NPM 015-2003

Requesting Entity: Pasig River Rehabilitation Commission

Issues Concern: Clarification on Various Provisions of R.A. 9184



Is the PRRC Inter-Agency Bids and Awards Committee (IABAC) legal in relation to Section 5 of R.A. 9184?

Legality of an IABAC

Considering that there is no prohibition, expressed or implied, in Section 11 of R.A. 9184 as regards the creation of an IABAC, it is our opinion that the establishment thereof by PRRC is allowed, provided, that the composition and membership, including the ranking of the members to be designated must comply with the requirements of R.A. 9184 and its proposed IRR.

Additionally, it is worthy to note that the unique setup of PRRC, the same being an inter-agency Commission composed of and collectively governed by the Secretaries and Heads of the different member agencies, would allow it to create an IABAC to promote direct and active participation among its members on matters relating to its procurement activities.

May the PRRC decentralize its procurement authority to another government agency/department or local government unit who acts as implementing agency for PRRC projects?

Decentralization of PRRC’s Procurement Activities

Section 12, Rule IV, Rules and Regulations Implementing (RRI) Executive Order No. 54 (E.O. 54), allows PRRC to engage the services of government or private procurement agents and entities to conduct the procurement activities for and in its behalf. The same authority is given to PRRC under the proposed IRR of R.A. 9184, in that, PRRC may “outsource” its procurement projects, where it may request other agencies to undertake such procurement activities for the Commission.

May these implementing agencies, pursuant to R.A. 9184, be responsible for the approval of the project cost/budget and award of the contract?

Approval of Project Cost/Budget and Award of Contract

Pursuant to Section 12 of R.A. 9184, the functions of the BAC are confined within the scope of the responsibilities enumerated therein, and the approval of project/cost or the Approved Budget for the Contract (ABC) is not one of them. Moreover, the approval of the ABC is not within the ambit of the powers of the BAC, as a matter of fact, the approval thereof properly pertains to the Head of the Procuring Entity, the governing Boards or the respective Sanggunian. Witness Section 5(a), R.A. 9184, to wit:

x x x x

Moreover, the BAC has no power to approve and award contracts for specific procurement projects, for under R.A. 9184, said function pertains to the Head of the Procuring Entity, Section 37, R.A. 9184 states that:

x x x x

May the approval of project/cost budget and award of the contract be relinquished to the Mayor as Head of Agency?

Relinquishment of Authority to the Mayor Re: Approval of Project Cost/Budget and Award of Contract

Under Section 8, Rule III, RRI of E.O. 54, “the Commissioners sitting en banc shall be the governing board and policy-making body of PRRC,” this being so, and in line with Section 5(a) of R.A. 9184, supra, the Commission itself is the governing Body mandated and tasked to approve the project cost or the ABC, and such authority to approve the ABC may not be delegated by the Commission to the Head of the member agencies or the City Mayors since the law is clear that the Head of the Procuring Entity shall be responsible for the approval of the ABC.

On the contrary, with respect to the approval and award of contract, Section 37 of R.A. 9184, supra, specifically provides that the Head of the Procuring Entity or his duly authorized representative shall approve or disapprove the recommendation to award made by the BAC, and in case of approval, the Head of the Procuring Entity or his duly authorized representative shall immediately issue the Notice of Award to the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid. Clearly then, the approval and award of contract may be delegated by the Head of the Procuring Entity to its duly authorized representative, except the BAC as already explained, and in this regard, PRRC may choose to authorize the Local Chief Executive to approve the recommendation made by the BAC and award the contract corresponding to such recommendation.

Does Section 11 of R.A. 98184 make it mandatory for PRRC to establish its own BAC even if it has already delegated this

Establishment of PRRC’s Own BAC

Section 11 of R.A. 9184 is couched in no uncertain terms, in that, said provision mandates the creation of a single BAC in every agency or several BACs when the nature of the procurement activities in said agency shall so warrant. For this reason, we believe that PRRC should establish its own BAC aside from the IABAC it previously created. However, as already stated, PRRC may still opt to outsource, as provided for under Section 53 (e) of R.A. 9284, supra, its procurement to expedite and hasten its procurement activities.

Is it valid for the BAC to recommend award of the contract to the implementing agency?

Recommendation of Award to Implementing Agency

The actual Procuring Entity in this case is the PRRC, as such, the BAC, under Section 12 of R.A. 9184, is mandated to recommend approval and award of contract to the Head of PRRC, that is the governing Board of the Commission, or its duly authorized representative. Thus, the primary obligation of the BAC is to make the recommendation directly to the Head of the Procuring Entity unless there was prior delegation of the power to approve and award in favor of another Agency or Local Government Unit (LGU). Only when a delegation of authority was made to an Agency or LGU, in so far as the approval and award of the contract are concerned, may the BAC make such recommendation to the designated Agency, LGU or authorized representative.

Does Negotiated Procurement apply to supplemental contracts and variation orders?

Applicability of Negotiated Procurement to Supplemental Contracts and Variation Orders

Negotiation as an alternative method of procurement presupposes that there is no existing contract between the agency and the bidder, as such, the would be parties to the contract are supposed to negotiate on the terms and conditions of the contract with respect to the project being bid out, subject to the provisions of existing procurement laws, rules and regulations. On the other hand, in “supplemental contracts” and “variation orders,” the assumption is that, there is already an existing contract between the agency and the winning bidder only that, either or both parties would want to introduce an amendment, addition or improvement to the stipulations, agreements and covenants in their original contract.

Section 48(e) of R.A. 9184 provides that “Negotiated Procurement is a method of procurement whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant. From the definition, it can be safely deducted that Negotiated Procurement may only be utilized for contracts that are yet to be entered into by the agency and the bidder, and not those which has already been signed and executed. Although in “supplemental contract” and “variation order” there is, in a way, negotiation between the parties, this negotiation, however, is not the same negotiation being contemplated and understood in Section 48(e) of R.A. 9184.