable sources, of the best quality, and at the most advantageous price for the whole of government. Access to goods and equipment in economic lost sizes may likewise be achieved by PS-DBM through consignment or any appropriate contractual agreement.

 

Related Articles: 

• Key Takeaways from the Philippine Digital Workforce Competitiveness Act
• Technology and Procurement System Improvements under Republic Act No. 12009 or the New Government Procurement Act

 

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