NPM 114-2004

Requesting Entity: Philippine National Oil Company - Exploration Corporation

Issues Concern: Request for Comments/Remarks on the Procedures Followed in the Procurement of Asian Utility Vehicle



1. Whether or not public bidding was conducted by the Bids and Awards Committee (BAC) for procurement of AUV in accordance with Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A).

We note two (2) possible irregularities in the ubject procurement, specifically the following: (i) whether the procurement was conducted by the BAC or by the Purchasing Section; and (ii) whether an Invitation to Apply for Eligibility and to Bid (“IAEB”) was posted/published for the procurement activity or the six (6) Toyota dealers were merely invited directly by PNOC-EC.

With respect to the first observation, please note that as provided in Section 12.1 of the IRR-A of R.A. 9184 the function of conducting competitive biddings pertains exclusively to the BAC. Thus, if the procurement of AUV was conducted by the Purchasing Section of PNOC-EC instead of its BAC, such procurement is tainted with an irregularity that may be a ground for its disallowance. As regards the second observation, we wish to point out that the subject procurement should, as general rule, follow competitive bidding procedures with the following steps, namely: advertisement, pre-bid conference, eligibility screening of prospective bidders, receipt and opening of bids, evaluation of bids, post-qualification, and award of contract. Accordingly, failure to conduct any of the required steps in the conduct of a competitive bidding will warrant a valid disallowance of the procurement.

In view of the foregoing, if the procurement of AUV by PNOC-EC suffers from any of the irregularities mentioned, such procurement may be disallowed by the Commission on Audit.

2. Whether or not the prohibition on reference to brand names was violated.

Strict application of this prohibition is mandatory such that violation thereof justifies disallowance of the procurement. As such, although PNOC-EC may use the quote of Toyota as basis for the Approved Budget for the Contract (ABC) of its AUV procurement, the specifications in the bidding documents should not contain any reference to the brand Toyota; otherwise, disallowance is proper.

3. Whether or not the limited offer for a discount of Php35,000.00 included by the Lowest Calculated Bidder in its bid was considered for purposes of bid evaluation.

Lastly, we raise the concern on the conduct of the bid evaluation for the subject procurement. We note the fact that the quoted price of the Lowest Calculated Bidder, specifically Toyota Shaw-Ortigas, included a discount amounting to Thirty Five Thousand Pesos (P35,000.00) valid up to August 13, 2004 only.

Although discounts are not entirely prohibited, it should be made an integral part of the original bid such that the discount and the bid price have the same validity period in order for it to be considered for purposes of bid evaluation; otherwise, the bid shall be evaluated sans the discount. Accordingly, all premises considered, the bid of Toyota Shaw-Ortigas should have been evaluated without considering the discount offered.