GOVERNMENT PROCUREMENT LAW

DECLARATION OF POLICY: It is the declared policy of the State to promote the ideals of good governance in all its branches, departments,
agencies, subdivisions, and instrumentalities, including government-owned and/or -controlled corporations and local government units.

GOVERNING PRINCIPLES: All procurement of the national government, its departments, bureaus, offices and agencies, including state
universities and colleges, government -owned and/or-controlled corporations, government financial institutions and local government units, shall,
in all cases, be governed by these principles:
a) Transparency in the procurement process and in the implementation of procurement contracts.
b) Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public
bidding.
c) Streamlined procurement process that will uniformly apply to all government procurement. The procurement process shall simple and
made adaptable to advances in modern technology in order to ensure an effective and efficient method.
d) System of accountability where both the public officials directly or indirectly involved in the procurement process as well as in the
implementation of procurement contracts and the private parties that deal with government are, when warranted by circumstances,
investigated and held liable for their actions relative thereto.
e) Public monitoring of the procurement process and the implementation of awarded contracts with the end in view of guaranteeing that
these contracts are awarded pursuant to the provisions of this Act and its implementing rules and regulations, and that all these contracts
are performed strictly according to specifications.

SCOPE AND APPLICATION: This act shall apply to the:

1. Procurement of Infrastructure Projects
2. Goods and Consulting Services

Regardless of source of funds, whether local of foreign, by all branches and instrumentalities of government, its departments , offices and
agencies, including government-owned and/or-controlled corporations and local government units, subject to the provisions of Commonwealth
Act No. 138.

Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is signatory shall be
observed.

DEFINITION OF TERMS
Approved Budget for the refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the
Contract (ABC) General Appropriations Act and/or continuing appropriations, in the National Government Agencies; the Corporate
Budget for the contract approved by the governing Boards, pursuant to E.O.No.518, series of 1979, in the case of
Government Financial Institutions and State Universities and Colleges; and the Budget for the contract approved
by the respective Sanggunian, in the case
of Local Government Units.
BAC refers to the Bids and Awards Committee
Bidding Documents refer to documents issued by the Procuring Entity as the basis for Bids, furnishing all information
necessary for a prospective bidder to prepare a bid for the Goods, Infrastructure Projects, and Consulting
Services to be provided.
Bid refers to signed offer or proposal submitted by a supplier, manufacturer, distributor, contractor or consultant in
response to the Bidding Documents.
Competitive Bidding refers to a method of procurement which is open to participation by any interested party and which consist of the
following processes: advertisement, pre-bid conference, eligibility screening of bids, evaluations of bids, post -
qualification, and award of contract, the specific requirements and
mechanics of which shall be defined in the IRR to be promulgated under this Act.
Consulting Services refer to services for Infrastructure Projects and other types of projects or activities of the Government requiring
adequate external technical and professional experts that are beyond the capability and/or capacity of the
government to undertake such as, but not limited to: (I) advisory and review services;
(ii) pre investment or feasibility studies; (iii) design; (iv) construction supervision; (v) management and related
services; and (vi) other technical services or special studies.
G – EPS refers to the Government Electronic Procurement System
Goods refer to all items, supplies, materials and general support services, except consulting services and infrastructure
projects, which may be needed in the transaction of the public businesses or in the pursuit of any government
undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for construction,
or personal property of any kind, including non - personal or contractual services such as the repair and
maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or
analogous services, as well as
procurement of materials and supplies provided by the procuring entity or such services.
GPPB refers to the Government Procurement Policy Board
Head of the Procuring refers to:
Entity i. The head of the agency or his duly authorized official, for national government agencies;
ii. The governing board or its duly authorized official, for government-owned and/or-controlled corporations; or
iii. The local chief executive, for local government units. Provided, That in a department, office or agency where
the procurement is decentralized, the Head of each decentralized unit shall be considered as the Head of the
Procuring Entity subject to the limitations and authority delegated
by the head of the department, office or agency.

Infrastructure Projects include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and
bridges, railways, airports, seaports, communication faci9lities, civil works components of information technology
projects, irrigation, flood control and drainage, water supply, sanitation, sewerage and solid waste management
systems, shore protection, energy/power and electrification
facilities, national buildings, school buildings and other related construction projects of the government.
 IRR refer to the implementing rules and regulations to be promulgated in accordance with this Act.
Portal refers to a website that aggregates a wide variety of content for the purpose of attracting a large number of users.

