2003-12-11

PM 016-2003

Requesting Entity: Department of Public Works and Highways

Issues Concern: Contract Package No. 7 – Restoration of Mancatian Bridge including Access Road, Pampanga Component of the On-going Implementation of Pinatubo Hazard Urgent Mitigation Project, Phase II, JBIC LA No. PH-P209

 

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Whether or not award of contract could be issued to the bidder with the lowest calculated and responsive bid for the above-captioned project, notwithstanding that the said bid is higher than the ABC.

On this particular issue, we wish to point out that the Department of Justice (DOJ), in its letter dated September 24, 2003, addressed to your office, clarifying its DOJ Opinion No. 58, series of 2003, regarding the subject-matter contract, emphasized that the only exceptions to the prohibition against the award of contract at a price more than the agency estimate or approved budget for the contract are the following:

( 1 ) Foreign assisted projects referred to in Section 14, Special Provisions DPWH Budget, General Appropriations Act (GAA) for fiscal year 2003 ,which have already been bid out and awarded at the effective date of the said GAA and ( 2 ) projects of contracts governed by any treaty or international or executive agreement existing as of the effective date of the same GAA. (Emphasis supplied)

Your query is being raised in light of Section 14, Special Provisions DPWH Budget of the GAA for fiscal year 2003, which we quote hereunder:

Section 14. Implementation of Foreign-Assisted Projects. Except for the projects which have already been bid out and awarded, no project enumerated under Item II on Foreign-Assisted projects shall be awarded above the approved agency estimate or approved budget for the contract. Contracts entered into in violation of this provision shall be null and void.

Thus, even if the subject-matter contract may not fall under the first exception above-quoted and appearing in Section 14 of the GAA, the same, appears to fall under the second exception, i.e. “projects or contracts governed by any treaty or international or executive agreement existing as of the effective date of the same GAA.” Particularly, in consonance with the afore-mentioned DOJ opinions, and the Foreign Borrowings Law, we believe that the said Contract Package No. 7 covering the Restoration of Mancatian Bridge including Access Road is governed by an international agreement between JBIC and the Government of the Republic of the Philippines – Loan Agreement for Pinatubo Hazard Urgent Mitigation Project (Phase II), PH-P209 and its Guidelines for Procurement dated December 1987, which obviously has been existing even before the effective date of the GAA for FY 2003. Henceforth, the prohibition against the award of contract above the Approved Budget for the Contract (ABC) should not apply to this project.