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THE BARANGAY AND THE GOVERNMENT PROCUREMENT REFORM ACT

(Republic Act No.9184 s. 2003)

ARCHIMEDES C. ARTICULO, M.B.A., Ll. B., D.P.L.A.

Dean, College of Arts & Sciences

Vice-Chairman, University Bids & Awards Committee

Con-current Head, Bids & Awards Committee Secretariat

Cagayan State University

Andrews & Carig Campus

1. Introduction

The call for the Philippine government to rationalize and harmonize its

procurement system with international standards and best practices was

positively, and finally, responded to by the government in January, 2003 with the

passage of the Government Procurement Reform Act (GPRA) or Republic Act

No. 9184 (RA 9184).

The new procurement law espoused the principles of transparency,

competitiveness and accountability. It also mandates the use of streamlined

procurement processes and monitoring of government procurement activities

by the public.

One important breakthrough in the Government Procurement Reform Act

is the provision mandating all government agencies to utilize the Government

Electronic Procurement System (now the PhilGEPS http://www.philgeps.net) as

the single portal that shall serve as the primary source of information on all

government procurement.1 The procurement process across all government

agencies, from all branches of government, to local government units and

public schools and universities, now involves announcing and advertising all

procurement opportunities, inviting qualified parties to bid, evaluation of bids,

awarding of contracts, monitoring of delivery and performance and payment.

The whole process is recorded and posted electronically for others to see.

1 Sec. 8.1.1. on PROCUREMENT BY ELECTRONIC MEANS AND THE PHILIPPINE GOVERNMENT

ELECTRONIC PROCUREMENT SYSTEM (PHILGEPS), the law states that to promote transparency

and efficiency, information and communications technology shall be utilized in the conduct of

procurement procedures. Accordingly, there shall be a single portal that shall serve as the

primary source of information on all government procurement. The PhilGEPS shall serve as the

primary and definitive source of information on government procurement.

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On July 28, 2011, President Benigno S. Aquino III, issued Administrative

Order No. 17 on “Directing the Use of the Procurement Service and the

Philippine Government Electronic Procurement System in Procurement Activities

in Accordance With Republic Act No. 9184, And Improving the Operation of the

Procurement Service”. AO 17 prescribes coverage and compliance of

procurement rules even by Local Government Units.

We quote DBM Secretary Florencio B. Abad, when he announced the

savings and efficiencies that the government realized through Procurement

reforms:

“With our present fiscal state, every peso should count. We are

encouraging all government departments and agencies, as well

as the local government units up to the barangay level, to use PS

and PhilGEPS so that their procurement will be cost-efficient,” he

said.

“But more than the cost benefits, PhilGEPS will enshrine

transparency and accountability in all government procurement

and minimize human intervention and discretion in the bidding

process. Technology will empower us to fulfil the promise of „kung

walang corrupt, walang mahirap,‟” he said. (DBM Press Release

Feb. 8, 2011)

While it is true that most Barangays have small procurements, nevertheless, the

reach of the procurement law covers even the smallest local government unit.

It is therefore important to understand the salient features of the Procurement

Law as they relate to the procurement activities of the Barangay.

2. SCOPE AND COVERAGE OF RA 9184

REPUBLIC ACT NO. 9184

GOVERNMENT PROCUREMENT REFORM ACT

REVISED RULES & REGULATIONS

OF R.A. No. 9184

SEC. 4. Scope and Application. – This Act shall

apply to the 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 department, offices and

agencies, including government-owned

Section 4. Scope and Application of the IRR

4.1. 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),

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and/or controlled corporations and local

government units, subject to the provisions of

Commonwealth Act No. 1382. Any treaty or

international or executive agreement affecting

the subject matter of this Act to which the

Philippine government is a signatory shall be

observed.

government financial institutions (GFIs),

state universities and colleges (SUCs), and

local government units (LGUs).

3. PROCUREMENT PRINCIPLES

Why do we need to observe the new rules on government procurement?

The answer is enshrined in Section 3 of the rules as it declares that government

procurement must be guided by specific, to wit:

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 public

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.