Procurement refers to the acquisition of Goods, Consulting Services, and the contracting for Infrastructure Projects by the
Procuring Entity. Procurement shall also include the lease of goods and real estate. With respect to real property,
its procurement shall be governed by the provisions of Republic Act No.8974,
entitled "An Act to Facilitate the Acquisition of Right-of -Way Site or Location of National Government Infrastructure
Projects and for Other Purposes" and other applicable laws, rules and regulations.
Procuring Entity refers to any branch, department, office, agency, or instrumentality of the government, including state universities
and colleges, government-owned and/or - controlled corporations, government
financial institutions, and local government units procuring Goods, Consulting Services and Infrastructure
Projects.

PREPARATION OF BIDDING DOCUMENTS

FORM AND CONTENTS OF BIDDING DOCUMENTS: The Bidding Documents shall be prepared by the Procuring Entity following the
standard forms and manuals prescribed by the GPPB. The Bidding Documents shall include the following:
a) Approved Budget for the Contract;
b) Instructions to Bidders, including criteria for eligibility, bid evaluation and post-qualification, as well as the date, time and place of the pre-
bid Conference (where applicable), submission of bids and opening of bids;
c) Terms of Reference;
d) Eligibility Requirements;
e) Plans and Technical Specifications;
f) Form of Bid, Price Form, and List of Goods or Bill of Quantities;
g) Delivery Time or Completion Schedule;
h) Form and Amount of Bid Security;
i) Form and Amount of Performance Security and Warranty; and,
j) Form of Contract, and General and special Conditions of Contract.

The Procuring Entity may require additional document requirements or specifications necessary to complete the information required for the bidders
to prepare and submit their respective bids.

Reference to Brand Names: Specifications for the Procurement of Goods shall be based on relevant characteristics and/or performance
requirements. Reference to brand names shall not be allowed.

Access to Information: In all stages of the preparation of the Bidding Documents, the Procuring entity shall ensure equal access to
information. Prior to their official release, no aspect of the Bidding Documents shall be divulged or released on any prospective bidder or having
direct or indirect interest in the project to be procured.

INVITATION TO BID

PRE-PROCUREMENT CONFERENCE: Prior to the issuance of the Invitation to Bid, the BAC is mandated to hold a pre- procurement
conference on each and every procurement, except those contracts below a certain level or amount specified in the IRR, in which case, the
holding of the same is optional.

The pre-procurement conference shall assess the readiness of the procurement in terms of confirming the certification of availability of
funds, as well as reviewing all relevant documents and the draft Invitation to Bid, as well as consultants hired by the agency concerned
and the representative of the end -user.

ADVERTISING AND CONTENTS OF THE INVITATION TO BID: In line with the principle of transparency and competitiveness, all Invitations to
Bid contracts under competitive bidding shall be advertised by the Procuring Entity in such manner and for such length of time as may be
necessary under the circumstances, in order to ensure the widest possible dissemination thereof, such as, but not limited to, posting in the
Procuring Entity's premises, in newspapers of general circulation, the G-EPS and the website of the Procuring Entity, if available. The details
and mechanics of implementation shall be provided in the IRR to be promulgated under this Act.

Contents: The Invitation to Bid shall contain, among others:

a) A brief description of the subject matter of the Procurement;
b) A general statement on the criteria to be used by the Procuring entity for the eligibility check, the short listing of prospective bidders, in the case
of the Procurement of Consulting Services the examination and evaluation of Bids, and post- qualification;
c) The date, time and place of the deadlines for the submission and receipt of the eligibility requirements, the pre-bid conference if any, the
submission and receipt of bids, and the opening of bids;
d) The Approved Budget for the Contract to be bid;
e) The source of funds;
f) The period of availability of the Bidding Documents, and the place where these may be secured and;
g) The contract duration; and
h) Such other necessary information deemed relevant by the Procuring Entity.

Pre-bid Conference: At least one pre-bid conference shall be conducted for each procurement, unless otherwise provided in the IRR. Subject to
the approval of the BAC, a pre-bid conference may also be conducted upon the written request of any prospective bidder.

The Pre-bid conference(s) shall be held within a reasonable period before the deadline for receipt of the bids to allow prospective bidders to
adequately prepare their bids, which shall be specified in the IRR.

