Republic Act No. 12009, aptly also known as the “New Government Procurement Act,” was approved on 20 July 2024 and marks a pivotal moment in the evolution of government procurement practices in the Philippines. This landmark legislation REPEALED Republic Act No. 9184 (“Government Procurement Reform Act”) and Commonwealth Act No. 138 (An Act to Give Native Products and Domestic Entities the Preference in the Purchase of Articles for the Government). This new law establishes a comprehensive and robust framework for procurement activities within the Philippine government. The act’s overarching goal is to transform government procurement into a system that prioritizes transparency, efficiency, accountability, and sustainability, thereby ensuring the prudent use of public funds and promoting good governance.

This in-depth article delves into the key provisions of Republic Act No. 12009, meticulously examining its foundational principles, strategic planning aspects, diverse modes of procurement, the crucial role of the Bids and Awards Committee (BAC), the implementation of electronic procurement, the emphasis on sustainable practices, administrative sanctions, and final provisions. Each section provides a detailed exploration of the act’s provisions, highlighting their implications and potential impact on the procurement landscape within the Philippines.

I. General Provisions: A Foundation of Transparency, Efficiency, and Integrity

The act commences with a clear articulation of its purpose and the fundamental principles that underpin its implementation.

a) Short Title and Declaration of Policy:

The act declares the state’s unwavering commitment to upholding the principles of good governance, aiming to ensure transparency, competitiveness, efficiency, proportionality, accountability, public monitoring, professionalization, sustainability, and value for money in all government procurement activities.

b) Governing Principles:

Eight fundamental principles serve as the cornerstone of government procurement under the act:

Transparency: This principle mandates open access to information relating to the procurement process, aligning with open contracting practices that enable the disclosure of data and facilitate information sharing at all stages of procurement. The act envisions a procurement system where every step, from planning to implementation, is readily accessible to the public, fostering public scrutiny and accountability.
Competitiveness: The act emphasizes the provision of equal opportunities for all eligible and qualified suppliers, manufacturers, distributors, contractors, consultants, and service providers. It promotes a level playing field where merit and capability, rather than favoritism or undue influence, are the primary determinants of success in the procurement process.
Efficiency: The act aims to implement an organized, uniform, and streamlined government procurement process, leveraging emerging technologies and innovative solutions. This principle seeks to eliminate unnecessary bureaucracy and redundancies, ensuring a smooth and timely procurement process that maximizes efficiency and minimizes delays.
Proportionality: The act mandates that the development of requirements, choice of procurement modality, and implementation of contracts are tailored to the specific needs of the Procuring Entity and the nature of the contract or project. It emphasizes the avoidance of overly burdensome requirements or complex procedures that are disproportionate to the scale or nature of the procurement, promoting a practical and sensible approach.
Accountability: The act holds all public officials and personnel involved in the procurement process accountable for their actions, with provisions for investigations and appropriate measures when necessary. This principle underscores the importance of ethical conduct and adherence to legal requirements, deterring corrupt practices and ensuring that public resources are used responsibly.
Participatory Procurement: The act encourages public monitoring of the procurement process and contract implementation, ensuring compliance with the law and the prudent use of government resources. It recognizes the value of public oversight in safeguarding the integrity of government procurement, allowing citizens to hold accountable those responsible for managing public funds.
Sustainability: Procurement practices are encouraged to be environmentally conscious, considering the entire lifecycle of a property, maximizing societal and economic benefits, and minimizing environmental impact. The act emphasizes the importance of sustainable practices, integrating environmental considerations into the procurement process to promote responsible consumption and production patterns.
Professionalism: The act stresses the importance of developing qualification standards, a competency and certification framework, and a code of ethics for public procurement professionals. It seeks to raise the professional standards of those involved in government procurement, fostering a culture of excellence and ethical conduct.

c) Scope and Application:

