Requesting Entity: 911 Alarm

Issues Concern: Sample Form of the Cash Deposit Certificate

Details

Clarification on the legal basis of Sample Form-Good No. 16 (SF-Good-16) requiring cash deposit certificate to be put on hold for the procuring entity until the duration of the project.

Under Section 23.6 (j) of the IRR-A of R.A. 9184, the prospective bidder must submit any of the following: (i) a commitment from a licensed bank to extend to it a credit line if awarded the contract to be bid, or (ii) a cash deposit certificate in an amount not lower than that set by the procuring entity in the bidding documents, which shall be at least equal to ten percent (10%) of the ABC for the contract to be bid; or (iii) must have a Net Financial Contracting Capacity at least equal to the ABC for the contract to be bid.

The rationale behind Section 23.6 (j) of the IRR-A of R. A. 9184 is to establish the bidder’s liquidity and capacity to absorb the additional obligations in connection with the contract to be bid. Thus, the absence of any statement in the cash deposit certificate – that there is a hold-out on cash deposit equal to the amount stipulated in the bidding documents and that the same is relevant to a specific project would unduly defeat the objective of said requirement in requiring the certification, which is to safeguard the interest of the procuring entity by ensuring that the bidder has the necessary resources to successfully implement and complete the project to be bid.