THENG E. SALIK JR.

CE LAW

Week #3

ARTICLE XVI

ALTERNATIVE METHODS OF PROCUREMENT

SEC. 48. Alternative Methods - Subject to the prior approval of the Head of the Procuring Entity
or his duly authorized representative, and whenever justified by the conditions provided in this
Act, the Procuring Entity may, in order to promote economy and efficiency, resort to any of the
following alternative methods of Procurement:

 (a) Limited Source Bidding, otherwise known as Selective Bidding - a method of

Procurement that involves direct invitation to bid by the Procuring Entity from a set of
pre-selected suppliers or consultants with known experience and proven capability
relative to the requirements of a particular contract;
 (b) Direct Contracting, otherwise known as Single Source Procurement- a method of
Procurement that does not require elaborate Bidding Documents because the supplier
is simply asked to submit a price quotation or a pro-forma invoice together with the
conditions of sale, which offer may be accepted immediately or after some negotiations;
 (c) Repeat Order a method of Procurement that involves a direct Procurement of Goods
from the previous winning bidder, whenever there is a need to replenish Goods
procured under a contract previously awarded through Competi Bidding
 (d) Shopping a method of Procurement whereby the Procuring y simply requests for the
submission of price quotations for readily available off shelf Goods or ordinary/regular
equipment to be procured directly from suppliers known qualification; or
 (e) Negotiated Procurement a method of Procurement that may resorted under the
extraordinary circumstances provided for in Section 53 of this and other instances that
shall be specified in the IRR, whereby the Procuring Ey directly negotiates a contract
with a technically, legally and financially capa supplier, contractor or consultant. In all
instances, the Procuring Entity shall ensure that the most advantage price for the
govemment is obtained.

SEC. 49. Limited Source Bidding. - Limited Source Bidding may be resorted to only in any of the
following conditions:

 (a) Procurement of highly specialized types of Goods and Consulti Services which are
known to be obtainable only from a limited number of sources; of
 (b) Procurement of major plant components where it is deeme advantageous to limit
the bidding to known eligible bidders in order to maintain an optimum and uniform
level of quality and performance of the plant as a whole.

SEC. 50. Direct Contracting. - Direct Contracting may be resorted to only M any of the following
conditions:
  (a) Procurement of Goods of proprietary nature, which can be obtained only
 rom the proprietary source, i.e. when patents, trade secrets and copyrights prohibi
others from manufacturing the same item: (b) When the Procurement of critical
components from a specific manufacturer, supplier or distributor is a condition
precedent to hold a contractor lo quarantee its project performance, in accordance with
the provisions of his contact; or
 (c) Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers
selling at lower prices and for which no suitable substitute can be obtained at more
advantageous terms to the government.

SEC. 51. Repeat Order. When provided for in the Annual Procurement an, Repeat Order may be
allowed wherein the Procuring Entity directly procures oods from the previous winning bidder
whenever there arises a need to replenish oods procured under a contract previously awarded
through Competitive Bidding t to post-qualification process prescribed in the Bidding
Documents and provided following conditions are present

 (a) The unit price must be equal to or lower than that provided in the original
 (b) The repeat order does not result in splitting of requisitions or purchase
 (c) Except in special circumstances defined in the IRR, the repeat order shall availed of
only within six (6) months from the date of the Notice to Proceed arising the original
contract: and, (d) The repeat order shall not exceed twenty-five percent (25%) of theity
of each item of the original contract.

SEC. 52. Shopping - Shopping may be resorted to under any of the following instances:

 (a) When there is an unforeseen contingency requiring immediate purchase: ovided,

however, That the amount shall not exceed Fifty thousand pesos (P50, 000);
 (b) Procurement of ordinary or regular office supplies and equipment not vailable in the
Procurement Service involving an amount not exceeding Two hundred y thousand pesos
(P250,000): Provided, however, That the Procurement does not suit in Splitting of
Contracts: Provided, further, That at least three (3) price quotations. um bona fide
suppliers shall be obtained. The above amounts shall be subject to a periodic review by
the GPPB. For his purpose, the GPPB shall be authorized to increase or decrease the said
amount in ter to reflect changes in economic conditions and for other justifiable
reasons.

