LGU Volume 1

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Guidelines on Establishing Procurement Systems and Organizations

for LGUs

TABLE OF CONTENTS

ABBREVIATIONSANDACRONYMS ...........................................IIIPURPOSE,SCOPE AND APPLICATION .................................................. 7

1.

Purpose.............................................................................................. 7

2. Scope ................................................................................................ 73. Application ......................................................................................... 7

PRINCIPLES OF GOVERNMENT PROCUREMENT....................................... 71. Transparency...................................................................................... 72. Competitiveness.................................................................................. 83. Streamlining and Use of Modern Technology in Procurement...................... 84. Accountability ..................................................................................... 85. Public Monitoring................................................................................. 8

THE ORGANIZATIONAL STRUCTURE.................................................. 101. The Procuring Entity............................................................................102. The Bids and Awards Committee (BAC)..................................................103.

BAC Secretariat..................................................................................12

4. The TWG...........................................................................................135. Observers..........................................................................................13

ROLES AND RESPONSIBILITIES ....................................................... 141. The Procuring Entity............................................................................142. The BAC............................................................................................153. The BAC Secretariat............................................................................164. The TWG...........................................................................................175. The Observers....................................................................................176. The Bidders .......................................................................................18

PACKAGE OF BENEFITS FORBAC,TWG AND SECRETARIAT ................... 191. Grounds for the Grant of Honoraria .......................................................192.

DBM Guidelines for the Grant of Honoraria .............................................19

3. Guidelines for Legal Assistance and Indemnification of BAC Members.........21

1. Free Legal Assistance.................................................................................. 212. Liability Insurance ...................................................................................... 223. Medical Assistance...................................................................................... 224. Procedures................................................................................................. 22

PROCUREMENT PLANNING - PROCUREMENT PLANNING AND

BUDGET LINKAGE ........................................................................ 25PROCUREMENT PLANNING PREPARATION OF THE PROJECT

PROCUREMENT MANAGEMENT PLAN (PPMP)..................................... 251. The PPMP ..........................................................................................252. Developing the Project Requirements ....................................................263.

Writing the Technical Specifications, Scope of Work and Terms ofReference..........................................................................................26

4. Determining the Approved Budget for the Contract..................................265. Procurement Milestones.......................................................................266. Method of Procurement .......................................................................277. Format of the PPMP.............................................................................27

PROCUREMENT PLANNING PREPARATION OF THE ANNUAL

PROCUREMENT PLAN (APP).......................................................... 271. The Annual Procurement Plan...............................................................27


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2. Format of the APP...............................................................................283. The APP and Budget Preparation...........................................................28

COMPETITIVE BIDDING................................................................. 31ALTERNATIVE METHODS OF PROCUREMENT........................................ 31

1. Conditions for Use of Alternative Methods of Procurement ........................312. The Different Alternative Methods .........................................................32

PROCUREMENT BY ELECTRONIC MEANS AND THE PHILIPPINEGOVERNMENT ELECTRONIC PROCUREMENT SYSTEM ............................. 34

1. The PhilGEPS .....................................................................................342. Features of the PhilGEPS .....................................................................34

FOREIGN ASSISTED PROJECTS........................................................ 39STANDARD OF ETHICS .................................................................. 41

1. Definition of Corrupt, Fraudulent, Collusive, and Coercive Practices............412. Applicable Penalty for Fraud, Misrepresentation and Collusion ...................41

CONFLICT OF INTEREST................................................................. 41PENAL LIABILITIES AND SANCTIONS................................................ 421. Penal Liabilities of Public Officers ..........................................................42

2. Penal Sanctions for Public Officers.........................................................433. Penal Liabilities of Private Individuals ....................................................434. Penal Sanctions for Private Individuals...................................................44

CIVIL LIABILITY ......................................................................... 441. Civil Liability in Case of Conviction ........................................................442. Liquidated Damages............................................................................44

ADMINISTRATIVE LIABILITIES AND SANCTIONS ................................. 451. Administrative Liabilities ......................................................................452. Administrative Sanctions .....................................................................45

1. Against Erring Bidders................................................................................. 452.

Against Erring Local Officials and Employees.................................................. 46

BLACKLISTING GUIDELINES ........................................................... 46

1. Prohibition on Blacklisted Persons/Entities to participate in PublicBidding .............................................................................................46

2. Sanctions and Grounds for Blacklisting...................................................47ANNEX ......................................................................49ANNEX A................................................................................... 50ANNEX B................................................................................... 53GLOSSARY ................................................................................. 57


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ABBREVIATIONS AND ACRONYMS

ABC Approved Budget for the Contract

ABM Agency Budget Matrix

ADB Asian Development Bank

AFP Armed Forces of the Philippines

APP Annual Procurement Plan

BAC Bids and Awards Committee

BSP Bangko Sentral ng Pilipinas

CIAP Construction Industry Authority of the Philippines

COA Commission on Audit

COFILCO Confederation of Filipino Consulting Organizations

CPES Contractors Performance Evaluation System

CPESIU Contractors Performance Evaluation System Implementing Unit

CSO CivilSociety Organization

CSC Civil Service Commission

DBM Department of Budget and Management

DBM-PS/PS-DBM Department of Budget and Management-Procurement Service

E.O. Executive Order

FAPs Foreign Assisted Projects

GCC General Conditions of Contract

GFI Government Financial Institution

GOCC Government-Owned or Controlled Corporation

GOP Government of the Philippines

GPPB Government Procurement Policy Board

GPPB-TSO Government Procurement Policy Board Technical Support Office

GPRA Government Procurement Reform Act

HRB Highest Rated Bid

HRRB Highest Rated and Responsive Bid

IAEB Invitation to Apply for Eligibility and to Bid

ICB International Competitive Bidding

ICT Information and Communications Technology

IFI International Financing Institution

ITB Instructions to Bidders

JBIC Japan Bank for International Cooperation

LCB Lowest Calculated Bid

LCE Local Chief Executive

LCRB Lowest Calculated and Responsive Bid

LGU Local Government Unit

LOI Letter of Intent


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MOOE Maintenance and Other Operating Expenses

NACAP National Constructors Association of the Philippines

NCB National Competitive Bidding

NFCC Net Financial Contracting Capacity

NGA National Government Agency

NGO Non-Government OrganizationNSO National Statistics Office

NTP Notice to Proceed

OS Obligation Slip

PA Professionals Association

PAGASA Philippine Atmospheric, Geophysical and Astronomical Services Administration

PBDs Philippine Bidding Documents

PCA Philippine Constructors Association, Incorporated

PCAB Philippine Contractors Accreditation Board

PCCI Philippine Chamber of Commerce and Industry

PERT/CPM Project Evaluation Review Technique / Critical Path Method

PhilGEPS/G-EPS Philippine Government Electronic Procurement System

PICE Philippine Institute of Civil Engineers

PICPA Philippine Institute of Certified Public Accountants

PMO Project Management Office

PNP Philippine National Police

PPA Programs, Projects and Activities

PPMP Project Procurement Management Plan

PRC Professional Regulation Commission

R.A. Republic Act

R.A. 9184 Republic Act No. 9184, otherwise known as the Government Procurement

Reform Act

RIS Requisition and Issuance Slip

RFP Request for Proposal

RFQ Request for Quotation

ROW Right-of-Way

SARO Special Allotment Release Order

SBD Standard Bidding Documents

SCC Special Conditions of Contract

SEC Securities and Exchange Commission

SME Small and Medium Enterprises

SOW Scope of Work

SUC State Universities and Colleges

SWA Statement of Work Accomplished

TOR Terms of Reference

TSO Technical Support Office


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TWG Technical Working Group

UBOM Updated Budget Operations Manual

UNDB United Nations Development Business

VAT Value-Added Tax

WB The World Bank

WFP Work and Financial Plan


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Manual on Establishing Procurement Systems and Organizationsfor LGUs

Purpose, Scope and Application

1. PurposeThe Procurement Manual for LGUs is developed to guide local government procurementpractitioners with the different steps involved in the whole procurement process under R.A.9184 and its IRR-A taking into consideration the distinct structure and systems of localgovernments.

In case of inconsistency or conflict between this Manual and R.A. 9184 and/or its IRR-A, thelatter shall govern.