RECEIPT, OPENING AND SUBMISSION OF BIDS

ELIGIBILITY REQUIREMENTS FOR THE PROCUREMENT OF GOODS AND INFRASTRUCTURE PROJECTS: The BAC or,
under special circumstances specified in IRR, its duly designated organic office shall determine the eligibility of prospective bidders for the
procurement of Goods and Infrastructure Projects, based on the bidders' compliance with the eligibility requirements within the period set forth in
the Invitation to Bid. The eligibility requirements shall provide for fair and equal access to all prospective bidders. The documents submitted in
satisfaction of the eligibility requirements shall be made under oath by the prospective bidder or by his duly authorized representative certifying
to the correctness of the statements made and the completeness and authenticity of the documents submitted.
A prospective bidder may be allowed to submit his eligibility requirements electronically. However, said bidder shall later on certify under oath as
to correctness of the statements made and the completeness and authenticity of the documents submitted.

ELIGIBILITY REQUIREMENTS AND SHORT LISTING FOR CONSULTING SERVICES: The Eligibility of prospective bidders for the
Procurement of Consulting Services shall be determined by their compliance with the eligibility requirements prescribed for the competitive
Bidding concerned, within the period stated in the Invitation to bid. The eligibility requirements shall provide for fair and equal access to all
prospective bidders. The prospective bidder shall certify under oath as to the correctness of the statements made, and the completeness and
authenticity of the documents submitted.

A prospective bidder may be allowed to submit his eligibility requirements electronically. However, said bidder shall later on certify under oath as to
correctness of the statements made and the completeness and authenticity of the documents submitted.

The eligible prospective bidders shall then be evaluated using numerical ratings on the basis of the short listing requirements prescribed for the
Competitive Bidding concerned, within the period stated in the Invitation to Bid to determine the short list of bidders who shall be allowed to
submit their respective bids.

SUBMISSION AND RECEIPT OF BIDS: A bid shall have two(2) components, namely:
1. The technical components; and
2. The financial components

Subject to the following rules:

1. The bids’ components should be in separate sealed envelopes, and which shall be submitted simultaneously.
2. The bids shall be received by the BAC on such date, time and place specified in the invitation to bid.
3. The deadline for the receipt of bids shall be fixed by the BAC, giving the prospective bidders sufficient time to study and prepare their bids.

The deadline shall also consider the urgency of the procurement involved. Bids submitted after the deadline shall not be accepted.

The GPPB may prescribe innovative procedure for the submission, receipt and opening of bids through the G-EPS.

MODIFICATION OF BIDS: A bidder may modify his bid, provided that this is done before the deadline for the receipt of bids. The
modification shall be submitted in a sealed envelope duly identified as a modification of the original bid and stamped received by the BAC.

WITHDRAWAL OF BIDS: A bidder may, through a letter, withdraw his bid or express his intention not to participate in the bidding before
the deadline for the receipt of bids. In such case, he shall no longer be allowed to submit another Bid for the same contract either directly or
indirectly.

BID SECURITY: All Bids shall be accompanied by a Bid security, which shall serve as guarantee that, after receipt of the Notice of Award, the
winning bidders shall enter into contract with the Procuring Entity within the stipulated time and furnish the required performance security. The
specific amounts and allowable forms of the Bid security shall be prescribed in the IRR.

BID VALIDITY: Bids and Bid securities shall be valid for such reasonable period of time indicated in the Bidding Documents. The duration for
each undertaking shall take into account the time involved in the process of Bid evaluation and award of contract.

BID OPENING: the BAC shall publicly open all bids at the time, date, and place specified in the bidding documents. The minutes of the bid
opening shall be made available to the public upon written request and payment of a specified fee.

BID EVALUATION

PRELIMINARY EXAMINATION OF BIDS: Prior to Bid evaluation, the BAC shall examine first the technical components
of the bids using "pass/fail" criteria to determine whether all required documents are present.

Only bids that are determined to contain all the bid requirements of the technical component shall be considered for opening and evaluation of
their financial component.

CEILING FOR BID PRICES: The ABC shall be the upper limit or ceiling for the Bid prices.

Bid prices that exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the
amount of the award.

BID FOR THE PROCUREMENT OF GOODS AND INFRASTRUCTURE PROJECTS: For the procurement of Goods and Infrastructure
Projects, the BAC shall evaluate the financial component of the bids.

The bids that passed the preliminary examination shall be ranked from lowest to highest in terms of their corresponding calculated price shall be
referred to as the "Lowest Calculated Bid".

