“2020 Vision: Competitive Procurement, Logistics and Supply Chain”2015 PASIAWorld Annual Conference

Dennis S. SantiagoExecutive Director

Department of Budget

“Understanding Government Contracting: The Philippine Context”

“An Act Providing for the

Modernization, Standardization and Regulation of the Procurement Activities of the

Government and for Other Purposes”

Republic Act No. 9184Government Procurement Reform

Act (2003)

Government Procurement Reform Act (GPRA)

Governing Principles

GPRA

Key Features

• Competitive Bidding as PrimaryMode of Procurement.

• Shift from Pre-QualificationRegime to Simplified EligibilityChecking and Strengthened Post-Qualification.

• Use of Non-DiscretionaryPass/Fail Criterion.

Key Features

• Use of the Approved Budget for the Contract (ABC) asCeiling for Bid Prices.

• Use of Standardized Philippine Bidding Documents(PBDs), Generic Procurement Manuals (GPMs) andLocal Government Procurement Manual (LGPM).

• Creation of a procurement policy oversight body –Government Procurement Policy Board.

Key Features• Use of the Lowest Calculated and Responsive Bid

for goods, supplies, materials and relatedservices; and Highest Rated and Responsive Bidfor consulting services.

• Allowance of Centralized or DecentralizedProcurement.

• Introduction of a Protest Mechanism.

• Participation of Observers.

Key FeaturesPhilippine Government Electronic Procurement System

(PhilGEPS)

• PhilGEPS shall serve as the primary and definitive source of information on all government procurement.

• Utilized for the procurement of common-used supplies

• Features of the PhilGEPS

a) Electronic Bulletin Board

b) Registry of Manufacturers, Suppliers, Distributors,

Contractors and Consultants

c) Electronic Catalogue (Common-Use Supplies)

d) Virtual Store

e) Electronic Payment

f) Electronic Bid Submission

Procurement of Goods and Works

Philippine Procurement Paradigm

NEEDS SATISFACTION

End User

BAC

BAC Sec

HOPE

Identify

Assess Selection

Implement

BAC

TWG

HOPE

End User

BAC Sec

• Cost-benefit analysis

• Feasibility study

• Market study

• PPMP

• Review studies

• Consolidate into APP

• Decide procurement

method

• Approve APP

• Determine readiness

• Post/Advertise

opportunity

• Open and evaluate

bids

• Post-qualify

• Award and enter into

contract

• Oversee

implementation

• Inspect and accept

deliveries

• Release payment

Budget

Procurement Standard

• All Procurement shall be done through Competitive Bidding except as provided in RA 9184.

• Resort to Alternative Methods shall be made only in highly exceptional cases.

Standardized Bidding Procedures for Goods and Works Procurement

Pre-ProcurementConf.

Advertisement Pre-BidConference

Opening of1st Env. - EligibilityDocs & Technical

Proposal

Opening of 2nd

Envelope – FinancialProposal

Submission ofBids

Bid Evaluation& Ranking

Post-qualificationAward ofContract

Pre-Procurement Conference

• Undertaken prior to Advertisement of Invitation to Bid.

• To be attended by: BAC, Secretariat, consultants and relevant officials

• General purpose: Determine readiness of procurement and criteria.

• Not required for Goods costing P2M and below (small procurements)

Bidding Documents

• Prepared by the PE (End-User, Consultant, BAC Sec., etc.)• Bid Docs Include the following:

a. Approved Budget for the Contract (ABC);b. Invitation to Bidc. Eligibility Requirements;d. Instructions to Bidders, including:

i. Scope of Bid;ii. Documents comprising the bid;iii. Criteria for eligibility;iv. Bid evaluation methodology/criteria;v. Post-qualification;vi. Date, time and place of the pre-bid conference, submission

of bids and opening of bids;

Bidding Documents

• BAC shall make the Bidding Documents available from the time the Invitation to Bid is first advertised/posted until the deadline for the submission and receipt of bids.

• Posted at PE and PhilGEPS website from the time that the Invitation to Bid is advertised.

• Bidders may be asked to pay for the Bidding Documents to recover cost for preparation.

• Bid docs may be downloaded from PE and PhilGEPS website and paid at the time of the submission of bid.

Sale of Bidding Documents• Standard Rates (Public Bidding or Alternative Methods)

- GPPB Resolution No. 04-2012, 24 February 2012

ABC Maximum Cost of Bidding Documents (PhP)

500,000 and below 500.00

>500,000 to 1M 1,000.00

>1M to 5M 5,000.00

>5M to 10M 10,000.00

>10M up to 50M 25,000.00

>50M to 500M 50,000.00

>500M 75,000.00

Advertisement of Invitation to Bid

• At least once in one (1) newspaper of general nationwide circulation, which has been regularly published for at least two (2) years before advertisement date.

