2007-08-13

NPM 044-2007

Requesting Entity: Philippine Charity Sweepstakes Office

Issues Concern: Eligibility Requirements for Joint Ventures

 

Details

1. Whether every party to a Joint Venture Agreement is mandated to submit all documents in the eligibility requirement under the IRR-A of R.A. 9184.

[T]his Office has ruled in NPM Opinion No. 18-2005 [that] the requirement for submission of legal documents should mean the individual submission of all the entities comprising the joint venture. On the other hand, because usually joint ventures have become a remedy to augment on the capability of smaller enterprises to participate in competition and to eventually perform the contract, the submissions of financial and technical documentary requirements by any of the entities constitute compliance.

Consequently, we reiterate our ruling that each member of the Joint Venture shall submit the Legal Documents under the eligibility requirements. This is to ensure that all the parties in the Joint Venture have the requisite legal personality to conduct business.

2. Whether the required percentage of Filipino and foreign ownership, participation or interest for a Joint Venture is mandatory.

In case prospective bidders form a Joint Venture, Filipino ownership or interest of the joint venture concerned, as a general rule, shall be at least sixty percent (60%), in case of procurement of goods and consultancy, or seventy five percent (75%) Filipino ownership or interest, in case of procurement of infrastructure projects (Section 23.11.1 [d], Section 24.1.1 [e], and Section 23.11.2 [d], IRR-A).

However, when the goods to be procured are not available from local sources as certified by the head of the procuring entity, or when there is a need to prevent situations that defeat competition or restrain trade, said procuring entity may invite foreign suppliers, manufacturers and/or distributors (Section 23.11.1, IRR-A). Foreign consultants forming a joint venture may also qualify for consulting services subject to the conditions provided in Section 24.1.2 of the IRR-A. On the other hand, joint ventures in which Filipino interest is less than 75% may be eligible for infrastructure projects if the structures to be built require the application of techniques and/or technologies provided Filipino ownership or interest shall not be less than 25% (Section 23.11.2 [d], IRR-A).

3. Whether the non-inclusion of the financial eligibility documents in the eligibility envelope but was otherwise included in the technical proposal envelope constitutes compliance with the eligibility requirement.

Under the IRR-A, the BAC shall determine if each bidder is eligible to participate in the bidding by examining the completeness of each eligibility requirements or statements against a checklist of requirements using a non-discretionary "pass/fail" criteria. Thus, if the eligibility documents are incomplete for failure to include the financial documents, the BAC is constrained to inform the bidder that it has been found ineligible to participate in the bidding, and the grounds for its ineligibility. The BAC shall not be allowed to receive, hold, and/or open the technical proposal of ineligible bids. If the ineligible bidder signifies its intent to file a motion for reconsideration, the BAC shall hold the bid of said ineligible bidder unopened and duly sealed until such time that the motion for reconsideration has been resolved. (Section 23.3, IRR-A; Section 24.13, IRR-A)

In sum, the non-inclusion of the financial eligibility documents in the eligibility envelope would result to the bidder being declared "ineligible" due to the absence of such financial document. The BAC shall not be allowed to receive and open the Technical Proposal envelope of the ineligible bidder until such time that the motion for reconsideration, if any, has been resolved.