EXECUTIVE ORDER NO. 40
EXECUTIVE ORDER NO. 40 -
CONSOLIDATING PROCUREMENT RULES AND PROCEDURES FOR ALL NATIONAL
GOVERNMENT AGENCIES, GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS AND
GOVERNMENT FINANCIAL INSTITUTIONS, AND REQUIRING THE USE OF THE
GOVERNMENT ELECTRONIC PROCUREMENT SYSTEM
WHEREAS,
the government is committed to good governance;
WHEREAS, the principles of good governance call for transparency,
accountability, equity, efficiency and economy in the government
procurement process, and the eradication of malpractices, particularly
graft and corruption;
WHEREAS, there is an urgent need to consolidate existing administrative
orders, issuances, rules and regulations on the procurement of goods,
civil works and consulting services and to develop a single set of
rules that embodies a streamlined procurement process uniformly
applicable to all government procurement;
WHEREAS, it is imperative that the procurement process be made
adaptable to, and utilize advances, in modern technology;
WHEREAS, in the pursuit of good governance, the government shall adopt
an electronic procurement process that will uniformly apply to all
government procurement; and
WHEREAS, to enhance transparency in government procurement, the
government shall encourage the public to monitor the procurement
process and the awarding of contracts with the end in view of
guaranteeing that these contracts are awarded pursuant to law.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic
of the Philippines, by virtue of the powers vested in me by law, do
hereby order:
GENERAL
PROVISIONS
Section 1. Scope and Application. — This Executive
Order shall apply to the procurement of: (a) goods, supplies, materials
and related services; (b) civil works; and (c) consulting services, by
all National Government agencies, including State Universities and
Colleges (SUCs), Government-Owned or Controlled Corporations (GOCCs)
and Government Financial Institutions (GFIs), hereby referred to as
“Agencies.” This Executive Order shall cover the procurement process
from the pre-procurement conference up to award of contract.
Nothing in this Order shall negate any existing and future government
commitments with respect to the bidding and award of contracts financed
partly or wholly with funds from international financing institutions
as well as from bilateral and other similar foreign sources.
Sec. 2. Statement of Policy. — It is the policy of
the government that procurement shall be competitive and transparent
and therefore shall be through public bidding, except as otherwise
provided in this Executive Order.
Sec. 3. General Guidelines. — Government
procurement shall be guided by the following reform principles:
(a)
Simplification of pre-qualification through the use of an eligibility
check and strengthening of post-qualification;
(b) Use of the
Lowest Calculated and Responsive Bid as the criterion of award in the
case of procurement of goods, supplies, materials and related services;
and civil works;
(c) Use of the
approved budget for the contract as the ceiling for the bid price and
the award; and
(d) Use of
transparent, objective and non-discretionary criteria which are
included in the bid documents, in undertaking the eligibility check,
evaluating bids and determining the winning bidder through post
qualification.
Sec. 4. Procurement Management Plan. — Each agency
shall judiciously prepare, maintain and update its Agency Procurement
Management Plan (APMP) for all its procurement. The APMP shall include
a Project Procurement Management Plan (PPMP) for each project.
Sec. 5. Procurement of Common-use Supplies,
Materials and Equipment. — Agencies shall procure common-use supplies,
materials and equipment from the Procurement Service (PS) attached to
the Department of Budget and Management (DBM), in accordance with
Letter of Instructions No. 755, Executive Order Nos. 289 series of
1987, 359 series of 1989, and 322 series of 2000, using the Electronic
Procurement System (EPS) referred to in Sec. 37 of this Executive
Order. Agencies without internet access may avail of the EPS Public
Access Terminals which shall be installed at DBM designated locations
in the provinces and in Metro Manila: Provided, however, That agencies
shall comply with Sec. 38 of this Executive Order. Small volume
purchases by agencies, as defined in the implementing rules and
regulations (IRR) of this Executive Order, through the electronic
catalogue of non common-use goods, supplies and materials are allowed
without need of public bidding.
