NPM 046-2004

Requesting Entity: Philippine Health Insurance Corporation

Issues Concern: Negotiated Contracts with other Government Agencies



Whether or not Republic Act No. 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A) allow negotiated contracts with other government entities for information system reengineering and other incidental services.

Considering that procurement from another Government agency is an exceptional case identified by the IRR-A warranting the use of Negotiated Procurement, PhilHealth may legally enter into a negotiated contract with another government entity. However, it must be noted that as the aforequoted provisions (Sections 53(e) and 54.2(g), IRR-A) indicate, direct negotiation with another government agency is allowed only in the procurement of goods.

Thus, if the reengineering of information system and the incidental services which PhilHealth desires to procure from other government entities involve the application of technical and professional expertise such as: (i) advisory and review services; (ii) pre-investment or feasibility studies; (iii) design; (iv) construction supervision; (v) management and related services; and (vi) other technical services or special studies, then such services are categorized as “Consulting Services” which are beyond the purview of Section 53(f) of the IRR-A. In this case, no direct negotiation can be had with another government agency.

On the other hand, if the services to be procured do not require the application technical or professional skill, such may be procured through direct negotiation with another government agency under Section 53(e) of the IRR-A, since nonpersonal or contractual services are classified as goods under R.A. 9184. In this case, however, the procuring entity must ensure that such direct negotiation with another government agency promotes economy and efficiency, and that the most advantageous price for the Government is obtained. Furthermore, the following methodology should be observed:
1. In the APP, the Bids and Awards Committee shall include a recommendation to the head of the procuring entity on the use of Negotiated Procurement as a method of procurement. If the original mode of procurement recommended in the APP was Public Bidding, the BAC shall recommend the change in the mode of procurement from Public Bidding to Negotiated Procurement through a Resolution to be approved by the head of the procuring entity.
2. The head of the procuring entity shall approve the same.
3. The BAC, through the Secretariat, shall post the procurement activity for a maximum period of fourteen (14) calendar days in: (a) the Government Electronic Procurement System (G-EPS); (b) the website of the procuring entity and its electronic procurement service provider, if any; and (c) any conspicuous place in the premises of the procuring entity.