NPM 077-2007

Requesting Entity: National Council for the Welfare of Disabled Persons

Issues Concern: Participation of Cooperatives in Public Procurement



Request to relax the application of the following provisions of R.A. 9184 and its IRR-A in favor of cooperatives:

a. Performance Security and Retention Money under Sections 39 and 62, R. A. 9184 and its IRR-A;
b. Ceiling for Bid Prices under Section 31, R. A. 9184 and its IRR-A; and
c. Contract period and prohibition on splitting of contract.

[W]hile the GPPB recognizes the role of cooperatives in promoting self-reliance and the need to extend assistance to them in order that they may develop into viable partners, it is without mandate to provide exemptions from the application of R.A. 9184 and its IRR-A. Further, it bears stressing that the rationale for the foregoing provisions insures that procurement is effected in a manner most advantageous to the government in line with the principle of transparency, efficiency and economy under R.A. 9184, to wit:

a. On the performance security and retention money

The purpose of these securities is to guarantee the faithful performance by the winning bidder of its obligations under the contract, to assure the procuring entity that manufacturing defects shall be corrected by the supplier, and to warrant that the goods supplied are free from patent and latent defects. Any violation of the contract by the contractor/supplier would result in the forfeiture thereof in favor of the Government.

The undertaking of the security is to indemnify the Government for any damage or loss due to non-completion or non-performance of projects. In addition, the warranty provides insurance that should there be defective works by the contractor/supplier, the Government has the means to compel the contractor/supplier to remedy these defective works or use the money retained to pay other parties to correct the defects in a manner satisfactory to the Government.

b. As regards the ceiling for bid prices

The rationale for the ceiling of bid prices is to ensure that all procurements are made pursuant to Government budgetary and expenditure programs, to forestall fraud and collusion, and to serve as a deterrent to the execution of unjust and inequitable contracts to the prejudice of the Government and the private parties as well.

c. On the splitting of contracts

Splitting is often calculated to do away with or circumvent certain control measures instituted by the Government. Splitting of contracts is meant to avoid inspection of deliveries, or to avoid action, review or approval by higher authorities as determined by the amount involved in each case, or to avoid public bidding.