Department of Education Manual On Procurement

VOLUME 2
Manual of Procedures for the

Procurement of Goods and
Services
Page i
MANUAL OF PROCEDURES FOR THE PROCUREMENT OF GOODS AND

SERVICES ......................................................................................................1
ABBREVIATIONS AND ACRONYMS............................................................ VII
INTRODUCTION.............................................................................................1
SCOPE OF VOLUME 2 ........................................................................................3
PREPARING FOR THE PROCUREMENT OF GOODS AND SERVICES ..................5
PREPARING FOR THE PROCUREMENT OF GOODS AND SERVICES ..................................7
PROCUREMENT PLANNING .................................................................................8
What are the factors to be considered in planning for the procurement of Goods? ........... 8
What are “Technical Specifications”? ......................................................................10
What are the considerations in setting the technical specifications of the goods to
be procured?......................................................................................................10
What is the “Approved Budget for the Contract” or the ABC? ......................................11
What are the factors that should be considered in determining the ABC? ......................11
PREPARING THE BIDDING DOCUMENTS ..............................................................13
Legal Reference ..................................................................................................13
What are Bidding Documents?...............................................................................13
In addition to properly crafted Bidding Documents, what other practices may a
Procuring Entity observe to ensure a successful procurement?....................................14
Who are involved in the preparation of the Bidding Documents? .................................14
When should you prepare the Bidding Documents? ...................................................14
What various types and sizes of contracts may be provided in the Bidding
Documents?.......................................................................................................14
Methodology: How are the Bidding Documents prepared? .........................................15
What is a Bid Security? ........................................................................................16
What are the preferred forms of Bid Security and the corresponding amounts
required?...........................................................................................................16
What is the period of validity of Bids and the corresponding Bid Security? ....................17
In what currency shall the Bid Security be denominated?...........................................17
What happens if a bidder does not submit a Bid Security?..........................................17
How does the Procuring Entity safe-keep the Bid Security posted?...............................17
When may a Bid Security be forfeited? ...................................................................17
When should Bid Securities be returned to the bidders?.............................................18
What is a Performance Security? ...........................................................................18
When shall the Performance Security be posted by the Bidder with the LCRB?...............18
What are the preferred forms of Performance Security and the corresponding
amounts required? ..............................................................................................18
In case of amendments in the contract price, will there be a corresponding change
in the amount of the Performance Security? ............................................................19
Who are the parties involved in the posting of the Performance Security? .....................19
Methodology: How is the Performance Security posted?.............................................19
How does the Procuring Entity safe-keep the Performance Security posted? ..................19
When may the Performance Security be forfeited? ....................................................20
When may the Performance Security be released?....................................................20
CONDUCT OF THE PRE-PROCUREMENT CONFERENCE ..............................................21
Legal Reference ..................................................................................................21
What is a Pre-procurement Conference? .................................................................21
Why is a Pre-procurement Conference necessary? ....................................................21
When do you conduct a Pre-procurement Conference? ..............................................21
Who calls for a Pre-procurement Conference? ..........................................................21
Who are involved in the Pre-procurement Conference? ..............................................21
What should a Pre-procurement Conference achieve?................................................22
THE PROCUREMENT SERVICE OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT AND THE PHILIPPINE GOVERNMENT ELECTRONIC
PROCUREMENT SYSTEM ..............................................................................23
THE PS-DBM AND THE PHILGEPS ...................................................................25
DepED Manual of Procedures for the Procurement of Goods and Services

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What is the mandate of the PS-DBM? .....................................................................25

What is the policy of the Government with respect to the use of the PhilGEPS for
the procurement of goods? ...................................................................................25
What present features of the PhilGEPS and the PS-DBM website are of special
relevance to the procurement of goods? .................................................................26
Methodology: How does a Procuring Entity procure through the PS-DBM?.....................26
INSTRUCTIONS ON THE PROCEDURAL STEPS FOR THE PROCUREMENT
OF GOODS AND SERVICES ...........................................................................29
COMPETITIVE BIDDING ..................................................................................31
What is Competitive Bidding?................................................................................31
STEP 1 ADVERTISE AND POST AN INVITATION TO APPLY FOR ELIGIBILITY AND
TO BID (IAEB) ............................................................................................32
Legal Reference ..................................................................................................32
What is the IAEB? ...............................................................................................32
Why do you post an IAEB? ...................................................................................32
What must an IAEB contain?.................................................................................32
When, where, and for how long must you post an IAEB? ...........................................33
Who shall ensure that the advertising/posting requirements of the IAEB are
complied with? ...................................................................................................34
Methodology: How are IAEBs advertised and posted? ...............................................34
STEP 2 ISSUE THE BIDDING DOCUMENTS .........................................................36
Legal Reference ..................................................................................................36
When must the bidding documents be made available to prospective bidders? ..............36
How much should prospective bidders pay for the Bidding Documents? ........................36
Methodology: How are the Bidding Documents issued? .............................................37
What are the responsibilities of a prospective bidder with regard to the Bidding
Documents?.......................................................................................................37
STEP 3 CALL A PRE-BID CONFERENCE AND, IF NECESSARY, ISSUE
SUPPLEMENTAL/BID BULLETINS ......................................................................39
Legal Reference ..................................................................................................39
What is a Pre-bid Conference?...............................................................................39
When do you hold a Pre-bid Conference? ................................................................39
Who are involved in the Pre-bid Conference? ...........................................................39
How should the participants conduct themselves during the Pre-bid Conference
and other stages of the procurement process? .........................................................40
Methodology: How is the Pre-bid Conference conducted? ...........................................40
What happens if there is a need for clarification or interpretation on the Bidding
Documents after the Pre-bid Conference had been held? ...........................................40
Who are involved in the Issuance of the Supplemental/Bid Bulletin? ............................41
Methodology: How is a Supplemental/Bid Bulletin issued?..........................................41
STEP 4 RECEIVE AND OPEN THE ELIGIBILITY AND BID ENVELOPES ........................43
Who may be eligible to participate in a public bidding for goods?.................................43
Are foreign suppliers allowed to bid? ......................................................................44
When is a prospective bidder eligible to bid?............................................................46
What are the minimum eligibility requirements? .......................................................46
What are the eligibility requirements of a prospective foreign bidder? ..........................50
What is the purpose of requiring an NFCC, a credit line or a certificate of a Hold-
out on Cash Deposit that is equal to the ABC?..........................................................50
How and when must the Eligibility Envelope be submitted? ........................................50
What happens if a bidder fails to submit its eligibility envelope and bid on the
date, time and place indicated in the IAEB? .............................................................50
When should the eligibility envelope be opened? ......................................................50
What is a Bid? ....................................................................................................51
What are the contents of the Technical Proposal? .....................................................51
What are the contents of the Financial Proposal? ......................................................52
When should Bids be submitted? ...........................................................................52
How should the envelopes be submitted and received?..............................................52
Who are involved in the receipt and opening of eligibility envelopes and bids? ...............52

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Methodology: How are the eligibility and bid envelopes received, opened and
examined?.........................................................................................................53
What happens if only one bidder submits its eligibility and bid envelopes? ....................55
What can a prospective bidder do if it is found ineligible or declared non-compliant
with the technical or financial requirements? ...........................................................55
What happens if questions/doubts have been raised about the eligibility of a
prospective bidder after it had been declared as eligible? ...........................................56
What happens if only one bidder is declared eligible? ................................................56
What is disqualification?.......................................................................................56
Other than a declaration of ineligibility, is there another way by which a
manufacturer, supplier or distributor may be disqualified from bidding? .......................56
What happens if no prospective bidder is declared eligible? ........................................57
What happens if only one bidder passes the Preliminary Examination of Bids? ...............58
What happens if a bidder fails to comply with the Technical and Financial
requirements of the Bid? ......................................................................................58
Can a bidder modify or withdraw its bid? ................................................................58
STEP 5 EVALUATE THE BIDS ..........................................................................59
Legal Reference ..................................................................................................59
What is the purpose of Bid Evaluation? ...................................................................59
When should the bids be evaluated? ......................................................................59
Who are involved in the Bid Evaluation Process? ......................................................59
Methodology: How are bids evaluated? ..................................................................59
Are there special privileges for cooperatives in the supply of goods to government
entities? ............................................................................................................61
What may be done if all prospective bidders are unable to comply with the
requirement of having a single contract whose value is at least fifty percent (50%)
of the ABC of the project to be bid?........................................................................61
What happens if a bidder does not accept the arithmetical corrections done by the
BAC on its bid? ...................................................................................................62
What happens if no bid complies with all bid requirements? .......................................62
How shall Domestic Preference be applied during bid evaluation? ................................62
What rules govern the lease of Computers, Communications, Information and
Other Equipment? ...............................................................................................64
STEP 6 POST-QUALIFY .................................................................................65
Legal Reference ..................................................................................................65
What is Post-qualification?....................................................................................65
What does Post-qualification entail? .......................................................................65
When should Post-qualification be conducted? .........................................................66
Who are involved in the conduct of Post-qualification?...............................................66
Methodology: How is Post-qualification conducted? ..................................................66
What happens if a bidder is found to have been included in any government
blacklisted suppliers?...........................................................................................67
What happens if a bidder or its employees is related within the third civil degree
of consanguinity to the HOPE or any officials or employees of the Procuring Entity
with direct access to information that may substantially affect the results of the
bidding? ............................................................................................................67
What happens if a bidder is found to have been committed an act that constitutes
fraud or misrepresentation or to have colluded with others for the purpose of
influencing the outcome of the bidding? ..................................................................67
What happens if the bidder with the LCB/SCB fails Post-qualification? ..........................67
What happens if all qualified bidders fail Post-qualification?........................................68
When may the Procuring Entity exercise its right to reject bids, declare a failure of
bidding, or not award the contract?........................................................................68
STEP 7 AWARD THE CONTRACT ......................................................................70
Legal Reference ..................................................................................................70
What is the rule on Contract Award? ......................................................................70
What is the Timeline for Contract Award?................................................................70
Who are involved in the Award of the Contract? .......................................................70
Methodology: How is a contract awarded?..............................................................71
What are the forms of Performance Security and the corresponding amounts
required?...........................................................................................................71

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STEP 8 HAVE THE CONTRACT SIGNED AND APPROVED AND ISSUE THE NOTICE
TO PROCEED (NTP).......................................................................................73
Legal Reference ..................................................................................................73
Who are involved in Contract Signing and Approval; and Issuance of the NTP? ..............73
Methodology: How is the contract prepared, approved and NTP issued? .......................73
What documents form part of the contract?.............................................................74
What are the rules governing the review and approval of government contracts?...........75
When is a contract “effective”? ..............................................................................75
What happens if the bidder with the LCRB or SCRB refuses or is unable, through
its own fault, to post the performance security and sign the contract within the
prescribed period? ..............................................................................................76
What happens if the failure of the bidder with the LCRB or SCRB to sign the
contract within the prescribed period is not its own doing? .........................................76
What happens if the bidder being considered for award does not accept the NTP? ..........76
TWO-STAGE COMPETITIVE BIDDING .................................................................77
What is Two-Stage Competitive Bidding? ................................................................77
What are the instances when a Procuring Entity may employ the Two-Stage
Competitive Bidding Procedure? ............................................................................77
What is the timeline for the conduct of a Two-Stage Competitive Bidding? ....................77
Who are involved in the Two-Stage Competitive Bidding process? ...............................78
Methodology: How is the Two-Stage Competitive Bidding process conducted? ...............78
What happens if no prospective bidder submits a Letter of Intent? ..............................79
INSTRUCTIONS ON THE PROCEDURAL STEPS FOR THE PROCUREMENT
OF GOODS AND SERVICES ...........................................................................81
THE ALTERNATIVE METHODS FOR THE PROCUREMENT OF GOODS AND SERVICES ..........83
What is the rule on the use of alternative methods of procurement? ............................83
What are the rules on the issuance of a resolution to award in alternative methods
of procurement? .................................................................................................84
LIMITED SOURCE BIDDING ..............................................................................85
What is Limited Source Bidding?............................................................................85
When is Limited Source Bidding allowed? ...............................................................85
Who shall be invited to bid? ..................................................................................85
Who are involved in conducting the Limited Source Bidding? ......................................85
Methodology: How is procurement through the Limited Source Bidding method
conducted? ........................................................................................................86
Are bid and performance securities required for this method of procurement? ...............86
DIRECT CONTRACTING ...................................................................................87
What is Direct Contracting? ..................................................................................87
When is Direct Contracting allowed?......................................................................87
How can Direct Contracting be justified? .................................................................88
Who are involved in procurement through Direct Contracting? ....................................88
Methodology: How is Direct Contracting conducted?.................................................88
Should a Procuring Entity require a performance security under this method of
procurement?.....................................................................................................89
REPEAT ORDER .............................................................................................90
What is Repeat Order? .........................................................................................90
When is Repeat Order Allowed? .............................................................................90
Who are involved in procurement through Repeat Order? ..........................................91
Methodology: How is procurement through Repeat Order done?.................................91
Should a Procuring Entity require a performance security under this procurement
method?............................................................................................................93
SHOPPING ...................................................................................................94
What is Shopping? ..............................................................................................94
When is Shopping allowed? ..................................................................................94
Who are involved in the conduct of procurement through Shopping?............................95
Methodology: How is procurement through the Shopping method done? .....................95
Are performance securities still required for procurements through the Shopping
method?............................................................................................................97

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NEGOTIATED PROCUREMENT ............................................................................98

What is Negotiated Procurement? ..........................................................................98
When is Negotiated Procurement allowed? ..............................................................98
Who are the parties involved in Negotiated Procurement? ..........................................99
Methodology: How is Negotiated Procurement undertaken?.......................................99
Are bid and performance securities required for purchases made through
Negotiated Procurement? ................................................................................... 107
GUIDELINES ON CONTRACT IMPLEMENTATION FOR THE
PROCUREMENT OF GOODS AND SERVICES ................................................109
CONTRACT IMPLEMENTATION FOR THE PROCUREMENT OF GOODS AND SERVICES .......111
Legal Reference ................................................................................................ 111
What is covered by Contract Implementation? ....................................................... 111
When is a contract deemed effective?.................................................................. 111
WARRANTY ................................................................................................112
Legal Reference ................................................................................................ 112
What is the purpose of a Warranty? ..................................................................... 112
What is the Warranty requirement for Goods?........................................................ 112
When are Goods considered defective? ................................................................. 112
Are there instances where partial release or reduction of the required warranty
may be done by the Procuring Entity? .................................................................. 113
AMENDMENT TO ORDER ................................................................................114
What is an Amendment to Order? ........................................................................ 114
When can the Procuring Entity issue an Amendment to Order? ................................. 114
Are corresponding adjustments in contract price and/or delivery schedules
allowed?.......................................................................................................... 115
What rules shall govern price adjustments due to Amendment to Order?.................... 115
Who are involved in the issuance of an Amendment to Order? .................................. 115
Methodology: How is an Amendment to Order issued?............................................ 116
Can a supplier proceed with the work under an Amendment to Order even if such
Amendment to Order has not yet been approved? .................................................. 116
SUSPENSION OF DELIVERY ............................................................................118
Legal Reference ................................................................................................ 118
What are the grounds for suspension of delivery or contract implementation? ............. 118
Are corresponding adjustments in contract price and/or delivery schedule allowed?...... 118
When can the Supplier/ Manufacturer/ Distributor resume delivery and/or contract
implementation? ............................................................................................... 118
Who are the parties involved in the issuance of a Suspension Order? ......................... 118
Methodology: How is a Suspension Order issued? ................................................... 119
DELAYS IN DELIVERY AND LIQUIDATED DAMAGES ..............................................120
Legal Reference ................................................................................................ 120
What is the rule on the applicable period for the delivery of goods or performance
of services? ..................................................................................................... 120
What are Liquidated Damages? ........................................................................... 120
What are the grounds for the imposition of Liquidated Damages?.............................. 120
What is the amount of Liquidated Damages that may be imposed upon the
supplier? ......................................................................................................... 120
Methodology: How are Liquidated Damages imposed? ............................................ 121
OTHER RULES AND GUIDELINES .....................................................................122
Legal Reference ................................................................................................ 122
Incidental Services ............................................................................................ 122
Spare Parts...................................................................................................... 122
Purchaser’s Responsibilities ................................................................................ 123
Prices 123
Payment.......................................................................................................... 126
Taxes and Duties .............................................................................................. 129
Subcontracts.................................................................................................... 130
Standards........................................................................................................ 130
Packaging........................................................................................................ 130

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Insurance ........................................................................................................ 131

Transportation.................................................................................................. 131
Inspection and Tests ......................................................................................... 132
Intellectual Property Rights................................................................................. 133
Limitations of Liability ........................................................................................ 133
Termination for Default ...................................................................................... 133
Termination for Insolvency ................................................................................. 134
Termination for Convenience .............................................................................. 134
Assignment...................................................................................................... 135
Blacklisting ...................................................................................................... 135
ANNEX.......................................................................................................137
ANNEX A – NEGATIVE LIST OF ISLAND-SCHOOLS/DIVISIONS ...............................139
GLOSSARY .................................................................................................143

Page vii
ABBREVIATIONS AND ACRONYMS
ABC Approved Budget for the Contract
ABM Agency Budget Matrix
APP Annual Procurement Plan
APR Agency Procurement Request
BAC Bids and Awards Committee
BDS Bid Data Sheet
BFAD Bureau of Food and Drugs
BIR Bureau of Internal Revenue
BPS Bureau of Product Standards
BSP Bangko Sentral ng Pilipinas
CDA Cooperatives Development Authority
CAF Certificate of Availability of Funds
CED Collection Enforcement Division
CIF Cost, Insurance and Freight
CIP Carriage and Insurance Paid To (named place of destination)
COA Commission on Audit
CPT Carriage Paid To (named place of destination)
CSW Complete Staff Work
DAP Development Academy of the Philippines
DBM Department of Budget and Management
DBM-PS/
PS-DBM Department of Budget and Management-Procurement Service
DDP Delivered Duty Paid (named place of destination)
DepED Department of Education
DFA Department of Foreign Affairs
DOH Department of Health
DOJ Department of Justice
DTI Department of Trade and Industry
DV Disbursement Voucher

Page viii
EFPS Electronic Filing and Payment System
E.O. Executive Order
FAP Foreign Assisted Project
FCA Free Carrier (named place)
FED Firearms and Explosives Division
GAA General Appropriations Act
GCC General Conditions of Contract
GFI Government Financial Institution
GOCC Government-owned and/or –controlled corporation
GPPB Government Procurement Policy Board
GPPB-TSO GPPB – Technical Support Office
GPRA Government Procurement Reform Act (R.A. 9184)
G.R. General Reference
HOPE Head of the Procuring Entity
IAEB Invitation to Apply for Eligibility and to Bid
ICT Information and Communication Technology
IFI International Financing Institution
IRR-A Implementing Rules and Regulations Part A of R.A. 9184
IT Information Technology
ITB Instructions to Bidders
JBIC Japan Bank for International Cooperation
JO Job Order
JVA Joint Venture Agreement
LC Letter of Credit
LCB Lowest Calculated Bid
LCRB Lowest Calculated Responsive Bid (this shall have the same meaning as
Lowest Evaluated and Responsive Bid [LERB] for IFIs)
LGU Local Government Unit
LOI Letter of Instructions
MDS Modified Disbursement Scheme
MOA Memoranda of Agreement
MOOE Maintenance and Other Operating Expenses

Page ix
NEDA National Economic and Development Authority
NFCC Net Financial Contracting Capacity
NGA National Government Agency
NOA Notice of Award
NPO National Printing Office
NSO National Statistic Office
NTC National Telecommunications Commission
NTP Notice to Proceed
PBDs Philippine Bidding Documents
PCFTR Payment Confirmation Form of Tax Return
P.D. Presidential Decree
PhilGEPS/
G-EPS Philippine Government Electronic Procurement System
PIATCO Philippine International Air Terminals Corporation
PMO Project Management Office
PNP Philippine National Police
PO Purchase Order
PPMP Project Procurement Management Plan
PR Purchase Request
R.A. 9184 Republic Act No. 9184, otherwise known as the “Government Procurement
Reform Act”
RELC Regional Educational Learning Center
RFQ Request for Quotation
SARO Special Allotment Release Order
SCB Single Calculated Bid
SCC Special Conditions of Contract
SCRB Single Calculated and Responsive Bid
SEC Securities and Exchange Commission
SMEs Small and Medium Enterprises
SOW Scope of Work
SPA Special Power of Attorney
SUCs State Universities and Colleges
TIN Tax Identification Number

Page x
TOR Terms of Reference
TSD Technical Support Division - Procurement Service - DepED
TWG Technical Working Group
VAT Value Added Tax

SECTION 1
Introduction
Page 3
Scope of Volume 2
This Manual seeks to provide its users with clear, concise, and accurate information on the
public procurement of goods and services, by discussing the steps that need to be taken
to effect such procurement in the manner prescribed by R.A. 9184, otherwise known as the
“Government Procurement Reform Act,” and its Implementing Rules and Regulations – A
(IRR-A). It also discusses important issues that may confront government officials in all
stages of goods and services procurement, from the preparation of bid documents, to the
actual bidding activity, monitoring of contract implementation and the final payment to the
supplier.
This Manual focuses on public procurement of goods. The procedures are harmonized to a
large extent with the International Financing Institutions (IFI) and bi-lateral agencies lending
to the Philippines. There are however policies which are specific to a particular lending
agency or grantor and the document highlights the main differences. It should however be
noted that the loan, credit or grant agreement with the relevant IFIs and/or bilaterals and
their respective Guidelines will be the overriding factors governing the foreign assisted
projects.
GOODS and SERVICES 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. The term refers to, among other subjects, 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. It also
refers to trucking, hauling, janitorial, security, printing services and related or analogous
services (e.g. rental of venues and facilities, catering services, short term services not
considered as consulting 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.
(IRR-A Section 5[k])
Likewise, this Manual shall be used together with the Philippine Bidding Documents (PBD) for
Goods and Services prescribed by the Government Procurement Policy Board (GPPB).

SECTION 2
Preparing for the Procurement
of Goods and Services
Page 6

Page 7
Preparing for the Procurement of Goods and Services
Volume I of this Manual contains an extensive discussion of Procurement Planning as a

general concern for all kinds of government procurement, while this volume mainly focuses on
concerns that are particular to the procurement of goods and services. As such, it is
advisable for the reader to refer to the pertinent discussions in Volume I before and during
the reading of this Section.
Preparing makes for higher efficiency and efficacy. It enables the procurement officials
concerned to anticipate the onset of events and, as a consequence, better calibrate their
response to them. Having a better appreciation of forthcoming events gives these officials the
opportunity to test a range of possible courses of action, choose the best and most feasible of
these, and identify measures to put them into action. Ultimately, it would enable them to
determine the best manner by which such measures are to be implemented, ensuring that
their individual and collective impacts are optimized at the least cost.
Preparing for procurement basically involves three (3) activities: procurement planning,
preparation of the bidding documents, and the conduct of the pre-procurement conference.
Procurement planning entails ensuring that plans for procurement are linked to budgets,
preparing the Project Procurement Management Plan (PPMP) and consolidating all PPMPs into
the Annual Procurement Plan (APP). Formulating the PPMP involves identifying the
procurement project requirements, writing the technical specifications, determining the
Approved Budget for the Contract (ABC), identifying the schedule of milestone activities, and
determining the method of procurement.
The PPMP is then transformed into the bidding documents, which ought to contain all the
information a prospective bidder needs to prepare its bid. Therefore, in preparing the bidding
documents, one has to ensure that these accurately and comprehensively reflect the main
elements of the PPMP. One also has to make sure that the documents are of the kind and
form prescribed by the IRR-A and this Manual.
The pre-procurement conference is the forum where all officials of the Procuring Entity
involved in the project meet to discuss all aspects of the said project to determine the
readiness of the Procuring Entity to undertake the procurement. The conference focuses on
the technical specifications, the ABC, the appropriateness and applicability of the
recommended method of procurement, and the availability of pertinent budget releases,
among others.

Page 8
Procurement Planning
Planning of the procurement of goods and services shall be in accordance with the principles
of government procurement as provided for under Section 3 Volume I of this Manual.
What are the factors to be considered in planning for the procurement of

Goods?
The Project Management Office (PMO) or the end-user unit should consider the following
factors which have an impact on contract packaging, the procurement method to be used, and
other components of Procurement Planning as discussed in Volume 1 of these Manuals:
1. Nature of the Goods to be Procured. Goods may be classified into different

categories, such as:
a. common-use supplies;
b. inventory items;
c. non-common use supplies (which may include equipment or supplies that are
project-specific); or
d. services.
“Common-use supplies” as defined in the IRR-A are those goods, materials, and
equipment that are repetitively used in the day-to-day operations of procuring entities
in the performance of their functions. For the purpose of the IRR-A, common-use
supplies shall be those included in the Price List of the PS-DBM. (IRR-A Section 5
[g]) Common-use supplies should be procured from the PS-DBM on a quarterly
basis.
“Inventory items” include common-use supplies, goods, materials and equipment

including textbooks and school furniture that are not in the Price List of the PS-DBM
but are regularly used and kept on stock by the Procuring Entity. Inventory items
that are not “common-use supplies” may be procured from commercial sources, or
suppliers other than the PS-DBM. The bulk purchase of these goods may be a good
strategy to lower costs and achieve administrative efficiency. Likewise, it is a good
practice to monitor the consumption of these items and identify when re-orders are
necessary to ensure “round-
the-clock” availability and to
Let’s make things easier avoid over-the-counter
purchases or purchases using
petty cash funds.
On using the PS-DBM for procurement
“Non-common use supplies”
are those goods, materials,
The Procuring Entity must consider the services of the and equipment that are neither
PS-DBM in the procurement of all kinds of supplies. This “common-use supplies” nor
will free it from the tediousness of attending to “inventory items”, and may
recurring transactions, and provide greater time for the include those goods, materials
procurement of high value, highly specialized and equipment that are
requirements for its more significant projects. required by the Procuring
Entity for a specific project
only. These shall include, but
are not limited to, food, medicine, medical devices and equipment. Since these are
not used regularly, and may even be highly specialized, these may be procured

Page 9
individually. There may be cases, however, when the APP will reveal that similar
items are required for different projects, and in order to minimize costs, these may be
procured under a single contract. For goods that are available off-the-shelf and are of
relatively low value, shopping or negotiated procurement may be resorted to,
provided the conditions for the use of this alternative mode of procurement are
present.
“Services” refer to general support services, except consulting services and

infrastructure projects, which may be needed in support of the transaction of public
businesses or in the pursuit of any government undertaking, project or activity.
These include 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 (e.g. rental of venues and facilities,
catering services, attendance to trainings and seminars, short term services not
considered as consulting services). The terms “related services” 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.
2. Availability of the Goods or Services in the Market. The identification of the

mode of procurement is sometimes dependent on the supply market. The
procurement unit or office should, therefore, study the supply market to determine
the availability of the goods. Goods that are universally available should be procured
through public bidding. However, there are instances wherein alternative modes of
procurement may be applicable.
Goods that are available seasonally, or those that are to be manufactured specially for
the Procuring Entity only upon its order, would require more intensive planning in
terms of timelines for procurement, taking into consideration manufacturing lead-
time.
Unless otherwise amended, twenty-five (25%) of the amount released for the
procurement of desks, furniture and equipment shall be allocated to procure the same
which were manufactured and fabricated by cooperatives. At least ten percent (10%)
of this twenty-five (25%) shall be allocated to cooperatives of persons with disabilities
and the remaining fifteen percent (15%) to other types of cooperatives. (Section 11
of the Special Provisions in the General Appropriations Act (GAA))
In addition to Section 11 of said Provision, arts and trade schools and other similar
technical and
vocational high
schools which possess
the technical Let’s make things easier
capabilities shall be
given preference in On Ordering Agreements
the manufacturing
and fabrication of
desks, furniture and Under GPPB Resolution No. 06-2005, ordering
equipment. (DepED agreements may be resorted to in situations where the
Order No. 48, s. procuring entity intends to procure non-inventory parts
2007) necessary to maintain the operational effectiveness of
existing major equipment. The requirement thereof,
3. Obsolescence, although identified, becomes necessary only upon the
operation, and happening of a fortuitous event. For this reason, the
maintenance of quantity and the exact time of need for said parts cannot
equipment/non- be accurately pre-determined. Therefore, for reasons of
consumable Goods. economy, keeping in stock of said parts for possible
In buying equipment, future use or by procuring them for inventory would be
the Procuring Entity disadvantageous to the government. This excludes parts
has to consider the required for routine maintenance, the volume and
operation and delivery time being determinable at an earlier period.
maintenance
requirements of the

Page 10
goods to be procured. These refer to the availability and cost of spare parts in the
local market, the skills required in operating and maintaining the equipment, and
similar considerations. For example, if spare parts and maintenance services are not
available locally, or, if available, are very expensive, the Procuring Entity may
consider buying, instead, the substitute or equivalent product. It should be noted,
however, that spare parts must be available locally. On the other hand, if the items
being procured are high-technology items, or are highly specialized (e.g., fighter jets)
and cannot be satisfactorily substituted by other products, the Procuring Entity may
consider including the supply of spare parts, consumables and/or maintenance
services for a specified period of time, as part of the contract package.
Obsolescence could also be a factor in deciding whether to lease or to buy equipment.

It may be more economical for the Procuring Entity to consider the leases of
equipment that are easily rendered obsolete, like Information Technology (IT)
equipment. (Please refer to the last paragraph on bid evaluation on this Manual)
The Procuring Entity shall also take into consideration the warranty requirements for
goods under Section 62.1 of IRR-A.
What are “Technical Specifications”?
The term “technical specifications” refers to the physical description of the goods or services,
as well as the Procuring Entity’s requirements in terms of the function, performance,
environmental interface and design standard requirements to be met by the goods to be
manufactured or supplied, or the services to be rendered. The technical specifications must
include the testing parameters for goods, when such testing is required in the contract.
“Functional description” is the description of the functions for which the Goods are to be
utilized. For example, a ballpen is expected to write 1.5 km of straight, continuous lines.
“Performance description” refers to the manner that the Goods are required to perform the
functions expected of them. For example, a ballpen that writes at 1.5km should do so
continuously and smoothly, without skipping, and with the color of the ink being consistent.
“Environmental interface” refers to the environment in which the required functions are
performed at the desired level. For example, a ballpen should write continuously for 1.5km
on pad paper or bond paper, but not necessarily on wood or on a white board.
“Design” refers to the technical design or drawing of the goods being procured. A design
standard is particularly useful in cases where the goods procured are specially manufactured
for the Procuring Entity.
What are the considerations in setting the technical specifications of the

goods to be procured?
In determining the technical specifications of the goods it will procure, the PMO or end-user
unit must consider the objectives of the project or the procurement at hand, and identify the
standards that should be met by the goods in terms of function, performance, environmental
interface and/or design. It must also conduct a market survey that will include a study of the
available products or services, industry developments or standards, product or service
standards specified by the authorized government entity like the Bureau of Product Standards
(BPS), ISO9000 or similar local or international bodies. As a rule, Philippine standards, as
specified by the BPS, must be followed. For products where there are no specified Philippine
standards, the standards of the country of origin or other international body may be
considered. Product brochures, technical publications, industry newsletters, the industry
itself, as well as the Internet, are good sources of product information. The conduct of a
comparative study of the options available in the market and their relevance to the
requirements of the Project is highly recommended.
In-house experts who are part of the TWG, if any, or the PMO must likewise be tapped to
provide technical advice. If there are no in-house experts available to provide advice on

Page 11
highly technical Goods, the Procuring Entity may hire consultants to assist it in developing the
technical specifications for the procurement at hand.
It is important to note that the use of brand names is prohibited by the IRR-A. Specifications
for the procurement of goods shall be based on relevant characteristics and/or performance
requirements. Hence, a generic description of the product or service must be used.1
What is the “Approved Budget for the Contract” or the ABC?
The ABC is the budget for the contract duly approved by the Head of the Procuring Entity
(HOPE), as provided for in:
1. The GAA and/or continuing appropriations,;
2. Memoranda of Agreement/Understanding with donor agencies, local or foreign, funds

of which are transferred to DepED.
Thus, the ABC referred to in R.A. 9184 and its IRR-A basically refers to the proposed budget
for the project approved by the HOPE based on the APP as consolidated from various PPMPs.2
What are the factors that should be considered in determining the ABC?
In determining the ABC, the PMO/end-user unit, with the assistance of the TWG,(when
necessary), must consider the different cost components, namely:
1. The cost or market price of the product or service itself;
2. Incidental expenses like freight, insurance, taxes, installation costs, training costs, if
necessary, and cost of inspection;
3. The cost of money, to account for government agencies usually buying on credit
terms;
4. Inflation (based on Wholesale Consumer Price Index) and/or as determined by the

Authorized sources like Bangko Sentral ng Pilipinas (BSP), National Economic
Development Authority (NEDA) or National Statistics Office (NSO);
5. Quantities, considering that buying in bulk usually means lower unit prices; and
6. The supply of spare parts and/or maintenance services, if these are part of the
contract package.
If the project or contract has a foreign component, it is also best to include a currency
valuation adjustment factor, in order to address foreign exchange rate fluctuations between
the planning phase and the actual procurement date. To determine the factor to be used, the
PMO or end-user unit may request for guidance from the BSP, or refer to BSP forecasts, if
available.
1
FAPs guidelines generally require the procuring entity to specify internationally accepted standards such as those issued
by the International Standards Organization with which the equipment or materials or workmanship should comply,
except that where such international standards are unavailable or are inappropriate, national standards may be
specified. For this reason, the procuring entity should refer to the pertinent provisions of the applicable standard bidding
documents for the project. For example, although specifications should be based on relevant characteristics and/or
performance requirements, and references to brand names, catalog numbers, or similar classifications should be
avoided, in certain instances, it may be necessary to quote a brand name or catalog number of a particular manufacturer
to clarify an otherwise incomplete specification, the words “or its equivalent” should be added after such reference. The
specifications shall then permit the acceptance of offers for goods which have similar characteristics and which provide
performance at least substantially equivalent to those specified.
2
For FAPs, reference to the standard bidding documents for the project should be made to determine the applicability of
the ABC.

Page 12
If the sum of the different cost components is lower than the appropriation for the
procurement, then the ABC should be equal to the sum of the cost components. If the
resulting sum is higher than the appropriation, it is advisable to review the technical
specifications and the computation of the ABC. In any case, the ABC should not exceed the
appropriation.
In case of adjustment of ABC due to failure of bidding, GPPB Resolution 07-2005 provides that
the ABC may be adjusted upwards only under the following conditions:
a. There has been failure of bidding for the second time due to all bids submitted
exceeding the ABC or no bids have been submitted, or failure in the negotiated
procurement after two failed biddings; and
b. There has been previous modification of the terms, conditions and specifications of
the project based on Section 35 of the IRR-A, except when the project is indivisible,
where the technical component is an integral part of the whole that cannot be
reduced, and it constitutes the minimum requirement of the Procuring Entity for
which there are no substitutes.
GPPB Resolution 07-2005 further states that the ABC may be adjusted downwards if there is a
need to reflect actual market prices and/or scope of work (SOW) or suit actual field conditions
of the project. Upon adjustment of ABC, the Procuring Entity must conduct re-bidding with
re-advertisement/posting. Any succeeding adjustment of the ABC shall be in accordance with
these guidelines.

