NPM 162-2004

Requesting Entity: Philippine Health Insurance Corporation (PHIC)

Issues Concern: Lease of Office Space



Whether or not lease of office space should be procured through competitive bidding.

The appropriate procurement method for the lease of office space is Competitive Bidding. Competitive bidding implies an open participation by any and all qualified suppliers, consultants or contractors in a selection process to determine the party that can offer to the government the most advantageous deal. x x x

However, the peculiarity involved in the lease of office space deserves more consideration specifically in the preparation of the technical specifications. The lease of office space depends entirely on the needs and requirements of the agency such as, but not limited to, location, the width and dimension of the area, floor shape and size, accessibility, amount of lease, structural aptness, architectural design, interior set-up, floor to ceiling clearance, communication readiness, electricity load, access to light, view and air, and the like.

The restrictive and customized technical specifications involved in the lease of office space calls for elaborate specifications which may indicate more detailed and need-specific requirements. As such, although competitive bidding is the primary recourse, the peculiarity of the object to be bid limits the number of bidders qualified to deliver an agency’s requirements.

In sum, except where the canvassing and actual physical inspection undertaken by DTI are merely considered as preliminary to the determination of technical specifications to be required in view of the contemplated procurement, the previous action was not in accordance with the dictates of R.A. 9184.

So as to avoid the recurring issue on the re-negotiation or renewal of lease contracts, it is best to refer to the corporate charter or legislative franchise of PHIC, such that if the charter allows the governing Board to enter into multi-year contracts, the Board within the limits provided for by its charter and applicable laws, may pass a Resolution allowing lease of office spaces on a multi-year basis. It must, however, be reiterated that contracting out by the Board on a multi-year basis should be legally allowed so as not to invalidate, at a later time, its corporate act as ultra vires.