One UP One University One Procurement System Isagani

One UP. One University. One Procurement System. Isagani L. Bagus Acting Chief, UP System SPMO UP Manila 25 November 2014 1

House Rules Turn off or put in silent mode all mobile phones Take phone calls outside the Conference Room Address questions/clarifications to the speaker Active participation is highly encouraged Stay awake 2

Training Objectives • Train the UP Manila personnel on procurement process as per Republic Act 9184 Implementing Rules and Regulations; • To have a uniform interpretation on the procurement process and procedures; and • Gather feedback that shall serve as a guide to help UP improve the system on procurement in all aspects and improve the quality of service that University is providing. 3

Question? Is Procurement a Problem in UP Manila? 4

Answer pro. CUREment 5

Common Questions in all CUs • Why procurement process is very long? • Why it took procurement more than a year? • Why specifications is wrong? • Why failed bid? • Why wrong posting in Phil. GEPS. Announcement? • Why …. Why 6

Solution to the Questions? • B. L. A. M. E. • Bakit • Lagi • Ako ang • Mali • Eh di naman 7

P. B. B. on Procurement P P B Procurement Process Best PRACTICE 8

P. B. B. on Procurement P P B Procurement Process Bad PRACTICE 9

Q and A 10

Present Status on Procurement of UP: Policy Implementation 11

Constituent U’s of UP UPD UPOU UPM UP System UPLB UPV 12

UP: One UP. One University. One Procurement System UPD UPOU UPM UP System UPLB UPV 13

Republic Act 9184? • Procurement Law of the Philippines • Includes the following: – Implementing Rules and Regulations on Procurement – Procurement Policy and Procedures of the Philippines – Executive Orders – Govt. Procurement Policy Board (GPPB) Resolutions – Phil. GEPS Requirements – Others: COA, UP, DBM, Procurement Service 14

Nature of Procurement 15

Nature of Procurement • Goods • Example: equipment, furniture, stationery, materials for construction, or personal property of any kind, including non-personal or contractual services, such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, procurement of supplies and materials, etc. Infra • Example: construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and bridges, railways, airports, seaports, communication facilities, civil works components of information technology projects, irrigation, flood control and drainage, water supply, sanitation, etc. Services • Example: requiring adequate external technical and professional expertise that are beyond the capability and/or capacity of the GOP to undertake such as, but not limited to: advisory and review services; pre-investment or feasibility studies; design; construction supervision; management and related services; and other technical services or special studies. 16

Q and A 17

Major Stakeholders of Procurement in UP 18

Major Stakeholders of Procurement End-User Budget Officers SPMO/BAC Secretariat BAC Members TWG Members Accountant Internal Auditor Observers / Resource Persons H. O. P. E. 19

Functions of Stakeholders 20

End-User • Prepare the following: – PPMP – Technical Specifications Particulars Specifications - Consult the expert Remarks • • Complete and generic (No brand please/equivalent) Do not copy brochure/catalogue being issued by supplier Range for minimum and maximum After Sales • • • Warranty Insurance Training of personnel Delivery period • Be realistic • 21

End-User • Approved Budget Ceiling Particulars Remarks Cost Do not copy the brochure/catalogue provided by supplier Value Added Tax Included 12% VAT Additional Warranty Request for a costing if there is additional warranty Bid Documents Cost of Bid documents might also consider in computing ABC Value for Money Do not delay payment to supplier/s 22

Budget Officer • Issue Budget Clearance / Availability of Funds – DBM Funds, UP Funds, or other source of funds – Expiration / End of Life of SARO / Budget Clearance 23

SPMO / BAC Secretariat – Assist the BAC in the conduct of its functions – Serve as the main support unit of BAC – Post the Invitation to Bid in Phil. GEPS, Bulletin Board, Website, and Newspaper (if necessary) – Receive suppliers queries/questions and other documents address to BAC – Prepare the bidding documents (before and after procurement) 24

Members of the BAC • Advertise and/or post the Invitation to Bid • Conduct pre-procurement and pre-bid conferences • Determine the eligibility of prospective bidders • Receive bids • Conduct the evaluation of bids • Undertake post qualification proceedings • Recommend award of contracts the event to the HOPE 25

Technical Working Group • Review the specifications submitted by end-user during pre-procurement conference • Conduct evaluation on the specifications submitted by end-user • Evaluate the proposal of supplier on technical specifications • Conduct ocular inspection if necessary 26

Accountant • • Issued Availability of Funds Evaluate the NFCC submitted by bidder/s Obligate the funds after delivery Prepare other COA requirements 27

