REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
Third Regular Session

House Bil! No, 6411

Introduced by Rep. Erico B. Aumentado

EXPLANATORY NOTE

It has been observed that contractors jockeying for govemment projects tend to
understate the price of the project in their bid proposal to comer juicy contvacts. Some even
venture to propose bid prices coating tees than fifty percent of the approved Agency Budget of
the Contract (ABC) just to ensure that they will get the project. This may sound advantageous to
the goverment as it would translate to substantial savings on the part of the implementing
agency. However, the result is not at all advantageous to the government since the project suffers
in terms of poor quality, the terms of reference in the project not being followed and, were, are
not completed for lack of finances.

‘The usual recourse of the winning bidder, with a very low bid bordering on the break
even scale of the contract, is to request repeated change orders to recoup alloged loses or non
Profit. This strategy, in more cases than not, leads to graft and corruption as the very low bid
usually lacks transparency and accountability.

In the present set up, the law on the government procurement only provides for a
maximum ceiling of bid prices for bidders to observe, while there iv no cap or minimum limit of
bid prices that shall be awarded. Thus, unscrupulous contractors venture to propose a
considerably lowered price in their bids compared to the actual approved ABC and then ask for
change orders. If the request for change order is not granted, the bidder normally resort to
substandard work in order to prevent more looses.

Take for example the project implemented in the second district of Bohol, namely:

(1) Sagbayan-Danao Road Project with an appropriations of 200
million, an Approved Budget for the Contract (ABC) of P189
million, and the winning bid of P139 million.

As of May 25 ultimo the project incurred a negative slippage of 9.355 percent with a
percent time elapsed of 41.39 percent for lack of equipment and manpower support, the project is
moving very slow especially so that local contractors refused to lease their heavy equipment to
the bidder for failure to settle on time its obligations.


‘The contractor is supposed to use a computerized cement batching plant and a cement
Paver. Sadly, the contractor fielded an old cement paver which has been lying idle and by reason
of being an old cement paver model, the contractor is still using steel forms to straighten the
concrete pavement.

Meanwhile, local contractors in the same Sagbayan-Danao Road project are performing
much better than the contractor of the P200 million project under the FY 2011 General
Appropriations Act.

This project is in danger of not being completed despite the huge approved budget.

This is the dilemma that the passage of this bill seeks to address by amending the
Government Procurement Law to introduce a cap or fleor linsit on bid prices of winning bidders

for goverment projects.

The approval of this bill is eamestly sought.

REP. ERICO B. Al ADO.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
FIFTEENTH CONGRESS

House BillNo._ 6411

Introduced by Honorable Erico B, Aumentado

AN ACT
SETTING A CAP FOR FLOOR BID PRICE OF WINNING BIDDER, AMENDING FOR
THE PURPOSE SECTION 31 OF REPUBLIC ACT NO. 9184, OTHERWISE KNOWN
AS THE “GOVERNMENT PROCUREMENT REFORM ACT”, PROHIBITING
CHANGE ORDER, AND FOR OTHER PURPOSES

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

Section 1, Section 3/ of Republic Act No, 9184 shall be amended to read as follows:

“Scotion 31. Ceiling AND FLOOR for Bid Prices. - The

Budget for the Contract (ABC) shall be the upper limit or ceiling for the Bid
prices, PROVIDED: THAT THE FLOOR BID FOR WINNING BIDDER
SHALL NOT BE LOWER BY TWENTY FIVE (25) PERCENT OF THE
APPROVED ABC. Bid prices that exceed [this} THE UPPER LIMIT OR
ceiling, OR BELOW THE FLOOR LIMIT shall be disqualified outright
from further participating in the bidding. [There shall be no lower firnit to the
amount of the award.)

Section 2. Change Order. Any request for change order by the winning bidder, which is
not due to errors of the infrastructure agency or due to force majeur, is hereby prohibited for
transparency, accountability and avoidance of graft and corruption.

Section 3. Separability Clause. - If any part of the provision of this Act shall be
held unconstitutional or invalid, other provisions, which are not affected thereby, shall continue
to be in full force and effect.

Section 4, Repealing Clause. — All faws, presidential decrees, executive orders, rules
and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby
repealed, amended or modified accordingly.

Section 5. Effectivity Clause. - This Act shall take effect fifleen (15) days after its
publication in at least (2) national newspapers of general circulation,

Approved