Republic Act No. 12009 applies broadly, encompassing all branches and instrumentalities of the national government, including departments, bureaus, offices, and agencies. This includes state universities and colleges (SUCs), government-owned and/or controlled corporations (GOCCs), government financial institutions (GFIs), and local government units (LGUs). The act’s reach extends to the procurement of goods, infrastructure projects, and consulting services, regardless of the source of funding, whether local or foreign. It also recognizes and integrates any treaty or international or executive agreement that pertains to the subject matter of this Act to which the Philippine government is a signatory.

d) Definitions:

The act meticulously defines key terms for clarity and consistency in interpretation, providing a shared understanding of the language used throughout the act. Crucial definitions include:

Approved Budget for the Contract (ABC): This term refers to the budget for the contract duly approved by the Head of the Procuring Entity. It is based on the General Appropriations Act or other authorized sources of funds for national government agencies (NGAs), the corporate budget for GOCCs, GFIs, and SUCs, and the budget approved by the Sanggunian (local council) for LGUs. The ABC establishes the financial ceiling for the procurement, ensuring that the procurement process remains within budgetary constraints.
Beneficial Owner: This term refers to a natural person who ultimately owns or dominantly influences the management or policies of a juridical entity, or exercises ultimate effective control over the entity. This definition seeks to identify the true beneficiaries of contracts, uncovering potential conflicts of interest and promoting transparency in the procurement process.
Consulting Services: These encompass the services of natural or juridical persons engaged in various professional activities such as planning, design, supervision, management, and other professional advisory and technical services. The act recognizes the importance of professional expertise in various aspects of procurement, encompassing a wide range of consulting services that support the successful execution of government projects.
Goods: This definition includes all items, supplies, materials, and general support services, except consulting services and infrastructure projects. It encompasses equipment, furniture, stationery, construction materials, personal property, and non-personal or contractual services such as repair and maintenance, trucking, hauling, janitorial, security, and related services. This broad definition ensures that a wide range of goods and services used by government entities are subject to the act’s provisions.
Government Procurement Policy Board (GPPB): Established under Article XIX of the act, this board serves as the central body responsible for setting strategic direction and making policy decisions concerning public procurement. The GPPB plays a critical role in shaping the procurement landscape, ensuring consistency and effectiveness across government agencies.
Head of the Procuring Entity (HoPE): This term designates the head of the agency or duly authorized official for NGAs, the governing board or its authorized official for GOCCs, SUCs, and GFIs, and the local chief executive for LGUs. The HoPE is vested with the authority to oversee the procurement process within their respective entities, ensuring compliance with the act’s provisions.
Infrastructure Projects: These encompass the construction, improvement, rehabilitation, demolition, repair, restoration, or maintenance of roads, bridges, railways, airports, seaports, communication facilities, civil works components of information technology projects, and other related infrastructure projects. The act specifically addresses the procurement of infrastructure projects, recognizing their significance in national development and the need for rigorous oversight.
Philippine Government Electronic Procurement System (PhilGEPS): This system serves as the primary electronic portal for all government procurement activities, promoting transparency and efficiency. The PhilGEPS is a crucial tool for facilitating electronic procurement, centralizing information and streamlining various stages of the procurement process.
Procuring Entity: This refers to any branch, department, bureau, office, agency, or instrumentality of the government, including SUCs, GOCCs, GFIs, and LGUs, that procure goods, infrastructure projects, and consulting services. This broad definition encompasses a wide range of government entities, ensuring that all entities involved in procurement are subject to the act’s provisions.
Technical Eligibility: This refers to the experience or expertise required to undertake the services, manufacturing, distribution, or delivery of the procured goods, infrastructure projects, and consulting services. The act recognizes that technical competence is essential for successful procurement, ensuring that bidders possess the necessary skills and knowledge to deliver on their commitments.
Value for Money: This term refers to the optimal combination of quality and cost to meet the requirements and objectives of the end-user. The act emphasizes the importance of achieving the best possible value for every procurement, balancing quality with cost-effectiveness to ensure that public resources are used wisely.

