Dennis S. Santiago Executive Director Department of Budget

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1 Dennis S. Santiago Executive Director Department of Budget 2015 PASIAWorld Annual Conference 2020 Vision: Competitive Procurement, Logistics and Supply Chain

2 Understanding Government Contracting: The Philippine Context

3 Republic Act No Government Procurement Reform Act (2003) An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for Other Purposes

4 Government Procurement Reform Act (GPRA) Governing Principles GPRA

5 Key Features Competitive Bidding as Primary Mode of Procurement. Shift from Pre-Qualification Regime to Simplified Eligibility Checking and Strengthened Post- Qualification. Use of Non-Discretionary Pass/Fail Criterion.

Key Features Use of the Approved Budget for the

6 Key Features Use of the Approved Budget for the Contract (ABC) as Ceiling for Bid Prices. Use of Standardized Philippine Bidding Documents (PBDs), Generic Procurement Manuals (GPMs) and Local Government Procurement Manual (LGPM). Creation of a procurement policy oversight body Government Procurement Policy Board.

7 Key Features Use of the Lowest Calculated and Responsive Bid for goods, supplies, materials and related services; and Highest Rated and Responsive Bid for consulting services. Allowance of Centralized or Decentralized Procurement. Introduction of a Protest Mechanism. Participation of Observers.

8 Key Features Philippine 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

9 Procurement of Goods and Works

Philippine Procurement Paradigm HOPE BAC BAC Sec Budget Assess Review studies Consolidate into APP Decide procurement method Approve APP Determine readiness Post/Advertise opportunity Open and

10 Philippine Procurement Paradigm HOPE BAC BAC Sec Budget Assess 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 Selection HOPE BAC TWG BAC Sec End User End User Identify Cost-benefit analysis Feasibility study Market study PPMP Oversee implementation Inspect and accept deliveries Release payment Implement NEEDS SATISFACTION

11 Procurement Standard All Procurement shall be done through Competitive Bidding except as provided in RA Resort to Alternative Methods shall be made only in highly exceptional cases.

12 Standardized Bidding Procedures for Goods and Works Procurement Pre-Procurement Conf. Advertisement Pre-Bid Conference Submission of Bids Opening of 1 st Env. - Eligibility Docs & Technical Proposal Opening of 2 nd Envelope Financial Proposal Bid Evaluation & Ranking Post-qualification Award of Contract

13 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)

14 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 Bid c. 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;

15 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.

16 Sale of Bidding Documents Standard Rates (Public Bidding or Alternative Methods) - GPPB Resolution No , 24 February 2012 ABC Maximum Cost of Bidding Documents (PhP) 500,000 and below >500,000 to 1M 1, >1M to 5M 5, >5M to 10M 10, >10M up to 50M 25, >50M to 500M 50, >500M 75,000.00

17 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.

18 Advertisement of Invitation to Bid Medium Above 2M/5M 2M/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

19 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-qualification and 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 bid docs may be secured and websites where the bid docs may be downloaded Name, address, tel. and fax numbers, and website addresses of the procuring entity concerned Other relevant information

20 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.

21 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

22 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.

23 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.

24 OPENING OF BIDS Two-Envelope System 1 st Envelope - Eligibility Req. & Technical Component 2 nd Envelope Financial Component Submitted to the BAC on the date, time, and place specified in the Invitation to Bid and bidding documents. Date of submission should bot be later than the following period from the last day of posting of the Invitation to Bid:

25 Opening of Bids Bids submitted after the deadline shall be considered as Late and should not be accepted Bidders only have to submit their bids not later than the deadline for the submission and receipt of bids, which can be extended or rescheduled together with the opening of bids as provided in Section 29 of the IRR of RA (NPM )

26 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.

