2004-01-05

NPM 001-2004

Requesting Entity: Provincial Legal Office of Cotabato

Issues Concern: Compliance with Net Financial Contracting Capacity (NFCC) Requirement

 

Details

1. The NFCC of prospective bidders may not comply with the requirement that the same should be at least fifty percent (50%) of the approved budget for the contract.

As part of the eligibility criteria for the procurement of goods under the Implementing Rules and Regulations (“IRR”) of Executive Order No. 40, Series of 2001 (“E.O. 40”), specifically Section 16, 2,1(3), prospective bidders are mandated to comply with the NFCC requirement, such that it is imperative that their NFCC, based on their net working capital, must be at least equal to the approved budget for the contract to be bid. Should the prospective proponent fail to satisfy the NFCC requirement, it will be declared ineligible to participate in the ensuing public bidding.

As such, in the event the interested bidders fail to comply with the NFCC requirement, then AFPLC has no other recourse but to declare a failure of bidding and re-bid the project with a re-advertisement. The inclusion of the NFCC as an eligibility criteria under E.O. 40 and its IRR was intended to determine at the earliest opportunity the financial capacity of the bidder to perform or deliver the project being bid out, such that if it is determined at the outset that the bidder has no financial capacity or would have possessed such capacity were it not for the fact that it has spread resources throughout too many on-going contracts, it will not be allowed to participate in the bidding process.


2. The available remedy should three (3) bidders submit identical offers for an item.

At this point, it should be noted that this situation appears not to have been contemplated in either E.O. 40 or R.A. 9184 for lack of any provision therein. However, we believe that you have also raised a theoretical problem regarding a circumstance wherein three (3) bidders submit identical offers. Should this peculiar situation take place, procuring entities, such as the AFPLC may, if the three (3) bidders agree, award portions or components of the project to each of them, provided that the project is divisible. In the event that the project being bid out is indivisible or has no separate components, the procuring entity may consider re-bidding the contract among the three (3) remaining bidders, with respect to the financial proposal so as to determine the lowest price while retaining the approved budget for the contract.

In fine, should three bidders submit identical offers for an item, all of which fail to comply with the bid requirements, we recommend that the procuring entity:
1. Award portions or components of the project to each of the bidders, if the bidders agree, provided that the project is divisible; or
2. Exercise the remedy under Section 35.2 of the IRR-A, which is to declare a failure of bidding and re-bid the contract while retaining the approved budget for the contract if the project is indivisible.