RECENT GOVERNMENT POLICIES AND PROCEDURES ON PROCUREMENT Dennis Lorne S. Nacario 10 July 2008

RECENT GOVERNMENT POLICIES AND PROCEDURES

ON PROCUREMENT

Dennis Lorne S. Nacario10 July 2008

Updates on Procurement Policies

General Updates

Procurement of Goods

Negotiated Procurement

General Updates

Issuance Title / Subject Matter Approved Effectivity

Resolution05-2007

Amending Secs. 23.3 & 24.13, IRR-A

4 May 2007 14 Aug 2007

Resolution 22-2007

Amending Sec. 17.6, IRR-A and providing for Annex “G”

28 Sept 2007 10 Nov 2007

Manuals approval

Resolutions approving the Local Government Procurement Manuals and Customized Procurement Manuals

Various Various



Resolution 23-2007

Revised Guidelines on Extension of Contracts for General Support Services

28 Sept 2007 10 Nov 2007

Resolution 24-2007

Guidelines on Procurement of Security and Janitorial Services

28 Sept 2007 10 Nov 2007

Circular 01-2008

Clarification on the Adoption of Additional Eligibility and Technical Documents to Ensure Compliance with Labor Laws and Other Social Legislation

7 March 2008 7 March 2008



Resolution 03-2007

Amending Sec. 53 (e), IRR-A to include infrastructure projects and consulting services

30 May 2007 24 July 2007

Resolution 04-2007

Amending Sec. 53, IRR-A to include lease of privately owned real estate for official use

4 May 2007 14 Aug 2007

Resolution 12-2007

Amending Sec. 53, IRR-A to include participation of NGOs in public procurement

29 June 2007 10 Nov 2007

GENERAL UPDATES

Updates as of July 2008

Design and Build

General Updates

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

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

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

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

What are the pros and cons of a DB Scheme?

Advantages Disadvantages

• One contractor bears all risks and responsibilities

• Too much discretion given to contractor

• Reduced design and construction periods and final project cost

• Difficulty in predicting the final cost

• Assured quality of the structure

• The end-result may not exactly be in accordance with what the procuring entity required

Concept Planning

Preliminary Design

Select Design-Builder

Final Project Design & Clearances

Construction

Design-Build Associated Time Savings

Minimal to Extensive Contractor Input

Extensive Contractor Input

Concept Planning

Preliminary Design

Select Designer

Final Project Design & Clearances

ConstructionSelect Contractor

Extensive Contractor Input

Minimal Contractor Input

Design-Bid-Build Scheme

Design-Build Scheme

Source: http://www.fhwa.dot.gov/reports/designbuild/designbuild.htm

PROCUREMENT OF GOODS


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

What are the previous rules on contract extension?

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

What is the contract extension guidelines for?

Prior approval of HOPE upon BAC recommendation.

In addition, if contract extension exceeds 6 months, HOPE shall inform GPPB in writing.

What are the requirements 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

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

What are the conditions for contract extension?

Security and Janitorial Services


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

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

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

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

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

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

Additional Eligibility and Technical Documents


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

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

NEGOTIATED PROCUREMENT


Agency to Agency Agreement


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

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

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

How is it done?

Lease of Privately-Owned Real Estate for Official Use


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

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

How is it done?

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

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

NGO Participation in Public Procurement


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

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

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

Thank you

Comments, questions?