2 COMMONWEALTH ACT NO. 138 - AN ACT TO GIVE NATIVE PRODUCTS AND DOMESTIC ENTITIES

THE PREFERENCE IN THE PURCHASE OF ARTICLES FOR THE GOVERNMENT

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4. TERMS TO REMEMBER

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 not be limited to, lease or purchase of office space, media

advertisements, health maintenance services, and other services

essential to the operation of the procuring entity.

Infrastructure Projects. Include the construction, improvement, rehabilitation,

demolition, repair, restoration or maintenance of roads and bridges,

railways, airports, seaports, communication facilities, civil works

components of information technology projects, irrigation, flood control

and drainage, water supply, sanitation, sewerage and solid waste

management systems, shore protection, energy/power and

electrification facilities, national buildings, school buildings, hospital

buildings, and other related construction projects of the government. For

purposes of, and throughout this IRR, the term “Infrastructure Projects”

shall have the same meaning as, and shall be used interchangeably

with, “civil works” or “works”.

Consulting Services. Refer to services for infrastructure projects and other types

of projects or activities of the GOP requiring adequate external technical

and professional expertise that are beyond the capability and/or

capacity of the GOP to undertake such as, but not limited to: (i) advisory

and review services; (ii) pre-investment or feasibility studies; (iii) design; (iv)

construction supervision; (v) management and related services; and (vi)

other technical services or special studies. General principles on

consulting services are provided for in Annex “B” of this IRR.

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

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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. 8974

and other applicable laws, rules and regulations.

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, consulting

services and infrastructure projects.

5. BAC COMPOSITION

Are the provisions of R.A. 9184 pertaining to BAC composition also

applicable to barangay units? Are all barangays obliged to create their own

BAC? Who are to be members of the barangay BAC?

Under R.A. 9184 and its IRR, all procuring entities, including barangays are

mandated to create at least one (1) BAC.

In relation to this, the GPPB has issued a resolution regarding the

composition of the BAC in the barangay level. According to Resolution 01 – 2004

that was issued by the GPPB, the BAC in barangay levels shall be composed of

five (5), but not more than seven (7) regular members of the Sangguniang

Barangay, except the Punong Barangay. The Punong Barangay, being the local

chief executive, shall designate the members of the BAC. The members shall

elect among themselves who shall act as the Chairman and Vice-Chairman.

In no case shall the Head of the Procuring Entity and/or the approving

authority be the Chairman or a member of the BAC (Read Sec. 11.2.5. of the

Revised IRR).

The Punong Barangay may suspend or remove a member of the BAC for

justifiable causes, including, but not limited to, violations of the provisions of the

R.A. 9184 or its IRR-A and the Anti-Graft and Corrupt Practices Act. The following

officials are disqualified from membership in the BAC:3

1) The Punong Barangay;

2) The Barangay Treasurer;

3) Other appointive barangay officials.

3 VOLUME 1. Guidelines on the Establishment of Procurement Systems and Organizations

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6. FUNCTIONS OF THE BAC

Sec. 12.1. of the Revised IRR provides following functions of the BAC:

1. advertise and/or post the invitation to bid/request for expressions of

interest;

2. conduct pre-procurement and pre-bid conferences;

3. determine the eligibility of prospective bidders;

4. receive bids;

5. conduct the evaluation of bids;

6. undertake post-qualification proceedings;

7. resolve motions for reconsideration;

8. recommend award of contracts to the Head of the Procuring Entity

or his duly authorized representative:

9. recommend the imposition of sanctions in accordance with Rule

XXIII;

10. recommend to the Head of the Procuring Entity the use of

Alternative Methods of Procurement as provided for in Rule XVI

hereof; and

11. perform such other related functions as may be necessary,

including the creation of a Technical Working Group (TWG) from a

pool of technical, financial, and/or legal experts to assist in the

procurement process, particularly in the eligibility screening,

evaluation of bids, and post-qualification.

As to Quorum during BAC meeting, the rule provides, a majority of the total

BAC composition as designated by the Head of the Procuring Entity shall

constitute a quorum for the transaction of business, provided that the presence

of the Chairman or Vice-Chairman shall be required (Read, Sec. 12.3. revised

IRR).

