2006-01-26

PM 01-2006

Requesting Entity: Procurement Service Department of Education

Issues Concern: Contract Price Adjustment

 

Details

Whether a contract price adjustment during the post-qualification stage would be appropriate so as to allow participating bidders to include the cost for Expanded Value Added Tax (EVAT) in their submitted bids, in view of the subsequent implementation of the EVAT law.

[T]he appropriate recourse would be to allow with the continuance of the procurement activity until award of contract has been made and thereafter, have a contract price adjustment to be agreed upon by the winning bidder and the procuring entity in accordance to Section 17.7.4 of the IRR-A, which provides:

Before submitting their bids, the bidders are deemed to have become familiar with all existing laws, decrees, ordinances, acts and regulations of the Philippines which may affect the contract in any way. However, in cases where the cost of the awarded contract is affected by any applicable new laws, ordinances, regulations or other acts of Government promulgated after the date of bidding, a contract price adjustment shall be made or appropriate relief shall be applied on a no loss-no gain basis, provided such is not covered by the contract provisions on price adjustment. (Emphasis supplied)

Further, a basis for a contract price adjustment should be provided by the winning bidder and the same should prove that the passage of a new law, or even any other ordinance, regulation or any other act of the Government has indeed substantially affected the contract price, thereby necessitating a contract price adjustment.