Honoraria in Government Procurement can now be paid out of savings!

For BAC, Secretariat and TWGs of Procuring Entities, the DBM has recently issued Budget Circular No. 2007-3 expanding the funding source for payment of honoraria and overtime pay of those involved in government procurement.

The previous issuances, Budget Circular Nos. 2004-5 and 2004-5A, restricted the funding sources of honoraria and overtime pay to income generated from procurement activities such as sale of bid documents, registration fees, protest fees, and forfeiture of bid security. BC 2007-3 added as funding source the savings realized from the current year's budget of national agencies, GOCCs and LGUs. The circular also reiterates that honoraria and overtime pay can only be paid for successfully completed procurement, and that in case of deficiency in collections and non-availability of savings, payment shall be adjusted proportionately.

This is good news to BAC members, Secretariat and TWGs. At least, they can now be compensated for services rendered related to procurement which are more tedious and risky than their regular assignments.

Copy of the BC can be downloaded from the GPPB web site

Training for new procurement officials in LGUs.

The Regional Composite Team will hold a series of three-day trainings for newly-appointed/constituted Bids and Awards Committee (BAC) members, Secretariat and Technical Working Group of LGUs in Region VI on November 6-8 and 13-15, 2007. Venue is at the Punta Villa Resort, Arevalo, Iloilo City.

To enhance the learning experiences of the participants, the Team will adopt the ADB-prescribed training program. In conformity with GPPB policy, the number of participants per school shall be limited to 100 so reservation shall be on a first-come-serve basis. Interested participants can download the confirmation form from the dbmro6 website, and fax the same to the PHILLBO Secretariat at the Iloilo PBO Office, Fax No. 033-3369049, or the DBM Regional Office VI, Fax No. 033-3351235.

Simplified Procurement Manuals for LGUs in the works!

The GPPB with the technical assistance from the Asian Development Bank (ADB) is coming up with a Simplified Procurement Manuals (SPM) designed for LGUs.

The series of consultation meetings with selected LGUs from the different regions were done from July to September to gather inputs, suggestions and procurement issues inherent to LGUs. Region VI was represented in that consultation by BAC members, Secretariat or TWG of the provinces of Antique, Capiz, Iloilo and Negros Occidental; the cities of Iloilo, Passi and San Carlos; and the municipalities of Ivisan, Capiz, Igbaras, Iloilo and Tobias Fornier, Antique.

With the consultation completed the GPPB will next conduct a validation workshop to be participated by five (5) representatives from each region comprising of the DBM Regional Office and four (4) LGU-participants coming from the group which participated in the regional consultation meeting. This is scheduled on October 10-13, 2007 in Zamboanga City. Two (2) other sessions will be scheduled in the coming weeks after which, the SPM will be finalized. Roll-out of the Manual is January of 2008.

PTG to ensure that govt. contracts are aboveboard!

In the spite of the latest scandals that has rocked our national experience, specifically, the National Broadband Network (NBN) supposed contract with the Chinese firm, ZTE, the President issued Executive Order No. 662, creating the Procurement Transparency Group (PTG).

The PTG is composed of the Presidential Anti-Graft Commission (PAGC), National Economic and Development Authority (NEDA), Department of Justice (DOJ), Department of Budget and Management (DBM), Department of Interior and Local Government (DILG), Bishops-Businessmen Conference for Human Development, Transparency and Accountability Network, Volunteers Against Crime and Corruption (VACC), and two other NGOs involved in training procurement observers and/or procurement reforms.

As mandated by EO 662, the PTG shall monitor and evaluate all proposed and awarded contracts entered into by all national government agencies (NGAs), government owned and controlled corporations (GOCCs), government financial institutions (GFIs), state universities and colleges (SUCs) and local government units (LGUs), amounting to P100 million or more.

The PTG shall recommend remedial actions, improvements in procurement, contract implementation and monitoring processes to ensure compliance with contractual terms and to safeguard government and public interest.

If the contract is found non-compliant, the PTG shall recommend to the PAGC the imposition of sanctions, implementation of remedial measures, and the filing of criminal, civil and/or administrative charges if warranted.

Reforms in DepEd's textbook procurement.

The Department of Education )DepEd) has reduced to almost half the cost of textbooks following the implementation of procurement reforms.

According Secretary Jesli Lapus, the introduction of International Competitive Bidding (ICB) also helped improve the quality of the paper used for the textbooks. This translates into substantial savings for the government and better textbooks for the public school system. The previous average cost of a textbook was P90, but now it only costs P45.