II. Strategic Procurement Planning: A Blueprint for Responsible Procurement

Republic Act No. 12009 emphasizes that proper planning is essential for effective procurement, ensuring that resources are allocated strategically and that projects are executed efficiently.

a) Procurement Planning:

The act mandates that all procurement activities must be preceded by thorough planning and preparation. This includes conducting market scoping, supply positioning, analyzing available procurement modalities, managing risks, and establishing disposal procedures as necessary. A well-defined procurement plan helps to mitigate risks, ensure the acquisition of appropriate goods or services, and minimize the potential for waste or inefficiencies.

b) Multi-Year Contractual Authority:

The act introduces the concept of multi-year contractual authority, allowing for the procurement of multi-year projects. However, it requires prior approval from the Department of Budget and Management (DBM) before embarking on such projects. This provision empowers the government to undertake long-term projects, fostering stability and continuity in infrastructure development and other major initiatives.

c) Lifecycle Cost Analysis:

To ensure value for money, the act mandates that procuring entities conduct lifecycle cost analysis in their project planning. This approach considers the costs associated with a project throughout its entire lifespan, from initial acquisition to operation, maintenance, and eventual disposal. By taking into account the full range of costs, lifecycle cost analysis promotes a more comprehensive and strategic approach to project planning, ensuring that long-term costs are factored into decision-making.

III. Modes of Procurement: A Spectrum of Procurement Options

The act outlines a variety of procurement modes, providing flexibility to procuring entities to select the most appropriate method based on the specific circumstances and nature of the procurement.

a) Competitive Bidding:

This is the primary mode of procurement, promoting fairness, transparency, and competition. The process involves several stages:

Publication: The invitation to bid is published for seven calendar days in the PhilGEPS, on the premises of the procuring entity, and on its website or social media platforms, if available. This ensures that potential bidders have ample opportunity to learn about the procurement opportunity and submit their bids.
Pre-bid Conferences: These conferences are optional, allowing potential bidders to clarify their understanding of the bidding documents. Pre-bid conferences provide a platform for bidders to address any ambiguities or uncertainties, ensuring a shared understanding of the procurement requirements.
Bid Evaluation: The BAC evaluates bids based on pre-determined criteria and selects the winning bidder. Bid evaluation involves a rigorous process of assessing bids based on pre-defined criteria such as price, technical capability, and past performance, ensuring that the winning bidder is the most qualified and offers the best value for money.

b) Negotiated Procurement:

This mode is permitted under specific circumstances , such as:

Two failed biddings: When two previous competitive bidding attempts have failed, negotiated procurement allows the procuring entity to negotiate directly with a potential supplier, contractor, or consultant. This provides flexibility in situations where competitive bidding has proven unsuccessful.
Emergency cases: Negotiated procurement is permissible in emergency cases, such as those involving a threat to public safety or the need to address a major calamity. This allows for a more expedited procurement process in urgent situations, ensuring a swift response to critical needs.
Goods, infrastructure projects, and consulting services that can only be contracted to a particular supplier, contractor, or consultant: When the nature of the procurement is such that it can only be undertaken by a specific entity, negotiated procurement allows for a direct contract with that entity. This applies to situations where specialized expertise or unique capabilities are required, and competition is limited.
Lease of real property and venue for official use: This mode allows procuring entities to negotiate directly with owners of real property for lease agreements, ensuring the availability of appropriate spaces for government operations.
Appropriation law or ordinance earmarks an amount to be specifically contracted out to non-governmental organizations (NGOs): When an appropriation law designates funds for specific projects to be undertaken by NGOs, the procuring entity may enter into a memorandum of agreement (MOA) with the selected NGO.
Directly procuring agricultural and fishery products from local farmers and fisherfolk: The act allows for direct procurement of agricultural and fishery products from local producers, supporting local economies and ensuring a consistent supply of essential commodities.
Directly negotiating simple infrastructure projects with local communities or social groups: The act encourages community participation in small-scale infrastructure projects, allowing procuring entities to negotiate directly with local communities for their construction or rehabilitation. This promotes grassroots development and strengthens community involvement in local infrastructure projects.
Procuring from specialized agencies of the UN, international organizations, or international financing institutions: When procuring goods or services from international organizations, the act permits negotiated procurement, facilitating collaboration and cooperation on a global scale.
Direct retail purchases of petroleum fuel, oil, and lubricant (POL) products, electronic charging devices, and online subscriptions: The act allows for the direct retail purchase of essential commodities, such as POL products, electronic charging devices, and online subscriptions, streamlining procurement for these commonly needed goods and services.
Procuring defense equipment or materiel and/or defense-related consultancy services under defense cooperation agreements: The Secretary of National Defense can directly negotiate with foreign agencies or instrumentalities for the procurement of major defense equipment or materiel, subject to specific conditions. This provision recognizes the unique requirements of national defense and allows for direct negotiations with trusted international partners.