2. ScopeThis Manual shall apply to all procurement activities of provincial, city and municipalgovernments, regardless of class or category. A separate manual shall be developedparticularly for the Barangays to address the peculiarities of their organization and operations.

This Manual does not cover the following:

a) private sector infrastructure or development projects, such as the build-operate-transferscheme and its variants;

b) acquisition of right-of-way site or location for infrastructure projects;c) leasing out of government-owned buildings or spaces for private use.For application of procurement methods needed to address peculiar situations, agencies areadvised to consult the GPPB.

3. ApplicationThe procurement procedures provided in this Manual shall apply to the following:

a. Goods and Services;b. Infrastructure Projects; andc. Consulting Services.This Manual shall be used together with the Philippine Bidding Documents (PBDs) prescribedby the GPPB.

Principles of Government Procurement

Government procurement shall be governed by the following principles:

1. TransparencyThe procurement process and the implementation of procurement contracts must betransparent. LGUs must ensure the widest dissemination of bid opportunities and theparticipation of pertinent NGOs.


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2. CompetitivenessPublic procurement must be competitive. It must be conducted through public bidding,except as otherwise provided for under the GPRA and its IRR-A, and should provide fair andequitable opportunities to all competing bidders. Competition among proponents will urgethem to offer more beneficial terms to the government.

3. Streamlining and Use of Modern Technology inProcurement

The procurement process must be made simple and should allow access to and the use ofmodern technology in order to enhance its effectiveness and efficiency.

4. AccountabilityThe public officials directly or indirectly involved in the procurement process as well as in theimplementation of procurement contracts, and the private parties that deal with governmentshould be made accountable for their actions relative thereto. For this purpose, they should

see to it that the pertinent law and the prescribed procedures are faithfully complied with inthe discharge of their functions in all stages of the procurement process. To achieve this, theresponsibilities of each official involved in the procurement process must be clear and legallyidentifiable.

5. Public MonitoringA system of monitoring and reporting of procurement actions, when effectively carried out,

provides an incentive for positive action among the key players of the procurement process.This feedback mechanism shall result to an increased transparency of the procurementtransactions inasmuch as it allows public involvement as observers or watchdogs, toguarantee that the rules are complied with and that the interest of the government isprotected. For this purpose, qualified and eligible CSOs such as NGOs, PAs, academicinstitutions, and religious groups are allowed to observe and monitor the procurement process

until contract implementation.


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The Organizational Structure

1. The Procuring EntityThe Procuring Entity shall be the provincial, city, or municipal government concerned.

2. The Bids and Awards Committee (BAC)a. The LCE must, as a general rule, create a single BAC. However, with due

regard to professionalization and harmonization of procedures and standards,separate BACs may be created under any of the following conditions:

i. The items to be procured are complex or specialized; orii. If the single BAC cannot reasonably manage the procurement

transactions as shown by delays beyond the allowable limits.

b. The LGU may consider the creation of separate BACs according to the natureof procurement.

c. BAC Members. The LCE must designate the Members of the Bids and AwardsCommittee (BAC) in accordance with the following rules:

i. The BAC shall consist of at least five (5) members and shall notexceed seven (7).

ii. The LCE shall designate the members of the BAC, who should occupyplantilla positions of the Local Government concerned.

iii. All members designated by the LCE are regular members except theend-user member who is considered as a provisional member. Themembers, whether regular or provisional, are equally entitled toparticipate and to vote during deliberations.

How many regular and provisional members shouldbe designated if the BAC is composed of seven (7)members?

If the BAC has seven (7) members, the LCE may designate additionalmembers in any of the following manner:

(i) two (2) more regular(ii) two (2) more provisional; or(iii) a combination of one (1) regular and one (1) provisional.

iv. The regular offices under the Office of the Governor or Mayor, as thecase may be, may be represented in the BAC. The offices that shall berepresented, are the following, among others:

iv.1. the Office of the Administrator;iv.2. the Budget Office;iv.3. the Legal Office;


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iv.4. the General Services Office; andiv.5. Engineering Office.

v. In case of municipalities which do not have an Office of theAdministrator or a Legal Office, the Mayor shall designate arepresentative from the office/s performing the functions equivalent tothat of the former.

vi. The BAC members shall elect among themselves the Chairman andVice-Chairman. The Chairman shall be at least a third (3 rd) rankingpermanent official of the provincial/city/municipal government.

The IRR-A does not specify the rank of those who may be appointed as BACmembers, although it mentions that the Chairman should be at least a third(3rd) ranking permanent official. Considering the nature of BAC functions,the LCE may choose to appoint officials of the local government who areholding positions of responsibility.

In GPPB Resolution No. 01-2004, dated March 10, 2004, for purposes ofdetermining the rank in provinces, cities and municipalities, the first (1 st)

ranking permanent official shall be the governor or mayor, as the case maybe; the second (2nd) ranking permanent official shall be the vice-governor orvice-mayor, as the case may be; and the third (3 rd) ranking permanentofficial shall be the head of any of the regular offices under the Office of theLCE: Provided, however, That the vice-governor/vice-mayor shall not bedesignated as member of the BAC as its office is not one of the regularoffices under the Office of the LCE.

vii. The BAC members shall be designated for a term of one (1) year only,reckoned from the date of designation. However, the LCE may renewsuch designation at his discretion.

The designation of the members of the BAC is within the exclusive

prerogative and discretion of the LCE and they may be removed from suchdesignation for justifiable causes (e.g. gross misconduct and violation of theprovisions of RA 9184 and its IRR-A, among others).

viii. In case of resignation, retirement, separation, transfer, re-assignment, or removal of a BAC member, the LCE may designate areplacement, who must be similarly qualified as the officialreplaced. The replacement shall serve for the unexpired term. Incase of leave or suspension, the replacement shall serve only for theduration of the leave or suspension.

ix. The following officials are disqualified from membership in the BAC:ix.1. the LCE and other elective officials of the

province/city/municipality;

ix.2. the official who approves procurement contracts;ix.3. the Chief Accountant or Head of the Provincial/City/Municipal

Accounting Office and his/her staff, unless the AccountingDepartment is the end-user unit, in which case the ChiefAccountant, Head of the Accounting Department or his/herstaff may be designated as an end-user member.


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Quorum

The simple majority (one-half of membership plus one) of the BAC membersshall constitute a quorum, provided that the Chairman or the Vice-Chairmanshould be present in all meetings and deliberations. The Chairman or, in hisabsence, the Vice-Chairman shall preside over the meetings. The PresidingOfficer shall vote only in case of a tie.

While the duly authorized representatives of the BAC members may beallowed to sit and participate during the BAC proceedings, their presenceshall not be considered in the determination of quorum and are notpermitted to vote or sign resolutions in behalf of the BAC member they arerepresenting.

All BAC decisions should be embodied in resolutions duly signed by at least amajority of the members and the Chairman or Vice-Chairman thereof, as thecase may be.

3. BAC Secretariata. It is encouraged that the LCE create a permanent BAC Secretariat not only to

ensure an orderly management of procurement actions and records, but alsoto facilitate the continuity and the professionalization of procurementfunctions. For this purpose, the LCE may create a new office or designate anexisting organic office to act as BAC Secretariat. In designating an alreadyexisting office as BAC Secretariat, the LCE shall consider homogeneity orsimilarity of functions (i.e. also carrying out procurement functions) and theavailability of resources, in terms of personnel and the capacity to absorbadditional responsibilities on top of regular office functions.

b. The LCE should consider the following factors, among others, in selecting thepersonnel who will be assigned to the BAC Secretariat:

i. Integrity;ii. Procurement proficiency, as shown by experience and trainings

attended;

iii. Satisfactory completion in a certification program conducted by theGPPB or its accredited institutions, if any;

iv. The appropriate Civil Service qualification standards;v. The appropriate rank of the head of the BAC Secretariat, which should

be:

v.1. Preferably a fourth (4th) ranking permanent employee, whichshould be at least a Section chief; or

v.2. A permanent official of the next lower rank, if the fourth (4 th)ranking permanent employee is not available.

c. In designating members of the BAC Secretariat from an organic office, theLCE must ensure that check and balance is maintained, and procurementpersonnel are not given assignments that may conflict with their designationas such.


