NPM No. 004-2018
Requesting Entity: Mr. Rasset Rasonabe
Issues Concern: Expired Security Service Contract
Guidance on how to address expired security service contract, particularly on the remedy, and procedure on the payment to service provider who still renders service despite its expired contract.
Extension of contracts allowed under the Guidelines, however, contemplate a situation where the Procuring Entity intends to extend the duration and effectivity of an ongoing contract which is about to expire. . . .
In case the service contract was extended, such extension must be in accordance with the referenced Guidelines which provides for a maximum of one (1) year extension period. Any extension of contract that shall pass the one (1) year maximum period is not in accord with the existing Guidelines, hence, invalid. It was represented that the one (1) year period of extension of contract already expired, hence, services rendered after the expiration is not supported by a valid contract.
Considering that the security agency provided services outside a valid contract, the determination of the legality or validity of the action and decision of the Bids and Awards Committee (BAC), in relation to payment of services rendered without a valid contract, is not within the express mandate of the GPPB.
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Any payment made for services rendered may be subject of an Audit for lack of a valid contract to support the payment. Nonetheless, the security agency may file a money claim in the proper forum to receive payment for services rendered outside a valid contract under the principle of quantum meruit.
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All told, the BAC should have made sure that prior to the expiration of the contract with the security agency, an extension contract should have been entered into by the parties, in accordance with the Guidelines. Nonetheless, payment cannot be made outright for services rendered without a valid contract. Such may be subject of a money claim on the basis of quantum meruit.