NPM 005-2005

Requesting Entity: Department of Trade and Industry

Issues Concern: Extension of Health and Medical Insurance Contract



1. Whether or not DTI may extend year 2004’s insurance contract to cover January to March of 2005.

Applying the above-cited jurisprudential crucible (G.R. Nos 115121-25, February 1996), it can be said that services indispensable in the ordinary course of the prosecution of a procuring entity’s mandate may be maintained until after a replacement therefor has been lawfully acquired or contracted. Here, the obvious intent is to elude the ill possibility of a “service vacuum” meantime that selection process for a replacement is being made. An extension of contract for a reasonable period of time is but a dictate of prudence and judgment. Elsewise put, if award of contract through competitive bidding cannot be attained due to valid and tenable reasons, the status quo may be maintained for a short span of time until the new contract is awarded to the winning bidder.

In the case of DTI, the extension sought is due to the fact that the bidding procedure is not expected to be completed before the end of March 2005. Within that period, the extension is fairly permissible in the context of avoiding hiatus in the medical services that the employees require that may directly and most necessarily result from the expiration of the contract. The extension, while may be seen as negotiating an interim measure, is also virtually a measure to maintain the status quo until after the bidding procedure is finalized and a new contract is awarded to a new service provider.

We appreciate the effort and commitment of DTI to adhere to the rules laid down in the new procurement law, and we take this opportunity to caution agencies that in pursuing contract extensions, good faith must at all times be observed, such that ample proof/evidence should be available to show the actual attempt to bid out the project at the earliest opportunity and for completion within the earliest reasonable time. This goes without saying that the reasons for the extension itself be justified as inevitable because of conditions not attributable to the agency’s bad faith or lack of foresight and anticipation.

2. Whether the extension of the insurance contract under the rules allowing for negotiated procurement is possible as said extension is necessary to prevent damage to the health of DTI employees or perhaps even loss of life.

The interruption of insurance coverage arising from the expiration of the insurance contract may hardly be perceived as a direct threat to the health and life of the employees. Granting arguendo that such is a threat, this situation is a cause remote to and/or indirect to any damage in health or life of the employees. Hence, Negotiated Procurement may not be resorted to by the DTI in their case.