How does it work? A new process is being done wherein the bidding for the development of manuscript is separated from the printing and delivery. Under this process of procurement, four-level content evaluation in 2005 was adopted.

To further improve the process, in the case of English textbooks, selected titles are being reviewed by the Ateneo de Manila University for elementary textbooks and the University of the Philippines for high school textbooks.

The DepEd's Textbook Procurement Program was recently cited as a best practice by the Organization for Economic Cooperation and Development-Development Assistance Committee (OECD-DAC), an international forum of donor governments and international multilateral organizations, including the United Nations and the World Bank.

Amendment to the Guidelines on Index-based pricing of Petroleum products

The GPPB has recently passed Resolution No. 011-2007 amending the Revised Guidelines on procurement of petroleum, oil and lubricants (POL) through index-based pricing.

The original guidelines per GPPB Resolution No. 05-2005 included lubricants as among the POLs that can be procured through index-based pricing. However, the later amendment per GPPB Resolution No. 09-2006, excluded lubricants. Upon the request of the National Power Corporation, the GPPB restored the item lubricants that can be procured through the said scheme hence, the issuance of Resolution No. 011-2007. the said resolution also gives procuring entities the option to use either fixed or index based pricing in the procurement of lubricants as well as to use the Independent Commodity Information System - London Oil Report (ICIS-LOR) index if the procuring entity's cost benefit analysis or assessment indicates that index-based pricing is more favorable in the bulk procurement of lubricants.

Implementing Infra projects by Administration .

Here's the GPPB's latest guidelines on implementation of projects by administration as contained in Annex "A" of Resolution No. 018-2006 dated December 6, 2006:

Definition - "By Administration" refers to the procedure by which the implementation of an infrastructure project is carried out under the administration and suprevision of the concerned agency (or LGU) thorugh its own personnel.

General Conditions and Requirements - Projects undertaken by administration shall be included in the Annual Procurement Plan (APP). If the original mode of procurement for the said project is public bidding, the BAC shall pass a resolution recommending to the head of the procuring entity the change in procurement mode. The Procuring Entity (PE) shall possess a track record of having completed or supervised a project similar to the one to be implemented with a cost of at least 50% of the project at hand. Further, the PE shall own the tools and construction equipment to be used or have access to such tools and equipment owned by another government agency.

Specific Conditions and Requirements - Projects costing Php 5 M or less may be undertaken by Administration subject to the General Conditions and requirements mentioned above. On the other hand, projects costing over Php 5 M may be undertaken by administration only in the following cases:

a. emergency arising from natural calamities or where immediate action is
necessary to prevent imminent loss of life or property;
b. comply with government commitments;
c. failure to award a contract after competitive bidding for a valid cause;
d. termination or rescission of contract;
e. area with critical peace and order problems as certified by the Local
Peace and Order Council.

Approving Authority - Prior authority shall be obtained from the Secretary of the DPWH for projects costing Php 5 M up to Php 20 M, while projects costing more than Php 20 M shall bear the authority of the President.

Lease of privately owned real estate can be procured thru negotiated procurement.

Another item has been added by the GPPB to the enumeration of the items that can be procured through negotiated procurement under Section 53 of the Implementing Rules and Regulations-A (IRR-A) of RA 9184.

Through Resolution No. 2007-04 dated May 4, 2007, the lease of privately owned real estate for official purpose is now included as one of the instances where a procuring entity can resort to negotiated procurement. Prior to the passage of the said resolution, rental of office space can only be procured through public competitive bidding. But feedbacks from procuring entities revealed that public bidding does not usually result to the most advantageous terms for the government. On the other hand, in resorting to negotiated procurement, agencies are afforded the flexibility to consider factors such as location and building structures as well as providing them control measures to ensure reasonableness of rental rates.

With this resolution, there are now nine (9) instances where negotiated procurement can be applied, namely: failure of bidding for the second time; during state of calamity; take-over of contracts; project that is adjacent or contiguous to an on-going project; purchase of goods from another government agency; hiring of consultants that are highly technical or proprietary, and primarily confidential or policy determining; procurement with prior approval from the President; small value procurement (with ABC of P50,000 and below); and lease of privately owned real estate.

Procurement manual for LGUs in the works.

The GPPB will hold a consultation with selected LGUs as part of the preparation for the development of a procurement manual for LGUs. The consultation will be held on July 5th at Iloilo Grand Hotel. A total of 40 participants will be invited coming from Region VI and VII. Preferred participants are those coming from 1st class, 4th and 5th class provinces and municipalities including component cities who are either BAC members, BAC Secretariat or TWG. Invitations will be sent out by the respective DBM Regional Offices.