BID EVALUATION OF SHORT LISTED BIDDERS FOR CONSULTING SERVICES: For the Procurement of Consulting Services, the Bids of the
short listed bidders shall be evaluated and ranked using numerical ratings in accordance with the evaluation criteria stated in the Bidding
Documents, which shall include factors such as, but not limited to:
1. Experience
2. Performance
3. Quality or Personnel
4. Price and
5. Methodology

The Bids shall be ranked from highest to lowest in terms of their corresponding calculated ratings. The Bid with the highest calculated rating shall
be the "Highest Rated Bid."

After approved by the Head of the Procuring Entity of the Highest Rated Bid, the BAC shall invite the bidder concerned for
negotiation and/or clarification on the following items:
1. Financial proposal submitted by the bidder
2. Terms of reference
3. Scope of services
4. Methodology and work program
5. Personnel to be assigned to job
6. Services/facilities/data to be provided by the Procuring Entity concerned, and
7. Provisions of the contract.

When negotiations with first-in-rank bidder fails, the financial proposal of the second rank bidder shall opened for negotiations: Provided, that the
amount indicated in the financial envelope shall be made as the basis for negotiations and the total contract amount shall not exceed the
amount indicated in the envelope and the ABC.

Whenever necessary, the same process shall be repeated until the bid awarded to the winning bidder.

POST-QUALIFICATION

OBJECTIVE AND PROCESS OF POST-QUALIFICATION: Post-qualification is the stage where the bidder with the Lowest Calculated Bid, in
the case of Goods and Infrastructure Projects, or the Highest Rated Bid, in the case of Consulting Services, undergoes verification and
validation whether he has passed all the requirements and conditions as specified in the Bidding Documents.

If the bidder with the Lowest Calculated Bid or Highest Rated Bid passes all the criteria for post-qualification, his Bid shall be considered:
1. The "Lowest Calculated Responsive Bid,” in the case of Goods and Infrastructure or
2. the "Highest Rated Responsive Bid," in the case of Consulting Services.

However, if a bidder fails to meet any of the requirements or conditions, he shall be "post-disqualified" and the BAC shall conduct the post-
qualification on the bidder with the second Lowest Calculate Bid or Highest Rated Bid.

If the bidder with the second Lowest Calculated Bid or Highest Rated Bid is post-disqualified, the same procedure shall be
repeated until the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid is finally determined.

In all cases, the contract shall be awarded only to the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

FAILURE OF BIDDING: there shall be a failure of bidding if:

a. No bids are received;
b. No bid qualifies as the Lowest Calculated Responsive Bid/Highest Rated Responsive Bid; or,
c. Whenever the bidder with the highest rated/lowest calculated responsive bid refuses, without justifiable cause to accept the award of
contract, as the case may be.

Under any of the above instances, the contract shall be re-advertised and re-bid. The BAC shall observe the same process and set the new
periods according to the same rules followed during the first bidding.

After the second failed bidding, however, the BAC may resort to negotiated procurement, as provided below.

SINGLE CALCULATED/RATED AND RESPONSIVE BID SUBMISSION: A single calculated/rated and responsive bid shall be considered for
award if it falls under of the following circumstances:
a. If after advertisement, only one prospective bidder submits a Letter of Intent and/or applies for eligibility check, and meets the eligibility
requirements or criteria, after which it submits a bid, which is found to be responsive to the bidding requirements;
b. If after the advertisement, more than one prospective bidder applies for eligibility check, but only one bidder meets the eligibility
requirements or criteria, after which in submits a bid which is found to be responsive to the bidding requirements; or
c. If after the eligibility check, more than one bidder meets the eligibility requirements, but only one bidder submits a bid, and its bid is
found to be responsive to the bidding requirements.

In all instances, the Procuring Entity shall ensure that the ABC reflects the most advantageous prevailing price for the government.

AWARD, IMPLEMENTATION AND TERMINATION OF THE CONTRACT

NOTICE AND EXECUTION OF AWARD: Within a period not exceeding fifteen (15) calendar days from the determination and declaration by
the BAC of the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid, and the recommendation of the award, the Head of the
Procuring Entity or his duly authorized representative shall approve or disapprove the said recommendation.
Notice of Award: In case of approval, the Head of the Procuring Entity or his duly authorized representative shall immediately
issue the Notice of Award to the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

Entering into the contract:

1. Within ten (10) calendar days from receipt of the Notice of Award, the Winning bidder shall formally enter into contract with the
Procuring Entity.
2. When further approval of higher authority is required, the approving authority for the contracts shall be given a
maximum of twenty (20) calendar days to approve or disapprove it.
3. In the case of government-owned and/or -controlled corporations, the concerned board shall take action on the said recommendation
within thirty (30) calendar days from receipt thereof.