Internal Auditor • Serve as observer of the Public Bidding • Re-examined the procurement if compliant with Republic Act 1984 and COA provisions 28

Observers • To enhance the Transparency of the procurement process, the BAC shall in all stages of the procurement process, invite, in addition to the representative of the COA at least two (2) observers to sit in procurement proceedings • The observer should meet the criteria of observer as set forth in the IRR 29

Head of Procuring Entity • Approved or Disapprove the recommendation of the BAC – Constitution of BAC members – to award the contract to the winning bidder – BAC Resolutions 30

Delineation of Authority Delegated Approval Ceilings Board of Regents -Construction and repair, including construction management services -Purchase of equipment, materials, supplies, and services President -Construction and repair, including construction management services -Purchase of equipment, materials, supplies, and services - Chancellors - Construction and repair, including construction management services - Purchase of equipment, materials, supplies, and services Above Php 75 M UPD, UPLB, UPM, UPV: Php 25 M UPB, UPMin, UPOU, and UP Cebu Php 15 M 31

Q and A 32

Mode of Procurement 33

Mode of Procurement • Shopping Public Bidding AMP: Negotiated AMP: Repeat Order AMP: Emergency Pucrhase AMP: Others 34

What is Small Value Procurement? • Where the procurement does not fall under Shopping in Section 52 of the IRR and the amount involved does not exceed the thresholds prescribed in IRR • Requirements: Three (3) quotations from Bona fide Suppliers • Thresholds: Below Php 50, 000. 00 and below 35

Flow Chart for Small Value P 50, 000 and below Purchase Request Budget Clearance Posting to Phil. GEPS End-User Budget Office SPMO/BAC Sec. Delivery and Payment Preparation of Procurement Documents End-User SPMO 36

NEW Flow Chart for Shopping P 50, 000 and below Purchase Request Budget Clearance Posting to Phil. GEPS End-User Budget Office SPMO/BAC Sec. Delivery and Payment Preparation of Procurement Documents Request for 3 -Quotations End-User SPMO End-User 37

Q and A 38

Shopping • Shopping is a method of procurement of goods whereby the procuring entity simply request for the submission of price quotations for readily available off the-self goods or ordinary/regular equipment to be procured directly from the supplier of know qualifications – Requirements: at least three (3) price quotations from bona fide suppliers; Purchase Request, Budget Clearance, Complete specifications (note: no brand name, and lock-in to a certain brand/specifications) 39

Shopping PRESENT Flow Chart for P 100, 000 up to P 499, 999. 99 Purchase Request End-User Budget Clearance Posting to Phil. GEPS End-User (at least 2 days) SPMO (at least 7 – 9 days) Delivery and Payment End-User Preparation of Procurement Documents SPMO (within 3 days) 40

Q and A 41

Public Bidding • All procurement shall be done through competitive bidding, except as provided in Rule XVI of RA 9184 – IRR • Amount subject to Public Bidding: Php 500, 000. 00 and above • Requirements: – Budget Clearance (dont use catalogue price as much as possible, includes cost of bid documents, value added tax) – Purchase Request (conduct intial canvass from bonafide supplier) – Complete Specifications (dont copy the catalogue specifications, no lackin) – If infrastructure/renovation: plans are needed, bill of quantities of materials, complete specifications) – If services (Terms of Reference) – Phil. GEPS posting (Newspaper posting if Php 2 M and above) 42

Public Bidding: ABC Php 500 to P 2 Million Purchase Request End. User Budget Clearance Budget Office Pre-Proc. Conf. Posting to Phil GEPS Pre. Bidding Conf. SPMO 3 -days 1 -day (7 -days) Public Bidding BAC (12 days) 43

Public Bidding: ABC Php 2 Million and Above Purchase Request Budget Clearance Pre-Proc. • Specifications • Proposed Budget • BUS/BUR • Availability of Funds • SPMO/BAC Sec. • BAC Public Bidding - BAC/BAC Sec. TWG/E. U/Observer Pre-Bidding Conference - BAC/BAC Sec. TWG/E. U/Observer Phil. GEPS/ Newspaper/ Bulletin Board - SPMO/BAC Sec 44

Simple Question and Answer • • • Question: Can we bid less than Php 500, 000. 00? Answer: Yes Why? The Default of procurement is public bidding, when in doubt …. . Public bid 45

Q and A 46

Negotiated • Procuring entity directly negotiates a contract with a technical. Legally and financially capable supplier, contractor or consultant • Cases to undergo Negotiated: – – – – Two Failed Bidding Emergency cases Take-over of contracts Adjacent or contiguous Agency to Agency Procurement Agent Highly Technical Consultants 47