Sec. 6. Manuals, Standard Bidding Documents and
Training. — The Procurement Policy Board (PPB), created under Executive
Order No. 359 series of 1989, and the Committee on Infrastructure
(Infracom) of the National Economic and Development Authority Board
shall pursue the development of a generic procurement manual and
standard bidding documents, and shall establish a sustainable training
program for developing the capacity of the BACs, Secretariats and
Technical Working Groups of the agencies.
BIDS
AND AWARDS COMMITTEE
Sec. 7. The BAC and its Composition. — Each agency
shall establish a single Bids and Awards Committee (BAC) for its
procurement. The BAC shall be chaired by at least a third ranking
officer of the procuring entity, and its composition shall be specified
in the IRR. Alternatively, as may be deemed fit by the agency head,
there may be separate BACs where the number and compity of the items to
be procured shall so warrant. Similar BACs for decentralized and lower
level offices may be formed when deemed necessary by the head of the
agency.
Sec. 8. Functions of the BAC. — The BAC shall,
among others, determine the eligibility of prospective bidders, receive
and open bids, conduct the evaluation of bids, undertake
postqualification proceedings, and recommend the award of contract. The
scope of the BAC activities is from the pre-procurement conference up
to the recommendation of award. All members of the BAC shall be on
“jury duty” type of assignment until the notice of award is issued by
the agency head.
Sec. 9. Observers. — To enhance the transparency
of the procurement process, the BAC shall invite, in addition to the
representative of the Commission on Audit, at least two (2) observers
from the relevant sectors to sit in and monitor the proceedings.
Sec. 10. Checks and Balances. — The BAC
chairperson and the official who shall approve the ensuing contract for
the agency shall not be the same person.
Sec. 11. BAC Secretariat. — The agency shall have
a Secretariat or a designated organic office as the main support unit
of the BAC(s). It shall be separately designated by the head of agency
or the appropriate designating authority, and shall be under the
supervision of the BAC(s). Similarly, a Secretariat may also be formed
in decentralized and lower level offices to support the local BAC(s)
that may be established.
Sec. 12. Technical Working Group. — For each
specific procurement, the BAC may create a Technical Working Group from
a pool of technical, financial and/or legal experts to assist in the
evaluation of bids.
STANDARDIZED
PROCEDURES FOR PUBLIC BIDDING
Sec. 13. Pre-Procurement Conference. — Prior to
the issuance of the invitation to bid, the BAC shall call a
pre-procurement conference for each procurement, except for small
procurement.
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 in relation to their
adherence to law. This shall be attended by the BAC, the unit or
officials who prepared the bidding documents and the draft invitation
to bid, including consultants hired by the agency concerned, as well as
representatives of the end-user.
Sec. 14. Invitation to Bid. — The invitation to
bid shall contain, among others: a brief description of the items to be
procured; the eligibility requirements; the place, date and time of the
deadlines for receipt of eligibility requirements and bids; the
approved budget for the contract to be bid; the time and place of the
opening of bids; and the contract duration or delivery schedule.
The invitation to bid shall be advertised in such manner and for such
period of time as to ensure the widest possible dissemination, the
details of which shall be provided in the IRR.
Sec. 15. Pre-Bid Conference. — The BAC shall
convene a pre-bid conference for contracts costing P1,000,000 or more
to explain any of the requirements, terms and conditions, and
specifications stipulated in the bid documents. For contracts below
P1,000,000, the pre-bid conference is optional, at the discretion of
the BAC.
Sec. 16. Eligibility Check of Prospective Bidders
for the Procurement of : (a) Goods, Supplies, Materials and Related
Services; and (b) Civil Works. — The BAC or its duly designated organic
office shall determine the eligibility of prospective bidders for the
procurement of: (a) goods, supplies, materials and related services;
and (b) civil works, based on submission of the eligibility
requirements provided in the bidding documents. 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 and authenticity of the
said documents.