c) Other Modes of Procurement:

The act also outlines several other modes of procurement, providing for specific scenarios that require alternative approaches:

Repeat Order: This allows the procuring entity to procure goods from the previous winning bidder when there is a need to replenish goods previously procured through bidding. This streamlining mechanism allows for efficient procurement when procuring identical or similar goods, avoiding the need for a new bidding process.
Small Value Procurement: This allows for the procuring entity to request price quotations for goods, infrastructure projects, and consulting services when the amount involved does not exceed Two million pesos. This simplified procurement process is applicable for smaller-scale purchases, promoting efficiency and reducing administrative burdens.
Direct Contracting: This mode permits procuring entities to procure directly from any known and reputable source when certain conditions are met. This mode allows for a more direct approach to procurement when there is a clear need for specific goods or services and the procuring entity has a strong relationship with a reliable supplier.
Emergency Procurement: This mode is allowed for urgent procurements when there is a threat to public safety or a need to address a major calamity. This mode enables a rapid response in emergency situations, prioritizing immediate action to mitigate risks or address urgent needs.
Limited Source Bidding: This mode is used when there are only a limited number of suppliers, manufacturers, contractors, or consultants who can provide the goods, infrastructure projects, and consulting services. This mode is appropriate when the market for the specific goods or services is limited, and competitive bidding is not feasible.
Shopping: This mode is applicable for procuring goods, infrastructure projects, and consulting services that are readily available in the market. This mode allows for a more straightforward procurement process when there are numerous suppliers offering similar goods or services, simplifying the acquisition process.

IV. The Bids and Awards Committee (BAC): The Foundation of Procurement Integrity

Each procuring entity must establish a Bids and Awards Committee (BAC) to oversee the procurement process, ensuring fairness, transparency, and accountability.

a) Establishment of BAC:

The BAC is composed of at least five members, including a chairperson, and is responsible for overseeing the procurement process. The BAC members are appointed based on their expertise and knowledge of procurement, ensuring that the committee has the necessary skills and experience to guide the procurement process.

b) Functions of BAC:

The BAC plays a crucial role in the procurement process, undertaking tasks such as:

Recommending procurement modes: The BAC is responsible for recommending the most appropriate procurement mode for each project, taking into account the specific requirements and circumstances. This ensures that the selected mode aligns with the needs of the project and the principles outlined in the act.
Conducting pre-procurement conferences: The BAC convenes pre-procurement conferences, allowing potential bidders to seek clarification on the procurement requirements and specifications. This facilitates a clear understanding of the procurement process, promoting fairness and avoiding misunderstandings.
Determining bidder eligibility: The BAC assesses the eligibility of bidders to participate in the procurement process, ensuring that they meet the necessary legal, technical, and financial requirements. This vetting process helps to eliminate unqualified bidders, maintaining the integrity and quality of the procurement process.
Receiving bids: The BAC receives bids from eligible bidders, ensuring that they are submitted in accordance with the specified procedures and deadlines. The BAC carefully reviews each bid to confirm its completeness and adherence to the stipulated requirements.
Recommending contract awards: After thorough evaluation of bids, the BAC recommends the winning bidder to the HoPE for contract award. The BAC’s recommendation is based on the bid evaluation criteria, ensuring that the award is made to the most qualified and responsive bidder.
Implementing the rules and guidelines for the implementation and termination of contracts: The BAC plays a role in ensuring the smooth implementation and termination of contracts, monitoring compliance and addressing any issues that may arise. This oversight ensures that contracts are executed according to the agreed-upon terms and conditions.
Conducting the preliminary examination and opening of bids: The BAC is responsible for conducting the preliminary examination and opening of bids, ensuring that the process is transparent and fair. This involves confirming the completeness of bids, verifying the bid security, and publicly opening the bids to all interested parties.

