Transparency in Public Procurement Module

This publication has been reviewed by the Philippine Government Electronic Procurement System

TRANSPARENCY IN PUBLIC PROCUREMENT 2

Rationale:

The Philippines has been perceived to be one of the most corrupt nations in Asia. This

public perception may have stemmed from reports and studies of corruption in public

procurement. Thus, in 2003, the government, together with non-governmental organizations,

spearheaded the enactment of a comprehensive law that will cover all government purchases,

whether domestic or foreign. Said law, most commonly referred to as the 2003 Government

Procurement Reform Act, includes such important features such as participation of civilian

observers and an electronic portal called the Philippine Government Electronic Procurement

System (PhilGEPS). The implementation of the law is still said to be in its infancy stage,

requiring information about the law with the general public and the latter’s participation in the

quest for a more transparent public procurement system.

Description:

This is a module designed to assist trainors in the World Bank-Knowledge for

Development Center (KDC) Project on Transparency in Public Procurement. It covers the

Philippine public procurement processes and systems including its laws, implementing rules and

regulations, issuances and directives which are adopted by the Government Procurement Policy

Board (GPPB) and the Philippine Government Electronic Procurement System (PhilGEPS).

These agencies are under the country’s Department of Budget and Management.

Target Audience:

With special emphasis on the PhilGEPS, this module aims to streamline the trainings

conducted by KDC branches in the Philippines as part of their endeavor to impart the basic

principles on the country’s public procurement system to young people aged 12-24 years old.

The training envisions that young people will appreciate how transparency can be promoted in

the public procurement system, both in its ideal and practical applications. In addition, the


training will help them effectively gather and provide data as they actively participate in

measures to promote transparency in government transactions and expenditures.

Young people are an ideal target audience for this endeavor primarily because the quest

of nation-building does not border age. The KDCs are established for the purpose of maximizing

the participation of the youth sector in important good governance initiatives, particularly in

promoting transparency in public procurement.

Goals and Objectives:

At the end of the training, it is envisioned that young participants are able to:

• Know the basic principles of a sound public procurement system like transparency,

integrity and efficiency;

• Know the basic principles and processes involving the Philippines’ public procurement

system under the new Government Procurement Reform Act, its implementing rules and

regulations, and other related government issuances;

• Know how the PhilGEPS works;

• Identify red flags in actual procurement processes;

• Identify compliance of bidders and government agencies with existing procurement laws

by viewing PhilGEPS;

• Fill out a standard PhilGEPS questionnaire regarding the use of PhilGEPS in specific

local government units;

• Promote the principle of transparency in public procurement.

• If called for, act as civilian observers in any public bidding.

Outline:

I. Introduction to public procurement

A. Definitions

B. Principles of a Sound Public Procurement System

C. History of Philippine Public Procurement


II. The Public Procurement System in the Philippines

A. Special Features

a. Comprehensive Law

b. Civilian Observers

c. PhilGEPS

d. Bids and Awards Committee

e. Coverage of National and Local Governments

B. Types of Procurement Covered

a. Procurement of Goods

b. Procurement of Infrastructure Projects

c. Procurement of Consulting Services

C. The Procurement Process Competitive Bidding

a. Pre-procurement Conference

b. Invitations to Bid

c. Pre-bid Conference

d. Submission of Bids and Bid Opening

e. Bid Evaluation

f. Post-Qualification

g. Award

D. The Procurement Process- PhilGEPS

a. Nature

b. Features

c. Process

E. Red Flags in the Bidding Process

a. Same Supplier/Contractor Gets the Award Repeatedly

b. No Posting of Invitations to Bid

c. No Posting of Bid Bulletins

d. No Pre-bid Conference

e. No Opening of Bids in Public

f. No Announcement of Lowest Complying Bid (LCRB/HCRB)

g. Award of Contract to BAC Member’s Relative


h. Winning Bid Too Low

i. Bid Accepted after Close of Bids; BAC accepts modifications of bids after the

close of bids

F. Penalties for Violations of Transparency

a. For government employees

b. BAC members

c. Other government employees

d. For suppliers/contractors

e. For other private persons acting in connivance

G. NGOs and government agencies where citizens can help in promoting transparency in

public procurement


TRAINING PROPER

I. Introduction to Public Procurement

A. Definitions

1. Public procurement

This is the process by which government buys goods and services from suppliers

(from both public and private) for the needs of its people.

