NPM 046-2012

Requesting Entity: Davao City Water District (DCWD)

Issues Concern: Multi-year Vehicle Lease Contracts



Whether multi-year vehicle lease contracts may be allowed under Republic Act (RA) 9184 and its Implementing Rules and Regulations (IRR).

[T]he Department of Budget and Management (DBM) has issued DBM Circular No. 2004-12 on 7 October 2004 prescribing the guidelines and procedures for the implementation of multi-year contracts.

x xx Section 2 of the Guidelines explicitly states that it shall not be applicable to other general support services such as repair and maintenance of equipment and furniture, trucking, hauling, and other services. Nonetheless, the Guidelines do not make any categorical pronouncement that the multi-year contracting approach may be availed of only and exclusively in the case of contracts for janitorial and security services.

[W]e are of the opinion that DCWD should first verify if it is allowed to enter into multi-year contracts under DBM Circular No. 2004-12 or whether its governing board is authorized to enter into multi-year contracts under its enabling law or corporate charter. In the event that the confirmation yields a negative result, we propose that the contract be procured on a yearly basis.