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4. The TWGa. The BAC, with the LCEs prior approval, may create a TWG from a pool of

technical, financial and/or legal experts to assist in the procurement process.

b. In creating the TWG, the BAC shall consider the expertise required based onthe nature of the procurement. It is recommended that the TWG should have

as members, a representative or representatives of the end-user unit andexperts in various disciplines who can handle the different aspects of theprocurement at hand, to ensure that the bid documents properly reflect the

requirements of the LGU, and the bids submitted will be rigorously evaluated.

c. To be able to effectively study the requirements and evaluate the bidssubmitted, the BAC may create separate TWGs to handle differentprocurements (e.g. Goods, Infrastructure Projects, Consulting Services, oraccording to the nature of the procurement undertaking and the field ofexpertise required).

d. In some cases, the LGU may also engage the services of consultants inaccordance with the IRR-A and Volume 4 of this Manual who shall only servein an advisory capacity, and may not vote during deliberations.

5. Observersa. To enhance the transparency of the process, the BAC is required to invite, at

least two (2) days before the scheduled activity, Observers who may attendand observe in all stages of the procurement.

b. The BAC must invite, in writing, atleast three (3) Observers, who

shall be:

i. a COA representative;ii. at least one (1) observer

who shall come from a

duly recognized private group in a sector or discipline relevant to theprocurement at hand, for example:

ii.1. for infrastructure projectsii.1(a) National Constructors Associations duly recognized by

the CIAP, such as, but not limited to, the PCA; and theNACAP; or

ii.1(b) The PICE.ii.2. for goods

ii.2(a) A specific relevant chamber-member of the PCCI.ii.3. for consulting services

ii.3(a) a project-related professional organization accreditedor duly recognized by the PRC or the Supreme Court,such as, but not limited to, the PICE; and the PICPA;or

ii.3(b) the COFILCO; andiii. at least one (1) observer who shall come from an NGO.

The mere non-attendance of

observers does not invalidatethe proceedings as long as theobservers were properly invited.


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c. In accordance with Section 13.2 of the IRR-A, the Observers coming from theprivate sector (e.g., organization of experts and NGOs) should belong to an

organization duly registered with the SEC and who should meet the followingcriteria:

i. knowledge, experience or expertise in procurement or in the subjectmatter of the contract to be bid;

ii. absence of direct or indirect financial interest in the contract to be bidout; and

iii. any other criteria that may be determined by the BAC.

Practical Tip

To enhance transparency, in addition to the invited SEC-registeredNGO/PA/CSO, the BAC may invite in writing, at least two (2) days before anystage of the procurement process, an organization or association of goodreputation within the locality.

It is also a good practice for the BAC to utilize information that may be heldby other LGUs regarding the existence of SEC-registered NGO/PA/CSO thatmay be interested to participate in its procurement proceedings.

Roles and Responsibilities

1. The Procuring Entitya. Responsibilities of the LCE. The LCE shall have the following

responsibilities in the procurement process:

i. Ensure that the APP is regularly prepared, reviewed and updated andthat all procurement undertakings of the LGU, regardless of theprocurement methods to be used, are in line with the same.

ii. Establish the BAC and the BAC Secretariat, and ensure that theirmembers give utmost priority to their assignments over all otherduties and responsibilities until the requirements for the saidassignments at hand are completed.

iii. Promptly act on the recommendations of the BAC. On the other hand,he must not interfere in the performance of the BACs functions duringthe procurement proceedings until the requirements for the saidassignments at hand are completed. (IRR-A Section 14.3)

iv. Ensure that the staff of the Procurement Unit/Office and the membersof the BAC, BAC Secretariat and TWG are given ample training onprocurement and related matters, with the end in view ofprofessionalizing the procurement organization of the LGU.

v. Impose the necessary administrative sanctions on errant members ofthe BAC Secretariat/BAC/TWG, in accordance with Section 70 of theIRR-A.

vi. Ensure that the members of the BAC and the TWG and theSecretariat, if applicable, shall receive their incentives.


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vii. In case of consulting services, approves the followingrecommendations of the BAC:

vii.1. Evaluation procedure to be adopted, whether quality-costbased or quality based evaluation

vii.2. Short-listed bidders; andvii.3. The bidder with the Highest Rated Bid, after bid evaluation.

2. The BACa. Responsibilities of the BAC. The following shall be the responsibilities of

the BAC:

i. Recommend to the LCE the method of procurement of the goods,services, infrastructure projects, and consulting services included inthe APP, i.e. whether to use public bidding or any of the alternativemethods of procurement.

ii. Creation of the TWG, if necessary, from a pool of technical, financialand/or legal experts to assist in the procurement process.iii. Undertake the procurement process from advertisement and/or

posting of the invitation to bid until recommendation for award ofcontract, including the conduct of pre-procurement conferences andthe resolution of Requests for Reconsideration.

iv. Resolve any Motions/Requests for Reconsiderations filed.v. Prepare a procurement monitoring report that shall be approved and

submitted by the LCE to the GPPB on a semestral basis or wheneverrequired.

vi. Invite the Observers required by law to be present during all stages ofthe procurement process, in accordance with the guidelines stipulatedin R.A. 9184, its IRR-A and this Manual.

vii. Furnish the Observers, upon the latters request, with the followingdocuments:

vii.1. Minutes of the proceedings of BAC meetings;vii.2. Abstract of bids;vii.3. Post-qualification summary report;vii.4. APP and related PPMP; andvii.5. Copies of opened proposals.

viii. Conduct due diligence review or verification of the qualifications ofObservers.

ix. Give utmost priority to BAC assignments over all other duties andresponsibilities, until the requirements of the procurement at hand arecompleted (Jury Duty).

x. Perform such other related functions as may be necessary to theprocurement process.


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The BAC recommends to the LCE the following actions in the procurementprocess:

(i) Methods of procurement (IRR-A Section 12.1.)(ii) Award of contract (IRR-A Section12.1.)(iii) Sanctions to Erring Bidders (IRR-A Section 12.1)(iv) Shortlist of Consultants (IRR-A Section 24.15.4.)(v) Choice of Evaluation Procedure in the selection of consultant (IRR-A

Section 20.1.6)(vi) Approval of the Highest Rated Bid in the evaluation procedure in the

selection of consultants (IRR-A Section 33.3.5.)

3. The BAC Secretariata. Responsibilities of the BAC Secretariat. The BAC Secretariat is the main

administrative support of the BAC and as such it shall:

i. Organize and make all necessary arrangements for the BAC meetings,TWG meetings, pre-procurement conferences, pre-bid conferences

and bid openings;

ii. Attend BAC meetings and procurement-related conferences asSecretary;

iii. Assist the BAC in the drafting of resolutions;iv. Prepare Minutes of the BAC meetings and ensure that all procurement

undertaken by the LGU are properly documented;

v. Take custody of procurement documents and be responsible for thesale and distribution of bidding documents to interested bidders;

vi. Monitor procurement activities and milestones for proper reporting torelevant agencies and/or end-users, when required;

vii. Be the central channel of communications for the BAC and the centraldepository of all procurement related information and continuallyupdate itself with the most current GPPB resolutions issuances,circulars and events, and downstream the same to all relevantofficers, employees, and parties requiring information.

viii. Prepare the APP from the consolidated PPMPs submitted by thevarious end-user units of the LGU, to make them available for reviewas indicated in Section 7 of the IRR-A;

ix. Based on inputs from the BAC and the TWG, it must prepare theprocurement documents, i.e., purchase orders, job orders, contracts,and their attachments, for processing and routing to the signing andapproving authorities. It must monitor the status of the procurements

routed for approval, and cause the correction of any formaldeficiencies in the said procurement documents to facilitate action onthe part of the approving authorities.

x. Create, maintain and update the registry of suppliers, contractors, andconsultants.

xi. Create, maintain and update a price-monitoring list, if one ismaintained by the LGU.


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xii. Manage and undertake procurements using the following alternativemethods - Repeat Order and Shopping - upon prior resolution of the

BAC and approval by the LCE.

4. The TWGa. Responsibilities of the TWG. The TWG shall provide assistance to the BACin terms of the technical, legal and other aspects of the procurement at hand.

