NPM No. 020-2019
Requesting Entity: Bureau of Corrections
Issues Concern: Procurement by Lot and Splitting of Contracts
Whether a procurement of a single project divided into several lots would constitute as “splitting of contract” proscribed under Section 54.1 of the 2016 revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184.
With respect to the splitting of contracts, Section 54.1 of the revised IRR of RA No. 9184 is instructive. It defines splitting of contracts as the division or breaking up of government contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and its IRR, particularly the necessity of competitive bidding and the requirements for the alternative methods of procurement. Thus, the mere act of dividing a contract into smaller quantities or phases does not automatically constitute splitting of contract.
What is material for the procuring entity(PE) to consider in deciding to divide the procurement project into lots is if the same will circumvent the provisions of RA No. 9184 and its 2016 revised IRR. In fine, the PE is authorized to divide a procurement project into lots to attract the maximum competition and carry out procurement in an efficient and economic manner and when doing so, should ensure that the same is not made to circumvent any provisions of RA No. 9184 and its revised IRR.