RULE 1. PRELIMINARY PROVISION

These Implementing Rules and Regulations (IRR) shall cover all official development assistance loans or loans and grants as hereunder defined, contracted by the President on behalf of the National Government on or after 1 January 1995 under Republic Act (R.A.) 8182 amending Paragraph 1, Section 2 of R.A. 4860, as amended.

RULE 2. GENERAL PROVISIONS

SECTION 2.1 Definition of Terms. For purpose of these Implementing Rules and Regulations, the terms and phrases hereunder shall be understood as follows:

a) Act – Refers to R.A. 8182, amending Paragraph 1, Section 2 of R.A. 4860.

b) Implementing Agency/Agencies – Refers to any department, bureau, office, commission, authority or agency of the national government, including government-owned or –controlled corporations (GOCCs), authorized by law or their respective charters, and local government units (LGUs) likewise authorized by law to undertake development projects.

c) Weighted Average Grant Element – Refers to the sum of the products of: (i) the grant element of the ODA loan or loan and grant and (ii) the proportion of the loan or loan and grant to the total outstanding loans and loans and grants.

d) Interest Rate – The interest rate of the loan or the loan component of the loan and grant is the nominal interest rate at the time the loan is contracted.

e) ODA-Assisted Project – Refers to a project that is funded partly or wholly by an ODA loan or loan and grant.

f) Counterpart Funds – Refers to the component of the project cost to be financed from government-appropriated funds, as part of the government’s commitment in the implementation of the project. In the case of government-owned and – controlled corporations, the total peso counterpart may be the equity contribution of the national government and/or internally generated cash.

g) Head of Agency – Refers to the authorized approving authority of the Agency, local government unit, and, in the case of a GOCC, the GOCC Governing Board.

h) Local Government Units (LGUs) – Refers to provincial, city and/or municipal government entities.

i) IRR – Refers to the Implementing Rules and Regulations of R.A. 8182, unless otherwise specified.

j) Cost Overruns – Refers to additional costs over and above the ICC-approved project cost.

k) Project Cost – Shall include construction cost, price, administrative and physical contingencies and interest during construction.

l) Loan and Grant – Refers to a financing facility that combines a loan and grant, neither of which can be offered independently to the borrower.

m) Loan Proceeds – Refers to loan or loan and grant disbursements for ODA-assisted projects.

n) Supplies – Shall include both goods and equipment.

RULE 3. FUNDS FOR PROJECT DEVELOPMENT

SECTION 3.1 Funds Sourcing and Administration. The NEDA shall aim to obtain ODA funds worth approximately five (5) percent of total ODA loans and loans and grants committed in the immediately preceding year for project identification, preparation of feasibility studies, including environmental impact assessment, master planning, and monitoring and evaluation of projects. The NEDA Secretariat shall coordinate the efforts in obtaining ODA funds for the said activities. Should portions of the funds be sourced from ODA lending institutions, NEDA and DBM shall establish a mechanism for securing appropriations cover for the utilization of such portions of the fund. The guidelines for the administration of the funds shall be submitted by the NEDA Secretariat for approval by the NEDA Board.

SECTION 3.2 Forms of Assistance. ODA resources to be channeled to the said activities may, among others, take the following forms of assistance:

a) Technical assistance projects designed to conduct any of the abovementioned project development/master planning activities in support of local/regional or sectoral investment priorities;
b) Conduct of project development/master planning activities as a component of a larger investment package to be financed by an ODA donor/creditor;

c) Technical assistance facilities designed to accommodate multiple project proposals for project development/master planning activities;

d) Conduct of and/or technical assistance for the monitoring of ongoing ODA-assisted projects; and

e) Conduct of post-evaluation and impact assessment of completed ODA-assisted projects.

SECTION 3.3 Counterpart Funds. Government counterpart funds for ODA projects for the activities enumerated in this rule shall be imputed within the regular budgets of the agencies.

RULE 4. ICC PROCESSING AND APPROVAL

Processing of projects proposed to be financed by ODA loans or loans and grants shall be in accordance with the Investment Coordination Committee’s (ICC) (i) Guidelines and Procedures and (ii) Project Evaluation Guidelines and Procedures. These guidelines and procedures shall be updated as may be necessary to reflect the developments in government policies, procedures and methodologies regarding investment programming and project evaluation.

RULE 5. COUNTERPART & PROCEEDS OF LOANS & LOANS & GRANTS

SECTION 5.1 General Principles on Budget. All expenditures, inclusive of counterpart and proceeds of loans and loans and grants funds, must be included in the annual national expenditure program to be submitted to Congress for approval.

SECTION 5.2 Budget Requirement. The budgetary requirements for the two succeeding years, inclusive of local counterpart and proceeds of loans and loans and grants of ODA-assisted projects shall be determined during the annual ODA Portfolio Review conducted by NEDA during the second semester of the year. The heads of all concerned implementing agencies, or their authorized representatives, shall certify and approve the budget estimates submitted for this exercise. NEDA and DBM shall work closely to ensure that the projected budgets are consistent with the Work and Financial Plans and Programs of Work for the projects.

The budget requirements of projects that are meant to cover costs overruns shall only be included in the national expenditure program to be submitted to Congress with the prior approval of the ICC.

SECTION 5.3 Agency Submission of Budget Documents. All implementing agencies shall submit to the NEDA Secretariat, for the purpose of conducting the annual ODA Portfolio Review, the following project information:

Status of project implementation to include:

i. cumulative physical targets and actual accomplishments expressed in output indicators and relative percentage accomplishments;
ii. corresponding budget support and funds utilization; and
iii. schedule of implementation, indicating whether the project would be completed on schedule, or when slippage is expected, the extent of and factors causing such slippage.

b) Projected annual physical targets, by component, and the corresponding budget requirements for the remaining years of project implementation;

c) Explanations for implementation delays encountered, if any, and actions taken;

d) Magnitude of and explanations of cost overruns incurred, if any, and prospective cost overruns to be incurred for the remaining years of project implementation;

e) Summary of expenditures for land/right-of-way acquisition, capital outlays, consulting services and project management office operations; and

f) Other information which may be relevant in assessing the progress of implementation of the project.

Implementing agencies may use existing forms that provide the required information and shall adopt additional reporting forms as may be prescribed by NEDA in providing other relevant information.

SECTION 5.4 Projects with Cost Overruns. Projects with cost overruns, regardless of cause, shall be remanded to the ICC for reappraisal.

The reappraisal will determine the continued viability of the projects and the reasonable levels of cost overruns that shall be the basis for recommending additional appropriations to be included in the annual national expenditure program to be submitted to Congress.

A quarterly report on project with cost overruns shall be submitted by the NEDA Secretariat to ICC for inclusion in the annual report to Congress.

RULE 6. GOVERNMENT PROCUREMENT

SECTION 6.1 Project Execution. As a general rule, all government projects funded partly or wholly through ODA shall be administered by the concerned implementing agencies. In case a government project, is of such magnitude or scope as would require a level of expertise or attention beyond the capability of the agency concerned, the head of agency may delegate project execution subject to the submission of a report indicating the reasons and justifications therefore for approval by the ICC and confirmation by the NEDA Board.

SECTION 6.2 Filipino Preference/Association by Foreign Firms with Local Firms/Practitioners. In order to develop/upgrade a pool of Filipino experts and managers, the role of technology transfer in the implementation of development projects shall be ensured. To effect technology transfer to local firms/individuals, foreign consulting and/or construction firms wishing to participate in development projects in the Philippines shall be required to associate themselves with local firms and/or shall be required to engage Filipinos in carrying out the project s which they have selected to undertake. Such preference shall not adversely affect the project and shall meet the minimum standards/specifications required thereof.

The foregoing paragraph shall be without prejudice to existing laws including but not limited to R.A. 4860 (Foreign Borrowings Act), Presidential Decree (P.D.) 1594 (for procurement of civil works), Executive Orders (E.O.s) 164 (for the procurement of consulting services) and 302 (for procurement of goods/equipment).

SECTION 6.3 Competitive Procurement. All procurement shall be conducted in an open, fair, transparent and competitive manner in accordance with the provisions of P.D. 1594, E.O. 164 and E.O. 302 and their respective IRRs.

SECTION 6.4 Limitations on Consultants and Consultancy Firms. Consultants and consulting firms engaged in the feasibility studies and design aspects of the project may not participate directly or indirectly in any subsequent phase of project implementation.

SECTION 6.5 Costs of Consultant Services. For consulting services contracts, no increase in costs shall be allowed beyond and above the contract amount indicated in the agreement for consulting services except for the following:

a) Adjustment in rates in accordance with the pertinent provisions of E.O. 164 IRR on procurement of consulting services;

b) Additional works not covered under the scope of works contained in the consulting services agreement; and

c) Additional costs that may be incurred due to reasonable delays (greater than 15% of approved contract duration) in project implementation due to acts undeniably attributable to government and/or force majeure.

Such increase in costs shall be covered by a supplemental agreement and subject to the approval of the concerned head of agency or governing boards of government-owned and – controlled corporations (GOCCs) and government financing institutions (GFIs), but in no case shall the total costs, including such increase, exceed the limits of the percentage fees set forth under the pertinent provisions of E.O. 164 and its IRR on procurement of consulting services.

RULE 7. CONTINUOUS AND EFFECTIVE MONITORING

SECTION 7.1 Monitoring of Ongoing ODA-Assisted Projects. The NEDA shall conduct the continuous and effective monitoring of all ongoing ODA-assisted projects. For this purpose, all concerned implementing agencies with ODA-assisted projects shall submit to the NEDA Secretariat not later than four (4) weeks after the end of every quarter, reports containing the following information:

Physical targets and actual accomplishments;

b) Budget allocation, project expenditures and loan and loan and grant disbursements;

c) Statement of expenses submitted to funding agencies per month during the quarter;

d) Implementation delays experienced and actions taken;

e) Recommended actions or action plan to resolve implementation problems; and

f) Other information which may be relevant in assessing the progress of implementation of the project.

The implementing agencies shall also provide the abovecited information to the Project Monitoring Committees (PMCs) of the regions, provinces, cities and municipalities established under E.O. 93 (s.1993) amending E.O. 376 (s.1989) creating the Regional Project Monitoring and Evaluation System (RPMES); at the regional level, these may be forwarded to the NEDA Regional Offices (NROs) which serve as the secretariats of the Regional Project Monitoring Committees (RPMCs).

The NEDA shall report to the President within six (6) weeks after the end of each semester the overall performance of all ongoing ODA-assisted projects.

SECTION 7.2 Monitoring Officers. Heads of agencies shall be responsible for the monitoring of projects and the submission of appropriate reports to the NEDA Secretariat. Each concerned agency shall designate a senior official as Monitoring Officer or his alternate to serve as agency liaison for purposes of monitoring.

SECTION 7.3 Reporting on Contracts. All implementing agencies shall submit copies of contracts costing P1 million and above for consultancy and P10 million and above for civil works and supplies in accordance with pertinent provisions of existing laws such as P.D. 1594, E.O.s 164 and 302, among others, and their respective rules and regulations for purposes of NEDA’s monitoring of project execution. These shall include implementation schedules using project management tools showing quarterly programmed physical outputs. Quarterly projected payments to contractors, quarterly reports on approved claims due to price escalation and variation orders of previously awarded contracts as well as other pertinent information regarding contract administration shall likewise be submitted.

The implementing agencies have the sole responsibility for determining the technical, financial, legal and moral soundness of each contract. The ICC-approved project cost shall serve as basis for NEDA’s monitoring of cost overruns.

SECTION 7.4 Disaggregation of Reporting Data. To facilitate the monitoring of the equitable allocation and use of ODA among provinces, all implementing agencies shall include the provincial breakdown of physical accomplishments and funds utilization in reports to be submitted to the NEDA Secretariat.

RULE 8. REPORTING

NEDA shall report to Congress the outcome of the annual ODA Portfolio Review including the performance of projects financed by ODA, causes of delays, reasons for bottlenecks, cost overruns, both actual and prospective, not later than June 30 of every year.

RULE 9. FINAL PROVISIONS

SECTION 9.1 Existing Laws. The rules contained herein are without prejudice to the application of existing laws not expressly amended under R.A. 8182.

SECTION 9.2. Effectivity of the IRR and Amendments. These IRR, including any subsequent amendments thereto, shall take effect five (5) days after their publication in a newspaper of general circulation. No amendments to these IRR may be adopted and prescribed without due public consultations.

Attested by:

(Sgd.) CIELITO F. HABITO
Secretary of Socioeconomic Planning
Director-General, NEDA
Vice-Chairman, NEDA Board and
Chairman, IRR Committee

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

ARTICLE 1
GENERAL PROVISIONS

Section 1. Short Title.- This act shall be known as the ” Government Procurement reform Act.”

Section 2. Declaration of Policy.- It is the declared policy of the State to promote the ideals of good governance in all its branches, departments, agencies, subdivisions, and instrumentalities, including government-owned and/or -controlled corporations and local government units.

Section 3. Governing Principles on Government Procurement.
All procurement of the national government, its departments, bureaus, offices and agencies, including state universities and colleges, government -owned and/or-controlled corporations, government financial institutions and local government units, shall, in all cases, be governed by these principles:

(a) Transparency in the procurement process and in the implementation of procurement contracts.
(b) Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding.
(c) Streamlined procurement process that will uniformly apply to all government procurement. The procurement process shall simple and made adaptable to advances in modern technology in order to ensure an effective and efficient method.
(d) System of accountability where both the public officials directly or indirectly involved in the procurement process as well as in the implementation of procurement contracts and the private parties that deal with government are, when warranted by circumstances, investigated and held liable for their actions relative thereto.
(e) Public monitoring of the procurement process and the implementation of awarded contracts with the end in view of guaranteeing that these contracts are awarded pursuant to the provisions of this Act and its implementing rules and regulations, and that all these contracts are performed strictly according to specifications.

Section 4. Scope and Application.- This act shall apply to the Procurement of Infrastructure Projects, Goods and Consulting Services, regardless of source of funds, whether local of foreign, by all branches and instrumentalities of government, its departments, offices and agencies, including government-owned and/or-controlled corporations and local government units, subject to the provisions of Commonwealth Act No. 138. Any treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is signatory shall be observed.

