NPM 013-2012

Requesting Entity: National Food Authority

Issues Concern: Meaning of Philippine Association of Detective and Protective Agency Operators (PADPAO) Rate



Whether PADPAO rate is inclusive of administrative cost or agency fee.

To address your concerns, we refer to the Standard Cost Distribution Per Month Wage Order issued by PADPAO for different regions. It provides that the PADPAO rate includes three components: the Total amount to guard and government, agency fee, and value added tax.

Relative thereto, the Government Procurement Policy Board (GPPB) has issued a circular to advise government agencies of the application and definition of cut-throat competition in accordance with the amendments to the Implementing Rules and Regulations of Republic Act No. 5487 (An Act Governing the Organization and Management of Private Security Agencies, Company Guard Forces and Government Security Forces) on Cut-throat Competition (Revised Rules).

Pursuant to the Revised Rules, a Philippine Security Agency (PSA) bidding for government contracts may offer different bid prices below the PADPAO rate without being charged of cut-throat competition or violating the provisions of the IRR of RA 5487, provided that they do not go below the standard salaries and benefits for the guards and the mandated taxes in the minimum cost distribution formula in conformity with existing wage laws. Impliedly, the PSA can offer an amount lower than the PADPAO rate by reducing the agency fee covering operational and administrative expenses in computing for its bid price.

From the foregoing discussion, we are of the view that the administrative cost or agency fee is included in the PADPAO rate.