• Posted continuously for 7 calendar days –

– PhilGEPS

– website of the PE, if any.

– website of IFI, if applicable.

– At any conspicuous place in the premises of the PE.

Medium Above

2M/5M2M/5M and

below

• Newspaper of General Nationwide Circulation

• PhilGEPS website

• PE’s Website, if available

• Conspicuous Place

• Website prescribed by the foreign government/foreign or international funding institution, in case of foreign funded procurement

Advertisement of Invitation to Bid

Advertisement/Posting of Invitation to Bid

Contents of the Invitation to Bid:

Name and brief description of the goods

Criteria used for bid examination and evaluation, post-qualificationand award of contract

Date, time and place of the ff.:

i. Submission, receipt, opening and examination of bids; and

ii. Pre-bid conference

ABC and source of funding

Period of availability and price of the bid docs, place where the biddocs may be secured and websites where the bid docs may bedownloaded

Name, address, tel. and fax numbers, e-mail and website addressesof the procuring entity concerned

Other relevant information

Advertisement of Invitation to Bid• Period between last day of Advertisement of

Invitation to Bid and Opening of Bids:

• Invitation to Bid should specify the APPROVED BUDGET for the contract and the source of funding.

• ABC shall be the upper limit/ceiling for bid prices.

Pre-Bid Conference

• At least 1 Pre-Bid conference for bids with ABC of P1M or more.

• Discretionary for bids costing less than P1M

• Held at least 12 c.d. before deadline for Submission of Bids

Pre-Bid Conference• Attendance of Bidder is not necessary.

• At the option of the PE, only those who purchased bidding docs shall be allowed to participate in the pre-bid conference.

• Minutes shall be made available to all bidders not later than 3 c.d. after the Pre-Bid Conference.

Clarification of Bidding Documents

• Supplemental/Bid Bulletins– issued by BAC to answer requests for clarification (query submitted 10 c.d. before deadline) or interpretation, and upon BAC’s initiative to clarify or modify any provision of Bidding Docs. (at least 7 c.d. before deadline for bids).

• Supplemental/Bid Bulletins posted in PhilGEPS and PE’s website, if any.

• Two-Envelope System

1st Envelope - Eligibility Req. & Technical Component

2nd Envelope – Financial Component

• Submitted to the BAC on the date, time, and placespecified in the Invitation to Bid and biddingdocuments.

• Date of submission should bot be later than thefollowing period from the last day of posting of theInvitation to Bid:

OPENING OF BIDS

Opening of Bids

• Bids submitted after the deadline shallbe considered as “Late” and should notbe accepted

• Bidders only have to submit their bidsnot later than the deadline for thesubmission and receipt of bids, whichcan be extended or rescheduledtogether with the opening of bids asprovided in Section 29 of the IRR of RA9184. (NPM 55-2013)

Opening of Bids

• Eligibility Requirements

– Eligibility documents shall be submitted together w/ the Technical Envelope and Financial Envelope, on or before deadline for the submission of bids; and opened on the date of bid opening.

Opening of Bids

• Eligibility Requirements

• The capabilities and resources of prospective bidders shall be initially assessed, SUBJECT TO POST-QUALIFICATION, to determine eligibility.

• The Eligibility Requirements are not contract sensitive.

• A non-discretionary “pass/fail” criterion shall be used .

• A checklist of requirements (Class “A” and “B”) shall be used.

Eligibility RequirementsCLASS “A” DOCUMENTS

• SEC, DTI, CDA Registration

• Mayor’s Permit

• Tax Clearance

Legal Eligibility

• Statement of ALL ongoing and completed gov’t & private Ks, including Ks awarded but not yet started, w/in relevant period.

• PCAB License & Registration (for Civil Works)

Technical Eligibility

• Audited Financial Statement stamped “received” by the BIR

• Net Financial Contracting Capacity

Financial Eligibility

• Valid Joint Venture Agreement (JVA), if available; OR, Duly Notarized Statements from ALL potential JV partners

CLASS “B” DOCUMENTS

Who May Bid?