Section 5. Definition of Terms.- For purposes of this Act, the following terms or words and phrases shall mean or be understood as follows:

(a) Approved Budget for the Contract (ABC) – refers to the budget for the contract duly approved by the Head of the Procuring Entity, as provided for in the General Appropriations Act and/or continuing appropriations, in the National Government Agencies; the Corporate Budget for the contract approved by the governing Boards, pursuant to E.O.No.518, series of 1979, in the case of Government Financial Institutions and State Universities and Colleges; and the Budget for the contract approved by the respective Sanggunian, in the case of Local Government Units.
(b) BAC – refers to the Bids and Awards Committee established in accordance with Article V of this Act.
(c) Bidding Documents – refer to documents issued by the Procuring Entity as the basis for Bids, furnishing all information necessary for a prospective bidder to prepare a bid for the Goods, Infrastructure Projects, and Consulting Services to be provided.
(d) Bid – refers to signed offer or proposal submitted by a supplier, manufacturer, distributor, contractor or consultant in response to the Bidding Documents.
(e) Competitive Bidding – refers to a method of procurement which is open to participation by any interested party and which consist of the following processes: advertisement, pre-bid conference, eligibility screening of bids, evaluations of bids, post – qualification, and award of contract, the specific requirements and mechanics of which shall be defined in the IRR to be promulgated under this Act.
(f) Consulting Services – refer to services for Infrastructure Projects and other types of projects or activities of the Government requiring adequate external technical and professional experts that are beyond the capability and/or capacity of the government to undertake such as, but not limited to: (I) advisory and review services; (ii) pre investment or feasibility studies; (iii) design; (iv) construction supervision; (v) management and related services; and (vi) other technical services or special studies.
(g) G – EPS – refers to the Government Electronic Procurement System as provided in Section 8 of this Act.
(h) Goods – refer to all items, supplies, materials and general support services, except consulting services and infrastructure projects, which may be needed in the transaction of the public businesses or in the pursuit of any government undertaking, project or activity, whether in the nature of equipment, furniture, stationery, materials for construction, or personal property of any kind, including non – personal or contractual services such as the repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or analogous services, as well as procurement of materials and supplies provided by the procuring entity or such services.
(i) GPPB – refers to the Government Procurement Policy Board established in accordance with Article X of this Act.
(j) Head of the Procuring Entity- refers to: (I) the head of the agency or his duly authorized official, for national government agencies; (ii) the governing board or its duly authorized official, for government-owned and/or-controlled corporations; or (iii) the local chief executive, for local government units. Provided, That in a department, office or agency where the procurement is decentralized, the Head of each decentralized unit shall be considered as the Head of the Procuring Entity subject to the limitations and authority delegated by the head of the department, office or agency.
(k) Infrastructure Projects – include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and bridges, railways, airports, seaports, communication faci9lities, civil works components of information technology projects, irrigation, flood control and drainage, water supply, sanitation, sewerage and solid waste management systems, shore protection, energy/power and electrification facilities, national buildings, school buildings and other related construction projects of the government.
(l) IRR – refer to the implementing rules and regulations to be promulgated in accordance with Section 75 of this Act.
(m) Portal – refers to a website that aggregates a wide variety of content for the purpose of attracting a large number of users.
(n) Procurement – refers to the acquisition of Goods, Consulting Services, and the contracting for Infrastructure Projects by the Procuring Entity. Procurement shall also include the lease of goods and real estate. With respect to real property, its procurement shall be governed by the provisions of Republic Act No.8974, entitled “An Act to Facilitate the Acquisition of Right-of -Way Site or Location of National Government Infrastructure Projects and for Other Purposes” and other applicable laws, rules and regulations.
(o) Procuring Entity – refers to any branch, department, office, agency, or instrumentality of the government, including state universities and colleges, government-owned and/or – controlled corporations, government financial institutions, and local government units procuring Goods, Consulting Services and Infrastructure Projects.
Section 6. Standardization of Procurement Process and Forms.- To systematize the procurement process, avoid confusion and ensure transparency, the procurement process, including the forms to be used, shall be standardized insofar as practicable.
For this purpose, the GPPB shall pursue the development of generic procurement manuals and standard bidding forms, the use of which once issued shall be mandatory upon all Procuring Entities.

ARTICLE II
PROCUREMENT PLANNING

Section 7. Procurement Planning and Budgeting Linkage- All procurement should be within the approved budget of the Procuring Entity and should be meticulously and judiciously planned by the Procuring Entity concerned. Consistent with government fiscal discipline measures, only those considered crucial to the efficient discharge of governmental functions shall be included in the Annual Procurement Plan t o be specified in the IRR.
No government Procurement shall be undertaken unless it is in accordance with the approved Annual Procurement Plan of the Procuring Entity. The Annual Procurement Plan shall be approved by the Head of the Procuring Entity and must be consistent with its duly approved yearly budget. The Annual Procurement Plan shall be formulated and revised only in accordance with the guidelines set forth in the IRR. In the case of Infrastructure Projects, the Plan shall include engineering design and acquisition of right-of-way.

ARTICLE III
PROCUREMENT BY ELECTRONIC MEANS

Section 8. Procurement By Electronic Means.- To promote transparency and efficiency, information and communications technology shall be utilized in the conduct of procurement procedures. Accordingly, there shall be single portal that shall serve as the primary source of information on all government procurement. The G-EPS shall serve as the primary and definitive source of information on government procurement. Further, the GPPB is authorized to approve changes in the procurement process to adapt to improvements in modern technology, provided that such modifications are consistent with provisions of Section 3 of this Act.

To take advantage of the significant built-in-efficiencies of the G-EPS and the volume discounts inherent in bulk purchasing, all Procuring Entities shall utilize the G-EPS for the procurement of common supplies in accordance with the rules and procedures to be established by the GPPB. With regard to the procurement of non-common use items, infrastructure projects and consulting services, agencies may hire service providers to undertake their electronic procurement provided these service providers meet the minimum requirements set by the GPPB.

Section 9. Security, Integrity and Confidentiality.- The G-EPS shall ensure the security, integrity and confidentiality of documents submitted through the system. It shall include feature that provides for an audit trail for on-line transactions and allow the Commission on Audit to verify the security and integrity of the systems at any time.

ARTICLE IV
COMPETITIVE BIDDING

Section 10. Competitive Bidding.- All Procurement shall be done through Competitive Bidding, except as provided for in Article XVI of this Act.

ARTICLE V
BIDS AND AWARDS COMMITTEE

Section 11. The BAC and its Composition.- Each procuring entity shall establish a single BAC for its procurement. The BAC shall have at least five (5) members, but not more than seven (7) members. It shall be chaired by at least a third ranking permanent official of the procuring entity other than its head, and its composition shall be specified in the IRR. Alternatively, as may be deemed fit by the head of the procuring entity, there may be separate BACs where the number and complexity of the items to be procured shall so warrant. Similar BACs for decentralized and lower level offices may be formed when deemed necessary by the head of the procuring entity. The numbers of the BAC shall be designated by the Head of Procuring Entity. However, in no case shall the approving authority be a member of the BAC.

Unless sooner removed for cause, the members of the BAC shall have a fixed term of one (1) year reckoned from the date of appointment, renewable at the discretion of the Head of the Procuring Entity. In case of resignation, retirement, separation, transfer, re-assignment, removal, the replacement shall serve only for the unexpired term: Provided, That in case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension. For justifiable causes, a member shall be suspended or removed by the Head of the Procuring Entity.

Section 12. Functions of the BAC.- shall have the following functions: advertise and/or post the invitation to bid, conduct pre-procurement and pre-bid conferences, determine the eligibility of prospective bidders, receive bids, conduct the evaluation of bids, undertake post-qualification proceedings, recommend award of contracts to the Head of the Procuring Entity of his duly authorized representative: Provided, That in the event the Head of the Procuring shall disapprove such recommendation, such disapproval shall be based only on valid, reasonable and justifiable grounds to be expressed in writing, copy furnished the BAC; recommend the imposition of sanctions in accordance with Article XXIII, and perform such other related functions as may necessary, including the creation of a Technical Working Group from a pool of technical, financial and/or legal experts to assist in the procurement process.

In proper cases, the BAC shall also recommend to the Head of the Procuring Entity the use of Alternative Methods of Procurement as provided for in Article XVI hereof.
The BAC shall be responsible for ensuring that the Procuring Entity abides by the standards set forth by this Act and the IRR, and it shall prepare a procurement monitoring report that shall be approved and submitted by the Head of the Procuring Entity to the GPPB on a semestral basis. The contents and coverage of this report shall be provided in the IRR.

Section 13. Observers.- To enhance the transparency of the process, the BAC shall, in all stages of the procurement process, invite, in addition to the representative of the Commission on Audit, at least two(2) observers to sit in its proceedings, one(1) from a duly recognized private group in a sector or discipline relevant to the procurement at hand, and the other from a non-government organization: Provided, however, That they do not have any direct or indirect interest in the contract to be bid out. The observers should be duly registered with the Securities and Exchange Commission and should meet the criteria for observers as set forth in the IRR.

Section 14. BAC Secretariat.- To assist the BAC in the conduct of its functions, the Head of the Procuring Entity shall create a Secretariat that will serve as the main support unit of the BAC. The Head of the Procuring Entity may also designate an existing organic office within the agency to serve as the Secretariat.
Section 15. Honoraria of BAC Members.- The Procuring Entity may grant payment of honoraria to the BAC members in an amount not to exceed twenty five percent (25%) of their respective basic monthly salary subject to availability of funds. For this purpose, the Department of Budget and Management (DBM) shall promulgate the necessary guidelines.

Section 16. Professionalization of BAC, BAC Secretariat and Technical Working Group Members.- The GPPB shall establish a sustained training program for developing the capacity of the BAC’s, BAC Secretariats and technical Working Groups of Procuring Entities, and proffessionalize the same.

ARTICLE VI
PREPARATION OF BIDDING DOCUMENTS

Section 17. Form and Contents of Bidding Documents.- The Bidding Documents shall be prepared by the Procuring Entity following the standard forms and manuals prescribed by the GPPB. The Bidding Documents shall include the following:

(a) Approved Budget for the Contract;
(b) Instructions to Bidders, including criteria for eligibility, bid evaluation and post-qualification, as well as the date, time and place of the pre-bid Conference (where applicable), submission of bids and opening of bids;
(c) Terms of Reference;
(d) Eligibility Requirements;
(e) Plans and Technical Specifications;
(f) Form of Bid, Price Form, and List of Goods or Bill of Quantities;
(g) Delivery Time or Completion Schedule;
(h) Form and Amount of Bid Security;
(i) Form and Amount of Performance Security and Warranty; and,
(j) Form of Contract, and General and special Conditions of Contract.
The Procuring Entity may require additional document requirements or specifications necessary to complete the information required for the bidders to prepare and submit their respective bids.

Section 18. Reference to Brand Names.- Specifications for the Procurement of Goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed.

Section 19. Access to Information.- In all stages of the preparation of the Bidding Documents, the Procuring entity shall ensure equal access to information. Prior to their official release, no aspect of the Bidding Documents shall be divulged or released on any prospective bidder or having direct or indirect interest in the project to be procured.

ARTICLE VII
INVITATION TO BID
Section 20. Pre-Procurement Conference. – Prior to the issuance of the Invitation to Bid, the BAC is mandated to hold a pre-procurement conference on each and every procurement, except those contracts below a certain level or amount specified in the IRR, in which case, the holding of the same is optional.

The pre- procurement conference shall assess the readiness of the procurement in terms of confirming the certification of availability of funds, as well as reviewing all relevant documents and the draft Invitation to Bid, as well as consultants hired by the agency concerned and the representative of the end -user.

Section 21. Advertising and Contents of the Invitation to Bid. – In line with the principle of transparency and competitiveness, all Invitations to Bid contracts under competitive bidding shall be advertised by the Procuring Entity in such manner and for such length of time as may be necessary under the circumstances, in order to ensure the widest possible dissemination thereof, such as, but not limited to, posting in the Procuring Entity’s premises, in newspapers of general circulation, the G-EPS and the website of the Procuring Entity, if available. The details and mechanics of implementation shall be provided in the IRR to be promulgated under this Act.

The Invitation to Bid shall contain, among others:
(a) A brief description of the subject matter of the Procurement;
(b) A general statement on the criteria to be used by the Procuring entity for the eligibility check, the short listing of prospective bidders, in the case of the Procurement of Consulting Services the examination and evaluation of Bids, and post-qualification;
(c) The date, time and place of the deadlines for the submission and receipt of the eligibility requirements, the pre-bid conference if any, the submission and receipt of bids, and the opening of bids;
(d) The Approved Budget for the Contract to be bid;
(e) The source of funds;
(f) The period of availability of the Bidding Documents, and the place where these may be secured and;
(g) The contract duration; and
(h) Such other necessary information deemed relevant by the Procuring Entity.

Section 22. Pre-bid Conference. – At least one pre-bid conference shall be conducted for each procurement, unless otherwise provided in the IRR. Subject to the approval of the BAC, a pre-bid conference may also be conducted upon the written request of any prospective bidder.

The Pre-bid conference(s) shall be held within a reasonable period before the deadline for receipt of the bids to allow prospective bidders to adequately prepare their bids, which shall be specified in the IRR.

ARTICLE VIII
RECEIPT AND OPENING OF BIDS
Section 23. Eligibility Requirements for the Procurement of Goods and Infrastructure Projects.- The BAC or, under special circumstances specified in IRR, its duly designated organic office shall determine the eligibility of prospective bidders for the procurement of Goods and Infrastructure Projects, based on the bidders’ compliance with the eligibility requirements within the period set forth in the Invitation to Bid. The eligibility requirements shall provide for fair and equal access to all prospective bidders. The documents submitted in satisfaction of the eligibility requirements shall be made under oath by the prospective bidder or by his duly authorized representative certifying to the correctness of the statements made and the completeness and authenticity of the documents submitted.

A prospective bidder may be allowed to summit his eligibility requirement s electronically. However, said bidder shall later on certify under oath as to correctness of the statements made and the completeness and authenticity of the documents submitted.

Section 24. Eligibility requirements and Short Listing for Consulting Services.- The Eligibility of prospective bidders for the Procurement of Consulting Services shall be determine by their compliance with the eligibility requirements prescribed for the competitive Bidding concerned, within the period stated in the Invitation to bid. The eligibility requirements shall provide for fair and equal access to all prospective bidders. The prospective bidder shall certify under oath as to the correctness of the statements made, and the completeness and authenticity of the documents submitted.

