Requesting Entity: Department of Finance
Issues Concern: Procurement of the Services of a Credit Rating Agency (CRA)
Requesting for advice as regards the method of procurement to be utilized in procuring the services of a CRA, including the proper procedure to be undertaken in the procurement thereof.
Method of Procurement:
Looking at the peculiarity and uniqueness of the services being rendered by CRAs, compounded further by the serious implication and effect of its credit ratings in the international market as a whole, and to the country’s economy in particular, the direct engagement of specific CRAs becomes inevitable due to the recognition, trust, dependence and reliance afforded to them by investors in the market. For this reason, we opine that the engagement of the services of CRAs, which we consider as procurement of goods and services, can be coursed through the alternative method of procurement known as “direct contracting” or “single source procurement”.
In fine, since only a particular CRA is trusted and recognized in a specific area or region and only the rating of such CRA holds water or has more weight to investors within that jurisdiction, coupled by the proprietary character of the system, methodology, trade secret and discipline each adopts, the DOF may engage the services of the said CRA through direct contracting.
At this juncture, emphasis must still be made that in order to secure the desired competence of a CRA that will be acceptable to international investors, the DOF must prepare its criteria and technical specifications such that the end result will be the engagement of a CRA bearing the reputation and trustworthiness recognized by investors in a particular region.
Procedure for the Procurement:
Applying Section 50 (a) of the IRR-A of R.A. 9184, the procedures in the procurement of CRAs do not require elaborate bidding documents, the DOF may simply request the selected CRA to submit a price quotation together with the conditions for the engagement of its services. The offer made by the selected CRA may be accepted immediately or after some negotiations, thereafter, the procuring entity may now award the contract to the CRA concerned.