NPM 009-2006

Requesting Entity: NFA Cebu Regional Office

Issues Concern: Effect of E-VAT on Procurement Contracts



Whether or not price adjustment as a result of E-VAT is allowed for contracts which are currently advertised for bids and those which have been awarded.

[T]he matter was discussed by the Inter-Agency Technical Working Group (IATWG) of the Government Procurement Policy Board (GPPB) last 05 January 2006 and it was agreed that the issuance of a supplemental/bid bulletin containing the adjusted prices would be the proper recourse of the procuring entity if the bids have not been opened.

However, if the bids have been opened at the time of the effectivity of the EVAT law, then the procurement activity shall be continued until contract award, subject to the subsequent agreement between the procuring entity and the winning bidder of corresponding price adjustments as may be necessary in accordance with Section 17.7.4 of the IRR-A, x x x.

Moreover, the winning bidder is also required to provide for a sufficient basis to justify the requested contract price adjustment. Further, the bidder should also show proof of the substantial effect of the new law, ordinance, regulation or any other act of the Government to the contract price, thereby necessitating a contract price adjustment.