2. Public Bidding

Definition under R.A. 9184: “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, the

specific requirements and mechanics...”

Explanation for the Trainor: This is the process of knowing which person or

company should government buy goods and services. Under Philippine law, that

would be the one that meets the minimum specifications at the lowest price.

3. Bid

Definition under R.A. 9184: “This refers to a signed offer or proposal submitted

by a supplier, manufacturer, distributor, contractor or consultant in response to the

Bidding document.”

Explanation for the Trainor: This is an offer or proposal to enter into a contract

with government. It is given by a supplier, called the bidder, to the government

agency who does the bidding.


4. Bidder

Definition under R.A. 9184: “An eligible contractor, manufacturer, supplier,

distributor and/or consultant competing for the award of a contract in any government

procurement. A contractor, manufacturer, supplier, distributor or consultant is said to

be eligible if it meets all the eligibility requirements issued by the procuring entity.”

Explanation for the Trainor: This refers to a person who submits the bid either for

himself or for another person who has given him the authority to do the submission

before the government agency concerned.

5. Goods

Definition under R.A. 9184: “These 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.”

Explanation for the Trainor: This refers to all items, supplies, materials and

general support services which may be needed by government and its agencies for its

activities. Goods can be equipment, furniture, stationery, materials for construction,

or property of any kind, including repair of equipment and furniture, trucking,

hauling, janitorial, security, and related services.


6. Infrastructure

Definition under R.A. 9184: “These include the construction, improvement,

rehabilitation, demolition, repair, restoration or maintenance of roads and bridges,

railways, airports, seaports, communication facilities, civil works components of

information technology 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. For

purposes of, and throughout this IRR-A, the term “infrastructure projects” shall have

the same meaning as and shall be used interchangeably with “civil works”.”

Explanation for the Trainor: This includes the construction, improvement,

development, demolition, repair, or maintenance of roads and bridges, railways,

airports, seaports, communication facilities, irrigation, flood control and drainage,

water supply, sanitation, national buildings, school buildings, hospital buildings, and

other related construction projects of the government.

7. Bids and Awards Committee (BAC)

This is a group of at least five (5) but not more than seven (7) persons who are all

government officials occupying plantilla positions. They are in charge of the conduct

of bidding for government purchases.

8. Consulting Services.

These are 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.


B. Principles of a Sound Public Procurement System

• Transparency

This is a principle that allows all interested participants (government agency, private

company and the general public) to know and understand the processes of awarding

government contracts.

Under Philippine law, competitive bidding is preferred in all types of government

procurement.

• Efficiency

This refers to spending the least in buying what is needed.

• Integrity

This involves rules to ensure that the bidding is within established rules and

regulations.

• Competition

This ensures that everyone has an equal opportunity to take part in government

transactions.

• Best Value and Customer Satisfaction

This ensures that government gets the best value for the taxpayer’s money.

• Uniformity

This ensures that the law applies to all government purchases and transactions

• Public Monitoring

This guarantees that contracts are awarded pursuant to the provisions of the Act

and this IRR-A, and that all these contracts are performed strictly according to

specifications.


C. History of Philippine Public Procurement

Is there a law that applies to government purchases?

Yes, Republic Act 9184 which is also known as the Government Procurement

Reform Act of 2003. It is the first law that applies to all government purchases

whether national government or local government units such as provinces, cities and

municipalities including NGA’s, GOCC’s, GFI’s, LGU’s, Provinces, Cities,

Municipalities and Barangays.

What was government procurement like before Republic Act 9184?

Since 1901, government purchases of supplies, materials and equipment have

been done through public bidding. The purchase of infrastructure and consulting

services were governed by separate laws. It was only in 2001 when government

decided to put together all procurement rules and procedures. Finally, on January 10,

2003 President Gloria Macapagal-Arroyo signed into law what is today the

Government Procurement Reform Act (RA 9184). It took effect on October 8, 2003.

II. The Public Procurement System of the Philippines

A. Special Features

a. Comprehensive Law

Technical Statement: Republic Act 9184 is the first law that applies to the

Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of

source of funds, whether local or foreign, by all branches and instrumentalities of

government, its department, offices and agencies, including government-owned and

controlled corporations and local government units.

Explanation for the Trainor: Republic Act 9184 is the first law that covers all

government purchases whether goods, infrastructure or consulting services.


b. Civilian Observers

Who are civilian observers?