The Chairman or, in his absence, the Vice-Chairman, shall preside at all

meetings of the BAC. The decision of at least a majority of those present at a

meeting at which there is quorum shall be valid and binding as an act of the

BAC: Provided, however, That the Chairman or, in his absence, the Vice-

Chairman, shall vote only in case of a tie. (See Sec. 12.4. of the Revised IRR).

7. THE BAC SECRETARIAT

The Head of the Procuring Entity shall create a Secretariat which will serve

as the main support unit of the BAC. In the Barangays, the Treasurer shall serve

as the Head of the Procurement Unit/Office.4

4 VOLUME 1. Guidelines on the Establishment of Procurement Systems and Organizations

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The Secretariat shall have the following functions and responsibilities:

(Read Sec. 14.1. of the Revised Rule)

1. Provide administrative support to the BAC;

2. Organize and make all necessary arrangements for BAC meetings and

conferences;

3. Prepare minutes of meetings and resolutions of the BAC;

4. Take custody of procurement documents and other records;

5. Manage the sale and distribution of Bidding Documents to interested

bidders;

6. Advertise and/or post bidding opportunities, including Bidding

Documents, and notices of awards;

7. Assist in managing the procurement processes;

8. Monitor procurement activities and milestones for proper reporting to

relevant agencies when required;

9. Consolidate PPMPs from various units of the procuring entity to make them

available for review; and

10. Act as the central channel of communications for the BAC with end users,

PMOs, other units of the line agency, other government agencies,

providers of goods, infrastructure projects, and consulting services,

observers, and the general public.

8. OBSERVERS

To enhance the transparency of the process, the BAC shall, in all stages of

the procurement process, invite, in addition to the representative of the COA, at

least two (2) observers, who shall not have the right to vote, to sit in its

proceedings.5

If this provision is violated, the entire BAC proceeding is invalid. However,

the absence of observers will not nullify the BAC proceedings, provided that

they have been duly invited in writing.6

5 13.1. of the Revised IRR. According to the rules, at least one (1) shall come from a duly

recognized private group in a sector or discipline relevant to the procurement at hand, for

example: For infrastructure projects, national associations of constructors duly recognized by

the Construction Industry Authority of the Philippines (CIAP), such as, but not limited to the

following: (1) Philippine Constructors Association, Inc.; (2) National Constructors Association of

the Philippines, Inc.; and (3) Philippine Institute of Civil Engineers (PICE). For goods, a specific

relevant chamber-member of the Philippine Chamber of Commerce and Industry. For

consulting services, a project-related professional organization accredited or duly recognized

by the Professional Regulation Commission or the Supreme Court, such as, but not limited to:

(1) PICE; (2) Philippine Institute of Certified Public Accountants (PICPA); and (3) Confederation

of Filipino Consulting Organizations; and b) The other observer shall come from a non-

government organization (NGO). Sec. 13 of the Revised Rule. 6 Sec. 13.1. of the Revised Rule

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9. PROCUREMENT PLANNING

Sec. 7.2. of the Revised IRR of R.A. 9184 states:

No procurement shall be undertaken unless it is in accordance

with the approved APP of the procuring entity. The APP shall bear

the approval of the Head of the Procuring Entity or second-ranking

official designated by the Head of the Procuring Entity to act on

his behalf, and must be consistent with its duly approved yearly

budget.[emphasis added]

How does the Annual Procurement Plan (APP) prepared? Section 7 of the

Revised IRR details the procedure, covering both procurement planning and

Budgeting Linkage. The rule states that the APP shall be formulated and revised

only in accordance with the following guidelines7:

1. At the start of every budget period, the procuring entity shall prepare its

proposed budget for the succeeding calendar year, taking into

consideration the budget framework for that year in order to reflect its

priorities and objectives for the budget period.8

2. The end-user units of the procuring entity shall prepare their respective

Project Procurement Management Plan (PPMP) for their different

programs, activities, and projects (PAPs). The PPMP shall include (See Sec.

