Requesting Entity: STX Marine Service

Issues Concern: Domestic Preference

Details

Whether Domestic Preference is also applicable to procurement of services, i.e. Operation and Maintenance Service Contract;

While Section 5(r) of the revised Implementing Rules and Regulations of Republic Act No. 9184 classifies general support services as part of Goods procurement, this does not mean that the Domestic Preference rule is likewise applicable to services. The law clearly provides that a bidder can only claim Domestic Preference in case it is offering domestically produced and manufactured goods, supplies and materials. Notably, Section 43 of RA 9184 is based on CA 138, which grants preference to articles, materials and supplies produced, made, and manufactured in the Philippines. Accordingly, general support services are excluded from the ambit of the Domestic Preference Rule.

Domestic Preference Rule does not apply to services. It can only be availed by a Domestic Bidder offering goods, supplies and materials that are produced and manufactured in the Philippines

With respect to Domestic Entities claiming preference under Clause 27.2 of the Instruction to Bidders (ITB), Philippine Bidding Documents for Goods:

a. What is the reckoning point of the five (5)- year period?

b. How to determine the shareholder percentage to comply with the seventy-five percent (75) equity requirement?

Due to a recent legislative policy shift, however, we note that Section 55 of the Philippine Competition Law repealed Section 4 of Commonwealth Act (CA) No. 138 or the Flag Law that grants preference to Domestic Entities. With this repeal, discussion on domestic entity and its preferential entitlement becomes moot and academic, because preference to a “domestic entity” can no longer be invoked by bidders and provided by the procuring entity.