It shall have the following responsibilities:

i. Assist the BAC in the preparation of the bidding documents, ensuringthat the same properly reflects the requirements of the LGU and thatthese conform to the standards set forth by R.A. 9184, its IRR-A andthe PBDs prescribed by the GPPB.

ii. Assist the BAC in the conduct of eligibility screening of prospectivebidders, and in the short-listing of prospective bidders in case ofbiddings for consulting services.

iii. Assist the BAC in the evaluation of bids and prepare theaccompanying reports for the BACs consideration and approval.

iv. Assist the BAC in the conduct of post-qualification activities andprepare the post-qualification summary report for the BACs approval

v. Assist the BAC and BAC Secretariat in preparing the resolutionrecommending award, with regard to the technical aspect, ifnecessary.

vi. Provide utmost priority to BAC assignments over all other duties andresponsibilities, until the requirements for the procurement at hand iscompleted (Jury Duty).

5. The ObserversThe attendance of Observers ensures the transparency of the procurement process.Thus, they shall have the following responsibilities:

a. Preparation of the Procurement Observation Report either jointly orseparately, indicating their observations made on the bidding activityconducted by the BAC.

In the said report, they shall indicate:

i. An assessment on the extent of the BACs compliance with thesubstantive and procedural requirements of R.A. 9184, its IRR-A andthis Manual.

ii. The areas of improvement in the BACs proceedings.

When there are substantive or procedural irregularities in theprocurement at hand, the Report shall provide therein details of thealleged irregularity.

The report shall be submitted to the LCE, and a copy thereof furnished theBAC Chairman who shall forward it to the BAC Secretariat for inclusion in theprocurement documents that will be submitted to the proper authorities for


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approval. This will be part of the official record of the bidding, and part of theaudit trail. The Observer may also give a copy of the Report to the Office of

the Ombudsman or the Resident Ombudsman and the COA Auditor of the LGUin any of the following instances:

i. when the BAC has failed to follow the prescribed bidding procedures;or

ii. for any justifiable and reasonable ground where the award of thecontract will not redound to the benefit of the Government.

b. For the purpose of preparing the report, the Observer may request for copiesof the following documents from the BAC, which shall be promptly provided tothe observer:

i. Minutes of related proceedings of BAC meetings;ii. Abstract of bids;iii. Post-qualification summary report;iv. Pertinent portions of the APP and related PPMP; andv. Copies of opened proposals.

c. The Observer must sign as witness in the Abstract of Bids and in the Post-Qualification Report. However, if in his/her independent observation, thebidding process was not conducted in accordance with the proceduresdescribed in the IRR-A of R.A. 9184 and this Manual, the Observer must signthe Abstract of Bids or the Post-Qualification Report, as may be appropriate,and indicating his reservation and reference to a Procurement ObservationReport where perceived procedural and/or substantive lapses of the BAC willbe identified and/or discussed. This will enable the approving authority to beapprised of any possible cases of irregularities in the bidding process, forconsideration.

6. The BiddersAn eligible bidder must be responsible for having: (IRR-A Section 17.7.1)

a. Taken steps to carefully examine all of the bidding documents;b. Acknowledged all conditions, local or otherwise, affecting the implementation

of the contract;

c. Made an estimate of the facilities available and needed for the contract to bebid, if any; and

d. Complied with his responsibility as provided for under IRR-A Section 22.5.1,which provides that it shall be the responsibility of all those who have properlysecured the bidding documents to inquire and secure supplemental/bid

bulletins that may be issued by the BAC.

Failure to observe any of the above responsibilities shall be at the risk of the eligiblebidder concerned.

The LGU is not responsible for any erroneous interpretation or conclusions by theprospective or eligible bidders of the data it furnished. (IRR-A Section 17.7.3)

Bidders are deemed to have become familiar with all existing Philippine laws, decrees,ordinances, acts, and regulations that may affect the contract in any way. (IRR-ASection 17.7.4)


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Package of Benefits for BAC, TWG and Secretariat

1. Grounds for the Grant of HonorariaThe LGU is authorized to grant honoraria to the members of the BAC,the TWG, and the BACSecretariat, when allowed under the guidelines,provided:

a. the amount so granted does not exceed twenty-five percent (25%) of their respectivebasic monthly salary;

b. funds are available for the purpose; andc. the grant of honoraria conforms to the guidelines promulgated by the DBM. (IRR-A

Section 15)

2. DBM Guidelines for the Grant of HonorariaBudget Circular No. 2004-5A1, dated 7 October 2005, issued by the DBM provides the

guidelines on the grant of honoraria to government personnel involved in governmentprocurement. Among others, this Circular provides the following:

a. The chairs and members of the BAC and the TWG may be paid honoraria only forsuccessfully completed procurement projects as identified, described, detailed,scheduled and budgeted for in the Project Procurement Management Plan prepared by

the agency. A procurement project shall be considered successfully completed oncethe contract has been awarded to the winning bidder.

b. The payment of honoraria shall be limited to procurement that involves competitivebidding. Competitive bidding activities are present only in:

i. Open and Competitive Bidding;ii. Limited Source Bidding; andiii. Negotiated Procurement under Section 53 (a) of the IRR-A, where the bidding

has been failed twice.

Conversely, honoraria will not be paid when the procurement is through:

i. Direct Contracting;ii. Repeat Order;iii. Shopping; andiv. Negotiated Procurement under Section 53 (b) of the IRR-A where the LGU is

authorized to directly negotiate with a previous supplier, contractor orconsultant; or when the infrastructure project is undertaken by administrationor through the Armed Forces of the Philippines.

c. To be entitled to honoraria, personnel should be duly assigned as chair or member ofthe BAC or the TWG by the head of the department/agency concerned.

d. The members of the BAC Secretariat who are performing the attendant functions inaddition to their regular duties in other non-procurement units of the agency may

1As amended by Budget Circular No. 2007-3, dated 29 November 2007.


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likewise be paid honoraria at the same rate as the TWG chair and members, subjectto the same regulations.

e. In lieu of honoraria, the payment of overtime services may be allowed for theadministrative staff, such as clerks, messengers and drivers supporting the BAC, theTWG and the Secretariat, for procurement activities rendered in excess of officialworking hours. The payment of overtime services shall be in accordance with theexisting policy on the matter.

f. Those who are receiving honoraria for their participation in procurement activitiesshall no longer be entitled to overtime pay for procurement-related services renderedin excess of official working hours.

g. The amount necessary for the payment of the honoraria and overtime pay authorizedherein shall be sourced only from the following:

i. Collections from successfully completed procurement projects limited,however, to activities prior to awarding of contracts to winning bidders:

i.1. proceeds from sale of bid documents;i.2. fees from contractor/supplier registry;i.3. fees charged for copies of minutes of bid openings, BAC resolutions

and other BAC documents;

i.4. protest fees; andi.5. proceeds from bid security forfeiture; and

ii. Savings from local budgets approved by their respective Sanggunian subjectto the pertinent provisions of RA 7160, otherwise known as the LocalGovernment Code of 1991.

h. Savings refer to portions or balances of LGUs budget free from any obligation orencumbrance which are:

i.

Still available after the completion or final discontinuance or abandonment ofthe work, activity or purpose for which the appropriation is authorized;

ii. Arising from unpaid compensation and related costs pertaining to vacantpositions and leaves of absences without pay; and

iii. Realized from the implementation in improved systems and efficiencies andthus enabled the LGU to meet and deliver the required or planned targets,programs, and services at lesser cost.

i. Pursuant to the DOF-DBM-COA Permanent Committee Resolution No. 2005-2, datedJune 2005, all agencies are authorized to treat the collections from the sourcesidentified above as trust receipts to be used exclusively for the payment of honorariaand overtime pay duly authorized. Agencies may utilize up to one hundred percent(100%) of the said collections for the payment of honoraria and overtime pay subject

to the guidelines in the Budget Circular. Any excess in the amount collected shall formpart of the local government funds.

j. The manner of payment of honoraria and overtime pay to entitled governmentpersonnel to be charged against the above-mentioned sources shall be in accordancewith the immediately preceding paragraph.

Also see GPPB Resolution 21-2005 on the Guidelines for Legal Assistance andIndemnification of BAC Members and its Support Staff, which provide the generalconditions, procedures and funding source for free legal assistance, liability insuranceand medical assistance.


