NPM No. 021-2015

Requesting Entity: Department of Transportation and Communications (DOTC)

Issues Concern: Negotiated Procurement (Adjacent or Contiguous)



Applicability of RA 9184; Official Development Assistance (ODA)

[T]he procurement of goods, infrastructure projects and consulting services funded through Foreign Grants and governed by Republic Act No. (RA) 8182, otherwise known as the Official Development Assistance Act of 1996, as amended by RA 8555, are not covered by RA 9184 and its associated revised Implementing Rules and Regulations (IRR), unless the Government of the Philippines and the foreign grantor/foreign or international financing institution agree otherwise.

Entering into a contract through Negotiated Procurement (Adjacent or Contiguous) with a contractor different from contractor in the original contract

Article 1311 of the New Civil Code of the Philippines mandates that contracts take effect only between the parties, their assigns and heirs, a rule of law commonly referred to as the principle of relativity of contracts. Under this principle, contract can only bind the parties who entered into it, and it cannot favor or prejudice third persons. Accordingly, when an existing procurement contract between a PE and a private contractor becomes the subject negotiated contract between the same private contractor and another PE, it gives an unwarranted favor to such different PE which is not privy to, or a party to the original contract, and an undue prejudice to other private contractors who are also eligible and qualified to undertake the execution of the contract given the right opportunity.

In this regard, it is our considered view that the PE can only resort to Negotiated Procurement under Section 53.4 (Adjacent or Contiguous) of the IRR of RA 9184 if it is a party to the original contract subject of negotiation, and provided that all other conditions for the use of this alternative method of procurement are strictly complied with.