Negotiated Procurement Image Article Nicolas & de Vega Law

This article talks about negotiated procurement or a method of procurement resorted to under extraordinary circumstances whereby the government directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant. Negotiated procurement is allowed in cases of two failed biddings, emergency cases, take-over of contracts, adjacent or contiguous contracts, agency-to-agency, exclusive technology services, highly technical consultants, defense cooperation agreements, small value procurement, lease of venue for official use, NGO participation, community participation, international organizations and direct retail purchase of fuel and airline tickets.

Section 48(e) of Republic Act No. 9184, otherwise known as the Government Procurement Reform Act, defines negotiated procurement as a method of procurement that may be resorted under the extraordinary circumstances provided for in Section 53 of this Act and other instances that shall be specified in the IRR, whereby the Procuring Entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant. In general, it is only allowed in cases of two failed biddings, emergency cases, take-over of contracts, adjacent or contiguous contracts, agency-to-agency, exclusive technology services, highly technical consultants, defense cooperation agreements, small value procurement, lease of venue for official use, NGO participation, community participation, international organizations and direct retail purchase of fuel and airline tickets.

 Section 53 of the Implementing Rules of 9184 defines in detail the cases where negotiated procurement is allowed, as shown below:

Two Failed Biddings

53.1 Two Failed Biddings. Where there has been failure of competitive bidding or  Limited Source Bidding for the second time as provided in Section 35 of the Act and  this IRR.

Emergency Cases

53.2 Emergency Cases. In case of imminent danger to life or property during a state of  calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.

The instances or situations where the foregoing conditions may be applied include  the provision of immediate response and initial recovery steps to avoid loss of life,  injury, disease and other negative effects on human, physical, mental and social well-being, together with damage to property, destruction of assets, loss of services, social and economic disruption and environmental degradation.

In the case of Infrastructure Projects, the Procuring Entity has the option to undertake the project through negotiated procurement or by administration or, in high security risk areas, through the AFP.

Take-Over of Contracts

53.3 Take-Over of Contracts. Take-over of contracts, which have been rescinded or terminated for causes provided for in the contract and existing laws, where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities.

Adjacent or Contiguous Contracts

3.4 Adjacent or Contiguous. Where the subject contract is adjacent or contiguous to an ongoing Infrastructure Project or Consulting Service where the consultants have unique experience and expertise to deliver the required service: Provided, however, That (a) the original contract is the result of a Competitive Bidding; (b) the subject contract to be negotiated has similar or related scopes of work; (c) it is within the contracting capacity of the contractor/consultant; (d) the contractor/consultant uses the same prices or lower unit prices as in the original contract less mobilization cost; (e) the amount of the contiguous or adjacent work involved does not exceed the amount of the ongoing project; and (f) the contractor/consultant has no negative slippage/delay: Provided, further, That negotiations for the procurement of the contiguous or adjacent work are commenced before the expiry of the original contract.

Agency-to-Agency Procurement

53.5 Agency-to-Agency. Procurement of Goods, Infrastructure Projects and Consulting Services from another agency of the GoP, such as the DBM-PS, which is tasked with a centralized procurement of Common-Use Supplies for the GoP in accordance with Letters of Instruction No. 755 and E.O. 359, s. 1989.

Exclusive Technology Services

53.6 Scientific, Scholarly or Artistic Work, Exclusive Technology and Media Services. Where Goods, Infrastructure Projects and Consulting Services can be contracted to a particular supplier, contractor or consultant and as determined by the HoPE, for any of the following:

1. The requirement is for:

a. Work of art; commissioned work or services of an artist for a specific artist skill (e.g., Singer, poet, writer, painter, sculptor, etc.);

b. Scientific, academic, scholarly work or research, or legal services;

c. Highly-specialized life-saving medical equipment, as certified by the Department of Health (DOH);

d. Scientific, technical, economic, business, trade or legal journal, magazine, paper, subscription, or other exclusive statistical publications and references; or

e. Media documentation, advertisement, or announcement through television, radio, newspaper, internet, and other communication media.

Due to the nature of the information to be disseminated, alongside principles of transparency, efficiency and economy, award to more than one (1) supplier may be made by the Procuring Entity.

2. The construction or installation of an infrastructure facility where the material, equipment, or technology under a proprietary right can only be obtained from the same contractor.

