The Red Tape Surrounding Emergency Response: Procurement at a Time of Emergencies

By: Thea T. Daep, Raquel Wealth A. Taguian, Monica Leonila B. Siron 
 
 In the Philippines, as in most jurisdictions, the policy of the government is that procurement of goods, infrastructure projects, and consulting services shall be competitive and transparent and hence, shall undergo competitive public bidding, save for certain situations where alternative modes of procurement are allowed under the law.¹
 
This policy is embodied in Republic Act No. (“RA”) 9184, or the “Government Procurement Reform Act,” which took effect on 26 January 2003, and was later enforced by subsequent implementing rules and regulations, the latest being the 2016 Revised Implementing Rules and Regulations (“2016 Revised IRR”) on 28 October 2016. 
 
 Fast forward to 2020, the Philippine government had to act fast and enact decisive measures and simplify rules for procurement with the aim of addressing the extremely urgent and detrimental emergencies brought about by the novel coronavirus disease (“COVID-19”) pandemic. To illustrate, as of the date of this writing, the Department of Health (“DOH”) has confirmed the emergence of 181 new COVID-19 cases, bringing the national total count to 7,958, while the death count is at 530.²     

Thus, on 8 March 2020, President Rodrigo R. Duterte signed Proclamation No. 922 declaring a State of Public Health Emergency throughout the Philippines upon recommendation of the DOH following the confirmed local transmission of COVID-19. The President likewise placed the entire island of Luzon under an Enhanced Community Quarantine (“ECQ”) beginning 17 March 2020 to 13 April 2020, which was extended to 30 April 2020 and later, 15 May 2020, for selected high-risk areas. Under the State of Public Health Emergency, all government agencies and local government units (“LGUs”) are enjoined to render full assistance and cooperation; and mobilize the necessary resources to undertake critical, urgent, and appropriate response and measures in a timely manner to curtail and eliminate the COVID-19 threat.³
 
A day later, pursuant to its authority under Section 63 of RA 9184 and its 2016 Revised IRR, the Government Procurement Policy Board (“GPPB”) issued Resolution No. 03-2020 (“Resolution 032020”),4 which, among others, proposed the inclusion of instances where the alternative procurement mode of Negotiated Procurement (Emergency Cases) may be resorted to by the Procuring Entity (“PE”).  
 
Under the existing rules, specifically, Section 53.2 of the 2016 Revised IRR and Item V(D)(2a) of Annex “H” of the same IRR, only in the following Emergency Cases may Negotiated Procurement as an alternative method of procurement be done: 
 
a. In case of imminent danger to life or property during a state of calamity, or 
 
b. When time is of the essence arising from natural or man-made calamities, or 
 
c. Other causes where immediate action is necessary: 
  1. to prevent damage to or loss of life or property, or 
     
  2. to restore vital public services, infrastructure, facilities and other public utilities.  
 
Thus, in addition to the foregoing, the following situations are sought to be included under Resolution 03-2020 in light of the declared State of Public Health Emergency: 
  1. 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; 5 and 
     
  2. The lease of real property or venue for use as quarantine centers, evacuation sites, medical relief and aid distribution locations, warehousing facilities, or similar temporary disaster or emergency response facility.6;
In terms of procedure, the GPPB issued the following simplified rules, to wit: 
  1. Allow the End-user unit or any other appropriate bureau, committee, support or procuring unit to recommend to the Head of the Procuring Entity (“HoPE”) any revision of the Annual Procurement Plan (“APP”) to cover the Procurement Project that will be resorting to Negotiated Procurement (Emergency Cases) subject to the validation by the appropriate office in the PE that there are funds in the budget to cover the same. Thus, the Bids and Awards Committee (“BAC”) need not be the one to recommend the revision of the APP; 

    Moreover, by approving the APP, the HoPE effectively confirms the existence and veracity of the ground(s) relied upon in resorting to Negotiated Procurement (Emergency Cases), thereby dispensing with the previous written confirmation requirement from the HoPE prior to approval of contract; 
     
  2. Similarly, the HoPE may now authorize the End-user unit or any other appropriate bureau, committee, support or procuring unit to directly negotiate with a legally, technically, and financially capable supplier, contractor, or consultant. Hence, the BAC need not be the one to negotiate or procure; and   
     
  3. Allow the HoPE to delegate the awarding of contract to any official of the PE, except to those where there exists conflict of interest such as the BAC Chairperson, members or person authorized to negotiate the bidding. 
 