SEC. 53. Negotiated Procurement. Negotiated Procurement shall be wowed only in the
following instances:

 (a) In cases of two (2) failed biddings, as provided in Section 35 hereof,

 (b) In case of imminent danger to life or property during a state of calamity. when time
is of the essence arising form natural or man-made calamities or other auses 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 ties:
  (c) Take-over of contracts, which have been rescinded or terminated for Sauses
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 pu services,
infrastructure facilities and other public utilities,
 (d) Where the subject contract is adjacent or contiguous to an on-go infrastructure project, as
defined in the IRR: Provided, however, That the origin contract is the result of a Competitive
Bidding; the subject contract to be negotiated has similar or related scopes of work, it is within
the contracting capacity of the contracti the contractor uses the same prices or lower unit prices
as in the original contract less mobilization cost; the amount involved does not exceed the
amount of the ongoing project and, the contractor has no negative slippage: Provided, further.
Th negotiations for the procurement are commenced before the expiry of the ongin contract
Whenever applicable, this principle shall also govern consultancy contracts where the
consultants have unique experience and expertise to deliver the require service, or,
 (e) Subject to the guidelines specified in the IRR, purchases of Goods from another agency of the
government, such as the Procurement Service of the DBM, whic is tasked with a centralized
procurement of commonly used Goods for the government in accordance with Letters of
Instruction No. 755 and Executive Order No. 359, series of 1080

SEC. 54. Terms and Conditions for the use of Alternative Methods. - The specific terms and conditions,
including the limitations and restrictions, for the application of each of the alternative methods
mentioned in this Article shall be specified in the IRR.

ARTICLE XVII

PROTEST MECHANISM

SEC. 55. Protests on Decisions of the BAC. Decisions of the BAC in all stages of procurement may be
protested to the head of the procuring entity and shall be in writing. Decisions of the BAC may be
protested by filing a verified position paper and paying a non-refundable protest fee. The amount of the
protest fee and the periods during which the protests may be filed and resolved shall be specified in the

IRR SEC. 56. Resolution of Protests. - The protests shall be resolved strictly on the basis of records of the
BAC. Up to a certain amount to be specified in the IRR the decisions of the Head of the Procuring Entity
shall be final.

SEC. 57. Non-interruption of the Bidding Process. In no case shall any protest taken from any decision
treated in this Article stay or delay the bidding process. Protests must first be resolved before any award
is made. SEC 58 Report to Regular Courts, Certiorari Court action may be resorted to only after the
protests contemplated in this Article shall have been ompleted Cases that are filed in violation of the
process specified in this Article shall s dismissed for lack of jurisdiction. The regional trial court shall have
jurisdiction ever final decisions of the head of the procuring entity. Court actions shall be vered by Rule
65 of the 1997 Rules of Civil Procedure.

This provision is without prejudice to any law conferring on the Supreme Court the sole jurisdiction to
issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government.

ARTICLE XVIII

SETTLEMENT OF DISPUTES
SEC. 59. Arbitration. - Any and all disputes arising from the implementation of a contract covered by this
Act shall be submitted to arbitration in the Philippines eccording to the provisions of Republic Act No.
876, otherwise known as the Arbitration Law: Provided, however, That, disputes that are within the
competence of the Construction Industry Arbitration Commission to resolve shall be referred thereto.
The process of arbitration shall be incorporated as a provision in the contract that will be executed
pursuant to the provisions of this Act: Provided, That by mutual agreement, the parties may agree in
writing to resort to alternative modes of dispute resolution.

SEC. 60. Appeals. The arbitral award and any decision rendered in accordance with the foregoing Section
shall be appealable by way of a petition for review to the Court of Appeals. The petition shall raise pure
questions of law and shall be governed by the Rules of Court.

