Requesting Entity: Bangko Sentral ng Pilipinas
Issues Concern: Application of Negotiation as an Alternative Method of Procurement to Priority Projects of the Bangko Sentral ng Pilipinas
Use of the Alternative Method
As regards the second issue, it will be noted that upon concurrence of the BSP General Counsel, the Pre-qualification Bids and Awards Committee (PBAC) adopted Section 35.2(e) of the IRR of E.O. 40 as an alternative method in the upgrade of the 5th Floor of the BSP 5-Storey Building and other related areas, more specifically the civil works component thereof. Although an agency or instrumentality of the government, including government owned or controlled corporations (“GOCCs”) and Government Financial Institutions (“GFIs”) may adopt any of the alternative methods, the same must be with the concurrence and approval of the Head of Agency or his duly authorized representative. Section 35.1 of E.O. 40 and its IRR provides:
In the interest of economy and efficiency, the agency concerned may adopt the following alternative methods of procurement after the Head of Agency concerned or his duly authorized representative has approved the use of the same, upon recommendation of the BAC, as indicated in the bidding documents.
In short, in the adoption of any of the alternative methods of procurement, the function of the BAC is to recommend which alternative method may be utilized in the procurement of a specified project. However,
the use of any of these alternative methods would have to be approved by the Head of Agency or its authorized representative. It is for this reason that the above provision clearly states that the BAC’s function is simply recommendatory in character. In this regard, we believe that the use of Negotiation by the BSP-BAC motu proprio, even with the concurrence of the BSP General Counsel, is not sanctioned by Section 35 of E.O. 40 and its IRR, because it would have to be approved by the Board of Directors of BSP.
Use of Negotiation as an Alternative Method of Procurement
Section 35.2, IRR of E.O. 40, allows the use of Negotiation as an alternative method in the procurement of civil works. However, the grounds by which Negotiation may be availed of under civil works procurement are limited only to the situations specified therein.
Considering the exclusivity of the enumerations in the said Section, agencies are allowed to procure civil works projects by way of Negotiation only if the reason therefor is one of those enumerated above. At this juncture, it is worthy to point out that items (e) to (g) of Section 35.2, are requirements, conditions and procedures to be considered and followed in inviting contractors to participate in Negotiated procurement of civil work projects.
Specifically, Section 35.2(e) which was relied upon by BSP, provides for who may be allowed to participate in the negotiated procurement of civil works projects namely: (1) a bona fide contractor whose eligibility documents are on file with the Construction Industry Authority of the Philippines (CIAP); (2) a contractor registered with the Department of Public Works and Highways (DPWH) Contractors’ Registry; (3) a contractor registered with the procuring agency; or, (4) such other contractors who may also apply for eligibility; provided that the contractor concerned is classified under the type of project where the subject contract falls. Hence, it can be seen from the foregoing that Section 35.2(e) is not, in itself, a ground to justify procurement of civil works by way of Negotiation, as it simply provides for who may be allowed to participate in the said negotiated procurement.
In fine, Negotiation as an alternative method of procurement for the two BSP projects may be allowed, provided that BSP is able to fully justify that the same falls within any of the conditions provided under items (a) to (d) of Section 35.2 of the IRR of E.O. 40; otherwise, the said projects should be procured by way of public bidding as mandated by Section 2.1, IRR of E.O. 40.