Use of PhilGEPS facility is now mandatory!

With the passage of Republic Act No. 9401, the General Appropriations Act (GAA) for fiscal year 2007, it now becomes mandatory for national government agencies, GOCCs, GFIs, SUCs, and LGUs, specifically, provinces and cities to use the facilities of the Government Electronic Procurement System (PhilGEPS).

Section 86, General Provisions of the 2007 GAA requires these entities to utilize the GEPS through its electronic catalogue for the procurement of common-use supplies, and that all Invitations to Apply for Eligibility and to Bid (IAEB), Notices of Award, and all other other procurement-related notices shall be posted in the Electronic Bulletin Board.

On the other hand, regional offices of national agencies and municipal governments are enjoined to "undertake measures to ensure their on-line access and connectivity to the GEPS and its full use by the end of 2007".

No time table was set on the mandatory use of the GEPS by barangays. To require barangays to utilize the GEPS facilities may be impractical at this time considering that many of these barangays do not have computers, and/or internet connections, or that no barangay personnel has the capability to access or manage their accounts with the GEPS.

GPPB Guidelines on procurement of water and other utilities.

To address the predicament of many procuring entities on the proper mode of procurement for public utility services, the GPPB has issued Resolution No. 019-2006.

The said Resolution recognizes that the provision of certain public utility services like water, electricity, telecommunications, and internet are vital to the success and continuity of government operations, and that procurement of these services if done through public bidding would not be advantageous. Instead, the GPPB prescribes the following:

Water and Electricity - service providers are granted exclusive franchises to operate within the specific territory therefore, procurement shall be done through direct contracting.

Landline, Cellular Phones and Internet - For existing lines/connections: Contracts entered into with telcos shall be respected. But at the end of each year, an assessment as to the range and quality of services and charges shall be made and if the result of such assessment continues to favor the existing service provider, a renewal of contract can be allowed. If it does not, said services shall be bid out if there is more than one provider, or by direct contracting if there is only one provider. For additional lines, repeat order may be resorted subject to Section 51(c) of the IRR-A.

For new lines or connections - competitive public bidding if there is more than one service provider; if there is only one, direct contracting can be resorted to.

The Resolution while issued on December 6, 2006, shall take effect on April 24, 2007.

GPPB issues guidelines on procurement during election period

The election fever is heating up and has not only occupied politicians and the electorate but procurement activities as well. Of late, we have received various queries on how to go about the conduct of bidding or other alternative mode of procurement for the duration of the election period.

To help procurement officials, this is what I have gathered from the GPPB website. Resolution No. 01-2007 dated 23 February 2007, but published in the web site only last March 28th, prescribes the guidelines on the conduct of procurement activities from March 30 to May 14, 2007 (the election ban). The Resolution, in effect, reconciles and clarifies COMELEC Resolution No. 7707 (prohibited activities during the election period) with the provisions of RA 9184. In summary:

Reminder: Election ban is not designed to paralyze the operations of the government but to insulate government procurement from political partisan activities, usually in the form of new projects, which are designed to influence the public during the elections.

In general: Procuring entities can go on with the procurement whether public bidding or alternative mode (posting/advertising, pre-bid conference, bid opening, post qualification) but cannot issue the Notice of Award for the duration of the election ban (March 30, 2007 until May 14, 2007. This holds true for procurement of public works, social projects and housing-related projects.

What are allowed: The GPPB Resolution also clarifies that complete procurement activities is allowed for:

- Maintenance work involving maintenance of existing and/or completed public works projects;
- Contract entered into or awarded either through public bidding or negotiated procurement, provided it is reported to the COMELEC;
- Preparatory works like payment of preparation cost for drawings, bill of materials, etc. including purchase of materials and other incidental expenses;
- Calamity involving restoration of damaged facilities;
- Ongoing projects both locally funded and foreign-assisted that has commenced before March 30, 2007, provided this was reported to the COMELEC;
- Routine and normal expenses; and
- Expenses covered by COMELEC exemption

For better understanding, the subject Resolution can be downloaded here.

Regional Procurement Depot soon to open in Iloilo City

Upon instruction of DBM Secretary Rolando G. Andaya, Jr., preparations are underway to finally establish a regional procurement depot here in Iloilo City.

Assistant Secretary Eduardo Opida, Chairman of the Inter-Agency Bids and Awards Committee (IABAC) together with Procurement Service Executive Director Estanislao Granados came over last week to inspect the would-be office and warehouse of the depot, and also to orient the Regional Inter-Agency Bids and Awards Committee (R-IABAC). The R-IABAC which composed of the regional offices of the DBM (Chair), DTI, BLGF and DILG; and two private sector observers - is tasked to conduct the bidding of locally produced supplies and common used items that will be sold by the depot.