ARTICLE XIX

CONTRACT PRICES AND WARRANTIES

SEC. 61. Contract Prices. - For the given scope of work in the contract as awarded, all bid prices shall be
considered as fixed prices, and therefore not subject to price escalation during contract implementation,
except under extraordinary circumstances and upon prior approval of the GPPB.

For purposes of this Section, "extraordinary circumstances shall refer to events that may be determined
by the National Economic and Development Authority in accordance with the Civil Code of the
Philippines, and upon the recommendation of the procuring entity concerned. SEC 62 Warranty

(a) For the procurement of Goods, in order to assure that manufacturing defects shall be corrected by
the supplier manufacturer, distributor, as the case may be, for a specific time after performance of the
contra warranty shall be required from the contract awardee for such period of time as my be provided
in the IRR, the obligation for which shall be covered by either retenti money in the amount equivalent to
a percentage of every progress payment of special bank guarantee equivalent to a percentage of the
total contract price, to e provided in the IRR. The said amounts shall only be released after the lapse of
the warranty period, provided that the Goods supplied are free from defects and all conditions imposed
under the contract have been fully met. Act the undeInfra are

(b) For the procurement of infrastructure projects, the contractor she assume full responsibility for the
contract work from the time project construction commenced up to a reasonable period as defined in
the IRR taking into consideration the scale and coverage of the project from its final acceptance by the
government and shall be held responsible for any damage or construction of works except those
occasioned by force majeure. The contractor shall be fully responsible for the safety protection, security,
and convenience of his personnel, third parties, and the public a large, as well as the works, equipment,
installation and the like to be affected by his construction work and shall be required to put up a
warranty security in the form of

cash, bank guarantee, letter of credit, Government Service Insurance System bond or callable surety
bond. The contractor shall undertake the repair works, at his own expense, of any defect or damage to
the infrastructure projects on account of the use of materials of inferior quality within ninety (90) days
from the time the Head of the Procuring Entity has issued an order to undertake repair. In case of failure
or refusal to comply with this mandate, the government shall undertake such repair works and shall be
entitled to full reimbursement or expenses incurred therein upon demand. Any contractor who fails to
comply with the preceding paragraph shall suffer perpetual disqualification from participating in any
public bidding and his property or properties shall be subject to attachment or garnishment proceedings
to recover the costs. All payables of government in his favor shall be offset to recover the costs.

ARTICLE XX

THE GOVERNMENT PROCUREMENT POLICY BOARD

SEC. 63. Organization and Functions. - A Government Procurement Policy Board (GPPB) is hereby
established to:

 (a) protect national interest in all matters affecting public Procurement, having due regard to
the country's regional and International obligations;
 (b) formulate and amend, wherever necessary, the IRR and the corresponding standard forms
for Procurement;
 (c) ensure that Procuring Entities regularly conduct Procurement training programs and prepare
a Procurement operations manual for all offices and agencies of government, and

(d) conduct an annual review of the effectiveness of this Act and recommend any amendments thereto,
as may be necessary. The GPPB shall convene within fifteen (15) days from the effectivity of this Act to
formulate the IRR and for other related purposes. The GPPB shall be Supported by a technical support
office. In addition to the powers granted under this Act, the GPPB shall absorb all the powers, functions
and responsibilities of the Procurement Policy Board created under Executive Order No. 359, series of
1989. All affected functions of the Infrastructure Committee of the National Economic and Development
Authority Board are hereby transferred to the GPPB.

SEC. 64. Membership. The GPPB shall be composed of the Secretary of the Department of Budget and
Management, as Chairman, the Director-General of the National Economic and Development Authority,
as Alternate Chairman, with the following as Members; the Secretaries of the Departments of Public
Works and Highways, Finance, Trade and Industry, Health, National Defense, Education, Interior and
Local Government, Science and Technology. Transportation and Communications, and Energy, or their
duly authorized representatives and a representative from the private sector to be appointed by the
President upon the recommendation of the GPPB. The GPPB may invite a representative from the
Commission on Audit to serve as a resource person