7.3.2.):

a) information on whether PAPs will be contracted out,

implemented by administration in accordance with the

guidelines issued by the GPPB, or consigned;9

b) the type and objective of contract to be employed;

c) the extent/size of contract scopes/packages;

7 See Sec. 7.3. 8 See Sec. 7.3.1. Consistent with government fiscal discipline measures, only those considered

crucial to the efficient discharge of governmental functions shall be included in the Annual

Procurement Plan (APP). For purposes of this IRR, a procurement project shall be considered

crucial to the efficient discharge of governmental functions if it is required for the day-to-day

operations or is in pursuit of the principal mandate of the procuring entity concerned. 9 For purposes of this Section, consignment refers to an arrangement where the following

requisites are present: (a) delivery of goods by their owner (consignor), without sale, to a

government agency (consignee); (b) consignee must try to sell the goods and remit the price

of the sold goods to the consignor; (c) consignee accepts without any liability except for

failure to reasonably protect them from damage; (d) no disbursement of government funds is

involved; and (e) at terms not disadvantageous to the GOP.

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d) the procurement methods to be adopted, and indicating if the

procurement tasks are to be outsourced as provided in Section

53.6 of this IRR;

e) the time schedule for each procurement activity and for the

contract implementation; and

f) The estimated budget for the general components of the

contract.

Note that the term “end-user units” refer to sub-offices of the Barangay,

for instance, the Barangay council, the Lupon, the Office of the Barangay

Captain, etc. which, in the performance of their official functions, may

require goods, such as office supplies and/ or equipments.

3. The PPMP shall then be submitted to the procuring entity’s Budget Office.

The procuring entity’s Budget Office shall evaluate each end-user’s

submitted PPMP and, if warranted, include it in the procuring entity’s

budget proposal for approval by the Head of the Procuring Entity.10

4. After the budget proposal has been approved by the Head of the

Procuring Entity and/or other oversight bodies, the procuring entity’s

budget office shall furnish a copy of the procuring entity’s budget

proposal as well as the corresponding PPMPs to the BAC Secretariat for its

review and consolidation into the proposed APP.;11

5. The proposed APP shall be consistent with the procuring entity’s budget

proposal.

6. As soon as the GAA, corporate budget, or appropriation ordinance, as

the case may be, becomes final, the end-user units shall revise and adjust

the PPMP to reflect the budgetary allocation for their respective PAPs.

The revised PPMPs shall be submitted to the BAC, through its Secretariat,

for the finalization of the modes of procurement under the proposed APP. The

APP shall then be approved in accordance with Section 7.2 of this IRR. (See Sec.

7.3.5.).

10. UPDATING OF PROCUREMENT PLAN

Note that the PPMP is not fixed. It may be updated from time to time. 10 See Sec. 7.3.3. 11 See Sec. 7.3.4.

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Under the rules, updating of the individual PPMPs and the consolidated

APP for each procuring entity shall be undertaken every six (6) months or as

often as may be required by the Head of the Procuring Entity. The updating of

the PPMPs shall be the responsibility of the respective end-user units of the

Procuring Entities, while the consolidation of these PPMPs into an APP shall be

lodged with the BAC Secretariat, subject to approval of the Head of the

Procuring Entity. (Read Sec. 7.4. of the Revised IRR).12

We may ask, how about procurements in emergency cases? Will they be

included in the plan? Under the rules, yes. Although we cannot identify the

specific nature of the items to be procured under emergency procurement, at

least we could anticipate, based on experience, that there are circumstances

that procurements are unanticipated.

The APP shall include provisions for foreseeable emergencies based on

historical records (Sec. 7.1., Ibid.).

11. COMPETITIVE BIDDING

The Procurement law declares that all procurement shall be done through

competitive bidding, except as provided in Rule XVI of this IRR (read Section 10).

Steps in Public Bidding:

1. Pre-Procurement Conference13: Prior to the advertisement or the issuance

of the Invitation to Bid/Request for Expression of Interest for each

procurement undertaken through a public bidding, the BAC, shall call for

a pre-procurement conference to perform, among others, the following:

to confirm the description and scope of the contract, the ABC, and

contract duration; to ensure that the procurement is in accordance with

the project and annual procurement plans; and determine the readiness

of the procurement at hand;14

12 Note, the ABC as reflected in the APP or PPMP shall be at all times consistent with the

appropriations for the project authorized in the GAA, continuing, and automatic

appropriations, the corporate budget, and the appropriation ordinance, as the case may be.