Highly Technical Consultants

53.7 Highly Technical Consultants. In the case of individual consultants hired to do work that is (i) highly technical or proprietary; or (ii) primarily confidential or policy determining, where trust and confidence are the primary consideration for the hiring of the consultant: Provided, however, That the term of the individual consultants shall, at the most, be on a six month basis, renewable at the option of the appointing HoPE, but in no case shall exceed the term of the latter.

Defense Cooperation Agreement

53.8 Defense Cooperation Agreement; Defense Inventory-Based Items.

a. Defense Cooperation Agreement. The DND may directly negotiate with an agency or instrumentality of another country with which the Philippines has entered into a defense cooperation agreement or otherwise maintains diplomatic relations when the procurement involves major defense equipment or materiel and/or defense-related consultancy services subject to the following conditions:

1. The Secretary of National Defense has deemed it necessary in order to protect the interest of the country;

2. The expertise or capability required is not locally available; and

3. The defense equipment or materiel and/or defense-related consultancy services to be procured under this modality is included in the Armed Forces of the Philippines Modernization Program previously approved by the President of the Philippines.

b. Defense Inventory-Based Items. The DND may directly negotiate with a supplier or manufacturer in procuring inventory-based items, which pertain to major defense equipment or materiel as contemplated in Section 53.8(a) subject to the following conditions:

1. The Secretary of National Defense has determined that it is necessary to negotiate directly with a supplier or manufacturer in order to protect the interest of the country;

2. Resort to direct negotiation will address compatibility, interoperability and sustainability;

3. The supplier or manufacturer had fully and satisfactorily implemented a contract of the same item with the DND or any of its bureaus or attached agencies; and

4. The supplier or manufacturer shall provide a performance security in accordance with Section 39 of this IRR.9

Small Value Procurement

53.9  Small Value Procurement. Procurement of Goods, Infrastructure Projects and Consulting Services, where the amount involved does not exceed the threshold prescribed in Annex “H” of this IRR: Provided, That in case of Goods, the procurement does not fall under shopping in Section 52 of this IRR.

Lease of Venue for Official Use

53.10 Lease of Real Property and Venue. Lease of real property and venue for official use, subject to Annex “H” of this IRR.

NGO Participation

53.11 NGO Participation. When an appropriation law or ordinance earmarks an amount to be specifically contracted out to Non-Governmental Organizations (NGOs), the Procuring Entity may enter into a Memorandum of Agreement with an NGO, subject to the guidelines issued by the GPPB for the purpose.

Community Participation

53.12 Community Participation. Where, in the interest of project sustainability or to achieve certain specific social objectives, it is desirable in selected projects, or its components, to call for participation of local communities in the delivery of goods, including non-consulting services, and simple infrastructure projects, subject to the Community Participation Procurement Manual (CPPM) issued by the GPPB.

International Organizations

53.13 United Nations Agencies, International Organizations or International Financing Institutions. Procurement from specialized agencies of the United Nations, International Organizations or International Financing Institutions, of any of the following: (a) small quantities of off-the-shelf goods, primarily in the fields of education and health; (b) specialized products where the number of suppliers is limited, such as but not limited to vaccines or drugs; or (c) Goods, Infrastructure Projects and Consulting Services, involving advanced technologies, techniques and innovations not locally available as certified by the HoPE, when it is most advantageous to the government.

Retail Purchase of Fuel & Airline Tickets

53.14 Direct Retail Purchase of Petroleum Fuel, Oil and Lubricant (POL) Products and Airline Tickets. Where Goods and Services are required by a Procuring Entity for the efficient discharge of its principal mandate, governmental functions, or day-today operations, direct retail purchase of (i) petroleum fuel, oil and lubricant (POL) products; and (ii) airline tickets may be made by end-users delegated to procure the same from identified direct suppliers or service providers.

Requirement of Performance and Warranty Securities

Performance securities will be required in cases of two failed bidding, emergency cases, take-over contracts, adjacent/contiguous contracts and small value procurement.  Furthermore, warranty securities must still be given in cases of  two failed bidding, emergency cases, take-over contracts, adjacent/contiguous and small value procurement) [see Sec. 54.5, IRR of RA 9184].

Posting of Notice of Award

The BAC, through the Secretariat, shall post, for information purposes, the notice of award, contract or purchase order, including notice to proceed if necessary, in the PhilGEPS website, the website of the Procuring Entity concerned, if available, and at any conspicuous place reserved for this purpose in the premises of the Procuring Entity, except for contracts with ABC of Fifty Thousand Pesos (₱50,000.00) and below [Sec. 54.3, IRR of RA 9184].

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 info@ndvlaw.com. Visit our website https://ndvlaw.com.

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