Repeat Order • Procurement of goods from the previous winnig bidder – Unit price of the repeat order must be the same as or lower than those in the original contract – Not result to splitting of contracts – Within six (6) months from the effectivity of the contract stated in the NTP – Not to exceed 25% of the quantity of each item in the original contract 48

Emergency Purchase • In case of imminent danger to life or property during a state of calamity, or when the time is of the essence arising from natural or man-made calamities or other causes, where immediate action is necessary • Actors in Emergency Purchase: Argentinian and Russian 49

Flow Chart End-User • Write a letter of Request for Emergency Purchase after purchasing of Goods, Transportatio n, • And other expenses SPMO BAC Chair Accounting • Recommen • Approve or dis-approve d or not to the request recommend for the request emergency for purchase emergency purchase 50

New Flow Chart: Emergency Purchase End-User Prepare for Voucher with supporting documents Accounting Office Evaluate the reimbursement Cash Office Payment 51

Q and A 52

Annual Procurement Plan (APP) Procurement Planning and the Preparation of the Annual Procurement Program/Plan and Amendatory/Supplementary Program/Plan 53

Annual Procurement Plan • Procurement Planning is the first step in the procurement process. This may consist of the preparation of a procurement plan or procurement program. • An APP refers to the itemized list prepared by the Head of the Agency showing the kind, estimated quantity, estimated cost, description of supplies together with the balance on hand, if any, required by the agency for the ensuing fiscal year. 54

Applicable Laws on APP • Section 3. 2 of the IRR of E. O No. 302 dated Feb. 19, 1996. (Procurement Planning) – Procurement of goods shall be undertaken according to a procurement plan that the agency concerned shall formulate to ensure that the goods to be procured are available when needed. • Section 424 of GAAM – An Annual Procurement Program showing itemized quantity, description and estimated cost of supplies/materials/equipment required for a fiscal year shall be prepared by all agencies of the national government 55

– The APP shall include provisions forforeseeable emergencies based on historical records – No procurement shall be undertaken unless it is in accordance with the approved APP – The end-user units shall prepare the respective Project Procurement Management Plan (PPMP) for programs, ivities, different the (PAPs) – Updating of the PPMPs and the consolidated APP shall be undertaken every 6 mons or as often as may be required by the HOPE. 56

Forms of PPMP and APP • PPMP. doc • APP Format. xls 57

UP System APP and PPMP 58

UP System APP and PPMP 59

UP System APP and PPMP 60

UP System APP and PPMP 61

UP System APP and PPMP UPS Office Goods TOTAL 72, 752, 671. 33 Service Infra l 3, 528, 666. 70 27, 000. 00 Php 103, 281, 338. 03 62

Illustrative Case • Nature: Purchase of medicines Annual Procurement Program • Decision No. : COA Decision No. 2606 dated Dec. 1, 1992. 63

Illustrative Case • Particulars: This is an appeal dated January 20, 1992 of the Executive Director, Philippine Trade Training Center (PTTC) to lift the disallowance on the purchase of medicines amounting to P 4, 687. 05. The amount was disallowed by the Auditor for lack of legal basis for the charging of the expenditure to Fund 101 object codes 07(supplies) and 19(representation expenses). The Executive Director, in his appeal cited the provision of Occupational Safety and Health Standards Law which states that every employer including the government shall keep in the workplace a minimum medical facilities listed in Table 47 of the law. 64

Illustrative Case • The facilities listed therein maybe substituted with other comparable medicines. The appeal was granted. The cost of the medicines/medicinal supplies purchased can be validly charged against the allotment for supplies and materials (07) under Fund 101 as long as these medicinal supplies are included in the Annual Procurement Program of the agency in support of the Work and Financial Plan of the agency as approved by the Department of Budget and Management (DBM) or to the allotment for extraordinary and miscellaneous expenses (18) authorized under Section 26 of the 1991 General Appropriations Act. 65

Benefits of PPMP and APP • An effective plan saves time and money • An effective plan serves as a conduit to achieving entity’s objectives • An effective plan ensures compliance with regulatory policies • An effective plan provides a framework to guide procurement officers in the achievement of their tasks and duties. 66

Q and A 67

Updates on the Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9184 2012 - 2013 68

Guidelines on Ordering Agreement 69

Guidelines on Ordering Agreement • GPPB Resolution 01 -2012 dated 27 January 2012 • Expands the application of Ordering Agreements to the following: § Expendable and Non-expendable Goods § Services for Hotel Accomodation, Air Travel, and Repair and Maintenance 70