For NGAs, to facilitate the immediate implementation of projects even pending approval of

the GAA, the ABC shall be based on the budget levels the proposed national budget

submitted by the President to Congress. (See Sec. 7.5., R-IRR) 13

See Sec. 20 of the Revised IRR 14 Others include, d) Review, modify and agree on the criteria for eligibility screening, evaluation,

and post-qualification; e) Review and adopt the procurement schedule, including deadlines

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2. Advertising and Contents of the Invitation to Bid/Request for Expression of

Interest15: The Invitation to Bid/Request for Expression of Interest shall

provide prospective bidders the relevant information about the

procurement at hand. As per Section 21.2., the IAEB should be advertised

observing the following guidelines:

2.1. If the contract to be bid has an approved budget of more than two

Million Pesos (P2,000,000.00) for the procurement of goods, more

than Five Million Pesos (P5,000,000.00) for the procurement of

infrastructure projects, and more than One Million Pesos

(P1,000,000.00) or those whose duration is more than four (4) months

for the procurement of consulting services, the invitation to bid must

be advertised in at least one (1) newspaper of general nationwide

circulation which has been regularly published for at least two (2)

years before the date of issue of the advertisement. If the ABC is less

than the aforementioned, this requirement may be dispensed with;

2.2. IAEB to be posted continuously in the PhilGEPS website for seven (7)

calendar days starting on date of advertisement,

2.3. IAEB to be posted continuously in the website of the procuring entity

concerned, if available, for seven (7) calendar days starting on

date of advertisement; and

2.4. IAEB to be posted at any conspicuous place reserved for this

purpose in the premises of the procuring entity concerned for seven

(7) calendar days, if applicable, as certified by the head of the BAC

Secretariat of the procuring entity concerned. 16

3. Pre-bid Conference17: If the contract to be bid is less than One Million

Pesos, this stage may be dispensed with. The pre-bid conference shall

discuss, among other things, the eligibility requirements and the technical

and financial components of the contract to be bid. Attendance of the

bidders shall not be mandatory. However, only those who have

and timeframes, for the different activities; and f) Reiterate and emphasize the importance of

confidentiality, in accordance with Section 19 of this IRR, and the applicable sanctions and

penalties, as well as agree on measures to ensure compliance with the foregoing. Note,

however, that as per Section 20.2. of the Rules, the holding of a pre-procurement conference

may not be required for small procurements, i.e., procurement of goods costing Two Million

Pesos (P2,000,000.00) and below, procurement of infrastructure projects costing Five Million

Pesos (P5,000,000.00) and below, and procurement of consulting services costing One Million

Pesos (P1,000,000.00) and below; 15

Section 21 of the Revised Rules 16 Advertisement of the Invitation to Bid/Request for Expression of Interest in a newspaper of

general nationwide circulation provided in Section 21.2.1(a) shall not be required for. Sec.

21.2.2. of the Revised Rules. 17

Section 22, Revised IRR

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purchased the Bidding Documents shall be allowed to participate in the

pre-bid conference and raise or submit written queries or clarifications.

4. Submission, Receipt, and Evaluation of Bids18: Only the BAC, through the

BAC Secretariat, is authorized to receive bids. Under the new rule, the two

envelope system is adopted. The first envelope contains the Eligibility and

Technical documents and the second envelope contains the financial

proposal. The BAC shall open the bids at the time, date, and place

specified in the Bidding Documents. The bidders or their duly authorized

representatives may attend the opening of bids. The BAC shall adopt a

procedure for ensuring the integrity, security, and confidentiality of all

submitted bids. The minutes of the bid opening shall be made available to

the public upon written request and payment of a specified fee to

recover cost of materials.

5. Post-Qualification19: The Lowest Calculated Bid/Highest Rated Bid shall

undergo post-qualification in order to determine whether the bidder

concerned complies with and is responsive to all the requirements and

conditions as specified in the Bidding Documents.