           Recognizing that there may still be LGUs that have not issued Business or Mayor’s Permits and/or that the supplier, manufacturer, contractor, etc. may have some difficulty in having their oaths administered by notaries public or other authorities given the ECQ, the GPPB allowed PEs to accept (a) the expired Business or Mayor’s permit with Official Receipt of renewal application, subject to submission of Business or Mayor’s permit after award of contract and (b) an unnotarized Omnibus Sworn Statement (“OSS”), subject to submission of the notarized OSS after award of contract.7;
 
On 24 March 2020, the Philippine Congress enacted into law RA 11469, otherwise known as the “Bayanihan to Heal as One Act,” 8 which, pursuant to Article VI, Section 23 (2) of the Philippine Constitution, authorized the President to exercise powers that are necessary and proper to carry out the declared national policy to address the COVID-19 pandemic and to adopt temporary emergency measures to respond to the crisis brought about by the pandemic. 9 Among others, the President shall: 
 
 “(k) Undertake the procurement of the following as the need arises, in the most expeditious manner, as exemptions from the provisions of [RA] 9184 or the ‘Government Procurement Reform Act’ and other relevant laws: 
 
  1. Goods, which may include personal protective equipment such as gloves, gowns, masks, goggles, face shields; surgical equipment and supplies; laboratory equipment and its reagents; medical equipment and devices; support and maintenance for laboratory and medical equipment, surgical equipment and supplies; medical supplies, tools, and consumables such as alcohol, sanitizers, tissue, thermometers, hand soap, detergent, sodium hydrochloride, cleaning materials, povidone iodine, common medicines (e.g., paracetamol tablet and suspension, mefenamic acid, vitamins tablet and suspension, hyoscine tablet and suspension, oral rehydration solution, and cetirizine tablet and suspension); testing kits, and such other supplies or equipment as may be determined by the DOH and other relevant government agencies xxx’ 
     
  2.  Goods and services for social amelioration measures in favor of affected communities; 
     
  3.  Lease of real property or venue for use to house health workers or serve as quarantine centers, medical relief and aid distribution locations, or temporary medical facilities; 
     
  4.  Establishment, construction, and operation of temporary medical facilities; 
     
  5.  Utilities, telecommunications, and other critical services in relation to operation of quarantine centers, medical relief and aid distribution centers and temporary medical facilities; and 
     
  6.  Ancillary services related to the foregoing.” ¹10;[Emphasis and underscoring supplied] 
 
Consequently, the GPPB issued Resolution No. 06-2020 dated 6 April 2020, which endorsed for the approval of the President: (a) the increase in the allowable amount for advance payment from fifteen percent (15%) to thirty percent (30%) of the contract amount for the procurement of items 1 to 6, Section (k) of the Bayanihan to Heal as One Act; (b) maintaining the maximum amount of fifty percent (50%) for advance payment of the contract amount for contracts entered into by PEs for the services where requirement of down payment is a standard industry practice, such as the lease of real property or venue for use to house health workers or serve as quarantine centers, medical relief and aid distribution locations or temporary medical facilities; and (c) directing the PEs to promptly release the advance payment within three (3) working days from the award of contract to support the supplier or contractor during the delivery of the necessary items or services. 
 
Likewise on 6 April 2020, the GPPB issued Circular No. 01-2020, or the “Guidelines for Emergency Procurement under Republic Act No. 11469 or the Bayanihan to Heal as One Act,” the salient points of which are summarized below: 
 
  1. Effectivity . PEs which issued a Notice of Award (“NOA”) during the effectivity of the Circular may proceed with their contract implementation even after said effectivity.¹¹ After the lapse of the effectivity of the Circular, no NOA shall be issued.¹²

    The Circular shall take effect immediately and shall be in full force and effect only for three (3) months from 25 March 2020 or the effectivity of the Bayanihan to Heal as One Act.13
     
  2. Scope and Application. The Circular is applicable to all PEs or to any branch, constitutional commission or office, agency, department, bureau, office, or instrumentality of the Government of the Philippines, National Government Agencies, including Government-Owned and/or Controlled Corporations, Government Financing Institutions, State Universities and Colleges, and Local Government Units procuring Goods, Infrastructure Projects and Consulting Services, particularly, items 1 to 6, Section (k) of the Bayanihan to Heal as One Act.14
     
  3. Procedure.
    First, PEs shall prepare the project requirements, with the following details:
    a. Project Name; 
    b. Approved Budget for the Contract (“ABC”); 
    c. Technical Specifications, Scope of Work, or Terms of Reference; 
    d. Date of Delivery or Implementation; 
    e. Required quantity; and 
    f. Other relevant information that the PE may require.15;