Timetable for the opening of the depot is between April and May. If this materializes, Region VI will be the only region with two (2) procurement depots: the pilot provincial depot in Bacolod City co-managed by the provincial government of Negros Occidental and the PS; and the soon-to-be opened depot here in Iloilo City under the DBM Regional Office VI. Abangan!

Resolving Identical Bid price

Here's a peculiar issue raised by a participant in one of our trainings: "What should the BAC do if two (2) bidders offered the same bid price?"

The commonly suggested solution is to split the contract equally among the bidders who offered identical bid proposal. Not likely. I did some research on this and luckily stumbled upon an opinion of the GPPB, PM 002-2005 way back in August 2005.

The GPPB suggested the use of drawing of lots similar to the provision of Section 240 of Batas Pambansa Bilang 881 (Omnibus Election Code). It justifies that the situation addressed is "analogous to a case of tie in the bidding process. Applying the foregoing principle in the case of breaking a tie, the use of any non-discretionary/non-discriminatory tie-breaking procedure seems to be an acceptable approach towards resolving such issue, considering that the real intent of R.A. 9184 is to eliminate all forms of discretion in bid evaluation on the part of the BAC, and that every bidder who passed the post-qualification stage is as much a LCRB as the others; hence, equally eligible and qualified".

So procurement officials, be guided.

GPM Roll-out and GPRA Updates sked for March

With the training of procurement officials of barangays in the province of Iloilo almost done, the Regional Composite Team will next reach out to the barangays in the other provinces of Panay and Guimaras. Schedule of the trainings is as follows:

March 8-9 - Provinces of Capiz and Guimaras (1st batch)
March 15-16 - Province of Capiz (2nd batch)
March 22-23 - Province of Aklan
March 27-28 - Province of Antique (1st batch)
March 29-30 - Province of Antique (2nd batch)

The trainings will be held in Punta Villa except for Antique where the MBO Association has requested to have the CAP Auditorium in San Jose as the venue.

Voluntary suspension of Trainings during Election period.

The decision of whether to suspend or continue with the conduct of GPRA trainings during the election period is left at the discretion of the Composite Team and SUCs trainors.

In a Memorandum dated 21 February 2007, the Executive Director conveyed to the trainors the policy of the GPPB to "allow the voluntary suspension of trainings during election period, if said trainings will be used as venues for holding of political caucuses, meetings, rallies in support of or against any electoral candidate". The suspension, if the trainors so decide shall cover the period from March 30, 2007 to may 15, 2007. On the other hand, trainors in the region who opt to continue with their scheduled trainings should take additional safeguards in order that they may not be accused of engaging in any form of partisan political activity.

In the region, there are three groups of trainors accredited by the GPPB: the Regional Composite Team composed of DILG, DBM, COA and PHILLBO which caters to LGUs, and WVSU and UP Visayas which are assigned to train NGA and GOCCs procurement officials. As early as October last year, the trainors commenced the series of trainings on the roll-out of the Generic Procurement Manuals and Updates on GPRA Issuances. In as far as the Composite Team is concerned the trainings are scheduled every Thursday and Friday in Punta Villa Resort, Iloilo City.

Procurement of Second-hand vehicles allowed by GPRA.

The Government Procurement Policy Board (GPPB) has recently issued an opinion declaring that the procurement of second hand or reconditioned motor vehicle is not prohibited by R.A. No. 9184, the Government Procurement Reform Act(GPRA).

In a letter dated 15 December 2006, GPPB Executive Director Ruby U. Alvarez opined that "procurement of second-hand vehicles is not prohibited by R.A. 9184. It is the procurement of second-hand vehicle through an auction that is prohibited by R.A. 9184." The same opinion is reiterated under GPPB's Non-Policy Matter Opinion No. 33-2006 dated 27 December 2006.

Said opinion further states that procurement of second-hand vehicle must follow the procedures prescribed in the GPRA and its IRR-A.

Procurement Updates for Barangays resumes.

The Regional Composite Trainors Team will resume the conduct of seminar updates on procurement rules for barangays on the following dates:

January 25-26, 2007
February 8-9, 2007
February 15-16, 2007
February 22-23, 2007

Invited participants are Punong Barangays, Chairmen and Secretariats of the Bids and Awards Committee (BAC) of barangays in the Province of Iloilo. This seminar-updates started in December 2006, and so far only about 250 barangays were covered for a total of 893 trainess. Venue of the seminar is at Punta Villa Resort, Iloilo City.