NPM 011-2006

Requesting Entity: DOH - Regional Field Office VII

Issues Concern: Validity of Contract Extensions/Renewals vis-a-vis Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A)



1. Whether or not a government agency is mandated to conduct an annual public bidding for the aforementioned general support services.

Concept of Annual Procurement Plan

A perusal of the provisions of R.A. 9184 and its IRR-A would lead us to infer that what the law clearly intends is to have a totally new and separate procurement contract for general support services for each year to be reflected in the agency's Annual Procurement Plan (APP) and thereafter consistent with its duly approved yearly budget.

We clearly do not agree with the supposition that there is no prohibition in the annual extension/renewal of procurement contracts under R.A. 9194 and its IRR-A. At this juncture it would be good to emphasize that it is a settled rule under statutory construction that the legislative intent must be ascertained from a consideration of the statute as a whole. The particular words, clauses and phrases should not be studied as detached and isolated expressions but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. Clearly, the absence of a categorical provision which explicitly states the prohibition of a contract extension/renewal under R.A. 9184 evidently does not mean that contract extension is allowed at all times.

Moreover, a perusal of the provisions of the General Appropriation Act, FY 2005 would lead us to infer that contracts entered into by government agencies are generally for a duration only of one (1) year, otherwise, the Multi Year Obligational Authority would not have been specifically considered to be included therein for purposes of multi year contracts, which proves to be an exemption to the general rule calling for an annual bidding for these type of procurement contracts.

Purpose of Competitive Bidding

[T]he alternative methods of procurement do not, in any way, provide for a method calling for an automatic extension/renewal of government contracts.

To permit government agencies to have an annual renewal/extension of their existing contracts would be violative of the very prescriptions of the new procurement law.

Please take note that competitive public bidding, which is the very foundation of R.A. 9184, aims to protect the public interest by giving the public the best possible advantages thru open competition. It also aims to avoid or preclude suspicion of favoritism and anomalies in the execution of public contracts and consequently obtain the best possible deal for the government by fostering transparency and preventing favoritism, collusion and fraud in the award of contracts.

Also, the required bidding is aimed at affording all the participating bidders equal opportunities in securing awards of contracts. The idea is to place them on equal footing whereby the rules and regulations on bidding are applied to all of them indiscriminately, so that they compete among themselves under the same set of rules. More specifically, any and all requirements imposed thereunder apply equally to all bidders without exception.

2. Whether or not contract renewals/extensions are valid in light of R.A. 9184 and its IRR-A?

[P]lease be informed that the Government Procurement Policy Board (GPPB) has already issued GPPB Resolution No. 08-2005, as amended by GPPB Resolution No. 03-2006, providing for the specific rules and procedures to govern particular situations where contract extensions may be allowed for the purpose of averting any interruption in government service.