    There is no required form to be used in the preparation of the project requirements.16 PEs shall formulate their project requirements and contract packaging based on their needs and the capability of suppliers as determined through initial market scanning or scoping.17 Procuring from several sources, if no one supplier is able to provide the required quantity, is not splitting of contracts.18

    Second, once the budget for the Procurement Project has been validated by the budget officer or equivalent position, the Procurement Project shall be included in the APP approved by HoPE or his or her delegate.19;

    The procurement modality to be shown in the APP shall be “Emergency Procurement under the Bayanihan to Heal as One Act”.20

    Due to the urgent necessity of the procurement, the PE may commence with the procurement even without an approved APP, so long as there is a document or certification from the budget officer or equivalent position showing that there is a budget for the purpose.21 Thereafter, the APP shall be approved and posted on the PE’s website and submitted to the GPPB or posted on the GPPB online portal for Emergency Procurement under the Bayanihan to Heal as One Act, once operational, on or before 30 September 2020.22

    Third, the PE shall directly negotiate or procure from a legally, technically, and financially capable supplier, distributor, manufacturer, contractor, or consultant, which is one that meets the requirements provided in the immediately succeeding proviso.23

    During negotiations, a formal written offer or bid may be submitted but is not required. Verbal agreement on the price and compliance or commitment to comply with the legal, technical and financial requirements of the Procurement Project shall be sufficient basis to recommend award of contract to the supplier, distributor, manufacturer, contractor, or consultant.24

    Fourth, the BAC or End-user unit or any other appropriate procuring unit duly authorized by the HoPE, shall immediately recommend the award of contract to one that has the legal, technical, and financial capability to undertake the procurement at hand, and has:25;

    a. submitted the mandatory documentary requirements under the Circular or if said documents were to be submitted after award of contract, has committed to comply with the same in the OSS, with the stipulations provided in Appendix 1 for the OSS form for Emergency Procurement under the Bayanihan to Heal as One Act;   

    b. complied with the technical specifications, scope of work or terms of reference set by the PEs, and other documents supporting the same, including appropriate licenses and permits required by law or rules, or if said documents were required to be submitted after award of contract, has committed to comply with the same in the OSS; and

    c. submitted any financial requirements of the project such as the Net Financial Contracting Capacity (“NFCC”), in case of Infrastructure Projects, or if said documents were required to be submitted after award of contract, has committed to comply with the same in the OSS. 

    For foreign suppliers, the equivalent document in their jurisdiction would suffice consistent with Section 23.2 of the 2016 Revised IRR of RA No. 9184.26; 

    Fifth, the HoPE, upon recommendation of the BAC or duly authorized End-user unit or any other appropriate procuring unit, shall immediately award the contract to a legally, technically, and financially capable supplier, distributor, manufacturer, contractor, or consultant.27

    The HoPE reserves the right not to award the contract if it will not redound to the benefit of the government such as:28

    a. if the physical and economic conditions have significantly changed so as to render the project no longer economically, financially, or technically feasible, as determined by the HoPE;

    b. if the project is no longer necessary as determined by the HoPE; or

    c. if the source of funds for the project has been withheld or reduced through no fault of the PE. 

    Upon award, the supplier shall enter into contract with the PE, which shall immediately be signed by the HoPE or his duly authorized representative, provided that all the documents required to be submitted prior to award thereof are complied with and that the OSS has been submitted.29

    Sixth, the BAC, through its Secretariat, shall post for information purposes the NOA, contract, or purchase order in (i) the website of the PE or if none, any conspicuous place in the premises of the PE; and (ii) the GPPB online portal for Emergency Procurement under the Bayanihan to Heal as One Act, once it becomes operational.30

    Seventh, the PE shall be responsible for: (i) monitoring performance and compliance by the supplier, distributor, manufacturer, contractor, or consultant with all the obligations and undertakings in the contract, and (ii) imposing sanctions for nonperformance by the supplier, distributor, manufacturer, contractor, or consultant which may include adherence to an improvement plan or any other remedial measures.31

    In all stages of the procurement process, the HoPE is encouraged to delegate his/her authority and responsibility to efficiently and expeditiously deal with the emergency sought to be addressed under the Bayanihan to Heal as One Act ,32 including, but not limited to, direct negotiation or conduct of procurement activities to the End-user unit or any other appropriate procuring unit,33 and awarding of the contract to any official of the PE, except to those where there exists conflict of interest such as the BAC Chairperson and members or the person authorized to negotiate the bidding.34

    4. Documentary Requirements. PEs already maintaining a bidder’s updated file of any of the following requirements, whether through the Philippine Government Electronic Procurement System Certificate of Registration and Membership or its own records, shall not require its re-submission.35