Individual/Sole Proprietor

a) Partnershipb) Corporationc) Joint-Ventured) Cooperatives

Goods 100% 60%/40%

Works 100% 75%/25%

Consulting 100% 60%/40%

LEGAL ELIGIBILITY CRITERIA

GOODS INFRASTRUCTURE

• General rule: 60% Filipino • General rule: 75% Filipino

• Foreign bidder allowed if:• Stated in treaty or international or

executive agreement• National of a country offering

reciprocity rights to Filipinos• Goods not available from local

suppliers• To prevent situations that defeat

competition or restrain trade

• Foreign contractors allowed if stated in treaty or international or executive agreement

• If joint venture, less than 75% is allowed if -• Structures to be built require

techniques not possessed by 75% Filipinos

• Not less than 25% Filipino

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• Technical Eligibility Criteria – Goods

(Single Largest Completed Contract) General Rule Exceptions Require the ff.:

1. Expendable Supplies• 25% of the ABC

2. Services and Non-expendable Supplies• 50% of the ABC

If, at the outset and

after market research,

applying the general

rule will likely result to:

1.Failure of bidding; or

2.Monopoly

a) At least 2 similar

contracts

aggregate amount

at least equivalent

to required

percentage; and

b) Largest of the

similar contracts

amounts to at

least half (50%) of

required

percentage

Eligibility Requirements

TECHNICAL ELIGIBILITY CRITERIA

INFRASTRUCTURE PROJECTS – SINGLE LARGEST CONTRACT

Previous contract

Similar to the contract to be bid out (having the same civilworks components)

50% of the ABC- Based on the value of the previous completed contract, as

adjusted to current prices using the NSO consumer priceindex.

For foreign funded procurement, a different track record maybe agreed upon

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• Financial Eligibility Criteria – Goods and Works

• NFCC at least equal to ABC

• NFCC = [Current Assets – Current liabilities (K)] minus the value of all outstanding or uncompleted contracts, including awarded contract not yet started

Eligibility Requirements

Net Financial Contracting Capacity (NFCC) =

(current assets - current liabilities) (K) MINUS(outstanding, uncompleted portions under ongoingcontracts + contracts awarded but not yet started)

(K) = 10 (contract is 1 year or less)

15 (contract is more than 1 year to 2 years)

20 (contract is more than 2 years)

* The values of the bidder’s current assets and current liabilities shall be based on the data submitted to the BIR, through its Electronic Filing and Payment System (EFPS)

NFCC COMPUTATION

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Eligibility Requirements

• Class B:

– Valid JVA.

– Duly Notarized Sworn Statements from all potential JV partners to enter into a JVA.

– Failure to create JVA - ground for forfeiture of Bid Security.

– Each JV partner shall submit Legal eligibility doc, but submission of technical & financial docs by one JV partner will suffice.

Opening of Bids

• PREL. EXAMINATION OF TECHNICAL PROPOSAL

• Opening the Technical Envelope which contain the Technical Proposals to ascertain compliance with the submission requirements

• A non-discretionary “pass/fail” criterion shall be used

• A checklist of required documents shall be used

Opening of Bids

• Eligibility Requirements

• Bid Security – Form, Amount and Validity

• Technical Specifications -

• Production/delivery schedule

• Manpower requirements

• After sales service/parts

• Organizational Reqs. (CW)

• Key Personnel (CW)

• Equipment (CW)

• Omnibus Sworn Statement

Technical Proposal (1st Envelope)

Opening of Bids

Omnibus Sworn Statement – Project Related statements that includes the following:

• Non-inclusion in blacklist• Authenticity of documents• Verification authority• Signatory’s authority• Disclosure of relations• Responsibilities of bidders• Labor laws and standards

Opening of Bids

• PREL. EXAMINATION OF FINANCIAL PROPOSAL

• Open the Financial Envelopes of remaining eligible bidders whose Technical Proposals were rated “passed” to ascertain: (a) compliance with the submission requirements; and (b) that bid price does not exceed ABC

• Only bids that pass prel. examination of both envelopes shall be rated “passed” and considered for evaluation and comparison

• “Failed” bidder has 3 c.d. to file request for reconsideration. BAC has 7 c.d. to decide

Opening of Bids

•Financial Bid Component / Bid Price

Financial Proposal (2nd Envelope)

Opening of Bids

• Contents of the 2nd Envelope (Financial Component)

1. Financial Bid Form (includes bid prices and bill of quantities, as well as applicable price schedules)

2. In case of Goods, Certification from the DTI, SEC, or CDA, if claiming preference as Domestic Bidder or Domestic Entity

3. Other documents required in the bidding documents

Bid & Performance Security– Bank issued securities must be issued by a

universal/commercial bank

– Surety Bonds must be accompanied bycertification from Insurance Commission thatissuer is authorized to issue such security

– Bidder has option to choose amongacceptable forms of security

– Procuring entity may not limit options availableto bidders

Procuring entity shall indicate in the Bidding Documents atleast 2 acceptable forms of bid security, one of which should bethe Bid Securing Declaration.