Sec. 17. Eligibility Check and Short Listing of
Prospective Bidders for Consulting Services. — The BAC or its duly
designated organic office shall determine the eligibility of
prospective bidders for the procurement of consulting services using
numerical ratings on the basis of the eligibility requirements provided
in the bidding documents, to determine the short list of bidders whose
bids shall be considered for evaluation. The short list shall consist
of the highest ranked eligible bidders from three (3) to seven (7) in
number, as predetermined by the BAC and as indicated in the invitation
to bid. 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 and authenticity of the said documents.
Sec. 18. Submission and Receipt of Bids. — A bid
shall have two components, namely the technical and financial
components which should be in separate sealed envelopes, which shall be
submitted simultaneously. The bids shall be received by the BAC on such
date, time and place specified in the invitation to bid. The deadline
for the receipt of bids shall be fixed by the BAC, giving it sufficient
time to complete the bidding process and giving the prospective bidders
sufficient time to study and prepare their bids. The deadline shall
also consider the urgency of the procurement involved.
Sec. 19. Bid Security. — Except for the
procurement of consulting services, each bid shall be accompanied by a
bid security which shall serve as a guarantee that, after receipt of
the notice of award, the winning bidder shall enter into contract with
the agency within the stipulated time and shall furnish the required
performance security. The amount and allowable forms of the bid
security, as well as the manner by which it may be returned to the
bidders, shall be provided for in the IRR, notwithstanding Section s 32
and 44 herein.
Sec. 20. Modification and Withdrawal of Bids. — A
bidder may modify his bid, provided that this is done at least five (5)
calendar days before the deadline for the receipt of bids. The
modification shall be submitted before the deadline for receipt of bids
in a sealed envelope duly identified as a modification of the original
bid and stamped received by the BAC. A bidder may also withdraw his bid
or express his intention not to participate in the bidding before the
deadline for the receipt of bids.
Sec. 21. Single Calculated/Rated and Responsive
Bid Submission. — A single calculated/rated and responsive bid shall be
considered under any of the following exceptional circumstances,
notwithstanding the provisions of Section 17:
a)
If after advertisement, only one prospective bidder applies for
eligibility check and he meets the eligibility check requirements,
after which his bid is found to be responsive;
b) If after
advertisement, more than one prospective bidder applies for eligibility
check but only one meets the eligibility check requirements, after
which his bid is found to be responsive; or
c) If after
the eligibility check of more than one bidder, only one bid is
submitted and found to be responsive.
Sec. 22. Bid Opening and Examination. — For the
procurement of: (a) goods, supplies, materials and relevant services;
and (b) civil works, 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 its financial component.
Sec. 23. Bid Evaluation. — The BAC shall evaluate
the financial component of the bids and correct it for minor
deviations, such as computational errors, omissions and discounts, in
accordance with the bidding documents to enable proper comparison of
all eligible bids. Any adjustment to correct minor deviations shall be
calculated in monetary terms to determine the calculated prices. The
bids shall be ranked from lowest to highest in terms of their
corresponding calculated prices. For the procurement of: (a) goods,
supplies, materials and related services; and (b) civil works, the bid
with the lowest calculated price shall be referred to as the “LOWEST
CALCULATED BID.”
Sec. 24. Bid Evaluation of Short Listed Bidders
for Consulting Services. — For the procurement of consulting services,
the BAC shall evaluate bids of the short listed bidders and rank them
using numerical ratings in accordance with the evaluation criteria
stated in the bid documents. 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 referred to as the “HIGHEST
RATED BID.”
Sec. 25. Ceiling for Bid Price. — The approved
budget for the contract shall be the upper limit or ceiling for the bid
price. Bid prices which 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. For this purpose, the approved
budget for the contract shall be that approved by the head of the
agency.