They are persons who are not government officials or employees who are invited

by the BAC to be present in its proceedings. At least two civilian observers are

invited by the BAC.

What is the role of civilian observers in the procurement process?

The civilian observers serve as a watchdog of the general public in government

transactions. They assist in ensuring the government purchases meet minimum

specifications. They also function as a deterent to possible anomalous transactions

during the bidding process.

Who are qualified to be civilian observers?

R.A. 9184 Definition: “Any person who shall come from a duly recognized

private group in a sector or discipline relevant to the procurement at hand and is

familiar with the procurement law but has no direct or indirect interest in the contract

to be bid our; another person who shall come from an NGO.”

Explanation for the Trainor: Any person who is knowledgeable on the subject

matter and processes of the contract, and has no interest in the said contract.

Where do civilian observers come from?

They include:

1. a representative from a private group which has knowledge of the

procurement to be done, for example:

a. for infrastructure projects

� National Constructors Association (PCA)


� The Philippine Institute of Civil Engineers

b. for goods

� a member of the Chamber of Commerce (an organization of

businesspersons)

2. a representative from a non-government organization (an organization of

persons who organize for a cause, usually to help society) like Procurement

Watch, Inc or Transparency and Accountability Network.

What are the responsibilities of the observers?

The observers have the following responsibilities:

1. Prepare a report indicating their observations on the bidding activity

conducted by the BAC.

2. Sign documents if they believe that the bidding activity followed the correct

procedure or has complied with the law.

What if the BAC does not allow the observer to sign?

The observer must tell the BAC that he is required by law to sign.

If there is no observer present during the bidding process, can the BAC proceed

with the public bidding?

Yes. The BAC can proceed with the public bidding. However, it is necessary that

a written invitation should have been given to the observers at least two (2) days

before the scheduled bidding.

c. PhilGEPS

Technical Statement: This is the central portal that serves as the primary and

definitive source of information on all government procurement. This is a website

where government can publish what goods, consulting services and infrastructure

projects it needs and where suppliers, private contractors and companies can search


and view these procurement opportunities including the result. In the full

implementation of PhilGEPS, these suppliers may submit their offer or bid online.

The website address is www.philgeps.net.

Explanation for the Trainor: This is a website where government can publish

what goods and services it needs and suppliers can submit their offer to. It is at

www.philgeps.net.

Note: There are five (5) phases in the law for making relevant procurement

information available in PhilGEPS. To date, PhilGEPS is still on Phase 1.

d. Bids and Awards Committee (BAC)

What is the composition of BAC for national agencies, departments, bureaus, or

barangays?

The regular members consist of the chairman and four other members (2 regular

and 2 provisional: representative of end-user and one with technical expertise).

For National Government agencies, departments, bureaus, offices, or

instrumentalities of the Government, including the judiciary and legislative

branches, constitutional commissions, SUCs, GOCCs, and GFIs, the following are their

BAC members:

Regular Members:

1. Chairman, who is at least a third ranking permanent official of the procuring entity;

2. An officer, who is at least a fifth ranking permanent official, with knowledge,

experience and/or expertise in procurement who, to the extent possible, represents the

legal or administrative area of the procuring entity, provided that in the case of bureaus,

regional offices and subregional/ district offices, BAC members shall be at least a third

ranking permanent personnel;

3. An officer, who is at least a fifth ranking permanent official, with knowledge,

experience and/or expertise in procurement who, to the extent possible, represents the

finance area of the procuring entity, provided that in the case of bureaus, regional offices


and sub-regional/district offices, BAC members shall be at least a third ranking

permanent personnel;

Provisional Members:

4. An officer who has technical expertise relevant to the procurement at hand, and, tothe

extent possible, has knowledge, experience and/or expertise in procurement; and

5. A representative from the end user unit who has knowledge of procurement laws and

procedures.

For Local Government Units, the BAC shall be composed of one (1) representative each

from the regular offices under the Office of the Local Chief Executive such as, but not

limited to the following: Office of the Administrator, Budget Office, Legal Office,

Engineering Office, General Services Offices. The end user office shall always be

represented in the BAC. The Chairman of the BAC shall be at least a third ranking

permanent official of the procuring entity. The members of the BAC shall be personnel

occupying plantilla positions of the procuring entity concerned.