c) Observers:

To promote transparency and public scrutiny, the BAC is required to invite observers from civil society organizations to participate in the procurement process. These observers serve as independent monitors, ensuring the integrity and fairness of the proceedings. Their presence helps to deter any irregularities or impropriety, building public trust in the procurement process.

V. Procurement by Electronic Means: Embracing Technology for Transparency and Efficiency

Republic Act No. 12009 recognizes the transformative potential of technology in modernizing government procurement, enhancing transparency, efficiency, and accountability.

a) The PhilGEPS:

The Philippine Government Electronic Procurement System (PhilGEPS) is established as the primary electronic portal for government procurement activities. It serves as a central hub for information and communication, streamlining various stages of the procurement process. The PhilGEPS centralizes access to information, facilitating online publication of bidding documents, bid submission, and contract management, making the procurement process more accessible, transparent, and efficient.

b) Electronic Payment:

The act mandates the use of an electronic payment system for procurement transactions. This digital payment system aims to simplify and expedite financial transactions between the procuring entity and suppliers, manufacturers, distributors, contractors, consultants, and service providers. Electronic payment systems improve the efficiency and security of financial transactions, reducing delays and minimizing the risk of errors or fraud.

VI. Sustainable Public Procurement: A Commitment to Environmental Responsibility

Republic Act No. 12009 emphasizes the importance of sustainable practices in procurement, promoting responsible environmental stewardship and long-term economic viability.

a) Sustainable Procurement Program:

Procuring entities are required to establish sustainable public procurement programs. These programs are designed to achieve value for money on a whole-life basis, not only meeting organizational needs but also benefiting society and the economy while minimizing environmental impact. Sustainable procurement programs encourage the use of eco-friendly materials, energy-efficient technologies, and environmentally responsible practices throughout the procurement process.

b) Green Public Procurement Strategy:

The act promotes the procurement of goods, infrastructure projects, and consulting services with a reduced environmental impact throughout their lifecycles. This Green Public Procurement Strategy encourages the use of environmentally friendly materials, technologies, and practices. This strategy aims to reduce the government’s environmental footprint, promoting responsible consumption and production patterns across all government activities.

VII. Administrative Sanctions: Ensuring Accountability and Compliance

The act outlines a range of administrative sanctions to deter violations of procurement laws and regulations, upholding the integrity of the procurement process and ensuring accountability for misconduct.

a) Liability of Public Officers:

Public officers found to have committed acts such as opening sealed bids prematurely, delaying procurement procedures without justification, exerting undue influence on BAC members, splitting contracts, abusing rejection powers, simulating procurement requirements, or engaging in other acts of omission or commission that violate procurement laws are subject to administrative liabilities. These liabilities include penalties for government employees, even if no criminal prosecution is initiated. This provision reinforces the importance of ethical conduct and compliance with procurement regulations, imposing consequences for any deviation from the established rules.

b) Suspension and Blacklisting:

The act empowers the GPPB to suspend or blacklist private entities that violate procurement regulations. This mechanism serves to deter future misconduct and safeguard the integrity of the procurement process. By suspending or blacklisting entities that engage in unethical practices, the act discourages such behavior and promotes a more responsible and ethical procurement environment.

