NPM 010-2005

Requesting Entity: Department of Transportation and Communications

Issues Concern: Construction of the Philippine Coast Guard Support Base in Mactan, Cebu



1. Can DOTC still enter into contract with the winning bidder using the revised Approved Budget for the Contract (ABC) which is based on the reduced scope of work or new wharf design?

Grant of Price Adjustment

Firstly, it is a rule that for the given scope of work in the contract as awarded, all bid prices are considered fixed prices, and therefore not subject to price adjustment during contract implementation, except under extraordinary circumstances and upon prior joint approval of the Procurement Policy Board and the Infrastructure Committee of the National Economic and Development Authority. It is therefore presumed that before price adjustment may be granted in accordance with the afore-mentioned conditions, a valid contract should first be in existence. Considering that the contract for the Project was neither signed nor approved, its implementation cannot push through as well as any right to request price adjustment thereon.

Revision of ABC and Modification of Terms, Conditions, and Specifications

As provided in Section 18.4 of the IRR of E.O. 40, the procuring entity may modify the terms, conditions, and specifications of the bidding documents after the first failure of bidding in order to reflect current market prices. However, it is specifically provided therein that the ABC shall be maintained as the ceiling for the bid prices.

x x x x

[I]t is apparent that the ABC and the terms, conditions, and specifications may only be revised after a failure of bidding is declared. Accordingly, there being no such declaration of failure by DOTC, the ABC for the Project cannot be revised nor the terms, conditions, and specifications therefor be modified; more so can DOTC enter into contract with ECC on such terms.

Withdrawal of Bid

Under ordinary circumstances, the winning bidder’s withdrawal of its bid after the notice of award has been issued would prompt the procuring entity to call on its bid security or, if applicable, the performance security and proceed to post-qualify the next lowest rated bidder. However, taking into account the period that has lapsed since the issuance of the notice of award until the withdrawal by the winning bidder of its bid and the requirement for bid validity under Sections 19.3 and 30.2.3 of the IRR of E.O. 40, the performance security it has posted, as well as other bids, would have already ceased to be valid.

2. Can DOTC initiate a re-bidding without re-advertisement following the provision of Executive Order 40, Series of 2001 (E.O. 40) since the project was initially bid out under this procurement law?

Section 18.4 of the IRR of E.O. 40 mandates the re-advertisement and/or re-posting of the invitation for bids in cases of re-bidding. Thus, re-biddings necessarily include the process of issuing the invitation for bids through advertisement and/or posting as provided under Section 14.2 of the same IRR.

With the re-advertisement and/or re-posting of the invitation for bids, a new procurement opportunity is being opened to all who may be interested and qualified to participate therein which shall be conducted using the existing laws, rules, and regulations. As such, notwithstanding that the previous bidding was conducted under E.O. 40 and its IRR, the re-advertisement and/or re-posting should be made in accordance with the provisions of R.A. 9184 and its IRR-A.

3. Due to time constraint in the project implementation caused by factors beyond control, can DOTC use alternative procurement or directly enter into a negotiated procurement with the eligible bidders using the revised ABC?

Without any of the [conditions provided under Section 53 of the IRR-A], a contract for the Project cannot be validly entered into using negotiated procurement.

Based on your representation, it is our view that none of the above-mentioned conditions fall squarely with the circumstances attending the Project. Therefore, since negotiated procurement cannot be resorted, the procurement of the Project should be bid out.

Moreover, it is worthy to reiterate that as discussed earlier, the procuring entity cannot choose to revise the ABC and resort to negotiated procurement using the revised ABC. Under the present circumstances of the Project, if the procuring entity declares a failure of bidding and revises the ABC, the appropriate procurement method to be applied therefor is still public bidding not negotiated procurement.