Who will designate the members of the BAC?

The head of the procuring entity or the Local Chief Executive (City or Municipal

Mayor, Provincial Governor, Barangay Chairman) shall determine the members of

the BAC.

Can the head of the procuring entity or the local chief executive serve as the

chairman of the BAC?

No.

Can the head of the procuring entity refuse to create a BAC?

No.

Are relatives of the City or Municipal Mayor disqualified to be a BAC member?


Yes, to avoid conflict of interest. They might favor a bidder who is a supporter of

the mayor. The prohibition extends to the fourth civil degree (first cousin).

The fourth civil degree is determined by counting from the common ascendant.

To illustrate:

The grandson is the BAC member. From the grandson, go up to his father (1)

(ascendant) and then to the grandfather (2)(common ascendant). Then from the

common ascendant, go down to his father’s sister (3) and go down to her daughter (4)

who is the grandson’s first cousin.

What is the term of office of BAC members?

Regular BAC members shall have a fixed term of one (1) year counted from the

date of designation. This can be renewed.

Who can question the composition of the BAC if it does not conform to the

requirements of the law?

Any party, such as the Commission on Audit (COA) and the observers.


What are the functions of the BAC?

The BAC undertakes the procurement process (planning to award of contract) and

ensures compliance with the law.

e. Coverage for National and Local Governments

The procurement reform act covers all government purchases (national and local

governments).

B. Types of Procurement Covered

The law covers the procurement of infrastructure projects, goods and consulting

services, regardless of source of money, whether local or foreign, by all branches and

instrumentalities of government, its departments, offices and agencies, including

government-owned and/or-controlled corporations and local government units.

a. Procurement of Goods

Goods refer to all items, supplies, materials and general support services which

may be needed in the transaction of the public businesses or in the pursuit of any

government undertaking, project or activity. Excluded in the procurement of goods

are consulting services and infrastructure projects.

b. Procurement of Infrastructure Projects

These include the construction, improvement, rehabilitation, demolition, repair,

restoration or maintenance of the following:

• roads and bridges

• railways

• airports

• seaports

• communication facilities

• civil works components of information technology 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

• other related construction projects of the government

c. Procurement of Consulting Services

These refer to services for projects or activities of the government which require

professional expertise that cannot be rendered by government employees.

General Mode of Procurement

Minimum Requirements

All procurement, regardless of cost, shall be conducted through competitive

bidding. However, procuring entities may use the following alternative methods,

when the situation requires:

1. Limited Source Bidding otherwise known as selective bidding, is a

method of procurement of goods and consulting services, that involves direct

invitation to bid by the concerned procuring entity from a set of pre-selected

suppliers or consultants. These suppliers or consultants are known to have

experience and proven capability to fulfill the requirements of the particular

contract. The pre-selected suppliers or consultants come from a list maintained by

the relevant government authority that has expertise in the type of procurement


concerned. This list should have been submitted to the GPPB, and the government

authority should ensure that the list is updated. The BAC of the concerned

procuring entity shall directly send to the pre-selected bidders the invitation to

bid, which should already indicate the relevant information required to enable the

bidders to prepare their bids.

2. 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.

3. 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. Repeat orders from

the previous winning bidder may be resorted to by procuring entities only in cases

where the procured item is clearly superior to the other bids in terms of the price

quoted equipment reliability, availability of spare parts, after-sales service and

delivery. It shall not exceed 25% of the quantity in the original contract.

4. Shopping is a method of procurement of goods where 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.


5. Negotiated Procurement is a method of procurement of goods,

infrastructure projects and consulting services, where the procuring entity directly

negotiates a contract with a technically, legally and financially capable supplier,

contractor or consultant.

Does R.A. 9184 cover foreign-assisted projects?

Yes, R.A. 9184 covers foreign-assisted projects. However, any international

agreements involving these projects shall be observed. This means that if the project

is the effect of a bilateral agreement between the Philippines and another country, the

provisions of that bilateral agreement will govern. To date, the implementing rules

for procurement of foreign-funded projects is still being drafted.

C. The Procurement Process: Competitive Bidding

The procurement process takes at least thirty (30) calendar days.

Note: Baseline is for goods. Timelines change for infrastructure and consulting

services.