A prospective bidder may be allowed to submit his eligibility requirements electronically. However, said bidder shall later on certify under oath as to correctness of the statements made and the completeness and authenticity of the documents submitted.
The eligible prospective bidders shall then be evaluated using numerical ratings on the basis of the short listing requirements prescribed for the Competitive Bidding concerned, within the period stated in the Invitation to Bid to determine the short list of bidders who shall be allowed to submit their respective bids.

Section 25. Submission and Receipt of Bids.- A bid shall have two(2) components, namely the technical and financial components which should be in separate sealed envelopes, and which shall be submitted simultaneously. The bids shall be received by the BAC on such date, time and place specified in the invitation to bid. The deadline for the receipt of bids shall be fixed by the BAC, giving the prospective bidders sufficient time to study and prepare their bids. The deadline shall also consider the urgency of the procurement involved.

Bids submitted after the deadline shall not be accepted.
Notwithstanding the provisions of this Section and Section 26 of this Act, the GPPB may prescribe innovative procedure for the submission, receipt and opening of bids through the G-EPS.

Section 26. Modification and Withdrawal of Bids. – A bidder may modify his bid, provided that this is done before the deadline for the receipt of bids. The modification shall be submitted in a sealed envelope duly identified as a modification of the original bid and stamped received by the BAC.

A bidder may, through a letter, withdraw his bid or express his intention not to participate in the bidding before the deadline for the receipt of bids. In such case, he shall no longer be allowed to submit another Bid or the same contract either directly or indirectly.

Section 27. Bid Security. – All Bids shall be accompanied by a Bid security, which shall serve as guarantee that, after receipt of the Notice of Award, the winning bidders shall enter into contract with the Procuring Entity within the stipulated time and furnish the required performance security. The specific amounts and allowable forms of the Bid security shall be prescribed in the IRR.

Section 28. Bid Validity. – Bids and Bid securities shall be valid for such reasonable period of time indicated in the Bidding Documents. The duration for each undertaking shall take into account the time involved in the process of Bid evaluation and award of contract.

Section 29. Bid Opening. – the BAC shall publicly open all bids at the time, date, and place specified in the bidding documents. The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee.

ARTICLE IX
BID EVALUATION
Section 30. Preliminary Examination of Bids. – Prior to Bid evaluation, the BAC shall examine first the technical components of the bids using “pass/fail” criteria to determine whether all required documents are present. Only bids that are determined to contain all the bid requirements of the technical component shall be considered for opening and evaluation of their financial component.

Section 31. Ceiling for Bid Prices. – The ABC shall be the upper limit or ceiling for the Bid prices. Bid prices that exceed this ceiling shall be disqualified outright from further participating in the bidding. There shall be no lower limit to the amount of the award.

Section 32. Bid for the Procurement of Goods and Infrastructure Projects. – For the procurement of Goods and Infrastructure Projects, the BAC shall evaluate the financial component of the bids. The bids that passed the preliminary examination shall be ranked from lowest to highest in terms of their corresponding calculated price shall be referred to as the “Lowest Calculated Bid”.

Section 33. Bid Evaluation of Short Listed Bidders for Consulting Services. – For the Procurement of Consulting Services, the Bids of the short listed bidders shall be evaluated and ranked using numerical ratings in accordance with the evaluation criteria stated in the Bidding Documents, which shall include factors such as, but not limited to, experience, performance, quality or personnel, price and methodology. The Bids shall be ranked from highest to lowest in terms of their corresponding calculated ratings. The Bid with the highest calculated rating shall be the “Highest Rated Bid.” After approved by the Head of the Procuring Entity of the Highest Rated Bid, the BAC shall invite the bidder concerned for negotiation and/or clarification on the following item: financial proposal submitted by the bidder, terms of reference, scope of services, methodology and work program, personnel to be assigned to job, services/facilities/data to be provided by the Procuring Entity concerned, and provisions of the contract. When negotiations with first-in-rank bidder fails, the financial proposal of the second rank bidder shall opened for negotiations: Provided, that the amount indicated in the financial envelope shall be made as the basis for negotiations and the total contract amount shall not exceed the amount indicated in the envelope and the ABC. Whenever necessary, the same process shall be repeated until the bid awarded to the winning bidder.

ARTICLE X
POST-QUALIFICATION
Section 34. Objective and Process of Post-qualification. – Post-qualification is the stage where the bidder with the Lowest Calculated Bid, in the case of Goods and Infrastructure Projects, or the Highest Rated Bid, in the case of Consulting Services, undergoes verification and validation whether he has passed all the requirements and conditions as specified in the Bidding Documents.

If the bidder with the Lowest Calculated Bid or Highest Rated Bid passes all the criteria for post-qualification, his Bid shall be considered the “Lowest Calculated Responsive Bid,” in the case of Goods and Infrastructure or the “Highest Rated Responsive Bid,” in the case of Consulting Services. However, if a bidder fails to meet any of the requirements or conditions, he shall be “post-disqualified” and the BAC shall conduct the post-qualification on the bidder with the second Lowest Calculate Bid or Highest Rated Bid. If the bidder with the second Lowest Calculated Bid or Highest Rated Bid is post-disqualified, the same procedure shall be repeated until the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid is finally determined.
In all cases, the contract shall be awarded only to the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

Section 35. Failure of Bidding. – there shall be a failure of bidding if:
a. No bids are received;
b. No bid qualifies as the Lowest Calculated Responsive Bid; or,
c. Whenever the bidder with the highest rated/lowest calculated responsive bid refuses, without justifiable cause to accept the award of contract, as the case may be.
Under any of the above instances, the contract shall be re-advertised and re-bid. The BAC shall observe the same process and set the new periods according to the same rules followed during the first bidding. After the second failed bidding, however, the BAC may resort to negotiated procurement as provided for in Section 53 of this Act.

Section 36. Single Calculate/Rated and Responsive Bid Submission. – A single calculated/rated and responsive bid shall be considered for award if it falls under of the following circumstances:
a. If after advertisement, only one prospective bidder submits a Letter of Intent and/or applies for eligibility check, and meets the eligibility requirements or criteria, after which it submits a bide, which is found to be responsive to the bidding requirements;
b. If after the advertisement, more than one prospective bidder applies for eligibility check, but only one bidder meets the eligibility requirements or criteria, after which in submits a bid which is found to be responsive to the bidding requirements; or
c. If after the eligibility check, more than one bidder meets the eligibility requirements, but only one bidder submits a bid, and its bid is found to be responsive to the bidding requirements.
In all instances, the Procuring Entity shall ensure that the ABC reflects the most advantageous prevailing price for the government.

ARTICLE XI
AWARD, IMPLEMENTATION AND TERMINATION OF THE CONTRACT

Section 37. Notice and Executive of Award. – Within a period not exceeding fifteen (15) calendar days from the determination and declaration by the BAC of the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid, and the recommendation of the award, the Head of the Procuring Entity or his duly authorized representative shall approve or disapprove the said recommendation. In case of approval, the Head of the Procuring Entity or his duly authorized representative shall immediately issue the Notice of Award to the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.

Within ten (10) calendar days from receipt of the Notice of Award, the Winning bidder shall formally enter into contract with the Procuring Entity. When further approval of higher authority is required, the approving authority for the contracts shall be given a maximum of twenty (20) calendar days to approve or disapprove it.
In the case of government-owned and/or -controlled corporations, the concerned board shall take action on the said recommendation within thirty (30) calendar days from receipt thereof.

The Procuring Entity shall issue the Notice to Proceed to the winning bidder not later than seven (7) calendar days from the date of approval of the contract by the appropriate authority. All notices called for by the terms of the contract shall be effective only at the time of receipt thereof by the contractor.

Section 38. Period of Action on Procurement Activities. – The procurement process from the opening of bids up to the award of contract shall not exceed three (3) months, or a sho0rter period to be determined by the procuring entity concerned. Without prejudice to the provisions of the preceding section, the different procurement activities shall be completed within reasonable periods to be specified in the IRR.

If no action on the contract is taken by the head of the procuring entity or by his duly authorized representative, or by the concerned board, in the case of government-owned and/or -controlled corporations, within the periods specified in the preceding paragraph, the contract concerned shall be deemed approved.

Section 39. Performing Security. – Prior to the signing of the contract, the winning bidder shall, as a measure of guarantee for the faithful performance of an compliance with his obligations under the contract prepared in accordance with the Bidding Documents, be required to post a performance security in such form and amount as specified in the Bidding Documents.

Section 40. Failure to Enter into Contract and Post Performance Security. – If, for justifiable causes, the bidder with the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid fails, refuses or is otherwise unable to enter into contract with the Procuring Entity, or if the bidder fails to post the required performance security within the period stipulated in the Bidding Documents, the BAC shall disqualify the said bidder and shall undertake post-qualification for the next-ranked Lowest Calculated Bid or Highest Rated Bid. This procedure shall be repeated until an award is made. However, if no award is possible, the contract shall be subjected to a new bidding.

In the case of a failure to post the required performance security, the bid security shall be forfeited without prejudice to the imposition of sanctions prescribed under Article XXIII.
Section 41. Reservation Clause. – The Head of the Agency reserves the right to reject any and all Bids, declare a failure of bidding, or not award the contract in the following situations:

a. If there is prima facie evidence of collusion between appropriate public officers or employees of the Procuring Entity, or between the BAC and any of the bidders, or if the collusion is between or among the bidders themselves, or between a bidder and a third party, including any act which restricts, suppresses or nullifies or tends to restrict, suppress or nullify competition;
b. If the BAC is found to have failed in following the prescribed bidding procedures; or
c. For any justifiable and reasonable ground where the award of the contract will not redound to the benefit of the government as defined in the IRR.
Section 42. Contract Implementation and Termination. – The rules and guidelines for the implementation and termination of contracts awarded pursuant to the provisions of this Act shall be prescribed in the IRR. The rules and guidelines shall include standard general and special conditions for contracts.

ARTICLE XII
DOMESTIC AND FOREIGN PROCUREMENT

Section 43. Procurement of Domestic and Foreign Goods. – Consistent with the country’s obligations under international treaties or agreements, Goods may be obtained for domestic or foreign sources and the procurement thereof shall be open to all eligible suppliers, manufacturers and distributors. However, in the interest of availability, efficiency and timely delivery of Goods, the Procuring Entity may give preference to the purchase of domestically-produced and manufacturer goods, supplies and materials that meet the specified or desired quality.

ARTICLE XIII
BIDDING OF PROVINCIAL PROJECTS

Section 44. Bidding of Provincial Projects. – Priority programs and infrastructure projects funded out of the annual General Appropriations Act which are intended for implementation within the province shall be subject to the same public bidding and to the procurement processes prescribed under this Act. For purposes of this Article, Engineering District civil works projects, subject to consultation with the concerned Members of Congress, are included and subsumed in the term “provincial projects” and shall be governed by this Section and Section 45 hereof.

Section 45. Provincial Bidders. – Within five (5) years from the effectivity of this Act, contractor who participates in the bidding of provincial priority programs and infrastructure projects, whose principal office is within the same province, and who submits the lowest bid among the provincial bidders which is higher than the lowest bid made by a contractor with principal office outside the said province shall be granted the privilege to match the bid made by the latter: Provided, however, That the release of funds for said projects shall be published in a local newspaper with the widest circulation and the website of the DBM, the mechanisms of which shall be spelled-out in the IRR.

ARTICLE XIV
LEASE OF COMPUTERS, COMMUNICATIONS, INFORMATION AND OTHER EQUIPMENT

Section 46. Lease Contracts. – Lease of construction and office equipment, including computers, communication and information technology equipment are subject to the same public bidding and to the processes prescribed under this Act.

ARTICLE XV
DISCLOSURE OF RELATIONS

Section 47. Disclosure of Relations. – In addition to the proposed contents of the Invitation to Bid as mentioned under Section 21 of this Act, all bidding documents shall be accompanied by a sworn affidavit of the bidder that he or she or any officer of their corporation in not related to the Head of the Procuring Entity by consanguinity or affinity up to the third civil degree. Failure to comply with the aforementioned provision shall be a ground for the automatic disqualification of the bid in consonance with Section30 of this Act.

ARTICLE XVI
ALTERNATIVE METHODS OF PROCUREMENT
Section 48. Alternative Methods. – Subject to the prior approval of the Head of the Procuring Entity or his duly authorized representative, and whenever justified by the conditions provided in this Act, the Procuring Entity may, in order to promote economy and efficiency, resort to any of the following alternative methods of Procurement:
a. Limited Source Bidding, otherwise known as Selective Bidding – a method of Procurement that involves direct invitation to bid by the Procuring Entity from a set of pre-selected suppliers or consultants with known experience and proven capability relative to the requirements of a particular contract;
b. Direct Contracting, otherwise known as Single Source Procurement – a method of Procurement that does not require elaborate Bidding Documents because the supplier is simply asked to submit a price quotation or a pro-forma voice together with the conditions of sale, which offer may be accepted immediately or after some negotiations;
c. Repeat Order. – a method of Procurement that involves a direct Procurement of Goods from the previous winning bidder, whenever there is a need to replenish Goods procured under a contract previously awarded through Competitive Bidding;
d. Shopping – a method of Procurement whereby the Procuring Entity simply requests for the submission of price quotations for readily available off-the-shelf Goods or ordinary/regular equipment to be procured directly from suppliers of known qualification; or
e. Negotiated Procurement – 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 all instances, the Procuring Entity shall ensure that the most advantageous price for the government is obtained.

Section 49. Limited Source Bidding. – Limited Source Bidding may be resorted to only in any of the following conditions:
a. Procurement of highly specialized types of Goods and Consulting Services which are known to be obtainable only from a limited number of sources; or
b. Procurement of major plant components where it is deemed advantageous to limit the bidding to known eligible bidders in order to maintain an optimum and uniform level of quality and performance of the plant as a whole.

Section 50. Direct Contracting. – Direct Contracting may be resorted to only in any of the following conditions:
a. Procurement of Goods of propriety nature, which can be obtained only from the propriety source, i.e. when patents, trade secrets and copyrights prohibit others from manufacturing the same items;
b. When the Procurement of critical components from a specific manufacturer, supplier, or distributor is a condition precedent to hold a contractor to guarantee its project performance, in accordance with the provisions his contract; or,
c. Those sold by an exclusive dealer or manufacturer, which does not have sub-dealers selling at lower prices and for which no suitable substitute can be obtained at more advantageous terms to the government.