6. Notice and Execution of Award20: It involves the issuance of Notice of Post-

Qualification if the bidder passes the Post-Qualification, Notice of Award,

once the bidder posts performance security, the Signing of Contract, and

Notice to Proceed.

Note that under Section 46, on Lease Contracts, the procurement law

provides that the the lease of construction and office equipment, including

computers, communication and information technology equipment, are subject

to the same public bidding and to the processes prescribed under the Act and

this IRR.

Lease may also cover lease purchases or lease-to-own and similar

variations.

18

Sections 25 to 30 of the Revised IRR 19

See Sec. 34 20

See Section 37, of the Revised IRR

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12. ALTERNATIVE MODE OF PROCUREMENT

It is emphasized that:

1. As a general rule, the mode of procurement should be Public Bidding, in

accordance with Section 10 of the Revised IRR. Alternative methods shall

be resorted to only in the highly exceptional cases provided for in this

Rule. (Read Section 48.2. of the Revised IRR);

2. Alternative modes of procurement can only be used when:

2.1. There is a prior approval from the Head of the Procuring Entity;

2.2. Conditions provided in the procurement law, justifying the use of the

alternative mode, exist (Read Sec. 48.1.);

2.3. If the original mode of procurement recommended in the APP was

public bidding but cannot be ultimately pursued (Sec. 48.3.), and

justified as such by the BAC via resolution, and approved by the

HOPE.

3. The conditions on the use of the Alternative Mode of Procurement, as per

Section 54 of the Revised IRR, are properly observed, to wit:

3.1. Splitting of Government Contracts (Read Sec. 54.1.) Splitting of

Government Contracts means the division or breaking up of GOP

contracts into smaller quantities and amounts, or dividing contract

implementation into artificial phases or sub-contracts for the

purpose of evading or circumventing the requirements of law and

this IRR, especially the necessity of public bidding and the

requirements for the alternative methods of procurement.

3.2. Invitation or request for submission of price quotations is posted/

advertised continuously, for a period of seven (7) calendar days, in

the PhilGEPS website, the website of the procuring entity

concerned, if available; and at any conspicuous place reserved for

this purpose in the premises of the procuring entity (Read Sec. 54.2.),

for the following alternative modes:

3.2.1. Shopping under Sections 52.1 (b)

3.2.2. Negotiated Procurement under Section 53.1 (two-failed

biddings)

3.2.3. Negotiated Procurement under Sections 53.9 (small value

procurement)

3.3. Notice of award in all instances of alternative methods of

procurement shall be posted, for information purposes, in the

PhilGEPS website, the website of the procuring entity concerned, if

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available, and at any conspicuous place reserved for this purpose

in the premises of the procuring entity (Read Sec. 54.3.);

3.4. Posting of bid securities for alternative mode of procurement is not

required, except for Limited Source Bidding (Sec. 54.4.);

3.5. Performance and warranty securities, as prescribed in Sections 39

and 62 of the IRR, shall be submitted for contracts acquired through

the alternative methods of procurement, except for the following

(read Sec. 54.5.):

3.5.1. Shopping under Section 52;

3.5.2. Negotiated Procurement under Sections 53.2 (emergency

cases),

3.5.3. Negotiated Procurement under Sec. 53.9 (small value

procurement),

3.5.4. Negotiated Procurement under Sec. 53.10 (lease of real

property), and

3.5.5. Negotiated Procurement under Sec. 53.13 (UN agencies).

In all instances, the procuring entity shall ensure that the most

advantageous price for the Government is obtained (Read Sec. 48.1. of the

revised IRR).

What follows are the different alternative modes of procurement:

LIMITED SOURCE BIDDING

(UNDER SEC. 49)

As a Mode: Limited Source Bidding, otherwise known as selective bidding, is a

method of procurement of goods and consulting services that

involves direct invitation to bid by the procuring entity from the list of

pre-selected suppliers or consultants with known experience and

proven capability on the requirements of the particular contract.