Notice to Proceed: The Procuring Entity shall issue the Notice to Proceed to the winning bidder not later than seven (7) calendar days from
the date of approval of the contract by the appropriate authority. All notices called for by the terms of the contract shall be effective only at the
time of receipt thereof by the contractor.

PERIOD OF ACTION ON PROCUREMENT ACTIVITIES: The procurement process from the opening of bids up to the award of contract
shall not exceed three (3) months, or a shorter period to be determined by the procuring entity concerned. The different procurement activities
shall be completed within reasonable periods to be specified in the IRR.

If no action on the contract is taken by the head of the procuring entity or by his duly authorized representative, or by the concerned board, in
the case of government-owned and/or -controlled corporations, within the periods specified above, the contract concerned shall be deemed
approved.

PERFORMANCE SECURITY: Prior to the signing of the contract, the winning bidder shall, as a measure of guarantee for the faithful
performance of, and compliance with, his obligations under the contract prepared in accordance with the Bidding Documents, be required to
post a performance security in such form and amount as specified in the Bidding Documents.

FAILURE TO ENTER INTO CONTRACT AND POST PERFORMANCE SECURITY: If, for justifiable causes, the bidder with the Lowest
Calculated Responsive Bid or Highest Rated Responsive Bid fails, refuses or is otherwise unable to enter into contract with the Procuring Entity,
or if the bidder fails to post the required performance security within the period stipulated in the Bidding Documents, the BAC shall disqualify
the said bidder and shall undertake post-qualification for the next-ranked Lowest Calculated Bid or Highest Rated Bid. This procedure shall
be repeated until an award is made. However, if no award is possible, the contract shall be subjected to a new bidding.

In the case of a failure to post the required performance security, the bid security shall be forfeited without prejudice to the imposition of
sanctions prescribed under this Act.

RESERVATION CLAUSE: The Head of the Agency reserves the right to (1) reject any and all Bids, (2) declare a failure of bidding, or (3) not
award the contract in the following situations:
a. If there is prima facie evidence of collusion between appropriate public officers or employees of the Procuring Entity, or between the
BAC and any of the bidders, or if the collusion is between or among the bidders themselves, or between a bidder and a third party,
including any act which restricts, suppresses or nullifies or tends to restrict, suppress or nullify competition;
b. If the BAC is found to have failed in following the prescribed bidding procedures; or
c. For any justifiable and reasonable ground where the award of the contract will not redound to the benefit of the government as
defined in the IRR.

CONTRACT IMPLEMENTATION AND TERMINATION: The rules and guidelines for the implementation and termination of contracts awarded
pursuant to the provisions of this Act shall be prescribed in the IRR. The rules and guidelines shall include standard general and special
conditions for contracts.

SPLITTING OF GOVERNMENT CONTRACTS: Splitting of Government Contracts is not allowed. Splitting of Government Contracts means the
division or breaking up of government of the Philippine contracts into smaller quantities and amounts, or dividing contract
implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and its IRR,
particularly the necessity of competitive bidding and the requirements for the alternative methods of procurement.

Infrastructure Projects: for Infrastructure Projects to be implemented by phases, the Procuring Entity shall ensure that there is a clear delineation
of work for each phase, which must be usable and structurally sound.

GROUNDS FOR TERMINATION

A. Termination for Default

1. In contracts for Goods: The following are ground for termination of contract for default:
a. The Procuring Entity may terminate the contract when outside of force majeure, the Supplier fails to deliver or perform any or all
of the Goods within the period(s) specified in the contract, or within any extension thereof granted by the Procuring Entity
pursuant to a request made by the Supplier prior to the delay, and such failure amounts to at least ten percent (10%) of the
contract price;
b. The Procuring Entity may terminate the contract when, as a result of force majeure, the Supplier is unable to deliver or perform
any or all of the Goods, amounting to at least ten percent (10%) of the contract price, for a period of not less than sixty (60)
calendar days after receipt of the notice from the Procuring Entity stating that the circumstance of force majeure is deemed to
have ceased; or
c. The Procuring Entity shall terminate the contract when the Supplier fails to perform any other obligation under the Contract.

