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

FIFTEENTH CONGRESS
First Regular Session

949

House Bill No.

Introduced by Honorable REYNALDO V. UMALI

EXPLANATORY NOTE

Republic Act 9184, otherwise known as the “Government Procurement Reform
Act’, dated January 10, 2003, was enacted primarily to eradicate graft and
corruption in the government procurement system. The law likewise aims to
minimize wastage and thus maximize utilization of our government's meager
resources.

The passage of RA 9184 was hailed as a milestone that marked our
government's commitment to reform public procurement. It was even described
as “one of the best in the world” by Joachim von Amsberg, World Bank Country
Director for the Philippines and the East Asia and Pacific Region, during a
televised round table discussion with PGMA, as published in the August 11, 2006
issue of The Philippine Star.

Section 4 of RA 9184 states that “Scope and Application - This Act shall apply to
the Procurement of Infrastructure Projects, Goods and Consulting Services,
regardless of source of funds, whether local or 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 mater of this Act to
which the Philippine Government is a signatory shall be respected.” The intent of
the law is very clear - to bring within its scope both domestically-funded and
foreign-funded projects.

Section 31 of RA 9184 provides that the Approved Budget for the Contract (ABC)
shall be the upper limit or ceiling for bid prices, and that bid prices that exceed
this ceiling shall be disqualified outright from further participating in the bidding.
This provision is intended to prevent the government from entering into highly
onerous and overpriced contracts and, consequently reduce opportunities for
graft and

corruption. Unfortunately, while this particular provision is being strictly enforced
as regard domestically-funded projects, the same is not true with foreign-funded
ones.

Foreign lending institutions, however, claim that projects which they have funded
through a loan agreement are exempt from the coverage of the law by invoking
the provision under Section 4 which states that “Any treaty or international or
executive agreement affecting the subject mater of this Act to which the
Philippine Government is a signatory shall be respected.”


The above-cited provision speaks of any treaty or international or executive
agreement which the Philippine Government is already a signatory. It does not
refer to those which the Philippine Government will enter into subsequent to the
enactment of RA 9184. Thus, assuming for the sake of argument that loan
agreements partake of the nature of international or executive agreement, only
those loan agreements entered

into prior to the passage of RA 9184 are exempt from its coverage and not those
which the government will contract after the effectivity of the law.

The Department of Justice (DOJ) just recently declared that the National
Broadband Network (NBN) project is valid and thus exempted from the coverage
of RA 9184 based on the interpretation that loan agreements partake of the
nature of international or executive agreement and that it applies even to loan
agreements contracted after the enactment of the said law. In view of this
development, a similar opinion could be expected as regards the Cyber
Education Project (CEP) and other future projects that will be contracted by the
government.

Exempting foreign-funded projects from the coverage of RA 9184, particularly in
allowing bids or tenders over and above the Approved Budget for the Contract
(ABC), would defeat the purpose and the spirit behind its enactment. There
would be no genuine reform to speak of and the government procurement
‘system will remain graft ridden. Moreover, it will amount to unnecessary wastage
of government resources.

This bill seeks to remove any ambiguity in the interpretation of the scope and
application of RA 9184 by amending Section 4 thereof to make it very clear that it
applies to all government procurement activities, regardless of source of funds,
whether local or foreign, and that only treaties or international or executive
agreements entered into by the government prior to its enactment shall be
exempt from its coverage.

In view thereof, early consideration ahd, roval of this bill is earnestly sought.

Ri V. UMALI
Representative
Second District, Province of Oriental Mindoro


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

FIFTEENTH CONGRESS
First Regular Session

49

House Bill No.

Introduced by Honorable REYNALDO V. UMALI

AN ACT
AMENDING SECTION 4 OF REPUBLIC ACT 9184,
OTHERWISE KNOWN AS THE
“GOVERNMENT PROCUREMENT REFORM ACT.”

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

Section 1. Section 4 (Scope and Application) of Republic Act 9184 shall be
amended to read as follows:

“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 or foreign, by
all branches and instrumentalities of government, its departments,
Offices and agencies, including govemment-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 mater of
this Act [to which] ENTERED INTO BY the Philippine Government
[is a signatory] BEFORE THE PASSAGE OF THIS ACT shall be

respected.”

Section 2. Effectivity Clause - This Act shall take effect fifteen (15) days after

its publication in at least two (2) national papers of general circulation.

Approved,