Recent Government Policies and Procedures on Procurement

1. Recent Government Policies and Procedures on Procurement 10 July 2008 Dennis Lorne S. Nacario

2. Updates on Procurement Policies • General Updates • Procurement of Goods • Negotiated Procurement

3. General Updates

4. Procurement of Goods

5. Negotiated Procurement

6. GENERAL UPDATES Updates as of July 2008

7. General Updates Design and Build

8. What is Design and Build (DB) Scheme? • Design-Build • Project delivery system where the procuring entity contracts with a single entity to perform both design and construction under a single design-build contract • Design-Bid-Build (Traditional Method) • Project delivery system where the procuring entity contracts separately with a designer and constructor

9. Is DB Scheme allowed? • Legal Basis • Section 17.6 of IRR-A expressly recognizes the use of design and build scheme in the procurement of infrastructure projects

10. When is it applicable? • Flagship, priority, and fast track projects (included in the MTPIP and/or the RDIP) • Requiring advanced engineering or construction technologies or whose intellectual property rights belong to private companies • Design, equipment, plant and construction can be provided exclusively by a company or where manufacturer’s know-how is important in the construction of such facility • Small projects with previously approved drawings or standardized designs where innovation in design and construction methods will result in lower costs and higher quality projects

11. What are the conditions for its application? • Include in the Annual Procurement Plan • Create Design and Build Committee (optional) • Conduct Preliminary Design and Construction Studies

12. What are the pros and cons of a DB Scheme?

13. Design-Build Scheme Concept Planning Select Design-Builder Preliminary Design Final Project Design & Clearances Construction Design-Build Associated Time Savings Extensive Contractor Input Minimal to Extensive Contractor Input Design-Bid-Build Scheme Concept Planning Select Designer Preliminary Design Final Project Design & Clearances Select Contractor Construction Minimal Contractor Input Extensive Contractor Input Source: http://www.fhwa.dot.gov/reports/designbuild/designbuild.htm

14. Procurement of goods Updates as of July 2008

15. Procurement of Goods Contract Extension

16. What are the previous rules on contract extension? • GPPB Resolution 08-2005 (28 April 2005) • Contract extension allowed up to 2 months • After 2 months, GPPB approval • GPPB Resolution 03-2006 (20 January 2006) • Contract extension allowed up to 6 months • After 6 months, GPPB approval

17. What is the contract extension guidelines for? • General policy is to discourage contract extensions • Objectives: • To monitor and limit contract extension to certain conditions • To prevent hiatus in support services • To avoid interruption in government service

18. What are the requirements for contract extension? • Prior approval of HOPE upon BAC recommendation. • In addition, if contract extension exceeds 6 months, HOPE shall inform GPPB in writing.

19. What are the conditions for contract extension? • No contract extension shall exceed one (1) year • Original contract awarded in accord with RA 9184 and its IRR-A • Procuring entity has substantially undertaken the procurement activities prior to award • Contract extension is due to circumstances beyond its control and new contract cannot be awarded within a month after expiration • Contract extension is merely an emergency measure to maintain status quo • Incumbent service provider has not violated any of the provisions of the original contract • Terms and conditions of the original contract have not been changed or modified

20. What are the conditions for contract extension? • No contract extension shall exceed one (1) year • Original contract awarded in accord with RA 9184 and its IRR-A • Procuring entity has substantially undertaken the procurement activities prior to award • Contract extension is due to circumstances beyond its control and new contract cannot be awarded within a month after expiration • Contract extension is merely an emergency measure to maintain status quo • Incumbent service provider has not violated any of the provisions of the original contract • Terms and conditions of the original contract have not been changed or modified

21. Procurement of Goods Security and Janitorial Services

22. What are the salient features of this Guidelines? • Additional Technical Parameters • Evaluation is not based solely on cost • Multi-year (not to exceed 3 yrs.) • Saves time and resources for bidding • Allows service contractors to adjust, without being too familiar

23. What are the additional technical parameters for security services? • Stability • Yrs. of experience • Liquidity • Organizational set-up • Resources • No. of licensed firearms • No. and kind of communication devices • No. and kind of motor powered vehicles • No. of licensed guards • Security Plan • Other Factors • Recruitment and selection criteria • Completeness of uniforms and other paraphernalia

24. What are the additional technical parameters for janitorial services? • Stability • Yrs. of experience • Liquidity • Organizational set-up • Resources • No. and kind of equipment and supplies • No. of janitors and supervisors • Housekeeping Plan • Other Factors • Recruitment and selection criteria • Completeness of uniforms and other paraphernalia

25. What are the rules on the additional technical parameters? • Minimum standard for each parameter is determined by the procuring entity • Additional technical parameters and minimum standard must be expressly stated under technical specifications • Additional documents may be required as part of bidder's technical proposal • Non-discretionary "pass/fail" criterion is used in determining compliance with parameters