Sec. 26. Major Deviation. — The BAC shall
automatically disqualify a bid that contains a major deviation. A major
deviation is a deviation in a bid that, if allowed, would not fulfill
the purpose for which the bid was requested, or would prevent a fair
comparison with bids that comply with the bidding documents, as defined
in the IRR.
Sec. 27. Postqualification. — The BAC shall
undertake postqualification which involves the verification and
validation of all documents submitted by the bidder with the Lowest
Calculated Bid or the Highest Rated Bid, as the case may be, and all
information or statements contained therein, to determine whether he
satisfies all the requirements and conditions as specified in the
bidding documents, in which case his bid shall be considered the
“LOWEST CALCULATED AND RESPONSIVE BID” in the case of goods, supplies,
materials, related services and civil works, or the HIGHEST RATED AND
RESPONSIVE BID” in the case of consulting services.
Sec. 28. Procurement Outsourcing. — In order to
hasten project implementation, agencies which may not have the
proficiency or capability to undertake a particular procurement, as
determined by their heads, may request other agencies to undertake such
procurement for them, or at their option, recruit and hire consultants
or procurement agents to assist them directly and/or train their staff
in the management of the procurement function.
Sec. 29. Reservation Clause. — The government
reserves the right to reject any and all bids, or declare a failure of
bidding, or not award the contract for any justifiable reason including
among others, if there is evidence of collusion between relevant public
officers or employees of the agency or the BAC and any of the bidders,
or among the bidders, or between bidders and third parties, including
any act which restricts, suppresses or nullifies competition, or if the
BAC is found to have failed to follow the prescribed bidding procedures.
AWARD
OF CONTRACT
Sec. 30. Award of Contract and Notice to Proceed.
— The head of the agency or his duly authorized agency representative
shall award and issue the corresponding notice to proceed, when
applicable, to the bidder with the Lowest Calculated and Responsive Bid
or the Highest Rated and Responsive Bid, as the case may be, in
accordance with deadlines specified in the IRR.
Sec. 31. Performance Security.
Except for the procurement of consulting services, prior to contract
signing, the winning bidder shall post a performance security in the
form and amount specified in the bidding documents in accordance with
the IRR, to guarantee the faithful performance of and compliance with
his obligations under the contract in accordance with the bidding
documents.
Sec. 32. Failure to Enter into Contract and Post
Performance Security. — If the bidder with the Lowest Calculated and
Responsive Bid or the Highest Rated and Responsive Bid, as the case may
be, fails, refuses or is unable to make good his bid by entering into
contract with the agency or, in the case of goods, supplies, materials,
related services and civil works, post the required performance
security within the period stipulated in the bidding documents, the bid
security shall be forfeited where so applicable, and the appropriate
administrative sanctions shall be imposed except where such failure,
refusal or inability is through no fault of his. Thereupon, the BAC
shall disqualify the said bidder and shall postqualify the next ranked
Lowest Calculated Bid or Highest Rated Bid, as the case may be. This
procedure shall be repeated until an award is made. However, if no
award is made, the contract shall be re-bid.
Sec. 33. Price Adjustment. — Price adjustments may
be allowed under extraordinary circumstances, as defined in the IRR,
and upon prior approval of the PPB.
Sec. 34. Period for 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 agency concerned. The different
procurement activities shall be completed within reasonable periods to
be specified in the IRR. In addition, the agency head shall take action
on the recommendation of award of the BAC, and shall act on the notice
of award, as well as the approval of contract within fifteen (15)
calendar days from receipt thereof. In the case of GOCCs and GFIs, the
concerned board shall take action on the said recommendation within
thirty (30) calendar days from receipt thereof.
ALTERNATIVE
METHODS OF PROCUREMENT
Sec. 35. Alternative Methods. — When justified by
extraordinary conditions as provided in this Executive Order and its
IRR, and subject to the prior approval of the head of the agency in the
interest of economy and efficiency, the agency head, upon the
recommendation of the BAC, may adopt alternative methods of procurement.