Pre-Procurement Conference

Advertisement for Competitive Bidding Bid Evaluation and Ranking

Pre-Bid Conference

Submission and Receipt

Public Bid Opening

Preliminary Examination

Notice of Award

Post-Qualification

Notice to Proceed


STEP 1 - Pre-Procurement Conference

R.A. 9184 Definition: “A pre-procurement conference is the forum where all

officials involved in the procurement discuss all aspects of a specific procurement

activity. The discussion covers the technical specification, 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. This shall be attended by the BAC, the unit or

officials who prepared the bidding documents and the draft Invitation to Bid, as

well as the consultants hired by the agency concerned and the representative of

the end-user.”

Explanation for the Trainor: A pre-procurement conference is a meeting

between the government and any resource person knowledgeable on the

procurement involved. In this stage, the government agency confirms whether

there is money to pay any person who wins the bid. The specific good or service

to be bought is also reviewed.”

When is a Pre-Procurement Conference held?

The pre-procurement conference must be held at least seven (7) days before

the advertisement of the invitation to bid for the general public.

When is a Pre-Procurement Conference not Necessary?

The holding of a pre-procurement conference may not be required for small

procurements like procurement of goods costing Php2M and below; procurement

of infrastructure projects costing Php5M and below; and the procurement of

consulting services costing Php1M and below.


STEP 2 - Advertisement

Invitation to Apply for Eligibility of Bid (IAEB)

The Invitation to Bid is a statement from the government agency that wishes

to purchase goods, consulting services or infrastructure. It shall contain:

(a) A brief description of the project, goods, or services to be procured;

(b) A general statement on the criteria to be used for choosing the contractor;

(c) The date, time and place of the deadlines for the submission and receipt of

the eligibility requirements, the pre-bid conference, if any, the submission

and receipt of bids, and the opening of bids;

(d) The Approved Budget for the Contract to be bid;

(e) The source of funds;

(f) The period of availability of the Bidding Documents, and the place where

these may be found.

The invitations to bid of projects whose ABC is below 1M (for consulting),

2M (for goods) and 5M (for works) shall be posted at least in the website of the

procuring entity, if any, in PhilGEPS and in a public place within the procuring

office.

Note: Place in powerpoint for IAEB for specifications.


Bidding Documents

Definition under the Generic Procurement Manual: “Bidding documents refer

to documents issued by the procuring entity as the basis for bids. They contain all

information necessary for a prospective bidder to prepare a bid for the

infrastructure projects, goods and/or consulting services, required by the

procuring entity. These shall 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 the goods, infrastructure projects and

consulting services to be procured;

3. Expected contract duration, the estimated quantity in the case of the

procurement of goods, delivery schedule and/or time frame;

4. The obligations, duties and/or functions of the winning bidder;

5. The minimum eligibility requirements of bidders, such as track record to be

determined by the head of the procuring entity.

STEP 3 - Pre-Bid Conference

What is a Pre-Bid Conference?

The pre-bid conference is a meeting between Bids and Awards Committee

and the prospective bidders where they discuss matters related to the procurement,

including rules and regulations.

It must be held for contracts with approved budget of at least one million

pesos (P 1 Million) and upon written request of a prospective bidder.


When do you hold a Pre-bid Conference?

The pre-bid conference must be held at least twelve (12) calendar days before

the deadline for the submission of bids.

What is a Supplemental/Bid Bulletin?

Any prospective bidder intending to submit a bid must make a written request

for clarification to the BAC at least ten (10) calendar days before the deadline for

the submission and receipt of bids. The BAC must answer the questions 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.

The procuring entity may, in its own initiative, also issue supplemental/bid

bulletins to clarify any provision of the bidding documents not later than seven (7)

calendar days before the deadline for the submission and receipt of bids. Any

change in the bidding documents must be labeled as an “AMENDMENT.”

The supplemental/bid bulletin should be posted on the website of the

procuring entity concerned and on the PhilGEPS, within the same timetable.

All those who have signified interest or who secured bid documents must be

furnished with a copy of the bid bulletin.

STEP 4 - Submission of Bids and Bid Opening

How is a bid submitted?

Each bidder shall submit three sealed envelopes for the bid—(1) one for

eligibility (2) one for the technical component containing all relevant documents

and (3) for the financial component which includes the price for the project.


During the opening of bids, the eligibility envelopes will be opened first

using the pass/fail criteria. If the bidder passes the criteria, his two other

envelopes (representing technical and financial components) will be opened. The

price must not go beyond the approved budget for the contract (also called ABC).