Section 51. Repeat Order. – When provided for in the Annual Procurement Plan, Repeat Order may be allowed wherein the Procuring Entity directly procures Goods from the previous winning bidder whenever there arises a need to replenish goods procured under a contract previously awarded through Competitive Bidding, subject to post-qualification process prescribed in the Bidding Documents and provided all the following conditions are present:

a. The unit price must be equal to or lower than that provided in the original contract;
b. The repeat order does not result in splitting of requisitions or purchase orders;
c. Except in special circumstances defined in the IRR the repeat order shall be availed of only within six (6) months from the date of the Notice to Proceed arising from the original contract; and,
d. The repeat order shall not exceed twenty-five percent (25%) of the quantity of each item of the original contract.
Section 52. Shopping. – shopping may be resorted to under any of the following instances:

a. When there is an unforeseen contingency requiring immediate purchase: Provided, however, That the amount shall not exceed Fifty thousand pesos (P50,000); or
b. Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding Two hundred fifty thousand pesos (P250,000): Provided, however, That the Procurement does not result in Splitting of Contracts: Provided, further, That at least three (3) price quotations from bona fide suppliers shall be obtained.

The above amounts shall be subject to a period review by the GPPB. For this purpose, the GPPB shall be authorized to increase or decrease the said amount in order to reflect changes in economic conditions and for other justifiable reasons.
Section 53. Negotiated Procurement. – Negotiated Procurement shall be allowed only in the following instances:

a. In case of two (2) failed bidding as provided in Section 35 hereof;
b. 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;
c. 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;
d. Where the subject contract is adjacent or contiguous to an on-going infrastructure project, as defined in the IRR: Provided, however, That the original contract is the result of a Competitive Bidding; the subject contract to be negotiated has similar or related scopes of work; it is within the contracting capacity of the contractor; the contractor uses the same prices or lower unit prices as in the original contract less mobilization cost; the amount involved does not exceed the amount of the ongoing project; and, the contractor has no negative slippage: Provided, further, That negotiations for the procurement are commenced before the expiry of the original contract. Wherever applicable, the principle shall also govern consultancy contract, where the consultants have unique experience and expertise to deliver the required service; or,
e. Subject to the guidelines specified in the IRR, purchases of Goods from another agency of the government, such as the Procurement Service of the DBM, which is tasked with a centralized procurement of commonly used Goods for the government in accordance with Letters of Instruction No. 755 and Executive Order No. 359, series of 1989.

Section 54. Terms and Conditions for the use of Alternative Methods. – The specific terms and conditions, including the limitations and restrictions, for the application of each of the alternative methods mentioned in this Article shall be specified in the IRR.

ARTICLE XVII
PROTEST MECHANISM

Section 55. Protests on Decisions of the BAC.- Decisions of the BAC in all stages of procurement may be protested to the head of the procuring entity and shall be in writing. Decisions of the BAC may be protested by filing a verified position paper and paying a non-refundable protest fee. The amount of the protest fee and the periods during which the protests may be filed and resolved shall be specified in the IRR.

Section 56. Resolution of Protests. – The protest shall be resolved strictly on the basis of records of the BAC. Up to a certain amount to be specified in the IRR, the decisions of the Head of the Procuring Entity shall be final.

Section 57. Non-interruption of the Bidding Process.- In no case shall any protest taken from any decision treated in this Article stay or delay the bidding process. Protests must first be resolved before any award is made.

Section 58. Report to Regular Courts; Certiorari.- Court action may be resorted to only after the protests contemplated in this Article shall have been completed. Cases that are filed in violation of the process specified in this Article shall be dismissed for lack of jurisdiction. The regional trial court shall have jurisdiction over final decision of the head of the procuring entity. Court actions shall be governed by Rule 65 of the 1997 Rules of Civil Procedure.

This provision is without prejudice to any law conferring on the Supreme court the sole jurisdiction to issue temporary restraining orders and injunctions relating to Infrastructure Projects of Government.

ARTICLE XVIII
SETTLEMENT OF DISPUTES

Section 59. Arbitration. – Any and all disputes arising from the implementation of a contract covered by this Act shall be submitted to arbitration in the Philippines according to the provisions of Republic Act No. 876, otherwise known as the “Arbitration Law”: Provided, however, That, disputes that are within the competence of the Construction Industry Arbitration Commission to resolve shall be referred thereto. The process of arbitration shall be incorporated as a provision in the contract that will be executed pursuant to the provisions of this Act: Provided, That by mutual agreement, the parties may agree in writing to resort to alternative modes of dispute resolution.

Section 60. Appeals. – The arbitral award and any decision rendered in accordance with the foregoing Section shall be appealable by way of a petition for review to the Court of Appeals. The petition shall raise pure questions of law and shall be governed by the Rule of Court.

ARTICLE XIX
CONTRACT PRICES AND WARRANTIES

Section 61. Contract Prices. – For the given scope of work in the contract as awarded, all bid prices shall be considered as fixed prices, and therefore not subject to price escalation during contract implementation, except under extraordinary circumstances and upon prior approval of the GPPB.

For purposes of this Section, “extraordinary circumstances” shall refer to events that may be determined by the National Economic and Development Authority in accordance with the Civil Code of the Philippines, and upon the recommendation of the procuring entity concerned.

Section 62. Warranty. – (a) For the procurement of Goods, in order to assure that manufacturing defects shall be corrected by the supplier, manufacturer, or distributor, as the case maybe, for a specific time after performance of the contract, a warranty shall be required from the contract awardee for such period of time as may be provided in the IRR, the obligation for which shall be covered by either retention money in the amount equivalent to a percentage of every progress payment, or a special bank guarantee equivalent to a percentage of the total contract price, to be provided in the IRR. The said amounts shall only be released after the lapse of the warranty period, provided that the Goods supplied are free from defects and all the conditions imposed under the contract have been fully met.
b. For the procurement of infrastructure projects, the contractor shall assume full responsibility for the contract work from the time project construction commenced up to a reasonable period as defined in the IRR taking into consideration the scale and coverage of the project from its final acceptance by the government and shall be held responsible for any damage or construction or works except those occasioned by force majeure. The contractor shall be fully responsible for the safety, protection, security, and convenience of his personnel, third parties, and the public large, as well as the works, equipment, installation and the like to be affected by his construction work and shall be required to put up a warranty security in the form of cash, bank guarantee, letter of credit, Government Service Insurance System bond, or callable surety bond.
The contractor shall undertake the repair works, at his own expense, of any defect or damage to the infrastructure projects on account of the use of materials of inferior quality within ninety (90) days from the time the Head of the Procuring Entity has issued an order to undertake repair. In case of failure or refusal to comply with this mandate, the governments shall undertake such repair works and shall be entitle to full reimbursement of expenses incurred therein upon demand.
Any contractor who fails to comply with the preceding paragraphs shall suffer perpetual disqualification from participating in any public bidding and his property or properties shall be subject to attachment or garnishment proceedings to recover the costs. All payables of government in his favor shall be offset to recover the costs.

ARTICLE XX
THE GOVERNMENT PROCUREMENT POLICY BOARD

Section 63. Organization and Functions. – A Government Procurement Policy Board (GPPB) is hereby established to: (a.) protect national interest in all matters affecting public Procurement, having due regard to the country’s regional and international obligations; (b.) formulate and amend, whenever necessary, the IRR and the corresponding standard forms for Procurement; (c) ensure that Procuring Entities regularly conduct Procurement training programs and prepare a Procurement operations manual for all offices and agencies of government; and (d) conduct an annual review of the effectiveness of this Act and recommend any amendments thereto, as may be necessary.
The GPPB shall convene within fifteen (15) days from the effectivity of this Act formulate the IRR and for other related purposes. The GPPB shall be supported by a technical support office.
In addition to the powers granted under this Act, the GPPB shall absorb all the powers, function and responsibilities of the Procurement Policy Board created under Executive Order No. 359, series of 1989. All affected functions of the Infrastructure Committee of the National Economic and Development Authority Board are hereby transferred to the GPPB.

Section 64. Membership. – The GPPB shall be composed of the Secretary of the Department of Budget and Management, as Chairman, the Director-General of the National Economic and Development Authority, as Alternate Chairman, with the following as Members; the Secretaries of the Departments of Public Works and Highways, Finance, Trade and Industry, Health, National Defense, Education, Interior and Local Government, Science and Technology, Transportation and Communications, and Energy, or their duly authorized representatives and a representative from the private sector to be appointed by the President upon the recommendation of the GPPB. The GPPB may invite a representative from the Commission on Audit to serve as a resource person.

ARTICLE XXI
PENAL CLAUSE

Section 65. Offenses and Penalties. – (a) Without prejudice to the provisions of Republic Act No. 3019, otherwise known as the “Anti-Graft and Corrupt Practice Act” and other penal laws, public officers who commit any of the following acts shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day, but not more than fifteen (15) years:

1. Open any sealed Bid including but not limited to Bids that may have been submitted through the electronic system and any and all documents required to be sealed or divulging their contents, prior to the appointed time for the public opening of Bids or other documents.
2. Delaying, without justifiable cause, the screening for eligibility, opening of bids, evaluation and post evaluation of bids, and awarding of contracts beyond the prescribed periods of Bids or other documents.
3. Unduly influencing or exerting undue pressure on any member of the BAC or any officer or employee of the procuring entity to take a particular bidder.
4. Splitting of contracts which exceed procedural purchase limits and competitive bidding.
5. When the head of the agency abuses the exercise of his power to reject any and all bids as mentioned under Section 41 of this Act with manifest preference to any bidder who is closely related to him in accordance with Section 47 of this Act.
When any of the foregoing acts is done in collusion with private individuals, the private individuals shall likewise be liable for the offense.
In addition, the public officer involved shall also suffer the penalty of temporary disqualification from public office, while the private individual shall be permanently disqualified from transacting business with the government.
(b) Private individuals who commit any of the following acts, including any public officer, who conspires with them, shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than fifteen (15) years:
1. When two or more bidders agree and submit different Bids as if they were bona fide, when they knew that one or more of them was so much higher than the other that it could not be honestly accepted and that the contract will surely be awarded to the pre-arranged lowest Bid.
2. When a bidder maliciously submits different Bids through two or more persons, corporations, partnerships or any other business entity in which he has interest of create the appearance of competition that does not in fact exist so as to be adjudged as the winning bidder.
3. When two or more bidders enter into an agreement which call upon one to refrain from bidding for Procurement contracts, or which call for withdrawal of bids already submitted, or which are otherwise intended to secure as undue advantage to any one of them.
4. When a bidder, by himself or in connivance with others, employ schemes which tend to restrain the natural rivalry of the parties or operates to stifle or suppress competition and thus produce a result disadvantageous to the public.
In addition, the persons involved shall also suffer the penalty of temporary or perpetual disqualification from public office and be permanently disqualified from transacting business with the government.
(c) Private individuals who commit any of the following acts, and any public officer conspiring with them, shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but more than fifteen (15) years:
1. Submit eligibility requirements of whatever kind and nature that contain false information or falsified documents calculated to influence the outcome of the eligibility screening process or conceal such information in the eligibility requirements when the information will lead to a declaration of ineligibility from participating in public bidding.
2. Submit Bidding Documents of whatever kind and nature than contain false information or falsified documents or conceal such information in the Bidding Documents, in order to influence the outcome of the public bidding.
3. Participate in a public bidding using the name of another or allow another to use one’s name for the purpose of participating in a public bidding.
4. Withdraw a Bid, after it shall have qualified as the Lowest Calculated Bid/Highest Rated Bid, or to accept and award, without just cause or for the purpose of forcing the Procuring Entity to award the contract to another bidder. This shall include the non-submission of requirements such as, but not limited to, performance security, preparatory to the final award of the contract.
(d) When the bidder is a juridical entity, criminal liability and the accessory penalties shall be imposed on its directors, officers or employees who actually commit any of the foregoing acts.

Section 66. Jurisdiction. – Jurisdiction over the offenses defined under this Article shall belong to the appropriate courts, according to laws existing at the time of the commission of the offenses.

ARTICLE XXII
CIVIL LIABILITY

Section 67. Civil Liability in Case of Conviction. – Without prejudice to administrative sanctions that may be imposed in proper cases, a conviction under this Act or Republic Act No. 3019 shall carry with it civil liability, which may either consist of restitution for the damage done or the forfeiture in favor of the government of any unwarranted benefit derived from the act or acts in question or both, at the discretion of the courts.
Section 68. Liquidated Damages. – All contracts executed in accordance with this Act shall contain a provision on liquidated damages which shall be payable in case of breach thereof. The amount thereof shall be specified in the IRR.

ARTICLE XXIII
ADMINISTRATIVE SANCTIONS

Section 69. Imposition of Administrative Penalties. – (a) In addition to the provisions of Articles XXI and XXII of this Act, the Head of the Procuring Entity, subject to the authority delegated to the BAC, if any, shall impose on bidders or prospective bidders, the administrative penalty of suspension for one (1) years for the first offense, and suspensions of two (2) years for the second offense from participating in the public bidding process, for the following violations:
1. Submission of eligibility requirements containing false information or falsified documents.
2. Submission of bids that contain false information or falsified documents, or the concealment of such information in the Bids in order to influence the outcome of eligibility screening or any other stage of the public bidding.
3. Allowing the use of one’s name, or using the name of another for purposes of public bidding.
4. Withdrawal of a Bid, or refusal to accept an award, or enter into contract with the government without justifiable cause, after he had been adjudged as having submitted the Lowest Calculated Responsive Bid or Highest Rated Responsive Bid.
5. Refusal or failure to post the require performance security within the prescribed time.
6. Termination of the contract due to the default of the bidder.
Refusal to clarify or validate in writing its Bid during post-qualification within a period of seven (7) calendar days from receipt of the request for clarification.
Any documented unsolicited attempt by a bidder to unduly influence the outcome of the bidding in his favor.
All other acts that tend to defeat the purpose of the Competitive bidding.
(b) In addition to the penalty of suspension, the Bid security of the performance security posted by the concerned bidder or prospective bidder shall also be forfeited.
(c) the Head of the Procuring Entity may delegate to the BAC the authority to impose the aforementioned administrative penalties.

