What’s New in Government Procurement in the Philippines?

About The New Government Procurement Act

Republic Act No. 12009, or the “New Government Procurement Act,” is a game-changer for the Philippines. Think of it as a new rulebook for how the government buys things, from office supplies to gigantic infrastructure projects. This act repealed and replaced  Republic Act No. 9184 or the old “Government Procurement Reform Act,” takes a stand for transparency, fairness, and smart spending. It’s all about making sure our tax money is used wisely and that everyone gets a fair chance to do business with the government.

Let’s take a deep dive into the act and see how it’s transforming the procurement process in the Philippines.

Part I: The Big Picture: Good Governance and the New Rules of the Game

The New Government Procurement Act starts by setting out its core mission: promoting the ideals of good governance, with a focus on transparency, competitiveness, efficiency, proportionality, accountability, public monitoring, professionalization, sustainability, and value for money. It’s like a checklist of qualities that make a procurement process strong and trustworthy.

It applies to all government entities, big and small, including national departments, bureaus, and agencies, plus universities, corporations, financial institutions, and local governments. It also covers a broad range of procurements, from goods like furniture and stationery to massive infrastructure projects and even consulting services.

To ensure everyone is on the same page, the act meticulously defines key terms like “Approved Budget for the Contract” (ABC) and “Beneficial Owner”, making sure everyone understands the language of procurement.

The Guiding Principles: Making Sure that Government Procurement Works for Everyone

The act highlights eight key principles that shape the procurement process:

1. Transparency: It’s all about open access to information, from planning to awarding contracts. Think of it as letting the public peek behind the curtain and see how things work.
2. Competitiveness: Everyone gets a fair shot. The act promotes equal opportunities for all qualified bidders, ensuring that the best value for money wins, not just who has the best connections.
3. Efficiency: The act aims to make the procurement process as streamlined and straightforward as possible, utilizing technology to cut through unnecessary bureaucracy and speed up the process.
4. Proportionality: The act emphasizes that procurement requirements and procedures should be tailored to the specific needs of the project, making sure things are done right without being overly complicated or burdensome.
5. Accountability: Every step of the way, public officials are held accountable for their actions. This ensures that government funds are used responsibly and that any wrongdoing is investigated and addressed.
6. Participatory Procurement: The act encourages the public to be involved in monitoring the procurement process, ensuring that everything is done legally and ethically.
7. Sustainability: The act promotes environmentally conscious procurement practices, considering the entire lifecycle of a product or project to minimize environmental impact and promote responsible consumption.
8. Professionalism: The act emphasizes the importance of a high standard of professionalism in procurement, promoting qualifications, certifications, and ethical conduct among those involved.

Part II: Planning Ahead: Getting Ready for Smart Government Procurement

The act emphasizes the importance of planning before making any big purchases. It’s like preparing a detailed recipe before starting to cook.

Strategic Planning: Setting the Course for Effective Government Procurement

The act mandates a thorough planning process, including market scoping, supply positioning, risk management, and disposal procedures. Procuring entities are encouraged to develop a comprehensive procurement strategy that is fit-for-purpose, considers the project’s lifecycle, and aims to achieve value for money.

Multi-Year Contracts: Planning for the Long Haul

The act introduces the concept of multi-year contracts, allowing for the procurement of projects that span multiple years. This provides the government with the flexibility to undertake major projects and initiatives that require a longer timeline. However, it requires prior approval from the Department of Budget and Management (DBM) to ensure financial discipline.

Lifecycle Cost Analysis: Thinking Beyond the Initial Price

To ensure that the government gets the best value for money, the act mandates lifecycle cost analysis, which considers the costs associated with a project throughout its entire lifespan. This goes beyond the initial purchase price, taking into account operational costs, maintenance, and eventual disposal. This helps ensure that the government makes informed decisions based on long-term cost-effectiveness.

