Requesting Entity: Department of Public Works and Highways

Issues Concern: Approved Budget for the Contract as Basis for Award

Details

Applicability of the following DPWH Department Orders on the preparation of the bids by the prospective contractors:

1. Department Order No. 12, series of 2011, dated 14 March 2011, entitled Preparation of Approved Budget for the Contract; and

2. Department Order No. 29, series of 2011, dated 16 May 2011, entitled Revised Guidelines on the Preparation of Approved Budget for the Contract.

[T]he Government Procurement Policy Board (GPPB) and its Technical Support Office (GPPB-TSO) render policy and non-policy opinions respectively, on matters purely pertaining to the interpretation of the procurement law and its associated rules and regulations. We note, however, that DPWH DO Nos. 12 and 29, series of 2011, were both issued by the Honorable DPWH Secretary to lay down policies, rules and procedures relative to the preparation of the ABC for DPWH projects. As such, DPWH is in the best position to determine the applicability of the provisions and stipulations provided under these DOs. In this regard, we shall limit our discussion on the interpretation of the relevant provisions of the procurement law, rules and regulations pertinent to the issues presented.

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[T]he estimated budget for the cost components of an infrastructure project is used by PEs in determining the appropriate and reasonable amount of the ABC. On the other hand, the ABC, as the upper limit or ceiling for bid prices, is used by the bidder in submitting a responsive bid. Accordingly, bids that are within the ABC, even if the price offered for a particular component exceeds the identified estimated cost for such component, can be considered for award if proven to be the lowest calculated and responsive bid among all other bids.