2017-10-27

NPM No. 014-2017

Requesting Entity: Cebu Port Authority (CPA)

Issues Concern: Applicability of Republic Act (RA) No. 9184 to Contract of Lease

 

Details

Whether the proposed Contract of Lease between the CPA and the Oriental Port and Allied Services Corporation (OPASCOR), the cargo handling service provider for all foreign cargoes and foreign vessels at the Cebu International Port (CIP), Port of Cebu, is covered by the Government Procurement Reform Act or Republic Act No. (RA) 9184, the Build-Operate-Transfer Law or RA 6957 as amended by RA 7718, or by Executive Order (EO) No. 301, Series of 1987.


At the outset, we wish to inform you that the Government Procurement Policy Board (GPPB) and its Technical Support Office (TSO) render policy and non-policy opinions, respectively, on matters purely pertaining to the interpretation of the procurement law and its associated rules and regulations, which excludes actual controversies such as the conduct of the bidding process by the BAC. Additionally, the determination of the legality and/or validity of the actions and decisions of the BAC including contracts emanating therefrom is not within the express mandate of the GPPB.


Government Procurement


Procurement is defined as the acquisition of goods, consulting services, and the contracting for infrastructure projects by the procuring entity. In the process of acquisition, public funds are disbursed by the government. Hence, for as long as public funds are utilized or is contemplated to be spent for any procurement activity, it shall fall within the ambit of the present procurement law. Corollarily, if the government transaction or activity does not involve use of public funds, such transaction or activity is not within the purview and coverage of RA 9184 and its IRR.


Lease of Government Property for Private Use


In a prior opinion, we had the occasion to explain that:


     Leasing out of government-owned properties does not involve the acquisition of any particular equipment, material, or personal property or a contractual service such as janitorial, security and related services. Moreover, this kind of transaction does not involve any construction, improvement, rehabilitation or other activity which would fall under the definition of the term civil works, nor a contract for the performance of services such as advisory, review, design, management, or other service which would fall under the concept of consulting services. Accordingly, by the nature and peculiarity of this government contract, leasing out of government building remains to be governed by Executive Order No. 301, Series of 1987 (E.O. 301) particularly Section 7 thereof.


Public-Private Partnership Projects


It is not within the mandate of GPPB-TSO to render opinions with regard to the coverage, application or interpretation of BOT Law, NEDA JV Guidelines nor EO 301 as the execution and implementation of these kinds of government contracts are subject to the expertise or jurisdiction of other government agencies, i.e. Public-Private Partnership Center of the Philippines or Commission on Audit. The arrangement between CPA and OPASCOR does not fall within the coverage of RA 9184 and its IRR, but could be regarded as a contractual arrangement and relationship between the private entity and the government under other laws depending on the exact nature of the transaction. Please note, however, that a thorough study of the Contract is necessary to ensure that the best terms for the government will be provided under the contract, and the terms and conditions are advantageous to the government.