Part III: The Government Procurement Toolbox: A Variety of Tools for Diverse Needs

The act provides a toolkit of different procurement modes to accommodate various needs and circumstances:

Competitive Bidding in Government Procurement: The Fair and Open Option

Competitive bidding, the primary mode of procurement, is like a public auction where everyone who qualifies can participate. It’s all about creating a level playing field and ensuring that the best bid wins, not who has the best connections.

The process involves several steps, including:

1. Publication: The invitation to bid is published for seven calendar days, making sure everyone knows about the opportunity.
2. Pre-bid Conference: Potential bidders can attend optional conferences to clarify their understanding of the bidding documents.
3. Bid Evaluation: The Bids and Awards Committee (BAC) carefully assesses each bid based on predetermined criteria like price, quality, and technical capability.

Negotiated Procurement: When a Direct Approach is Needed

In certain situations, the New Government Procurement Act allows for negotiated procurement, where the government can negotiate directly with a supplier or contractor.

This approach might be used in scenarios such as:

1. Two Failed Biddings: If two competitive bidding attempts fail, negotiated procurement can provide an alternative path.
2. Emergency Cases: When there’s an urgent need, such as a disaster or a threat to public safety, negotiated procurement enables faster action.
3. Specialized Goods or Services: When a project requires unique expertise or specialized goods that can only be procured from a limited number of sources, negotiated procurement allows for a direct approach.

Other Procurement Modes: Filling the Gaps

The act also outlines several other procurement modes, each catering to specific circumstances:

1. Repeat Order: This streamlines the process when procuring the same goods as a previous contract, allowing for a more efficient replenishment.
2. Small Value Procurement: This simplified process is applicable for smaller-scale purchases, allowing for price quotations instead of a full-blown bidding process.
3. Direct Contracting: This mode allows the government to procure directly from a known and reputable source, streamlining the process for well-established relationships.
4. Emergency Procurement: When there’s a pressing need, this mode allows for expedited procurement to address urgent situations.
5. Limited Source Bidding: This mode is appropriate when the market for the specific goods or services is limited and competitive bidding isn’t feasible.
6. Shopping: This straightforward mode is applicable when there are numerous suppliers offering similar goods or services, simplifying the acquisition process.

Part IV: The Watchdogs: Ensuring Fair Play and Transparency in Government Procurement

The act places a strong emphasis on accountability and transparency, with the Bids and Awards Committee (BAC) playing a crucial role in overseeing the procurement process:

The Bids and Awards Committee: The Guardians of Government Procurement Integrity

The BAC is like a team of experts tasked with ensuring fairness, transparency, and adherence to the law in all procurement processes. They are responsible for:

1. Recommending Procurement Modes: The BAC recommends the most appropriate procurement mode for each project, based on the project’s needs and the principles outlined in the act.
2. Pre-procurement Conferences: The BAC facilitates conferences to allow potential bidders to clarify their understanding of the requirements.
3. Determining Eligibility: The BAC ensures that only qualified bidders are allowed to participate, ensuring that only those with the necessary legal, technical, and financial capabilities can enter the procurement process.
4. Receiving Bids: The BAC receives bids from eligible bidders and ensures that they are submitted according to the established procedures and deadlines.
5. Recommending Contract Awards: After carefully evaluating bids, the BAC recommends the winning bidder to the head of the procuring entity.

The Role of Observers: Independent Eyes on the Process

To further enhance transparency and public confidence, the BAC is required to invite observers from civil society organizations to participate in the procurement process. These observers act as independent monitors, ensuring that the process is conducted fairly and ethically.

Part V: The Power of Technology: Streamlining Government Procurement and Enhancing Transparency

Republic Act No. 12009 recognizes the transformative power of technology to improve the efficiency and transparency of procurement:

The PhilGEPS: The Digital Hub for Government Procurement

The Philippine Government Electronic Procurement System (PhilGEPS) serves as the central digital hub for all government procurement activities. It’s like a one-stop shop, providing information, facilitating online bid submissions, and supporting various stages of the procurement process.