Page 13
Preparing the Bidding Documents
Legal Reference
IRR-A Section 17 provides the rules in relation to the preparation of the bidding documents.
What are Bidding Documents?
Bidding documents are documents issued by the Procuring Entity to provide prospective
bidders all the necessary information that they need to prepare their bids. (IRR-A Section 5
[f]) These clearly and adequately define, among others:
1. The objectives, scope and expected outputs and/or results of the proposed contract;
2. The technical specifications of Goods to be procured;
3. Expected contract duration, the estimated quantity in the case of procurement of

goods, delivery schedule and/or time frame;
4. The obligations, duties and/or functions of the winning bidder; and
5. The minimum eligibility requirements of bidders, such as track record to be

determined by the HOPE. (IRR-A Section 17.2)
What are the contents of Bidding Documents?
The PBDs contain the following:3
1. Invitation to Apply for Eligibility and to Bid (IAEB);
2. Instructions to Bidders (ITB);
3. Bid Data Sheet (BDS);
4. General Conditions of Contract (GCC);
5. Special Conditions of Contract (SCC);
6. Schedule of Requirements;
7. Technical Specifications of the Goods and Services to be procured; and
8. Sample Forms as annex.
The specifications and other terms in the bidding documents shall reflect minimum
requirements. A bidder may, therefore, be allowed to submit a superior offer. However, in
the evaluation of the bids, no premium or bonus must be given as a result of this superior
offer. (IRR-A Section 17.4) This rule is based on the nature of the procedure used to
evaluate the technical proposals – a “pass/fail” method - such that the presence or absence of
the technical requirements is the sole basis for determining technical compliance. After
having established compliance with the technical specifications, the next factor to consider
would then be the price or financial bid.
3
The contents of the standard bidding documents for FAPs may vary.

Page 14
In addition to properly crafted Bidding Documents, what other practices

may a Procuring Entity observe to ensure a successful procurement?
1. All prospective bidders should be provided the same information, and should be
assured of equal opportunities to obtain additional information on a timely basis.
2. Procuring entities should provide reasonable access to project sites for visits by
prospective bidders.
3. For complex supply contracts, particularly for those requiring refurbishing existing
equipment, a pre-bid conference may be arranged whereby potential bidders may
meet with the Procuring Entity’s representatives to seek clarifications (in person or
online). Minutes of the conference should be provided to all prospective bidders (in
hard copy or sent electronically).
4. Any additional information, clarification, correction of errors, or modifications of

bidding documents should be sent to each recipient of the original bidding documents
in sufficient time before the deadline for receipt of bids to enable bidders to take
appropriate actions. If necessary, the deadline should be extended.
Who are involved in the preparation of the Bidding Documents?
The following are involved in the preparation of the bidding documents:
1. The end-user unit/PMO;
2. The BAC;
3. The TSD/TWG, if any;
4. Consultants, if any; and
5. The BAC Secretariat.
When should you prepare the Bidding Documents?
The bidding documents should be prepared by the BAC Secretariat, in coordination with the
end-user/PMO (End-user/PMO, in coordination with the BAC/BAC Secretariat, in the case of
the Central Office) in time for presentation at the pre-procurement conference. After the
conference, and before the advertisement and/or posting of the IAEB, it should be ascertained
that these documents must be ready and available for issuance to prospective bidders on the
day the IAEB is first advertised.
What various types and sizes of contracts may be provided in the Bidding
Documents?
The bidding documents should clearly state the type of contract to be entered into and
contain the proposed contract provisions appropriate therefore. The most common types of
contracts provide for payments on the basis of a lump sum, unit price, or combinations
thereof.4
4
Reimbursable cost contracts are acceptable to IFIs only in exceptional circumstances such as conditions of high risk or
where costs cannot be determined in advanced with sufficient accuracy. Such contracts should include appropriate
incentives to limit costs.

Page 15
The size and scope of individual contracts will depend on the magnitude, nature, and location
of the project, for example:
1. For projects requiring a variety of goods and works, separate contracts may be
awarded for the supply and/or installation of different items of equipment and plant
(“plant” refers to installed equipment, as in a production facility) and for the works.
2. For a project requiring similar but separate items of equipment or works, bids may be
invited under alternative contract options that would attract the interest of both small
and large firms, which could be allowed, at their option, to bid for individual contracts
(slices/items) or for a group of similar contracts (package). All bids and combinations
of bids should be received by the same deadline and opened and evaluated
simultaneously so as to determine the bid or combination of bids offering the lowest
calculated cost to the Procuring Entity.
Methodology: How are the Bidding Documents prepared?
The following procedures are followed in the preparation of the bidding documents:
1. The end-user/PMO provides the BAC Secretariat all the necessary documents and
information relative to the procurement at hand:
a. Authority to procure/purchase with the corresponding budget allotment;
b. Approved Purchase Request (PR) containing the specification of the items and
estimated cost, validated/analyzed by TWG, if any, including recommendation
from Clearing House (e.g. ICT Technical Committee in case of IT equipment
(DepED Order #01, s. 2007);
c. Draft Bidding Documents.
2. The BAC Secretariat, and the end-user/PMO,, with the assistance of the TSD/TWG,
consultants, if any shall ensure that the bidding documents followed the standard
forms and manuals prescribed by the RA 9184 (IRR-A Section 17.1). The bidding
documents must contain the following information:
a. ABC, and source of funds;
b. Date, time and place of the pre-bid conference (where applicable), submission
of bids and opening of bids;
c. Eligibility requirements;
d. ITB, including criteria for eligibility, bid evaluation and post-qualification,

submission of bids, and opening of bids;
e. SOW, for services;
f. Technical Specifications, which must not contain any reference to brand

names;
g. Form of Bid, Price Form, and List of Goods or Bill of Quantities;
h. Delivery Time or Completion Schedule;
i. Form, amount and validity period of Bid Security;
j. Form and amount of Performance Security and Warranty; and
k. Form of Contract, GCC and SCC.

Page 16
In the supplemental bid bulletin, the Procuring Entity may require additional document
requirements or specifications, where applicable and necessary for prospective bidders to
prepare their respective bids. The bidding documents, as amended, shall subsequently form
an integral part of the contract. (IRR-A Section 17.3) Statements not made in writing at
any stage of the bidding process shall not modify the bidding documents.
Any government action which permits substantial variance between the conditions under
which the bids are invited and the contract executed after the award shall be unlawful (Agan,
Jr. vs. PIATCO, G.R. No. 155001, January 21, 2004).
What is a Bid Security?
A bid security is a guarantee that the successful bidder will:
1. Not default on its offer, and
2. Enter into contract with the Procuring Entity within ten (10) calendar days, or less as
indicated in the ITB, from receipt of the Notice of Award (NOA), and furnish the
performance security provided for in Section 39 of the Act and its IRR-A. (IRR-A
Section 27.1)
A bid security must be submitted with every bid. It must be operative on the date of bid
opening, and payable to the Procuring Entity.
What are the preferred forms of Bid Security and the corresponding
amounts required?
The preferred forms of bid security and the corresponding amounts required are the following:
FORM OF BID SECURITY MINIMUM AMOUNT in %

of the ABC to be bid
a. Certified check, cashier’s check/manager’s check, 1% of ABC
bank draft; or
b. Irrevocable letter of credit issued by a reputable 1% of ABC
commercial bank or in the case of an irrevocable
letter of credit issued by a foreign bank, the same
shall be confirmed or authenticated by a reputable
local bank; or
c. Bank guarantee confirmed by a reputable local bank 1 ½% of ABC
or in the case of a foreign bidder, bonded by a
foreign bank; or
d. Foreign government guarantee as provided in an 100% of ABC
executive, bilateral or multilateral agreement, as
may be required by the HOPE concerned.
For purposes of determining the amount of the bid security in biddings with lots or items,
whereby a bidder submits a bid for more than one lot or item, the bid security shall be based
upon the sum of the ABC for each of the lots or items for which bids are submitted.
The Procuring Entity must specify in the bidding documents the preferred forms of bid security
and the respective amounts thereof. The bidder must choose which among the preferred
forms it shall submit.
For IFI Funded Projects, applicable percentage of the bid may be applied.

Page 17
What is the period of validity of Bids and the corresponding Bid Security?
Bids and bid securities must be valid for a reasonable period of time as determined by the
HOPE. This time period must be indicated in the bidding documents, but in no case should it
exceed one hundred twenty (120) calendar days from the date of the opening of bids. (IRR-A
Section 28) The recommended norm for bid validity is ninety (90) calendar days with the
corresponding bid security valid for one hundred twenty (120) calendar days to provide
reasonable time (thirty (30) calendar days) for the Procuring Entity to act if the security is to
be called.
Should it become necessary to extend the validity of the bids and the bid securities, the
Procuring Entity should request in writing all those who submitted bids for such extension
before the expiry date thereof. Bidders shall have the right to refuse to grant such extension
without forfeiting their bid securities. The bid security of bidders who refuse to grant the
Procuring Entity’s request for an extension of the validity of their respective bid securities will
have these securities returned to them. (IRR-A Section 37.2.2) However, they are deemed
to have waived their right to further participate in the bidding.
In what currency shall the Bid Security be denominated?
The bid security shall be denominated in Philippine currency (IRR-A Section 27.3), except in
case of foreign bidders, which are allowed to submit foreign currency denominated bids, their
bid securities shall be converted to Philippine currency based on the exchange rate prevailing
on the day of the bid opening.
What happens if a bidder does not submit a Bid Security?
Its bid will be rejected.
How does the Procuring Entity safe-keep the Bid Security posted?
The Cash Collecting Officer should be present during Bid Opening to accept the Bid Security
and issue the following:
1. Official Receipt for local currency denominated securities in the form of Cashier’s
Check, Manager’s Check, Bank Draft and Certified Check;
2. Acknowledgement Receipt for local or foreign denominated securities in the form of

irrevocable Letter of Credit, Bank Guarantee and Foreign Government Guarantee.
When may a Bid Security be forfeited?
A bidder’s bid security may be forfeited when:
1. The bidder withdraws its bid beyond the deadline therefore;
2. The bidder does not accept correction of arithmetical errors;
3. The bidder being considered for award does not accept the award or does not sign the
contract within the period prescribed in the bidding documents;
4. The bidder being post-qualified did not provide the BAC the required clarifications; or
5. The bidder is proven to commit any of the acts under Sections 65 and 69 of R.A. 9184
and its IRR-A.

Page 18
When should Bid Securities be returned to the bidders?
Bid Securities shall be returned only after the bidder with the Lowest Calculated Responsive
Bid has signed the contract and furnished the Performance Security, but in no case later than
the expiration of the Bid Security validity period indicated in the ITB. No bid securities shall be
returned to bidders after the opening of bids and before contract signing, except to those
that:
1. failed to comply with any of the requirements to be submitted in the first bid
envelope of bid or
2. were post-disqualified and submitted a written waiver of its right to file a motion for
reconsideration and/or protest.,(IRR-A Section 27.4)
What is a Performance Security?
A performance security is a guarantee that the winning bidder will faithfully perform its
obligations under the contract prepared in accordance with the bidding documents. (IRR-A
Section 39.1) It must be posted in favor of the Procuring Entity, and will be forfeited in the
latter’s favor in the event it is established that the winning bidder is in default in any of its
obligations under the contract. (IRR-A Section 39.2)
When shall the Performance Security be posted by the Bidder with the
LCRB?
Within a maximum period of ten (10) calendar days from the receipt of the NOA from the
Procuring Entity, and in all cases upon the signing of the contract, the successful bidder
should furnish the Procuring Entity with the performance security in accordance with the
Conditions of Contract, and in the Form prescribed in the Bidding Documents. (IRR-A
Section 39.1) The performance security forms part of the contract. (IRR-A Section
37.2.3)
What are the preferred forms of Performance Security and the

corresponding amounts required?
The forms of bid security and the corresponding amounts required are the following: 5
FORM OF PERFORMANCE SECURITY MINIMUM AMOUNT in

% of Total Contract
Price
a. Certified check, cashier’s/manager’s check, bank draft; 5% of contract price
or
b. Irrevocable letter of credit issued by a reputable 5% of contract price
commercial bank or in the case of an irrevocable letter
of credit issued by a foreign bank, the same shall be
confirmed or authenticated by a reputable local bank;
or
c. Bank guarantee confirmed by a reputable local bank or 10% of contract price
in the case of a foreign winning bidder, bonded by a
foreign bank; or
d. A foreign government guarantee as provided in an 100% of contract price
executive, bilateral or multilateral agreement, as may
be required by the HOPE concerned.
5
For FAPs, reference should be made to the appropriate standard bidding documents for the project in order to
determine the applicable amount and form of the performance security.

Page 19
The Procuring Entity must specify in the bidding documents the preferred forms of
performance security and the respective amounts thereof. The winning bidder must choose
which among the preferred forms it shall submit.
In case of amendments in the contract price, will there be a corresponding

change in the amount of the Performance Security?
Yes. The winning bidder shall post an additional performance security following the schedule
above to cover any cumulative increase of more than ten percent (10%) over the original
value of the contract as a result of amendments to order. (Section 1.4 Annex “D” of IRR-A
as amended by Section 1.4 M.O. 176, s. 2005) The percentages in the schedule above
must be applied to increases in the original value of the contract. The winning bidder must
also cause the extension of the validity of the performance security to cover approved
contract time extensions.
In case of a reduction in the contract value, the procuring entity may allow a proportional
reduction in the original Performance Security, provided that any such reduction is more than
ten percent (10%) and that the aggregate of such reductions is not more than fifty percent
(50%) of the original Performance Security. (IRR-A Section 39.6)
Who are the parties involved in the posting of the Performance Security?
The bidder with the LCRB, the Procuring Entity and the issuer of the security, e.g., the
banking/financial institution, are all involved in the posting of the performance security.
Methodology: How is the Performance Security posted?
The following steps are followed in the posting of the performance security:
1. The bidder with the LCRB posts a performance security. In so doing, it must comply
with the following conditions:
a. The performance security must be executed in the form prescribed by the

Procuring Entity in the ITB; and
b. The performance security must at least be co-terminus with the period of

completion of the contract.
2. The Cash Collecting Officer in the presence of the BAC Secretariat accepts the
performance security and indicates such posting and acceptance by attaching the
appropriate form to the contract.
How does the Procuring Entity safe-keep the Performance Security posted?
The Cash Collecting Officer accepts the Performance Security and issues the following:
1. Official Receipt for local currency denominated securities in the form of Cashier’s
Check, Manager’s Check, Bank Draft and Certified Check;
2. Acknowledgement Receipt for local or foreign denominated securities in the form of

irrevocable Letter of Credit, Bank Guarantee and Foreign Government Guarantee.

Page 20
When may the Performance Security be forfeited?
A bidder’s performance security may be forfeited when the winning bidder fails to perform any
of the conditions of the contract.
When may the Performance Security be released?
Subject to the conditions of the contract, the Procuring Entity may release the performance
security to the winning bidder after the issuance of the Certificate of Acceptance of the goods,
provided that there are no claims filed against the contract awardee. However, it must
ensure that the performance security is replaced by a warranty security.
In order to assure that manufacturing defects shall be corrected by the supplier,

manufacturer, or distributor, as the case may be, a warranty shall be required from the
contract awardee for a minimum period of three (3) months, in the case of supplies, and one
(1) year, in the case of equipment, after performance of the contract. The obligation for the
warranty shall be covered by either retention money in an amount equivalent to at least ten
percent (10%) of every progress payment, or a special bank guarantee equivalent to at least
ten percent (10%) of the total contract price. The said amounts shall only be released after
the lapse of the warranty period: Provided, however, that the goods supplied are free from
patent and latent defects and all the conditions imposed under the contract have been fully
met. (IRR-A Section 62.1.)

Page 21
Conduct of the Pre-Procurement Conference
Legal Reference
IRR-A Section 20 specifies the rules and the guidelines in relation to the conduct of a pre-
procurement conference.
What is a Pre-procurement Conference?
The pre-procurement conference is the forum where all officials involved in the procurement
meet and discuss all aspects of a specific procurement activity, which includes the technical
specifications, the ABC, the applicability and appropriateness of the recommended method of
procurement and the related milestones, the bidding documents, and availability of the
pertinent budget release for the project.
Why is a Pre-procurement Conference necessary?
For projects involving an ABC amounting to more than Two Million Pesos (P 2 Million), a pre-
procurement conference is conducted to determine the readiness of the Procuring Entity to
procure goods and services in terms of the legal, technical and financial requirements of the
project. More specifically, it ensures that the procurement will proceed in accordance with the
PPMP and APP, confirms the availability of appropriations and programmed budget for the
contract, and reviews all relevant documents in relation to their adherence to the law. (IRR-A
Section 20)
Even when the ABC amounts to P 2 Million and below, the BAC is encouraged to conduct a
pre-procurement conference if the circumstances, like the complexity of the technical
specifications, warrant the holding of such conference before the Procuring Entity proceeds
with the procurement.
When do you conduct a Pre-procurement Conference?
The pre-procurement conference is conducted prior to the advertisement or issuance of the

IAEB. (IRR-A Section 20.1) At least seven (7) calendar days prior to publication or
issuance of the IAEB would be an advisable timeframe for the pre-procurement conference, to
give the technical staff sufficient time to incorporate the necessary changes, amendments or
revisions thereto.
Who calls for a Pre-procurement Conference?
The BAC calls for a pre-procurement conference.
Who are involved in the Pre-procurement Conference?
The following are involved in the pre-procurement conference:
1. The BAC;
2. The BAC Secretariat;

Page 22
3. Representatives of the end-user unit/s or PMO;
4. The members of the TSD/TWG/s, if any, and consultants hired by the Procuring Entity
who prepared the technical specifications, TORs, SOWs, bidding documents and the
draft advertisement, as the case may be, for the procurement at hand;
5. Officials who reviewed the above-enumerated documents prior to final approval, if

any; and
6. Other officials concerned, as may be required.
What should a Pre-procurement Conference achieve?
A pre-procurement conference should: (IRR-A

Section 20.1) How’s that again?
1. Ensure that the procurement is in A “fair” evaluation criteria means such

accordance with the PPMP and APP. as are applicable to all similar goods
offered in the market, and are not tailor-
2. Determine the availability of the fit or customized for a particular
appropriations and programmed product/service or brand.
budget for the contract;
3. Determine the state of readiness of the pertinent budget release (e.g., ABM or SARO);
4. Review, modify and agree on the criteria for eligibility screening, and ensure that the
said criteria are fair, reasonable, and that they are of the “pass/fail” type and are
written in such manner; (IRR-A Section 20.1.3)
5. Review, modify and agree on the criteria for the evaluation of bids/proposals, and
ensure that the said criteria are fair,
reasonable and applicable to the
procurement at hand;
Let’s make things easier
6. Review, modify and agree on the
If a Procuring Entity has to procure acceptable minimum specifications and
similar goods or services, although other terms in the bidding documents;
through different public bidding
activities, it may opt to hold just one 7. Review the PPMP, including the
pre-procurement conference to simplify milestones and the method of
or shorten the process. procurement for the procurement at
hand;
8. Reiterate and emphasize the “no

contact rule” during the bid evaluation process, and the applicable sanctions and
penalties, as well as agree on measures to ensure compliance with the foregoing.
(Please refer Step 5, Evaluate Bids for a discussion on the “no contact rule”.); and
9. Ensure that the requirements of the goods and services to be procured are in
accordance with the ABC.

SECTION 3
The Procurement Service of the
Department of Budget and
Management and the Philippine
Government Electronic
Procurement System
Page 25
The PS-DBM and the PhilGEPS
What is the mandate of the PS-DBM?
The PS-DBM was created under LOI No. 755 (Relative to the Establishment of an Integrated
Procurement System for the National Government and its Instrumentalities) with the following
functions, among others:
1. Identify those supplies, materials, and such other items, including equipment and
construction materials, which can be economically purchased through central
procurement and which it shall cover within its scope of activity;
2. Determine the technical specifications of items that it will procure for agencies of the
Government;
3. Identify the sources of supply which are able to offer the best prices, terms and other
conditions for the items procured by government; and
4. Purchase, warehouse and distribute items for resale to agencies of government,

including GOCCs.
Moreover, it is mandated under the GPRA to administer the Philippine Government Electronic
Procurement System (PhilG-EPS).
All procuring entities are directed to purchase common-use supplies from the PS-DBM.
What is the policy of the Government with respect to the use of the
PhilGEPS for the procurement of goods?
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 government procurement. The
PhilGEPS shall serve as the primary and definitive source of information on government
procurement. For this purpose, the Electronic Procurement System established in accordance
with Executive Order No. 322, s. 2000 and Executive Order NO. 40, s. 2001 shall be continued
to be managed by the PS-DBM under the supervision of the GPPB, as the PhilGEPS in
accordance with the IRR-A.
All procuring entities are required to use the PhilGEPS in all its procurement of common-use
supplies. For the procurement of non-common use items, procuring entities may hire service
providers through competitive bidding to undertake their electronic procurement. (Refer to
the GPPB Circular 01-2005)
To fully comply with the requirement under Section 8.2.1 (a) of the IRR-A, and to promote
transparency and efficiency in government procurement, all notices of awards of contract, and
other related information must be posted in the bulletin board of the PhilGEPS website, being
the single portal of information on all government procurement activities, in addition to the
posting in the website of the Procuring Entity concerned, if available.

Page 26
What present features of the PhilGEPS and the PS-DBM website are of
special relevance to the procurement of goods?
As discussed in Volume 1 Section 6, the existing PhilGEPS has two features that are of special
relevance to the procurement of goods, namely: (i) notification feature which includes the
posting of IAEBs and other notices, as well as the matching of procurement opportunities with
the appropriate supplier; and (ii) the registry of suppliers.
Additionally, the DBM-PS website (www.procurementservice.org) contains an electronic

catalogue of common-use supplies that can be bought from the PS-DBM. This catalogue
includes the descriptions of the items, current prices, stock positions, and other relevant
information. Although this information is available online, purchasing is currently still done
manually.
Methodology: How does a Procuring Entity procure through the PS-DBM?
The following steps are undertaken in the procurement, by a Procuring Entity, of goods
through the PS-DBM:
1. The Procuring Entity transacts with the PS-DBM through its duly authorized
personnel, designated in accordance with the following guidelines:
a. For purposes of
TIPS: Let’s make things coordinating with the PS-
DBM and the PhilGEPS
easier regarding the procurement
of common-use supplies,
The Procuring Entity should institute the the BAC Secretariat shall
appropriate systems and procedures serve as the liaison officer
between the Procurement Officer and the with the former. In this
Supply Officer in order that coordination regard, the Supply Officer
between them with regard to their shall submit a copy of the
transaction with the PS-DBM would be Agency Procurement
optimal. This essentially means that Request (APR) to the BAC
documents and information are passed on Secretariat for posting;
from the Procurement Officer to the Supply
Officer, who takes over the procurement The BAC Secretariat should have registered
function upon delivery, inspection, and with the PhilGEPS and has been issued a
acceptance of the procured goods. Certification/Authorization, a user-name
and a system-generated password by the
latter;
b. For purposes of coordinating with the PS-DBM regarding the procurement,

delivery and technical inspection of common-use office supplies, the Supply
Officer shall serve as the liaison officer with the former;
2. For the procurement of common–use supplies, the Property/Supply Office obtains

from the PS-DBM its latest Price List of Common-Use Supplies. It then prepares the
APR where it will indicate the description, quantity and price of the goods it will
procure.
3. The APR is submitted by the Property/Supply Office to the Finance Offices for funding,
approval and payment.
4. The approved APR, together with the payment, is submitted to PS-DBM for
appropriate action. (Note: The internal procedures of the PS-DBM are embodied in
their Operations Manual. Reference thereto may be made. )
Dep ED Manual of Procedures for the Procurement of Goods and Services

Page 27
5. Once the PS-DBM indicates to the Let’s make things easier

Property/Supply Office the schedule of
delivery, the latter will request the
The Procuring Entity may wish to
Inspectorate Team to inspect the goods
consider authorizing the DBM to
procured in accordance with pertinent
withhold a certain amount of its
COA guidelines prior to acceptance by the
budget for the procurement of
Property/Supply Officer. (Refer to Section
common-use supplies from the PS-
5 of this Manual).
DBM. In doing so, it is spared of
preparing the DV and MDS check.
In addition to the foregoing, the following steps
Its Procurement Officer, instead,
are undertaken when:
shall indicate in the APR that
appropriate funds have been
1. Some items in the approved APR are not
deposited with the PS-DBM to cover
complete due to unavailability of the
the cost of the supplies being
items:
procured.
a. Secure Certification of Non-
Availability from PS-DBM, to
justify the use of alternative method of procurement.
b. Account for the balance of the check payment vis-à-vis the delivered items.
c. Follow procedure 2 to 5 above, indicating in the new APR the reference

number of the previous APR where the former will be charged.
2. Items delivered were found defective:
a. Within three (3) months from receipt of items procured, the end-user shall
inform PS-DBM through a letter specifying the defects of the item.
b. PS-DBM will verify/confirm the complaint.
c. If valid, PS-DBM shall replace the defective items.
Subject to the recommendation of the Procurement Service - DepED and approval of the
Procurement Service - DBM and in highly exceptional and meritorious cases, Island Divisions
and Schools, may be exempted from the above procedures.
For purposes of this manual, island divisions and schools shall refer to field offices (regional
and division) and schools situated on the islands, listed in Annex A, which were granted
exemption from procuring common-use goods and supplies through PS-DBM. The exemption
was based on the inaccessibility of the said offices to PS Depot, its geographical location
and/or the transportation, handling, shipping and other incidental costs which is grossly
unconscionable compared to the value of goods to be procured at PS Depot. The list of island
divisions and schools exempted by PS-DBM may be updated periodically.
Once classified as island divisions and schools, shopping or negotiated procurement may be
resorted to, provided the conditions for the use of this alternative mode of procurement are
present.

SECTION 4
Instructions on the Procedural
Steps for the Procurement of
Goods and Services
PART ONE – COMPETITIVE BIDDING
Page 31
Competitive Bidding
What is Competitive Bidding?
Competitive or Public Bidding is a method of procurement that is open to any interested and
qualified party. All procurement shall be done through competitive bidding, except as provided
in Rule XVI of the IRR-A. (IRR-A Section 10)
Competitive Bidding consists of the following processes: advertisement, pre-bid conference,

receipt of eligibility documents and bids, eligibility check, opening and examination of bids,
evaluation of bids, post-qualification, and award of contract. (IRR-A Section 5 [h])
The procurement process from the opening of the bids up to the award of contract should not
exceed three (3) months, or a shorter period to be determined by the Procuring Entity
concerned. In case the deadline for each activity falls on a non-working day (e.g. Saturday
and Sunday), legal holiday, or special non-working holiday, the deadline shall be the next
working day. (IRR-A Section 38.1)
There are two (2) types of Competitive Bidding procedures: the Single-Stage and Two-Stage.
The Single-Stage bidding is the regular procedure used for competitive or public bidding while
the two stage bidding is employed when the required technical specifications/ requirements of
the contract cannot be precisely defined in advance of bidding, or where the problem of
technically unequal bids is likely to occur.
The steps of the Single-Stage Bidding procedure will first be discussed in this section, to be
followed by those of the Two-Stage Bidding procedure.

Page 32
Single-Stage Competitive Bidding
Step 1 Advertise and Post an Invitation to Apply for

Eligibility and to Bid (IAEB)
Legal Reference
IRR-A Section 21 specifies the rules in relation to the advertising and posting of the IAEB.
What is the IAEB?
The IAEB serves as the notice to the public and all interested parties of the procurement and
bidding opportunities of the Procuring Entity.
Why do you post an IAEB?
It ensures transparency of the procurement process, widest possible dissemination to increase

the number of prospective bidders, and intensify competition for the procurement activity or
project. Intensified competition, in turn, will ensure that the government, in general, and the
Procuring Entity, in particular, will get the best possible quality and cost for the goods and
services sought to be procured.
What must an IAEB contain?
The IAEB must contain the following: (IRR-A Section 21.1)
1. The name of the contract to be bid, and a brief description of the goods to be
procured;
2. A general statement on the criteria to be used by the Procuring Entity for:
a. The eligibility check;
b. The examination and evaluation of bids; and
c. Post-qualification;
3. The date, time and place of the deadline for:
a. The submission and receipt of the eligibility requirements;
b. The pre-bid conference if any;
c. The submission and receipt of bids; and
d. The opening of bids;
4. The ABC;

Page 33
5. The source of funding;
6. The period of availability of the bidding documents, the place where the bidding
documents may be secured and, where applicable, the price of the bidding
documents;
7. The contract duration or delivery schedule;
8. The name, address, telephone number, facsimile number, e-mail and website
addresses of the concerned Procuring Entity, as well as its designated contact person;
9. The Reservation Clause, which is normally located at the bottom of the notice; and
10. Such other necessary information deemed relevant by the Procuring Entity.
The invitation should provide information that enables potential bidders to decide whether to
participate. As such, apart from the above essential items, the IAEB should also indicate any
important bid evaluation criteria (for example, the application of a margin of preference in bid
evaluation) or qualification requirement (for example, a requirement for a minimum level of
experience in manufacturing a similar type of product for which the invitation is issued).
The deadline for the submission of bids indicated in the IAEB should be no later than thirty
(30) calendar days from the date of advertisement and/or first day of posting.
When, where, and for how long must you post an IAEB?
The IAEB for procurements or projects with ABCs of more than Two Million Pesos (P 2 Million)
must be advertised and posted as follows: (IRR-A Section 21.2.1)
1. Advertised at least once in 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 (advisably from the 7th calendar day after the pre-procurement
conference, but if during the pre-procurement conference the BAC finds that it is not
prepared to undertake the bidding procedure, it should not hesitate to consider
moving back the advertisement/posting thereof to allow more time to perfect the
same);
2. Continuously on the website of the Procuring Entity concerned, if available, the

website of the Procuring Entity’s service provider, if any, as provided in IRR-A Section
8, and the PhilGEPS for seven (7) calendar days starting on date of advertisement, if
applicable; and
3. At any conspicuous place reserved for this purpose in the premises of the Procuring
Entity concerned, as certified by the head of the BAC Secretariat of the Procuring
Entity concerned, for seven (7) calendar days, if applicable.
For projects with ABCs of P 2 Million and below, the IAEB should be posted: (IRR-A Section
21.2.3)
1. Continuously on the website of the Procuring Entity concerned, if available, the

website of the Procuring Entity’s service provider, if any, as provided in IRR-A Section
8, and the PhilGEPS for seven (7) calendar days starting on date of advertisement, if
applicable; and
2. At any conspicuous place reserved for this purpose in the premises of the Procuring
Entity concerned, as certified by the head of the BAC Secretariat of the Procuring
Entity concerned, for seven (7) calendar days, if applicable.
For provincial projects, as described in Section 44 of the IRR-A, or programs funded out of the
GAA for implementation within the province, in addition to the above advertisement and
posting requirements, the IAEB may be advertised in a local newspaper with the widest
circulation for the same prescribed period.

Page 34
Who shall ensure that the advertising/posting requirements of the IAEB are
complied with?
The BAC shall ensure that the IAEB is advertised and posted in accordance with law.
Methodology: How are IAEBs advertised and posted?
The following steps are followed in the advertising and posting of IAEBs:6
1. For public bidding of contracts with an ABC costing more than Two Million Pesos (P 2
Million)
a. The BAC Secretariat prepares the draft IAEB for review/approval of the BAC.
b. The BAC approves the contents of the IAEB during the pre-procurement
conference.
c. The BAC Secretariat posts the IAEB in any conspicuous place reserved for this
purpose in the premises of the Procuring Entity for the duration required; and
this fact will be certified to by the head of the Secretariat.
d. The BAC Secretariat advertises the IAEB in a newspaper for the duration
required, as prescribed above. For priority programs and projects funded out
of the annual GAA, which are intended for implementation within the province,
the IAEB may also be advertised in a local newspaper for the same duration
as above.
e. The BAC Secretariat, through its member who is authorized to transact with
the PhilGEPS, posts the IAEB in the following websites: the PhilGEPS, that of
the Procuring Entity, and the Procuring Entity’s e-procurement service
provider, if any, for the duration required.
2. For public bidding of contracts with an ABC costing Two Million Pesos (P2 Million) and
below, and for alternative methods of procurement (Please refer to Section 4, Part 2,
for the discussion on Alternative Methods of Procurement):
a. The BAC Secretariat prepares the draft IAEB for review/approval of the BAC.
b. The BAC approves the contents of the IAEB.
c. The BAC Secretariat performs steps (c) and (e) in Item No. 1 above.
What is the Reservation Clause?
The Reservation Clause declares that the Procuring Entity reserves the right to reject any and
all bids, to declare a failure of bidding, or not to award the contract in any of the following
situations: (IRR-A Section 41)
1. If there is prima facie evidence of collusion between appropriate public officers or

employees of the procuring entity, or between the BAC and any of the bidders, or if
the collusion is between or among the bidders themselves, or between a bidder and a
third party, including any act which restricts, suppresses or nullifies or tends to
restrict, suppress or nullify competition;
2. If the BAC is found to have failed in following the prescribed bidding procedures; or
6
FAPs may have additional publication requirements. For this reason, reference should be made to the appropriate
standard bidding documents for the project.