2. In contracts for Infrastructure Projects: The Procuring Entity shall terminate a contract for default when any of the following conditions
attend its implementation:
a. Due to the Contractor’s fault and while the project is on-going, it has incurred negative slippage of fifteen percent (15%) or more in
accordance with Presidential Decree 1870;
b. Due to the Contractor’s fault and after the contract time has expired, it has incurred a negative slippage of ten percent (10%) or
more in the completion of the work; or
c. The Contractor:
i. abandons the contract works, refuses or fails to comply with a valid instruction of the Procuring Entity or fails to proceed
expeditiously and without delay despite a written notice by the Procuring Entity;
ii. does not actually have on the project site the minimum essential equipment listed on the Bid necessary to prosecute the
Works in accordance with the approved work plan and equipment deployment schedule as required for the project;
iii. does not execute the Works in accordance with the contract or persistently or flagrantly neglects to carry out its obligations
under the contract;
iv. neglects or refuses to remove materials or to perform a new work that has been rejected as defective or unsuitable; or
v. sub-lets any part of the contract works without approval by the Procuring Entity.
3. In contracts for Consulting Services: the Procuring Entity shall terminate a contract for default when any of the following conditions
attend its implementation:
a. Outside of force majeure, the Consultant fails to deliver or perform the Outputs and Deliverables within the period(s) specified in
the contract, or within any extension thereof granted by the Procuring Entity pursuant to a request made by the Consultant prior
to the delay;
b. As a result of force majeure, the Consultant is unable to deliver or perform a material portion of the Outputs and Deliverables for a
period of not less than sixty (60) calendar days after the Consultant’s receipt of the notice from the Procuring Entity stating that the
circumstance of force majeure is deemed to have ceased; or
c. The Consultant fails to perform any other obligation under the contract.

B. Termination for Convenience: the Procuring Entity may terminate the Contract, in whole or in part, at any time for its convenience. The
Head of the Procuring Entity may terminate a contract for the convenience of the Government if he has determined the existence of
conditions that make Project Implementation economically, financially or technically impractical and/or unnecessary, such as, but not limited
to, fortuitous event(s) or changes in law and national government policies.

C. Termination for Insolvency: The Procuring Entity shall terminate the contract if the Supplier/Contractor/Consultant is declared bankrupt or
insolvent as determined with finality by a court of competent jurisdiction. In this event, termination will be without compensation to the
Supplier/Contractor/Consultant, provided that such termination will not prejudice or affect any right of action or remedy which has accrued
or will accrue thereafter to the Procuring Entity and/or the Supplier/Contractor/Consultant.

D. Termination for Unlawful Acts: the Procuring Entity may terminate the contract in case it is determined prima facie that the
Supplier/Contractor/Consultant has engaged, before or during the implementation of the contract, in unlawful deeds and behaviors relative
to contract acquisition and implementation. Unlawful acts include, but are not limited to, the following:
a. Corrupt, fraudulent, collusive and coercive practices;
b. Drawing up or using forged documents;
c. Using adulterated materials, means or methods, or engaging in production contrary to rules of science or the trade; and
d. Any other act analogous to the foregoing.

E. Termination by Contractor/Consultant
 1. In contracts for Infrastructure Projects: the Contractor may terminate its contract with the Procuring Entity if the works are completely
stopped for a continuous period of at least sixty (60) calendar days through no fault of its own, due to any of the following reasons:
a. Failure of the Procuring Entity to deliver, within a reasonable time, supplies, materials, right-of-way, or other items it is obligated to
furnish under the terms of the contract; or
b. The prosecution of the work is disrupted by the adverse peace and order situation, as certified by the Armed Forces of the
Philippines Provincial Commander and approved by the Secretary of National Defense.
2. In contracts for Consulting Services: the Consultant may terminate its agreement with the Procuring Entity if the latter is in material
breach of its obligations pursuant to the contract and has not remedied the same within sixty (60) calendar days following its receipt of
the Consultant’s notice specifying such breach.

DISCLOSURE OF RELATIONS

DISCLOSURE OF RELATIONS: In addition to the proposed contents of the Invitation to Bid as mentioned above, all bidding documents shall
be accompanied by a sworn affidavit of the bidder that he or she or any officer of their corporation in not related to the Head of the
Procuring Entity by consanguinity or affinity up to the third civil degree.

Failure to comply with the aforementioned provision shall be a ground for the automatic disqualification of the bid and shall therefore not be
considered for opening and evaluation of financial component.

ALTERNATIVE METHODS OF PROCUREMENT

ALTERNATIVE METHODS: Subject to the prior approval of the Head of the Procuring Entity or his duly authorized representative, and
whenever justified by the conditions provided in this Act, the Procuring Entity may, in order to promote economy and efficiency, resort to any of
the following alternative methods of Procurement:

A. LIMITED SOURCE BIDDING, otherwise known as SELECTIVE BIDDING

A method of Procurement that involves direct invitation to bid by the Procuring Entity from a set of pre-selected suppliers or consultants with
known experience and proven capability relative to the requirements of a particular contract.