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3. Guidelines for Legal Assistance and Indemnification ofBAC Members

The Guidelines on Legal Assistance and Indemnification of BAC Members and its SupportStaff2 were issued by the GPPB for the following purposes:

a. To prescribe the rule and procedures in granting legal assistance and indemnificationof the BAC members and BAC Support Staff.3

b. To ensure that the mandate to insulate government procurement personnel from theunnecessary loss, damage or injury arising from the lawful exercise of their functionsis implemented in accordance with the provisions of R.A. 9184.

c. To establish the legal parameters for the effective implementation of the legalassistance and indemnification provided for BAC members and BAC Support Staff.

The funds to be used for the grant of the free legal assistance, liability insurance or medicalassistance shall be taken from the LGUs appropriation. Protest fees, proceeds from the saleof bidding documents, and any other additional funds derived from other income-generatingactivities of the agency may be used to augment the funds.

1. Free Legal AssistanceIn order for a member of the BAC or its Support Staff to avail of the free legalassistance, the following considerations must be met:

a. The LGU shall, to the fullest extent permitted by the rules, indemnify a BACmember and/or any of the BAC Support Staff who was or is a party to apending or completed action, suit or proceeding whether civil, criminal oradministrative in nature brought against him in the performance of his officialfunctions as BAC member or as BAC Support Staff.

b. The BAC member or BAC Support Staff concerned must have engaged theservices of a private lawyer or external counsel.

c. The BAC member or BAC Support Staff must have not been adjudged as guiltyof gross negligence, misconduct, or grave abuse of discretion.

d. The free legal assistance shall cover actual cost of suit and attorneys fees.The attorney representing the BAC member or BAC Support Staff shall beentitled to a maximum of Five Thousand Pesos (Php5,000.00) per appearancewhich shall be paid by the LGU.

e. The free legal assistance shall not cover:i. Any action or suit initiated by a BAC member or BAC Support Staff in

his personal capacity or in behalf of the LGU, unless such action,proceeding, or claim was authorized by the LCE or the approvingauthority therein; or

ii. Any action or suit initiated by the Government against the BACmembers or BAC Support Staff.

f. The BAC member or BAC Support Staff shall be entitled to actual, moral, andexemplary damages when awarded by the court. Likewise, the attorney

2 Approved and adopted by GPPB through its Resolution 021-2005, dated 07 October 2005, published at the OfficialGazette on 09 January 2006.3 Refers to the members of the BAC Secretariat and the Technical Working Group duly designated by the procuring entitypursuant to the provisions of Rule V of the IRR-A of R.A. 9184.


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representing the BAC member or BAC Support Staff shall be entitled toattorneys fees awarded by the court.

2. Liability InsuranceFollowing are the general conditions pertaining to the liability insurance for membersof the BAC and the BAC Support Staff:

a. The LGU shall have the responsibility to procure and maintain adequateliability insurance for and in behalf of its BAC members or BAC Support Staff.

b. The liability insurance policy shall cover only those liabilities asserted againstthe public official and incurred by him in his capacity as such BAC members orBAC Support Staff as the case may be.

c. In order to avail of the liability insurance, the BAC members or BAC SupportStaff should not be adjudged in such action or proceeding to be guilty of grossnegligence, misconduct, or grave abuse of discretion or guilty of any othercomplaint or charges.

d. In the event of settlement or compromise, indemnification shall be confinedonly to matters covered by the settlement, and to which the LGU had been

advised by counsel that the person to be indemnified have not committedgross negligence, misconduct, or grave abuse of discretion in the performanceof their duties and functions.

e. The insurer shall pay for the loss arising from the claim or suit made againstthe BAC members or BAC Support Staff during the policy period where they

serve in such capacity. For this purpose, the term loss shall includejudgments, expenses for settlement or compromise, as well as all reasonablefees and other expenses incurred by such persons in connection with anyadministrative, civil, or criminal action, suit or proceeding to which they maybe or have been made a party be reason of the lawful performance of theirofficial functions and duties in such capacity.

3. Medical AssistanceMedical assistance should be provided to BAC members and BAC Support Staff forinjuries/disabilities incurred in the lawful performance of their official functions andduties. The medical assistance consists of indemnification for medicines, laboratoryand hospitalization expenses and granted to the claimant as a matter of right andsubject to the conditions mandated by law.

Following are the general considerations pertaining to the medical assistance:

a. The claimant(s) should be entitled to indemnification for any injury ordisability resulting from the performance of their official functions as definedby law and without any contributory negligence on their part; provided thatthey exercised due diligence to prevent harm or injury to themselves.

b. The claimant(s) or his/her relatives must notify the LCE within seven (7)calendar days from the occurrence of the injury or disability.

c. The amount claimed shall not exceed the actual amount incurred,substantiated by receipts and other supporting documents. Indemnificationshall only be made upon presentation of the proof of payment in connectionwith the injury or disability suffered.

4. Proceduresa. The claimant(s) should file their respective claim(s) for legal assistance,

liability insurance, or medical assistance as the case may be, with the LCE;


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and shall secure the approval of the latter on the terms and conditions of theengagement of counsel.

b. The LCE should be given at least fifteen (15) to thirty (30) calendar days toexamine, review, verify and validate the authenticity of the documentspresented by the claimant.

c. Upon finding that all the requirements have been duly complied with and thatall the necessary documents submitted are genuine, it should then order theprocessing of the claims and the subsequent release of funds for the approvedclaims.

d. Any expenses incurred in advance by the claimant arising from theperformance of his official functions in such capacity shall be subject toreimbursement upon submission of the necessary documents and approvalthereof by the LCE.

e. If the BAC member or its support staff is found to be not guilty for grossnegligence, misconduct, or grave abuse of discretion, he shall liquidate hiscash advances by presenting receipts of payment and other necessarydocuments. On the other hand, if the BAC member or its support staff isfound to be guilty for gross negligence, misconduct, or grave abuse ofdiscretion, he shall pay the cash advances made through salary deductions orreimbursement.


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PROCUREMENT PLANNING - Procurement Planningand Budget Linkage

Procurement planning ensures that the overall goal of the particular project will be achieved

effectively and efficiently. Through plans, an LGU is able to effectively manage and trackprocurement all the way to contract performance. As such, it allows managers to determinehow to allocate limited cash and other appropriate resources under a given time line andidentify choke-points, weaknesses, and delays in the entire activity that can be addressed oreliminated. Also, a sound procurement planning enables the LGU to be cost efficient in itsprocurement, as it ensures a strong link between procurement needs and goals.

Proper planning ensures that only goods, infrastructure projects, and consulting serviceswhich have been included in the approved APP shall be procured thereby precluding occasionsfor unnecessary government purchases and circumventions of the prescribed procurementprocedures such as advance deliveries, suki system, or unwarranted resort to alternativemethods of procurement, among others.

Procurement planning should be done within budgetary context, reflecting the LGUs prioritiesand objectives for the budget period. Procurement Planning therefore involves two levels: the

LGUs over-all strategic plan and the project and/or operational plans that contain the detailsof the manner in which the strategic plan will be carried out.

PROCUREMENT PLANNING Preparation of theProject Procurement Management Plan (PPMP)

1. The PPMPA Project Procurement Management Plan or PPMP serves as a guide document in the

procurement and contract implementation process, as well as a vital reference in procurement

monitoring. It deals primarily with:

a. planning for the procurement of project requirements;b. bidding or procurement strategy;c. source selection;d. time schedule for each procurement activity;e. delivery schedules;f. contract administration;g. contract termination;h. procurement milestones; andi. other important procurement details or information.The PPMP is prepared by the end-user unit during the budget preparation to support the costestimates in the budget proposal of each of the end-user units.


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2. Developing the Project RequirementsThe development of the project requirements should be done, by the end-user units, duringthe preparation of the proposed PPMP. At this stage of the procurement planning process, theend-user unit must identify its needs and the alternative solutions/products/services availablefrom the market to address its need and the purpose of the procurement.

The end-user unit should conduct the market research at this point, and gather as muchinformation about the goods, services or expertise required. At the end of this activity, it

should know the market or the industry well enough to make an informed choice.