Page 35
3. For any justifiable and reasonable ground where the award of the contract will not
redound to the benefit of the Government as follows:
a. if the physical and economic conditions have significantly changed so as to

render the project no longer economically, financially or technically feasible as
determined by the HOPE;
b. if the project is no longer necessary as determined by the HOPE; and
c. if the source of funds for the project has been withheld or reduced through no
fault of the procuring entity.
In the case of Mata v. San Diego, G.R. No. L-30447 (March 21, 1975), the Supreme Court of
the Philippines declared that a bidder is bound by the reservation clause, and the said clause
vests in the authority concerned the discretion to ascertain who among the bidders is the
lowest responsive bidder or the lowest and best bidder or most advantageous to the best
interest of the Government. As such, a bidder has no right or cause of action to compel the
BAC or agency to award the contract to it. The Court further stated that this requires inquiry,
investigation, comparison, deliberation and decision – a quasi-judicial function which, when
honestly exercised, may not be reviewed by the courts. It should be noted, however, that
R.A. 9184 Section 41, has placed some limiting qualifiers on the possible contents of the
Reservation Clause.
A Procuring Entity should be prudent in the use of the reservation clause, because if the HOPE
abuses his power to reject any and all bids, as provided therein, with manifest preference to
any bidder who is closely related to him in accordance with IRR-A Section 47, or if it is proven
that he exerted undue influence or undue pressure on any member of the BAC or any officer
or employee of the Procuring Entity to take such action, and the same favors or tends to favor
a particular bidder, he shall be meted with the penalties provided in IRR-A Section 65. (IRR-
A Section 65.1.5)

Page 36
Step 2 Issue the Bidding Documents
Legal Reference
IRR-A Section 17 provides the rules in relation o the issuance of the bidding documents.
When must the bidding documents be made available to prospective

bidders?
The bidding documents must be made available to the prospective bidders from the time the
IAEB is advertised until immediately before the deadline for submission of bids. (IRR-A
Section 17.5) The Procuring Entity must ensure that prospective bidders are given ample
time to examine the bidding documents and to prepare their respective bids. A maximum
period of thirty (30) calendar days from the date of advertisement and/or first day of posting
of the IAEB up to opening of bids is provided by Section 21.2.2 of the IRR-A, which means
that there is a period of thirty (30) calendar days for which the bidding documents are
available for purchase.
The bidding documents are strictly confidential and shall not be divulged or released to any
person prior to its official release. It is advisable for a Procuring Entity to post an abstract or
a summary of the bidding documents, containing general information about the procurement
at hand, in the PhilGEPS website, the website of the Procuring Entity, and the website of its
electronic procurement system service provider, if any. This abstract may then be viewed
even by non-registered users of the PhilGEPS or of the other websites mentioned.
How much should prospective bidders pay for the Bidding Documents?
The BAC must consider the cost recovery component in determining the price which
interested suppliers have to pay for the bidding documents to ensure that the same would not
have an effect of discouraging competition.
The cost recovery component may include the following:
1. Direct costs, which includes:
a. Development costs, which are incurred in developing the original content of

the documents, designs, plans and specifications. However, the design cost
may be excluded if it is to be included in the capitalized cost of the project, or
the project cost, which is to be recovered from the use of the completed
project facility;
b. Reproduction costs, which are labor, supplies and equipment rental costs
incurred in the reproduction of the documents; and
c. Communication costs, which include mail and fax costs, plus costs of
advertising, meetings, internet/web posting, and other costs incurred for the
dissemination of information about the bidding.
2. Indirect costs, such as overhead, supervision, and administrative costs, allocated to

the bidding activity. This may include the costs of paying honoraria to the officers
and personnel of the Procuring Entity who are entitled thereto under the law. Under
Budget Circular No. 2004-5A, dated October 7, 2005, the chairs and members of the
BAC and the TWG may be paid honoraria for successfully completed procurement
projects, subject to the rates provided therein; and, for this reason, agencies are

Page 37
allowed to retain one hundred percent (100%) of their collections from the sale of
bidding documents, among others, to be used exclusively for the payment of such
honoraria or overtime pay, provided that the same shall not exceed twenty-five
percent (25%) of the basic monthly salary of the officer or personnel entitled thereto.
(Note that Budget Circular No. 2004-5A was issued in accordance with Section 15 of
R.A. 9184)
The BAC is discouraged from using the cost of bidding documents to limit the number of
bidders. If the procurement involves a fairly large acquisition of goods of a particular
complexity, and project implementation requires a higher level of size or capacity on the part
of the supplier, it would be more advisable for the BAC to allow the project requirements to
naturally limit competition among capable suppliers, by summarizing the qualification
requirements in the IAEB and detailing these in the bidding documents, rather than for the
BAC to unilaterally increase the price of the bidding documents and hope that this price
discourages competition. As such, if the BAC wants to encourage the participation of as many
bidders as possible to create competition, it should consider charging a lower price for the
bidding documents, keeping in mind that this price should be sufficient to recover the above-
enumerated costs.
Methodology: How are the Bidding Documents issued?
The following steps are followed in the issuance of the bidding documents:
1. The BAC Secretariat issues an Order of Payment, containing the following information:
Date, Name of Project, Amount of Bidding Documents. The prospective bidder shall
also be required to fill-up a Supplier Information Sheet.
2. The prospective bidder presents the Order of Payment to the Cashier and pays the
amount of the bidding documents..
3. The prospective bidder presents the Official Receipt as proof of payment to the BAC
Secretariat, who shall then issue the bidding documents.
For control purposes, the bidding documents may likewise, be pre-numbered and bidders
must be informed that the Procuring Entity will only accept bids from bidders that have
purchased the bidding documents.
Copies of the bidding documents shall be issued to the BAC Members, End-User, COA and
Observers free of charge.
What are the responsibilities of a prospective bidder with regard to the

Bidding Documents?
A prospective bidder shall be responsible for having: (IRR-A Section 17.7.1)
1. Taken steps to carefully examine all of the bidding documents;
2. Acknowledged all conditions, local or otherwise, affecting the implementation of the

contract;
3. Made an estimate of the facilities available and needed for the contract to be bid, if
any; and
4. Complied with his responsibility as provided for under Section 22.5.1, which provides
that it shall be the responsibility of all those who have properly secured the bidding
documents to inquire and secure supplemental/bid bulletins that may be issued by the
BAC.

Page 38
Failure to observe any of the above responsibilities shall be at the risk of the prospective or
eligible bidder concerned. For this purpose, one of the contents of the Technical proposal
would have to be a sworn statement executed by the bidder attesting to these responsibilities.
The Procuring Entity shall suffer the consequences of their negligent acts and the Procuring
Entity shall in no case be responsible for any erroneous interpretation or conclusions by the
prospective or eligible bidders of the data it furnished. (IRR-A Section 17.7.3)
Moreover, the 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. However,
if the contract is affected by new laws, ordinances, regulations or other acts of government
promulgated after the date of the bidding, a contract price adjustment shall be made or
appropriate relief shall be applied on a no loss-no gain basis provided such is not covered by
the contract provisions on price adjustment. (IRR–A Section 17.7.4)

Page 39
Step 3 Call A Pre-Bid Conference and, if necessary, Issue

Supplemental/Bid Bulletins
Legal Reference
IRR-A Section 22 specifies the rules in relation to the conduct of a pre-bid conference.
What is a Pre-bid Conference?
The pre-bid conference is the initial forum where the Procuring Entity’s representatives and
the prospective bidders discuss the different aspects of the procurement at hand.
The ground rules that will govern the procurement are discussed during the conference. In
particular, the participants discuss the legal, technical and financial components of the
contract to be bid. This is also an opportunity for the prospective bidders to request for
clarifications about the bidding documents. However, it should be noted that any statement
made at the pre-bid conference would not modify the terms of the bidding documents, unless
such statement is specifically identified in writing as an amendment of the documents and
issued as a supplemental/bid bulletin. (IRR-A Section 22.4)
It is important that responsible and knowledgeable officials attend the conference. The
persons who actually formulated the SOW, plans and technical specifications for the project
should be present and among those representing the Procuring Entity. Prospective bidders,
on the other hand, should be encouraged to send representatives who are legally and
technically knowledgeable about the requirements of the procurement at hand. It is also
important that the prospective bidders are given ample time to review the bidding documents
prior to the pre-bid conference.
When do you hold a Pre-bid Conference?
A pre-bid conference must be held for contracts with ABCs of at least One Million Pesos (P 1
Million). For contracts with ABCs of less than P 1 million, pre-bid conferences may or may not
be held at the discretion of the BAC. The BAC may also decide to hold a pre-bid conference
upon the written request of a prospective bidder. (IRR-A Section 22.1)
A pre-bid conference must be conducted at least twelve (12) calendar days before the
deadline for the submission and receipt of bids. (IRR-A Section 22.2) In addition to
this, it is suggested that it not be held earlier than seven (7) calendar days after the last day
of posting the IAEB. If the pre-bid conference is held less than 12 calendar days before the
deadline for the submission and receipt of bids, that deadline should be moved to a later date.
A supplemental/bid bulletin shall be issued for this reason. Note that these periods shall be
within the maximum period of thirty (30) calendar days from the date of advertisement
and/or first day of posting of the IAEB up to the opening of bids, as provided under IRR-A
Section 21.2.2 (i).
Who are involved in the Pre-bid Conference?
The following are involved in the Pre-Bid Conference:
1. The BAC;
3. The TSD/TWG members and consultants, if any;

Page 40
4. The end-user unit/PMO;
5. The prospective bidders; and
6. The Observers.
The attendance of the prospective bidders and observers shall not be mandatory during the
pre-bid conference. (IRR-A Section 22.2)
How should the participants conduct themselves during the Pre-bid

Conference and other stages of the procurement process?
The BAC, BAC Secretariat, TSD/TWG, if any, and other officials involved in procurement are
expected to act in an impartial, courteous and professional manner in all their dealings and
interactions with the bidders during all stages of the procurement. The bidders’
representatives are likewise enjoined to adopt the same professional manner in their dealings
with the Procuring Entity’s officials. Communications between the parties must, as much as
possible, be made in writing, except during the pre-bid conference when verbal clarifications
may be allowed – keeping in mind, however, that any statement made at the pre-bid
conference would not modify the terms of the bidding documents, unless such statement is
specifically identified in writing as an amendment of the documents and issued as a
supplemental/bid bulletin.
Methodology: How is the Pre-bid Conference conducted?
The manner by which the pre-bid

conference is conducted depends on TIPS: Let’s make things easier
the discretion of the BAC chairperson
or vice-chairperson. In no case shall The BAC must initiate discussions on contentious
the BAC transact business without a issues, most especially if the participating
quorum and if the BAC chairperson or prospective bidders have no ready questions. It
vice chairperson is absent. is probable that there are issues that may not
be apparent in the bidding documents but are
The pre-bid conference shall discuss, known to the representatives of the Procuring
among other things: Entity. If these issues are brought out and
openly discussed, prospective bidders will be
1. The technical and financial able to prepare responsive bids, thus avoiding
components of the contract to situations that may give rise to a failure of
be bid, the evaluation bidding due to lack of bids received or failure of
procedure, evaluation criteria, bids to comply with all the bid requirements.
and possible causes of failure This would also help prevent the birth
of the bidding. contentious issues during the bidding itself.
2. The BAC chairperson shall also

discuss the requirements in the
ITB, the replies to the bidders’ queries about the requirements, specifications and
other conditions of the project, the bid evaluation of all bidders and post-qualification
evaluation of the bidder with the lowest calculated bid (LCB). Emphasis should also
be given to the warranty requirement of the project and the different offenses and
penalties provided for in IRR-A of R.A. 9184.
3. The minutes of the pre-bid conference shall be recorded and made available to all
participants not later than three (3) calendar days after the pre-bid conference. (IRR-
A Section 22.3)
What happens if there is a need for clarification or interpretation on the

Bidding Documents after the Pre-bid Conference had been held?

Page 41
Requests for clarification(s) on any part of the bidding documents or for an interpretation may
be made by prospective bidders provided that these are in writing and are submitted to the
BAC at least ten (10) calendar days before the deadline for the submission and receipt of
bids. In this case, the BAC shall issue its response by issuing a supplemental/bid bulletin, to
be made available to all those who have properly secured the bidding documents at least
seven (7) calendar days before the deadline for the submission and receipt of bids. (IRR-A
Section 22.5.1)
The Procuring Entity may, at its own initiative, also issue supplemental/bid bulletins for
purposes of clarifying or modifying any provision of the bidding documents not later than
seven (7) calendar days before the deadline for the submission and receipt of bids. Any
modification to the bidding documents must be identified as an “AMENDMENT.” (IRR-A
Section 22.5.2)
The BAC should also post the supplemental/bid bulletin on the website of the Procuring Entity
concerned, if available, the website of its electronic procurement system provider, if any, and
on the PhilGEPS, within the same timetable. Nonetheless, it will be the prospective bidders’
responsibility to ask for, and secure, these bulletins, however BAC should ensure that all
prospective bidders receive the bid bulletins.
A supplemental/bid bulletin must contain a brief but comprehensive and accurate summary of
the issue or issues that it wishes to address. If it was a prospective bidder that raised the
issue addressed by the bulletin, then it ought to contain a summary of that bidder’s request
for clarification and/or interpretation, without identifying the bidder.
Bidders who have submitted bids before a supplemental/bid bulletin is issued have to be
informed in writing and allowed to modify or withdraw their respective bids. (IRR-A Section
22.5.2)
Who are involved in the Issuance of the Supplemental/Bid Bulletin?
The following are involved in the issuance of the supplemental/bid bulletin:
1. The BAC;
3. The TSD/TWG members and consultants, if any;
4. The end-user/PMO; and
5. The prospective bidders.
Methodology: How is a Supplemental/Bid Bulletin issued?
If the supplemental/bid bulletin is being issued upon the initiative of the BAC, the following
steps shall be undertaken:
1. The End-user with the assistance of TSD/TWG, if any, drafts the supplemental/bid
bulletin related to the technical requirements of the procurement for submission to
the BAC Secretariat.
In the case of field offices and attached agencies, the BAC Secretariat shall draft the
supplemental/bid bulletin;
2. The BAC Secretariat prepares the supplemental/bid bulletin related to administrative

aspects of procurement, e.g. change of schedules and venues of procurement
activities;
3. The BAC approves the supplemental/bid bulletin and the BAC chairperson signs it;

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4. The BAC Secretariat sends copies of the supplemental/bid bulletin to all prospective
bidders who have properly secured or purchased the bidding documents, not later
than seven (7) calendar days before the deadline for the submission and receipt of
bids;
5. The BAC Secretariat posts the supplemental/bid bulletin in the PhilGEPS, the website
of the Procuring Entity and that of the latter’s electronic procurement system
provider, if any, not later than seven (7) calendar days before the deadline for the
submission and receipt of bids;
If the supplemental/bid bulletin is being issued in response to a request for clarification

submitted by a prospective bidder, on the other hand, the process goes as follows:
1. The prospective bidder submits to the BAC, through the BAC Secretariat, a written
request for clarification, within the period prescribed above;
2. The BAC directs the BAC Secretariat and/or end-user, TSD/TWG, if any, to
study/analyze the request for clarification;
3. The End-user, TSD/TWG, if any, BAC and BAC Secretariat performs the steps
undertaken in issuing supplemental/bid bulletin.

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Step 4 Receive and Open the Eligibility and Bid Envelopes
Legal Reference
IRR-A Sections 25 to 31 specify the rules in relation to the submission and receipt of bids.
What is an eligibility check?
It is a procedure to determine if a prospective bidder is eligible to participate in the bidding at

hand. In determining a prospective bidder’s eligibility, the BAC shall use non-discretionary
“pass/fail” criteria, as stated in the IAEB and the ITB. Essentially, this means that the
absence, incompleteness or insufficiency of a document shall make a prospective bidder
ineligible to bid for the particular procurement.7 (IRR-A Section 23.2)
How do you determine the eligibility of the prospective bidders?
A prospective bidder is eligible to bid for a particular project if it complies with the eligibility
requirements prescribed for the competitive bidding, within the period stated in the invitation
to bid. The eligibility requirements shall provide for fair and equal access to all prospective
bidders.
Who may be eligible to participate in a public bidding for goods?8
The following manufacturers, suppliers and/or distributors, service providers shall be eligible
to participate in the bidding for the supply of goods: (IRR-A Section 23.11.1.1)
1. Duly licensed Filipino citizens/sole proprietorships;
2. Partnerships duly organized under the laws of the Philippines and of which at least
sixty percent (60%) of the interest belongs to citizens of the Philippines;
3. Corporations duly organized under the laws of the Philippines, and of which at least
sixty percent (60%) of the outstanding capital stock belongs to citizens of the
Philippines;
4. Joint ventures of manufacturers, suppliers and/or distributors, i.e., a group of two (2)
or more manufacturers, suppliers and/or distributors that intend to be jointly and
severally responsible or liable for a particular contract, provided that:9
a. Filipino ownership or interest

of the joint venture concerned
must be at least sixty percent
Why do we require that the
(60%); and bidder’s largest single contract
be at least 50% of the ABC of
b. In determining the eligibility of the contract to be bid?
the joint venture, the principle
of “collective compliance” will
be applied to its We do this because we want to be
members/principals in the assured that the prospective bidder has
sense that each of the entities the technical and financial capability to
undertake the contract to be bid.
7
For FAPs, reference should be made to the appropriate standard bidding documents for the project to determine the
rules on eligibility check.
8
For FAPs, reference should be made to the appropriate standard bidding documents for the project to determine the
appropriate qualification requirements of a bidder.
9
For FAPs, any firm may bid independently or in joint venture confirming joint and several liability, either with domestic
firms and/or with foreign firms, but the IFIs generally do not accept conditions of bidding which require mandatory joint
ventures or other forms of mandatory association between firms.

Page 44
of the joint venture must submit all of the documents that are required to
establish eligibility, although the non-compliance of one member/principal
may be compensated by the compliance of another member/principal;
5. Cooperatives duly registered with the CDA.
All of these entities must have:

What do we mean?
1. The experience of having completed within the
period specified in the IAEB concerned, a
single contract that is similar to the contract to When is a contract
be bid, and whose value, adjusted to current
“similar” to another?
prices using the wholesale consumer price
index, must be at least fifty percent (50%) of
the ABC to be bid (IRR-A Section A contract is similar to the
23.11.1.2); and contract to be bid if it involves
goods or related services of the
2. Any of the following: same nature and complexity as
those which are the subject of
An NFCC that is at least equal to the ABC to be the public bidding concerned; for
bid, calculated as follows: example, if it has the same
major categories of goods, such
NFCC = [(Current assets minus as computers and network
current liabilities) (K)] minus the value equipment.
of all outstanding projects under
ongoing contracts, including awarded
contracts yet to be started.
Where:
K = 10 for a contract duration of one year or less, 15 for a contract duration

of more than one year up to two years, and 20 for a contract duration of more
than two years.
or
A certificate of commitment from a licensed bank to extend to it a credit line if

awarded the contract to be bid – which commitment should be specific to the contract
to be bid;
or
a hold out on cash deposits issued by a licensed bank, which shall also be specific to
the contract to be bid.
The credit line and hold-out cash deposit certificate must be in an amount not lower
than that set by the Procuring Entity in the Bidding Documents. (IRR-A Section
23.11.2.5)
In determining the amount of credit line or hold out cash deposit, the BAC, TSD/TWG
consultants, if any, and the end-user shall consider the ABC, terms of payment and/or
delivery schedule. In no case shall the amount be lower than 10% of the ABC.
Are foreign suppliers allowed to bid?
Foreign suppliers, manufacturers, and/or distributors may be invited to participate in the

bidding for the procurement of goods, when:
1. The goods are not available from domestic sources at the prescribed minimum
specifications of the appropriate government authority and/or ABC of the Procuring
Entity, as certified by the HOPE, confirmed by the DTI. (IRR-A Section 23.11.1)

Page 45
Under GPPB Resolution 18-2005, goods are not available from Local Suppliers when,
at any time before advertisement for their procurement, it is determined that no Local
Supplier is capable to supply the required goods to the Government, in which case,
foreign suppliers, manufacturers and/or distributors may be invited to participate in
the bidding. Therefore, the HOPE or his duly authorized representative shall certify
that, after diligent market research conducted by the Procuring Entity, the goods
sought to be procured are not available from Local Suppliers. In addition, when
applicable, the Procuring Entity shall secure a certification from the appropriate
Government regulatory body, such as, but not limited to, the BPS of the DTI for
electrical products, mechanical/building & construction materials, chemicals, foods
and other consumer products, and the BFAD of the DOH for drugs, medicine, and
other related medical devices, that based on its available records, the goods sought to
be procured are not available from Local Suppliers.
If despite the availability of the goods sought to be procured, no local supplier is

interested to participate in the procurement process, the HOPE shall certify that it has
advertised the same for public bidding and shall make a statement that no local
supplier participated in the bidding and that the same is due to reasons not
attributable to the Procuring Entity. For purposes of inviting foreign suppliers, the
bidding requirements and conditions, as advertised, shall not be modified or changed.
Otherwise, modifications and/or changes in the requirements and conditions of the
bidding shall disallow the Procuring Entity to resort to invitation of foreign bidders.
The procurement of unavailable goods must be through competitive or public bidding

unless conditions prescribed under R.A. 9184 and its IRR-A warrant resort to
alternative methods of procurement.
2. There is a need to prevent situations that defeat competition or restrain trade. (IRR-
A Section 23.11.1)
Under Section 6.1 of GPPB Resolution 18-2005, in cases where the Procuring Entity
intends to procure goods from an exclusive local manufacturer, supplier, distributor,
or dealer through direct contracting under Section 50 (c) of the IRR-A, when said
method is recommended by the BAC and approved by the HOPE, and reflected in the
approved APP, it shall, before commencing any negotiations with a local supplier, post
through the website of the Procuring Entity, if any, and in the PhilGEPS, an invitation
to foreign manufacturers to submit a manifestation of its intention to participate.
Should any foreign manufacturer submit such manifestation within the period
prescribed in the invitation, the Procuring Entity shall commence the conduct of public
bidding. If no foreign manufacturer submits such manifestation within the said period,
the Procuring Entity may proceed with the intended procurement through direct
contracting with the said exclusive local manufacturer, supplier, distributor, or dealer.
3. The foreign citizen/entity who/that wishes to participate in the procurement of goods

is able to prove that the laws, rules and regulations of his/its country of origin grants
reciprocal rights and privileges to Filipino citizens with respect to the procurement of
goods by his/its own government. (R.A. 5183)
A bidder shall be deemed to have the nationality of a country if the bidder is a citizen
or is constituted, or incorporated, and operates in conformity with the provisions of
the laws of that country.
This criterion shall also apply to the determination of the nationality of proposed
subcontractors or suppliers for any part of the contract, including related services.
Under Section 7.2 of GPPB Resolution 18-2005, the Procuring Entity shall confirm
from the DFA countries with which the Philippines enjoys reciprocal rights on matters
of eligibility of its nationals in public procurement abroad. If the country of the
prospective foreign bidder is not in the list, the Procuring Entity shall require from the
said bidder the submission of a sworn statement that the country of which he is a
citizen or in which the corporation or partnership is organized and registered grants

Page 46
reciprocal rights or privileges to Filipino citizens, corporations or associations, citing its

country’s relevant laws.
The sworn statements mentioned above shall be validated during post-qualification of

bidders.
4. When provided for under any treaty or international or executive agreement.10
When is a prospective bidder eligible to bid?
A prospective bidder is eligible to bid for the procurement of goods if it complies with the
eligibility requirements prescribed for the competitive bidding, within the period stated in the
invitation to bid. The eligibility requirements shall provide for fair and equal access to all
prospective bidders.
As procuring entities and the bidders, manufacturers, suppliers or distributors are required to
observe the highest standard of ethics during the procurement and execution of contract,
bidders should not be under a declaration of ineligibility for corrupt, fraudulent, collusive and
coercive practices by the government. For this purpose:
1. “Corrupt practice” means behavior on the part of officials in the public or private
sectors by which they improperly and unlawfully enrich themselves, others, or induce
others 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 of
any such official in the procurement process or in contracting execution; entering, on
behalf of the government, into any contract or transaction manifestly and grossly
disadvantageous to the same, whether or not the public officer profited or will profit
thereby.
2. “Fraudulent practice” means a misrepresentation of facts in order to influence a

procurement process or the execution of a contract to the detriment of the Procuring
Entity, and includes collusive practices among bidders (prior to or after bid
submission) designed to establish bid prices at artificial, non-competitive levels and to
deprive the Procuring Entity of the benefits of free and open competition.
3. “Collusive practice” means a scheme or arrangement between two (2) or more

bidders, with or without the knowledge of the Procuring Entity, designed to establish
bid prices at artificial, non-competitive levels.
4. “Coercive practice means harming or threatening to harm, directly or indirectly,

persons, or their property to influence their participation in a procurement process, or
affect the execution of a contract.
The pertinent provisions of the Anti-Graft and Corrupt Practices Act, or R.A. No. 3019, shall
also be applied in determining the existence of “corrupt or fraudulent practice”
What are the minimum eligibility requirements?
Section 23.6 of the IRR-A requires bidders to submit the following eligibility requirements
contained in a separate envelope, to be submitted together with the technical and financial
bid envelopes, to wit:
10
Under FAPs, to foster competition, IFIs permit firms and individuals from eligible countries to offer goods, works, and
services. Any conditions for participation should be limited to those that are essential to ensure the firm’s capability to
fulfill the contract in question. In connection with any contract to be financed in whole or in part from an IFI loan, the
IFI generally does not permit a procuring entity to deny pre- or post-qualification to a firm for reasons unrelated to its
capability and resources to successfully perform the contract; nor does it permit a procuring entity to disqualify any
bidder for such reasons. Consequently, procuring entities should carry out due diligence on the technical and financial
qualifications of bidders to be assured of their capabilities in relation to the specific contract.

Page 47
1. Class “A” Documents
a. Legal Documents
i. DTI business name registration in the case of Single Proprietorships;

or SEC registration certificate, in the case of Partnerships or
Corporations; or CDA Registration, in the case of cooperatives;
ii. Valid and current Mayor’s permit/municipal license, if applicable;
iii. BIR Registration Certification, which contains the Taxpayer’s

Identification Number;
iv. Duly notarized statement of the prospective bidder that it is not

“blacklisted” or barred from bidding by the government or any of its
agencies, offices, corporations or LGUs, and that it is not included in
the Consolidated Blacklisting Report issued by the GPPB, once
released in accordance with the guidelines to be issued by the GPPB
as provided in Section 69.4 of the IRR-A;
v. Valid and current Tax Clearance Certificate stating that the bidder has
no listed tax liability, issued by the Collection Enforcement Division
(CED), BIR Main Office;
vi. Electronically filed Income Tax Returns (ITR) through the Electronic
Filing Payment System (EFPS) under E.O. 398, s. 2005, which must
have a Payment Confirmation Form of Tax Return (PCFTR); or if
applicable, Income or Business Tax Return stamped “received” by the
BIR or its duly accredited and authorized institutions, for the
immediate preceding calendar year provided they are already
registered at EFPS;
vii. Valid and Current Certificate of PhilGEPS Registration;
viii. Other appropriate licenses as may be required by the Procuring Entity

concerned.
b. Technical Documents
A statement of the prospective bidder of all its ongoing and completed

government and private contracts within the period specified in the IAEB,
including contracts awarded but not yet started, if any. This statement must
include the following information for each of the contracts:
i. Whether the contract is ongoing, completed or awarded but not yet

started within the relevant period;
ii. The name of the contract;
iii. The date of the contract;
iv. The kinds of goods sold;
v. The amount of contract and value of outstanding contracts;
vi. The date of delivery;
vii. The end user’s acceptance, for completed contracts;
viii. A specification whether the prospective bidder is a manufacturer,

supplier or distributor, or service provider; and

Page 48
ix. Whether the contract is similar or not in nature and complexity with
the contract to be bid.
c. Financial Documents
i. The prospective bidder’s audited financial statements, stamped

“received” by the BIR or its duly accredited and authorized
institutions, for the immediately preceding calendar year, showing,
among others, the prospective bidder’s total and current assets and
liabilities;
ii. Proof of the prospective bidder’s capacity to absorb the additional

obligations in connection with the contract to be bid and to finance its
implementation/completion:
• The prospective bidder’s computation of its NFCC which shall

be in accordance with in Sec. 23.11.2.5 of the IRR-A:
• A certificate of commitment from a licensed bank to extend to

it a credit line if awarded the contract to be bid, which
commitment should be specific to the contract to be bid; or
• A hold out on cash deposit certificate issued by a licensed

bank, which shall also be specific to the contract to be bid.
The credit line and hold-out cash deposit certificate must be in an

amount not lower than that set by the Procuring Entity in the Bidding
Documents. (IRR-A Section 23.1.2.5)
In determining the amount of credit line or hold-out cash deposit, the

BAC, TSD/TWG consultants, if any, and the end-user shall consider
the ABC, terms of payment and/or delivery schedule. In no case shall
the amount be lower than ten percent (10%) of the ABC.
2. Class “B” Documents
a. Valid JVA, if the prospective bidder is a joint venture, with the agreement
containing a statement on who the joint venture has constituted and
appointed as the lawful attorney-in-fact to sign the contract, if awarded the
project, and on which among the members/principals is the lead
representative of the joint venture.
All members of the joint venture should submit all the Class “A” eligibility
documents. All members of the joint venture should comply with all the legal
eligibility requirements, but compliance by one of the joint venture members
with the technical and financial requirements will suffice.
b. Letter authorizing the HOPE or his duly authorized representative/s to verify

any or all of the documents submitted for the eligibility check.
3. Other Eligibility Documents
a. Statement under oath that Bidder did not have any contract terminated for
default on the part of the bidder within two years with any unit of the
Department;
b. Articles of Partnership or Incorporation whichever is applicable, including

amendments thereto if any, for the purpose of checking the citizenship of the
owners/partners;

Page 49
c. For Corporation, submit the latest or the preceding calendar year’s issue of
General Information Sheet (GIS), stamped “received” by the Securities and
Exchange Commission (SEC) Office;
d. Copy of the Bidder’s largest single completed contract within the last five (5)
years reckoned from the date of bid opening similar to the contract to be bid,
the value of which must be at least equal to fifty percent (50%) of the total
ABC for the contract to be bid;
e. A notarized certification by the bidder or its duly authorized representative,

that each of the documents submitted in satisfaction of the eligibility
requirements is an authentic and original copy, or a true and faithful
reproduction or copy of the original, complete, and that all statements and
information provided therein are true and correct. (IRR-A Section 23.8) This
shall include a List of Documents submitted indicating whether the documents
are original or certified true copies;
f. Other appropriate documents as may be required by the Procuring Entity

concerned.
The BAC shall require the bidder’s authorized representative to initial every page of the
documents submitted. The purpose of this exercise is to ensure that the documents reviewed
by the BAC are authentic, and to protect the BAC from any insinuation of tampering with the
said documents.
What is a Certificate of Class “A” Documents?
It is a certificate issued by the BAC of the Procuring Entity to interested eligible bidders
certifying that the BAC maintains a file of Class “A” documents submitted by
suppliers/providers and that the bidder concerned has maintained this file current and
updated. It shall be valid for a period of one (1) year from date of issuance.
To facilitate eligibility checking, the BAC may maintain a file of the foregoing Class “A”
documents submitted by suppliers/providers. When such file is required by the procuring
entity, a supplier/provider who wishes to participate in a public bidding for goods and services
should maintain this file current and updated at least once a year, or more frequently when
needed.
A supplier/provider who maintains a current and updated file of its Class “A” documents will
be issued a Certificate of Class “A” Documents which may be submitted to the procuring
entity concerned in lieu of the foregoing Class “A” documents.
Methodology: How do we issue the Certificate of Class “A” Documents?
The following are the steps in the issuance of Certificate of Class “A” Documents:
1. Once the BAC has conducted Eligibility screening on the date specified in the IAEB, a
Notice of Eligibility shall be issued to eligible bidders;
2. Interested applicants/eligible bidders may apply for a Certificate of Class “A”
Documents upon filing of the prescribed application form and payment of reasonable
and non-refundable amount as processing fee;
3. After submission of the application form, the BAC/BAC Secretariat shall validate all the
applicant’s previously submitted class “A” documents;
4. Upon validation and verification, a Certification of Class “A” Documents shall be issued
to applicants/eligible bidders. Such certification shall be valid for a period of one (1)
year from date of issuance thereof and shall be updated by the eligible bidder
concerned;

Page 50
5. Certificate of Class “A” Documents may be submitted by the prospective bidders to

the issuing Procuring Entity in lieu of the required Class “A” Documents [IRR-A
Section 24.7.1 (k)].
What are the eligibility requirements of a prospective foreign bidder?
Foreign manufacturers, suppliers and distributors, when allowed to bid under the
circumstances mentioned in IRR-A Sec. 23.11.1 and R.A. 5183, must submit the same
eligibility requirements as domestic entities. However, the legal documents and the audited
financial statements under the Class “A” documents may be substituted by the appropriate
equivalent documents issued by the country of the foreign manufacturer, supplier or
distributor. (IRR-A Section 23.7) These documents must be duly acknowledged and
authenticated by the Philippine consulate located in that country.
What is the purpose of requiring an NFCC, a credit line or a certificate of a

Hold-out on Cash Deposit that is equal to the ABC?
The NFCC, a credit line or a certificate of a hold-out on cash deposit establishes the bidder’s
liquidity, its capacity to absorb the additional obligations in connection with the contract to be
bid and to finance its implementation/completion. Compliance with this eligibility requirement
may be done on the alternative, such that submission of any of the three is acceptable for
purposes of determining a bidder’s eligibility.
How and when must the Eligibility Envelope be submitted?
The Eligibility envelope must be submitted together with the Technical and Financial bid
envelopes, enclosed in an outer sealed envelope or any such appropriate container, to the
BAC on or before the deadline specified in the IAEB. Eligibility requirements submitted after
the deadline must not be accepted by the BAC. The envelope or container should be marked
in the following manner: ”Eligibility Envelope of __________(Name of Bidder)_______- Public
Bidding for ___(Name of Contract to be bid). These envelopes or containers will be opened on
the date specified in the IAEB for the submission and opening of bids, but prior to the opening
of the bid proposal..
A prospective bidder which has submitted a complete set and updated Class “A” documents,
and was issued a Certificate of Class “A” Documents by the BAC of the Procuring Entity may
submit the following:
1. Its Certificate of Class “A” Documents;
2. Its Class “B” documents; and
3. Its other eligibility documents.
What happens if a bidder fails to submit its eligibility envelope and bid on
the date, time and place indicated in the IAEB?
Any eligibility envelope, technical bid or financial bid submitted after the deadline for
submission and receipt of bids prescribed by the Procuring Entity shall be declared “Late” and
shall not be accepted by the BAC.
When should the eligibility envelope be opened?
The eligibility envelope should be opened and an eligibility check conducted by the BAC on the
day of the bid opening, but prior to the opening of the bid envelopes. After opening the

Page 51
eligibility envelopes of the bidders, the technical bid envelopes of bidders who were declared
eligible should then be opened. Thereafter, the financial bid envelopes of bidders who were
declared as technically complying should be opened. These activities are held on the day of
the bid opening, as stipulated in the bidding documents.
What is a Bid?
A Bid refers to a signed offer or proposal to undertake a contract submitted by a bidder in

response to, and in consonance with, the requirements stated in the bidding documents.
“Bid” is also equivalent to and may be used interchangeably with “Proposal” and “Tender”. A
Bid has two components, the Technical Proposal or the Technical Bid, and the Financial
Proposal or the Financial Bid. The Technical and Financial Bids must each be contained in
separate sealed bid envelopes.
What are the contents of the Technical Proposal?
The Technical Proposal should contain, at the minimum, the following technical
information/documents:
1. The preferred Bid Security, in accordance with the following schedule:
FORM OF BID SECURITY MINIMUM AMOUNT in %

of the ABC
a. Certified check, cashier’s check/manager’s check, 1% of ABC
bank draft; or
b. Irrevocable letter of credit issued by a reputable 1% of ABC
commercial bank or in the case of an irrevocable
letter of credit issued by a foreign bank, the same
shall be confirmed or authenticated by a reputable
local bank; or
c. Bank guarantee confirmed by a reputable local bank 1 ½% of ABC
or in the case of a foreign bidder, bonded by a
foreign bank; or
d. Foreign government guarantee as provided in an 100% of ABC
executive, bilateral or multilateral agreement, as
may be required by the HOPE concerned.
2. Authority of the signatory, which must be contained in a Board Resolution if the

bidder is a corporation or a cooperative, a Joint Venture Resolution if the same is a
Joint Venture, a Partnership Resolution if the bidder is a Partnership, or a Special
Power of Attorney (SPA) issued by the General Manager or Proprietor if the bidder is a
sole proprietor;
3. Production/delivery schedule, if applicable;
4. Manpower requirements, qualifications and experience, if applicable;
5. After-sales service/parts, if applicable;
6. Technical specifications;
7. Commitment from a licensed bank to extend to the bidder a credit line if awarded the
contract to be bid, or a hold out on cash deposit certificate (both in the prescribed
form), in an amount not lower than that set by the Procuring Entity in the Bidding
Documents. If the bidder previously submitted this document as an eligibility
requirement, the said previously submitted document shall suffice. In addition, the
bidder has the option to replace the cash deposit certificate with a credit line
certificate if awarded the contract;