VIII. Final Provisions: Ensuring Implementation and Sustainability

The act concludes with provisions that ensure its effective implementation and long-term impact, establishing a robust framework for continuous improvement and adaptation.

a) Appropriations:

The act allocates funds for its initial implementation from the current year’s available appropriations. Subsequently, necessary funds will be included in the annual General Appropriations Act. This ensures that the act has the necessary resources to be implemented effectively and to support ongoing efforts to improve government procurement practices.

b) Implementing Rules and Regulations (IRR):

The GPPB is tasked with formulating the necessary rules and regulations for the act’s implementation within 180 days of its promulgation. These IRR will provide detailed guidelines for various aspects of the procurement process, ensuring consistent and effective implementation. The IRR serves as a practical guide for government agencies, clarifying the act’s provisions and providing operational guidance for its implementation.

c) Standard Forms:

Within 90 days of the approval of the IRR, the GPPB is responsible for formulating and approving standard forms for procurement. These standardized forms aim to simplify and streamline the procurement process, promoting efficiency and reducing the potential for errors or inconsistencies. Standardized forms promote consistency and reduce the risk of errors or misinterpretations, streamlining the procurement process and facilitating smoother transactions.

d) Transitory Provision:

Prior to the effectivity of the IRR, the provisions of Republic Act No. 9184 and its IRR will remain in effect to ensure the continued implementation of existing programs, activities, and projects. The GPPB, HOPE, procuring entities, and BACS affected by the act will be given a three-year transitional period from the approval of the standard forms to fully comply with the requirements of this act. This transitional period allows for a gradual shift to the new procurement system, minimizing disruptions and providing ample time for agencies to adapt to the new regulations.

e) Reportorial Requirements:

The GPPB is obligated to publish the approved IRR and standard forms, making them accessible to the public. It is also required to notify the Office of the President, the Senate of the Philippines, and the House of Representatives when these documents are posted on its website. These reportorial requirements ensure transparency and accountability, allowing for public access to the key documents governing the implementation of the act.

f) Repealing Clause:

The act repeals Republic Act No. 9184 (“Government Procurement Reform Act”) and Commonwealth Act No. 138. It also repeals, amends, or modifies any other laws, acts, presidential decrees, executive orders, presidential proclamations, issuances, rules, and regulations, or parts thereof that are contrary or inconsistent with its provisions. This clause clarifies the legal landscape, ensuring that the new act supersedes any conflicting provisions in previous legislation.

g) Separability Clause:

Should any provision of the act be declared invalid or unconstitutional, other unaffected provisions will remain in full force and effect. This ensures that the act’s overall framework remains operational, even if individual provisions are challenged or declared invalid.

h) Effectivity:

The act takes effect 15 days after its publication in the Official Gazette or in two newspapers of general circulation. Since this act was published on 29 July 2024, this law will become effective on 13 August 2024.

IX. Conclusion: A Transformative Act for Responsible Government Procurement

Republic Act No. 12009 stands as a transformative piece of legislation, ushering in a new era of responsible government procurement in the Philippines. By establishing a comprehensive framework that prioritizes transparency, efficiency, accountability, and sustainability, the act empowers the government to procure goods, infrastructure projects, and consulting services in a more prudent, ethical, and environmentally conscious manner. This act serves as a testament to the Philippines’ commitment to strengthening its procurement system and ensuring that public resources are utilized for the benefit of its citizens.

Through its emphasis on open contracting practices, the act fosters public trust and confidence in government procurement, promoting a more transparent and accountable system. The act’s provisions for electronic procurement leverage technological advancements to streamline the procurement process, enhancing efficiency and reducing administrative burdens. Furthermore, the act’s focus on sustainable procurement practices encourages environmentally responsible decision-making, minimizing the environmental impact of government activities.

Republic Act No. 12009 represents a significant step forward in the Philippines’ journey toward good governance. Its implementation will undoubtedly require a concerted effort from all stakeholders, including government agencies, private sector entities, and civil society organizations. By working together, the Philippines can build a procurement system that is not only efficient and effective but also transparent, accountable, and sustainable, ensuring that public resources are used wisely and effectively for the benefit of all citizens.

About Nicolas and De Vega Law Offices

If you need assistance in government procurement and public bidding, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.

A New Era of Government Procurement in the Philippines Through Republic Act No. 12009