Conditions of Use: This alternative method of procurement may be employed

under any of the following conditions:

1. Procurement of highly specialized types of goods (e.g., sophisticated

defense equipment, complex air navigation systems, coal) and consulting

services where only a few suppliers or consultants are known to be

available, such that resorting to the public bidding method will not likely

result in any additional suppliers or consultants participating in the

bidding; or

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2. 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.

DIRECT CONTRACTING

(Under Section 50)

As a Mode: 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.

Conditions of Use: Direct contracting may be resorted to by concerned

Procuring Entities under any of the following conditions:

1. 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;

2. When the procurement of critical plant components from a specific

supplier is a condition precedent to hold a contractor to guarantee its

project performance, in accordance with the provisions of its contract; or

3. 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 GOP.

REPEAT ORDER

(Under Section 51)

As a Mode: Repeat Order, when provided for in the APP, 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.

Conditions for Use: Repeat orders shall likewise be subject to the following

conditions:

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1. Unit 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 GOP after price verification;

2. The repeat order will not result in splitting of contracts, requisitions, or

purchase orders, as provided for in Section 54.1 of this IRR;

3. Except in cases duly approved by the GPPB, the repeat order shall be

availed of only within six (6) months from the contract effectivity date

stated in the Notice to Proceed arising from the original contract; and

4. The repeat order shall not exceed twenty-five percent (25%) of the

quantity of each item in the original contract.

SHOPPING

(Under Section 52)

As a Mode: 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.

Conditions for Use: This method of procurement shall be employed in any of the

following cases:

1. When there is an unforeseen contingency requiring immediate purchase:

Provided, however, that the amount shall not exceed the thresholds

prescribed in Annex “H” of this IRR.

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2. Procurement of ordinary or regular office supplies and equipment not

available in the Procurement Service involving an amount not exceeding

the thresholds prescribed in Annex “H” of this IRR.

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Section 52.3. of the Revised Rule states that:

“Under Section 52.1 (b) of this IRR, at least three (3) price

quotations from bona fide suppliers shall be obtained.”

The submission of three (3) quotations applies only to Shopping (b) and

not to Sopping under emergency cases (Shopping [a]).

Important Terms/Phrases/Words to remember when using Shopping as a Mode:

1. The phrase “ordinary or regular office supplies” shall be understood to

include those supplies, commodities, or materials which, depending on

the procuring entity’s mandate and nature of operations, are

necessary in the transaction of its official businesses, and consumed in

the day-to-day operations of said procuring entity (Read Sec. 52.2).

2. The phrase “ordinary or regular office supplies” does not include

services such as repair and maintenance of equipment and furniture,

as well as trucking, hauling, janitorial, security, and related or

analogous services.

NEGOTIATED PROCUREMENT21

(Under Section 53)

As a Mode: Negotiated Procurement is a method of procurement of goods,

infrastructure projects and consulting services, whereby the

procuring entity directly negotiates a contract with a technically,

legally and financially capable supplier, contractor or consultant.

Conditions for Use: Negotiated Procurement may only be used in any of the

following cases:

1. Two Failed Biddings (Read Sec. 53.1). Where there has been failure of

public bidding for the second time as provided in Section 35 of the Act

and this IRR.

21 For purposes of this Paper, the following modes are excluded from this section: Agency-to-

Agency (Sec. 53.5), Procurement Agent (Sec. 53.6), Highly Technical Consultants (Sec. 53.7)

Defense Cooperation Agreement (Sec. 53.8). the Revised Rules to learn more about this

modes.

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2. Emergency Cases22, this form of negotiated procurement may only be

used when any of the following conditions are present:

2.1. In case of imminent danger to life or property during a state of

calamity, or

2.2. When time is of the essence arising from:

2.2.1. Natural or man-made calamities or

2.2.2. 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.

Note that in the case of infrastructure projects, the procuring entity has

the option to undertake the project through negotiated procurement or

by administration or, in high security risk areas, through the AFP.