Page 52
In determining the amount of credit line or hold out on cash deposit, the ABC, terms
of payment and/or delivery schedule shall be considered. In no case shall the amount
be lower than ten percent (10%) of the ABC.
8. Certificate from the bidder under oath of its compliance with existing labor laws and
standards, in the case of procurement of services;
9. A sworn affidavit of compliance with the Disclosure Provision under Section 47 of R.A.
9184 and its IRR-A in relation to other provisions of R.A. 3019;
10. A sworn statement attesting to the responsibilities mentioned in Section 17.7.1,

particularly that the bidder has taken steps to carefully examine all of the bidding
documents, has acknowledged all conditions, local or otherwise, affecting the
implementation of the contract, has made an estimate of the facilities available and
needed for the contract to be bid, and has complied with its responsibility of inquiring
and securing all supplemental/bid bulletins issued by the BAC; and
11. Other documents/materials as stated in the ITB.
What are the contents of the Financial Proposal?
The Financial Proposal shall contain, at the least, the bid form and price schedule in the
prescribed form.
When should Bids be submitted?
Bids should be submitted on or before the specified time and date of the deadline for
submission of bids, as stated in the IAEB, and within thirty (30) calendar days from
date of advertisement and/or first day of posting the IAEB. (IRR-A Section 21.2.2
[i]) Bids submitted after the specified deadline shall not be received or accepted by the BAC.
(IRR-A Section 25.2)
How should the envelopes be submitted and received?
Eligible bidders should submit their bids through their authorized managing officer or their
duly authorized representative (i) in the prescribed Bid Form, including its annexes, as
specified in the bidding documents, (ii) on or before the specified deadline, and (iii) in two (2)
separate sealed bid envelopes, the first containing the technical component of the bid, and
the second containing the financial component of the bid, with the name of the contract to be
bid and the name of the bidder in capital letters, addressed to the BAC of the agency
concerned. The bidder shall mark the two envelopes: “Do not open before (date and time of
opening of bids).” Both envelopes shall then be sealed in an outer envelope which shall be
addressed to the BAC and shall be
marked as specified in the ITB.
TIPS: Let’s improve transparency
Who are involved in the The BAC may request the prospective bidders to
receipt and opening of identify an individual who shall act as a third party
eligibility envelopes and bids? witness and countercheck the eligibility documents
being examined by the BAC. This is especially
important if there are no observers present during
The following parties are involved in the Bid Opening.
this process:
Alternatively, the BAC may use any device (i.e.,
1. The BAC; document camera, opaque projector, etc.) that will
enable all attendees to view the document being
2. The BAC Secretariat; examined

Page 53
3. The End-User/PMO;
5. Cash Collecting Officer;
6. The bidders; and
7. The Observers.
Methodology: How are the eligibility and bid envelopes received, opened
and examined?11
1. The BAC Secretariat shall receive the Eligibility, Technical and Financial envelopes at
the time, date and place specified in the bidding documents. Upon receipt of these
envelopes, the BAC Secretariat must stamp the face of the outer envelope as
“RECEIVED,” indicating thereon the date and time of receipt, and have the stamp
countersigned by the receiving officer.
2. The BAC Secretariat shall accomplish in triplicate a pre-numbered receipt indicating

the name of the prospective bidder and the date and time when the envelopes were
received. It then attaches one triplicate copy of the receipt on the envelopes, gives
the other triplicate copy to the prospective bidder, and keeps the original for records
purposes.
3. The BAC shall open in public the Eligibility envelopes on the same day as the bid
opening. (IRR-A Section 23.1) The BAC shall read in public the contents of the
Eligibility envelopes, and shall examine each prospective bidder’s eligibility
requirements or statements. It shall record the presence or absence of the required
eligibility requirements in a Checklist.
4. The BAC shall declare prospective bidders as either “eligible” or “ineligible”, based on
the findings in number 3 above, and inform them accordingly. The Eligibility envelopes
shall likewise be marked as such, and these markings shall be countersigned by the
BAC chairperson or his duly designated authority. (IRR-A Section 23.2) The BAC
may prepare a pro-forma Notice of Eligibility and a Notice of Ineligibility, which will be
duly accomplished by the BAC Secretariat and signed by the BAC members present
during the Eligibility Check. In case a prospective bidder is declared ineligible, the
Notice of Ineligibility shall state the reason for such ineligibility. The Notice will be
received officially by the Bidder’s authorized representative. Those found ineligible
have three (3) calendar days upon written notice or, if present at the time of opening
of eligibility requirements, upon verbal notification, within which to file a motion for
reconsideration with the BAC.
5. The BAC shall inquire from ineligible bidders who are present during the Eligibility
Check whether or not they intend to file a motion for reconsideration; if they
signify their intention to do so, the BAC shall keep the Eligibility envelopes containing
the eligibility requirements and re-seal and sign the same in the presence of all the
participants. These shall be deposited in the Bid Box or any other secured place or
location, together with the Technical and Financial envelopes, ensuring that the latter
documents remain sealed and unopened. If an ineligible bidder does not signify its
intention to file a motion for reconsideration during the Eligibility Check, considering
that it may decide to exercise its right to file one during the mandated three (3)
calendar day period therefore, it would be advisable for the BAC to place its own seal
over the Technical and Financial Bid envelopes of the said ineligible bidder – which
BAC seal shall be over the existing seal of the ineligible bidder – to ensure that no
tampering of these documents may be committed while in possession of the ineligible
bidder before resubmission. In any case, with or without any indication on the part of
11
The eligibility and bid opening methodology may vary for FAPs. Reference should be made to the appropriate standard
bidding documents for the project.

Page 54
the prospective bidder of its intention to file a motion for reconsideration, it would be
advisable for the BAC to hold on to the Eligibility envelopes containing the eligibility
requirements, duly re-sealed and deposited, including the technical and financial bid
envelopes, until the expiration of the period for filing a motion for reconsideration, to
ensure the integrity of these documents; unless if the said prospective bidder waives
its right to file a motion for reconsideration.
6. The BAC shall return the Eligibility, Technical and Financial Bid envelopes of a
prospective bidder if it is declared “ineligible” and it does not signify its intention to
file a motion for reconsideration or expressly waives its right to file a motion for
reconsideration. In the case of the latter, such waiver shall be made in writing to be
executed by the authorized representative of the ineligible bidder. The BAC must
decide on a motion for reconsideration within seven (7) calendar days form receipt
thereof.
7. The BAC shall proceed with the opening of the Technical envelopes (Technical
Proposals) of eligible bidders, and the Preliminary Examination of Bids, to determine
each bidder’s compliance with the documents that are required to be submitted for
the technical component of the bid. The opening shall also be done in public,
following the same procedure as the Eligibility Check. The BAC shall check the
submitted technical documents of each bidder against a Checklist of required technical
documents to ascertain if they are all present in the first bid envelope, using non-
discretionary “pass/fail” criteria. (IRR-A Section 30.1)
8. In case one or more of the above-required documents in the Technical Bid envelope is
missing, incomplete or patently insufficient, the bid shall be declared as “failed” and
immediately returned to the bidder concerned, together with the unopened financial
envelope. A bidder determined as “failed” has three (3) calendar days upon written
notice or, if present at the time of bid opening, upon verbal notification, within which
to file a motion for a reconsideration with the BAC. (IRR-A Section 30.3) The BAC
shall follow the procedures provided for under Nos. 4 and 5 above, with respect to the
Technical and Financial Bid envelopes.
9. Immediately after
determining compliance
How’s that again?
with the requirements in
the first envelope (Technical
Proposals), the BAC shall When is a document deemed “complete”
open the second bid and “sufficient”?
envelope (Financial
Proposals) of each For a document, to be deemed “complete” and
remaining technically “sufficient”, it must be complete on its face, that is,
complying bidder whose it contains all the information required, and must
submitted technical comply with the requirements set out in the bidding
requirements were rated documents. For example, a Mayor’s Permit should
“passed.” The second be current, and submission of an expired Mayor’s
envelope of each technically Permit is deemed a “non-submission”. Another
complying bidder shall be example of an insufficient submission is a Bid
opened on the same day. Security in an amount below the requirement.
The BAC shall determine
whether one or more of the
requirements of the Financial Bid is missing, incomplete or patently insufficient, and if
the submitted total bid price exceeds the ABC. If the Financial Bid is complete, the
BAC shall rate it “passed” and shall proceed with the evaluation of the Bid. Only bids
that are determined to contain all the bid requirements for both Technical and
Financial components shall be rated “passed” and shall be considered for evaluation
and comparison. (IRR-A Sections 30.2)
Bids that exceed the ABC will automatically be disqualified. In the case of foreign
currency denominated bids, where allowed by the law and rules, the same shall be
converted to Philippine currency based on the exchange rate prevailing on the day of
the bid opening. The BSP reference rate as of the date of the bid opening shall be
used.

Page 55
10. All members of the BAC or their duly authorized representatives and the Observers
who are present during bid opening, shall initial every page of the original copies of all
bids received and opened. (IRR-A Sections 29)
11. The BAC Secretariat shall record the proceedings using a tape recorder, or a video
recorder or other similar electronic devices that may facilitate the recording. The
minutes of the bid opening should be prepared within three (3) calendar days after
the bid opening date, so that copies thereof could immediately be sent to the BAC
members, Observers, bidders and other interested parties. Copies of the minutes
shall also be made available to the public upon written request and payment of a
specified fee to recover cost of materials.
What happens if only one bidder submits its eligibility and bid envelopes?
Even if only one bidder submits its eligibility and bid envelopes, the bidding process
continues. If the bidder is declared eligible and its bid is found to be responsive to the
bidding requirements, its bid will be declared as a Single Calculated and Responsive Bid
(SCRB) and considered for contract award. (IRR-A Section 36)
What can a prospective bidder do if it is found ineligible or declared non-

compliant with the technical or financial requirements?
A prospective bidder that was absent during the opening of the bids and was found ineligible
or was declared failed has three (3) calendar days from receipt of the Notice of
Ineligibility/Failure, within which to file a written motion for reconsideration before the BAC. If
the prospective bidder was
present during bid opening and
was duly notified (a verbal
notification will suffice in this How’s that again?
case) of its ineligibility/failure, it
also has three (3) calendar days What shall the position paper contain?
upon such notice within which to
file a written motion for The verified position paper shall contain the
reconsideration. The motion for following information:
reconsideration shall only be filed
once. The BAC shall resolve the 1. The name of bidder;
motion for reconsideration within 2. The office address of the bidder;
seven (7) calendar days after 3. The name of project/contract;
receiving the same. Only one 4. The implementing office/agency or procuring
motion for reconsideration shall entity;
be entertained by the BAC. In the 5. A brief statement of facts;
meantime, it will hold on to the 6. The issue to be resolved; and
Eligibility, Technical and Financial 7. Such other matters and information pertinent
envelopes of the prospective and relevant to the proper resolution of the
bidder until the motion for protest.
reconsideration is resolved. In so
doing, it can request the The position paper is verified by an affidavit that
prospective bidder to clarify its the affiant has read and understood the contents
eligibility documents, if necessary. thereof and that the allegations therein are true
(IRR-A Section 23.3) The BAC and correct of his personal knowledge or based on
may return the Eligibility, authentic records. An unverified position paper
Technical and Financial envelopes shall be considered unsigned, produces no legal
if the prospective bidder is effect, and results to the outright dismissal of the
declared “ineligible” and expressly protest. (IRR-A Section 55.2)
waives his right to file a motion
for reconsideration. Such waiver
shall be made in writing, to be
executed by the authorized representative of the ineligible bidder.

Page 56
If its motion for reconsideration is denied, the ineligible bidder may protest the decision in
writing with the HOPE within three (3) calendar days from receipt of the resolution. A protest
may be made by filing a verified position paper with the HOPE concerned, accompanied by
payment of a non-refundable protest fee in an amount equivalent to no less than one percent
(1%) of the ABC. (IRR-A section 55.1)
The protests shall be resolved strictly based on records of the BAC. The HOPE shall resolve
the protest within seven (7) calendar days from receipt thereof. Subject to the provisions of
existing laws on the authority of Department Secretaries and the heads of agencies,
branches, constitutional commissions or instrumentalities of the Government to approve
contracts, the decisions of the HOPE concerned shall be final up to the limit of his contract
approving authority. (IRR-A Section 56)
What happens if questions/doubts have been raised about the eligibility of

a prospective bidder after it had been declared as eligible?
Notwithstanding the eligibility of a prospective bidder, the Procuring Entity concerned reserves
the right to review its qualifications at any stage of the procurement process if it has
reasonable grounds to believe that a misrepresentation has been made by the said
prospective bidder, or that there has been a change in the prospective bidder’s capability to
undertake the project from the time it submitted its eligibility requirements. Should such
review uncover any misrepresentation made in the eligibility requirements, statements or
documents, or any changes in the situation of the prospective bidder which will affect the
capability of the bidder to undertake the project so that it fails the preset eligibility criteria,
the Procuring Entity shall consider the said prospective bidder as ineligible and shall disqualify
it from submitting a bid or from obtaining an award or contract. (IRR-A Section 23.4) A
prospective bidder found guilty of false information, by the court of competent jurisdiction,
faces imprisonment of not less than six (6) years and one (1) day but not more than 15
years. (IRR-A Section 65.3)
What happens if only one bidder is declared eligible?
The procurement process also proceeds with the Preliminary Examination of Bids. Again, if
the eligible bidder submits a bid that is found to be responsive to the bidding requirements,
its bid shall be declared as a SCRB and considered for contract award. (IRR-A Section 36)
What is disqualification?
Disqualification is a distinct concept from ineligibility and post-disqualification. When a Bidder

is disqualified, it is barred from further participating in the procurement at hand, even if, in
some instances, it has initially been declared eligible. Even if a Bidder is Post-qualified, if
after such Post-qualification, the Procuring Entity has found grounds for disqualification, the
latter may declare such Bidder disqualified, hence, the Procuring Entity shall not award the
contract to the former.
Other than a declaration of ineligibility, is there another way by which a

manufacturer, supplier or distributor may be disqualified from bidding?
Aside from those who are not eligible to bid for the procurement of goods, a bidder that has a
conflict of interest shall be disqualified to participate in the procurement at hand. A Bidder
would be considered as having a conflict of interest with another bidder in any of the events
described in paragraphs 1 through 3 below and a general conflict of interest in any 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, controlling

shareholders, partners or members in common with another bidder; or if the bidder is

Page 57
an individual or a sole proprietorship and he is the proprietor of another bidder, or an

officer, director or a controlling shareholder of another bidder; or if the bidder is a
joint 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 a
bidder;
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 them
in a position to have access to information about or influence on the bid of another
bidder, or influence the decisions of the Procuring Entity regarding the bidding
process. This will include a firm or an organization that lends, or temporarily seconds,
its personnel to firms or organizations which are engaged in consulting services for
the preparation related to procurement for or implementation of the project, if the
personnel would be involved in any capacity on the same project;
5. A bidder submits more than one bid in the bidding process. However, this does not
limit 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 technical

specifications 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 to the HOPE by
consanguinity or affinity up to the third civil degree or any of the Procuring Entity’s officers or
employees having 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 TSD/TWG,
if any, the BAC Secretariat, the members of the PMO, and the designers of the project. This
prohibition shall apply to the following persons:
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 to
each 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 its
representation relating to the foregoing, all bids must be accompanied by a Disclosure
Affidavit of the bidder to that effect. (IRR-A Section 47 and Section 25.3.A.9)
May a bidder file a Motion for Reconsideration of the BAC’s decision

declaring another bidder eligible?
Yes. Pursuant to Section 23.3 of the IRR-A.
What happens if no prospective bidder is declared eligible?
If no prospective bidder is found to be eligible, the BAC shall issue a Resolution declaring the
bidding a failure. The BAC in coordination with the end-user and TSD/TWG, if any, then
reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the
terms and conditions, including the quantities or specifications, provided that the ABC is left
unchanged. The BAC must, thereafter, formulate a new IAEB, post and publish the same and
conduct a re-bidding. All bidders that have initially responded to the IAEB in the first bidding
shall be allowed to submit new bids.

Page 58
Should a second failure of bidding occur, the BAC shall declare a failure of bidding and
recommend the use of negotiated procurement as an Alternative Method of Procurement to
the HOPE. The Procuring Entity may then enter into a negotiated procurement with a legally,
technically, and financially capable supplier (IRR-A Sections 35.3 and 53). However, the
terms, conditions, and specifications of the project as well as the ABC must be maintained,
subject to the terms and conditions under paragraph (b), 54.2 of the IRR-A.
If the Procuring Entity on the other hand, finds that there is a need to evaluate the
responsiveness of the ABC or re-asses the original estimate to meet the objectives of the
project, and so decides to adjust the ABC or reduce the scope of the project, the Procuring
Entity should conduct another public bidding with re-advertisement and posting.
What happens if only one bidder passes the Preliminary Examination of

Bids?
The procurement process also proceeds with the subsequent step of Bid Evaluation. Again, if
the eligible bidder submits a bid that is found to be responsive to the bidding requirements,
its bid shall be declared as a SCRB and considered for contract award. (IRR-A Section 36)
What happens if a bidder fails to comply with the Technical and Financial
requirements of the Bid?
The bidder that has failed to comply with any of the Technical or Financial requirements of the
Bid will be disqualified by the BAC, without prejudice to the filing of a written motion for
reconsideration within three (3) calendar days from the receipt of the communication
regarding its bid’s deficiency. (IRR-A Section 30.3)
In case the bidder is determined to have failed in the first envelope, which contains the
Technical Proposal, and it signifies its intention to file for a motion for reconsideration, the
BAC must hold the bidder’s second envelope unopened until the motion for reconsideration
has been resolved. (IRR-A Section 30.3)
Can a bidder modify or withdraw its bid?
A bidder may modify its bid, provided that this is done before the deadline for the submission
and receipt of bids. Where a bidder modifies its bid, it shall not be allowed to retrieve its
original bid, but shall only be allowed to send another bid equally sealed, properly identified,
linked to its original bid and marked as a “modification,” thereof, and stamped “received” by
the BAC. Bid modifications received after the applicable deadline shall not be considered and
shall be returned to the bidder unopened
A bidder may, through a Letter of Withdrawal, withdraw its bid, before the deadline for the
receipt of bids. A bidder may also express its intention not to participate in the bidding
through a letter which should reach and be stamped received by the BAC before the deadline
for the receipt of bids. A bidder that withdraws its bid shall not be permitted to submit
another bid, directly or indirectly, for the same contract. (IRR-A Section 26.2)
The bidder that withdraws its bid beyond the deadline for the submission of bids will forfeit its
bid security, as well as the imposition of any applicable administrative, civil and/or criminal
sanction prescribed in R.A. 9184 and its IRR-A.

Page 59
Step 5 Evaluate the Bids
Legal Reference
IRR-A Section 33 specifies the rules in relation to bid evaluation.
What is the purpose of Bid Evaluation?
The purpose of bid evaluation is to determine the LCB. (IRR-A Section 32.1) It shall be
determined by:
1. Establishing the correct calculated prices of the bids, through a detailed evaluation of
the financial component of the bids; and
2. Ranking of the total bid prices as so calculated from the lowest to the highest. The bid
with the lowest price shall be identified as the LCB.
When should the bids be evaluated?
The entire evaluation process for the bids for the procurement of goods must be completed in
not more than seven (7) calendar days from the deadline for receipt of proposals. (IRR-A
Section 32.3) However, the BAC should exert effort to complete the Bid Evaluation even
before the lapse of the 7-day period, as this will expedite the procurement process.
Who are involved in the Bid Evaluation Process?
The following are involved in the bid evaluation process:
1. The BAC;
3. The TSD/TWG, if any; and
4. The Observers.
The BAC Secretariat shall provide administrative support to BAC in the post qualification.
Methodology: How are bids evaluated?12
1. After the preliminary examination of bids, the BAC, with the assistance of TSD/TWG, if
any, shall immediately conduct a detailed evaluation of all bids rated “passed,” using
a non-discretionary pass/fail criteria, as stated in the IAEB and the ITB, which shall
include a consideration of the following: (IRR-A Section 32.4.1)
a. The bid must be complete. Unless the ITB specifically allow partial bids, bids
not addressing or providing all of the required items in the bidding documents
including, where applicable, those requirements pertaining to the civil works
components of Goods procured, shall be considered non-responsive and, thus,
12
For FAPs, the rules on evaluation will depend on the standard bidding documents for the project.

Page 60
automatically disqualified. In this regard, where a required item is provided,

but no price is indicated, the same shall be considered as non-responsive, but
specifying a “0” (zero) for the said item would mean that it is being offered for
free to the Government.
b. Minor arithmetical corrections to consider computational errors, omissions and

discounts, if allowed in the bidding documents, to enable proper comparison
of all eligible bids. Any adjustment shall be calculated in monetary terms to
determine the calculated prices. (IRR-A Section 32.4.1 [b]) For evaluation
purposes, in allowed instances, the bid must be converted into Philippine
currency based on the exchange rate prevailing on the day of the bid opening.
(IRR-A Section 61.1) The BSP reference rate as of the date of the bid
opening shall be used.
c. In the evaluation of bids, all bids shall be evaluated on an equal footing to

ensure fair and competitive bid evaluation. For this purpose, all bidders shall
be required to include the cost of all taxes, such as, but not limited to, value
added tax (VAT), income tax, local taxes, and other fiscal levies and duties
which shall be itemized in the bid form and reflected in the detailed estimates.
Such bids, including said taxes, shall be the basis for bid evaluation and
comparison. (IRR-A Sections 32.4.2) Moreover, applicable custom duties,
as well as other costs of acquisition such as freight, insurance, and bank
charges, must be incorporated in the bid.
d. In case of
Tip: Let’s make things easier discrepancies
between: (a) bid
prices in figures and
On clarifications during bid evaluation
in words, the latter
(the “no-contact” rule) shall prevail; (b) total
prices and unit prices,
During the bid evaluation stage, the BAC, BAC the latter shall
Secretariat and the TWG shall not entertain prevail; (c) unit cost
clarifications from Bidders, neither shall they in the detailed
initiate communication with the Bidders, estimate and unit cost
regarding the evaluation of the bids. There are in the bill of
two reasons for this rule: quantities, the latter
shall prevail. (IRR-A
1. There is no need for clarifications of Sections 32.4.3)
technical issues since the evaluation is
focused on arithmetical computations which 2. Based on the detailed
are determined from the face of the bid evaluation of bids, those that
itself; and comply with the above-
mentioned requirements shall
2. Communications with the Bidders might lead be ranked in the ascending
to possible collusion or the Bidder might try order of their total calculated
to influence the outcome of the bidding bid prices, as evaluated and
process. corrected for computational
errors, discounts and other
modifications, to identify the
LCB. Total calculated bid
prices, as evaluated and corrected for computational errors, discounts and other
modifications, which exceed the ABC shall be disqualified. (IRR-A Sections 32.4.4)
3. After all bids have been received, opened, examined, evaluated and ranked, the BAC
shall prepare the corresponding Abstract of Bids. All members of the BAC shall sign
the Abstract of Bids and attach thereto all the bids with their corresponding Bid
Securities and the minutes or proceedings of the bidding. (IRR-A Section 32.5) The
Observers shall also sign the Abstract of Bids if, in their independent observation, the
bidding activity conducted by the BAC followed the correct procedure indicated under
R.A. 9184 and its IRR-A. The Abstract of Bids shall contain the following:
a. Name of the contract and its location, if applicable;

Page 61
b. Time, date and place of bid opening; and
c. Names of bidders and their corresponding calculated bid prices arranged from
lowest to highest, the amount of bid security and the name of the issuing
entity.
4. The TSD/TWG, if any, with the assistance of the BAC Secretariat, when directed by
the BAC, should prepare the Evaluation Report, containing the details of the
evaluation conducted, preferably within three (3) calendar days from the date the
evaluation was concluded.
Are there special privileges for cooperatives in the supply of goods to

government entities?
Yes. Under the Cooperative Code of the Philippines, or Republic Act No. 6938, cooperatives
have preferential right to supply government institutions and agencies with rice, corn and
other grains, fish and other marine products, meats, eggs, milk, vegetables, tobacco and
other agricultural commodities produced by their own members.
Moreover, there is a recurring provision in the GAA which mandates the Government to
procure at least ten percent (10%) of its total purchases from duly registered cooperatives
and another ten per cent (10%) from SMEs.
What may be done if all prospective bidders are unable to comply with the
requirement of having a single contract whose value is at least fifty percent
(50%) of the ABC of the project to be bid?
If all prospective bidders are unable to comply with the requirement of having a single
contract whose value is at least fifty percent (50%) of the ABC of the contract to be bid, the
Procuring Entity may have to review the packaging of the project or procurement concerned,
taking into account the technical and financial capabilities and experience in the domestic and
international market, as well as the most logical and practical approach/SOW to complete a
project. However, the Procuring Entity must ensure that this will not result to a splitting of
contracts that is committed for the purpose of evading or circumventing the requirements of
law and existing rules and regulations.
In the alternative, the Procuring Entity may instead require prospective bidders to have at
least three (3) similar completed contracts the aggregate of which should be equivalent to at
least fifty percent (50%) of the ABC of the project to be bid; the largest of these similar
contracts must be equivalent to at least twenty-five percent (25%) of the ABC of the project
to be bid; and the business/company of the prospective bidder willing to participate in the
bidding has been in existence for at least three (3) consecutive years prior to the
advertisement and/or posting of the IAEB. Furthermore, when the item/good to be procured
is novel or its procurement is otherwise unprecedented or is unusual, and compliance to the
requirement on a largest single similar contract is impracticable, the prospective bidder will
only have to comply with the above-mentioned required period for the existence of a
business/company. This scheme may also be applied when requiring a single contract that is
at least fifty percent (50%) of the ABC will likely result to a monopoly that will defeat the
purpose of public bidding. (GPPB Resolution 007-2006, dated 20 January 2006)
The procuring entity can clarify in the bidding documents the similar projects that can be
considered in the bidding, which projects or contracts must have been completed within the
period specified in the IAEB. All other conditions of the contract must be the same as
provided for in the bidding documents.13
13
The experience requirement may vary for FAPs. As such, reference should be made to the appropriate standard
bidding documents for the project.

Page 62
What happens if a bidder does not accept the arithmetical corrections done
by the BAC on its bid?
The BAC must disqualify the bid and forfeit the bid security of the bidder.
What happens if no bid complies with all bid requirements?
If no bid complies with all bid requirements, the BAC shall issue a Resolution declaring the
bidding a failure. The BAC in coordination with the end-user and TSD/TWG, if any then
reviews the terms and conditions stated in the IAEB. If warranted, it changes any of the
terms and conditions, including the quantities or specifications, provided that the ABC is left
unchanged. The BAC must, thereafter, formulate a new IAEB, post and publish the same and
conduct a re-bidding. (IRR-A Section 35) All bidders that have initially responded to the
IAEB in the first bidding shall be allowed to submit new bids.
recommend the use of negotiated procurement as alternative method of procurement to the
HOPE. The Procuring Entity may enter into a negotiated procurement with a legally,
terms, conditions, and specifications of the project as well as the ABC must be maintained.
responsiveness of the ABC or reassess the original estimate to meet the objectives of the
How shall Domestic Preference be applied during bid evaluation?
A Procuring Entity shall apply domestic preference in the procurement of goods as long as it
complies with the provisions of IRR-A and R.A. 5183, and this shall be expressly mentioned in
the bidding documents.
In applying domestic preference, the Procuring Entity shall be guided by the provisions of C.A.
No. 138, to wit:
1. When the LCB including taxes and customs duties, is a “foreign bid” as defined in C.A.
No. 138 (see definition below), the award shall be made to the bidder who submitted
the lowest “domestic bid”, provided that:
a. the domestic bid is not more than fifteen per centum (15%) in excess of
the LCB. (Section 3 [e] C.A. No. 138); and
b. the bidder who submitted the lowest domestic bid must pass the post-
qualification.
An illustrative case is as follows: Foreign Bidder A submitted a bid of P15M which was
declared as the LCB. Domestic preference was specified in the bidding documents.
The lowest Domestic Bidder B submitted a bid of P16.5M, which is 10% in excess of
the LCB. If Bidder B is post-qualified, and the items offered pass the necessary
quality assurance tests, it shall be awarded the contract. However, if it is post-
disqualified, or if the goods it offered do not meet the standard of quality specified in
the Bidding Documents, the award shall be made to Bidder A.

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An illustrative case is as follows: Foreign Bidder A submitted a bid of P15M which was
declared as the LCB. Domestic preference was specified in the bidding documents.
The lowest Domestic Bidder B submitted a bid of P17.4M, which is 16% in excess of
the LCB. If Bidder A is post-qualified, and the items offered pass the necessary
quality assurance tests, it shall be awarded the contract, despite the domestic
preference.
A “foreign bid” means any offer of articles, materials or supplies not manufactured or
to be manufactured in the Philippines, substantially from articles, materials or supplies
of the growth, production, or manufacture, as the case may be, of the Philippines.
(Section 2[d], C.A. No. 138) Conversely, a “domestic bid” means any offer of
unmanufactured articles, materials, or supplies of the growth or production of the
Philippines, or manufactured articles, materials or supplies manufactured or to be
manufactured in the Philippines, substantially from articles, materials or supplies of
the growth, production or manufacture, as the case may be, of the Philippines.
(Section 2[c] C.A. No. 138) In US jurisprudence, the term “substantially” was
construed to mean “more than 75%.” Thus, even if a product is manufactured in the
Philippines, it may not be considered within the ambit of the preference if its raw
materials are not substantially sourced from the Philippines.
2. When several bidders participate in a public bidding for the supply of articles,
materials and equipment for a Procuring Entity, including public buildings or public
works, and the LCB is submitted by one other than a “domestic entity” (see definition
below), the award should be made to the domestic entity making the lowest bid,
provided that:
a. the bid of the domestic entity is not more than 15% in excess of the LCB; and
b. the same domestic entity must pass the post-qualification.
A “domestic entity” means any citizen of the Philippines habitually established in

business and engaged in the manufacture or sale of the merchandise covered by his
bid, or any corporate body or commercial company duly organized and registered
under the laws of the Philippines of whose capital 75% is owned by citizens of the
Philippines, or both. (Section 2[b] C.A. No. 138) Applying C.A. No. 138, in the case
of Asbestos Integrated Manufacturing, Inc. v. Metropolitan Waterworks and Sewerage
System (G.R. No. L-45515. October 29, 1987), the term “domestic entity” was
interpreted to mean citizens of the Philippines or corporate bodies or commercial
companies, duly organized and registered under the laws of the Philippines, 75% of
whose capital is owned by citizens of the Philippines, and who are habitually
established in business engaged in the manufacture or sale of merchandise covered
by their bid.
3. In the case of FAPs or procurement undertaken by virtue of international treaties or

agreements, when there is no provision disallowing the application of domestic
preference, in compliance with R.A. 9184 Section 43, the preference in item (a) above
for domestically-produced and manufactured goods, supplies and materials that meet
the specified or desired quality may further be allowed in the interest of:
a. Availability, that is, the domestically-produced goods are more readily
available in the market, like off-the-shelf items;
b. Efficiency; and
c. Timely delivery of goods.
1.
4. In the case of FAPs undertaken through IFI funding, at the request of the Procuring
Entity, and under conditions to be agreed under the loan agreement and set forth in

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the bidding documents, a margin of preference may be provided in the evaluation of

bids for:
a. Goods manufactured in the country of the Procuring Entity when comparing
bids offering such goods with those offering goods manufactured abroad; and
b. Works in member countries below a specified threshold of Gross National
Product per capita, when comparing bids from eligible domestic contractors
with those from foreign firms.
5. Where preference for domestically manufactured goods or for domestic contractors is

allowed, the methods and stages set forth in the loan agreement should be followed.
What rules govern the lease of Computers, Communications, Information

and Other Equipment?
Contracts for lease of construction and office equipment, including computers, communication
and IT equipment, are subject to the same public bidding and procurement procedures as
prescribed in R.A. 9184, its IRR-A and this Volume 2. (Please refer also to Joint Memorandum
Circular No. 2002-01 issued by the National Computer Center and the DBM, which provides
the policies, rules and regulations on lease of IT equipment. Also, reference may be made to
Department Order No. 188 (dated September 28,1999) and Department Order No. 219
(dated August 14, 2003), issued by the Department of Public Works and Highways, governing
the lease of construction equipment.)

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Step 6 Post-qualify
Legal Reference
IRR-A Section 34 specifies the rules for post qualification.
What is Post-qualification?
Post-qualification is the process of verifying, validating and ascertaining all the statements
made and documents submitted by the bidder with the LCB/SCB, which includes ascertaining
the said bidder’s compliance with the legal, financial and technical requirements of the bid.
If its eligibility documents had been

validated and verified, and its How’s that again?
compliance with the legal, financial,
and technical requirements of the bid The eligibility check does not ascertain the
had been ascertained, the bidder must validity and genuineness of the eligibility
be declared the bidder with the documents submitted by the bidders. Neither
“Lowest Calculated Responsive does it determine the veracity of the claims
Bid” (LCRB) / “Single Calculated made by the bidders in their financial and
Responsive Bid (SCRB). (IRR-A technical proposals.
Section 34.1)
The post-qualification process, on the other
hand, does.
What does Post-qualification
entail?
Post-qualification involves the BAC verifying, validating and ascertaining that the bidder
satisfies the following criteria: (IRR-A Section 34.2)
1. Legal Requirements. The post-qualification process under this criterion involves the
verification, validation and ascertaining of the supplier’s claim that it is not included in
any government “blacklist,” as well as all the licenses, permits and other documents it
submitted. The legal requirements refer to the Legal Documents submitted by the
bidder as part of the eligibility requirements, e.g., SEC registration, DTI business
name registration, Mayor’s permit, TIN, etc.
The bidder’s status with regard to “blacklisting” may be verified by checking the
Consolidated Blacklisting Report issued by the GPPB, or the “blacklist” of any
government agency.
2. Technical Requirements. Post-qualification under this criterion means that the BAC
would have to validate, verify, and ascertain the veracity of the documents submitted
by a supplier to prove compliance of the goods and services offered with the
requirements of the contract and bidding documents. This involves the following
processes:
a. Verification and validation of the bidder’s stated competence and experience;
b. Verification and/or inspection and testing of the goods/products, after-sales

and/or maintenance capabilities, in applicable cases; or inspection of the
plant/factory of a manufacturer, to determine production capacity; and
c. Ascertainment of the authenticity and sufficiency of the Bid Security as to

type, amount, form and wording, and validity period.