27 Eligibility Requirements Opening of Bids 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.

28 Eligibility Requirements CLASS A DOCUMENTS Legal Eligibility SEC, DTI, CDA Registration Mayor s Permit Tax Clearance Technical 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) Financial Eligibility Audited Financial Statement stamped received by the BIR Net Financial Contracting Capacity CLASS B DOCUMENTS Valid Joint Venture Agreement (JVA), if available; OR, Duly Notarized Statements from ALL potential JV partners

29 Who May Bid? Individual/Sole Proprietor a) Partnership b) Corporation c) Joint-Venture d) Cooperatives Goods 100% 60%/40% Works 100% 75%/25% Consulting 100% 60%/40%

30 LEGAL ELIGIBILITY CRITERIA GOODS General rule: 60% 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 INFRASTRUCTURE General rule: 75% Filipino 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 30

31 Eligibility Requirements Technical Eligibility Criteria Goods (Single Largest Completed Contract) General Rule Exceptions Require the ff.: 1. Expendable Supplies 25% of the ABC 2. Services and Nonexpendable 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

TECHNICAL ELIGIBILITY CRITERIA INFRASTRUCTURE PROJECTS SINGLE LARGEST CONTRACT Previous contract Similar to the contract to be bid out (having the same civil works components) 50% of the ABC -

32 TECHNICAL ELIGIBILITY CRITERIA INFRASTRUCTURE PROJECTS SINGLE LARGEST CONTRACT Previous contract Similar to the contract to be bid out (having the same civil works components) 50% of the ABC - Based on the value of the previous completed contract, as adjusted to current prices using the NSO consumer price index. For foreign funded procurement, a different track record may be agreed upon 32

33 Eligibility Requirements 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

34 NFCC COMPUTATION Net Financial Contracting Capacity (NFCC) = (current assets - current liabilities) (K) MINUS (outstanding, uncompleted portions under ongoing contracts + 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) 34

35 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.

36 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

37 Opening of Bids Technical Proposal (1 st Envelope) 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

38 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

39 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

40 Opening of Bids Financial Proposal (2 nd Envelope) Financial Bid Component / Bid Price

41 Opening of Bids Contents of the 2 nd 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

42 Bid & Performance Security Bank issued securities must be issued by a universal/commercial bank Surety Bonds must be accompanied by certification from Insurance Commission that issuer is authorized to issue such security Bidder has option to choose among acceptable forms of security Procuring entity may not limit options available to bidders

43 BID SECURITY Procuring entity shall indicate in the Bidding Documents at least 2 acceptable forms of bid security, one of which should be the Bid Securing Declaration. Bidders shall SUBMIT ONLY ONE (1) FORM of Bid Security In general, bank issued securities must be issued by a universal or commercial bank However, in biddings conducted by LGUs, securities may be issued by banks certified by BSP as authorized to issue said instruments Surety Bonds must be accompanied by certification from Insurance Commission that issuer is authorized to issue such security 43

44 Bid & Performance Security

45 Bid Securing Declaration GPPB Resolution No , 27 January 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.

46 Bid Securing Declaration GPPB Resolution No , 27 January Inserted Section 27.6 (original Section 27.5 of IRR of RA 9184): In no case shall bid security or Bid Securing Declaration be returned later than the expiration of the bid validity period indicated in the Bidding Documents, unless it has been extended in accordance with Section 28.2 of the IRR.

47 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

48 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.

49 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 nonresponsive Specifying a 0 or - means it is offered for free

50 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.)

51 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.

52 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)

53 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.

54 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.

55 Up by 240.8% from

56 Infrastructure Procurement for % of GDP PhP Billion = US$ 18 Billion

57 THANK YOU DENNIS S. SANTIAGO Executive Director V GPPB-TSO Comments, Questions? Telephone/Fax: (+632) to 44 Website: gppb@gppb.gov.ph

Philippine Consulate General New York

Philippine Consulate General New York A. General 1. Scope of Bid 1.1. The Philippines Consulate General New York (hereinafter referred to as the Procuring Entity) wishes to receive bids for its Structured