Such alternative methods of procurement can take the following forms:
a)
Limited Source Bidding, otherwise known as Selective Bidding;
b) Direct Contracting, otherwise known as Single
Source procurement
c) Repeat Order;
d) Shopping; or
e) Negotiated Procurement.
PROCUREMENT
OF INFORMATION AND COMMUNICATIONS TECHNOLOGY PROJECTS
Sec. 36. Information and Communications Technology
Projects. — The procurement of information and communications
technology (ICT) projects shall be governed by the following rules,
subject to additional guidelines that may be prescribed by the
Information Technology and E-Commerce Council (ITECC):
a)
The procurement of ICT equipment and/or software only shall be
considered as procurement of goods, supplies, materials and related
services.
b) The
procurement of ICT projects involving the establishment of physical
networks only shall be considered as procurement of civil works.
c) The
procurement of ICT projects involving development of software or
systems only shall be considered as procurement of consulting services.
d) In the case
of ICT projects involving at least two of the foregoing, the
procurement shall be considered as either one for: (a) goods, supplies
materials and related services; (b) civil works; or (c) consulting
services, whichever component has the greater or greatest cost.
THE
GOVERNMENT E-PROCUREMENT SYSTEM
Sec. 37. The Electronic Procurement System. —
Pursuant to Republic Act (R.A.) No. 8792, the “Electronic Commerce
Act,” the government shall establish a single and centralized
electronic portal for the procurement of: (a) goods, supplies,
materials and related services; (b) civil works; and (c) consulting
services, to be used by agencies, herein referred to as the EPS to
enhance transparency, accountability, equity, efficiency and economy in
government procurement. The PS under the supervision of PPB shall be
responsible for the establishment, management, operation and
maintenance of the EPS.
Sec. 38. Use of the EPS. — All agencies are hereby
mandated to fully use the EPS in accordance with the policies, rules,
regulations and procedures adopted by PPB. In connection thereto and in
accordance with R.A. No. 8792, the above-mentioned agencies shall
undertake measures to ensure that they shall have an access to an
on-line network to facilitate the open, speedy and efficient on-line
transmission, conveyance and use of electronic data messages or
electronic documents, and recognize the EPS as the primary source of
information on government procurement of: (a) goods, supplies,
materials and related services; (b) civil works; and (c) consulting
services. All notices and certifications to be issued by the BAC with
respect to a procurement shall be done through the EPS.
Sec. 39. Features of the EPS. — The EPS includes
the following features:
a)
Electronic Bulletin Board. A centralized electronic bulletin board for
advertising procurement opportunities, notices, awards and reasons for
award.
b) Suppliers’
Contractors’ and Consultants’ Registry. A centralized electronic
registry of all authorized suppliers, consultants and contractors, as
defined in the IRR.
c) Electronic
Catalogue. A centralized electronic price list consisting of two
categories, in particular: (i) Common-use goods, supplies, materials
and related services in the stores of PS shall be carried in the PS
Electronic Catalogue; and (ii) for non common-use goods, supplies,
materials and related services, as well as for civil works and
consulting services, the EPS-registered and accredited suppliers,
consultants and contractors thereof shall have their respective
electronic catalogues which shall be hosted by, or linked to, the EPS
website.
d) Additional
Features. The Virtual Store, electronic bid submission, on-line
payment, and such other features that may be developed in the future.
Sec. 40. Security, Integrity and Confidentiality.
— The EPS shall ensure the security, integrity and confidentiality of
documents submitted through the system. It shall include a feature that
provides for an audit trail for on-line transactions and allows the
Commission on Audit to verify the security and integrity of the system
at any time.
Sec. 41. Observers. — The EPS shall allow
observers authorized by the BAC to monitor the procurement proceedings
on-line: Provided, however, That such observers do not have any direct
or indirect interest in the contract to be bid out.