Section 70. Preventive Suspension. – The head of the procuring entity may preventively suspend any member of the Technical Working Group of the Secretariat, or the BAC if there are strong reasons or prima facie evidence showing that the officials or employees concerned are guilty or the charges filed against them under Articles XXI and XXII of this Act or for dishonesty as defined by the Civil Service Laws. In all cases, procedural and substantive due process as mandated by the Constitution and Civil Service Laws, rules and regulations, shall be strictly observed.

Section 71. Lifting of Suspension and Removal of Administrative Disabilities. – Lifting of preventive suspension pending administrative investigation, as well as removal of administrative investigation, as well as removal of administrative penalties and disabilities shall be in accordance with the provisions of Sections 52 and 53, Chapter 6 (Civil Service Commission), Book V of Executive Order No. 292, the Administrative Code of 1987.

ARTICLE XXIV
LEGAL ASSISTANCE AND INDEMNIFICATION OF BAC MEMBERS

Section 72. Private Legal Assistance. – All the members of the BAC are hereby authorized to engage the service of private lawyers or extend counsel immediately upon receipt of Court Notice that a civil or criminal action, suit or proceeding is filed against them. The lawyer’s fee shall be part of the indemnification package for the BAC members, subject to the provisions of Section 73 hereof.
Section 73. Indemnification of BAC Members. – The GPPB shall establish an equitable indemnification package for public officials providing services in the BAC, which may be in the form of free legal assistance, liability insurance, and other forms of protection and indemnification for all cost and expenses reasonably incurred by such persons in connection with any civil or criminal actions, suit or proceeding to which they may be, or have been made, a party by reason of the performance of their functions or duties, unless they are finally adjudged in such action or proceeding to be liable for gross negligence or misconduct or grave abuse of discretion.

In the event of settlement or compromise, indemnification shall be confined only on matters covered by the settlement, as to which the Procuring Entity had been advised by countset that the public officials to be indemnified have not committed gross negligence or misconduct in the performance of their functions and duties.
The members of the BAC and the BAC Secretariat shall also be entitled to medical assistance for injuries incurred in the performance of their functions.

ARTICLE XXV
FINAL PROVISIONS

Section 74. Oversight Committee. – There is hereby created a Joint Congressional Oversight Committee to oversee the implementation of this Act for a period not exceeding five (5) years from the effectivity of this Act. The Committee shall be composed of the Chairman of the Senate Committee on Constitutional Amendments and Revision of Laws and two (2) members thereof appointed by the Senate President, and the Chairman of the House Committee on Appropriations, and two(2) thereof to be appointed by the Speaker of the House of Representatives.

Section 75. Implementing Rules and Regulations and Standard Forms. – Within sixty (60) days from the promulgation of this Act, the necessary rules and regulations for the proper implementation of its provisions shall be formulated by the GPPB, jointly with the members of the Oversight Committee created under Section 74 hereof. The said rules and regulations shall be approved by the President of the Philippines. For a period not later than thirty (30) days upon the approval of the implementing rules and regulations the standard forms for Procurement shall be formulated and approved.

Section 76. Repealing Clause. – This law repeals Executive Order No. 40, series of 2001, entitled “Consolidating Procurement Rules and Procedures for all National Government Agencies, Government-Owned-or-Controlled Corporations and/or Government Financial Institutions, and requiring the Use of the Government Electronic Procurement System”; Executive Order No.262, series of 2000, entitled “Amending Executive Order No.302, series of 1996, entitled “Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government’ and Section 3 of Executive Order No.201, series of 2000, entitled “Providing Additional Policies and Guidelines and the Procurement of Goods/Supplies by the National Government”; Executive Order No. 302, series of 1996, entitled “Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government” and Presidential Decree No. 1594 dated June 11,1978, entitled “Prescribing Policies, Guidelines, Rule and regulations for Government Infrastructure Contracts.” This law amends Title Six, Book Two of Republic Act No. 7160, otherwise known as the “Local Government Code of 1991″; the relevant provisions of Executive Order No.164, series of 1987, entitled ” An Act Providing Additional Guidelines in the processing and Approval of Contracts of the Government”; and the relevant provisions of Republic Act No. 7898 dated February 23, 1995, entitled “An Act Providing for the Modernization of the Armed Forces of the Philippines and other Purposes.” Any other law, presidential decree or issuance, executive order, letter of instruction, administrative order, proclamation, charter, rule or regulation and/or parts thereof contrary to or inconsistent with the provisions of this Act, hereby repealed, modified or amended accordingly.

Section 77. Separability Clause. – If any provision of this Act is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.

Section 78. Effectivity Clause. – This Act shall take effect fifteen (150) days following its publication in the Officials Gazette or in two (2) newspapers of general circulation.

Approved,

Approved: January 10, 2003

Section 1. The President of the Philippines is hereby authorized in behalf of the Republic of the Philippines to contract such loans, credits and indebtedness with foreign governments, agencies or instrumentalities of such foreign governments, foreign financial institutions, or other international organizations, with whom, or belonging to countries with which, the Philippines has diplomatic relations, as may be necessary and upon such terms and conditions as may be agreed upon, to enable the Government of the Republic of the Philippines to finance, either directly or through any government office, agency or instrumentality or any government-owned or controlled corporation, industrial, agricultural or other economic development purposes or projects authorized by law:

Provided, That at least seventy-five per cent shall be spent for purposes or projects which are revenue-producing and self-liquidating, such as electrification, irrigation, river control and drainage, telecommunication, housing, construction and improvement of highways and bridges, airports, ports and harbors, school buildings, waterworks and artesian wells, air navigation facilities, development of fishing industry, and others:

Provided, That such foreign loans shall be used to meet the foreign exchange requirements or liabilities incurred in connection with said development projects to cover the cost of equipment, related technical services and supplies, where the same are not obtainable within the Philippines at competitive prices as well as part of the pesos costs, other than working capital and operational expenses not exceeding twenty per cent of the loan:

Provided, further, That in the case of roads, bridges, irrigation, portworks, river control, airports, and power, the amount shall not exceed seventy per cent of the loan. The authority of the President of the Philippines as herein provided shall include the power to issue, for the purposes hereinbefore stated, bonds for sale in the international markets the income from which shall be fully tax-exempt in the Philippines.

Section 2. The total amount of loans, credit and indebtedness, excluding interests, which the President of the Philippines is authorized to incur under this Act shall not exceed one billion United States dollars or its equivalent in other foreign currencies at the exchange rate prevailing at the time the loans, credits and indebtedness are incurred: Provided, however, That the total loans, credits and indebtedness incurred under this Act shall not exceed two hundred fifty million in the fiscal year of the approval of this Act, and two hundred fifty million every fiscal year thereafter, all in United States dollars or its equivalent in other currencies.

All loans, credits and indebtedness under the preceding section shall be incurred only for particular projects in accordance with the approved economic program of the Government and after the plans of such projects shall have been prepared by the offices or agencies concerned, recommended by the National Economic Council and the Monetary Board of the Central Bank of the Philippines, and approved by the President of the Philippines.

Section 3. The President of the Philippines is, likewise, hereby authorized, in behalf of the Republic of the Philippines, to guarantee, upon such terms and conditions as may be agreed upon, foreign loans extended directly to, or bonds for sale in international markets issued by, corporations owned or controlled by the Government of the Philippines for industrial, agricultural or other economic development purposes or projects authorized by law, such as those mentioned in Section one of this Act, including the rehabilitation and modernization of the Philippine National Railways, the cash capital requirements of the Land Bank, electrification, irrigation, river control and drainage, telecommunication, housing, construction and/or improvement of highways, airports, ports and harbors, school buildings, waterworks and artesian wells, air navigation, development of the fishing industry, iron and nickel exploitation and development, and others:

Provided, That at least seventy-five per cent shall be spent for purposes or projects which are revenue-producing and self-liquidating. The loans and/or bonded indebtedness of government-owned or controlled corporations which may be guaranteed by the President under this Act shall include those incurred by government-owned or controlled financial institutions for the purpose of re-lending to the private sector and the total amount thereof shall not be more than five hundred million United States dollars or its equivalent in other foreign currencies at the exchange rate prevailing at the time the guarantee is made:

Provided, That the government-owned or controlled financial institutions shall relend the proceeds of such loans and/or or bonded indebtedness to Filipinos or to Filipino-owned or controlled corporations and partnerships, at least sixty-six and two-thirds per centum of the outstanding and paid-up capital of which is held by Filipino at the time the loan is incurred, such proportion to be maintained until such time as the loan is fully paid:

Provided, however, That during anytime that any amount of the loan remains outstanding, failure to meet with the capital ownership requirement shall make the entire loan immediately due and demandable, together with all penalties and interests, plus an additional special penalty of two per centum on the total amount due.

Section 4. The implementation of this Act shall be subject to, and governed by, the provisions of Executive Order No. 236, dated February 13, 1957, prescribing procedures for the planning of development finances, the issuance of government securities, and the disbursement of proceeds, and creating the Fiscal Policy Council and the Technical Committee on Development Finance, as amended by Executive Order No. 26, dated May 26, 1966, not inconsistent with this Act, which are hereby adopted by reference and made an integral part of this Act.

Section 5. It shall be the duty of the President, within thirty days after the opening of every regular session, to report to the Congress the amount of loans, credits and indebtedness contracted, as well as the guarantees extended, and the purposes and projects for which the loans, credits and indebtedness were incurred, and the guarantees extended, as well as such loans which may be reloaned to Filipino-owned or controlled corporations and similar purposes.

Section 6. The Congress shall appropriate the necessary amount out of any funds in the National Treasury not otherwise appropriated, to cover the payment of the principal and interest on such loans, credits or indebtedness as and when they shall become due.

Section 7. This Act shall take effect upon its approval.

Approved: August 8, 1966

SECTION 1. Republic Act No. 8182 is hereby amended to include a new Section 11-A to read as follows:

“SEC. 11-A. In the contracting of any loan, credit or indebtedness under this Act or any law, the President of the Philippines may, when necessary, agree to waive or modify the application of any provision of law granting preferences in connection with, or imposing restrictions on, the procurement of goods or services: Provided,however, That as far as practicable, utilization of the services of qualified Filipino citizens or corporations or associations owned by such citizens in the prosecution of projects financed under this Act shall be prepared on the basis of the standards set for a particular project: Provided, further, That the matter of preference in favor of articles, materials, or supplies of the growth, production or manufacture of the Philippines, including the method or procedure in the comparison of bids for purposes therefor, shall be the subject of agreement between the Philippine Government and the lending institution.”

SECTION 2. Section 4 of Republic Act No. 8182 is hereby amended to read as follows:

“SEC. 4. Use of ODA for equitable development. — The proceeds of ODA shall be used to achieve equitable growth and development in all provinces through priority development projects for the improvement of economic and social service facilities taking into account such factors as land area, population, scarcity of resources, low literacy rate, infant mortality and poverty incidence in the area: Provided, That rural infrastructure, countryside development and economic zones established under the PEZA law shall be given preference in the utilization of ODA funds. Towards this end, the National Economic and Development Authority (NEDA) shall endeavor to obtain ODA funds from donor countries, which shall approximately be five percent (5%) of the total ODA loan from the immediately preceding year. Said funds shall be administered by the NEDA for project identification, feasibility studies, master planning at local and regional levels, and monitoring and evaluation: Provided, further, That ODA shall not be availed of or utilized directly or indirectly for the
following:

“(a) Telephone programs contracted as of 1 January 1996 except basic telephone programs and projects for rural areas not adequately serviced and/or currently developed by private enterprises shall be entitled to ODA loan availments;
“(b) Projects mandated primarily by law to be served by the private sector; and
“(c) Financing for private corporations with access to commercial credit. “The NEDA shall ensure that the ODA obtained shall be for previously identified national priority projects which are urgent or necessary. ODA shall not be accepted
or utilized solely because of its availability, convenience, or accessibility.”

SECTION 3. Effectivity. — This Act shall take effect after five (5) days from its publication in the Official Gazette or in at least two (2) national newspapers of general circulation whichever date comes first.

Approved: February 26, 1998

SECTION 1. Title. — This Act shall be known as the “Official Development Assistance Act of 1996.”

Sec. 2. Official Development Assistance (ODA). — For purposes of this Act, ODA is a loan or loan and grant which means all of the following criteria:

(a) It must be administered with the objective of promoting sustainable social and economic development and welfare of the Philippines;
(b) It must be contracted with governments of foreign countries with whom the Philippines has diplomatic, trade relations or bilateral agreements or which are members of the United Nations, their agencies and international or multilateral lending institutions;
(c) There are no available comparable financial instruments in the capital market; and
(d) It must contain a grant element of at least twenty-five percent (25%). Grant element under this Act is the reduction enjoyed by the borrower whenever the debt service payments which shall include both principal and interest and expressed at their present values discounted at ten percent (10%) are less than the face value of the loan or loan and grant. The grant element of a loan or loan and grant is computed at the ratio of (i) the difference between the face value of the loan or loan and grant and the debt service payments to (ii) the face value of the loan or loan and grant.

Sec. 3. Amendatory Clause. — Official Development Assistance, as defined in this Act, is hereby excluded from the application of Paragraph 1, Section 2 of Republic Act No. 4860, as amended: Provided, That the weighted average grant element of all ODA at anytime shall not be less than forty percent (40%): Provided, further, That in no case shall the interest rate on the loan or loan component exceed seven percent (7%).

Sec. 4. Use of ODA for Equitable Development. — The proceeds of ODA shall be used to achieve equitable growth and development in all provinces through priority development projects for the improvement of economic and social service facilities taking into account such factors as land area, population, scarcity of resources, low literacy rate, infant mortality and poverty incidence in the area: Provided, That rural infrastructure, countryside development and economic zones established under the PEZA law shall be given preference in the utilization of ODA funds. Towards this end, the National Economic and Development Authority (NEDA) shall endeavor to obtain ODA funds from donor countries, which shall approximately be five percent (5%) of the total ODA loan from the immediately preceding year. Said funds shall be administered by the NEDA for project identification, feasibility studies, master planning at local and regional levels, and monitoring and evaluation: Provided, further, That ODA shall not be availed of or utilized directly or indirectly for the following:

(a) Telephone programs contracted as of 1 January 1996 except basic telephone programs and projects for rural areas not adequately serviced and/or currently developed by private enterprises shall be entitled to ODA loan availments;
(b) Projects mandated primarily by law to be served by the private sector; and
(c) Financing for private corporations with access to commercial credit.
The NEDA shall ensure that the ODA obtained shall be for previously identified national priority projects which are urgent or necessary. ODA shall not be accepted or utilized solely because of its availability, convenience, or accessibility. (as amended by R.A. 8555)

Sec. 5. Counterpart Funds. — The counterpart funds necessary to implement each ODA project must be included in the Annual Expenditure Program submitted by the President to Congress within thirty (30) days from the opening of every regular session. Any request for funds to cover cost overruns must be submitted to Congress for appropriation.