    Otherwise, PEs shall require copies of (a) Mayor’s or Business Permit.36 For projects with an ABC above PhP500,000.00: (b) Income Tax Returns (Annual Income Tax Return of the preceding tax year) or Business Tax Returns (Value Added Tax or Percentage Tax Return covering the previous six months); (c) OSS, which shall be an original copy.37 Additional requirements for Infrastructure Projects: (d) Philippine Contractors Accreditation Board License; and (e) NFCC for Infrastructure Projects with an ABC above PhP500,000.00.38

    Bidders may submit their documentary requirements in printed copies or by electronic mail or facsimile.39 Any and all documentary requirements, except the OSS, shall be submitted at any time before award of contract or after award but before payment.40 The OSS shall be submitted at any time before award of contract.41

    Digital signature or similar means may also be used in all procurement-related documents.42

    5. Price Negotiation. The most advantageous price to the government should be negotiated by the PE based on: (1) existing price data of the agency, the Department of Trade and Industry or other relevant agencies; or (2) preliminary market scanning done by the agency showing prevailing market prices and practice.43

    6. Direct Purchase from Local Farmers. To ensure the availability of food for all affected sectors, PEs are encouraged to directly purchase agricultural products from local farmers or farmers’ associations or cooperatives.44

    7. Special Repeat Order. Due to the urgent necessity of the items to be procured and the difficulty in estimating the required quantity and the available funding at that time of the original purchase, a Special Repeat Order may be availed of by the PE provided all of the following conditions are present:

    a. limited to Goods to be procured under the Circular;   

    b. the Goods were procured under a contract previously awarded through any mode of procurement, provided that the NOA was issued within the last six (6) months;

    c. unit prices must be the same as, or lower than, those in the original contract. In case of the same unit price, the PE must ensure that there is no lower price available in the market;

    d. there has been a partial delivery, inspection and acceptance of the goods under a contract previously awarded; and

    e. the total amount shall not exceed one hundred percent (100%) of the original contract.45

    Prior to the Special Repeat Order, a careful study and confirmation of the prevailing market price of the Goods to be reordered and comparing this with the price of the Goods in the original contract should be undertaken by the BAC or End-user unit or any other appropriate procuring unit duly authorized by the HoPE.46

    When all the conditions are present, the HoPE, upon recommendation of the BAC or duly authorized End-user unit or any other appropriate procuring unit, shall issue the NOA which shall state that the award is a Special Repeat Order.47 Thereafter, the supplier shall enter into contract with the PE.48

    Note that advance payment is not allowed for a Special Repeat Order.49

    8. GPPB Online Portal for Emergency Procurement under the Bayanihan to Heal as One Act . The PEs shall post in the GPPB online portal for information purposes the updated APP, NOA, and other information relative to the Procurement Projects undertaken pursuant to the Circular.50

    9. Administrative and Criminal Penalties. PEs are authorized to impose the following penalties for the corresponding violations:51br />
    a. Failure of the supplier, distributor, manufacturer, contractor, or consultant to faithfully perform or deliver its obligations and undertakings under its contract, including compliance with the warranty clause and duly executed OSS shall be meted with the following sanctions: 

     i. Blacklisting for a period of two (2) years in all government procurement activities following the provisions under the Uniform Guidelines for Blacklisting of Manufacturers, Suppliers, Distributors, Contractors, and Consultants;   

    ii. In case advance payment was made or given, failure to perform or deliver any of the obligations and undertakings in the contract shall be sufficient grounds to constitute criminal liability for Swindling ( Estafa ) or the commission of fraud with unfaithfulness or abuse of confidence through misappropriating or converting any payment received by a person or entity under an obligation involving the duty to deliver certain goods or services, to the prejudice of the public and the government of the Philippines pursuant to Article 315 of Act No. 3815 s. 1930, as amended, or the Revised Penal Code;

    b. Delay in the completion or delivery of the Procurement Project through fault of the supplier, distributor, manufacturer, contractor, or consultant shall result in the imposition of liquidated damages, which is equivalent to at least one-tenth (1/10) of one percent (1%) of the cost of the unperformed portion for every day of delay. In case the total sum of liquidated damages reaches ten percent (10%) of the total contract price, the PE may cancel the contract. Should the PE decide not to cancel the contract, the same is without prejudice to the continued imposition of liquidated damages; and

    c. Refusal to prioritize and accept contracts for materials and services necessary to promote the declared national policy under the Bayanihan to Heal as One Act shall be punishable with imprisonment of two (2) months or a fine of not less than Ten Thousand Pesos (PhP10,000.00) but not more than One Million Pesos (PhP1,000,000.00), or both, such imprisonment and fine, at the discretion of the court.