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3. Financial Requirements. Under this criterion, the BAC ought to verify, validate and
ascertain the bid price proposal of the bidder and, whenever applicable, its
computation of the NFCC, the required bank commitment to provide a credit line to
the bidder, or the hold out on deposit status of the cash deposit certificate, in the
amount specified and over the period stipulated in the ITB. This is to ensure that the
bidder can sustain the operating cash flow of the transaction.
When should Post-qualification be conducted?
The post-qualification process shall be conducted and completed within seven (7) calendar
days from the determination of the LCB/SCB. However, in the procurement of goods requiring
elaborate testing (such as equipment sourced from abroad) and other exceptional cases, the
post-qualification process, shall, in no case exceed thirty (30) calendar days. (IRR-A Section
34.1)
Who are involved in the conduct of Post-qualification?
The following parties are involved in the conduct of post-qualification:
1. The BAC;
4. The eligible supplier/manufacturer, ranked starting from bidder with the LCB; and
5. The Observers.
The BAC Secretariat shall provide administrative support to BAC in the post qualification.
Methodology: How is Post-qualification conducted?
The following steps are followed in the conduct of post-qualification:
1. The BAC and TSD/TWG, if any, verifies, validates, and ascertains the genuineness,
validity and accuracy of the legal, technical and financial documents submitted by the
bidder with the LCB/SCB, using the non-discretionary criteria described above.
In verifying the information contained in such documents, the BAC and TSD/TWG, if
any, may make inquiries with appropriate government agencies and examine the
original documents kept in the bidder’s place of business. The use of other means for
verification and validation of such documents may be resorted to by the BAC and
TSD/TWG, if any, such as the Internet and other research methods that yield the
same results.
2. The BAC and TSD/TWG, if any, conducts a site inspection of the bidder’s place of
business and/or plant/factory, where applicable.
3. The BAC and TSD/TWG, if any, tests samples for compliance with specifications and
performance levels, where applicable.
4. The BAC and TSD/TWG, if any, inquires about the bidder’s performance in relation
with other contracts/transactions as indicated in its eligibility statement (statement of
on-going, completed or awarded contracts).

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6. If the TSD/TWG, if any, conducts the post-qualification, it prepares a Post-

qualification Report to be submitted to the BAC. The Report shall contain, among
others, the activities undertaken with regard to the post-qualification process,
feedback from inquiries conducted, and the results of any tests conducted by the
TSD/TWG, if any, or an accredited government testing center, where applicable.
7. The BAC reviews the Post-qualification Report submitted by the TSD/TWG, if any.
8. The BAC determines whether the bidder with the LCB/SCB passes all the criteria for
post-qualification.
9. If the LCB/SCB passes the post-qualification, the BAC declares it as the LCRB/SCRB.
10. After the BAC has determined the LCRB/SCRB, the Secretariat, with the assistance of
the TSD/TWG, if necessary, prepares the Notice of post-qualification and the
corresponding BAC Resolution declaring the LCRB/SCRB and to award.
What happens if a bidder is found to have been included in any government

blacklisted suppliers?
A bidder that has been blacklisted by any government agency or instrumentality shall be
disqualified by the BAC from further participating in the bidding process.
What happens if a bidder or its employees is related within the third civil
degree of consanguinity to the HOPE or any officials or employees of the
Procuring Entity with direct access to information that may substantially
affect the results of the bidding?
Such a bidder shall be disqualified by the BAC. (IRR-A Section 47)
What happens if a bidder is found to have been committed an act that

constitutes fraud or misrepresentation or to have colluded with others for
the purpose of influencing the outcome of the bidding?
Such bidder shall be disqualified by the BAC, its bid security forfeited and, upon conviction, it
shall suffer the penalty of imprisonment of not less than six (6) and one (1) day and not more
than fifteen (15) years, (IRR-A Section 65.2) and likewise suffer the administrative
penalties of suspension from participation in government procurement for the first offense and
suspension for two years on the second offense. (IRR-A Section 69.1)
What happens if the bidder with the LCB/SCB fails Post-qualification?
If the bidder with the LCB/SCB fails to pass post qualification, the BAC shall immediately
notify the said bidder in writing of its post-disqualification and the grounds for it. The post-
disqualified bidder shall have three (3) calendar days from receipt of the said notification to
request from the BAC, if it so wishes, a reconsideration of its decision. The BAC shall evaluate
the motion for reconsideration, if any, using the same non-discretionary criteria, and shall
issue its final determination of the said request within seven (7) calendar days from receipt
thereof. (IRR-A Section 34.4) Similar to the cases of bidders deemed to be ineligible and
whose bids are rated “failed,” the bidder with the LCB/SCB who fails to pass post-qualification
may likewise file a protest with the payment of the corresponding fee in case the BAC denies
its motion for reconsideration. (Please refer to Step 4, Receive and Open Eligibility Envelopes
and Bids for further discussions on filing a protest.)

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Immediately after the BAC has notified the first bidder of its post-disqualification, and
notwithstanding any pending motion for reconsideration thereof, the BAC shall initiate and
complete the same post-qualification process on the bidder with the second LCB. If the
second bidder passes the post-qualification, and provided that the motion for reconsideration
of the first bidder has been denied, the BAC shall declare the second bidder as the bidder with
the LCRB. The HOPE shall then award the contract to it. (IRR-A Section 34.5)
If the second bidder, however, fails the post-qualification, the procedure for post-qualification
shall be repeated for the bidder with the next LCB, and so on until the LCRB, is determined for
award. (IRR-A Section 34.7)
What happens if all qualified bidders fail Post-qualification?
If no bidder passes post-qualification, the BAC shall issue a Resolution declaring the bidding a
failure. The BAC in coordination with the end-user and TSD/TWG, if any, then reviews the
terms and conditions stated in the IAEB. If warranted, it changes any of the terms and
conditions, including the quantities or specifications, provided that the ABC is left unchanged.
The BAC must, thereafter, formulate a new IAEB, post and publish the same and conduct a
re-bidding. (IRR-A Section 35) All bidders that have initially responded to the IAEB in the
first bidding shall be allowed to submit new bids.
recommend the use of negotiated procurement as alternative method of procurement to the
HOPE. The Procuring Entity may enter into a negotiated procurement with a legally,
terms, conditions, and specifications of the project as well as the ABC must be maintained.
responsiveness of the ABC or reassess the original estimate to meet the objectives of the
When may the Procuring Entity exercise its right to reject bids, declare a
failure of bidding, or not award the contract?
The Procuring Entity may exercise the right to reject any and all bids, to declare a failure of
bidding, or not to award the contract in any of the following situations (IRR-A Section
41.1):
1. If there is prima facie evidence of collusion between appropriate public officers or

employees of the Procuring Entity, or between the BAC and any of the bidders, or
between or among the bidders themselves, or between a bidder and a third party,
including any act which restricts, suppresses or nullifies or tends to restrict, suppress
or nullify competition;
2. If the BAC is found to have failed in following the prescribed bidding procedures,
for which the applicable sanctions shall be applied to the erring officers, as provided in
IRR-A Section 65; or
3. For any justifiable and reasonable ground where the award of the contract will not
redound to the benefit of the government as follows:
a. If the physical and economic conditions have significantly changed so as to

render the project no longer economically, financially or technically feasible as
determined by the HOPE;
b. If the project is no longer necessary as determined by the HOPE; and

Page 69
c. If the source of funds for

the project has been How’s that again?
withheld or reduced
through no fault of the
Procuring Entity. What are the instances where the BAC
is considered to have failed in following
the prescribed procedures?
The following are some instances where the BAC

is deemed to have failed to follow prescribed
procedures:
1. Prescribing an insufficient number of

days in the advertisement and/or posting
of the IAEB;
2. Exceeding the required periods for
eligibility screening, bid evaluation, post-
qualification for each lowest calculated
bidder or for awarding the contract
without justifiable cause;
3. Conducting the pre-bid conference or
issuing the bidding documents in less
than the required number of days before
deadline for the submission and opening
of bids;
4. Requiring the bidder to submit additional
documents which is tantamount to
improving his bidding documents; and
5. Allowing a bidder to become eligible or
pass the post-qualification with
incomplete documents.

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Step 7 Award the Contract
Legal Reference
IRR-A Section 37 specifies the rules and guidelines for the awarding of contract.
What is the rule on Contract Award?
The BAC shall issue a Resolution recommending to the HOPE award of the contract to the
bidder with the LCRB/SCRB at its submitted bid price or its calculated bid price, whichever is
lower. (IRR-A Section 37.1)
Prior to the expiration of the period of bid validity, the Procuring Entity should notify the
successful bidder in writing that its bid has been accepted, through a NOA received personally
or sent by registered mail, electronically or through facsimile. It is important that, in case the
NOA is not received personally, its receipt must be confirmed in writing within two (2) days by
the successful bidder and submitted personally or sent by registered mail or electronically to
the Procuring Entity (this particular instruction must be included in the ITB so that the bidder
may be guided accordingly).
In case bid security expires prior to the award of the contract, the Procuring Entity shall
request in writing all those who submitted their bids for extension before the expiration date.
Bidders, however, shall have the right to refuse to grant such extension without forfeiting
their bid security.
What is the Timeline for Contract Award?
The Head of Procuring Entity or his duly authorized representative should approve or
disapprove the recommendation of award within a period not exceeding seven (7)
calendar days from the determination and declaration by the BAC of the LCRB/SCRB.
The Notice of Award shall be given to the bidder with the LCRB/SCRB immediately after
approval of the recommendation. Simultaneously, the BAC shall notify all losing bidders of its
decision.
How’s that again?

Who are involved in the Award of
What is the maximum period of time the Contract?
within which a contract can be
awarded? The following are involved in the activities
related to the awarding of the Contract:
Contract award must be made within eighty 1. The HOPE;

(80) calendar days from the date of bid
opening but not to exceed the bid validity 2. The BAC;
period as specified in the bidding documents.
(IRR-A Section 37.2.2) If award cannot be 3. The BAC Secretariat;
made within the said period, the bid validity
period should be extended. (Please refer to 4. The bidder with the LCRB/SCRB;
Step on Preparing the Bidding Documents for and
the discussion on extension of the bid validity
period.) 5. The Observers.

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Methodology: How is a contract awarded?
The following steps are followed in the awarding of a contract:
1. The BAC Secretariat consolidates all the documents and/or records of the proceedings
of the BAC with regard to the procurement at hand, and attaches the same to the BAC
Resolution.
2. The BAC Secretariat drafts the BAC Resolution recommending award.
3. The BAC signs the Resolution Recommending Award, and transmits the same to the
HOPE or his/her duly authorized representative.
4. The HOPE, or his/her duly authorized representative, acts on the recommendation for
award within a period not exceeding seven (7) calendar days from the determination
and declaration by the BAC of the LCRB/SCRB.
5. In case of approval of the recommendation, the HOPE or his/her duly authorized

representative, through the BAC Secretariat, issues the NOA to the bidder with the
LCRB/SCRB, while the BAC accordingly notifies the losing bidders. In case of a
disapproval of the recommendation of award, the HOPE or his/her duly authorized
representative shall state the reason(s) for disapproval.
6. The bidder with the LCRB/SCRB confirms receipt and signs “Conforme” of the NOA.
7. The successful bidder posts the performance security in accordance with the
Conditions of Contract, and in the form prescribed in he bidding documents within a
maximum period of ten (10) calendar days from the receipt of the NOA, and in all
cases prior to the signing of the contract. (IRR-A Section 37.3)
What are the forms of Performance Security and the corresponding

amounts required?
The performance security shall be in accordance with the following schedule:14
MINIMUM AMOUNT in
FORM OF PERFORMANCE SECURITY % of the Total Contract
Price
a. Certified check, cashier’s/manager’s check, bank draft; 5% of contract price
or
b. Irrevocable letter of credit issued by a reputable 5% of contract price
commercial bank or in the case of an irrevocable letter
of credit issued by a foreign bank, the same shall be
confirmed or authenticated by a reputable local bank;
or
c. Bank guarantee confirmed by a reputable local bank or 10% of contract price
in the case of a foreign winning bidder, bonded by a
foreign bank; or
d. A foreign government guarantee as provided in an 100% of contract price
executive, bilateral or multilateral agreement, as may
be required by the HOPE concerned.
What happens if the bidder being considered for award does not accept the
award?
If the bidder refuses to accept the award within the bid validity period, the BAC shall
forfeit the bid security of the bidder and shall initiate the blacklisting proceedings in
accordance with the Uniform Guidelines for Blacklisting (GPPB Resolution No. 09-
14
For FAPs, reference should be made to the appropriate standard bidding documents for the project in order to
determine the applicable amount and form of the performance security.

Page 72
2004). It then initiates and completes the post-qualification of the bidder with the second
LCB. If found qualified, the said bidder shall be awarded the contract. This procedure is
repeated until the LCRB is determined. Should all eligible bidders fail post-qualification, the
BAC must declare the bidding a failure.
Refusal to accept an award, without just cause or for the purpose of forcing the Procuring
Entity to award the contract to another bidder, if proven, is meted with a penalty of
imprisonment of not less than six (6) years and one (1) day by not more than fifteen (15)
years. (IRR-A Section 65.3.4) Additional penalties of suspension for one (1) year from
participation in government procurement for the first offense, and suspension for two (2)
years for the second offense shall also be imposed on the bidder. (IRR-A Section 69.1)

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Step 8 Have the Contract Signed and Approved and Issue

the Notice to Proceed (NTP)
Legal Reference
IRR-A Section 37 specifies the rules regarding contract signing and approval.
Who are involved in Contract Signing and Approval; and Issuance of the
NTP?
The following are involved in the signing and approval of the contract, and in the issuance of
the NTP:
1. HOPE or his/her duly authorized representative;
2. End-user/PMO;
3. BAC Secretariat;
4. TSD/TWG, if any;
5. Legal Office, if any;
6. Budget Office;
7. Accounting Office;
8. Records Office;
9. Winning bidder
Methodology: How is the contract prepared, approved and NTP issued?
1. The BAC Secretariat (End-user, with assistance of the BAC Secretariat in the case of
Central Office), prepares the contract based on the prescribed contract form attached
in the bidding documents and submit the same to the legal office, if any, for review.
2. The BAC Secretariat (End-user, with assistance of the BAC Secretariat in the case of
Central Office), finalizes the contract in accordance with the comments of the legal
office, if any, and issues the contract to the supplier for his/her signature and that of
his/her instrumental witness. The end-user should advice the supplier to submit the
contract to the BAC Secretariat for the preparation of Complete Staff Work (CSW).
3. Upon receipt of the signed contract, the BAC Secretariat transmits the same with the
CSW to the Head of Accounting Office to ascertain availability of funds and to sign as
instrumental witness of the Procuring Entity.
4. The Accounting Office transmits the contract to the HOPE or his/her duly authorized
representative for signature within ten (10) calendar days from receipt thereof.
5. If higher approval is required or a review by another government body is necessary

(e.g. NEDA or DOJ review), the HOPE or his/her duly authorized representative
transmits the contract documents to the appropriate approving authority or reviewing

Page 74
body which shall be given a maximum of fifteen (15) calendar days from actual
receipt thereof, together with all documentary requirements to perfect the said
contract, to approve or to disapprove it (IRR-A Section 37.4).
6. The office of the HOPE or his/her duly authorized representative transmits the
signed/approved contract to the BAC Secretariat.
7. The BAC Secretariat then coordinates with the supplier for contract notarization.
8. Upon notarization of the contract, the BAC Secretariat prepares the NTP for signature
of the HOPE or his/her duly authorized representative and serves the same to the
supplier within three (3) calendar days from the date of signing/approval thereof.
9. The BAC Secretariat presents the contract with NTP to the Records Office for official
recording.
10. The BAC Secretariat releases the contract and NTP to the end-user for contract
implementation, copy furnished the COA resident auditor.
11. The BAC Secretariat posts the contract awarded at the PhilGEPS, Website of the
procuring entity and conspicuous places.
TIPS: Let’s make things easier

What documents form part
In most procuring entities, particularly the bureaus or of the contract?
lower-level offices of national government agencies
(NGAs) or centrally managed GOCCs or GFIs, the The contract shall include the
contract signatory is a different official from the following:
approving authority. For example, a bureau director
may only be authorized to approve contracts up to 1. The Contract Agreement;
P50M. Contracts exceeding the said amount are
brought up to the Secretary for approval. Different 2. Conditions of the contract
procuring entities have different levels of delegated (General and Special);
authority, but the principle is essentially the same –
the higher the contract amount, the higher is the 3. Duly approved Authority
level of the approving authority. In cases like this, to Purchase/Procure with
the contract is considered approved upon the Certified Availability of
approval of such higher authority. The existence of Funds (CAF)/Allotment;
this policy is the usual cause of delays in
procurement transactions. 4. Technical Specifications
of Goods or SOW for
Section 38 of R.A. 9184 and Section 38.2 of its IRR-A services;
are designed to remove this cause for delay. These
provisions mandate that if further approval of a 5. Drawing/Plans, if
higher authority within or outside the procuring entity applicable;
(other than the President of the Philippines) is
required, and that authority does not take any action 6. IAEB;
on the contract within the prescribed period, the
contract concerned is deemed approved. 7. Instruction to Bidder
(ITB) and BDS;
Only contracts that are duly signed by the
appropriate signatory, but require further approval, 8. Addenda and/or
are covered by this rule, because an unsigned Supplemental/Bid
contract is a mere piece of paper and cannot be the Bulletins, if any;
basis of a government liability.
9. Bid form and price

schedule including all the documents/statements contained in the winning bidder’s
two bidding envelopes, as annexes;
10. Eligibility requirements, documents and/or statements;

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11. Performance Security;
12. Credit Line issued by a licensed bank in accordance with the provisions of the IRR-A, if
applicable;
13. NOA of Contract and winning bidder’s “Conforme” thereto; and
14. Other contract documents that may be required by existing laws and/or the Procuring
Entity concerned.
What are the rules governing the review and approval of government
contracts?
Executive Order 423, s. 2005, prescribes the rules and regulations on the review and approval
of government contracts. Essentially, E.O. 423 provides that, except for government
contracts required by law to be acted upon and/or approved by the President, the HOPE shall
have full authority to give final approval and/or enter into all government contracts of his
respective government agency, awarded through public bidding, regardless of amount.
Provided, that the HOPE certifies under oath that the contract has been entered into in faithful
compliance with all applicable laws and regulations. The Head of a Procuring Entity may also
delegate in writing this full authority to give final approval and/or enter into government
contracts awarded through public bidding as circumstances may warrant (i.e. to
decentralization of procurement in a government agency), subject to such limitations as he
may impose. For procurement undertaken through any of the alternative methods allowed by
law, where the government contract involves an amount less than P500 Million, except where
action or approval of the President is required, the HOPE shall have full authority to give final
approval and/or enter into such contract, provided that the Department Secretary concerned
certifies under oath that the contract has been entered into in faithful compliance with all
applicable laws and regulations. He may delegate in writing this authority, as circumstances
may warrant (i.e. to decentralize procurement), subject to such limitations as he may impose.
Where the HOPE has made a determination that a Government contract, including
Government contracts required by law to be acted upon and/or approved by the President,
involving an amount of at least P500 Million falls under any of the exceptions from public
bidding allowed by law, the HOPE shall, before proceeding with the alternative methods of
procurement provided by law and applicable rules and regulations, obtain the following
requirements:
1. An opinion from the GPPB that said Government contract falls within the exceptions
from public bidding; and
2. Approval from the Director-General of NEDA to proceed with a specific alternative

method of procurement under the exceptional cases provided by law and applicable
rules and regulations.
Except for Government contracts required by law to be acted upon and/or approved by the
President, the HOPE, after obtaining the foregoing requirements, shall have full contracts of
their his respective agency, entered into through alternative methods of procurement allowed
by law. Provided, that the head of the procurement entity certifies under oath that the
contract has been entered into in faithful compliance with all applicable laws and regulations.
When is a contract “effective”?
Unless otherwise specified in the contract, a contract is effective upon receipt of the NTP. If
an effectivity date is provided in the NTP by the Procuring Entity concerned, all notices called
for by the terms of the approved contract shall be effective only from such effectivity date,

Page 76
but such effectivity date should not be later than seven (7) calendar days from the
issuance of the NTP. (IRR-A Section 37.5)
What happens if the bidder with the LCRB or SCRB refuses or is unable,
through its own fault, to post the performance security and sign the
contract within the prescribed period?
1. Its bid security is forfeited;
2. It is disqualified from further participating in the bidding at hand;
3. Upon conviction, the guilty officer/s or individual/s, at the discretion of the court shall
suffer the penalty of imprisonment of not less than six (6) years and one (1) day and
not more than fifteen (15) years; and
4. Upon determination of administrative liability, the guilty officer/s or individual/s will

suffer the administrative penalties of suspension for one (1) year from participation in
government procurement for the first offense, and suspension for two (2) years for
the second offense. This is without prejudice to the blacklisting proceedings in
accordance with the Uniform Guidelines for Blacklisting (GPPB Resolution 09-2004).
The BAC shall administer the process of blacklisting.
For its part, the BAC must initiate and complete the post-qualification of the bidder with the
second LCB. This procedure must be repeated until the LCRB is determined for award. If no
bidder passes post-qualification, the BAC declares the bidding a failure and conducts a re-
bidding with re-posting and re-advertisement. Should there be another failure of bidding
after the conduct of the re-bidding, the Procuring Entity may enter into a negotiated
procurement. (IRR-A Section 40.2)
If the bidder that fails to post the performance security and sign the contract happens to be
one with the SCRB, the BAC must declare the bidding a failure. It then conducts a re-bidding
with re-posting and re-advertisement. Should there be another failure of bidding after the
conduct of the re-bidding, the Procuring Entity may enter into a negotiated procurement.
What happens if the failure of the bidder with the LCRB or SCRB to sign the
contract within the prescribed period is not its own doing?
If the failure of the bidder with the LCRB or SCRB to sign the contract within the prescribed
period is not due to its fault, the sanctions mentioned above shall not be imposed. (IRR-A
Section 40.1)
What happens if the bidder being considered for award does not accept the
NTP?
If the winning bidder refuses or is unable to make good its bid by accepting the NTP with the
procuring entity within the prescribed period, the performance security will be forfeited and
the appropriate sanctions provided in the IRR-A and existing laws, shall be imposed. In such
case, the BAC shall consider for award the Second LCB.

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Two-Stage Competitive Bidding
What is Two-Stage Competitive Bidding?
The Two-Stage Competitive Bidding is one where the bidding process is divided in two (2)
stages. The first stage involves the issuance by the Procuring Entity of bidding documents
with technical specifications that are not yet well defined and merely in the form of
performance criteria, and the submission by the bidders of their respective Letters of Intent,
eligibility requirements, if needed, and initial Technical Proposals without price. This allows
the Procuring Entity to receive inputs from the eligible bidders whose Technical Proposals
meet the minimum performance standards (a meeting/discussion may be held with these
bidders), for purposes of drawing up the final revised technical specifications/requirements of
the contract. The second stage involves the release of the well-defined technical
specifications by the Procuring Entity, followed by the conduct of the regular procedure for
public bidding with all the bidders identified during the first stage, who shall then be required
to submit their respective revised Technical Proposals including their Financial Proposals.
What are the instances when a Procuring Entity may employ the Two-Stage
Competitive Bidding Procedure?
The Two-Stage Competitive Bidding Procedure may be employed for the procurement of
goods when:
1. Due to the nature of the project requirements (e.g. complex information and
communications technology), the required technical specifications/requirements of the
contract cannot be precisely defined in advance of bidding, or it may be undesirable or
impractical to prepare complete technical specifications in advance.
Procuring entities may consider it undesirable or impractical to compare complete

technical specifications in advance under any of the following circumstances:
a. In the case of turnkey contracts;
b. Contracts for large complex facilities;
c. Complex ICT; or
d. Works of a special nature.
2. The problem of technically unequal bids is likely to occur.
The purpose of the bidding procedure is to come up with well-defined, standardized technical
specifications, with inputs from all stakeholders, including the bidders themselves.
What is the timeline for the conduct of a Two-Stage Competitive Bidding?
The timeline for the conduct of a Two-Stage Competitive Bidding will depend on several
variables:
1. The Project Timelines as defined by the PMO or end-user unit;
2. The technical complexity of the Project; and
3. The time required for drawing up the final technical specifications.

Page 78
These variables, however, affect only the first stage of the bidding, as well as the drawing up
of the final technical specifications. Thus, while the timelines for the first stage may not be
definite, the second stage shall follow the timelines prescribed for the regular competitive
bidding procedure. In setting the timelines, the Procuring Entity should ensure that the time
periods involved are reasonable and that there is no undue delay of the entire procurement
procedure and project implementation.
Who are involved in the Two-Stage Competitive Bidding process?
The following are involved in the Two-Stage Competitive Bidding process:
1. The PMO or end-user unit;
3. The BAC;
4. The BAC Secretariat; and
5. The Observers.
Methodology: How is the Two-Stage Competitive Bidding process

conducted?
The general process for a two-stage bidding is as follows:
1. In the first stage, bidders are first invited to submit technical offers (plus other bid
requirements) without prices, on the basis of a conceptual design or performance
specifications which lay down the minimum operating and performance requirements.
2. Each of the unpriced technical bids shall then be discussed between the bidder
concerned and the Procuring Entity and its consultants, if any, for the purpose of
providing for technical and commercial clarifications and adjustments, and in order to
agree on an acceptable technical standard for all bids.
3. At the second stage, the bidding documents will then be amended, but in revising the
said bidding documents, the Procuring Entity would have to respect the confidentiality
of the bidders’ technical proposals used in the first stage, consistent with
requirements of transparency and intellectual property rights. After the discussions,
the bidders shall be given an opportunity to revise or adjust their proposals to
conform to the standards agreed upon. The bidders shall also be invited to submit
price proposals and these shall be evaluated.
The following specific steps are followed in the conduct of the Two-Stage Bidding process:
1. The TSD/TWG, if any, with the assistance of the PMO or end-user unit, prepares the
bidding documents in accordance with the usual procedures. However, the technical
specifications shall only be in the form of performance criteria, i.e. the technical
specifications shall contain functional descriptions of the goods, or expected output for
services, without specifying the details thereof.
2. If necessary, the BAC calls a Pre-Procurement Conference, following the procedures

set forth in Step 1 of competitive Bidding.
3. The BAC issues the Bidding Documents which contain, in addition to the items
prescribed for competitive bidding, a request for the prospective bidders to submit the
following:
a. Letter of Intent;

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b. Eligibility requirements, if needed; and

c. Initial Technical Proposals only (no price tenders).
4. The BAC, with the

assistance of the Tip: Let’s make things easier
TSD/TWG, if any,
conducts the Eligibility
On the drawing up of the final technical
Check, as conducted in
a Single-Stage
specifications under the Two-Stage
Competitive Bidding Competitive Bidding procedure
procedure, and
proceeds with the In drawing up the final technical specifications, the TWG
determination of the and BAC should ensure that the PMO/end-user unit is
eligible and ineligible properly consulted, and has agreed to the said
bidders. specifications.
5. The TSD/TWG, if any,

evaluates the technical
merits of the proposals received from eligible bidders vis-à-vis the required
performance standards, and determines the proposals that meet the minimum
standards.
6. The TSD/TWG, if any, and BAC meet/discuss with the eligible bidders whose Technical
Proposals meet the minimum required standards stipulated in the bidding documents.
The purpose of this meeting is to draw up the final revised technical
specifications/requirements of the contract.
7. Once the final revised technical specifications are completed and duly approved by the
BAC, copies of the same shall be provided to all eligible bidders that met the minimum
technical standards. The latter are then required to submit their revised Technical
Proposals, including their Financial Proposals in two (2) separate sealed envelopes, at
a specified deadline, after which time no more bids shall be received.
8. The BAC proceeds with the bid evaluation, post-qualification, award of contract and
contract signing in accordance with the procedure and timelines prescribed for
competitive bidding.
What happens if no prospective bidder submits a Letter of Intent?
If no prospective bidder submits a Letter of Intent, the BAC shall issue a Resolution
declaring the bidding a failure. In such a case, the BAC shall issue a Resolution declaring a
failure of bidding. The BAC then reviews the terms and conditions stated in the IAEB. If
warranted, it changes any of the terms and conditions, including the quantities or
specifications, provided that the ABC is left unchanged. It must, thereafter, conduct a re-
bidding, in the process formulating a new IAEB and posting and publishing this as required.
(IRR-A Section 35) All
bidders that have initially
responded to the IAEB in the
How’s that again? first bidding shall be allowed
to submit new bids.
How does the ABC affect a bidder under a
Two-Stage Competitive Bidding procedure? If the original estimate is
found to be inadequate on
reassessment to meet the
The approved budget for the contract under bidding shall
objectives of the project, it is
be the upper limit or ceiling for acceptable bid prices. If a
may be necessary to reduce
bid price, as evaluated and calculated in accordance with
the scope of the project (or
this IRR-A, is higher than the approved budget for the
adjust the ABC should there
contract under bidding, the bidder submitting the same
be a second failure of
shall be automatically disqualified. There shall be no
bidding).
lower limit or floor on the amount of the award.

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Should a second failure of bidding occur and the Procuring Entity finds that there is a need to
evaluate the responsiveness of the ABC, and so decides to revise the ABC accordingly, the
Procuring Entity should conduct another public bidding with re-advertisement and/or posting.
Alternatively, the Procuring Entity may enter into a negotiated procurement with a legally,
technically, and financially capable supplier. (IRR-A Sections 35.3 and 53) However, if
the Procuring Entity resorts to negotiated procurement, the terms, conditions, and
specifications of the project as well as the ABC must be maintained.

SECTION 5
Instructions on the Procedural
Steps for the Procurement of
Goods and Services
PART TWO – ALTERNATIVE METHODS OF
PROCUREMENT
Page 83
The Alternative Methods for the Procurement of Goods and

Services
What is the rule on the use of alternative methods of procurement?
Generally, procurement should be through competitive bidding. In preparing the APP, the
Procuring Entity must ensure that there is sufficient time to undertake competitive bidding.
However, the law allows the use of alternative methods of procurement in some exceptional
instances, provided:
1. There is prior approval of the HOPE on the use of alternative methods of procurement,
as recommended by the BAC; and
2. The conditions required by law for the use of alternative methods are present.
The method of procurement to be used shall be as indicated in the approved APP. If the
original mode of procurement recommended in the APP cannot be ultimately pursed, the BAC,
through a resolution, shall justify and recommend the appropriate mode of procurement and
amends/updates the APP to be approved by the HOPE.
One of the reasons for the use of alternative methods of procurement is for administrative
convenience. This means that the Procuring Entity is given the opportunity to procure goods
and services at advantageous terms without having to undergo the entire public bidding
process which could be time-consuming. Or, there could be changes in circumstances that
preclude the use of public bidding as originally proposed in the APP, like in those cases where
the BAC has twice declared a failure of bidding.
In resorting to any of the alternative methods of procurement, the Procuring Entity must
ensure that the method chosen promotes economy and efficiency, and that the most
advantageous price for the government is obtained.15
While the law allows the use of alternative methods or procurement, it emphasizes that
splitting of government contracts is not allowed. (IRR-A Section 54.1) There is splitting of
government contracts when, for the purpose of evading or circumventing the requirements of
law and the IRR-A, especially the necessity of public bidding and the requirements for the
alternative methods of procurement, the Procuring Entity:
1. Divides or breaks up government contracts into smaller quantities and amounts; or
2. Divides contract implementation into artificial phases or sub-contracts.
Thus, the amount indicated in the ABM/SARO shall not be divided into several projects for
bidding.
For the procurement of goods, the following alternative methods of procurement may be
resorted to:
1. Limited Source Bidding

2. Direct Contracting
15
For FAPs, different rules of procedures apply for procurement of commodities, because the market prices of
commodities – such as grain, animal feed, cooking oil, fuel, fertilizer and metals – fluctuate depending upon the demand
and supply at any particular time. Many are quoted in established commodity markets.

Page 84
3. Repeat Order
4. Shopping
5. Negotiated Procurement
What are the rules on the issuance of a resolution to award in alternative

methods of procurement?
One of the responsibilities entrusted to the BAC is to recommend the award of contracts to
the HOPE or his duly authorized representative. However, this responsibility is performed by
the BAC in cases where the agency procures through competitive bidding or under the
alternative methods of procurement where public bidding procedures are required to be
adopted, such as Limited Source Bidding under Section 49 of the IRR-A of R.A. 9184, and
Negotiated Procurement under Section 53 (a) and (b) of the same rules.
With respect to other alternative methods of procurement where the public bidding
procedures are not mandated to be undertaken, such as, Direct Contracting, Repeat Order
and Shopping, under Sections 50, 51 and 52 of the IRR-A of R.A. 9184, respectively, there is
no need for the BAC to issue resolution to award. (GPPB NPM 068-2004, May 17, 2004)

Page 85
Limited Source Bidding
What is Limited Source Bidding?
LIMITED SOURCE BIDDING, otherwise known as SELECTIVE BIDDING, is a method of

procurement of goods that involves the issuance of a direct invitation to bid by the concerned
Procuring Entity to a set of pre-selected suppliers with known experience and proven
capability on the requirements of the particular contract. (IRR-A Section 49)
When is Limited Source Bidding allowed?
Limited Source Bidding may be employed by a Procuring Entity under any of the following
conditions:
1. If only a few suppliers of the goods to be procured are known to be available, such
that resorting to public bidding method will not likely result in any additional suppliers
participating in the bidding. An example is the procurement of highly
classified/specialized types of Goods like security printing (e.g., test materials,
scannable answer sheets, security papers); or
2. In the procurement of major plant components where it is deemed advantageous to

limit the bidding to known qualified bidders in order to maintain uniform quality and
performance of the plant as a whole.
Who shall be invited to bid?
In choosing the Bidders, the Procuring Entity shall consider only those suppliers appearing in
a list maintained by the relevant government authority that has expertise in the type of
procurement concerned. This list should have been submitted to, maintained and updated
with the GPPB and posted in the PhilGEPS. (IRR-A Section 49) In the absence of a relevant
government authority, the Procuring Entity has to resort to open competitive bidding in its
selection of a supplier. Examples of relevant government authorities are the NTC for
telecommunications equipment, the FED of the PNP for firearms and ammunition, the Bureau
of Food and Drug for drugs and the National Printing Office for security printers.
Who are involved in conducting the Limited Source Bidding?
The following are involved in the conduct of limited source bidding for the procurement of
goods:
1. The HOPE;
2. The BAC;
5. The end-user/PMO;
6. The pre-selected suppliers; and
7. The Observers.