Sec. 6. Mechanism for the Distribution and Utilization of ODA Funds. — The President of the Republic of the Philippines, upon recommendation of the NEDA, shall develop and formulate the mechanism for the equitable distribution and utilization of ODA funds to all provinces consistent with the provinces consistent with the provisions of this Act.

Sec. 7. Applicability. — This Act shall apply to ODA loans and loans and grants contracted on or after 1 January 1995.

Notwithstanding the exclusion of ODA loans as prescribed in Section 3 hereof from the debt ceiling of Ten billion US dollars (US$10B) prescribed in Section 2 of Republic Act No. 4860, as amended by Presidential Decree No. 1939, nothing contained in this Act
shall be interpreted to mean that whatever ODA loans that are within the debt ceiling of Ten billion US dollars (US$20B) can be substituted or replaced by non-ODA loans.

Sec. 8. Oversight. — Pursuant to its constitutional duties, the Executive Department, particularly NEDA, the Commission on Audit and Congress shall discharge Oversight functions, to wit:

(a) The NEDA shall conduct annual review of the status of all projects financed by ODA, identify causes of delays, reasons for bottlenecks, cost overruns, both actual and prospective, and continued viability, and report to Congress not later than June 30 of each year;
(b) The Commission on Audit shall conduct an audit on each ongoing and completed project and report to Congress not later than June 30 each year; and
(c) There shall be a Congressional Oversight Committee composed of the Chairmen of the Committee on Ways and Means of both the Senate and the House of Representatives, five (5) members each from the Senate and the House representing the majority and two (2) members each from the Senate and the House representing the minority to be designated by the leaders of the majority and minority in the respective chambers.

Sec. 9. Continuous Monitoring. — All concerned implementing and oversight agencies shall submit to the NEDA all information and reports as may be required by it to review draft contracts and to assess the performance of individual ongoing projects as well as the overall performance of all projects which are funded in whole or in part by ODA.

Sec. 10. Report. — It shall be the duty of the President of the Republic of the Philippines to submit, within thirty (30) days after the opening of every regular session, a separate report to each member of Congress on the amount of ODA loans and grants incurred under this Act.

Sec. 11. Implementation, Restrictions, Rules and Regulations. — In the implementation of the projects: (a) Consultants for the feasibility and design aspects of the project may not participate, directly or indirectly, in any subsequent phase of project implementation; (b) Project execution shall not be delegated by the implementing agency except where the latter does not have the capacity to implement such project; (c) In the hiring of consultants, contractors, architects, engineers, and other professionals necessary for a project’s implementation, Filipinos shall be given preferences; (d) In the purchase of supplies and materials, preference shall be given to Filipino suppliers and manufacturers, so long as the same shall not adversely alter or affect the project, and such supplies and materials are to the standards specified by the consultants, contractors, architects, engineers, and other professionals connected with the projects;
and (e) ODA projects shall not be exempt from the requirement of first obtaining an Environmental Compliance Certificate (ECC), or other such certificates and clearances necessary or required by law for the purpose of environmental protection, from the Department of Environment and Natural Resources (DENR) or proper government agency, as the case may be.

The NEDA shall promulgate the Implementing Rules and Regulations (IRR) to implement this Act within thirty (30) days from its approval.
The Implementing Rules and Regulations shall take effect five (5) days after publication in a newspaper of general circulation.

Sec. 11-A. In the contracting of any loan, credit or indebtedness under this Act or any law, the President of the Philippines may, when necessary, agree to waive or modify the application of any provision of law granting preferences in connection with, or imposing restrictions on, the procurement of goods or services: Provided, however, That as far as practicable, utilization of the services of qualified Filipino citizens or corporations or associations owned by such citizens in the prosecution of projects financed under this Act shall be prepared on the basis of the standards set for a particular project: Provided, further, That the matter of preference in favor of articles, materials, or supplies of the growth, production or manufacture of the Philippines, including the method or procedure in the comparison of bids for purposes therefor, shall be the subject of agreement between the Philippine Government and the lending institution. (as amended by R.A. 8555)

Sec. 12. Separability. — Provisions herein which may be declared unconstitutional shall not revoke the effectivity and enforcement of other provisions of this Act.

Sec. 13. Repealing Clause. — All laws, decrees, executive orders, rules and regulations and other issuances inconsistent with this Act are hereby repealed or amended accordingly.

Sec. 14. Effectivity. — This Act shall take effect after five (5) days from its publication in the Official Gazette or in at least two (2) national newspapers of general circulation whichever date comes earlier.

Approved: June 11, 1996.

Public-works projects are marred by irregularities. For this reason, many people think that public officials build roads, bridges, dams, and other civil works only so they could make illicit money on the side.

It seems anomalies are a standard feature of any project, whether it is a simple government-funded contract to build a road such as the Diosdado Macapagal Highway or a complex build-operate-transfer (BOT) project such as the Ninoy Aquino International Airport Terminal III.

Decades ago, the completion of public works such as roads, bridges, dams and even power plants were considered feats of engineering worthy of national pride. Praise, instead of suspicion, was heaped on the successful project manager. The National Power Corp. project engineer who oversaw the construction of the country’s first three hydroelectric power plants in the early 1950s, Filemon C. Rodriguez, for example, was named “Power Man of the Year” in 1953 by the Free Press magazine.

In fact, in the early days of the Philippine Republic, public works projects were viewed as a developmental tool that opened up underdeveloped areas or enabled them to be more productive. The emergence of Baguio City, for example, is associated with the building of the Kennon Road, which made it possible for motorists to drive up to the mountain resort. The development of Iligan City in Northern Mindanao was made possible by hydroelectric dams along the Agnus River, which provided a steady and inexpensive supply of electricity to heavy industries such as steel, fertilizers, and cement that relocated to the city.

Those seeking information on government infrastructure projects should remember that the purpose of public works is to improve the lot of the community to make life a little easier and better for everybody. Ultimately, the standard against which government projects should be measured is whether the benefits they bring outweigh their financial, social, and environmental costs.

Given the country’s lack of resources, planners are obliged to choose projects that give the highest economic and social returns to the community. Unfortunately, this consideration is set aside on many occasions as projects are prioritized based on the availability of funding support. Worthy projects that do not enjoy access to funding may not be considered at all. Approving bodies also succumb to pressure from powerful bureaucrats and politicians who lean on them to endorse so-called “prestige” but poorly conceived projects.

Corruption and anomalies in project planning and implementation are, of course, a constant concern, but they should not be the only ones. A public-works undertaking may be free of irregularity but may still be a total waste of public funds if it is badly designed and fails to address the problems it was mean to solve.

Project proponents may follow all the rules in the book but could be implementing something that damages the environment or promotes economic inequality. Graft invariably results in bad projects, but it is not the only cause of problematic projects. Poor judgment, lack of skills, and complacency also cause projects to turn bad.

Whether one is a journalist writing a story about a government project or a community leader wondering how a project will affect his or her neighborhood, it is important to understand how projects are planned, approved, funded and implemented. There are rules and procedures to be followed for each stage of the project cycle. Violations of-or deviations from – these rules are often the most obvious sign that something wrong is going on. However, it is also important to realize that not everything is all right even when the procedure are being followed.

This guide is not a manual on project evaluation. It will not help readers distinguish a good project from a bad one. (A list of references is provided in the chapter for readers wishing to know more about project evaluation). It will describe the process of project evaluation and approval, the various stages projects go through, the agencies involved, and the basic laws, rules,and regulations that apply. This chapter will also provide tips on the different ways to get information about government projects.

Overview

In any given year, state entities from the national agencies to local units implement tens of thousands of capital projects, big and small, designed to increase the government’s capacity to deliver more goods and services. Investment projects usually take the form of infrastructure such as roads, bridges, school, buildings, water distribution systems and irrigation canals.

As much as a third of the national government’s 2003 obligation budget of P804 billion goes to projects. That’s around P267 billion, almost half of which has been allotted for infrastructure projects such as roads, bridges, and irrigation canals. Another 38.3 percent goes to current operations, the bulk of which is spent on the salaries of schoolteachers, soldiers, policemen, clerks. The rest (27.8 percent) is used to pay interest on the government’s local and foreign borrowings.

The entirety of public investment projects is much bigger than what is in the government budget, however. Some projects are not funded or carried out by the government but by private investors under joint-venture, BOT, and similar schemes. In 2003, private companies were implementing 15 projects worth $5 billion for various national government agencies and corporations. Since the early 1900s, more than half of all the new power plants were built and run by independent power producers. This saved the government millions of dollars but later resulted in excessively higher power rates for consumers.

Laws and Policies

A number of laws govern the approval, financing, and implementation of public-investment projects. Familiarity with these regulations should help anyone seeking information on government projects as the rules define the procedures and identify the entities involved in various aspects of project development.

Executive Order 230 (Reorganizing the National Economic and Development Authority, 22 July 1987) lays down the basis for the evaluation of major public-investment projects by the National Economic and Development Authority (NEDA) and its Investment Coordination Committee (ICC). Separate regulations earlier defined “major” projects as those costing at least P300 million for national-government projects and P200 million for local-government projects. Other projects may still need to be evaluated by the NEDA secretariat but no longer need to go through the ICC process. The rest can be approved either by the head of agency, the directors of a government corporation, or the board of a local government.

Public-investment projects, like all government purchases, are subject to state procurement laws and regulations, which were recently consolidated into Republic Act 9184, or an Act Providing for the Modernization, Standardization, and Regulation of the Procurement Activities of the Government. The law requires the government to choose suppliers of goods, services, and even civil works through competitive and transparent bidding. It details how this is to achieved through such mechanisms as the bids, awards and contracts committees, which are to be set up within each agency, Government Corporation, and local government unit.

Build-operate-transfer and similar projects financed and implemented by private investors in return for the right to collect fees from users of toll roads, irrigation canals, and water distribution systems are governed by RA 7718, also known as the BOT law. The law requires competitive bidding in the award of BOT contracts, except in exceptional cases and when a government agency or unit receives what is called an unsolicited proposal. RA 7718 also states that BOT projects proposed by a national government agency worth at least P300 million need approval of the ICC and the NEDA board.

Sources of Basic Information

Researching public investment projects can be easy or hard depending on the information being sought. There are several published or online official lists of government projects that provide basic information such as cost, proponent, timetable, and funding source.

A basic source of information is the NEDA’s Medium Term Public Investment Program (MTPIP), which is prepared along with the Medium Term Development Program (MTDP) once every five years.The public investment program is a comprehensive list of infrastructure and other projects that various government agencies want to implement over the next few years. The list provides information on the project cost, location, timetable, and proposing agency. The MTPIP covers only proposed projects. Only some will eventually be considered, approved and implemented.

Recognizing the importance of the MTPIP, the ICC and international funders require a project to be in the investment program before it is considered for funding. However, the integrity of the list is being diminished by frequent changes in the composition of projects included. Government agencies also treat the investment program as mere ‘wish list” by including more projects that they can reasonably fund from their projected budgetary allocations.

The General Appropriations Acts (GAA), the national government budget as approved by Congress, also lists public investment projects and the proposed spending for them for a specific year. The projects are listed by implementing agency and are further subdivided into those that projects listed in the appropriations law will be implemented as are locally funded and foreign assisted. There is a higher degree of probability that a funding is already available for it. When using a GAA as an information source, remember that the amount mentioned for a projec represents only expenditures for a specific year, not the entire cost.

Another budget publication, the Budget of Expenditures and Sources of Funds (BESF), lists ongoing foreign-assisted projects and the appropriation for them in a given year, as well as the implementing agency and the foreign donor or funder. Again, readers should remember that the amounts mentioned in this document refer only to a specific year and do not constitute the entire project cost.

For the status of government projects financed by concessional loans and grants from other countries and multilateral lending organizations, an important source of information is the NEDA’s annual official development assistance (ODA) portfolio review. The latest available, released in June 2003, covers ODA-funded projects as of December 31, 2002

The annexes are particularly useful because they all list the projects, including the implementing agency, funding source, loan effectivity and closing date, loan amount, loan cancellation, scheduled availment, actual availment, the availment rate, amount of backlog, disbursement target, actual disbursement, and percent attainment of target disbursement. The annexes also list projects facing various kinds of difficulties such as right of way, peace and order, change in scope and additional work, contractor’s poor performance, environmental clearance certificate, and budget-related problems. Care should be exercised in using the numbers mentioned in this report as they refer to loan amount, not the project costs, which are bigger as they include a local peso counterpart.

Information about private sector financed and managed projects under BOT and similar schemes are listed on the website of the BOT Center (www.botcenter.gov.ph), a unit under the Department of Trade and Industry tasked with promoting private investments in public infrastructure projects. The lists include only basic information such as the project name, proponent agency, project cost, investment scheme, and the private investor (if the project has been awarded ). One of the lists (List of Completed, Operational, and Awarded BOT Projects) classifies the projects by status i.e. completed, operational, under construction, bidding stage, feasibility study. It distinguishes between BOT projects that were awarded through public bidding and the so called unsolicited proposals that were awarded largely through negotiation. Another list (Projects for Investment) provides a brief description, estimated cost, and status of public investments projects being offered to private investors.

There is a lot more to projects than costs, funding source, and dates, however. Those looking for more substantial information toward making an assessment of the beneficial or adverse effects of specific government projects cannot only rely merely on lists. They need to look at the actual proposals, feasibility studies, evaluation reports, and other documents generated in the course of a project’s life cycle.

Project Idea Feasibility

One of the distinguishing features of investment projects, as opposed to other government activities is that they have a beginning and an end. Public school teachers will forever be teaching and policemen will forever be catching criminals, but building a road is expected to be finished at some point. Valuable information, usually written down in documents, is generated at various phases of a project’s life, so it is worthwhile to spend some time learning a little bit about how projects start, develop, and end.

