NPM 029-2007

Requesting Entity: National Power Corporation

Issues Concern: Procurement of Fuel Additive by Direct Contracting



Whether the supply of a fuel additive, being manufactured by a foreign company with international patent protection both for technology and its application and solely distributed by a local distributor, may be procured through Direct Contracting. 9184.

In order to justify the need to procure through direct contracting, the BAC should conduct a survey of the industry and determine the supply source. The survey should confirm the exclusivity of the source of goods to be procured. In all cases where direct contracting is contemplated, the survey must be conducted prior to the commencement of the procurement process. Moreover, the procuring entity must justify the necessity for an item that may only be procured through direct contracting, and it must be able to prove that there is no suitable substitute in the market that can be obtained at more advantageous terms (Section 4, Part 2, Volume 2, Manual). In addition, specifications for the procurement of goods shall be based on relevant characteristics and/or performance requirements (Section 18, R. A. 9184).

If the BAC of your office, after conducting the survey, has determined that all the conditions under Section 50 of the IRR-A are present, the BAC may make the proper recommendation to the head of the procuring entity for the use of direct contracting (Section 12, R. A. 9184). The head of the procuring entity may approve or disapprove said recommendation (Section 48.1 IRR-A, R. A. 9184).