NPM 022-2010

Requesting Entity: Local Water Utilities Administration

Issues Concern: Supplier's Credit with Foreign Government or International Financing Institutions



1. Whether procurement of specified water supply equipment pursuant to a foreign loan or supplier's credit falls within the coverage of Republic Act 9184.

RA 9184 shall apply to the purchase of water supply equipment even via supplier's credit unless said agreement qualifies as a treaty, international or executive agreement and explicitly prescribes that purchase shall be made from a selected supplier. x x x

At this point, please allow us to amplify the discussion by stating that the GPPB discourages the practice of entering into supply-driven contracts or arrangements where the supplier has been predetermined prior to execution of the financing agreement. x x x

Procuring entities should thus be cautious about entering into supply contracts masquerading as financing agreements. The GPPB believes that these contracts do not promote the principles espoused by RA 9184 and that public officers who enter into these contracts must be accountable for these decisions.

2. If yes, whether the Local Water Utilities Administration can resort to alternative method of Direct Contracting or Limited Source Bidding.

Direct Contracting may only be resorted to if any of the conditions prescribed under Section 50 of the IRR exists.

Limited Source Bidding, on the other hand, may only be employed under any of the conditions under Section 49 of the IRR.