3. Writing the Technical Specifications, Scope of Work andTerms of Reference

The Technical Specifications (for Procurement of Goods), Scope of Work (for General Servicesand Infrastructure Projects) or Terms of Reference (for Consulting Services) is the documentthat provides the detailed description of the deliverables of the Supplier, Contractor or

Consultant.

The Technical Specifications, Scope of Work and Terms of Reference are discussed in detail inVolumes 2, 3 and 4, respectively.

4. Determining the Approved Budget for the ContractThe ABC refers to the budget approved by the LCE based on the appropriation approved bythe Sanggunian for the particular procurement planned to be undertaken. In determining theABC, the end-user unit has to consider several factors, namely: the appropriation for theproject or procurement, the market price of the goods and/or services being procured,inflation and cost of money which are directly related to the procurement time table, amongothers.

The determination of the ABC for each type of procurement (Goods, Infrastructure Projectsand Consulting Services) is discussed in Volumes 2, 3 and 4.

5. Procurement MilestonesThe PPMP must include a schedule of procurement milestones. These procurement milestonesreferred to are the following:

a. pre-procurement conference (if required or necessary);b. publication and/or posting of the IAEB;c. pre-bid conference;d. submission of eligibility requirements and LOI (for procurement of infrastructure

projects and consulting services);

e. submission of bids (for procurement of goods, submission of eligibility requirementsand bids are done simultaneously);

f. bid evaluation;g. determination of LCRB or HRRB;


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h. issuance of notice of award;i. contract execution and approval;j. issuance of notice to proceed; andk. delivery dates or commencement of project implementation.Each of these significant activities should be scheduled so as to provide the end-user unit witha guide in each procurement undertaken by the LGU.

6. Method of ProcurementAs a general rule, all procurement should be through public bidding. However, the lawrecognizes that certain exceptional circumstances require the use of other methods ofprocurement. The selection of the method of procurement is dependent on the presence orabsence of specific conditions that justify the use of a particular method.

7. Format of the PPMPThe PPMP shall contain the following information:

a. The name of the project/procurement;

b. General description of the project/procurement;

c. The extent/size of contract scopes/packages;

(This refers to the general description of the lot to be included in a particular contract,

i.e. the goods, infrastructure project or consultingservices, or a combination of anytwo or three of these types of procurement, including quantities where applicable.)

d. The procurement methods to be adopted, and indicating if the procurement tasks areto be outsourced as provided in Section 53(e) of the IRR-A;

e. The time schedule for each procurement activity; and

f. The ABC.

PROCUREMENT PLANNING Preparation of theAnnual Procurement Plan (APP)

1. The Annual Procurement PlanThe APP is the document that consolidates the various PPMPs submitted by the various end-user units or the PMO within the LGU. It reflects the entirety of the procurement activitiesthat will be undertaken by the LGU within the calendar year. In the consolidation of PPMPs,the BAC may adopt a strategy through which similar items of procurement are packaged intoone procurement undertaking and under a single PPMP, in which the original PPMPs shall beconsolidated and revised. Also, during the review of the PPMPs, the BAC shall determine thenature of the procurement, whether they be procurement of goods, infrastructure orconsulting services.

The APP is prepared by the BAC through the BAC Secretariat upon submission by the end-user units of their respective PPMPs. In preparing the APP, the BAC shall take intoconsideration the following factors:


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a. The APP should include all procurement activities planned for the year. The approvedAPP shall be the basis for the LGUs procurement, and only those projects /

procurement included therein shall be undertaken.

b. The APP shall include provisions for a lump sum to cover foreseeable emergencies orcontingencies usually indicated by historical records.

c. Scheduling of procurement activities in the APP should be done in such a manner thatthe BAC and the other offices/units in the LGU that are involved in the procurementprocess are able to efficiently manage the conduct of procurement transactions.Moreover, it is paramount that project implementation timelines are met.

2. Format of the APPThe BAC shall prepare one consolidated APP, which shall classify the different procurementaccording to their nature, i.e. Procurement of Goods, Infrastructure Projects, or ConsultingServices.

The APP shall contain the following information:

a. Name of the project/procurement;b. End-user unit;c. General description of the project/procurement (general description of requirements

and quantities, where applicable);

d. The procurement methods to be adopted, and indicating if the procurement tasks areto be outsourced as provided in Section 53(e) of the IRR-A;

e. The time schedule for each procurement activity; andf. The ABC.A review and updating of the individual PPMPs and the APP shall be done regularly as often asnecessary. The review and updating of the PPMPs will be done by the end-user units. These

units may avail of the services of technical experts to review the individual PPMPs. Theupdated PPMPs will then be submitted to the BAC Secretariat for subsequent inclusion in theupdated APP. For flexibility and to encourage advance procurement actions, the APP andPMPP should also be based on proposed budget to allow for advance planning for thesucceeding budget year.

3. The APP and Budget PreparationThe Budget Process in LGUs consists of five (5) phases. These are: (i) Budget Preparation;(ii) Budget Authorization; (iii) Budget Review; (iv) Budget Execution; and (v) BudgetAccountability. Among these phases, the linkage between budget preparation and the APPclearly exist in Budget Preparation and Budget Execution.

In relation to Budget Preparation, the UBOM recognizes preparation of the PPMP as animportant factor in identifying the mode of procurement and projecting the quantity andquality of the expected results of the program/project/activity, among others.

With respect to Budget Execution, the UBOM provides a clearer connection between the twoconcepts as Step 3 of the Budget Execution Process requires the adjustment of the PPMP andcorresponding APP on the basis of authorized allotment.

Practical Tip


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In order to better appreciate the linkage between the APP and the budget process, the LGUmay refer to the pertinent provisions of the UBOM.

Step 2.3 of the Budget Preparation Process provides as follows:

In the preparation of the of the budget for the ensuing year it is important that theProject Procurement Management Plan is prepared simultaneously with the budgetproposal to provide details on the mode of procurement, schedule of procurement,technical description and specifications of the materials, equipment and civil works to beprocured and its proposed budget. This plan more or less is an important determinantfactor in projecting the quantity and quality of the expected results of theProgram/Project/Activity.

The preparation of the PPMP should be guided by the expected output and cost estimatesembodied in the approved AIP.

Step 3 of the Budget Execution Process provides as follows:

The released allotment, LBM or ARO, whichever is applicable is the basis in finalizing theapproved budget for the contract (ABC) as originally reflected in the PPMP and APP duringthe preparation of the budget. The PPMP and APP should therefore be adjusted in terms of

their quantity and quality to be procured if there is substantial increase or decrease in theauthorized allotments released to the various departments or offices.


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Competitive Bidding

All procurement shall be through competitive or public bidding, except as provided in Rule XVI

of the IRR-A, which provides for the conditions for use of the alternative methods ofprocurement. This is so specified in Section 10, Article IV of R.A. 9184 and Section 10, Rule

IV of its IRR-A. In keeping with this policy, LGUs are enjoined to provide for sufficient lead

time in its procurement program for the conduct of public bidding.

Competitive Bidding or Public Bidding is defined in R.A. 9184 and its IRR-A as follows:

Refers to the method of procurement which is open to participation by any interested party

and which consists of the following processes: advertisement, pre-bid conference, eligibility

screening of prospective bidders, receipt and opening of bids, evaluation of bids, post-

qualification, and award of contract, the specific requirements and mechanics of which shall

be defined in the IRR to be promulgated under this Act.

Competitive bidding opens up the procurement opportunity to a greater number of suppliers,

contractors,or consultants who compete among themselves in providing the best goods or

services to the Government for the best value. This enables the Government to obtain goods,

infrastructure projects, and consulting services at the most advantageous terms.

Competitive bidding is discussed in detail in Volumes 2, 3 and 4 of these Manuals.

It is conceded, however, that there are instances when resorting to any of the alternative

methods of procurement is necessary.

Alternative Methods of Procurement

1. Conditions for Use of Alternative Methods of ProcurementIn highly exceptional cases, as justified by the environmental conditions of the procurement

at hand, the LGU is allowed to resort to the alternative methods of procurement in order to

promote economy and efficiency, subject to the following conditions:

a. The BAC should recommend to the LCE the use of alternative methods of procurementin cases where public bidding is not feasible, to be indicated in the APP;

b. The LCE or his duly authorized representative has approved the use of any of thealternative methods of procurement.