    Notwithstanding the above penalties, the PE may impose other fines or penalties under other relevant laws, rules and regulations, or as agreed by the parties in the contract. 

1  Sec. 2, Rule I, 2016 Revised Implementing Rules and Regulations (“2016 Revised IRR”). The alternative modes of procurement are Limited Source Bidding, Direct Contracting, Repeat Order, Shopping, and Negotiated Procurement.  2  43 COVID-19 patients recover as coronavirus infection in PH nears 8,000; link available at: https://newsinfo.inquirer.net/1266057/43-covid-19-patients-recover-as-coronavirus-infection-in-ph-nears8000#ixzz6KtWKKRC6 (last accessed on 28 April 2020). 
3  Sec. 2, Proclamation No. (“Proc.”) 922. 
4  Resolution No. 03-2020 dated 9 March 2020 (“Resolution 03-2020”) entitled, “Approving the Adoption of Efficient, Effective and Expedient Procurement Procedures During a State of Public Health Emergency.” 
5  Sec. 1, Resolution 03-2020. 
6  Sec. 5, Resolution 03-2020. 
7  Resolution No. 05-2020 dated 20 March 2020 entitled, “Approving the Acceptance of an Expired Mayor’s Permit with Official Receipt for the Renewal Application and Unnotarized Omnibus Sworn Statement as Basis for Award under the Negotiated Procurement (Emergency Cases) Modality.”  
8  Republic Act No. (“RA”) 11469 entitled, “An Act Declaring the Existence of a National Emergency Arising from the Coronavirus Disease 2019 (COVID-19) Situation and a National Policy in connection therewith, and Authorizing the President of the Republic of the Philippines for a Limited Period and Subject to Restrictions, to Exercise Powers Necessary and Proper to Carry out the Declared National Policy and for Other Purposes.” 
9  Sec. 4, RA 11469. 
10  Sec. 4(k), RA 11469.  
11  Sec. 11, Circular No. 01-2020 dated 6 April 2020 (“Circular 01-2020”). 
12  Sec. 11, Circular 01-2020. 
13  Sec. 11, Circular 01-2020. 
14  Sec. 2, Circular 01-2020. 
15  Sec. 3.1, Circular 01-2020. 
16  Sec. 3.1, Circular 01-2020. 
17  Sec. 3.1, Circular 01-2020. 
18  Sec. 3.1, Circular 01-2020. Note that splitting of government contracts is not allowed. “Splitting of Government Contracts means the division or breaking up of [Government of the Philippines] contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and this IRR, particularly the necessity of competitive bidding and the requirements for the alternative methods of procurement.” [Sec. 54, 1, Rule XVI, 2016 Revised IRR]   
19  Sec. 3.2, Circular 01-2020. 
20  Sec. 3.2, Circular 01-2020.  
21  Sec. 3.2, Circular 01-2020. 
22  Sec. 3.2, Circular 01-2020. 
23  Sec. 3.3, Circular 01-2020. 
24  Sec. 3.3, Circular 01-2020. 
25  Sec. 3.4, Circular 01-2020. 
26  Sec. 3.4, Circular 01-2020. 
27  Sec. 3.5, Circular 01-2020.  
28  Sec. 3.5, Circular 01-2020. 
29  Sec. 3.5, Circular 01-2020. 
30  Sec. 3.6, Circular 01-2020. 
31  Sec. 3.7, Circular 01-2020. 
32  Sec. 3.2, Circular 01-2020. 
33  Sec. 3.3, Circular 01-2020. 
34  Sec. 3.5, Circular 01-2020. 
35  Sec. 4.1, Circular 01-2020. 
36  Sec. 4.1, Circular 01-2020. 
37  Sec. 4.1, Circular 01-2020.  
38  Sec. 4.1, Circular 01-2020. 
39  Sec. 4.2, Circular 01-2020. 
40  Sec. 4.2, Circular 01-2020. 
41  Sec. 4.3, Circular 01-2020. 
42  Sec. 4.3, Circular 01-2020. 
43  Sec. 5, Circular 01-2020. 
44  Sec. 6, Circular 01-2020. 
45  Sec. 8.1, Circular 01-2020. 
46  Sec. 8.2, Circular 01-2020. 
47  Sec. 8.3, Circular 01-2020. 
48  Sec. 8.3, Circular 01-2020. 
49  Sec. 8.4, Circular 01-2020. 
50  Sec. 9, Circular 01-2020. 
51  Sec. 10, Circular 01-2020.  

This article is intended for informational purposes only and should not be construed as legal advice. 
 
 




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