Bidders shall SUBMIT ONLY ONE (1) FORM of Bid Security

In general, bank issued securities must be issued by auniversal or commercial bank

However, in biddings conducted by LGUs, securities maybe issued by banks certified by BSP as authorized toissue said instruments

Surety Bonds must be accompanied by certification fromInsurance Commission that issuer is authorized to issue suchsecurity

BID SECURITY

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Bid & Performance Security

Bid Securing Declaration

• GPPB Resolution No. 03-2012, 27 January 2012- Section 27.5 of IRR of RA 9184 was amended. A bidder may

now submit a Bid Securing Declaration.

• Bid Securing Declaration (BSD) - is an undertaking which states, among others, that upon receipt of NOA:

1. the bidder shall enter into contract with the Procuring Entity

2. furnish the required performance security within ten (10) cd

3. commits to pay the fine and be suspended for a period of time from being qualified to participate in any government procurement activity in the event it violates any of the conditions stated therein as required in the guidelines issued by the GPPB.

Bid Securing Declaration

• GPPB Resolution No. 03-2012, 27 January 2012

- Inserted Section 27.6 (original Section 27.5 of IRR of RA 9184):

“In no case shall bid security or Bid SecuringDeclaration be returned later than theexpiration of the bid validity period indicatedin the Bidding Documents, unless it has beenextended in accordance with Section 28.2 ofthe IRR.”

Bid Evaluation

• Purpose is to determine the Lowest Calculated Bid (LCB), by:

1. Establishing correct calculated prices of bids; and

2. Ranking calculated total bid prices from lowest to highest

• A non-discretionary criterion shall be used, which shall include consideration of: (a) completeness of bids; and (b) minor arithmetical corrections

Bid Evaluation

• No Contact Rule - Prohibition on communication w/ bidders from bid evaluation until award of contract.

• Bid Evaluation shall not be more than 7 c.d.

• In case of discrepancies, the ff. shall prevail:

- words over figures

- unit prices over total prices

- actual sum of prices over total price

- bill of quantities over detailed est.

Bid Evaluation

• Unless the ITB specifically allows partial bids, those not providing all required items shall be considered non-responsive

• Placing no price is considered as non-responsive

• Specifying a “0” or “-” means it is offered for free

Post-Qualification

• To determine whether bidder with LCB complies with and is responsive to all requirements and conditions of eligibility and the bidding of the contract – to be declared the Lowest Calculated and Responsive Bid (LCRB)

• A non-discretionary pass/fail criterion shall be used to “Verify, Validate and Ascertain” all statements and documents (licenses, certificates, etc.)

• To be accomplished not more than 7 c.d. from determination of LCB. (Exceptional cases not to exceed 30 c.d.)

Post-Qualification

• BAC will notify the Bidder with the Lowest Calculated Bid that it was determined as such.

• Within 3 c.d. from receipt of Notice, submit the ffg:

– Latest Income and Business Tax Returns;

– Certificate of PhilGEPS Registration; and,

– Other appropriate Licenses and Permits required by law and stated in the Bidding Documents.

Post-Qualification

• BAC shall recommend award of contract to the LOWEST CALCULATED AND RESPONSIVE BID (LCRB) at submitted price or calculated price, whichever is lower

• In case of approval by HOPE, Notice of Award should be IMMEDIATELY issued by HOPE to the LCRB. (HOPE has 7 days to decide w/n to issue NOA)

Award of Contract

• NOA is subject to the following conditions:

– Submission of valid JVA, within 10 c.d. upon receipt by bidder that it was determined as the LCRB;

– Posting of Performance Security (post within 10 days, including signing);

– Signed Contract.

• Contract award shall be made within the bid validity period.

• Notice of Award of Contract to be posted at the PhilGEPS,

website and CP within 3 c.d. after issuance.

Notice to Proceed

• The PE shall issue the Notice to Proceed (NTP) together with a copy of the Contract within 3 c.d. upon approval.

• Contract effectivity date – indicated in the NTP w/c shall not be later than 7 c.d. from its issuance.

• Within 15 c.d. from the issuance of NTP, BAC Secretariat shall post a copy of the NTP and the Approved Contract in the PhilGEPS.

Up by 240.8%

from 2010-2015

Infrastructure Procurement for 2016

5% of GDP

PhP 829.6 Billion = US$ 18 Billion

THANK YOU…

DENNIS S. SANTIAGOExecutive Director V

GPPB-TSO

Comments, Questions?

Telephone/Fax: (+632) 900-6741 to 44 Website: http://www.gppb.gov.ph Email: gppb@gppb.gov.ph