NPM 130-2013

Requesting Entity: Laguna Water District (LWD)

Issues Concern: Multi-Year Contract



Whether LWD may enter into a five-year contract with a septage provider pursuant to Republic Act (RA) No. 9275 (Clean Water Act), which mandates Local Government Units' (LGUs) Water Districts to desludge all septic tanks once within five (5) years or when the septic tank is half full.

Procuring entities may procure and enter into multi-year contracts, subject to applicable rules and regulations governing multi-year obligations. As such, LWD is urged to first verify if it is allowed to enter into multi-year contracts under DBM Circular No. 2004-12 or whether its governing board is authorized to enter into multi-year contracts under its enabling law or corporate charter. In the event that the confirmation yields a negative result, we propose that the contract be procured on a yearly basis. LWD is also suggested to inquire with DBM for an authoritative and definitive interpretation of the applicability of its Circular to LWD.