STEP 5 - Bid Evaluation and Ranking

This is the opening of the technical envelopes. If the bidder complies with the

technical specifications of the project, the BAC opens the financial envelopes and

ranks the remaining bids according to price. The bidder with the lowest bid is

ranked first.

Lowest Calculated Bid for goods and infrastructure and for Consulting

Services, Highest Rated Bid.

STEP 6 - Post-Qualification

Post-qualification is the stage where the Lowest Calculated Bid for goods and

infrastructure projects or the Highest Rated Bid for consulting services is checked

and validated to ensure that it has passed all the requirements and qualification as

stated in the bidding documents. If it does, it shall be referred to as the “Lowest

Calculated Responsive Bid” or the “Highest Rated Responsive Bid”.

Bidder 2

Bidder 1


What happens if the Lowest Calculated Bid or the Highest Rated Bid does not

meet all the criteria?

The BAC shall look at the bidder with the second Lowest Calculated Bid or

Highest Rated Bid. If the bidder with the second Lowest Calculated Bid or

Highest Rated Bid does not meet the criteria either, the same procedure shall be

repeated until the Lowest Calculated Responsive Bid or Highest Rated

Responsive Bid is finally determined.

When does a Failure of Bidding happen?

There is a Failure of Bidding if a) no bids are received; b) all prospective

bidders are declared ineligible; c) all bids fail to comply with all the bid

requirements or fail post-qualification or in consulting services, no successful

negotiation, or d) the bidder with the Lowest Calculated Responsive Bid or

Highest Rated Responsive Bid refuses to accept the award with no valid

justification.

Second Lowest Calculated

Bid/Second

Highest Calculated

Bid

Third Lowest

Calculated Bid/

Third Highest

Calculated Bid

Lowest Calculated Bid/

Highest Calculated

Bid


What happens when there is a Failure of Bidding?

The contract shall be re-advertised and re-bid. The BAC shall observe the

same process and set the new periods according to the same rules during the first

bidding.

When should post-qualification be conducted?

The post-qualification process must be conducted and completed within seven

(7) calendar days from date of determination of the HRB/LCB. This period may

be extended but no case shall the period exceed thirty (30) calendar days.

STEP 7 - Award

The contract is awarded after the approval by the head of the procuring entity of

the recommendation of the BAC. This is done within fifteen (15) days from the

determination of the Lowest Calculated Responsive Bid or the Highest Rated

Responsive Bid.

When must the winning bidder and the procuring entity enter into a contract?

The winning bidder and the procuring entity must enter into a contract

immediately after all documents needed for the contract have been submitted. The

parties must sign the contract within ten (10) calendar days from receipt by the

winning bidder of the Notice of Award.


D. The Procurement Process: PhilGEPS

1. Nature

To ensure transparency and efficiency in government transaction, the electronic

procurement system called PhilGEPS was established. It is the website that contains

the required information about all government procurement.

May add:

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 and definitive source of

information on government procurement. All procuring entities are required to use

PhilGEPS in all their procurement activities. To fully comply with the requirement

and to promote transparency and efficiency, procuring entities are mandated to post

all bid notices, notices of awards of contract and other related information at all times.

2. Features of PhilGEPS

a. Electronic Bulletin Board

PhilGEPS has a centralized electronic bulletin board. All government agencies

are required to post the following in the PhilGEPS Electronic Bulletin Board:

� Invitation to Bid and all notices of other procurement opportunities

� Supplemental/Bid bulletins

� Contract awards, the corresponding notices of award, including the reasons for

award of contract

� Results of bidding and related information

� Other notices, announcements, information for interested parties


� Bid matching of procurement opportunities with appropriate PhilGEPS

registered suppliers is being done automatically by the system once a

government buyer posts an opportunity.

To date, bid opportunities, notices of award, supplemental bids bulletins,

results of bidding and other related information are found on the website.

b. Registry of Manufacturers, Suppliers, Distributors, Contractors and

Consultants

PhilGEPS has a database of all manufacturers, suppliers, distributors,

contractors and consultants registered under the system.


c. Electronic Catalogue

PhilGEPS includes a list of common-use goods, supplies, materials and

equipment called Electronic Catalogue. Procuring entities are required to procure

common-use goods, supplies, materials and equipment through the Electronic

Catalogue in the PhilGEPS.

