NPM 147-2004

Requesting Entity: Government Service Insurance System

Issues Concern: Procurement for Third Party Securities Custodianship



Whether or not the selection for third party securities custodian should pass through the bidding process.

It is clear that R.A. 9184 and its IRR-A prescribe public bidding as the general mode that shall be used by Government agencies in the procurement of goods, services or infrastructure projects, and resort to the alternative methods of procurement is allowed only in highly exceptional cases set forth in Sections 48-54 of R.A. 9184 and its IRR-A and upon compliance with the rigid conditions set forth by law.

Evidently, under the aforequoted provision (Section 49, R.A. 9184 and its IRR-A), securities custodianship does not fall under any of the foregoing circumstances. Such type of service cannot be classified as highly specialized goods, considering that the same can be offered by a number of banking institutions albeit accreditation is required -- and is not a practice exclusively enjoyed by a few. While, to date, there are only six (6) accredited banks for securities custodianship, the same does not sufficiently justify resort to Limited Source Bidding.