Electronic Payment: Simplifying Financial Transactions

The act mandates the use of electronic payment systems, streamlining financial transactions between the government and its suppliers. This reduces delays and errors, making the procurement process more efficient and secure.

Part VI: Embracing Sustainability: Procurement for a Brighter Future

The act recognizes the importance of sustainable practices in procurement, encouraging the government to consider the environmental impact of its purchases:

Sustainable Government Procurement: Making a Difference for the Planet

Procuring entities are required to establish sustainable procurement programs that prioritize environmentally friendly practices and products. It’s about making sure that government purchases not only meet immediate needs but also contribute to a more sustainable future.

Green Government Procurement: Reducing the Environmental Footprint

The act promotes a Green Public Procurement Strategy, which encourages the use of environmentally friendly materials, technologies, and practices throughout the procurement process. This helps reduce the government’s environmental footprint and promotes a more responsible approach to public purchasing.

Part VII: Holding Accountable: Sanctions for Wrongdoing

The act outlines administrative sanctions to ensure that those involved in the procurement process adhere to the law and ethical standards:

Administrative Liability for Public Officers: Ensuring Ethical Conduct

Public officers who violate procurement laws, such as opening sealed bids prematurely or exerting undue influence on BAC members, are subject to administrative liabilities, including penalties. This ensures that those in positions of power are held accountable for their actions.

Suspension and Blacklisting: Deterring Unethical Practices

The act empowers the Government Procurement Policy Board (GPPB) to suspend or blacklist private entities that violate procurement regulations. This mechanism serves as a deterrent to future misconduct, promoting a more responsible and ethical procurement environment.

Part VIII: Putting the Act into Action: Ensuring Implementation and Long-term Impact

The act includes provisions to ensure its effective implementation and long-term sustainability:

Implementing Rules and Regulations (IRR): Providing Clarity and Guidance

The GPPB is tasked with formulating the necessary rules and regulations for the act’s implementation within 180 days of its promulgation on 20 July 2024. These IRR provide detailed guidelines for various aspects of the procurement process, ensuring consistent and effective implementation.

Standard Forms: Streamlining Procedures

The GPPB is also responsible for formulating and approving standard forms for procurement within 90 days of the approval of the IRR. These standardized forms simplify and streamline the procurement process, promoting efficiency and reducing the potential for errors or inconsistencies.

Transitory Provision: Towards A Smooth Transition

The act provides a three-year transitional period from the approval of standard forms for procurement to allow entities to fully comply with the new requirements. This gradual transition ensures a smooth transition to the new procurement system, minimizing disruptions and providing ample time for agencies to adapt.

Reportorial Requirements: Ensuring Transparency and Accountability

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 promote transparency and accountability, allowing for public access to the key documents governing the implementation of the act.

Repealing Clause: A Clean Slate for a New Era

The act repeals previous legislation, including Republic Act No. 9184 (the “Government Procurement Reform Act”) and Commonwealth Act No. 138, ensuring that the new act serves as the primary framework for government procurement. It also repeals, amends, or modifies any other conflicting provisions in previous laws, acts, decrees, and regulations.

Effectivity: The Start of a New Chapter

The act takes effect 15 days after its publication in the Official Gazette or in two newspapers of general circulation. Thus, the law already took effect last 13 August 2024.

Part IX: A New Era of Government Procurement: Looking Forward

Republic Act No. 12009 represents a significant step forward in the Philippines’ commitment to good governance. By establishing a comprehensive framework that prioritizes transparency, efficiency, accountability, and sustainability, the act empowers the government to acquire goods, infrastructure projects, and consulting services in a more responsible, 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.

The act’s 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.

This new procurement act marks a turning point for the Philippines. It’s about building a system that is more transparent, more efficient, and more accountable. It’s about making sure that government purchases are made wisely and that public funds are used to benefit everyone. It’s about making a real difference in the lives of the Filipino people.

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.