What is the effect of a failure to post a procurement opportunity?

Failure to post a procurement opportunity will make the contract null and

void. The government office that failed to post the procurement opportunity will

be fined and may face imprisonment.


Steps:

This is an illustration of the steps involved:

Registration of a procuring agency

Username and Password given

Bid Evaluation and Ranking

Posting of Procurement Opportunity or

Invitation to Bid

Pre-Bid Conference

Submission of Bid

Notice of Award

Post-Qualification

Notice to Proceed

Preparation of

Contract/Purchase Order

Delivery of Goods and Technical

Inspection

Payment Processsing


V. Red Flags in the Bidding Process

1. Actual Bidding Process

a. Same Contractor/Supplier gets the award repeatedly

Philippine procurement law promotes the principle that each interested person or

corporation can have equal opportunity to bid for any government contract. If a

bidder is repeatedly awarded a contract, the situation creates a suspicion that such

contractor is given special consideration above all others because of his relationship

with the members of the BAC or the city or municipal officials. It can also indicate

that there is a possibility of corruption. If this happens, the observers who are present

during the bidding should increase their vigilance to make sure that no bidder is

favored over the others.

b. No invitations to bid are found in public places, any newspaper of national

circulation or the PhilGEPS website and a contract is awarded to a person

If a project is awarded by government without an invitation to bid was posted as

required by law, a violation of the procurement laws exists and the opportunity was

not made available to all. This also creates a suspicion that the contractor is favored


by government over all others or that government officials probably received a

special gift in cash or in kind.

Observers in actual bidding should ask for a copy of the invitation to bid or look

at the PhilGEPS website to make sure that the posting requirement has been complied

with.

c. No bid bulletin posted in public places, any newspaper of national circulation or

the PhilGEPS website and a contract is awarded to a person

All changes in the invitation to bid or bid opportunities made after pre-bid

conference should be posted in PhilGEPS. At the same time, the BAC must furnish

copies of the bid bulletin to all who have signified interest to bid or who have secured

copies of the bid documents. The notice of the changes is important to the bidding

process because the bidders who submitted before the issuance of the

Supplemental/Bid Bulletin are still allowed to modify their bids to fit the new

requirements. Without the issuance of the Supplemental/Bid Bulletin, fair

competition is denied.

As a review, it is required that the Invitation to Bid be published in a newspaper

of general circulation, at least once. It must also be posted continuously for seven (7)

calendar days in the website of the procuring entity, if there is any, and in PhilGEPS,

as well as in a public place within the procuring entity.

d. No pre-bid conference

Pre-bid conference is required for purchases of Php1M pesos and above for

goods, 2M pesos for consulting services and Php5M pesos for infrastructure. It is held

at least twelve (12) calendar days before the deadline for the submission of bids. If no

pre-bid conference is conducted as required, there is a violation of procurement laws

and the bidders do not get the chance to clarify any items in the bidding documents.

Any person observing the bidding can ask for information if this has been done.

At the PhilGEPS website, observers can check whether a pre-bid conference has been

indicated by looking at the procuring agency’s site at least twelve (12) days before the


indicated deadline for submission of bids. A bid bulletin, if any, shall be

posted/issued within this period but not later than seven (7) calendar days before the

deadline for submission of bids.

e. No bidders and observers in the opening of bids

Transparency is demonstrated through the presence and participation of observers

in all stages of the procurement process. Opening of sealed bids is one of the most

important steps in the bidding process because it shows who among the bidders

complied with the requirements. If the opening of bids is done privately, there is no

transparency and this may make the bidding questionable.

f. No announcement of award

An announcement tells all bidders who won the bids and how much the contract

price is. It allows the bidders to verify “on the spot” whether their respective bids are

indeed higher than the declared lowest bidder and if the lowest bidder met the

minimum requirements under the law.

g. Award of contract to relative or “favored person” of the head of the procuring

entity, BAC chair or members, members of the technical working group (TWG),

BAC secretariat, members of the project management office (PMO) and

designers of the project

The law prohibits the award of contract to the relative of the BAC member within

the fourth civil degree. Awards to a favored person limit competition. Contracts

awarded to those who are close to officers and employees of the procuring entity who

have direct access to information may substantially affect the results of the bidding.