26. What are the rules on multi-year contracts for these services? • Not to exceed three (3) years • Invitation to Apply for Eligibility and to Bid must state: • Term of the contract to be bid • ABC for the first year only • All bid prices shall be fixed throughout the term of the contract, except: • Increase in minimum daily wage and taxes • Procuring entity sees the need for an increase or decrease in the number of guards or janitors • Financial Proposal shall contain a breakdown of all costs

27. What are the rules on multi-year contracts for these services? • Satisfactory level of performance throughout term of contract must be maintained based on following: • quality of service delivered • time management • management and suitability of personnel • contract administration and management • provision of regular progress reports • Before end of each year, procuring entities shall conduct a performance assessment • If not favorable, the procuring entity may pre-terminate the contract

28. Procurement of Goods Additional Eligibility and Technical Documents

29. What is the purpose of GPPB Circular 01-2008? • Advise procuring entities on the following: • Implied repeal of Memorandum Circular 80, Series of 1994 • MC 80 mandates the submission of: (i) an undertaking to pay worker at least the minimum wage; (ii) an undertaking to comply with the SSS law; and (iii) a clearance from DOLE and SSS that there is no pending administrative case for violation of SSS and minimum wage laws • Guiding principles on the adoption of additional eligibility or technical documents

30. What are the guiding principles on adoption of additional documents? • General Policy: Discourage imposition of additional eligibility and technical documents • Requirement for a clearance or certificate of no pending administrative case is prohibited for being violative of due process • Post-qualification should cover verification on the following: • Compliance with the mandated minimum wage • Remittance required under SSS, PHIC, and PAG-IBIG • Absence of final judgment on violation of any labor law • Clearances may be required during contract implementation

31. NEGOTIATED PROCUREMENT Updates as of July 2008

32. Negotiated Procurement Agency to Agency Agreement

33. What is the amendment about? • Sec. 53 (e), IRR-A • Covers infrastructure projects, consulting services, and goods • Rationale: • General policy is to outsource • Except when it is more efficient and economical to purchase from another government agency • Definition of government agency excludes those formed under the Corporation Code of the Philippines

34. When are the conditions in A-A Agreements? • General Conditions • Favorable cost-benefit analysis • Does not exceed 25% of PE’s total procurement budget • Servicing Agency (SA) has the mandate to deliver/perform • Servicing Agency owns or has access to necessary tools and equipment • PE may require SA to post performance and/or warranty security

35. When are the conditions in A-A Agreements? • For infrastructure projects, SA must have: • Track record of completed or supervised similar project at least 50% of the project at hand • Private contractors cannot be engaged to undertake the project • Implement project in-house, by job-order, or through the pakyaw contracting system

36. How is it done?

37. Negotiated Procurement Lease of Privately-Owned Real Estate for Official Use

38. What lease transactions are covered? • Scope and Application • Lease contracts for privately-owned real properties for government use • Lease of government-owned buildings/spaces for private use is still governed by DBM-DENR-DPWH Joint Circular No. 1, dated 30 September 1987

39. What are the principles governing this transaction? • Guiding Principles • Preference is to lease from other government agencies • Choice of location should be governed by prudence, economy, suitability of area to PE’s mandate, accessibility to PE’s clients • Rent must be reasonable • Rent + Additional Expenses (assoc. dues, etc.) < ABC

40. How is it done?

41. How is reasonableness of rental rate determined? • Evaluation Methods • Computation based on Observed Depreciation • Uses depreciation rate as determined by the BAC upon meticulous ocular inspection of the actual condition of the building/space • Computation based on Straight Line Depreciation • Uses depreciation rate determined from a Table of Structural Depreciation provided by the DPWH

42. What are the terms and conditions for lease? • Lease contracts may be entered into on a multi-year basis, subject to DBM guidelines • Procuring entity has the flexibility to negotiate with lessor for the most advantageous terms and conditions to government

43. Negotiated Procurement NGO Participation in Public Procurement

44. When may NGOs be given due preference in government contracts? • If appropriation law/ordinance earmarks an amount for projects to be specifically contracted out to NGOs • Public bidding limited to NGOs • Enter into negotiated procurement under Sec. 53 (j), IRR-A

45. What are the requirements in NGO participation in public bidding? • IAEB advertisement and posting in accordance with Sec. 21.2.1, including the following: • legal basis or appropriation law or ordinance • statement that project is limited to NGOs • In determining NGO’s eligibility, following documents are required in lieu of or in addition to those under Secs. 23.6 or 24.7.1: • CDA registration certificate in lieu of SEC registration certificate • Latest articles of incorporation • Audited financial statements for the past 3 years

46. What is the process under Sec. 53 (j), IRR-A?

47. Thank you • Comments, questions?