Limited Source Bidding may be resorted to only in any of the following conditions:
a. Procurement of highly specialized types of Goods and Consulting Services which are known to be obtainable only from a limited
number of sources; or
 b. Procurement of major plant components where it is deemed advantageous to limit the bidding to known eligible bidders in order to
maintain an optimum and uniform level of quality and performance of the plant as a whole.

B. DIRECT CONTRACTING, otherwise known as SINGLE SOURCE PROCUREMENT

A method of Procurement that does not require elaborate Bidding Documents because the supplier is simply asked to submit a price
quotation or a pro-forma invoice together with the conditions of sale, which offer may be accepted immediately or after some
negotiations.

Direct Contracting may be resorted to only in any of the following conditions:

a. Procurement of Goods of propriety nature, which can be obtained only from the propriety source, i.e. when patents, trade secrets and
copyrights prohibit others from manufacturing the same items;
b. When the Procurement of critical components from a specific manufacturer, supplier, or distributor is a condition precedent to
hold a contractor to guarantee its project performance, in accordance with the provisions his contract; or,
c. Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers selling at lower prices and for which no suitable
substitute can be obtained at more advantageous terms to the government.

C. REPEAT ORDER - a method of Procurement that involves a direct Procurement of Goods from the previous winning bidder, whenever
there is a need to replenish Goods procured under a contract previously awarded through Competitive Bidding.

When provided for in the Annual Procurement Plan, Repeat Order may be allowed wherein the Procuring Entity directly procures Goods
from the previous winning bidder whenever there arises a need to replenish goods procured under a contract previously awarded
through Competitive Bidding, subject to post-qualification process prescribed in the Bidding Documents and provided all the following
conditions are present:
a. The unit price must be equal to or lower than that provided in the original contract;
b. The repeat order does not result in splitting of requisitions or purchase orders;
c. Except in special circumstances defined in the IRR the repeat order shall be availed of only within six (6) months from the date of
the Notice to Proceed arising from the original contract; and,
d. The repeat order shall not exceed twenty-five percent (25%) of the quantity of each item of the original contract.

D. SHOPPING - a method of Procurement whereby the Procuring Entity simply requests for the submission of price quotations for readily
available off-the-shelf Goods or ordinary/regular equipment to be procured directly from suppliers of known qualification.

Shopping may be resorted to under any of the following instances:

a. When there is an unforeseen contingency requiring immediate purchase, the amount shall not exceed the following:
i. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P200,000

ii. For LGUs, in accordance with the following schedule:

DOF Classification of Maximum Amount (in Philippine Peso)

LGUs Province City Municipality
1st Class 200,000 200,000 100,000
2nd Class 200,000 200,000 100,000
3rd Class 200,000 160,000 100,000
4th Class 160,000 120,000 100,000
5th Class 120,000 100,000 100,000
6th Class 100,000 100,000 100,000

b. Procurement of ordinary or regular office supplies and equipment not available in the DBM-PS, in the amount not to exceed the
following:
i. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P1,000,000.
ii. For LGUs, in accordance with the following schedule:

DOF Classification of Maximum Amount (in Philippine Peso)

LGUs Province City Municipality
1st Class 1,000,000 1,000,000 200,000
2nd Class 1,000,000 1,000,000 200,000
3rd Class 1,000,000 800,000 200,000
4th Class 800,000 600,000 100,000
5th Class 600,000 400,000 100,000
6th Class 400,000 200,000 100,000
In the case of barangays, Fifty Thousand Pesos (₱50,000)

The phrase “ordinary or regular office supplies” shall be understood to include those supplies, commodities, or materials which are
necessary in the transaction of official businesses, and consumed in the day-to-day operations. However, office supplies shall not include
services such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or
analogous services.