Page 86
Methodology: How is procurement through the Limited Source Bidding

method conducted?
The following steps are followed in conducting limited source bidding:
1. The end-user submits pertinent documents to the BAC Secretariat such as:
a. Approved Authority to Procure/Purchase with Certified Availability of Funds

(CAF)/Allotment;
b. Approved PR containing the Technical Specifications, Schedule of

Requirements, Packing Requirements (if applicable) and other conditions of
the contract/purchase order (PO)/job order (JO). The end-user, through the
TSD/TWG, if any, and the BAC Secretariat prepares the bidding documents,
including the IAEB (indicating therein the method of procurement to be used)
and the technical specifications, in accordance with the procedures laid down
in the IRR-A, this Manual and the PBDs;
c. Draft Bidding Documents.
2. The BAC, through the Secretariat, gets the list of pre-selected suppliers maintained by
the GPPB. It may also access the PhilGEPS website as a secondary source of
information.
3. If a pre-procurement conference is required or deemed necessary as previously

discussed in this Manual, the BAC holds the said conference. The end-user shall
justify the existence of the conditions required by law for procurement through
Limited Source Bidding.
4. The BAC, through the Secretariat, posts for information purposes the IAEB for a
period of seven (7) calendar days prior to sending the IAEB, in:
a. The PhilGEPS;
b. The website of the Procuring Entity (DepED official website for Central Office,
DepED Regional website for Regional Offices, DepED Division website for
Division Offices, School website) and its electronic procurement service
provider, if any; and
c. Any conspicuous place in the premises of the Procuring Entity;
5. The BAC Secretariat sends the IAEB to the pre-selected suppliers. The IAEB is sent to
ALL suppliers in the list.
6. The BAC proceeds with the pre-bid conference (if deemed warranted under the
circumstances), eligibility check, bid evaluation, post-qualification and succeeding
activities up to contract award, signing and approval, following the procedures for
Competitive Bidding.
Are bid and performance securities required for this method of

procurement?
Yes, these are required and should be posted in accordance with the procedures for
competitive bidding.

Page 87
Direct Contracting
What is Direct Contracting?
DIRECT CONTRACTING or SINGLE SOURCE PROCUREMENT is a method of procurement

of Goods that does not require elaborate bidding documents. The supplier is simply asked to
submit a price quotation or a pro-forma invoice together with the conditions of sale. The offer
may be accepted immediately or after some negotiations. (IRR-A Section 50)
When is Direct Contracting allowed?
Direct Contracting may be resorted to by a Procuring Entity under any of the following
conditions:
1. Procurement of items of proprietary nature which can be obtained only from the
proprietary source, i.e., when patents, trade secrets and copyrights prohibit others
from manufacturing the same item.
This is applicable when the goods or services being procured are covered by a patent,
trade secret or copyright duly acquired under the law. Under the Intellectual Property
Code of the Philippines (R.A. No. 8293), the registered owner of a patent, a copyright
or any other form of intellectual property has exclusive rights over the product, design
or process covered by such patent, copyright or registration. Such exclusive right
includes the right to use, manufacture, sell, or otherwise to derive economic benefit
from the item, design or process.
2. When the procurement of critical plant components from a specific manufacturer,

supplier or distributor is a condition precedent to hold a contractor to guarantee its
project performance in accordance with the provisions of its contract.
This is applicable when there is a contract for an infrastructure project consisting of

the construction/repair/renovation of a plant, and critical components of such plant
are prescribed by the contractor for it to guarantee its contract performance. For
example, in the construction of a power generation plant, the contractor may require
the use of certain components manufactured by a specific manufacturer, whose
products have been found to meet certain standards and are compatible with the
technology used by the contractor. In this instance, Direct Contracting may be
resorted to in the procurement of such critical plant components. However, the BAC
must require technical proof that such critical plant components are the ONLY
products compatible with the plant.
3. Those sold by an exclusive dealer or manufacturer that does not have sub-dealers
selling at lower prices and for which no suitable substitute can be obtained at more
advantageous terms to the Government. Exclusive dealership does not per se give
rise to the use of direct contracting as an alternative mode. The supplier/contractor/
manufacturer must prove through proper documentation that it is the sole source of
the said the goods, equipment, or services required.
This condition anticipates a situation where the goods are sold by an exclusive dealer
or distributor, or directly sold by the manufacturer. In this instance, it is highly
unlikely that sub-dealers can sell the same at lower prices. Further, the Procuring
Entity has not identified a suitable substitute for the product that can be procured at
terms more advantageous to the government.

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How can Direct Contracting be justified?
To justify the need to procure through the Direct Contracting method, the BAC should conduct
a survey of the industry and determine the supply source. This survey should confirm the
exclusivity of the source of goods or services to be procured. In all cases where Direct
Contracting is contemplated, the survey must be conducted prior to posting of Request for
Quotation (RFQ). Moreover, the Procuring Entity must justify the necessity for an item that
may only be procured through Direct Contracting, and it must be able to prove that there is
no suitable substitute in the market that can be obtained at more advantageous terms.
Who are involved in procurement through Direct Contracting?
The following are involved in the conduct of direct contracting:
1. The HOPE;
2. The BAC;
5. The end-user/PMO;
6. The supplier/manufacturer; and
7. The Observers.
Methodology: How is Direct Contracting conducted?
The following steps are undertaken in conducting Direct Contracting:

(CAF)/Allotment;
b. Approved PR with Technical Specifications, Schedule of Requirements,

Packaging Requirements (if applicable) and other conditions of the
contract/PO/JO when applicable;
c. Price quotation or pro-forma invoice together with the conditions of sale

(certificate of patents, copyrights, exclusive/sole distributorship/dealership
issued by the manufacturer/principal
d. Certification that there are no sub-dealers/distributors selling at a lower price

and that no suitable substitute is available and subject for validation by the
BAC Secretariat;
2. The BAC, through the Secretariat, identifies the supplier from whom the goods will be
procured.
3. The BAC, through the BAC Secretariat, posts for information purposes the Request for
Quotation (RFQ) for a period of seven (7) calendar days prior to sending the RFQ, in:
a. The PhilGEPS;

Page 89
4. If necessary, negotiations with the selected supplier are conducted by the BAC to
ensure that the Government is able to procure the goods at the most advantageous
terms.
5. To ensure that the contract/PO/JO is prepared and approved within the prescribed
timelines, the end-user is responsible that the following are undertaken:
a. The BAC Secretariat prepares and submits the CSW together with the
necessary documents to the end-user for the preparation of the
contract/PO/JO and submission to the Legal Office, if any, to advise whether
or not the provisions in the contract/PO/JO is in compliance with the existing
laws and regulations;
b. The end-user finalizes the contract/PO/JO in accordance with the comments

of the Legal Office. The head of the Legal Office, if any, affixes his/her
signature in every page of the original contract/PO/JO. The same shall be
issued to the supplier for his/her signature and that of his/her instrumental
witness;
c. Upon receipt of the contract/PO/JO signed by the supplier, the end-user

transmits and retrieves the same to/from the Head of the Accounting Office
for signature as instrumental witness of the Procuring Entity and certification
as to funds availability;
d. The end-user transmits, together with an endorsement letter, and retrieve the
contract/PO/JO to/from the HOPE or his/her duly Authorized Representative
for/upon approval;
e. The end-user coordinates with the supplier for contract notarization. The
supplier shall bear the cost for notarization;
f. After receipt of the notarized contract/PO/JO from the supplier, the end-user
presents the contract/PO/JO to the Records Office for official recording and
provides a copy to the BAC Secretariat for posting at the following:
i. The PhilGEPS;
ii. The website of the Procuring Entity (DepED official website for Central
Office, DepED Regional website for Regional Offices, DepED Division
website for Division Offices, School website) and its electronic
procurement service provider, if any; and
To ensure efficiency in procurement processes, the above procedures must be completed

within a maximum period of thirty (30) calendar days.
Should a Procuring Entity require a performance security under this method

of procurement?
Yes, performance security must be posted.

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Repeat Order
What is Repeat Order?
REPEAT ORDER, is a method of procurement of goods from the previous winning bidder,
whenever there is a need to replenish Goods procured under a contract previously awarded
through Competitive Bidding. The procurement should be covered by the contingency
provided for in the APP. (IRR-A Section 51)
Repeat Orders from the previous winning bidder may be resorted to by the Procuring Entity
only in cases where the procured item is clearly superior to the other bids. This superiority
must exist, not only in the price quoted but also in equipment reliability, availability of spare
parts, after-sales service and delivery period, among others. The bid should not have been so
closely contested, such that if a bidding would be conducted again, the previous winning
bidder would still have a high probability of winning.
When is Repeat Order Allowed?
Repeat Order may be resorted to by a

Procuring Entity if the following conditions Tips: Let’s make things
are satisfied:
easier
1. The original contract must have
been procured through competitive Especially if the procuring entity
bidding. anticipates that it would have to procure
through Repeat Order, it would be helpful
2. Contract prices of the repeat order for the BAC Secretariat or the
must be the same as or lower than procurement unit to maintain a price
those in the original contract, monitor of goods and services procured.
provided that such prices are still
the most advantageous to the
government after price verification;
3. The repeat
order will How’s that again?
not result in
splitting of
contracts, What is “splitting of contract”?
requisitions
or purchase Splitting of contracts is the act of dividing or breaking up
orders, as government contracts into smaller quantities and amounts. It
provided also is the act of dividing contract implementation into artificial
for in phases or sub-contracts. Both actions are for the purpose of
Section evading or circumventing the requirements of law and the
54.1 of the IRR-A of R.A. 9184, especially the necessity of public bidding and
IRR-A; the requirements for the alternative methods of procurement.
4. Except in
cases duly If the procuring entity is found to have resorted to this mechanism
approved to subvert the law, those responsible for this act shall suffer the
by the penalty of imprisonment of not less than six (6) years and
GPPB, the one (1) day, but not more than fifteen (15) years. This
repeat penalty is without prejudice to the imposition of other sanctions
order shall provided for in RA 3019 and other penal laws. (IRR-A Section
be availed 65.1.4)
of only
within six

Page 91
(6) months from the date of the NTP arising from the original contract; and
5. The repeat order should not exceed twenty-five percent (25%) of the quantity of each
item in the original contract, and must be part of the contingency provided for in the
APP.
Who are involved in procurement through Repeat Order?
The following are involved in procuring through the Repeat Order method:
1. The HOPE;
2. The BAC;
5. The end-user unit/PMO; and
6. The supplier who won in the previous public bidding.
Methodology: How is procurement through Repeat Order done?
In order to procure through the Repeat Order method, the following steps are followed:
1. The PMO or end-user unit requests for the procurement of additional units of goods
previously procured. If the requirement is twenty-five percent (25%) or less than the
original quantity, it indicates/recommends the use of Repeat Order as a mode of
procurement.

(CAF)/Allotment;
b. Approved PR containing the Technical Specifications, Schedule of

Requirements, Packing Requirements (if applicable) and other conditions of
the contract/PO/JO;
c. Certified True Copy of the previous Contract/PO/JO;
d. Certified True Copy of the previous sales invoice.
3. For information purposes, the BAC, through the BAC Secretariat posts the notice
requesting for repeat order of additional units of goods previously procured in the
following:
a. The PhilGEPS;
4. The BAC, through the BAC Secretariat, conducts a survey of the prevailing market
price of the goods to be procured and compares this with the price of the goods in the
original contract/PO/JO.
5. The BAC confirms the price with the supplier that won the previous public bidding.

Page 92
6. If a pre-procurement conference is required or deemed necessary as previously

discussed in this Manual and in the IRR-A, the BAC holds the said conference. If such
pre-procurement conference is held, the following must be done:
a. The TSD/TWG, if any, reviews the specifications;
b. The end-user unit or PMO confirms the additional requirement as to necessity

and corresponding quantity;
c. The participants confirm if the price and terms in the original contract is most
advantageous to the government; and
d. The BAC determines the existence of the conditions required for procurement
through Repeat Order.
7. The BAC recommends the conduct of a Repeat Order through a Resolution and
amends/updates the APP to be approved by the HOPE.
8. The BAC, through the Secretariat, confirms the Repeat Order with the previous
supplier.
9. To ensure the that the contract/PO/JO is prepared and approved within the prescribed
a. The BAC Secretariat prepares and submits the CSW together with the
contract/PO/JO and submission to the Legal Office, if any, to advice whether
or not the provisions in the contract/PO/JO is in compliance with the existing
laws and regulations;
b. The end-user finalizes the contract/PO/JO in accordance with the comments

of the legal office. The head of the Legal Office affixes his/her signature in
every page of the original contract/PO/JO. The same shall be issued to the
supplier for his/her signature and that of his/her instrumental witness;
c. Upon receipt of the contract/PO/JO signed by the supplier, the end-user

transmits and retrieves the same from the Head of the Accounting Office for
signature as instrumental witness of the Procuring Entity and certification as
to funds availability;
d. The end-user transmits, through an endorsement letter, and retrieves the

contract/PO/JO to/from the HOPE or his/her duly Authorized Representative
for/upon approval;
e. The end-user coordinates with the supplier for contract notarization. The
supplier shall bear the cost for notarization;
f. After receipt of the notarized contract/PO/JO from the supplier, the end-user
presents the contract/PO/JO to the Records Office for official recording and
provides a copy to the BAC Secretariat for posting at the following:
i. The PhilGEPS;
ii. The website of the Procuring Entity (DepED official website for Central
website for Division Offices, School website) and its electronic
To ensure efficiency in procurement processes, the above procedures must be completed

within a maximum period of thirty (30) calendar days.

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Should a Procuring Entity require a performance security under this

procurement method?
Yes. Performance security shall be posted by the supplier in accordance with the provisions of
RA 9184.

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Shopping
What is Shopping?
SHOPPING is a method of procurement of goods whereby the Procuring Entity simply

requests for the submission of price quotations for readily available off-the-shelf Goods or
ordinary/regular equipment to be procured directly from suppliers of known qualifications.
(IRR-A Section 52)
Inherent in this definition are the following requisites:
1. The goods to be procured are readily available off-the-shelf items or ordinary/regular

equipment; and
2. The suppliers from whom the goods are procured are of “known qualifications.”
With respect to the procurement of ordinary/regular supplies/equipment not available in the

PS-DBM, the suppliers from whom goods are procured should be in good standing, and
have not committed any breach of contract (e.g., short deliveries, unreasonable delays in
delivery of goods, delivery of defective goods, or similar acts) in previous transactions with
the Procuring Entity or other government entity. It is the responsibility of the Procuring
Entity, through the procurement office, to monitor contract implementation as well as
constantly coordinate with the GPPB-TSO for updates on blacklisted suppliers.
The term “ordinary or regular office supplies” should 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. However, office supplies shall not include
services such as repair and maintenance of equipment and furniture, as well as
trucking, hauling, janitorial, security, and related or analogous 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.
When is Shopping allowed?
Shopping shall be employed only in any of the following cases:
1. When there is an unforeseen contingency requiring the immediate purchase of goods.

However, the amount must not exceed Fifty Thousand Pesos (Php50,000.00) per
transaction, and the aggregate amount of such purchases must not exceed the
maximum allowed by the GAA.
2. When ordinary or regular office supplies and equipment not available in the PS-DBM
needs to be procured, the price of such purchase not exceeding Two Hundred Fifty
Thousand Pesos (Php250,000.00). However, it must be ensured that the
procurement does not result in splitting of contracts, as provided in Section 54.1 of
the IRR-A. At least three (3) price quotations from bona fide suppliers must likewise
be obtained. (IRR-A Section 52 [b])
The contract ceiling for procurement through Shopping is subject to periodic review by the
GPPB, and may be increased or decreased to reflect changes in economic conditions or for
other justifiable reasons. (IRR-A Section 52)

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Who are involved in the conduct of procurement through Shopping?
The following are involved in the conduct of procurement through the Shopping method:
1. The HOPE;
2. The BAC;
4. The end-user/PMO; and
5. The supplier(s).
Tips: Let’s make things easier
On planning properly for contingency purchases
Section 7.1 of the IRR-A requires all procurement to be in accordance with the APP, and all
procuring entities are not allowed to procure anything unless it is included in the APP. The
requirement extends to those immediate purchases of readily available off-the-shelf goods
and to contingencies. These purchases include those charged against cash advances, or
the so-called “over-the-counter” purchases. Procuring entities are not allowed to procure
anything unless it is included in the APP.
Contingencies must therefore be provided for in the APP based on historical data. (IRR-A
Section 7.3) This can be done by allocating for such purchases a percentage of the total
procurement budget as reflected in the procuring entity’s APP. However, it would be
advisable for this allocation not to be more than four percent (4%) of the total
appropriations for Maintenance and Other Operating Expenses (MOOE) as provided for in
the GAA.
To enable it to plan its purchases more efficiently, and consequently approximate realistic
levels for the amount that it would need for its contingency purchases or its small
purchases of ordinary/regular office supplies/equipment, the procuring entity must conduct
a regular study of its “Over-the-Counter Purchases”. Based on this study, the procuring
entity would be able to identify recurring expenses that could more reasonably be included
in the APP, and thus determine a more realistic allocation for contingencies.
Methodology: How is procurement through the Shopping method done?
The following steps need to be followed in procuring through the Shopping method:
1. For an unforeseen contingency requiring immediate purchase:
a. Pursuant to a BAC Resolution duly approved by the HOPE, an immediate

purchase (not to exceed P50,000.00) brought about by an unforeseen
contingency, may be undertaken directly by the end-user with a supplier and
charged against their cash advances. Provided that the procurement shall be
justified by the head of office that an unforeseen contingency occurred.
Provided further, that it shall follow Budgeting, Accounting and Auditing rules
and regulations.
b. The period for posting may be waived, so that the procurement activity may
be posted by the BAC Secretariat after the same has been conducted for
information purposes only. (IRR-A Section 54.2 [h]) Otherwise, the need
for an immediate purchase brought about by an unforeseen contingency may
be negated.

Page 96
2. For procurement of ordinary or regular office supplies, materials and equipment not
available in the Department of Budget and Management – Procurement Service (DBM-
PS) not exceeding Two Hundred Fifty Thousand Pesos (P250,000.00):
a. The end-user submits pertinent documents to the BAC Secretariat such as:
i. Approved Authority to Procure/Purchase with Certified Availability of

Funds (CAF)/Allotment;
ii. Approved PR containing the Technical Specifications, Schedule of

Requirements, Packing Requirements (if applicable) and other
conditions of the PO/JO.
b. The BAC, through the BAC

Secretariat prepares Tips: Let’s make things easier
Request for Quotation.
On approving authorities for
c. The BAC, through the purchases through the Shopping
Secretariat, posts for
method
information purposes the
procurement opportunity
(Request for Quotation), Considering the small value of procurement
for a period of seven (7) through Shopping, the HOPE is encouraged
calendar days, in. to delegate the function of approving such
requests to lower level officials, provided the
i. The PhilGEPS; aggregate amount of such procurement
transactions still falls within the amount
ii. The website of the allowed for contingencies in the APP. If the
Procuring Entity aggregate amount of these transactions
[DepED official exceed the amount provided for in the APP, it
website for Central could indicate either of two things:
Office, DepED
Regional website 1. the APP does not reflect a realistic
for Regional percentage of contingent procurements,
Offices, DepED requiring a more thorough study of past
Division website procurement data; or
for division offices,
School website] 2. there is a tendency to purchase
and its electronic indiscriminately, possibly to avoid
procurement competitive bidding.
service provider, if
any; and In either case, the HOPE should step in and
ensure that proper measures are carried out
iii. Any conspicuous to correct the situation.
place in the
premises of the Another alternative would be for the BAC to
Procuring Entity. include in the APP a general recommendation
for Shopping as an alternative method to be
d. The BAC, through the BAC employed in case of an occurrence of a
Secretariat, issues contingency, so that the approval of the APP
Requests for Quotation to by the HOPE would necessarily cover an
at least three (3) suppliers approval of such recommendation; provided,
in good standing. of course, that the limits indicated for
contingencies are not exceeded.
e. The suppliers submit the
Price Quotations (please
refer to attached Standard
Forms) through the BAC
Secretariat.
f. The BAC should obtain at least three quotations from suppliers.

Page 97
g. The BAC evaluates the quotations submitted to make sure that it complies
with the technical specifications of the end-user and to correct mathematical
errors, if any.
h. For shopping under Section 52(b) of the IRR-A, award shall be made by the
BAC to the supplier with the lowest price quotation.
i. To ensure that the PO/JO is prepared and approved within the prescribed
i. The BAC Secretariat prepares and submits the CSW together with the
PO/JO;
ii. The end-user prepares and finalizes the PO/JO;
iii. After the PO/JO has been signed and approved, the end-user presents
the same to the records office for recording and provides a copy to the
BAC Secretariat for posting at the following.
a) The PhilGEPS;
b) The website of the Procuring Entity [DepED official website for

Central Office, DepED Regional website for Regional Offices,
DepED Division website for division offices, School website]
and its electronic procurement service provider, if any; and
c) Any conspicuous place in the premises of the Procuring Entity.
To ensure efficiency in procurement processes, the above procedures must be

completed within a maximum period of thirty (30) calendar days.
Are performance securities still required for procurements through the

Shopping method?
In cases when shopping is employed in case of an unforeseen contingency where the

compliance of the supplier’s obligation to deliver or perform is immediate such that there is no
more delivery or performance to be guaranteed, suppliers may be exempted from posting a
performance security provided that the goods procured are delivered upon purchase.
However, for purchases of ordinary or regular office supplies or equipment not available in the
PS-DBM, the Procuring Entity should require the posting of performance securities.

Page 98
Negotiated Procurement
What is Negotiated Procurement?
NEGOTIATED PROCUREMENT is a method of procurement of Goods whereby the Procuring

Entity directly negotiates a contract with a technically, legally and financially capable supplier.
(IRR-A Section 53)
The latter portion of the above definition indicates the advisability for the existence of a
registry of suppliers maintained and updated by the Procuring Entity. Moreover, particularly
in the cases of emergency procurement, the suppliers from whom goods are procured
should be in good standing, and have not committed any breach of contract (e.g., short
deliveries, unreasonable delays in delivery of goods, delivery of defective goods, or similar
acts) in previous transactions with the Procuring Entity or other government entity. It is the
responsibility of the Procuring Entity, through the procurement office, to monitor contract
implementation as well as constantly coordinate with the GPPB-TSO for updates on blacklisted
suppliers.
When is Negotiated Procurement allowed?
For the procurement of goods, negotiated procurement is employed only in any of the
following cases:
1. Where there has been failure of public bidding for the second time provided in Section
35 of R.A. 9184;
2. In case of imminent danger to life or property during a state of calamity, or when

time is of the essence arising from actual or man-made calamities or other causes
where immediate action is necessary to prevent damage to or loss of life or property,
or to restore vital public services, infrastructure facilities and other public utilities;
3. 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. Procurement of goods from another agency of the government, (For purposes

of this manual, the term Procuring Agency refer to DepED and its field offices and
attached agencies. The term Servicing Agency shall refer to any of the various units of
the Government, including Department, Bureau, Office, Instrumentality excluding
Government Owned and Controlled Corporations [GOCCs] incorporated under Batas
Pambansa Blg. 68 [Corporation Code of the Philippines]).
a. Procurement of goods in this section shall include but not limited to,
procurement of venue with accommodations, school desks, furniture &
equipment from arts & trade schools and the like, from another agency of the
government (e.g. DAP, Teachers Camp, RELC & Ecotech) which owns facilities
necessary for the project.
b. The Agency-to-Agency Agreements shall satisfy the following conditions:
i. Conduct of Cost-benefit Analysis by the Procuring Entity indicating that

entering into an Agency-to-Agency Agreement with the Servicing Agency
is more efficient and economical for the DepED.

Page 99
ii. The total amount of all goods to be undertaken through Agency-to-

Agency Agreements should not exceed twenty-five percent (25%) of the
Procuring Entity’s total procurement budget for each category as reflected
in the approved APP;
iii. Servicing Agency has the mandate to deliver the goods and services
required to be procured; and
iv. Servicing Agency owns the facilities and necessary tools and equipment
required for the project.
c. Subject to appropriate guidelines, the Procuring Agency may require the

Servicing Agency to post a performance security under Section 39 of R.A.
9184 and/or post a warranty security under Section 62 of R.A. 9184.
d. All procurement to be undertaken by the Servicing Agency, including those

required for the project, shall continue to be governed by the provisions of
R.A. 9184.
e. All projects undertaken through Agency-to-Agency Agreements shall be

subject to pertinent budgeting, accounting, and auditing rules.
5. Where the procurement does not fall under Shopping in Section 52(a) of the IRR-A
and amounts to Fifty Thousand Pesos (P50,000.00) and below, provided that the
procurement does not result in splitting of contracts.
6. Procurement of hotel and restaurant services/conference/seminar and exhibit areas

involving an amount not exceeding P1,000.000.00. [Procurement of venue with
accommodation and/or catering services]
Who are the parties involved in Negotiated Procurement?
The following are involved in purchasing goods through negotiated procurement:
1. The HOPE;
2. The BAC;
5. The end-user unit or PMO; and
6. The registered suppliers.
Methodology: How is Negotiated Procurement undertaken?
The following steps are undertaken in purchasing goods through the negotiated procurement
method:
1. For Two-Failed Biddings:
a. The BAC, through a resolution justifies and recommends the change in the
mode of procurement to be approved by the HOPE or his/her duly Authorized
Representative.
b. The BAC convenes the appropriate officials for the pre-procurement

conference, if deemed necessary.

Page 100
c. The BAC, through the Secretariat, posts for information purposes the
procurement opportunity, for a period of seven (7) calendar days, in:
i. The PhilGEPS;
ii. The website of the Procuring Entity [DepED official website for Central
website for division offices, School website] and its electronic
iii. Any conspicuous place in the premises of the Procuring Entity.
d. The BAC, through the BAC Secretariat, draws up a list of at least three (3)
suppliers in good standing which will be invited to submit bids and negotiate
with the bidder who submitted the LCB.
The BAC shall maintain a registry of suppliers as basis for drawing up of

suppliers for negotiations.
e. If the offer of the bidder who submitted the LCB is not responsive to the
original specifications and ABC, negotiation shall be made in ascending order
starting from the lowest offer. The bidder whose bid is found to be responsive
to the original specifications and ABC shall be considered for award.
f. To ensure that the contract/PO/JO is prepared and approved within the

prescribed timelines, the end-user is responsible that the following are
undertaken:
necessary documents to the End-user for the preparation of the
Contract/PO/JO and submission to the Legal Office, if any, to advice
whether or not the provisions in the contract/PO/JO is in compliance
with existing laws and regulations.
ii. The End-user finalizes the contract/PO/JO in accordance with the

comments of the legal office, if any. The head of the Legal Office, if
any, affixes his/her signature in every page of the original
contract/PO/JO. The same shall be issued to the supplier for his/her
signature and that of his/her instrumental witness.
iii. Upon receipt of the contract/PO/JO signed by the supplier, the end-
user transmits and retrieves the same to/from the head of the
accounting office for signature as instrumental witness of the Procuring
Entity and certification as to funds availability.
iv. The End-User transmits, together with an endorsement letter, and

retrieves the contract/PO/JO to/from the HOPE or his/her duly
Authorized Representative for/upon approval.
v. The End-User coordinates with the supplier for contract notarization.

The Supplier shall bear the cost for notarization.
vi. After receipt of the notarized contract/PO/JO from the supplier, the
end-user presents the contract/PO/JO to the records office for official
recording and provides a copy to the BAC Secretariat for posting at the
following:
a) The PhilGEPS;

DepED Division website for division offices, School website] and
its electronic procurement service provider, if any; and

Page 101

2. In case of imminent danger to life or property during a state of calamity, or

when time is of the essence arising from actual or man-made calamities or
other causes where immediate action is necessary to prevent damage to or
loss of life or property, or to restore vital public services, infrastructure
facilities and other public utilities:
a. The End-User submits pertinent documents to the BAC Secretariat such as:
i. approved Authority to Procure/Purchase with Certified Availability of

Funds/Allotment
ii. approved PR containing the Technical Specifications, Schedule of

iii. Declaration issued by the concerned authority that there is presence of

imminent danger to life or property during a state of calamity, or when
time is of the essence arising from actual or man-made calamities or
other causes where immediate action is necessary to prevent damage
to or loss of life or property, or to restore vital public services,
infrastructure facilities and other public utilities
b. The BAC convenes the appropriate officials for the pre-procurement

conference, if deemed necessary.
c. The BAC, through a resolution justifies and recommends the mode of

procurement and amends/updates the APP to be approved by the HOPE.
d. The BAC negotiates with a previous supplier of good standing situated within
the vicinity where calamity or emergency occurred.
e. To ensure that the contract/PO/JO is prepared and approved within the

undertaken:


retrieves the contract/PO/JO to/from the HOPE for/upon approval.

Page 102

following:
a) The PhilGEPS;


3. 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:
a. The BAC, through a resolution justifies and recommends the mode of

procurement and amends/updates the APP to be approved by the HOPE. The
BAC’s authority to negotiate contracts for projects under these exceptional
cases shall be subject to prior approval by the heads of the procuring entities
concerned, within their respective limits of approving authority;
b. The BAC may negotiate the contract starting with the bidder with the second
LCB for the project under consideration at the bidder’s original bid price. If
negotiation fails, then negotiation shall be done with the bidder with the third
LCB at his original price. If the negotiation fails again, a short list of at least
three (3) eligible suppliers shall be invited to submit their bids, and
negotiation shall be made starting with the lowest bidder;
c. To ensure that the contract/PO/JO is prepared and approved within the

undertaken:



Page 103

following:
a) The PhilGEPS;


4. Procurement of goods from another agency of the government
a. The end-user unit undertakes a Cost–benefit analysis, taking into

consideration the following factors: prevailing standard cost for the project in
the market, absorptive capacity of the Servicing Agency, and such other
factors.
b. It likewise secures a certificate from the relevant officer of the Servicing

Agency that it is qualified to enter into an Agency-to-Agency Agreement and l
submits pertinent documents to the BAC Secretariat such as:

Funds/Allotment

c. Based on the assessment and recommendation of the end-user unit, the BAC l
issues a resolution recommending the use of Agency-to-Agency Agreement to
the head of the Procuring Agency.
d. Upon approval of the BAC resolution, the Procuring Agency enters into a
Memorandum of Agreement (MOA) with the Servicing Agency.
e. The MOA reflects the agreement of the parties with regard to the posting of
performance security and/or a warranty security.
f. The BAC, through the Secretariat, posts for information purposes the
procurement opportunity, for a period of seven (7) calendar days, in:
i. The PhilGEPS;
iii. Any conspicuous place in the premises of the Procuring Entity;

Page 104
g. To ensure that the contract/PO/JO is prepared and approved within the

prescribed timelines, the end-user shall be responsible that the following shall
be undertaken:

iv. The End-User transmits together with an endorsement letter and


following:
a) The PhilGEPS;

DepED Division website for division offices, School website for
those school with fiscal autonomy and have their own BAC]

5. Procurement of goods from Department of Budget and Management -

Procurement Service (DBM-PS).
(Refer to Section 3 – The Procurement Service of the Department of Budget and

Management and the Philippine Government Electronic Procurement System of this
Manual).
6. Negotiated Procurement of goods where the amount involved is P50,000.00

and below.

Funds/Allotment.

Page 105

b. The method of procurement to be used must always be as indicated in the

approved APP. Otherwise, the APP would have to be amended or updated in
accordance with Section 7 of the IRR-A. If the original mode of procurement
recommended in the APP was Public Bidding but cannot be ultimately pursued,
the BAC, through a resolution shall justify and recommend the change in the
mode of procurement and amends/updates the APP to be approved by the
HOPE.
c. The BAC, through the Secretariat, prepares Request for Quotation.
d. The BAC, through the Secretariat, posts for information purposes the
procurement opportunity (Request for Quotation), for a period of seven (7)
calendar days, in:
i. The PhilGEPS;
website for division offices, School website for those school with fiscal
autonomy and have their own BAC] and its electronic procurement
service provider, if any; and
e. The BAC, through the BAC Secretariat, draws up a list of at least three (3)
suppliers of known qualifications which will be invited to submit quotations.
f. The suppliers submit the Price Quotations through the BAC Secretariat.
g. The BAC evaluates the quotations submitted to make sure that it complies with
the technical specifications of the end-user and to correct mathematical errors,
if any.
h. Award shall be made by the BAC to the supplier with the lowest price
quotation.
i. To ensure that the PO/JO is prepared and approved within the prescribed



Page 106

The Supplier shall shoulders the cost of notarization.
vi. After the PO/JO has been signed and approved, the end-user presents
the same to the records office for official recording and provides a copy
to the BAC Sec for posting at the following:
a) The PhilGEPS;

DepED Division website for division offices, School website] and
its electronic procurement service provider, if any; and
c) Any conspicuous place in the premises of the Procuring Entity

7. Procurement of hotels and restaurant services involving an amount not

exceeding P1,000.000.00 (subject to the guidelines to be issued by the GPPB), the
following methodology shall be observed:
i. approved Authority to conduct training, workshop, seminars,

conferences, or the like, with Certified Availability of Funds/Allotment.
ii. Schedule of Requirements, Service specifications (e.g. guaranteed pax,

food and beverage, and room accommodation requirements) and other
conditions for the conduct of activity.
b. The BAC, through the Secretariat, prepares Request for Quotation (RFQ).
The RFQ for hotels and restaurant services may be modified to reflect the
schedule of quotations depending on the number of participants/guests and its
corresponding validity period (i.e. 3, 6, 9, or 12 months). The prospective
bidder that submitted the lowest quotation for the specific requirement of the
procurement at hand shall be awarded the contract and its performance will be
evaluated by the end-user after the activity.
Other end-users of the DepED who will conduct seminars, trainings,

workshops, conference, symposium and other similar activity in the same
vicinity may engage the hotel and restaurant services. Provided, that the
activity will be conducted during the validity period of the quotations. Provided
further, they obtained at least a satisfactory performance evaluation rating by
previous end-user.
c. The BAC, through the Secretariat, posts for information purposes the
procurement opportunity (Request for Quotation), for a period of seven (7)
calendar days, in:
i. The PhilGEPS;

Page 107
d. The BAC, through the BAC Secretariat, issues Requests for Quotation (for
hotels and restaurant services).
e. The bidders submit the Price Quotations and its validity period, through the
BAC Secretariat.
f. The BAC evaluates the quotations submitted to make sure that it complies with
the technical specifications of the end-user and to correct mathematical errors,
if any.
g. Award shall be made by the BAC to the bidder with the lowest quotation.
h. To ensure that the contract is prepared and approved within the prescribed

iv. The End-User shall transmit together with an endorsement letter and
retrieve the contract/PO/JO to/from the HOPE for/upon approval.

following:
a) The PhilGEPS;

DepED Division website for division offices, School website for
those school with fiscal autonomy and have their own BAC]

Are bid and performance securities required for purchases made through
Negotiated Procurement?
Yes, both securities are required except for the following:

Page 108
1. Procurement of goods from another agency of the government,
2. Procurement of goods from Department of Budget and Management - Procurement

Service (DBM-PS),
3. Negotiated Procurement of goods where the amount involved is P50,000.00 and below
and Procurement of Hotels and Restaurant Services.

