Requesting Entity: Department of Finance
Issues Concern: Legality of success-based arrangement for the procurement of financial advisory/consultancy services for the Government’s privatization projects
As payment scheme, the agency and process by which it is to be accomplished should be addressed and set out in the terms and conditions of the contract, in accordance with the Philippine Bidding Documents. Under this proposed arrangement, the payment of the financial consultant/advisor will be made to depend on the eventual success of the principal undertaking which is the sale of government assets. In this case, payment becomes conditional to the happening of an uncertain event which concern is not within the intention of RA 9184.
The foregoing having been stated, it is our considered view that while the proposed scheme addresses payment or other incidents of the prospective contract, the procedures involved in the acquisition of the consulting services shall be governed by the provisions of RA 9184. This is without prejudice to whatever legal sanction that may be available to justify the adoption of a success-based payment arrangement in government contracts. Be that as it may, the legality of the same is beyond the jurisdiction of this office to determine.