PROCUREMENT
MONITORING
Sec. 42. Procurement Monitoring. — The head of the
BAC Secretariat shall have the responsibility for monitoring the
performance against standards set forth by this Executive Order, its
IRR, and existing rules and regulations. The head of the Secretariat
shall prepare a procurement monitoring report that shall be approved
and submitted by the head of the procuring agency on a quarterly basis.
The contents and coverage of this report shall be provided for in the
IRR.
INCENTIVES
AND SANCTIONS
Sec. 43. Incentives and Sanctions. — In
consultation with agencies and the Civil Service Commission, the PPB
and Infracom shall establish:
a)
an equitable indemnification package for officials/staff providing
services in the BAC, Secretariat and the Technical Working Group, which
may be in the form of free legal assistance, liability insurance, and
other forms of indemnification and protection; and
b) a set of
sanctions for violations of this Executive Order and its IRR committed
by officials/staff providing services in the BAC, Secretariat and the
Technical Working Group.
Sec. 44. Administrative Penalties for Bidders and
Prospective Bidders. — The head of the agency shall impose on bidders
or prospective bidders, the administrative penalties of suspension from
participating in any public bidding of the agency for one (1) year for
the first offense and two (2) years for the second offense, as well as
disqualification from further participating in the public bidding
currently being undertaken by the agency concerned, where applicable,
for the following violations, without prejudice to the imposition of
criminal and civil sanctions as provided by laws, rules and regulations:
a)
Submission of eligibility requirements containing false information or
falsified documents.
b) Submission
of bids that contain false information or falsified documents or the
concealment of such information in the bids.
c) Allowing
the use of one’s name, or using the name of another, for purposes of
public bidding.
d) Withdrawal
of a bid or refusal to accept an award or enter into contract with the
government without just cause, after it shall have been determined to
have submitted the Lowest Calculated and Responsive Bid or the Highest
Rated and Responsive Bid, as the case may be.
e) Refusal or
failure to post the required performance security within the prescribed
time.
f) Termination
of the contract due to the default of the bidder.
g) Any
documented unsolicited attempt by a bidder to unduly influence the
outcome of the bidding in his favor.
h) All other
acts that tend to defeat the purpose of the public bidding.
In addition to the above administrative penalties, the bid security or
the performance security of the bidder concerned, where so applicable,
shall also be forfeited.
The authority to impose the above-mentioned administrative penalties
may be delegated by the head of the agency to the BAC.
FINAL
PROVISIONS
Sec. 45. Local Government Units. — All procurement
of local government units funded by the national government shall be
governed by the provisions of this Executive Order and its IRR.
Furthermore, local government units are encouraged to apply the rules
and procedures provided in this Executive Order for procurement funded
from local government funds.
Sec. 46. Appeals. — Decisions of the BAC in all
stages of procurement may be appealed to the head of the agency in
writing. Appeals shall be made by filing a verified position paper and
paying a non-refundable protest fee. The amount of the protest fee and
the periods during which the appeals may be filed and resolved shall be
specified in the IRRs.
Sec. 47. Implementing Rules and Regulations (IRR).
— Within sixty (60) calendar days from the issuance of this Executive
Order, the PPB and the Infracom shall jointly issue the policies,
rules, regulations and procedures to implement this Executive Order,
leading to a more transparent and efficient procurement system for the
government. These IRR may be amended jointly by the PPB and the
Infracom as the need arises.
Sec. 48. Repealing Clause. — All executive
issuances, orders, rules and regulations or parts thereof inconsistent
with this Executive Order are hereby repealed, amended and/or modified
accordingly.
Sec. 49. Separability Clause. — If any provision
of this Executive Order is declared invalid or unconstitutional, the
other provisions not affected thereby shall remain valid and subsisting.
Sec. 50. Effectivity Clause. — This Executive
Order shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.
DONE in the City of Manila,
this 8th day of October in the year of Our Lord, Two Thousand and One.
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Since 19.07.98.