This limits competition and increases the risk of corruption.

h. Winning bid substantially too low

The reason a government agency must come up with the Approved Budget for the

Contract (ABC) is to set the reasonable amount that it can pay for its projects. It

reflects the most advantageous price for the government and makes sure that


taxpayer’s money is spent wisely. When the bid becomes too low, the quality of the

project may suffer.

i. Bids accepted after deadline of bid submission

Acceptance of bids after the deadline of bid submission creates that suspicion that

the contractor who submitted it is favored. The deadline for submission determines

the closure of the bids, where no one is allowed to submit anymore. Qualified

bidders, in the case of procurement of infrastructure and consulting services, are

already determined even before the bids are closed. Only they can submit their

respective bids. If anyone is allowed to submit a bid after the deadline, his eligibility

was surely not evaluated beforehand. The integrity of the entire bidding process will

be compromised.

j. Always shopping

Shopping is an alternative mode of procurement used when there is an unforeseen

contingency requiring immediate purchase for an amount that shall not exceed fifty

thousand pesos (P50,000) or for procurement of ordinary or regular office supplies

and equipment not available in the Procurement Service involving an amount not


exceeding two hundred fifty thousand pesos (P250,000). The law prohibits the use of

this mode to split huge contracts. When a government agency frequently resorts to

shopping, it creates a suspicion that there are certain contracts that have been split to

favor certain contractors.

VI. Penalties for violations of transparency

What are the penalties for violations of R.A. 9184?

Public officers who commit any of the acts prohibited by R.A. 9184 can be

imprisoned for six (6) to fifteen (15) years. They can also be punished under other laws

like the Anti-Graft and Corrupt Practice Act (RA 3019). Aside from staying in prison,

they will be required to pay the government for the profit they derived from the

transaction.

In addition, a violator may be suspended from work for one (1) year if he committed

the offense for the first time, and suspensions of two (2) years for the second offense.

Can procuring entities be held liable if they decide not to enter into a contract?

No, the procuring entity reserves the right to reject any bid, declare a failure of

bidding, or not award the contract: a) when the BAC failed to follow the applicable

procurement laws; b) when there is collusion (a connivance between the BAC and a

bidder); or, c) when the project is no longer needed.

When can a member of the BAC be held liable, before or after the award of the

contract?

A BAC member can be held liable before and after the award of the contract.


VII. NGOS and government agencies where citizens can assist in promoting transparency

in public procurement

There are citizens who have formed groups to help fight corruption in public

procurement. You can join any of them.

1. Procurement Watch Incorporated

Procurement Watch Incorporated (PWI) is a civil society organization that was

formed to fight graft and corruption in public procurement. PWI does this through

advocacy, research, training, and partnerships. PWI helped to lobby for important laws

like the Procurement Reforms Act. Today, PWI monitors public biddings of various

national government agencies and submits their observations to the appropriate

government offices.

Their website is www.pwi.org.

2. G-Watch

G-Watch, or Government Watch, is an anti-corruption organization based in the

Ateneo School of Government. They monitor the contract implementation side of

procurement by the different departments of the government.

Their website is www.gwatch.org.

3. Coalition Against Corruption

The Coalition Against Corruption is a group composed of church, business,

professional and civil society organizations. It aims to implement counter-corruption

projects, initially in the area of procurement and delivery of essential public services. One

of the initial projects of the coalition is the training of Bids and Awards Committee

observers.

4. Transparency and Accountability Network

The Transparency and Accountability Network (TAN) is a civil society coalition

formed for the purpose of exchanging information about developments and initiatives in

transparency and accountability. It has a membership base of 25 organizations composed


of the academe, private sector, professional and civil society groups with strong interest

in anti-corruption and good governance.

Their website is www.tan.org.


GLOSSARY OF ACRONYMS USED

WB-KDC World Bank-Knowledge for Development Center

BAC Bids and Awards Committee

PhilGEPS Philippine Government Electronic Procurement System

GPPB Government Procurement Policy Board

R.A. Republic Act

NGO Non-Governmental Organization

COA Commission on Audit

IAEB Invitation to Apply for Eligibility to Bid

HRRB Highest Rated Responsive Bid

LCRB Lowest Calculated Responsive Bid

HRB Highest Rated Bid

LCB Lowest Calculated Bid

TWG Technical Working Group

PMO Procurement Management Office

PWI Procurement Watch Incorporated

G-Watch Government-Watch

TAN Transparency and Accountability Network