Public Bidding for the Supply and Delivery of the Petroleum, Oil and Lubricant (POL) Requirements of the Armed Forces of the Philippines
Date
:
2004-05-05
Requesting Entity
:
Department of National Defense
Issues Concern
:
Public Bidding for the Supply and Delivery of the Petroleum, Oil and Lubricant (POL) Requirements of the Armed Forces of the Philippines
Details
:
1. Whether or not the Wholesale Posted Price (WPP) may be adopted as a fixed price and as an exemption to Section 61 of the IRR-A of R.A. 9184. It must be noted that the fixed price requirement on bid prices under R.A. 9184 and its IRR-A is a stringent requirement that must be observed by procuring entities and bidders. Section 61 of R.A. 9184 presupposes that the bidders for a particular government project should submit a fixed bid price in its financial proposal for the project being bid out at the competitive bidding stage, which shall be treated as its offered price to the government. This price quoted by the bidder shall be the very basis of bid evaluation in the determination of the lowest calculated bid. The bidder adjudged to be with the lowest calculated bid shall then be subject to post-qualification, and if he passes all the criteria thereto, such bidder shall be declared as the bidder with the lowest calculated responsive bid, and the head of the procuring entity concerned shall award the contract to said bidder at its submitted bid price. This bid price shall be the contract price, which cannot be adjusted or modified during the contract implementation stage, save in cases of requests for price escalation under extraordinary circumstances, which shall be determined by the NEDA and subject to the approval of the GPPB.
Thus, it can be deduced that the fixed price requirement for bid prices in R.A. 9184 and its IRR-A cannot be compromised as it is the very basis for the exact comparison of bids. It has been held that the three principles in public biding are (1) the offer to the public; (2) opportunity for competition; and (3) a basis for the exact comparison of bids. Exclusion of any of these factors destroys the distinctive character of the system and thwarts the purpose of its adoption. Hence, considering that the requirement of law that bid prices should be fixed prices is part of the underlying precepts in public biding, the GPPB is not disposed to adopt a new or innovative mode of comparison of bids. We believe that strict adherence on the principles, rules and regulations on public bidding must be sustained to preserve the integrity and the faith of the general public on the procedure.
In view of the foregoing legal constraints, we are of the opinion that it is more feasible to bid the AFP’s POL requirements annually instead of being covered by a multi-year contract. In this manner, petroleum oil companies as bidders would be able to make a more realistic and reasonable estimate in their financial proposal relative to the prevailing market prices of petroleum crude products and then bid at fixed prices. It would also be advantageous for the AFP if the service requirements needed for the supply, delivery and continuous availability of POL products, such as the maintenance of service depots and AFP POL Stations, be bid out separately and subject of a separate contract, instead of factoring it as a support service in the Terms of Reference for the supply and delivery of the POL requirements of the AFP. This will encourage new oil players to participate in such procurement as the contract for the supply and delivery of AFP’s POL requirements would not entail additional investments on their part. With this arrangement, all bidders shall be placed on equal footing and the most advantageous and best possible price for the government shall be obtained through open competition, free from suspicion of favoritism, collusion and fraud in the award of such contract.
2. Whether or not foreign oil companies may be allowed to participate in the procurement of AFP’s POL requirements even if they do not satisfy the nationality requirement prescribed by law in the procurement of goods.
In the absence of the implementing guidelines that would put into effect the exemption to Filipino ownership/equity requirement under Section 23.11.1 of the IRR-A of R.A. 9184, the DND, however, is not without recourse as it may still allow foreign oil companies to participate in the procurement of AFP’s POL requirements under existing laws which grants exemptions to the nationality requirement. In Policy Matter No. 02-2003 and 03-2003 the GPPB had the occasion to elucidate on the provisions of law that provide for exemptions from the sixty percent (60%) Filipino ownership/equity requirement in the award of government contracts, which include Section 1 of R.A. 5183, viz:
x x x x
Accordingly, if a foreign country grants to Filipino citizens the right to engage in and conduct business within their jurisdiction without restrictions as regards ownership or equity requirements, the Philippines is likewise ready to provide similar or equal benefit to citizens of that foreign country who desire to engage in business here in the Philippines. It must be stressed, however, that the foreign citizen/proponent/bidder must prove that, indeed, his country of origin provides for such benefit(s) to Filipino citizens, otherwise, his participation in any government contract may be rightfully questioned and eventually be denied.
In light of the foregoing, we are of the view that foreign oil companies may be invited to participate in the procurement of AFP’s POL requirements but such foreign bidder must prove that his/its country of origin grants reciprocal rights to Filipino citizens with respect to procurement goods by its government, in compliance with R.A. 5183. However, the exemption on reciprocity provided for by R.A. 5183 is with the caveat that the Flag Law shall continue to be applicable. Thus, should foreign oil companies be invited by the DND to bid in the procurement of AFP’s POL requirements, eligible oil companies participating in the bidding whose capital 75 per centum is owned by citizens of the Philippines shall be awarded the contract, if its bid is not more than fifteen per centum in excess of the lowest bid made by the foreign oil company.