In cases where the original method of procurement specified in the APP is public bidding andconditions arise justifying the use of an alternative method of procurement after the APP is

finalized, the APP may be updated. This can be done after a BAC Resolution recommendingthe use of the alternative method is approved by the LCE. The procedures are discussed inVolumes 2, 3, and 4.


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2. The Different Alternative Methodsa. Limited Source Bidding, otherwise known as selective bidding, is a

method of procurement of goods and consulting services that involvesdirect invitation to bid by the concerned entity from a set of pre-selectedsuppliers or consultants with known experience or proven capability on therequirements of the particular contract.

The pre-selected suppliers or consultants shall be those appearing in the list

maintained by the relevant Government authority (e.g., Bureau of Food and

Drugs for medicines, National Telecommunications Commission for

telecommunication equipment, etc.) that has expertise and experience in the

type of procurement concerned, which list should have been submitted to,

maintained and updated with, the GPPB. For highly specialized goods andconsulting services, where no such list is being maintained by a relevant

Government authority, competitive bidding shall be conducted. It is noted

that the purpose of the list is to regulate the quality of goods being offered

and the qualifications of consultants in the particular field of expertise.

The particular conditions under which this alternative method of procurement

may be used are outlined in Section 3, Part 2, Volume 2 (for procurement of

goods, and Section 3, Part 2, Volume 4 (for procurement of consulting

services), of this Manual.

b. Direct Contracting or single source procurement is a method ofprocurement of goods that does not require elaborate bidding documents.The supplier is simply asked to submit a price quotation or a pro-formainvoice together with the conditions of sale. The offer may be acceptedimmediately or after some negotiations.


may be used are outlined in Section 3, Part 2, Vol. 2 of this Manual.

c. Repeat Order is a method of procurement of goods from the previouswinning bidder, whenever there is a need to replenish goods procured under a

contract previously awarded through Competitive Bidding.


may be used are outlined in Section 3, Part 2, Volume 2 of this Manual.

d. Shopping is a method ofprocurement of goods whereby the LGU simplyrequests for the submission of price quotations for readily available off-the-shelf goods or ordinary/regular equipment to be procured directly fromsuppliers of known qualifications.


may be used are outlined in Section 3, Part 2, Volume 2 of this Manual.

e. Negotiated procurement is a method of procurement of goods,infrastructure projects and consulting services, whereby the LGU directlynegotiates a contract with a technically, legally and financially capablesupplier, contractor, consultant or, where allowed, an individual consultant,only in the cases provided for in Section 53 of R.A. 9184 and Section 53, RuleXVI of its IRR-A.


may be used are outlined in Section 3, Part 2, Volume 2, Section 3, Part 2,

Volume 3 and Section 3, Part 2, Volume 4 of this Manual.


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Procurement by Electronic Means and the Philippine

Government Electronic Procurement System

1. The PhilGEPS4Consistent with the policies of transparency and streamlining of the procurement process, andto achieve efficiency, ICT shall be utilized in the conduct of government procurement. A two-pronged approach has been adopted to achieve this:

a. institutionalization of the PhilGEPS, which will be used for procurement of common-use items and as repository of all Government procurement information; and

b. use or engagement of electronic procurement service providers by the individualProcuring Entities for procurement of non-common use items.

The PS-DBM manages the PhilGEPS under the supervision of the GPPB. The PhilGEPS servesas the single portal and primary source of information on all government procurement.

All Procuring Entities, including LGUs are mandated to utilize the PhilGEPS for the

procurement of common-use supplies, through its Electronic Catalogue Facility, and for theposting of procurement-related notices, through the Electronic Bulletin Board.

The GPPB has yet to issue the necessary procedural guidelines covering procurement throughthe PhilGEPS.

2. Features of the PhilGEPSa. Electronic Bulletin Board

The PhilGEPS shall have a centralized electronic bulletin board.

LGUs are required to post the following in the PhilGEPS Electronic Bulletin

Board:

i. IAEB for competitive bidding and notices of other procurementopportunities using the alternative methods of procurement;

ii. Supplemental/Bid bulletins;iii. Contract awards, the corresponding Notices of award, including the

reasons for award of contract;

iv. Results of bidding and related information; andv. Other notices, announcements, information for interested parties.Failure to post a procurement opportunity will render the resulting contract

null and void.

Failure to post a Notice of Award shall render the erring government official/sadministratively liable in accordance with R.A. 6713 and other pertinent laws,rules and regulations, and appropriate sanctions shall be imposed.

4 In case of FAPs, e-procurement should be consistent with the requirements of the IFI concerned.


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Posting of notices and other transactions with the PhilGEPS shall be donethrough duly authorized personnel of the LGU. In accordance with Section8.2.3 of the IRR-A, the LGU shall be required to designate its personnel whowill be authorized to transact with the PhilGEPS. The internal procedures ofPhilGEPS require that a LGU shall have at least one (1) but not more thantwo (2) such authorized personnel. For purposes of consistency with theprescribed procurement procedures, the LGU shall designate such personnelwho is a member of the BAC Secretariat.

(Please refer also to Section 4, Volume 2 of this Manual for the proceduresfor transacting with the PS-DBM.)

Posting of the IAEB shall follow the guidelines in Section 21 of the IRR-A,Section 3, Part 1, Volume 2, Section 3, Part 1, Volume 3, and Section 3, Part1, Volume 4 of this Manual.

b. Registry of Manufacturers, Suppliers, Distributors, Contractorsand Consultants

The PhilGEPS also has a centralized electronic database of all manufacturers,

suppliers, distributors, contractors and consultants registered under thesystem.

Registration shall entail the submission of the requirements specified by thePS-DBM. Details of the requirements may be obtained from the PS-DBMwebsite (www.procurementservice.org), or the PhilGEPS website(www.philgeps.net). Submission of these requirements may be done on-lineat the PhilGEPS website or physically at the PhilGEPS office. Registration shallbe effective for one year and may be renewed, provided that themanufacturer, supplier, distributor, contractor or consultant concernedmaintains its registration current and updated at least once a year, or morefrequently when needed.

Manufacturers, suppliers, distributors, contractors and consultants applyingfor registration must also indicate their account number with a bank duly

licensed by the BSP to facilitate payment as well as the posting of bid andperformance security, when applicable.

The PhilGEPS shall deny registration to or exclude from the registry any partythat is found to have willfully misrepresented any of the information providedin the application for registration or who is in the blacklist of theGovernment or any of its procuring entities from participating in any of itsprocurement opportunities.

A manufacturer, supplier, distributor, contractor or consultant applying forregistration shall be required to provide an e-mail address to which allcommunications from the BAC and the LGU shall be sent. The e-mail addressprovided shall be considered as such applicants information system forpurposes of reckoning the date of sending or receipt of electronic messages ordocuments.

Once the PhilGEPS allows electronic bid submission and other on-linetransactions requiring digital signatures, registered manufacturers, suppliers,distributors, contractors and consultants shall secure a digital certificate fromthe appropriate certification authority to be able to participate in theprocurement activities of the PhilGEPS.

Registration with the PhilGEPS is not tantamount to a finding of eligibility, noris it a guaranty that a manufacturer, supplier, distributor, contractor or


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consultant may participate in a public bidding without first being determinedto be eligible for that particular public bidding.

c. Electronic CatalogueThe PhilGEPS features a centralized electronic catalogue of common and non-common use goods, supplies, materials and equipment.

LGUs are required to procure common-use goods, supplies, materials andequipment from the PS-DBM through the Electronic Catalogue in the PhilGEPS.Once the PhilGEPS is fully operational, the procedures for transacting with thePhilGEPS shall be provided for in detail in the websites of the PhilGEPS(procurementservice.net) and the PS-DBM (procurementservice.org).

The Electronic Catalogue may also feature non-common use items that maybe procured directly and without public bidding by procuring entities fromsuppliers: Provided, however, That for an item to be carried in the ElectronicCatalogue for this purpose, the supplier thereof must have been determined

as the Lowest Calculated Responsive Bidder in a previous bidding conductedby PS-DBM or by a Procuring Entity for PS-DBM: Provided, further, That suchitem will be featured in the Electronic Catalogue for a maximum period of six(6) months unless another supplier offers a price lower by at least five percent(5%) and such supplier is determined by the Procuring Entity that conductedthe previous bidding to meet the eligibility and bidding requirements for theitem, in which case the item from the latter supplier will be that featured inthe Electronic Catalogue for the remainder of the six (6)-month period.

