NPM 141-2014

Requesting Entity: National Power Corporation

Issues Concern: Department of Labor and Employment Order (DOLE) Department Order (DO) 18-A and Government Procurement Policy Board (GPPB) Policy Matter (PM) Opinion No. 03-2012



Clarification on the applicability of Section 9(b)(ii) of DOLE No. 18-A and GPPB PM No. 03񮖬 on the minimum administrative fee in service agreements

Considering that the computation for the cost of a service contract/agreement involves factors, the respective amount of which are set by law, such as the items identified as Reimbursable Costs under Annex "A" of DOLE DO 18-A, requiring servicing agencies to adopt administrative fee that is at least ten percent (10%) of the total contract cost effectively prohibits them from offering bids lower than the sum of the Total Reimbursable Costs and ten percent (10%) administrative cost.

This scenario results in the imposition of floor in bid prices, which clearly runs counter to the pronouncement in Section 31 of RA 9184 and its revised IRR that "[t]here shall be no lower limit to the amount of the award."