NPM 011-2007

Requesting Entity: Dagupan City Water District

Issues Concern: Adjustment of the Approved Budget for the Contract



1. Can we increase by two percent (2%) the approved budget for the contract (ABC) of all procurement works this year?

[U]nder Section 7.5 of the IRR-A of R.A. 9184, the head of the procuring entity may update the individual PPMP and the APP every six (6) months or as often as may be required.

Thus, the procuring entity may increase the ABC for its procurement works in order to comply with the provisions of the E-VAT Law provided the following steps are undertaken: (i) the end-user units or the Project Management Offices shall review and update the PPMPs; (ii) the BAC Secretariat shall consolidate these PPMPs into the APP; and (iii) the HOPE shall approve the revised APP (Section 7.4, IRR-A).

2. If not allowed by law, how can we cope with the effect of the two percent (2%) VAT increase?

[I]n cases where the cost of the awarded contract is affected by any applicable new laws, ordinances, regulations or other acts of Government promulgated after the date of bidding, a contract price adjustment shall be made or appropriate relief shall be applied on a no loss-no gain basis, provided such is not covered by the contract provisions on price adjustment under Section 61 of R. A. 9184 (Section 17.7.4, IRR-A).

However, in cases when the new law, ordinance, regulation, or other act of Government takes effect before the deadline for the submission of bids, the BAC shall issue a supplemental/bid bulletin to reflect the adjustment in the ABC in accordance with the provisions of Section 22.5 of IRR-A.