SECTION 6
Guidelines on Contract
Implementation for the
Procurement of Goods and
Services
Page 111
Contract Implementation for the Procurement of Goods and

Services
Legal Reference
IRR-A Section 42 and Annex “D” provide the rules on contract implementation and
termination.
What is covered by Contract Implementation?
Contract implementation covers the following:
1. Effectivity of the contract;
2. Contractor’s performance of its

TIP: Let’s make things easier
contractual obligations;
The PMO or end-user unit should determine
the period of contract implementation during
3. Procuring Entity’s performance
the procurement planning stage, and include it
of its contractual obligations, as
in the PPMP. In determining the contract
specified in the contract;
implementation period, it must ensure that the
supplier is given ample time to undertake any
4. Final acceptance or project
preparatory activity/ies necessary for it to
sign-off;
comply with the conditions of the contract.
5. All other related activities; and
6. Payment by the Procuring Entity.
When is a contract deemed effective?
A contract becomes effective either on the date of the receipt by the winning bidder of the
NTP or, if an effectivity date is provided in the NTP, then on such date, but in no case later
than seven (7) calendar days from its issuance. All notices called for by the terms of the
contract shall be effective only from either of these effectivity dates. These provisions must be
stated clearly in the contract itself. (IRR-A Section 37.5)
TIP: Let’s make things easier

The PMO or end-user unit must ensure that the
Chief Accountant of the procuring entity issues
a CAF for the project. Only with a CAF can the
contract be valid.
The Chief Accountant must also sign the

contract as a witness.

Page 112
Warranty
Legal Reference
IRR-A Section 62.1.
What is the purpose of a Warranty?
A Warranty is required in the procurement of goods to ensure that the supplier, manufacturer
or distributor, as the case may be, will correct any manufacturing defect.
What is the Warranty requirement for Goods?
For the procurement of goods, a warranty shall be required from the contract awardee for a
minimum period of three (3) months, in the case of supplies, and one (1) year, in the case of
equipment, after the acceptance by the Procuring Entity of the goods and/or equipment.
The obligation for the warranty shall be covered by either retention money in an amount
equivalent to at least ten percent (10%) of every progress payment, or a special bank
guarantee equivalent to at least ten percent (10%) of the total contract price. The special
bank guarantee must be contract specific, that is, it shall be executed for the special purpose
of covering the warranty for the subject procurement contract. If the warranty period is
longer than the minimum period of three (3) months for supplies and one (1) year for
equipment, the period beyond the minimum period need not be covered by retention money
or special bank guarantee. After the lapse of the minimum period, the Procuring Entity must
release the retention money or special bank guarantee.
The warranty shall only be released after the lapse of the warranty period, provided that the
goods supplied are free from patent and latent defects and all the conditions imposed under
the contract have been fully met.
When are Goods considered defective?
Goods are considered defective when they are “unfit for the use for which it is intended,” or
“its fitness for such use is diminished to such an extent that, had the vendee been aware
thereof, he would not have acquired it or would have given a lower price for it….” (Civil Code
of the Philippines Article 1561). A defect can either be:
1. A patent defect, which is one that is apparent to the buyer on normal observation. It
is an apparent or obvious defect. For example, a ballpen that does not write is
patently defective.
2. A latent defect, which is one that is not apparent to the buyer by reasonable
observation. A latent defect is “hidden” or one that is not immediately determinable.
For example, a ballpen that writes .75 kilometers instead of the expected 1.5
kilometers, has a latent defect.
Both latent and patent defects are covered by the warranty expressly required in R.A. 9184
and its IRR-A. This means that the Procuring Entity may proceed against the warranty
whenever any of these defects are determined to be present in the goods procured, and the
same are determined within the period covered by the warranty. However, wear and tear due
to normal usage of the goods is excluded from the coverage of the warranty.

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The Procuring Entity should promptly notify the supplier in writing of any claims arising under
the warranty. Upon receipt of such notice, the supplier should, within the period specified in
the contract and with all reasonable speed, repair or replace the defective goods or parts
thereof, without costs to the Procuring Entity. If the supplier, having been notified, fails to
remedy the defects within the period specified in the contract, the Procuring Entity may then
proceed to call upon the warranty security, without prejudice to any other rights which it may
have against the supplier under the contract and under the applicable law.
Are there instances where partial release or reduction of the required

warranty may be done by the Procuring Entity?
Yes, a partial release or reduction of the warranty may be allowed in the case of partial
deliveries. In this case, the warranty periods will vary among the various lots. The warranty
for goods delivered ahead will lapse earlier than the succeeding deliveries. The retention
money or a portion of the special bank guarantee covering the warranty for goods received or
delivered ahead may thus be released. The effect is that there will be partial releases of the
retention money or special bank guarantee to coincide with the lapse of the warranty period
for each delivered lot.
However, the warranty must be in the form of retention fee equivalent to ten percent (10%)
of every progress payment. For example, in the case of a procurement transaction allowing
partial deliveries and progress payment for each delivery, the amount of the warranty for the
first partial delivery may be released after the lapse of the warranty period for such first
delivery. The remaining goods that are still under warranty will be covered by a warranty fee
equivalent to ten percent (10%) of each progress payment.

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Amendment to Order
What is an Amendment to Order?
An Amendment to Order refers to any necessary adjustment within the general scope of the
contract in any one or more of the following aspects in order to fully meet the requirements of
the project:
1. Drawings, design or specifications of the goods, provided that:

a. The goods to be furnished are to be specifically manufactured for the
government in accordance therewith;
b. The change is an improvement of the goods and advantageous to the
government;
c. It is done at no extra cost; and
d. It is not prejudicial to the losing Bidders in the sense that such change/s could
not have been foreseen during the conduct of the bidding and would have
significantly affected the other bidders’ bids;
2. The method of shipment or packing;
3. The place of delivery;
4. The place of performance of the services;
5. Additional items needed and necessary for the protection of the goods procured,
which were not included in the original contract; or
6. Any other change affecting the specifications or SOW of the goods and/or services to
be procured.
Such amendment may or may not result to an increase or a decrease of the contract price,
and/or an extension or reduction of the delivery period. However, the amendment should not
have the result of changing the subject matter of the contract or the specifications of the
goods or services, in any material aspect and to such an extent that, if introduced during the
bidding stage, may have had a significant effect on other bidders’ bids, because this situation
would actually require another bidding activity, except if the original procurement was done
through an alternative method that did not involve a bidding.
When can the Procuring Entity issue an Amendment to Order?
Amendments to Order may be issued by the Procuring Entity at any time during contract
implementation, provided that such adjustment is required to fully meet the requirements of
the project. Any of the following circumstances may serve as basis for such amendment/s:
1. Emergency cases, fortuitous events or unforeseen contingencies arising during

project/contract implementation, and such contingencies have an impact on the
procurement at hand, such as:

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a. Changes in the conditions affecting the project, e.g., a change in the place of
delivery;
b. Time is of the essence in the implementation of the project, and any changes
require immediate implementation; and
c. Additional requirements have been identified as necessary for the protection

of the goods procured, such as changes in the packaging of the goods, or
additional items have become necessary to ensure that the goods are
sufficiently protected from the elements;
2. When the contract does not reflect the real intention of the parties due to mistake or
accident, and the amendment is necessary to reflect the parties’ intention; and
3. Other analogous circumstances that could affect the conditions of the procurement at
hand.
Are corresponding adjustments in contract price and/or delivery schedules

allowed?
Yes. If an amendment to order increases or decreases the cost of, or the time required for
executing any part of the work under the original contract, an equitable adjustment in
contract price and/or delivery schedule should be mutually agreed upon between the parties
concerned, and the contract should be modified in writing. It is required, however, that any
increase in contract price must not exceed ten percent (10%) of the original contract price.
Otherwise, the procurement should be subject to another bidding, unless the original
procurement was done using any of the alternative methods that did not involve bidding.
Moreover, in the adjustment of the price, the supplier and the Procuring Entity must ensure
that the principle of “no loss, no gain” is applied, such that neither party gains or loses
anything from the resulting price adjustment.
What rules shall govern price adjustments due to Amendment to Order?
If the amendment to order consists of additional items, the price adjustment shall be based
on the unit prices in the original contract for items of goods similar to those in the original
contract. If the contract does not contain any rate applicable to the additional items, then
suitable prices shall be mutually agreed upon between the parties, based on prevailing market
prices.
Any request for payment by the supplier for additional items must be accompanied by a
statement with the approved supporting forms, giving a detailed accounting and record of the
amount for which it claims payment.
If the amendment to order consists of a change in drawings, design or specifications of the

goods, method of shipment or packing, or place of delivery, the price adjustment shall be
equivalent to the corresponding value of the change, based on prevailing market prices.
Who are involved in the issuance of an Amendment to Order?
The following parties are involved in the issuance of an Amendment to Order:

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2. The supplier/manufacturer/distributor; and
3. The HOPE or his duly authorized representative.
Methodology: How is an Amendment to Order issued?
The following steps are undertaken in the issuance of an Amendment to Order:
1. The PMO or end-user unit determines the existence of condition/s that require/s an
amendment to order.
2. The PMO or end-user unit discusses with the supplier/manufacturer/distributor

regarding the adjustments in contract price and/or delivery schedule, if necessary.
3. The PMO or end-user unit drafts the contract amendment containing the agreements
reached with the supplier/manufacturer/distributor.
4. The PMO or end-user unit secures a CAF for the procurement, to be attached to the
contract amendment when this is submitted to the HOPE for approval.
5. The contract amendment is submitted to the HOPE or his duly authorized

representative, for approval, with the approval process following the same timelines
prescribed by the IRR-A and this Manual for contract approval.
6. Upon approval by the HOPE or his duly authorized representative, the PMO or end-
user unit notifies the supplier/manufacturer/ distributor to proceed with the
work/delivery of items in accordance with the amendment. It shall also notify the
procurement unit/office of such approval, and furnish the latter with a copy of the
amended contract.
7. The procurement unit/office posts the Amendment to Order in the PhilGEPS, the
website of the Procuring Entity, and the latter’s electronic procurement service
provider, if any.
8. The supplier/manufacturer/distributor proceeds with the work/delivery of items in

accordance with the amended contract.
Can a supplier proceed with the work under an Amendment to Order even if
such Amendment to Order has not yet been approved?
Under no circumstance shall a supplier proceed to commence work under any Amendment to
Order unless the same has been approved by the HOPE concerned or his duly authorized
representative.
As an exception to the rule, the Regional Director/Head concerned may authorize the
immediate start of work under any Amendment to Order in the event of emergencies to avoid
detriment to public service, or damage to life and/or property, or when time is of the essence.
His authorization, however, is valid only up to the point where the cumulative increase in the
contract cost which has not yet been fully approved by the HOPE or his duly authorized
representative does not exceed five percent (5%) of the original contract cost. Moreover, the
corresponding Amendment to Order must immediately be prepared and submitted for
approval to the HOPE or his duly authorized representative. For an Amendment to Order
involving a cumulative amount exceeding five percent (5%) of the original contract price, no
work thereon shall be commenced unless the same has been approved by the HOPE

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concerned or his duly authorized representative. However, the said cumulative amount
should not exceed ten percent (10%) of the original contract price. (IRR-A Annex “D”)
Payment for any work or delivery done in accordance with an Amendment to Order shall not
be made unless the approval of the HOPE or his duly authorized representative has been
secured.

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Suspension of Delivery
Legal Reference
IRR-A Annex “D.”
What are the grounds for suspension of delivery or contract

implementation?
The Procuring Entity may suspend the delivery or contract implementation, wholly or partly,
by written order for a certain period of time, as it deems necessary due to force majeure or
any fortuitous event as defined in the contract.
Are corresponding adjustments in contract price and/or delivery schedule

allowed?
Yes, appropriate adjustments shall be made in the delivery or contract schedule, or contract
price, or both, and the contract shall be modified accordingly. (IRR-A Annex “D”)
When warranted, price adjustments may be made in accordance with the guidelines
previously discussed in the immediately preceding section on “Amendment to Order.”
Tip: Let’s make things easier

When can the Supplier/
Manufacturer/ Distributor
On the resumption of suspended
resume delivery and/or
contracts
contract implementation?
The procuring entity must either lift the
Work must be resumed or delivery suspension order or terminate the contract
made either upon the lifting or the before the expiration of the suspension period.
expiration of the suspension order. If the period of the order is allowed to expire,
However, if the Procuring Entity the supplier/manufacturer/ distributor shall
terminates the contract covered by automatically have the right to resume work,
such order, resumption of work which may not be the intention of the PMO at
cannot be done. that time.
Who are the parties involved in the issuance of a Suspension Order?
The following parties are involved in the issuance of a Suspension Order:
2. The supplier/manufacturer/distributor; and
3. The HOPE or his duly authorized representative.

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Methodology: How is a Suspension Order issued?
The following steps are necessary for the issuance of a suspension order:
1. The PMO or end-user unit determines the existence of a force majeure or fortuitous
event that will be the basis for the issuance of a suspension order.
2. Based upon the findings and recommendation of the PMO or end-user, the HOPE
issues a written order suspending the order or work, wholly or partly, for a certain
period of time.
3. The supplier/manufacturer/distributor shall take all reasonable steps to minimize the

costs allocable to the order or work covered by the order during the suspension.
4. The PMO or end-user unit discusses with the supplier/manufacturer/distributor any

need for adjustments in the delivery or contract schedule and/or contract price,
including any need to modify contract.
5. The PMO or end-user unit drafts the contract amendment containing the agreements
reached with the supplier/manufacturer/distributor.
6. The contract amendment is submitted to the HOPE or his duly authorized

representative, for approval.
7. Prior to the expiration of the suspension order, the PMO or end-user unit determines
whether or not the grounds for suspension are still existent. If such grounds continue
to exist, or if it is no longer practicable to complete the delivery or continue with the
work, it shall cancel the delivery of the items subject of the suspension order, or
terminate the work subject of the order, by written notice. If, however, the grounds
for suspension no longer exist, and completion of delivery or continuation of the work
may already be done, the PMO, with the approval of the HOPE or his duly authorized
representative, shall lift the suspension order by written notice, thereby instructing
the supplier/manufacturer/distributor to proceed with the delivery or work in
accordance with the amended contract.

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Delays in Delivery and Liquidated Damages
Legal Reference
IRR-A Section 68, Annex “D,” and the Civil Code of the Philippines Art. 2226.
What is the rule on the applicable period for the delivery of goods or
performance of services?
The supplier/manufacturer/distributor must deliver the goods or perform the services

procured within the period prescribed by the Procuring Entity, as specified in the Contract.
If delays are likely to be incurred, the supplier/manufacturer/distributor must notify the

Procuring Entity in writing. It must state therein the cause/s and duration of the expected
delay. The Procuring Entity may grant time extensions, at its discretion, if based on
meritorious grounds, with or without liquidated damages.
In all cases, the request for extension should be submitted before the lapse of the original
delivery date. The maximum allowable extension shall not be longer than the initial delivery
period as stated in the original contract.
What are Liquidated Damages?
Liquidated damages are damages agreed upon by the parties to a contract, to be paid in case
of breach thereof. (Civil Code of the Philippines Art. 2226)
What are the grounds for the imposition of Liquidated Damages?
When the supplier fails to satisfactorily deliver the goods or services under the contract within
the specified delivery schedule or project implementation schedule, inclusive of duly granted
time extensions, if any, the supplier shall be liable for damages for the delay and shall pay the
Procuring Entity liquidated damages, not by way of penalty, for every day of delay until such
goods or services are finally delivered or performed and accepted by the Procuring Entity
concerned. The Procuring Entity need not prove that it has incurred actual damages to be
entitled to liquidated damages.
What is the amount of Liquidated Damages that may be imposed upon the
supplier?
The supplier must pay the Procuring Entity liquidated damages, not by way of penalty, an
amount equal to one-tenth (1/10) of one percent (1%) of the cost of the delayed goods or
services scheduled for delivery or performance for every day of delay. The liquidated
damages will be imposed until such goods or services are finally delivered or performed and
accepted by the Procuring Entity concerned.
In no case shall the sum of liquidated damages reach ten percent (10%) of the contract
amount. If it does, the contract shall automatically be rescinded by the Procuring Entity,
without prejudice to other courses of action and remedies open to it. The Procuring Entity
may also take over the contract or award the same to a qualified supplier through negotiation.

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In addition to the liquidated damages, the erring supplier’s performance security shall also be
forfeited.
Methodology: How are Liquidated Damages imposed?
The following steps need to be followed in the imposition of liquidated damages:
1. The supplier/manufacturer/distributor submits a written request to the PMO or end-

user unit for an extension of the delivery or performance period, citing the reason/s
for such delay.
2. The PMO or end-user unit either approves or disapproves the request for extension.
3. If the extension is granted, the liquidated damages may or may not be imposed and
the supplier/manufacturer/distributor is informed of this in writing. The
supplier/manufacturer/distributor is then asked to extend the validity of the
performance bond, to conform to the extended period.
4. If, however, the request for extension is denied, the PMO or end-user unit informs in
writing the supplier/manufacturer/distributor of such denial, and ensures that the said
notice or communication is received by the latter within a reasonable time from
receipt of the request for extension. In this case, the Procuring Entity imposes the
liquidated damages in accordance with the provisions of the contract and the
procedures outlined below.
5. If the supplier/manufacturer/distributor incurs delay and it does not request for an

extension
a. The PMO or end-user unit informs, within a reasonable time from the first day
of delay, the supplier/manufacturer/distributor that the Procuring Entity shall
impose the liquidated damages agreed upon by the parties.
b. Upon delivery, the PMO or end-user unit and the Technical Inspection and
Acceptance Committee records the delay in the inspection documents, noting
therein the amount of the liquidated damages imposable on the supplier.
c. Upon payment, the amount of liquidated damages due is deducted from the
total amount payable to the supplier, and the same shall be reflected in the
DVs. Or, if the contract provides that the liquidated damages is to be
collected from securities or warranties posted by the supplier, the PMO or
end-user unit informs the official authorized to call on the securities or
warranties about the delay and the corresponding liquidated damages
imposable.

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Other Rules and Guidelines
Legal Reference
IRR-A Section 42.1 and Annex “D”, IRR-A.
Incidental Services
What are Incidental Services?
Incidental Services are those services ancillary to the supply of the goods, such as
transportation and insurance, installation, commissioning, provision of technical assistance,
training, and other such obligations of the supplier specified in the Contract and the bidding
documents. In particular, these services may refer to any of the following:
1. Performance or supervision of
on-site assembly and/or Tips: Let’s make things easier
start-up of the supplied goods;
On incidental services being in the
2. Furnishing of tools required for contract
assembly and/or maintenance
of the supplied goods;
The Incidental Services must be clearly
specified in the contract, and identified as
3. Furnishing of a detailed
separate components from the goods to be
operations and maintenance supplied or services to be rendered, so that
manual for each appropriate prices indicated on the price schedule shall be
unit of the supplied goods; entered separately, in accordance with the
ITB. The cost thereof should also be indicated
4. Performance or supervision or in the contract.
maintenance and/or repair of
the supplied goods, for a period
of time agreed by the parties,
provided that this service shall
not relieve the supplier of any warranty obligations under the Contract;
5. Training of the Procuring Entity’s personnel, at the supplier’s plant and/or on-site, on
assembly, start-up, operation, maintenance, and/or repair of the supplied goods; and
6. Any other related services necessary for completion of the project and indicated in the
contract.
Spare Parts
What are Spare Parts?
Spare parts refer to extra components, equipment, tools, instruments or parts of machinery
or apparatus that replace the ones that are damaged or worn out.

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What information is required from

Tips: Let’s make things easier the Supplier with regard to spare
parts of goods?
On spare parts
The supplier may be required to provide
any or all of the following materials,
The procuring entity may include the delivery notifications, and information pertaining
of a limited supply of fast-moving and/or to spare parts manufactured or
hard-to-find spare parts in the technical distributed by the Supplier:
specifications when procuring heavy
equipment or machinery. This is to ensure 1. Such spare parts as the
the continued use or operation of the Procuring Entity may elect to
equipment. purchase from the supplier,
provided that this election shall
not relieve the supplier of any
warranty obligations under the
contract;
2. Such spare parts that the Procuring Entity may be able to purchase from other
suppliers/manufacturers but are compatible with the goods procured; and
3. In the event of termination of production of the spare parts:
a. Advance notification to the Procuring Entity of the pending termination, in

sufficient time to permit the Procuring Entity to procure needed requirements;
and
b. Following such termination, furnishing at no cost to the Procuring Entity the

blueprints, drawings, and specifications of the spare parts, if requested.
The supplier may likewise be required to issue a Certification that spare parts, particularly
those that are product-specific, shall continue to be manufactured by them within a period of
time, e.g., five (5) years, after the bidding date.
The above information shall be included in the Technical Bid.
Purchaser’s Responsibilities
What are the Procuring Entity’s responsibilities to the supplier/manufacturer/

distributor if the latter requires coordination with other government entities for it to
be able to perform its contractual obligations?
Whenever the supply of goods and related services requires that the
supplier/manufacturer/distributor obtain permits, approvals, and import and other licenses
from local public authorities, the Procuring Entity may, upon request by the
supplier/manufacturer/distributor, assist the latter in complying with such requirements in a
timely and expeditious manner. However, the supplier/manufacturer/distributor shall bear
the costs of such permits and/or licenses. On the other hand, the Procuring Entity shall pay
all costs involved in the performance of its responsibilities, in accordance with the contract.
Prices
How much should the contract price be?
The contract price must not vary from the price quoted by the supplier in its bid. This is
based on the rule that the contract, as awarded, should not differ in any material aspect from
the terms stipulated in the bidding documents, considering that these terms were the basis
for the comparison of bids. Otherwise, the purpose bidding process would have been
defeated.

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In what denomination shall the contract price be stated?
For goods and services that will be supplied from within the Philippines, the price in the
contract shall be denominated and payable in Philippine currency, and this shall be stated in
For goods and services that will be supplied from outside the Philippines, such as in the case
of goods with a high import content, i.e. more than fifty percent (50%) of the contract cost,
the Procuring Entity may disaggregate the cost components into foreign and local costs, and
may denominate and pay contract prices in foreign and Philippine currencies, as stipulated in
the bidding documents. For this purpose, the ITB may provide that the prices for goods and
services supplied from outside the Philippines may be quoted either in Philippine Pesos or
United States Dollars, at the discretion of the bidder.
Unless otherwise provided, payment of the contract price shall be made in Philippine Pesos. In
instances where the Procuring Entity is allowed to receive bids denominated in foreign
currency, the same shall be converted to Philippine currency based on the exchange rate
officially prescribed for similar transactions as established by the BSP on the date of the bid
opening. However, this conversion rate shall only be for purposes of bid evaluation. The
contract must state the foreign currency denominated amount and the peso equivalent on the
date of bid opening.
Are contract prices fixed?
Price escalation is generally not allowed.16 For the given SOW in the contract as awarded, the
price must be considered as a fixed price, except under extraordinary circumstances as
determined by the NEDA in accordance with the Civil Code of the Philippines, upon
recommendation of the Procuring Entity concerned, and upon prior approval of the GPPB. Any
request for price escalation under extraordinary circumstances should be submitted by the
concerned entity to the NEDA with the endorsement of the Procuring Entity. The burden of
proving the occurrence of extraordinary circumstances that will allow for price escalation shall
rest with the entity requesting for such escalation. NEDA shall only respond to such request
after receiving the proof and the necessary documentation.
“Extraordinary circumstances” shall refer to events defined in the Civil Code of the Philippines,
consistent with the guidelines issued by the GPPB. In particular, the Guidelines for Contract
Price Escalation approved by the GPPB in Resolution No. 07-2004, dated July 22, 2004,
provides that the term “extraordinary circumstances” shall refer to the following Articles of
the Civil Code of the Philippines:
1. Article 1174, as it pertains to Ordinary Fortuitous Events or those events which could
be reasonably foreseen but are inevitable, such as, but not limited to the following:
(a) typhoons; (b) thunderstorms; (c) flooding of lowly areas; and (d) vehicular
accidents; provided that the following are present:
a. The cause of the extraordinary circumstances must be independent of the will

of the parties;
b. The event must be either unforeseeable or unavoidable;
16
For FAPs, the bidding documents would have to state whether the bid prices will be fixed or whether price adjustments
would be made to reflect any changes (upwards or downwards) in major cost components of the contract, such as labor,
equipment, materials, and fuel. Price adjustment provisions are usually not necessary in simple contracts involving
completion of works generally within twelve (12) months in the case of JBIC, or eighteen (18) months in the case of
World Bank-funded projects, but should be included in contracts which extend beyond eighteen (18) months. Prices may
be adjusted by the use of a prescribed formula (or formulae) which breaks down the total price into components that are
adjusted by price indices specified for each component or, alternatively, on the basis of documentary evidence (including
actual invoices) provided by the contractor. The use of the formula method of price adjustment is preferable to that of
documentary evidence. The method to be used, the formula (if applicable), and the base date for application shall be
clearly defined in the bidding documents. If the payment currency is different from the source of the input and
corresponding index, a correction factor shall be applied in the formula, to avoid incorrect adjustment.

Page 125
c. The event must be such as to render it difficult but not impossible for the
supplier to fulfill his obligation in a normal manner or within the contemplation
of the parties;
d. The supplier must be free from any participation in or aggravation of the
injury to the Procuring Entity; and
e. The allowance for price escalation, should an ordinary fortuitous event occur,
is stipulated by the parties or the nature of the obligation requires the
assumption of risk.
2. Article 1250, as it pertains to Extraordinary Inflation or Deflation, which may refer to

the decrease or increase of the purchasing power of the Philippine currency which is
unusual or beyond the common fluctuation in the value of said currency, in
accordance with the two (2) standard deviation rule computed in accordance with the
Guidelines for Contract Price Escalation, and such decrease or increase could not have
been reasonably foreseen or was manifestly beyond the contemplation of the parties
at the time of the establishment of the obligation.
3. Article 1680, as it enumerated Extraordinary Fortuitous Events or those events which

do not usually happen, such as, but not limited to the following: (a) fire; (b) war; (c)
pestilence; (d) unusual flood; (e) locusts; and (f) earthquake; provided that the
circumstances before, during and after the event shall be taken into consideration.
What is the procedure to be followed when requesting for approval of price

escalation?
In the review and approval of a request for price escalation, the Procuring Entity should
comply with the following conditions detailed in the Guidelines for Contract Price Escalation,
before the same can be acted upon:
1. Endorsement. The HOPE concerned shall endorse the request for price escalation to
the NEDA, through its Director-General, accompanied by several documentary
requirements.
2. Two-Stage Review Process. The review process shall commence only after the NEDA
has acknowledged the completeness of the request. A request for price escalation
shall only be granted if it satisfies both the First Stage (Legal Parameters) and Second
Stage (Technical Parameters) reviews of the NEDA.
3. Amount of Price Escalation to be Granted. The amount of escalation to be granted in

the case of goods should only be the remaining amount over and above the
thresholds as computed under the Second Stage review process.
4. Period and Frequency of Requests for Price Escalation. Requests for price escalation
shall only be made for cost items already incurred by the supplier. No request for
price escalation shall be made for prospective application. Further, price escalation
shall only be granted to those items included in a specific request. Provided further,
that requests for price escalation shall be made not shorter than six (6) months
reckoned from the start of the contract implementation, and not shorter than six (6)-
month period thereafter. For contracts wherein the duration is shorter than six (6)
months, the request for contract price escalation shall be made after the completion
of the contract.
5. Misrepresentation. Any misrepresentation made by the Procuring Entity or the

supplier in any stage of the processing of a particular request for price escalation shall
cause the automatic denial/disapproval of said claim.
6. Recommendation/Approval. The NEDA shall, upon completion of its review pursuant

to the Guidelines for Contract Price Escalation, submit its recommendation to the
GPPB for appropriate action. The GPPB shall then approve/act upon the request for

Page 126
price escalation during one of its meetings, to be attended by the HOPE concerned or
his duly authorized representative/s.
Payment
What is the method of payment for contracts for the procurement of Goods?
The method and conditions of payment must be specified in the contract. However, the
following guidelines may be considered by the Procuring Entity in preparing the contract
provisions regarding payment:
1. As a general rule, no advance payment, or any payment made prior to the delivery
and acceptance of goods, shall be made to any supplier/manufacturer/distributor,
subject to the following exceptions:
a. When there is prior approval by the President; or
b. When the procurement is made from another government agency.
How’s that again? 2. Partial payment of the

contract price will only be
allowed if the contract
On payments upon termination of a provides/allows for partial or
contract staggered delivery of goods
procured, and such partial
Payment on a quantum meruit basis may be payment must correspond to
made in favor of the the value of the goods
supplier/manufacturer/distributor in case of delivered and accepted;
contract termination for any cause other than
engaging in corrupt, fraudulent, collusive or 3. Payment must only be made
coercive practices, in competing for or in after the appropriate
executing the contract. inspection and acceptance
procedures, as mandated by
“Quantum meruit” means “as much as he existing government rules
deserves.” It is an equitable doctrine, based on and regulations, have been
the concept that no one who benefits by the labor complied with by the
and materials of another should be unjustly Procuring Entity; and
enriched thereby; under these circumstances, the
law implies a promise to pay a reasonable 4. Payment must be made in
amount for the labor and materials furnished. accordance with prevailing
(Black’s Law Dictionary, Fifth Edition) accounting and auditing rules
and regulations.
When may an advance payment be made to a private

supplier/manufacturer/distributor?
In accordance with P.D. No. 1445, advance payment may be made only after prior approval of
the President, and it should not exceed fifteen percent (15%) of the contract amount, unless
otherwise directed by the President. Prior approval by the President is not necessary in the
following cases:
1. In contracts entered into by the Procuring Entity for the following services where
requirement of down payment is a standard industry practice: (i) hotel and restaurant
services; (ii) use of conference/seminar and exhibit areas; and (iii) lease of office
space; and
2. For procurement of goods required to address contingencies arising from natural or

man-made calamities in areas where a “State of Calamity” has been declared by
appropriate authorities.

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In the case of item (a) above, a single advance payment not exceeding fifty percent (50%) of
the contract amount is allowed. In the case of item (b) above, an advance payment not
exceeding fifteen percent (15%) of the contract amount is allowed, unless otherwise directed
by the President.
All progress payments should first be charged against the advance payment until the latter
has been fully exhausted, unless otherwise approved by the President. (Memorandum
Order No. 172, dated 19 May 2005)
When must payment be made?
Payments must be made promptly by the Procuring Entity, but in no case later than forty-
five (45) days after the supplier’s request/s for payment shall be made in writing,
accompanied by an invoice describing, as appropriate, the goods delivered and/or services
performed, by documents submitted pursuant to the contract, and upon fulfillment of other
obligations stipulated in the contract, as well as upon inspection and acceptance of the goods
by the appropriate Technical and Inspection Committee. In addition, the Procuring Entity shall
ensure that all budgeting, accounting and auditing requirements are met prior to payment.
Only the portion of a claim that is not satisfactory supported/accepted may be withheld from
payment subject to the usual budgeting, accounting and auditing rules and regulations.
What are the documents required prior to payment?
The documents required prior to payment are the following:
1. For procurement thru competitive public bidding, limited source bidding and
negotiated procurement due to: second failure of bidding, in case of imminent
danger, time is of the essence, or to restore vital public services:
a. Authority to Purchase/Procure
b. Purchase Request
c. Original Contract/Purchase Order (PO)/Job Order (JO)/Memoranda of
Agreement (MOA) duly received by supplier
d. Original Sales Invoice
e. Request for Inspection
f. Inspection and Acceptance Report
g. Result of Test/Analysis by proper government agency (if items subject to test)
h. Delivery Receipt
i. Copy of IAEB
j. Abstract of bids supported by winning bidder’s offer and bid tenders of other
bidders
k. Performance Security of the winning bidder
l. NOA
m. Resolution to Award
n. Requisition and Issue Slip
o. Inventory Custodian Slip, for semi-expendable items
p. Acknowledgement Receipt of Equipment, for equipments
q. Supplies Availability Inquiry, if applicable
r. Report of Supplies and Materials Issued, if applicable
s. Report of Waste Materials, if any
t. Other forms required by COA
2. For procurement thru direct contracting:
b. Purchase Request
c. Original Contract/Purchase Order (PO)/Job Order (JO)/Memoranda of
Agreement (MOA) duly received by supplier

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h. Delivery Receipt
i. Certificate Exclusive Distributorship issued by manufacturer/principal
j. Certification that there are no sub-dealers/distributors selling at a lower price
and that no suitable substitute is available
k. Price quotation or pro-forma invoice
l. Requisition and Issue Slip
m. Inventory Custodian Slip, for semi-expendable items
n. Acknowledgement Receipt of Equipment, for equipments
o. Supplies Availability Inquiry, if applicable
p. Report of Supplies and Materials Issued, if applicable
q. Report of Waste Materials, if any
r. Other forms required by COA
3. For procurement thru shopping and negotiated procurement not to exceed P50,000.00
that does fall under shopping:
b. Purchase Request
c. Original Contract/Purchase Order (PO) duly received by supplier
h. Delivery Receipt
i. Abstract of quotation
j. at least three (3) quotations from bonafide suppliers
k. Requisition and Issue Slip
l. Inventory Custodian Slip, for semi-expendable items
m. Acknowledgement Receipt of Equipment, for equipments
n. Supplies Availability Inquiry, if applicable
o. Report of Supplies and Materials Issued, if applicable
p. Report of Waste Materials, if any
q. Other forms required by COA
4. For procurement thru repeat order:
b. Purchase Request
c. Original Contract/Purchase Order (PO) duly received by supplier
e. Certified True Copy of previous Contract/PO
f. Certified True Copy of previous Sales Invoice
g. Request for Inspection
h. Inspection and Acceptance Report
i. Result of Test/Analysis by proper government agency (if items subject to test)
j. Delivery Receipt
k. Requisition and Issue Slip
l. Inventory Custodian Slip, for semi-expendable items
m. Acknowledgement Receipt of Equipment, for equipments
n. Supplies Availability Inquiry, if applicable
o. Report of Supplies and Materials Issued, if applicable
p. Report of Waste Materials, if any
q. Other forms required by COA

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5. For procurement thru negotiated procurement (procurement of hotel and restaurant

services):
a. Authority to Procure/Conduct
b. Original Contract duly received by supplier
c. Original Sales Invoice/Billing Statement
d. Result of Test/Analysis by proper government agency (if items subject to test)
e. Abstract of quotation
f. at least three (3) quotations from bonafide suppliers/providers
g. Other forms required by COA
In what currency must payment be made?
As a general rule, payment must be made in Philippine currency.17
For goods and services that will be supplied from within the Philippines, the price in the
contract shall be denominated and payable in Philippine currency, and this shall be stated in
For goods and services that will be supplied from outside the Philippines, such as in the case
of goods with a high import content, i.e. more than fifty percent (50%) of the contract cost,
the Procuring Entity may disaggregate the cost components into foreign and local costs, and
may denominate and pay contract prices in foreign and Philippine currencies, as stipulated in
If a foreign currency denominated contract is payable in Philippine currency, the contract may
contain a provision allowing the BSP reference rate at the time of payment or on the date of
opening of the Letter of Credit to be used to convert the foreign currency denominated
amount to Philippine Pesos, but the same should in no case exceed the ABC. This will be the
basis for the payment in pesos. Furthermore, if the amount payable in Philippine currency is
greater than the Peso value of the contract price, such increase must not be more than the
allowable variance mandated by GPPB guidelines, reckoned as a percentage of the peso
amount as of bid opening date. Projected exchange rate fluctuations based on BSP forecasts
must be factored in by the Procuring Entity in determining the ABC, to ensure that the project
cost reflects currency values at the time of project implementation.
Are incentive bonuses allowed?
No. No incentive bonus, in whatever form or for whatever purpose, must be allowed.18 (IRR-
A Section 42.4)
Taxes and Duties
Who must be responsible for the payment of taxes and other duties?
A foreign supplier must be entirely responsible for all taxes, stamp duties, license fees, and
other such levies imposed up to the delivery of the goods to the Project Site as specified in
the contract.
17
For FAPs, Payment of the contract price should be made in the currency or currencies in which the bid price is
expressed in the bid of the successful bidder. When the bid price is required to be stated in local currency but the bidder
has requested payment in foreign currencies expressed as a percentage of the bid price, the exchange rates to be used
for purposes of payments should be those specified by the bidder in the bid, so as to ensure that the value of the foreign
currency portions of the bid is maintained without any loss or gain. At any rate, where the price is to be paid, wholly or
partly, in a currency or currencies other than the currency of the bid, the exchange risk should not be borne by the
supplier or contractor and, to this end, the contract should provide that amounts payable in a currency or currencies
other than that of the bid should be calculated at the rates of exchange between these currencies specified for the
purpose in the bidding documents.
18
For FAPs, provision may be made for a bonus to be paid to suppliers or contractors for completion of works or delivery
of goods ahead of the times specified in the contract when such earlier completion or delivery would be of benefit to the
procuring entity. The option to grant incentive bonus is given by the IFIs to the procuring entity.