3. Take-Over of Contracts23. 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.

4. Adjacent or Contiguous24. Where the subject contract is adjacent or

contiguous to an on-going Infrastructure Project or Consulting Service

where the consultants have unique experience and expertise to deliver

the required service: Provided, however, that:

4.1. The original contract is the result of a Competitive Bidding;

4.2. The subject contract to be negotiated has similar or related scopes

of work;

4.3. It is within the contracting capacity of the contractor/consultant;

4.4. The contractor/consultant uses the same prices or lower unit prices

as in the original contract less mobilization cost;

4.5. The amount involved does not exceed the amount of the ongoing

project; and

4.6. The contractor/consultant has no negative slippage/delay;

4.7. Negotiations for the procurement are commenced before the

expiry of the original contract.

22 Sec. 53.2 23 Sec. 53.3 24 Sec. 53.4

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5. Small Value Procurement25. Where the procurement does not fall under

Shopping in Section 52 of this IRR and the amount involved does not

exceed the thresholds prescribed in Annex “H” of this IRR.

A good example where this form may be used is the procurement of a

Barangay electric generator with an ABC, for instance, of 20,000 and

procured for a purpose and reason other than unforeseen contingency.

The generator is not an office supply, but equipment. Since shopping (b)

covers on regular and ordinary office supplies, the generator does not fall

under Shopping, and since the ABC does not exceed 50,000, which is the

threshold prescribed for Barangays under Annex “H” of the Revised Rules,

the procurement, therefore, qualifies for Small Value Procurement.

13. OFFENSES AND PENALTIES

Imposable penalties under the Procurement Law are of three (3) kinds,

Criminal26, Civil27, and Administrative28.

We will limit our attention to the criminal penalty imposable on erring public

officers.

Under the law, the criminal penalty is imprisonment of not less than six (6) years

and one (1) day, but not more than fifteen (15) years, without prejudice to the

provisions of R.A. 3019 and other penal laws, to public officers who commit any

of the following acts:

1.1. Opening any sealed bid including but not limited to Bids that may

have been submitted through the electronic system and any and

all documents required to be sealed or divulging their contents,

prior to the appointed time for the public opening of Bids or other

documents.

1.2. Delaying, without justifiable cause, the screening for eligibility,

opening of bids, evaluation and post evaluation of bids, and

awarding of contracts beyond the prescribed periods of action

provided for in this IRR.

25 Sec. 53.9 26 Sec. 65 27 Sections 67 and 68 28 Sec. 69

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1.3. Unduly influencing or exerting undue pressure on any member of

the BAC or any officer or employee of the procuring entity to take a

particular action which favors, or tends to favor a particular bidder.

1.4. Splitting of contracts which exceed procedural purchase limits to

avoid competitive bidding or to circumvent the limits of approving

or procurement authority.

1.5. Abuse by the Head of the Procuring Entity of his power to reject any

and all bids as mentioned under Section 41 of the Act and this IRR,

with manifest preference to any bidder who is closely related to him

in accordance with Section 47 of the Act and this IRR.

According to the rules, when any of the foregoing acts is done in collusion with

private individuals, the private individuals shall likewise be liable for the offense.

In addition, the public officer involved shall also suffer the penalty of temporary

disqualification from public office, while the private individual shall be

permanently disqualified from transacting business with the Government.29

14. FINAL NOTES

In a 2008 case, the Supreme Court struck down as void the Manila International

Airport Authority’s authority to enter into negotiated contracts for its janitorial

and maintenance services without holding a public bidding, it said:

“The rationale behind the requirement of a public bidding, as a mode of

awarding government contracts, is to ensure that the people get maximum

benefits and quality services from the contracts. More significantly, the strict

compliance with the requirements of a public bidding echoes the call for

transparency in government transactions and accountability of public officers.

Public biddings are intended to minimize occasions for corruption and

temptations to abuse of discretion on the part of government authorities in

awarding contracts.”30

If we, in the Barangay, endeavor to observe, as best as we could, in light of our

circumstances and individual realities, the provisions of the procurement law,

then, we could send a strong message across our polity that responsible

governance, through accountable government procurement, is a doable ideal

that is possible in the grassroots level.

29 Sec. 65.2. 30 MIAA, et al vs. Gana, et al. G.R. No. 146184-85. January 31, 2008