NEDA project analysts divide a project’s life cycle into three broad phases: pre-investment, implementation, and post-investment (see components of a project cycle)

The first phase includes concept or identification, definition or preparation, feasibility study, and approval and financing. Many people think that the most important activity in the pre-investment phase is the feasibility study and thus focus their attention solely on the document. To planners, the study is critical because it establishes the workability of a project idea.

COMPONENTS OF A PROJECT CYCLE

But journalists, researchers, and other outsiders looking in should also be interested in how a project concept came about. Ideally, projects are identified based on gaps in the economy or society. Oftentimes, projects arise because of pressure from interest groups or beneficiaries, including foreign suppliers. Politicians, too, often push for pet projects even when there is no clear demand for them. An influential former senator, for example, wanted a women’s training center built beside the Technical Skills Development Authority (TESDA) Building just because she saw one in Japan. The project went through ICC and NEDA board but was fortunately turned down by the Japanese government itself.

This is not to say that outsiders should ignore the feasibility study, which provides a comprehensive account of the factors considered by the proponent in pushing for a project. No two feasibility studies are exactly alike, but according to the NEDA, the ideal study should contain the following modules: market or demand and supply, technical or engineering, manpower and administrative support, financial, economic, social, institutional, and environmental. Traditionally, cost-benefit analysis widely used in these studies covered only financial and economic variables. Increasingly, social and environmental costs are also being quantified and brought into the equation. For example, if a project damages the environment, the costs of pollution should be included in the project cost.

Evaluation and Approval

After the feasibility study come approval and financing, which involve NEDA’s investment coordinating committee and the various external funding sources.

Government projects do not go through the same evaluation and approval process. Some merely require the go signal of head of the agency or local government board concerned while others need the approval of no less than the Philippine president and key embers of the Cabinet. The most rigorous assessment is reserved for the biggest projects having the most impact on people, the community, and the economy. More often than not, these are also funded by official development assistance (ODA) or grants or low-interest long-term loans form other countries or multilateral organizations such as the World Bank and the Asian Development Bank.

The stringest review procedure is carried out by the NEDA–ICC which evaluates all public-sector capital projects if they cost P300 million or higher, are funded by a foreign loan at least $5 million, or are undertaken by then private sector seeking access to ODA financing. Public works worth at least P300 million (P200 million if sponsored by a local government unit) undertaken by investors under BOT and other similar private sector participation schemes also need ICC approval.

Full NEDA – ICC evaluation and approval goes through a four-stage process: 1.) the ICC core secretariat, staffed by NEDA analysts and sector experts; 2.) the ICC Technical Board, composed of undersecretaries of selected departments; 3.) The ICC Cabinet Committee composed of secretaries of selected departments ; and 4.) the NEDA Board, chaired by the President and composed of 18 Cabinet secretaries and one representative of the central bank.

Some projects require NEDA Board approval but no longer need to go through complete ICC review. Endorsement from the ICC secretariat is enough. Examples include projects requiring less than $5 million foreign borrowing, those funded by grants or so-called programs loans incurred strictly for balance of payments and budgetary support.

In general, the following projects are also excluded from ICC review and approval: LGU-funded projects; regular maintenance and operating expenses; spare parts acquisition; relending of concessional funds to private borrowers; and technical assistance activities such as research, training, and expert services.

After a project is evaluated and approved, it is endorsed for funding. Projects meant to be funded by other countries or multilateral organizations are submitted either to their respective embassies or representative offices in the Philippines. Negotiations usually follow and an agreement results in the signing of several loan or grant documents. Sometimes changes in the project scope or scale are deemed too substantial that the project is resubmitted to the NEDA-ICC for review.

The evaluation, approval and funding activities generate documents that contain important information on the project. Any journalist or researcher wishing to study a project in-depth should strive to get hold of these papers, which include submissions by the implementing agencies and evaluation reports made by various units of the NEDA and the ICC.

Government agencies proposing a project for NEDA and ICC review fill up several project evaluation forms (PE Form 1 on general information, PE form 2 on sources of financing; PE form 3 on project cost; PE form 4 on annual operations, and maintenance costs; PE form 5 on estimate project benefits; and PE form 6 on project framework.) In addition, they submit the feasibility study, regional development council endorsement for local projects, Department of Finance review for projects proposed by government corporations, NCC review for relending programs, right of way (ROW) acquisition and resettlement action plan, project funding strategy, and the environmental impact study or environment compliance certificate.

The various units of NEDA and ICC, in turn write reports at various stages of the evaluation and approval process. As soon as it has finished reviewing a project, the ICC secretariat writes a comprehensive project evaluation report that is submitted to the ICC Technical Board. If approved, the ICC Secretariat writes another shorter report endorsing the project to the ICC Cabinet Committee. Afterwards, only a brief project summary is prepared for the NEDA Board which confirms the ICC Cabinet Committee approval.

Both the forms and other documents submitted by the implementing agency and the evaluation reports written by the various NEDA and ICC Units are public documents. Outside parties can request a copy in writing to the NEDA development information staff.

Though not as rigorous, project proposals and evaluation reports are written for projects that no longer need to go though the NEDA and ICC, and need only approval of the agency head., a government board, or a local government body. The proposals and reports are often prepared by a project development office or similar unit within the agency, state firm, or local government unit.

Implementation and Monitoring

Ideally, journalists, NGOs and government watchdogs should start to write about projects at the identification and feasibility study stage to give the affected communities the opportunity to intervene and have a say in shaping the project. In truth, many people get to learn about projects and their likely impact on communities only when implementation is well on its way.This is the time when government social workers suddenly appear in the neighborhood to convince households to resettle somewhere else because a new expressway will be built on the land they are occupying.

Even the best-designed projects could turn bad if poorly executed. A well-planned highway may turn into a killing zone if the contractor cheats and uses substandard materials to cut costs. For this reason, implementation which covers both the completion of construction activities as well as the initial operation, is considered a critical phase of the project life-cycle. Implementation is followed by post-investment evaluation, which aims to assess short-and-medium-term impact of the project and identify future projects for consideration.

Many issues in project implementation are of interest to the public. For affected communities, the No.1 question, of course is making sure that project is implemented in a way that minimizes harm to the environment and the populace. The construction of a new rail transit system is sure to ease traffic but may worsen road congestion in them meantime because of improper deployment of equipment and materials along the major thoroughfares.

The public is also keen to see that projects are completed on time and within budget. Unfortunately, government’s overall capability to implement projects effectively remains weak, leading funding agencies to complain often about the low loan utilization rates. Disbursement level in 1999 and 2000 fell to below $1 billion, while the ODA availment rate went down to 63 percent, the lowest in a long time. The slow implementation of projects that results in low levels of loan utilities also raises the costs for the government, which has to pay higher commitment fees to keep the loan active. Project delays do not just postpone potential benefits but exposes the project to the danger of cost escalation.

Graft and corruption is another issue in project implementation. Bribery, extortion, and collusion distort the competitive process essential in selecting the best company to supply goods and services for public-investment projects.

There is no officials list of graft-ridden government projects, but the NEDA’s Project Monitoring Staff (PMS) maintains a database on the status of major projects approved by the agency. The ICC publishes on its website a list of approved projects. The NEDA also maintains an online contracts database containing summaries of its review of all government contracts above P50 million. The database contains basic information about contracts between government agencies, corporations, and local units on one hand, and private sector suppliers of goods and services on the other. A substantial number of the contracts involve public-investment projects. When using the database to research the status of a public investment project, one should remember that a single project may involve several contracts between government and various counterparties.

For foreign-assisted projects, the NEDA’s ODA Portfolio Performance report is an excellent source of information. A special table in the report lists is delayed or stalled projects and the problems they are encountering. Another list is a later report indicates project running longer and costing more then initially estimated.

A number of NGOs also maintain watchlists of government projects to prevent corruption and irregularity. They are an excellent source of information on why some projects are stretching beyond their budgets and timetables. Not every instance of cost or time overrun is a signal of inefficiency, irregularity, or worse, corruption. So it is important to find out why a particular project is failing.

The best source of information on the status of projects under implementation is the agency, government corporation, or the local government unit in charge. These organizations usually maintain an office tasked with initiating and managing projects that would have up to date information on what is happening to the government unit’s projects.

Organizations of affected communities or sectors, whether for or against a proposed projects are also a good source of information, particularly on the social, economic, and environmental impact of a project. Before the Senate Blue Ribbon Committee began investigating the BOT deal between Department of Transportation and Communication and the Philippine International Airport TerminalCo.(PIATCO),the organization of airport service companies that were likely to lose their business was just the only source of project documents including the BOT contract and its various supplements.

The private sector contractors and suppliers should not be neglected as potential sources of information as well. Materials coming from these sources tend to be self-serving. However, they could also be challenged to provide copies of contracts, agreements, environmental impact studies, and other documents. Companies entering into long-term agreements with the government through joint-venture-BOT, and similar schemes usually prepare business plans that spell out exactly how they intend to fulfill their obligations and make money at the same time. In general, they do not usually give out copies of their business plans to outside parties, but some do. The two private water concessionaires that took over the operations of Metropolitan Waterworks and Sewerage Systems submitted their business plans as part of their respective bids.

External lending and aid agencies that fund a great number of government projects also provide information on these past and present project loans on their websites. The World Bank, for example, provides not only project information briefs on the rationale, objectives, and targets of projects it is supporting but also extensive staff appraisal reports. Some documents such as the environmental impact assessment of a World Bank-funded project are also included. The Asian Development Bank also maintains information on supported projects on its website. However, bilateral lending institutions have yet to share reports and documents on projects they are supporting with loans and grants.

Source: PCIJ Guide to Government, Philippine Center for Investigative Journalism, 2003.

• Caucus of Development NGO Networks
• Freedom From Debt Coalition
• IBON Foundation Inc.
• ODA Watch
• Philippine Institute for Development Studies
• Procurement Watch Inc.
• Social Watch Philippines
• Transparency and Accountability Network

The World Bank provides financial and technical assistance to developing countries around the world. It aims to reduce global poverty and improve living standards. It is comprised of two development institutions owned by 185 member countries — the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world.

Asian Development Bank

The Asian Development Bank is dedicated to poverty reduction in Asia and the Pacific. It was established in 1966 and has its headquarters in Manila. The ADB is owned and financed by 67 member countries, of which 48 are from the region and 19 are from other parts of the globe.

The Philippines is ADB’s fifth largest borrower and technical assistant recipient, and ADB’s largest client for approved private sector loan, equity investment, and guarantee operations.

Japan Bank for International Cooperation

The Japan Bank for International Cooperation undertakes lending and other programs to promote Japanese exports, imports and economic activities overseas, stabilize the international financial order, and for economic and social development as well as economic stability in the developing economies.

JBCI has 985.5 billion yen in capital for international financial operations, and 7,231.5 billion yen for overseas economic cooperation operations.

Organization of the Petroleum Exporting Countries Fund (OFID)

The Organization of the Petroleum Exporting Countries (OPEC) fund for international development was created at the first OPEC meeting in 1979.

OFID provides financial assistance through public sector loans for development projects and programs, balance of payments support and debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, trade financing, support to private enterprises, grants for technical assistance, food aid, research and humanitarian relief work, and contributing to the resources of other development organizations

Australian Agency for International Development

AusAID is the Australian government’s overseas aid program. It is a federally funded program that aims to reduce poverty in developing countries.

Australia is one of the top three bilateral grant aid donors to the Philippines, along with the United States and Japan. AusAID has earnmarked an estimated $89.9 million in aid to the Philippines for 2007-2008, and has already provided $100.6 million in official development assistance.

In 2007, Australia revised its approach to development in the Philippines and began implementing a new, four-year country program strategy aimed in assisting the Philippines to meet its development goals, especially in reducing poverty, increasing economic growth and maintaining national stability

KfW Bankengruppe (KfW banking group)

The KfW Bankengruppe (KfW banking group) is one of the ten biggest banks in Germany. It was established in 1948 and is owned by the federal government (80%) and the Länder (20%)

KfW offers individual loan programs and supports small and medium-sized enterprises in Germany and investments abroad.

Export-Import Bank of Korea

The Export-Import Bank of Korea (Korea Eximbank) is an official export credit agency which provides comprehensive export credit and guarantee programs to support Korean enterprises in conducting overseas business. Since it was established in 1976, the bank has supported Korea’s export-led economy.

Korea Eximbank’s primary services include export loans, trade finance, and guarantee programs. The bank also provides overseas investment credit, import credit, and information services related to business opportunities abroad.

Korea Eximbank also operates two government funds: the Economic Development Cooperation Fund, a Korean Official Development Assistance program, and the Inter-Korean Cooperation Fund, an economic cooperation program with North Korea.

China

For the Philippines, China’s rising economy has generated billions of dollars in trade, investment, and development assistance.

It is the Philippines’s third largest trading partner, after Japan and the U.S., with an average annual growth rate of 41 percent. China is also our country’s third largest export partner. Chinese investments in the Philippines totaled $350 million from January to September 2006.

Agreements signed between the Philippines and China include a 2005 joint trade committee agreement to develop cooperation in mining and infrastructure, and a 2007 framework agreement on expanding and developing bilateral economic and trade cooperation.

United States

The U.S. is the Philippines’s second largest trading partner. The U.S. State department says that it is working closely with the Philippines to reduce poverty and increase prosperity.

USAID programs support the ‘Philippines’ war on poverty as well as the government’s reform agenda in critical areas, including anti-money laundering, rule of law, tax collection, and trade and investment. Other USAID programs have focused on conflict resolution, livelihood enhancement for former combatants, and economic development in Mindanao and the Autonomous Region in Muslim Mindanao.

Other continuing programs focus on modern family planning, infectious disease control, environmental protection, rural electrification, and provision of basic services–as well as PL 480 food aid programs and others, which together totaled $211.3 million. In 2006, the Millennium Challenge Corporation granted $21 million to the Philippines for a threshold program addressing corruption in revenue administration.

Banque Nationale de Paribas (BNP Paribas)

BNP Paribas is one of the largest international banking networks with strong positions in Asia and a significant presence in the United States.

In 2007, it ranked sixth in the banking industry first among French companies, according to Forbes magazine.

BNP Paribas operates in over 85 countries, and has 162,700 employees.

