NPM 002-2015

Requesting Entity: Office of the Auditor - National Dairy Authority (NDA)

Issues Concern: Request for Advice on the Use of Procurement Method



Whether the NDA, in resorting to Direct Contracting, violated Republic Act No. 9184 and its revised Implementing Rules and Regulations when it purchased locally supplied milk from NDA-assisted dairy cooperatives and, when the former were unable to meet its demand, from private entities available in the area


At the outset, please be advised that the determination of the legality and/or propriety of the actions and decisions of the Bids and Awards Committee (BAC) is not within the express mandate of the Technical Support Office. The Government Procurement Policy Board, likewise, has no authority to act for and decide in behalf of the BAC of the procuring entity concerned.


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[T]hat the government gives preference to the procurement of domestically produced and manufactured materials and supplies, does not sanction the immediate availment of the alternative methods of procurement such as direct contracting, in lieu of competitive bidding. Moreover, the direct purchase of milk from private entities available in the area without benefit of a public bidding must likewise satisfy the conditions for Direct Contracting before the BAC can make the recommendation to the Head of the Procuring Entity for the use of such alternative modality.


[T]he fact alone that the NDA-assisted dairy cooperatives are domestic suppliers of milk does not sanction the immediate resort to procurement through Direct Contracting under the third ground provided in Section 50 of the revised Implementing Rules and Regulations of Republic Act No. 9184, in lieu of Competitive Bidding. Under the rules, the procuring entity must first justify the necessity for purchasing milk from these cooperatives and private entities and it must be able to prove that there is no suitable substitute in the market that can be obtained at more advantageous terms, before it may decide to procure through Direct Contracting.