NPM No. 177-2015

Requesting Entity: Center for International Trade Expositions and Missions (CITEM)

Issues Concern: Contract Price Escalation; Approved Budget for the Contract (ABC)



Requesting approval from the Government Procurement Policy Board (GPPB) to allow the actual amount procured from a signage contractor in excess of the Actual Budget for the Contract (ABC) for various projects implemented in 2011 in reference to the rule on Price Escalation under Section 61.1 of the revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184, so as to lift the Notice of Disallowance issued by the CITEM Resident Commission on Audit (COA) Auditor.

[T]he authority of the GPPB to approve requests for contract price escalation is confined within the limits of RA 9184 and its IRR. Under Section 61 of RA 9184, for the given scope of work in the contract as awarded, all bid prices shall be considered as fixed prices, and therefore not subject to price escalation during contract implementation, except under extraordinary circumstances and upon prior approval of the GPPB. To provide the rules and procedures for the implementation of this mandate of the law, the GPPB issued the Revised Guidelines for Contract Price Escalation (Guidelines for brevity).

In order to justify the request for contract price escalation, it is necessary to establish that an extraordinary circumstance occurred during contract implementation.

- x x x -

The list of extraordinary circumstances, for purposes of approving requests for price escalation is exclusive. x x x . The increase in the cost of implementing the scope of work should be caused by an extraordinary circumstance as defined above, and not due to an increase in the quantity of items as indicated in the awarded contract or deviation in the scope of work or technical requirements of the project during contract implementation

[T]he provisions of Section 61 of RA 9184 and its IRR and the rules and procedures in the Guidelines do not apply when the contract price escalation is not based on an extraordinary circumstance as defined in the Guidelines. This notwithstanding, it bears stressing that any request for contract price escalation should be strictly processed in accordance with the review and approval process under Section 5 of the Guidelines.