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A local supplier must also be entirely responsible for all taxes, duties, license fees, and other
related expenses, incurred until delivery of the contracted goods to the Procuring Entity.
Subcontracts
Is subcontracting allowed for the procurement of goods and services?
Generally, a supplier may be allowed to subcontract a portion of the contract or project.

However, the supplier should not be allowed to subcontract a material or significant portion of
the contract or project, which portion must not exceed twenty percent (20%) of the total
project cost. The bidding documents must specify what are considered as significant/material
component(s) of the project.
All subcontracting arrangements must be disclosed at the time of bidding, and subcontractors
must be identified in the bid submitted by the supplier.
Any subcontracting arrangements made during project implementation and not disclosed at
the time of the bidding shall not be allowed. The subcontracting arrangement shall not relieve
the supplier of any liability or obligation under the contract. Moreover, subcontractors are
obliged to comply with the provisions of the contract and shall be jointly and severally liable
with the principal supplier, in case of breach thereof, in so far as the portion of the contract
subcontracted to it is concerned.
Subcontractors are also bound by the same nationality requirement that applies to the
principal suppliers.
Standards
What standards shall be applied in determining the quality of the goods supplied?
The goods supplied under the contract must conform to the standards mentioned in the
technical specifications, which must preferably be Philippine standards, or standards specified
by the BPS of the DTI. If there is no Philippine standard applicable, the goods must conform
to the authoritative standards appropriate to the goods’ country of origin. Such standards
must be the latest issued by the concerned institution.
Packaging
What manner of packaging shall be followed by the supplier?
The supplier must provide such packaging of the goods as is required to prevent their damage
or deterioration during transit to their final destination, as indicated in the contract and in
accordance with existing industry standards. The packaging must be sufficient to withstand,
without limitation, rough handling during transit and exposure to extreme temperatures, salt
and precipitation during transit, and open storage. Packaging case size and weights must
take into consideration, where appropriate, the distance and remoteness of the goods’ final
destination and the absence of heavy handling facilities at all points in transit.
The packaging, marking, and documentation within and outside the packages must comply
strictly with such special requirements as must be expressly provided for in the contract,
including additional requirements, if any, and in any subsequent instructions ordered by the
Procuring Entity. Moreover, the outer packaging must contain a “Packing List” which must
reflect the actual contents of the package.

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Insurance
What is the extent of insurance coverage for Goods?
The goods procured must be fully insured by the supplier in a freely convertible currency
against loss or damage incidental to their manufacture or acquisition, transportation, storage,
and delivery in the manner specified in the Contract.
Transportation
Who shall be responsible for the transportation, insurance and duties of Goods
procured?
The contract must contain provisions on who will bear the cost of transportation and
insurance (as well as customs duties in case of importation). For this purpose, the specific
Incoterm must be used and identified in the contract. The Incoterm also defines the point at
which the risk of loss or damage to the goods passes from the seller to the buyer. The
Procuring Entity shall identify which terms are most responsive to the requirements of the
project.
If the Supplier is required under the Contract to deliver the goods CIF, CIP or DDP, it shall
arrange and pay for the transport of the goods to the port of destination or such other named
place of destination in the Philippines, as shall be specified in the contract. It will also have to
pay for the cost that will be incurred in the transport of these goods, the cost to be included in
the contract price.
If the supplier is required under the contract to transport the Goods to a specified place of
destination within the Philippines, defined as the Project Site, it will arrange and pay for the
transport of the goods to such place of destination. It must also pay for insurance and
storage, and related costs. These costs must be included in the Contract Price.
The Procuring Entity is encouraged to enlist the assistance of an accredited customs broker or
forwarder in all importation.
What is the rule on transportation and insurance in Foreign Assisted Projects?
Bidding documents should permit suppliers to arrange transportation and insurance from any
eligible source. Bidding documents should state the types and terms of insurance to be
provided by the bidder. The indemnity payable under transportation insurance should be at
least one hundred ten percent (110%) of the contract amount in the currency of the contract
or in a freely convertible currency to enable prompt replacement of lost or damaged goods.
If a Procuring Entity wishes to reserve transportation and insurance for the import of goods to
national companies or other designated sources, bidders should be asked to quote FCA
(named place) or CPT (named place of destination) prices in addition to the CIP (place of
destination) price. Selection of the lowest evaluated bid should be on the basis of the CIP
(place of destination) price, but the Procuring Entity may sign the contract on FCA or CPT
terms and make its own arrangement for transportation and/or insurance. Under such
circumstances, the contract should be limited to the FCA or CPT cost. If the Procuring Entity
does not wish to obtain insurance coverage in the market, evidence should be provided to the
IFI that resources are readily available for prompt payment in a freely convertible currency of
the indemnities required to replace lost or damaged goods.

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Inspection and Tests
What is the scope of the Procuring Entity’s right to inspect and test the Goods
procured?
The Procuring Entity or its

representative has the right to Tips: Let’s make things easier
inspect and/or to test the goods to
confirm their conformity to the On the inspection of delivered goods
contract specifications at no extra
cost to it. The bidding documents
and the contract must specify what The appropriate Technical Inspection and
inspections and tests are required by Acceptance Committee of the procuring entity
the Procuring Entity, and where these must commence the inspection and acceptance
are to be conducted. The Procuring process within twenty-four (24) hours from
Entity must notify the supplier in delivery of the goods, and shall complete the
writing, in a timely manner, of the same as soon as practicable.
identity of any representatives
retained for these purposes. Pertinent COA regulations on technical inspection
and acceptance procedures shall be considered in
The inspections and tests may be the conduct of such inspection and acceptance by
conducted on the premises of the the procuring entity’s authorized inspectors.
supplier or its subcontractor(s), at
point of delivery, and/or at the goods’
final destination. If conducted on the
premises of the supplier or its subcontractor(s), all reasonable facilities and assistance,
including access to drawings and production data, must be provided by the supplier to the
inspectors at no charge to the Procuring Entity.
The Procuring Entity must bear its own costs and expenses incurred in connection with its
attendance at inspections, including, but not limited to, all traveling and board and lodging
expenses.
The Procuring Entity may require the supplier to carry out any test and/or inspection not
required by the contract but deemed necessary to verify that the characteristics and
performance of the goods comply with the technical specifications, codes and standards under
the contract. However, the reasonable costs and expenses incurred by the supplier in the
carrying out of such test and/or inspection will be added to the contract price. Furthermore, if
such test and/or inspection impedes the progress of manufacturing and/or the supplier’s
performance of its other obligations under the contract, due allowance will be made in respect
of the delivery dates and completion dates and the other obligations so affected. These tests
shall be conducted by a government testing laboratory, or, where there is none for the
particular item being procured, in any testing laboratory accredited by the DTI. The supplier
must provide the Procuring Entity with a report of the results of any such test and/or
inspection. These results will be conclusive of the quality of the items and not subject to
further dispute between the parties.
The Procuring Entity may reject any goods or any part thereof that fail to pass any test and/or
inspection or do not conform to the specifications. The supplier should either rectify or
replace such rejected goods or parts thereof or make alterations necessary to meet the
specifications at no cost to the Procuring Entity, and shall repeat the test and/or inspection, at
no cost to the Procuring Entity, upon giving a notice pursuant to the contract.
The supplier should agree in the contract that neither the execution of a test and/or
inspection of the goods or any part thereof, nor the attendance by the Procuring Entity or its
representative, shall release the supplier from any warranties or other obligations under the
contract.

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Intellectual Property Rights
Shall the Procuring Entity be liable for infringement of intellectual property rights
arising from the use of the goods procured?
The Procuring Entity should not be liable for any infringement of intellectual property rights
arising from the use of the goods procured. In case there are third-party claims of such
infringement of patent, trademark, or industrial design rights, the supplier must hold the
Procuring Entity free and harmless against such claims. These terms should be expressed in
the contract.
Limitations of Liability
What is the extent of the supplier’s liability for damages?
Except in cases of criminal negligence or willful misconduct, and in the case of infringement of
intellectual property rights, and unless otherwise specified in the contract, the supplier is
generally not liable to the Procuring Entity, whether in contract, tort or otherwise, for any
indirect or consequential loss or damage, loss of use, loss of production, or loss of profits or
interest costs, provided that this exclusion does not apply to any obligation of the supplier to
pay liquidated damages to the Procuring Entity. This is without prejudice to any other
liability, penalty or appropriate sanction that may be imposed upon the supplier under R.A.
9184 and other applicable laws.
Termination for Default
What are the grounds for

termination for default? How’s that again?
Any of the following conditions shall
On contract termination and damages
constitute as a ground for
termination of the contract for
default: Termination of a contract for default is without
prejudice to other remedies available to the
1. There being no force procuring entity for breach of contract, such as
majeure, the supplier fails to payment of liquidated and other damages, if there
deliver any or all of the goods are grounds for the latter.
within the period(s) specified
in the contract, or within any If the contract is not wholly terminated, the
extension thereof granted by supplier shall continue to deliver the remaining
the Procuring Entity pursuant goods or to perform the remaining services
to a request made by the contracted.
supplier prior to the delay,
and such failure amounts to at least ten percent (10%) of the contract price;
2. As a result of force majeure, the supplier is unable to deliver or perform any or all of
the goods or services, amounting to at least ten percent (10%) of the contract price,
for a period of not less than sixty (60) calendar days after the receipt of the notice
from the Procuring Entity stating that the circumstance of force majeure is deemed to
have ceased;
3. The supplier fails to perform any other obligation(s) under the contract; or
4. The supplier, in the judgment of the Procuring Entity, has engaged in corrupt,
fraudulent, collusive or coercive practices in competing for or in executing the
contract.

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How does the Procuring Entity proceed with the procurement in case of a contract
termination due to default?
If the Procuring Entity terminates the contract in whole or in part, due to default, it may
procure from third parties, through the appropriate alternative method of procurement, goods
or services similar to those undelivered. The supplier that defaulted will be liable to the
Procuring Entity for any excess costs for such similar goods or services.
Termination for Insolvency
What remedy does the Procuring Entity have when a supplier is unable to perform
his obligations due to bankruptcy or insolvency?
The Procuring Entity may at any time terminate the contract by giving written notice to the
supplier, if the supplier is declared bankrupt or insolvent as determined with finality by a court
of competent jurisdiction. In this event, termination will be without compensation to the
supplier, provided that such termination will not prejudice or affect any right of action or
remedy which has accrued or will accrue thereafter to the Procuring Entity and/or the
supplier.
Termination for Convenience
May termination be allowed for reasons other than those attributable to the
supplier?
The Procuring Entity, by written notice sent to the supplier, may terminate the contract, in
whole or in part, at any time for its convenience. The notice of termination shall specify that
the termination is for the Procuring Entity’s convenience, the extent to which performance of
the supplier under the contract is terminated, and the date upon which such termination
becomes effective.
What circumstances may constitute sufficient grounds to terminate a contract for

convenience?
Any of the following circumstances may constitute sufficient grounds to terminate a contract
for convenience:
1. If physical and economic conditions have significantly changed so as to render the

project no longer economically, financially or technically feasible, as determined by
the HOPE;
2. The HOPE has determined the existence of conditions that make project
implementation impractical and/or unnecessary, such as, but not limited to, fortuitous
event/s, changes in laws and government policies;
3. Funding for the project has been withheld or reduced by higher authorities through no
fault of the Procuring Entity; or
4. Any circumstance analogous to the foregoing.
Also see the Guidelines on Termination of Contracts approved by the GPPB in Resolution No.
018-2004, dated December 22, 2004.

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What effect shall termination for convenience have on pending deliveries?
The goods that are complete and ready for shipment within thirty (30) days after the
supplier’s receipt of notice of termination shall be accepted by the Procuring Entity at the
contract terms and prices. For the remaining goods, the Procuring Entity may elect:
1. To have any portion completed

How’s that again? and delivered at the contract
terms and prices; and/or
On the assignment of contractual
obligations and the entry of non- 2. To cancel the remainder and
bidders into the procurement process pay to the supplier an agreed
amount for partially completed
goods and services and for
Assignment of contractual obligations or the
materials and parts previously
contract itself may generally not be done
procured by the supplier.
because this will enable a non-bidder to
become a party to the contract. This
arrangement will make a mockery of the public
If the Supplier suffers loss in its initial
bidding process, so that one who was not
performance of the terminated
declared eligible to bid and did not participate
contract, such as purchase of raw
in the bidding process will end up as the
materials for Goods specially
contract awardee, although indirectly.
manufactured for the Procuring Entity
which cannot be sold in the open
Moreover, assignors will only add to the
market, it shall be allowed to recover
number of parties that the procuring entity has
partially from the contract, on a
to deal with, thereby complicating contract
quantum meruit basis. The fact of loss
implementation. This could also be a problem if
must be established before recovery
litigation becomes necessary to enforce the
may be made.
contract.
Assignment
May the Supplier assign a contract, or any of its rights or obligations arising from
the contract, to a third party?
As a general rule, the supplier may not assign the contract, or any of its rights or obligations
arising from the contract, to a third party, except with the Procuring Entity’s prior written
consent.
Blacklisting
The blacklisting of suppliers must conform to the GPPB Guidelines issued for this purpose. As
such, reference should be made to the Uniform Guidelines for Blacklisting of Manufacturers,
Suppliers, Distributors, Contractors and Consultants, approved by the GPPB in Resolution 09-
2004, dated August 20, 2004.

Annex
Page 138

Page 139
Annex A – Negative List of Island-schools/divisions
The following island divisions were granted exemption from procuring common-use goods and
supplies through PS-DBM. The exemption was based on the inaccessibility of the said offices
to PS Depot, its geographical location and/or the transportation, handling, shipping and other
incidental costs which is grossly unconscionable compared to the value of goods to be
procured at PS Depot. The list of island divisions and schools exempted by PS-DBM may be
updated periodically, as contained in the letters of Director Estanislao C. Granados, Jr.,
Executive Director of the Procurement Service – DBM.
1, Batanes
2. Quezon ( Alabat, Polilio Islands)
3. Occidental Mindoro
4. Oriental Mindoro
5. Romblon
6. Marinduque
7. Catanduanes
8. Masbate
9. Cebu Province (Camotes Islands)
10. Bohol
11. Siquijor
12. Sulu
13. Basilan
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Page 142

Page 143
Glossary
Abstract of Bids – The corresponding document prepared by the BAC after all bids have
been received, opened, examined, evaluated and ranked.
Abstract of Bidding Documents – A summary containing general information on the

procurement at hand that is posted in the PhilGEPS.
Advance payment – Refers to any payment made prior to the delivery and acceptance of
Goods, Works, or Consulting Services.
Amendment to Order – Refers to any change within the general scope of the contract, in
any of the following aspects: drawings, design or specifications of the Goods; the method of
shipment or packing; the place of delivery; SOW or services to be rendered; the place of
performance of the services; additional items needed and necessary for the protection of the
Goods procured, which were not included in the original contract; or any other change
affecting the specifications or SOW of the Goods and/or services to be procured.
Approved Budget for the Contract – The budget for the contract duly approved by the
HOPE, as provided for in the GAA and/or continuing appropriations, in the case of national
government agencies (NGAs); the corporate budget for the contract approved by the
governing board, pursuant to Executive Order No. 518, series of 1979 (“E.O. 518”), in the
case of GOCCs and GFIs, and Republic Act No. 8292 in the case of SUCs; and the budget
approved by the Sanggunian in the case of LGUs.
BAC – The Bids and Awards Committee, established in accordance with Rule V of the IRR-A of
R.A. 9184.
Bid – A signed offer or proposal to undertake a contract submitted by a bidder in response to

and in consonance with the requirements of the bidding documents. Also referred to as
Proposal and Tender, particularly when referring to the procurement of consulting services.
The term “bid” will be used instead of “proposal” or “offer.”
Bid Evaluation – The process of determining the Bidder with the LCB or the Highest Rated
Bid (HRB).
Bid Opening Date – The date specified in the IAEB for the opening of bids.
Bid Security – Cash, check, bank draft, letter of credit, bank guarantee, surety bond or a
foreign government guarantee that serves as a guarantee that the successful bidder shall not
default on his offer, and shall enter into contract with the Procuring Entity and furnish the
performance security.
Bid Validity – A reasonable period determined by the HOPE concerned, but in no case shall
exceed one hundred twenty (120) calendar days from the date of the opening of bids, wherein
a Bid Security is considered valid.
Bidder – A supplier, manufacturer or distributor that submits a bid. The term includes anyone
acting on behalf of the individual or other entity that submits a bid, such as agents,
employees, and representatives. More specifically, a supplier, manufacturer or distributor
competing for the award of a contract in any government procurement. See also Eligible
bidder, Prospective bidder, Bidder with the LCB, Bidder with the LCRB.
Bidder with the LCB – this refers to the bidder who’s bid was calculated and declared having
the lowest bid.
Bidder with the LCRB – this refers to the bidder with the LCB which passed the post-
qualification evaluation.

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Bidding Documents. – The documents issued by the Procuring Entity as the bases for bids,
furnishing all information necessary for a prospective bidder to prepare a bid for the goods,
services, infrastructure projects and/or consulting services required by the Procuring Entity.
Blacklisting – To place on, or as if on, a list of persons or organizations that have incurred
disapproval or suspicion or are to be boycotted or otherwise penalized.
Brand Name – A trade name or product name, which identifies a product as having been
made by a particular manufacturer.
Calculated bid price – The price of a bid, after taking into account minor arithmetical
corrections to consider computational errors, omissions and discounts, if allowed.
Certificate of Class “A” Documents – A certificate issued by the BAC of the Procuring
Entity to interested eligible bidders certifying that the BAC maintains a file of Class “A”
documents submitted by suppliers/providers and that the bidder concerned has maintained
this file current and updated. It shall be valid for a period of one (1) year from date of
issuance.
Civil Works – See Infrastructure Projects.
Collusion – An agreement between two or more persons, to commit acts to accomplish a

fraudulent or deceitful purpose.
Competitiveness– A principle in Government procurement that allows broad participation by

eligible and qualified suppliers, constructors, consultants to put forward offers for a project.
Competitive Bidding – A 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. Also referred to as Public Bidding.
Common-use Supplies – Goods, materials and equipment that are repetitively used in the
day-to-day operations of procuring entities in the performance of their functions. For the
purpose of the IRR-A of RA 9184 and this manual, the term common-use supplies shall be
those included in the Price List of the Procurement Service (PS) of the Department of Budget
and Management (DBM).
Communication costs – mail and fax costs, plus cost of advertising, meetings, internet/web
posting, and other costs incurred for the dissemination of information about the bidding.
Conference Notice – A formal written communication sent to the participants of the

conference (such as the Pre-procurement, Pre-bid and Post-Award Conference) informing
them when and where the conference will be held.
Conflict of Interest – Refers to a clash between public interest and the private pecuniary
interest of the individual concerned (Black’s law Dictionary, 5th ed.)
Consolidated Blacklisting Report – A report issued by the GPPB that contains a list of
people and/or organizations that are barred from participating in any Government
procurement project.
Constructor – One who undertakes to perform a work for a public or private entity. This shall
also refer to the bidder after the issuance of the NTP.
Consulting Services – Services for Infrastructure Projects and other types of projects or
activities of the Government requiring adequate external technical and professional expertise
that are beyond the capability and/or capacity of the Government 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. (IRR-A Section 5[i])

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Contract Completion – Project sign-off or acceptance of the project/goods by the end-user.
Contract Implementation – The execution of a contract, covering the following milestones:

effectivity of the contract; constructor’s performance of his contractual obligations; Procuring
Entity’s performance of its contractual obligations, as specified in the Contract; final
acceptance or project sign-off; all other related activities; and payment by the Procuring
Entity.
Contract Termination – Ending of a contract prior to its completion.
Corrupt Practice – the offering, giving, receiving, or soliciting of any thing of value to
influence the action of a public official in the procurement process or in contract execution.
Compare fraudulent practice.
Cost Recovery Component – Direct and indirect costs accounted for in determining the
price of Bidding Documents to be sold to interested suppliers/constructors.
Demand Regulation Component – a positive (+) or negative (-) unit amount allocated to
the bidding activity for the purpose of regulating the participation of bidders
Development Cost – Costs incurred in developing the original content of the documents,
designs, plans and specifications. The design cost may be excluded if the same is to be
included in the capitalized cost of the project which is to be recovered from the usage of the
completed project facility.
Direct Contracting – An alternative 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. Also referred to as Single Source Procurement.
Direct Costs - Costs directly incurred such as development, reproduction, and

communication costs allocated to the bidding activity. See Communication Cost, Development
Cost, Reproduction Cost. Compare Indirect Costs.
Disclosure – The act of disclosing, uncovering, or revealing
Disqualification – The act of barring a bidder from further participation in the procurement
at hand, even if, in some instances, it has initially been declared eligible or post-qualified.
Domestic Bid – Any offer of unmanufactured articles, materials, or supplies of the growth or
production of the Philippines, or manufactured articles, materials or supplies manufactured or
to be manufactured in the Philippines, substantially from articles, materials or supplies of the
growth, production or manufacture, as the case may be, of the Philippines.
Eligible Bidder – A supplier, manufacturer of distributor who passed all the eligibility
requirements issued by the Procuring Entity after the eligibility check/screening.
Eligibility – Refers to the status of a Bidder in relation to its legal, technical and financial
competence to comply with the requirements of the contract to be bid, as shown by eligibility
documents submitted to and checked by the BAC.
Eligibility Check – The process of determining the compliance of Prospective Bidders with
the eligibility requirements prescribed, using a non-discretionary, “pass/fail” criteria. It shall
also be used interchangeably with Eligibility Screening.
Eligibility Requirements - are Eligibility Documents enclosed in the Eligibility Envelope.
Eligibility Screening – see Eligibility Check.
Financial Bid – One of two components comprising a bid, the other being the Technical Bid.
Financial Envelope – Envelope containing the Financial component of the bid.

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Force Majeure – see Fortuitous events.
Foreign Bid – Any offer of articles, materials or supplies not manufactured or to be

manufactured in the Philippines, substantially from articles, materials or supplies of the
growth, production, or manufacture, as the case may be, of the Philippines.
Fortuitous events – An event which could not be foreseen, or which though foreseen, was
inevitable. (Art. 1174, Civil Code)
Fraudulent practice – Misrepresentation of facts in order to influence a procurement process

or the execution of a contract to the detriment of the Procuring Entity. Compare corrupt
practice.
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. (IRR-A Section 5[k])
Head of the Procuring Entity – (i) the head of the agency or body, or his duly authorized
official, for NGAs and the constitutional commissions or offices, and branches of government;
(ii) the governing board or its duly authorized official, for GOCCs, GFIs and SUCs; or (iii) the
local chief executive, for LGUs: Provided, however, that in an agency, department, or office
where the procurement is decentralized, the Head of each decentralized unit shall be
considered as the HOPE subject to the limitations and authority delegated by the head of the
agency, department, or office.
IAEB – Invitation to Apply for Eligibility and to Bid. This serves as the notice to the public and
all interested parties of the procurement opportunity.
Incidental Services – services ancillary to the supply of the Goods, such as transportation
and insurance; installation, commissioning, provision of technical assistance, training, and
other such obligations of the Supplier covered under the contract, RFP, TOR, and/or bidding
documents.
Indirect Costs - Costs indirectly incurred such as overhead, supervision, and administrative
costs allocated to the bidding activity. Compare Direct Costs.
Ineligible Bidder – A manufacturer, supplier, distributor, constructor or consultant who fails

to meet any or all of the eligibility requirements issued by 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 IT 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. (IRR-A
Section 5[n]) Also referred to as civil works.
Inspection – Examination and/or testing of merchandise to determine whether it has been

received in the proper quantity and condition, and to verify that it conforms to the applicable
specifications.
Inventory items – Goods, materials or equipment usually kept in stock by the Procuring
Entity, For the purpose of the IRR-A of RA 9184 and this manual, this shall include common-
use supplies that are not in the price list of the PS-DBM.

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Latent Defect – A defect that is not apparent to the buyer by reasonable observation. A
latent defect is “hidden” or one that is not immediately determinable.
Limited Source Bidding – An alternative method of procurement for Goods and Consulting
Services that involves direct invitation to bid by the concerned Procuring Entity from a set of
pre-selected suppliers or consultants with known experience and proven capability on the
requirements of the particular contract.
Liquidated Damages – Damages agreed upon by the parties to a contract, to be paid in

case of breach thereof.
Lowest Calculated Bid (LCB) – The bid with the lowest correct calculated price
Lowest Calculated Responsive Bid (LCRB) - After post-qualification the LCB is

determined to be post-qualified and declared the LCRB.
Motion for Reconsideration – In procurement, it is an application made to the BAC for the
purpose of obtaining a rule or order setting aside a previous decision.
Negotiated Procurement – An alternative 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, constructor or consultant.
Non – inventory items - Non-routinary or non-recurring requirements not ordinarily kept in

stock by the procuring entity but which may become necessary upon the happening of a
fortuitous event.
Notice of Award – The document issued by the HOPE to the bidder to whom the contract is
awarded.
Notice of Eligibility – The document issued by the BAC to the eligible bidder/s formally
informing the same that he/she/they met the eligibility requirements issued by the Procuring
Entity.
Notice of Ineligibility – The document issued by the BAC to the bidder/s who failed to meet
any or all of the eligibility requirements issued by the Procuring Entity.
Notice of Post-qualification – The document issued by the BAC to the bidder with LCB
whose bid is found responsive.
Notice of Post-disqualification – The document issued by the BAC to the bidder with LCB
whose bid is found non-responsive.
Notice to Proceed – The document issued by the HOPE to the winning bidder to proceed
with the implementation of the contract.
Observer – One who is invited to attend and observe all stages of the procurement,
especially: the pre-bid conference; opening of bids; bid evaluation; post-qualification;
contract award; and special meetings of the BAC.
Patent Defect – A defect that is apparent to the buyer on normal observation. An apparent
or obvious defect.
Performance Security – A security posted by the winning bidder to guarantee the faithful
performance by the same of its obligations under the contract prepared in accordance with
Portal – A website that integrates a wide variety of contents for the purpose of attracting and
aggregating multiple users together in a central virtual space.
Post-qualification – The process of validating and verifying the documents, information and
statements made in the Eligibility Documents by the Bidder who submitted the LCB, as well as

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ascertaining the said Bidder’s compliance with the legal, financial and technical requirements
of the bid.
Post-qualification Report – The report prepared by the TWG containing the findings/results
of the post-qualification conducted on the bidder with the LCB or HRB, as the case may be.
Pre-bid Conference – is the forum where the Procuring Entity’s representatives and the
Prospective Bidders discuss the different aspects of the procurement at hand.
Pre-procurement Conference – is the forum called by the BAC for procurements

undertaken through public bidding, where all officials involved in the procurement meet and
discuss all aspects of the transaction, including the technical specifications, the ABC, the
applicability and appropriateness of the recommended method of procurement and the related
milestones, the bidding documents, availability of the pertinent budget release for the project
/ contract, among others.
Procurement – The acquisition of Goods, Consulting Services, and the contracting for
Infrastructure Projects by the Procuring Entity. Procurement shall also include the lease of
goods and real estate. With respect to real property, its procurement shall be governed by
the provisions of R.A. 8974 and other applicable laws, rules and regulations.
Procurement Observation Report – The report submitted by the Observer to the HOPE,
based on the procurement checklist.
Procurement Service – An organic office in the DepED Central Office comprised of the BAC
Secretariat Division which performs BAC Secretariat functions, and the Technical Support
Division (TSD) which performs other procurement functions.
Procurement Unit – Refers to the organic office of the Procuring Entity that carries out the
procurement function.
Procuring Entity – Any branch, constitutional commission or office, agency, department,

bureau, office, or instrumentality of the Government, including GOCC, GFI, SUC and LGU
procuring Goods, Consulting Services and Infrastructure Projects.
Project Management Office – The unit/office/department of the Procuring Entity that is

primarily responsible for implementing and managing a project.
Proposal – See Bid.
Prospective Bidder – This refers to the bidder from the posting of the IAEB to the
submission of the Letter of Intent (LOI);
Protest – A formal declaration made by a person interested or concerned in some act to be

done, or already performed, whereby he expresses his dissent or disapproval, or affirms the
act against his will. The object of such declaration is usually to save some right which would
be lost to him if his implied anent could be made nil, or to exonerate himself from some
responsibility which would attach to him unless he expressly negatived his assent. (Black’s
Law Dictionary, 5th Ed.)
Provincial bidder – A constructor who participates in the bidding of provincial priority

programs and infrastructure projects as defined in Section 44 of the IRR-A of R.A. 9184, and
whose principal office is within the same province.
Public Bidding – See Competitive Bidding.
Public Monitoring – A principle in Government procurement…
Reproduction cost – labor, supplies and equipment rental costs incurred in the reproduction
of the documents.
Request for Clarification – A written request submitted by the bidder to the BAC, asking
the latter to clarify a particular provision of the Bidding Documents.

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Request for Proposal – A written request for proposals concerning goods or services the
government intends to acquire by means of Competitive Bidding. The procedure allows
changes to be made after other proposals are opened and contemplates that the nature of the
proposals and/or prices offered will be negotiated prior to award.
Request for Reconsideration – See Motion for Reconsideration.
Shopping – An alternative 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.
Single source procurement – See Direct Contracting.
Situated within the vicinity - The supplier, manufacturer or distributor must have an
office/branch or business presence within the province where the emergency or calamity
occurred. (Manual of Procedures for the Procurement of Infrastructure Projects for LGUs).
Spare parts – Refer to extra components, equipment, tools, instruments or parts of

machinery or apparatus that replace the ones that are damaged or worn out.
Specification – A description of what the purchaser requires and what a bidder must offer.
Splitting of Contracts – The act of dividing or breaking up government contracts into

smaller quantities and amounts. It also is the act of dividing contract implementation into
artificial phases or sub-contracts. Both actions are for the purpose of evading or
circumventing the requirements of law and this IRR-A, especially the necessity of public
bidding and the requirements for the alternative methods of procurement. (IRR-A Section
54.1)
Standard – The established and fixed measure used in assessing quality or performance.
Sub-contractor – One who takes a specific part of the work undertaken by the principal
contractor. (Black’s Law Dictionary, 5th Ed.)
Submitted bid price – The bid price as indicated in the financial proposal submitted by the
bidder.
Supplemental/Bid bulletin – A notice issued by the Procuring Entity to Prospective Bidders

with respect to any clarifications or modifications in the Bidding Documents, including those
affecting the technical specifications, eligibility requirements, procurement schedule, and
other similar matters.
Supplier – an individual, or any corporate body or commercial company, habitually

established in business and engaged in the manufacture or sale of the merchandise or
performance of the general services covered by a bid.
Technical Bid – One of two components comprising a bid, the other being Financial Bid.
Technical Envelope – The envelope containing the Technical component of the bid
Technical Support Division - an organic office in the Central Office under the Procurement
Service which provides technical assistance to the BAC.
Tender – See Bid.
Two-Stage Competitive Bidding – Bidding process divided into two stages. In the first
stage, bidders submit only the technical bids. In the second stage, when the technical
specifications have already been well defined, the regular procedure for public bidding is
followed. This may be employed for the procurement of Goods where, due to the nature of
the requirements of the project, the required technical specifications/requirements of the
contract cannot be precisely defined in advance of bidding, or where the problem of
technically unequal bids is likely to occur.

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Warranty – An undertaking by the supplier, manufacturer, distributor or constructor to

guarantee that it will correct any manufacturing/construction defects of the
goods/infrastructure project procured by the government.

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VOLUME 2

Manual of Procedures for the

MANUAL OF PROCEDURES FOR THE PROCUREMENT OF GOODS AND

DepED Manual of Procedures for the Procurement of Goods and Services

What is the mandate of the PS-DBM? .....................................................................25

DepED Manual of Procedures for the Procurement of Goods and Services

DepED Manual of Procedures for the Procurement of Goods and Services

DepED Manual of Procedures for the Procurement of Goods and Services

NEGOTIATED PROCUREMENT ............................................................................98

DepED Manual of Procedures for the Procurement of Goods and Services

Insurance ........................................................................................................ 131

DepED Manual of Procedures for the Procurement of Goods and Services

ABBREVIATIONS AND ACRONYMS

ABC Approved Budget for the Contract

ABM Agency Budget Matrix

APP Annual Procurement Plan

APR Agency Procurement Request

BAC Bids and Awards Committee

BDS Bid Data Sheet

BFAD Bureau of Food and Drugs

BIR Bureau of Internal Revenue

BPS Bureau of Product Standards

BSP Bangko Sentral ng Pilipinas

CDA Cooperatives Development Authority

CAF Certificate of Availability of Funds

CED Collection Enforcement Division

CIF Cost, Insurance and Freight

CIP Carriage and Insurance Paid To (named place of destination)

COA Commission on Audit

CPT Carriage Paid To (named place of destination)

CSW Complete Staff Work

DAP Development Academy of the Philippines

DBM Department of Budget and Management

DDP Delivered Duty Paid (named place of destination)

DepED Department of Education

DFA Department of Foreign Affairs

DOH Department of Health

DOJ Department of Justice

DTI Department of Trade and Industry

DepED Manual of Procedures for the Procurement of Goods and Services

EFPS Electronic Filing and Payment System

E.O. Executive Order

FAP Foreign Assisted Project

FCA Free Carrier (named place)

FED Firearms and Explosives Division

GAA General Appropriations Act

GCC General Conditions of Contract

GFI Government Financial Institution

GOCC Government-owned and/or –controlled corporation

GPPB Government Procurement Policy Board

GPPB-TSO GPPB – Technical Support Office

GPRA Government Procurement Reform Act (R.A. 9184)

G.R. General Reference

HOPE Head of the Procuring Entity

IAEB Invitation to Apply for Eligibility and to Bid

ICT Information and Communication Technology

IFI International Financing Institution

IRR-A Implementing Rules and Regulations Part A of R.A. 9184