E. NEGOTIATED PROCUREMENT - a method of Procurement that may be resorted under the extraordinary circumstances provided for in
Section 53 of this Act and other instances that shall be specified in the IRR, whereby the Procuring Entity directly negotiates a contract with
a technically, legally and financially capable supplier, contractor or consultant.
Negotiated Procurement shall be allowed only in the following instances:
a. In case of two (2) failed biddings;
b. In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or
man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to
restore vital public services, infrastructure facilities and other public utilities;
c. Take-over of contracts, which have been rescinded or terminated for causes provided for in the contract and existing laws, where
immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities
and other public utilities;
d. Where the subject contract is adjacent or contiguous to an on-going infrastructure project, as defined in the IRR, subject to the
following:
 i. The original contract is the result of a Competitive Bidding;
ii. The subject contract to be negotiated has similar or related scopes of work;
iii. It is within the contracting capacity of the contractor;
iv. The contractor uses the same prices or lower unit prices as in the original contract less mobilization cost;
v. The amount involved does not exceed the amount of the ongoing project; and,
vi. The contractor has no negative slippage.

Provided, that negotiations for the procurement are commenced before the expiry of the original contract. Wherever applicable, the
principle shall also govern consultancy contract, where the consultants have unique experience and expertise to deliver the required
service; or,
e. Subject to the guidelines specified in the IRR, purchases of Goods from another agency of the government, such as the
Procurement Service of the DBM, which is tasked with a centralized procurement of commonly used Goods for the government in
accordance with Letters of Instruction No. 755 and Executive Order No. 359, series of 1989.
f. Scientific, Scholarly or Artistic Work, Exclusive Technology and Media Services. Where Goods, Infrastructure Projects and
Consulting Services can be contracted to a particular supplier, contractor or consultant and as determined by the HoPE, for any of the
following:
1. The requirement is for:
a. Work of art; commissioned work or services of an artist for a specific artist skill (e.g., Singer, poet, writer, painter, sculptor,
etc.);
b. Scientific, academic, scholarly work or research, or legal services;
c. Highly-specialized life-saving medical equipment, as certified by the Department of Health (DOH);
d. Scientific, technical, economic, business, trade or legal journal, magazine, paper, subscription, or other exclusive
statistical publications and references; or
e. Media documentation, advertisement, or announcement through television, radio, newspaper, internet, and other
communication media.

Due to the nature of the information to be disseminated, alongside principles of transparency, efficiency and economy, award
to more than one (1) supplier may be made by the Procuring Entity.

2. The construction or installation of an infrastructure facility where the material, equipment, or technology under a proprietary right
can only be obtained from the same contractor.

g. Highly Technical Consultants. In the case of individual consultants hired to do work that is (i) highly technical or proprietary; or (ii)
primarily confidential or policy determining, where trust and confidence are the primary consideration for the hiring of the consultant:
Provided, however, That the term of the individual consultants shall, at the most, be on a six month basis, renewable at the option of
the appointing HoPE, but in no case shall exceed the term of the latter.
h. Defense Cooperation Agreement; Defense Inventory-Based Items-The DND may directly negotiate with an agency or instrumentality
of another country with which the Philippines has entered into a defense cooperation agreement or otherwise maintains diplomatic
relations when the procurement involves major defense equipment or material and/or defense-related consultancy services
i. Small Value Procurement: Procurement of (a) goods not covered by Shopping under (b) infrastructure projects, and
(c) consulting services, where the amount involved does not exceed the following threshold:

1. For NGAs, GOCCs, GFIs, SUCs, and Autonomous Regional Government, P1,000,000.
2. For LGUs, in accordance with the following schedule:

DOF Classification of Maximum Amount (in Philippine Peso)

LGUs Province City Municipality
1st Class 1,000,000 1,000,000 200,000
2nd Class 1,000,000 1,000,000 200,000
3rd Class 1,000,000 800,000 200,000
4th Class 800,000 600,000 100,000
5th Class 600,000 400,000 100,000
6th Class 400,000 200,000 100,000
In the case of barangays, Fifty Thousand Pesos (₱ 50,000)

j. Lease of Real Property and Venue for official use

k. NGO Participation: When an appropriation law or ordinance earmarks an amount to be specifically contracted out to Non-
Governmental Organizations (NGOs), the Procuring Entity may enter into a Memorandum of Agreement with an NGO
l. Community Participation: Where, in the interest of project sustainability or to achieve certain specific social objectives, it is desirable
in selected projects, or its components, to call for participation of local communities in the delivery of goods, including non-consulting
services, and simple infrastructure projects, subject to the Community Participation Procurement Manual (CPPM) issued by the GPPB
m. United Nations Agencies, International Organizations or International Financing Institutions - Procurement from specialized
agencies of the United Nations, International Organizations or International Financing Institutions
n. Direct Retail Purchase of Petroleum Fuel, Oil and Lubricant (POL) Products and Airline Tickets.