Guidelines on Ordering Agreement • Ordering Agreement – written agreement in the nature of an option contract between the PE and the winning bidder granting the PE the option to either place an order for any of the Goods identified in the Order Agreement List or not buy at all, within a given period of time. • Order Agreement List (OAL) – list of Goods, and their corresponding technical specifications, scope of work, projected quantities, and fixed prices, subject of the Ordering Agreement. 71

Guidelines on Ordering Agreement • Delivery Order Contract – contract that authorizes and obligates a supplier/service provider to deliver certain quantity or render a particular service within an agreed period and at a fixed price per unit, item or identified service pursuant to an Ordering Agreement. 72

Guidelines on Ordering Agreement PPMP APP Competitive Bidding Termination Delivery Order Contract Ordering Agreement 73

Policy relative to DOLE DO 18 -A • DOLE DO 18 -A (14 November 2011) § Issued to address unscrupulous undercutting of contract rate by service providers (e. g. , security and janitorial) § Requires that administrative cost should not be less than 10% of the total contract cost 74

Sample STANDARD COMPUTATION Payable Directly to Servicemen: 6, 500. 00 a. Basic Salary b. Night Differential c. Emergency COLA d. 13 th Month Pay e. Service Incentive Leave Payable as Employee’s Share: 500. 00 a. Social Security Premiums b. Philhealth Premiums c. ECC Insurance Premiums d. Pag-ibig Fund Contribution Total Cost 6, 000. 00 10% Administrative Cost 600. 00 Possible Bid Price 6, 600. 00 75

Policy relative to DOLE DO 18 -A • GPPB PM 03 -2012 dated 30 November 2012 § Section 9 (b) (ii) of DOLE DO 18 -A prohibits bidders from offering bids lower than the sum of the Total Reimbursable Costs and 10% Administrative Cost. § Scenario results in the imposition of floor in bid prices. § Runs counter to Section 31 of RA 9184. § GPPB is of the view that Section 9 (b) (ii) of DOLE DO 18 -A should be considered INVALID, and thus, cannot be a source of any right, duty, obligation, or power. Reiterated in GPPB PM 02 -2013 dated 11 April 2014 76

Bid Securing Declaration … 77

Bid Securing Declaration • GPPB Resolution 03 -2012 dated 27 January 2012 • Adopts Bid Securing Declaration as an additional form of bid security § A document/undertaking signed by the bidder committing to pay the corresponding fine and be suspended for a period of time from being qualified to participate in any government activity in the event of violation of any of the conditions stated therein as required by the GPPB Guidelines. 78

Bid Securing Declaration • Section 27, RA 9184 § All Bids 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 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. 79

Bid Securing Declaration • Existing forms § Have substantial monetary value. § Increases transactional costs and bid prices. • Bid Securing Declaration § § Insignificant monetary value Increases bidder’s participation Decreases the transactional costs Reduces bid prices 80

Bid Securing Declaration • Period of Effectivity § Reasonable period determined by the HOPE § Not to exceed 120 calendar days from the date of opening of bids (unless duly extended by the bidder upon the request of the HOPE) 81

Bid Securing Declaration • Automatic Expiration § Bid validity period or any extension expires § All bidders are declared ineligible or post-disqualified (no request for reconsideration filed/waiver is filed) § LCRB/HRRB furnishes the Performance Security and signs the contract 82

Bid Securing Declaration • Grounds for Enforcement § Withdraws bid during bid validity period; or § Fails or refuses to accept award and enter into contract or perform any and all acts necessary to the execution of the contract, in accordance with the bidding documents, after having been duly notified of the acceptance of its bid during the bid validity period 83

Bid Securing Declaration • Penalties § Automatic blacklisting for 2 years in ALL government procurement activities, and § Payment of fine • For multiple bidders: difference between the evaluated bid prices of LCRB/HRB with the next LCRB/HRB. In case bidder is the LCRB/HRB, the amount shall be based on the difference between the evaluated bid price and ABC. • For a single bidder: difference between the evaluated bid price and ABC. 84

Payment of Fine Approved Budget for the Contract Penalty of 3 rd Lowest or Single Third Lowest or Single Penalty of 2 nd Lowest Second Lowest Penalty of Lowest Ph. P 10, 300, 000. 00 Ph. P 700, 000. 00 Ph. P 9, 600, 000. 00 Ph. P 400, 000. 00 Ph. P 9, 200, 000. 00 Back Ph. P 99, 001. 00 Ph. P 9, 100, 999. 00 85

Sale of Bidding Documents … 86

Sale of Bidding Documents • GPPB Resolution 04 -2012 dated 24 February 2012 • Provides standard rates for the sale of bidding documents § Rationalizes the fees § Regulates price of Bidding Documents § Lessens the exercise of discretion of PEs § Encourages market participation and competition 87