Asian Development Bank

• Capital Market Development Program, 2000
• Northern Luzon Transmission and Generation Project, August 2001
• Rural Water Supply and Sanitation Sector Project, July 2002
• Metropolitan Cebu Water Supply Project, December 2002
• Forestry Sector Project, 2003
• Leyte Mindanao Interconnection Engineering Project, May 2003
• Rural Infrastructure Development Project, July 2004
• Nonbank Financial Governance Program, August 2003
• Power Sector Restructuring Program, July 2004
• Subic Bay Area Municipal Development Project, September 2004
• Umiray-Angat Transbasin Project, October 2004
• Rural Microenterprise Finance Project, February 2005
• LGU Private Infrastructure Project Development Facility, June 2005
• Airport Development Project, December 2005
• Regional Municipal Development Project, May 2006
• Clark Area Municipal Development Project, August 2006
• Power Transmission Reinforcement Project, August 2006
• Small Towns Water Supply Sector Project, August 2006
• Second Nonbank Financial Governance Program, September 2006
• Integrated Community Health Services Project, November 2006
• Early Childhood Development Project, June 2007

2002

• Agrarian Reform Infrastructure Support Project, March 2002
• Domestic Shipping Modernization Program, June 2002
• Meralco Rural Electrification Project, June 2002
• Rural Water Supply Project, July 2002
• Second Manadaue-Mactan Bridge Construction Project, September 2002
• Substation Expansion Project, September 2002
• Environmental Equipment Projects for Power Plants, September 2002
• Ninoy Aquino International Airport Terminal2 Development Project, September 2002
• Agro Industry Technology Project, October 2002
• Extra High Voltage Transmission Line Project, October 2002
• National Telephone Program, October 2002
• Postal Equipment Procurement Project, October 2002
• Regional Telecommunications Development Project, October 2002
• Rehabilitation and Maintenance of Bridges Along Arterial Roads, October 2002
• Rural Road Network Development Project, October 2002
• Export Industry Modernization Project, November 2002
• Maritime Communication Project, November 2002
• Metro Cebu Development Project, November 2002

2003

• South Luzon Expressway Construction Project, January 2003
• Regional Telecommunications Development Project Region3, January 2003
• Engineering and Science Education Project, February 2003
• Fishing Ports Development Project, February 2003
• Impact Evaluation Study on Public Private Partnership, July 2003
• South Luzon Expressway Construction Project, 2003

2004

• Cavite Export Processing Zone Development Project, 2004
• Third Party Opinion on Cavite Export Processing Zone Development Project, 2004
• Improvement in Power Grid Project, 2004
• Third Party Opinion on Improvement in Power Grid Project, 2004
• NEA-VECO Rural Electrification Project, 2004
• Third Party Opinion on NEA-VECO rural Electrification Project, 2004
• Rosario-Pugo-Baguio Road Rehabilitation Project, 2004
• Third Party Opinion on Rosario-Pugo-Baguio Road Rehabilitation Project, 2004

2005

• Arterial Road Link Development Project Tsubugo, 2005
• Environmental Infrastructure Support Credit Program, 2005
• Third Party Opinion on Environmental Infrastructure Support Credit Program, 2005
• Metro Manila Air Quality Improvement Sector Development Program, 2005
• Third Party Opinion on Metro Manila Air Quality Improvement Sector Development Program, 2005
• Metro Manila LRT Line1 Capacity Expansion Project, 2005
• Third Party Opinion on LRT Line1 Capacity Expansion Project, 2005
• Pampanga Delta Development Project, 2005
• Third Party Opinion on Pampanga Delta Development Project Pagderanga, 2005
• Subic Bay Freeport Environment Management Project, 2005
• Third Party Opinion on Subic Bay Freeport Environment Management Project, 2005

• Fourth Education Project, July 1986
• Fishery Training Project, June 1990
• Philippines Second Education Project, November 1982
• Vocational Training Project, September 1992
• Vocational Training Project, May 1994
• Manila and Jakarta Sewerage Projects, June 1995
• Support for SMEs Impact Evaluation, June 1998
• SZOPAD Social Fund Project, June 2003
• Inspection Panel Report on Manila Sewage Project, November 2003
• Second Subic Bay Freeport Project, April 2004
• Conservation of Priority Areas Grant, May 2004
• Social Expenditure Management Program, June 2004
• Transmission Grid Reinforcement Project, June 2004
• LGU Urban Water and Sanitation Project, June 2004
• Agrarian Reform Communities, June 2004
• Mindanao Rural Development Project, June 2005
• Land Administration and Management June 2005
• Early Childhood Development Project, May 2006
• Manila Second Sewerage Project, May 2006
• Mindanao Rural Development Project, June 2006
• Water Resources Development Project, June 2006
• Third Elementary Education Project, January 2007

THE public’s right to information is expressly guaranteed by the 1987 Constitution and affirmed by the judiciary. Yet access to data held by state agencies not only remains limited, it has become nil in some cases, apparently because of the current Senate scrutiny of particular government projects.

In fact, based on the recent experience of the PCIJ, agencies that had previously been accommodating of requests for information have suddenly shut their doors on such.

One stark example is the National Economic and Development Authority (NEDA), which last year initially granted PCIJ’s various requests for data regarding projects using official development assistance (ODA). But after Executive Secretary Eduardo Ermita issued a memorandum order last September 28 restricting the release of specific national broadband network (NBN) documents to the Senate Blue Ribbon Committee, as well as to media agencies, NEDA stopped processing requests for information connected to the project.

As of this writing, NEDA even plans to draft new guidelines for the release of project documents, a move that could further curb information access.

Sliding back?

Which is sad, says veteran journalist and occasional PCIJ fellow Roel R. Landingin. Before scandals involving state projects began erupting late last year, he says, the government seemed headed toward transparency. At the very least, advances in technology had been enabling agencies to increase transparency in their dealings and make more data available online.

“One hundred percent access, NEDA used to be like that,” Landingin says. “Perhaps, because of the intensity of attacks (on the President), access to information has been restricted.”

Nepomuceno Malaluan, lawyer and Access to Information Network (ATIN) co-convenor, says that when an agency withholds the information, it is probably to protect certain public officers from embarrassment, or from criminal or administrative liability. Landingin, the Manila senior correspondent of The Financial Times of London, adds that “some agencies are covering their backs.”

Landingin wrote the latest PCIJ series on ODA projects. Apart from interviews, his report was based largely on a six-month review of official documents that covered 71 of these projects. This meant gathering various ODA project documents such as copies of contracts, memoranda of agreement, feasibility studies, cost-benefit studies, presentation materials, status reports, and other related materials. This also meant submitting official requests for data and documents from various government agencies.

The PCIJ research team kept a log of request approvals and denials from July to December 2007, during the data-gathering work for the story. The PCIJ also recorded the number of phone calls made, letters sent by fax and e-mail, and the number of employees the researchers had spoken with or and were referred to. (see table)

Law affirms access

Republic Act 6713 or the Code of Conduct and Ethical Standards for Government Officials and Employees, provides a general rule on access to information. Implemented on March 25, 1989, Section 5 of the Code states: “All public documents must be made accessible to, and readily made for inspection by, the public within reasonable working hours.”

Malaluan explains: “When you go there (a government office) and make a request — based on that single rule — they (government officials) should make it available as long as it is of public concern.”

The PCIJ made 23 official requests but only 15 were addressed and eventually granted. This makes for a 65 percent rate of approval of requests for information. Still, most of the agencies that approved the requests also did not provide all the information that PCIJ had asked for.

For sure, some turned out to have incomplete data and had to refer PCIJ to other offices for the missing materials. Others, however, chose to release some information while withholding the rest of the data requested.

The Department of Transportation and Communications (DOTC), for instance, gave PCIJ a copy of the NBN contract, but excluded the annexes.

Contacted by phone, the DOTC’s Contract Review and Documentation Division said the project supplier, China’s Zhong Xing Telecommunication Equipment Company Limited (ZTE), had claimed “proprietary rights” over the contract annexes and feasibility study.

PCIJ then requested the DOTC for a formal written explanation for the exclusion the annexes, but the department has yet to do so. Landingin, meanwhile, says the DOTC can still find a way to make important information like component costs (to check for overpricing) available without compromising the supplier’s rights.

‘Executive privilege’

PCIJ also asked for a formal written response from the agencies that rejected its requests. Out of the eight rejected requests, however, only three agencies issued a written response that stated the reason why the request was turned down. All the responses invoked either the so-called confidential nature of the information requested, or simply, executive privilege.

The Department of Finance (DOF) said the request for the loan agreement between Export-Import Bank of China and the Philippine Government for the Non-Intrusive Container Inspection System Project would have to be referred to the Office of the Chief Presidential Legal Counsel because the requested document “may fall within the mantle of executive privilege and information.” This is even though government deals, once signed, become public documents.

The Philippine Domestic Construction Board (PDCB), for its part, said it was turning down the request for the Excel file version of its Consolidated Constructors Performance Summary Report because its policy is “to keep the source documents or files in strict confidence.”

It must be stressed that the same report was already available in PDF format on the web site of the Government Procurement Policy Board (GPPB). PCIJ requested for a copy in Excel only because this would make it easier for researchers to segregate foreign-funded projects from locally funded ones, list contractors and projects by implementing agency, and rank contractors by worth of projects awarded to them. PCIJ later got the requested Excel version from the GPPB.

Then there was the Philippine National Railways (PNR), which declined to release North Rail and South Rail Linkage Project documents to PCIJ because, according to a PNR representative, its Korean partners in the venture had “reservations of some sort.”

Landingin says that in the past, he was able to secure North Rail documents. This time around, the PNR was not the only state institution that decided to withhold the requested papers. North Luzon Railways Corporation (NLRC) took almost seven weeks — during which it waited for the appointment of a new chief — to decide to turn down the request for North Rail project data. The PCIJ also had to call NLRC the most number of times (21) among the agencies it contacted for Landingin’s report to follow up requests.

North Rail, another ODA project that has encountered controversy and seems to be currently in limbo, was the subject of a PCIJ investigative report in 2005. It was therefore no surprise that procuring data on it turned out to be among the most difficult to pull off, as was also the case with those on the NBN.

Somehow, though, information on a lesser-known project was even harder to get — at least from its implementing agency. R.A. 6713 stipulates: “All public officials and employees shall, within 15 working days from receipt thereof, respond to letters, telegrams, or other means of communications sent by the public.” The Department of Public Works and Highways (DPWH), however, took 59 days just to say that the documents for the President Arroyo’s Bridges Program were undergoing audit by the Commission on Audit (COA).

Fortunately, PCIJ had mailed a request for copies of the same documents to the aid provider, Britain’s Department for International Development (DfID), in Scotland. PCIJ received the documents from DfID, by mail, 44 days later (October 5). PCIJ also had no problem getting a different set of requested information on the same project from NEDA.

Run-around game?

In this case, the problem may have been more with the agency involved rather than the project. PCIJ’s research intern Philip Ney recalls his dealings with DPWH officials during the process: “(A) department secretary referred me to the undersecretary, who referred me back to the secretary, who told me to talk to the same undersecretary, who once again told me that I needed to ask the secretary.”

But DPWH was not the only agency that seemed to be unused to entertaining requests for ODA project information, and wound up giving disorganized responses and unclear instructions. For example, the Metropolitan Waterworks and Sewerage System (MWSS) had already given permission to pick up the executive summaries of the Angat Water Utilization and Aqueduct Improvement Project and Laiban Dam Project on September 21, 2007. But when PCIJ showed up at the MWSS doorstep to get the papers, the decision had been reversed and the documents withdrawn. Another letter was sent and more calls had to be made before the documents were released — more than a month later.

Indeed, apparent disorganization among the agencies approached by the PCIJ was one of the major factors that led to more than half of the requests taking over 15 working days to process.

Agencies also often do not really follow the provision on the law that says, “The reply must contain the action taken on the request.” Apart from PCIJ, many other groups that had tried to secure documents from state agencies have experienced getting nothing more than an acknowledgment of the receipt of their request.

Vincent Lazatin, Transparency and Accountability Network (TAN) executive director, points out that the usual agency response letter saying, “We’ve received your letter,” or “We’re endorsing your request” does not necessarily mean action was already taken, as stipulated by law.

“What they do is they endorse you to a supervisor or the next higher official, but that’s not replying,” says senior journalist Tess Bacalla, who had also worked as a PCIJ fellow.

Helpful agencies

Still, the PCIJ did find some agencies and employees helpful. Some officials, who believed in the ODA projects they oversaw, were eager for the media — and ultimately, the public — to know more about these.

The Department of Social Welfare and Development (DSWD), for example, provided substantial documents for the Kapit-Bisig Laban sa Kahirapan – Comprehensive Integrated Delivery of Social Services (Kalahi-CIDSS) project eight days after PCIJ sent its letter of request. These included the contract agreement, loan agreement, implementation status report, annual reports, and project review and project appraisal documents with annexes that contained project cost analysis, cost-benefit analysis, sensitivity analysis, cost-effectiveness analysis, environmental and social safeguards and other important details.

The Bases Conversion Development Authority (BCDA) and the Pasig River Rehabilitation Commission (PRRC) were also two of the most cooperative in providing data for the Subic-Clark-Tarlac Expressway project and the Pasig River Environmental Management and Rehabilitation Sector Development Program (PREMRSDP), respectively. Both agencies took less than 15 working days to approve the requests.

Lawyer Malaluan says that any citizen who is denied access to public information can take several actions to assert his or her right. “You can file before the Supreme Court a petition for mandamus or you can exhaust your administrative remedies by going to the next higher office such as the Departments and then the Office of the President,” Malaluan suggests. “Or you may request assistance from the Office of the Ombudsman or file an administrative case with the Civil Service Commission.”

He concedes, though, that these remedies take a great deal of time.

In the meantime, Landingin encourages journalists to use all available avenues to get the right information to the public at the right time. He says that on one level, journalists must insist on their right to access information and documents affecting public welfare and use of public funds. On another, he says, the reality of red tape means journalists must also nurture contacts and develop sources to increase their chances of accessing information.

Simply put, transparency is an important element of good governance. ATIN has thus proposed the “Freedom of Information Act of 2007,” a law that will help mend the gaps in access to information and provide more teeth to Republic Act 6713. The bill is currently set for plenary hall debates in Congress. - Philippine Center for Investigative Journalism, 2008