NPM 154-2004

Requesting Entity: National Food Authority

Issues Concern: Use of Alternative Methods of Procurement with Modifications



The following decisions and recommendations of the GPPB on the procurement method for each of the operations-related services of the NFA are based on the Minutes of the 6th Regular GPPB Meeting which was approved on 22 November 2004:

Handling Services

The GPPB recommends that the use of the “cabo” method be discontinued. Instead, the NFA is advised to encourage existing multi-purpose cooperatives to join public biddings conducted for the procurement of handling services. In case there is no cooperative within the locality, it is suggested that NFA initiate the formation of cooperatives in the localities where they transact business which will then be invited to participate in the biddings for its service requirements. In relation to this, the NFA is requested to develop a plan (within the next month) for the formation of these cooperatives.

Trucking, Vessel Hiring, and Integrated Cargo Handling Services

It is the recommendation of the GPPB that, pursuant to law, NFA determine the ABC. This may be done by adopting a “per unit” basis computation in arriving at the ABC. The NFA may set the ABC per unit/sack, the aggregate of which shall not exceed its allotted budget for the required service. Furthermore, it is suggested that the eligibility requirements reflect the minimum number of trucks at the disposal of each company, as well as each truck’s delivery capacity, to ensure satisfactory delivery of all their products. To address the problem of having only a single bidder which can provide the trucking services, the GPPB recommends that NFA conduct biddings for this type of service by cluster according to area or route.

These recommendations may also be considered in the procurement of vessels for hire and integrated cargo handling services due to the similarity of concerns with trucking services. In addition, however, the GPPB recognizes the possibility of using limited source bidding for vessel hiring and integrated cargo handling services, where the pre-selected service providers shall be those appearing in the list maintained by the NFA and submitted to the GPPB.

Milling Services

The GPPB takes no issue on the implementation of the “payment-in-kind” scheme by NFA for its milling services contracts. These contracts, however, shall have been procured through public bidding in order to ensure competition amongst existing milling services. Considering that the payment for the services will be in kind, the determination of the ABC shall be based on the amount to be provided by NFA that is representative of the current market price for the by-products. As such, the technical specifications shall include, among other things, the minimum percentage recovery of rice required and, more importantly, a schedule of the equivalent value per percentage of by-product generated from milling. In consonance with the concept of “lowest calculated bid,” the contract shall be awarded to the bidder that will offer the lowest price as a result of the lower percentage of by-products computed in accordance with the schedule of values provided by NFA.