NPM 019-2011

Requesting Entity: Office of Senator Franklin M. Drilon

Issues Concern: Bidding of Infrastructure Project Despite Insufficiency of Funds



1.Whether UP Law can bid out the entire construction project despite the insufficiency of funds.

Section 7.1 of the revised Implementing Rules and Regulations (IRR) of Republic Act (RA) 9184 provides that all procurement shall be within the approved budget of the procuring entity and should be meticulously and judiciously planned by the procuring entity. Consequently, no procurement shall be undertaken unless it is in accordance with the approved Annual Procurement Plan (APP) that comprises specific Project Procurement Management Plans (PPMP) for various programs, activities and projects (PAPs) of different end-user units within the procuring entity.


Alongside the APP, the ABC is a material requisite in any procurement activity inasmuch as it identifies the source and amount of fund allocated by the procuring entity for a specific PAP from its total budget for the year. It is also the mandatory ceiling for bids, and the maximum allowable contract amount for the PAP. As such, prior to the commencement of any procurement activity, it is imperative to identify sufficient fund sources to satisfy the ABC for a PAP, through specific, lump-sum or multi-year appropriations.

[I]f the Professional School Campus is treated and identified as a multi-year project that requires multi-year project that requires multi-year appropriations under the APP, UP Law may initiate the procurement of the entire construction project despite limited funds provided that a Multi-Year Obligational Authority (MYOA) has been applied for, approved and issued by the DBM prior to the commencement of the procurement activities.

2.Whether UP Law can bid out the construction by phase. If so, what steps should be undertaken to ensure that the phasing be not construed as "artificial phasing"?

UP law may bid out the construction of the project in phases so long as each contractual phase shall be procured through public bidding without circumventing any rules and regulations provided in RA 9184 and its IRR, specifically on splitting of contracts.

3.Whether the winning bidder assumes the risk of not getting paid in the event UP Law may lawfully bid out the project.

While the winning bidder may be said to have assumed the risk of not getting paid, and on the part of the procuring entity -non-performance, this does not take away the fact that the parties made their respective offer and acceptance at arm's length and they are duty bound to perform the contractual stipulations, covenants and agreements in utmost good faith.