NPM 091-2012

Requesting Entity: Bangko Sentral ng Pilipinas (BSP) - Security Plant Complex (SPC)

Issues Concern: Exemption from Performance and Warranty Securities



Whether the procurement of Liquefied Petroleum Gas (LPG) through Direct Contracting may be exempt from the submission of performance and warranty securities.

Section 39.1 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184 provides that a winning bidder shall post a performance security prior to the signing of the contract to guarantee the faithful performance of its obligations under the contract in accordance with the Bidding Documents.

Moreover, Section 54.5 of the IRR of RA 9184 provides that, as a general rule, performance and warranty securities are required except for procurement under Section 52 (Shopping), 53.2 (Emergency Cases), 53.9 (Small-value Procurement), 53.10 (Lease of Real Property) and 53.13 (UN Agencies).

Direct Contracting is not one of the exceptions to the requirements of posting of performance and warranty securities. Hence, SPC could not validly exempt its supplier from the said requirements at the mere expedient of claiming that it is against company policy.