NPM 004-2006

Requesting Entity: DPWH Northern Samar 2nd District Engineering Office

Issues Concern: Mandating bidders to submit Contractor's All Risk Insurance (CARI) as an additional requirement



Whether or not the Department of Public Works and Highways (DPWH) can mandate its contractors to submit the CARI as an additional requirement for contracts costing One Million Pesos (1 M Php) or more.

Forms and Contents of Bid documents

As clearly defined in Section 5 of the Implementing Rules and Regulations Part A (IRR-A) of Republic Act No. 9184 (R.A. 9184), bidding documents refer to the documents issued by the procuring entity as the bases for bids, furnishing all information necessary for a prospective bidder to prepare a bid for the infrastructure projects, goods, and/or consulting services required by the procuring entity. Evidently, the bidding documents issued by the procuring entity contain all the specific requirements, limitations and parameters of the procurement at hand, as determined by the procuring entity. Hence, it is the procuring entity that has the discretion in determining what to include in the bidding documents, provided that for bidding purposes, all the minimum requirements of the law as contained in Section 25 of the IRR-A of R.A. 9184 are met and that submission of additional documentary requirements from the bidders must be in accordance with law.

x x x

This being the case, it may be inferred that the law does not prohibit procuring entities from customizing their bidding documents in accordance with their specific requirements by requiring the submission of additional documentary requirements under the caveat it must be reasonable and not contrary to any provision of the law.

Nature of Contractor's All Risk Insurance (CARI)

The performance security operates to guarantee the faithful compliance by the contractor of the terms and conditions under his contract with the government; on the other hand, the CARI ensures that the contractor's risk is properly covered and readily enforceable in case the contractor is rendered financially incapable to respond to all of its liabilities under the contract.

[T]here having been no apparent inconsistency between the provisions of law and that of mandating the submission of CARI as an additional requirement as provided in the General Conditions of the Contract (GCC), we are of the view that such practice is valid and is in keeping with standard industry practice.