2012-01-16

NPM 010-2012

Requesting Entity: Office of the Ombudsman

Issues Concern: Execution of Contract and Issuance of Notice to Proceed

 

Details

Guidance in a construction project conducted by the Office of the Ombudsman, wherein a Notice of Award (NOA) was issued but the execution of the corresponding contract and Notice to Proceed (NTP) was deferred.

Effect of a communicated and duly received NOA

[T]he receipt by the winning bidder of the NOA is the initial step that leads to the execution of the contract and the issuance of the NTP. The effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder. xxx . Accordingly, a duly communicated and received NOA brings about the perfection of contracts through the meeting of the minds of the offeror - the bidder, and the offeree - the Procuring Entity.

Nature of government contracts

Even if the NOA was duly issued, communicated to and received by the winning bidder, the contract although deemed perfected, must comply with all the requirements provided for under the law and the rules for it to be legally enforceable.

Mandatory nature of the procurement rules and timelines

Under RA 9184 and its IRR, the winning bidder and Procuring Entity (PE) shall enter into contract within ten (10) calendar days from receipt of the NOA. Thereafter, the PE shall issue the NTP together with a copy of the approved contract to the successful bidder within three (3) calendar days from the date of the approval of the contract by the appropriate government approving authority. The contract effectivity date, as provided in the NTP, shall not be later that seven (7) calendar days from its issuance. Hence, the PE is provided a maximum of twenty (20) days from the issuance of the NOA to execute the actual contract and mandate its implementation.

It is implicit, however, in Section 65.1 (b) of RA 9184 that awarding of contracts beyond the prescribed period of action may be recognized for justifiable causes. In that, although the periods of action under RA 9184 and its IRR are mandatory in character, penal sanctions or liability will not set in against the concerned public officers provided that valid and reasonable, and justifiable causes exist to warrant a delay in the contract extension. Thus, in a related opinion, we stated that the PE may still award the contract even beyond the three-month period, provided that the failure was due to justifiable causes, and provided further, that the bid security of the bidder remains valid.

From the foregoing, we are of the view that although there is a delay in the procurement process, the Honorable Ombudsman may opt to pursue the execution of the contract by requiring the winning bidder to comply with the conditions under Section 37.1.4 of the IRR of RA 9184 after determination that the delay is due to valid, reasonable, and justifiable cause.