Sale of Bidding Documents Approved Budget for the Contract Maximum Cost of Bidding Documents in Ph. P 500, 000 and below 500. 00 More than 500, 000 up to 1 Million 1, 000. 00 More than 1 Million up to 5 Million 5, 000. 00 More than 5 Million up to 10 Million 10, 000. 00 More than 10 Million up to 50 Million 25, 000. 00 More than 50 Million up to 500 Million 50, 000. 00 More than 500 Million 75, 000. 00 88

Policy on TWG Membership 89

Policy on TWG Membership • GPPB Resolution 07 -2012 dated 27 April 2012 • Adopts an official position relative to HB 5366 § HB 5366 seeks to amend RA 9184 by appointing a “third party” from either a recognized academic institution or from a government office that is not part of the organizational structure of the procuring entity as a BAC member with respect to the procurement of highly technical equipment by the AFP and the PNP § “Third party” seen to help in evaluation of eligibility of bidders and technical specifications imposed by the bidding documents 90

Policy on TWG Membership • GPPB Circular 02 -2012 dated 3 August 2012 • Section 12. 1 of the revised IRR of RA 9184 allows the BAC to create a TWG from a pool of technical, financial, and/or legal experts to assist in the procurement process • TWG need not be limited to the employees or officials of the PE • BAC may engage the assistance of other government personnel and officials, and consultants from the private sector and academe with proven expertise 91

Eligibility Criteria on Infrastructure Projects 92

Submission of Letter of Intent 93

Submission of Letter of Intent • GPPB Resolution 27 -2012 dated 23 November 2012 • Deletes Sections 23. 4. 3 and 24. 4. 3 of the Revised IRR of R. A. 9184 § Provisions requiring the submission of a written LOI and/or application of eligibility together with the latest Class “A” Documents in case the procuring entity maintains a registry system using the Phil. GEPS or its own electronic system. • Rationale: § Harmonize with the rules on the use of the GOP-OMR § Prevent collusion among bidders 94

Submission of Statement of Ongoing and Completed Contracts 95

Submission of Statement of Ongoing and Completed Contracts • GPPB Resolution 29 -2012 dated 23 November 2012 • Amends Section 23. 1(a)(iii) § Statement of the prospective bidder of all its ongoing government and private contracts, including contracts awarded but not yet started, if any, whether similar or not similar in nature and complexity to the contract to be bid, within the relevant period as provided in the Bidding Documents § Statement identifying the bidder’s single largest completed contract similar to the contract to be bid, except under the conditions provided for in Section 23. 5. 1. 3 of the IRR, within the relevant period as provided in the Bidding Documents in the case of goods. 96

Financial Eligibility Requirement 97

Financial Eligibility Requirement • GPPB Resolution 20 -2013 dated 30 July 2013 • Amends Secs. 23. 1(a)(vi), 23. 5. 1. 4, and 23. 5. 2. 6 of the GPRA IRR § Credit line commitment (CLC) is NO longer an acceptable financial eligibility requirement § ONLY the computation of the NFCC will now be accepted § The values of the current assets and current liabilities shall be based on the data submitted by the bidder to the BIR through its EFPS 98

Submission of Tax Clearance 99

Submission of Tax Clearance • GPPB Resolution 21 -2013 dated 30 July 2013 • Amends Secs. 23. 1(a) and 24. 1(a) of the GPRA IRR, ITB Clause 12. 1(a) of both the PBDs for Goods and Infrastructure Projects, and Eligibility Documents Clause 2. 1 of the PBDs for Consulting Services § Tax clearance per Executive Order 398, Series of 2005, as finally reviewed and approved by the BIR. • Amends Sec. 34. 2 of the GPRA IRR, ITB Clause 29. 2 of the PBDs for Goods, ITB Clause 28. 2 of PBDs for Infrastructure Projects, ITB Clause 27. 2 of the PBDs for Consulting Services to delete the tax clearance requirement 100

OPTIONS FOR BID SECURITY 101

Options for Bid Security • GPPB Resolution 25 -2013 dated 30 August 2013 • Amends Secs. 27. 2, 27. 5 and 39. 2 of the GPRA IRR and the corresponding Clauses in the PBDs § The procuring entity shall indicate in the Bidding Documents the acceptable forms of bid security that bidders may opt to use, which shall include the Bid Securing Declaration provided in Section 27. 5 of this IRR and at least one (1) other form, the amount of which shall be equal to a percentage of the ABC in accordance with the following schedule: 102

Maraming Salamat 25 November 2014 103