2017-12-29

NPM No. 124-2017

Requesting Entity: GOVERNANCE COMMISSION FOR GOVERNMENT OWNED OR CONTROLLED CORPORATIONS (GCG)

Issues Concern: Form of Bid Security and Performance Security

 

Details

Whether the GCG may limit the prospective bidders to the submission of the following:


    (a)  a Bid Securing Declaration (BSD) or bank draft/guarantee or irrevocable letter of credit issued by a Universal or Commercial Bank as its preferred form of Bid Security; and


    (b)  a bank draft guarantee or irrevocable letter of credit issued by a Universal or Commercial Bank or a surety bond callable upon demand issued by a surety or insurance company duly certified by the Insurance Commission as its preferred form of Performance Security.


[U]nder the 2016 revised IRR, the option to choose which one (1) form of bid security and performance security to submit solely belongs to the bidders, such that the PE can no longer limit the acceptable forms of bid security, as well as that of performance security, in its Bidding Documents as provided under GPPB Resolution No. 25-2013 and clarified in GPPB Circular No. 01-2014.


We wish to note that the intention of the rule is to encourage greater participation in competitive bidding by granting the bidders the right to choose any of the prescribed forms of bid security and performance security. In any case, the acceptable forms provided under the 2016 IRR of RA 9184 were deliberated and considered as adequate to ensure that the procuring entities would not be left without remedy in the event that the bidder withdraws its bid or refuses to enter into contract with the procuring entity upon award; or when the winning bidder defaults in the performance of its obligations under the contract.


Accordingly, under the present state of the rules, the GCG cannot limit the forms of bid security and performance security to only two (2) GCG preferred forms. Ultimately, it is the bidder that has the discretion and choice as to what form of bid or performance security it shall post, and a departure therefrom would be a violation of the existing procurement rules and regulations.