LGUs without internet access may avail of the PhilGEPS Public AccessTerminals which shall be installed at DBM-designated locations in theprovinces and in Metro Manila.

d. Additional FeaturesThe PhilGEPS will also feature the following:

i. A Virtual Store that will enable the ordering of common-use and non-common use items online called a virtual store. This virtual store shall

be open only to registered Procuring Entities and may not be accessedby suppliers.

ii. An Electronic Payment function that will allow the system to managethe generation of purchase orders and the payment of bids processedthrough the system. The focus of this feature is to facilitate theelectronic transfer of funds from PS-DBM to and from ProcuringEntities and suppliers, and from Procuring Entities to suppliers for bidsmanaged directly by the Procuring Entity. This system will:

ii.1. Generate purchase orders from a bid notice, award notice orcontract;

ii.2. Support approval process for purchase orders before anypayment or fund transfer is processed;

ii.3. Have a process to submit request for payment upon deliveryof goods and/or services and the completion of the approvalprocess; and

ii.4. Have the ability to interface with the designated bank of theProcuring Entity and suppliers to support the electronictransfer of funds.


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iii. An Electronic Bid Submission that will support the implementation ofe-Bid submission processes, which includes creation of electronic bid

forms, creation of bid box, delivery of bid submissions, notification tosupplier of receipt of bids, bid receiving and electronic bid evaluation.This facility will cover all types of procurement for goods,infrastructure projects and consulting services.

iv. Other features that may be developed in the future under the policyguidance of the GPPB.

Procedures for the use of these features will be published once these becomeoperational.


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Foreign Assisted Projects

Section 4 of R.A. 9184 provides that any treaty or international or executive agreementaffecting the subject matter of this Act to which the Philippine government is a signatory shallbe observed. As such, when an executive agreement whether a loan or a grant isentered into by the LGU, the procurement guidelines specified in said agreement shall governthe conduct of the projects procurement.

Despite the legal mandate, the GOP and three of the most active IFIs in the country, namely,ADB, JBIC, and WB, continue to harmonize their procurement guidelines. Thus, when a loanor a grant agreement is signed between the GOP and ADB, JBIC, or WB, and such loan orgrant is considered or entered into pursuant to an executive agreement, then:

a. For national or local competitive bidding, R.A. 9184 shall be applied except forprocurement rules specified in the annex of the loan or grant agreement. The PBDsissued by the GPPB shall then be used.

b.

For international competitive bidding, the procurement guidelines specified in the loan orgrant agreement shall be applied. The SBDs of the relevant IFI shall be used.

It bears stressing, however, that for all FAPs, whether done through national/local orinternational competitive bidding, the organizational structure (e.g. composition of the BAC)and contract approval process prescribed by R.A. 9184 shall apply.

The harmonization of procurement procedures is a continuing and evolving process. Even ifprocurement harmonization in the Philippines began on the level of national/local competitive

bidding procedures, the entire activity opened the doors for possible harmonization ofinternational competitive bidding procedures in the future.


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Standard of Ethics

1. Definition of Corrupt, Fraudulent, Collusive, and CoercivePractices

LGUs and bidders, manufacturers, suppliers or distributors are required to observe the higheststandard of ethics during the procurement and execution of contract. Bidders determined tohave committed corrupt, fraudulent, collusive and coercive practices by the government willnot be eligible to bid in its projects.5 For this purpose:

a. Corrupt practice means behavior on the part of officials in the public or privatesectors by which they improperly and unlawfully enrich themselves, others, or induceothers to do so, by misusing the position in which they are placed, and it includes the

offering, giving, receiving, or soliciting of anything of value to influence the action ofany such official in the procurement process or in contracting execution; entering, onbehalf of the government, into any contract or transaction manifestly and grosslydisadvantageous to the same, whether or not the public officer profited or will profitthereby.

b. Fraudulent practice means a misrepresentation of facts in order to influence aprocurement process or the execution of a contract to the detriment of the LGU, andincludes collusive practices among bidders (prior to or after bid submission) designedto establish bid prices at artificial, non-competitive levels and to deprive the LGU ofthe benefits of free and open competition.

c. Collusive practice means a scheme or arrangement between two (2) or morebidders, with or without the knowledge of the LGU, designed to establish bid prices atartificial, non-competitive levels.

d. Coercive practice means harming or threatening to harm, directly or indirectly,persons, or their property to influence their participation in a procurement process, oraffect the execution of a contract.

The pertinent provisions of the Anti-Graft and Corrupt Practices Act, or R.A. 3019, shall alsobe applied in determining the existence of corrupt or fraudulent practice.

2. Applicable Penalty for Fraud, Misrepresentation andCollusion

If a bidder is found to have committed an act that constitutes fraud or misrepresentation or tohave colluded with others for the purpose of influencing the outcome of the bidding, it will bedisqualified by the BAC, its bid security will be forfeited, and, upon conviction, it will suffer thepenalty of imprisonment of not less than six (6) years and one (1) day but not more thanfifteen (15) years. (IRR-A Section 65.2) Likewise, it will suffer the administrative penaltiesof suspension for one (1) year from participation in government procurement for the firstoffense, and suspension for two (2) years for the second offense. (IRR-A Section 69.1)

Conflict of Interest

A bidder that has a conflict of interest shall be disqualified to participate in the procurement athand. A Bidder would be considered as having a conflict of interest with another bidder in any

5 A firm declared ineligible by an IFI for engaging in corrupt, fraudulent, collusive and/or coercive practice/s, shall beineligible to be awarded an IFI-financed contract during the period of time determined by the IFI concerned.


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of the events described in paragraphs 1 through 3 below and a general conflict of interest inany of the circumstances set out in paragraphs 4 through 6 below:

1. If the bidder is a corporation or a partnership and it has officers, directors, controllingshareholders, partners or members in common with another bidder; or if the bidder isan individual or a sole proprietorship and he is the proprietor of another bidder, or anofficer, director or a controlling shareholder of another bidder; or if the bidder is ajoint venture and it or any of its members has officers, directors, controlling

shareholders or members in common with another bidder, or any of its members is abidder;

2. A bidder receives or has received any direct or indirect subsidy from another bidder;3. A bidder has the same legal representative as any other bidder for purposes of the

bidding at hand.

4. A bidder has a relationship directly or through common third parties, that puts themin a position to have access to information about or influence on the bid of anotherbidder, or influence the decisions of the LGU regarding the bidding process. This willinclude a firm or an organization that lends, or temporarily seconds, its personnel tofirms or organizations which are engaged in consulting services for the preparationrelated to procurement for or implementation of the project, if the personnel would beinvolved in any capacity on the same project;

5. A bidder submits more than one bid in the bidding process. However, this does notlimit the participation of subcontractors in more than one bid; or

6. A bidder who participated as a consultant in the preparation of the design or technicalspecifications of the goods and related services that are the subject of the bid.

In accordance with Section 47 of the IRR-A, the bidder should not be related by consanguinityor affinity up to the third civil degree to the LCE or any of the LGUs officers or employeeshaving direct access to information that may substantially affect the result of the bidding,such as, but not limited to, the members of the BAC, the members of the TWG, the BACSecretariat, and the designers of the project. This prohibition shall apply to the followingpersons:

1.

If the bidder is an individual or a sole proprietorship, to the bidder himself;

2. If the bidder is a partnership, to all its officers and members;3. If the bidder is a corporation, to all its officers, directors and controlling stockholders;

and

4. If the bidder is a joint venture, items 1 through 3 above shall correspondingly apply toeach of the members of the said joint venture, as may be appropriate.

To establish the non-existence of the above relationship, and to bind the Bidders to itsrepresentation relating to the foregoing, all bids must be accompanied by a DisclosureAffidavit of the bidder to that effect. (IRR-A Sections 47 and 25.3.C.8)

Penal Liabilities and Sanctions

1. Penal Liabilities of Public OfficersWithout prejudice to the provisions of R.A. 3019 and other penal laws, public officers whocommit any of the following acts shall be criminally liable:

a. Opening any sealed Bid including but not limited to Bids that may have been

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