“SS EPRESEN
£eN

SIXTEENTH CONGRESS ) Ven
REPUBLIC OF THE PHILIPPINES ) KO RECEIVE! %
First Regular Session ) FF meer han FA
Tg: eo
HOUSE OF REPRESENTATIVES an Te

Introduced by Representative Rufus B. Rodriguez and \s
Representative Maximo B. Rodriguez, Jr. ‘

House Bill No. _3986
EXPLANATORY NOTE

The procurement of goods and services for government contracts is governed by
Republic Act No. 9184, otherwise known as the Government Procurement Reform Act
(GPRA). Apart from promoting transparency and accountability in the procurement
process and the implementation of government contracts, the GPRA also counts
competitiveness as a governing principle, by seeking to extend equal opportunities to
eligible and qualified private contracting parties.

However, the principle of competitiveness in the GPRA is diluted by its adoption
of the domestic preference policy embodied in a 78-year-old law - Commonwealth Act
No. 138 (CA 138). CA 138 was enacted in 1936, at a time when limitations in
infrastructure and technology confined the need to remain competitive primarily within
territorial boundaries. Times have clearly changed. Technology has improved by leaps
and bounds, facilitating freer and more efficient movement of goods and services across
borders. In the 21st century, competition has taken on a new, global dimension.

Regional free trade agreements, such as the developing Trans Pacific
Partnership Agreement (TPP), must be considered to keep us competitive. The
procurement chapter of the TPP would require that all firms operating in any signatory
country be provided equal access as domestic firms in government procurement
contracts. The United States, for example, would have to agree to waive “Buy
American" and "Buy Local" procurement policies for all such foreign firms. Countries
such as Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, the United States, and Vietnam are currently part of negotiations to join the
TPP, and therefore represent potential markets that the Philippines will either be a part
of or excluded from.

The World Trade Organization (WTO) Agreement on Government Procurement
(GPA) is undergoing revision to increase international competition in government
procurement contracts by providing for a more level playing field for foreign bidders in
countries that are Parties to the GPA. Joining as a Party to the GPA may mean that a
country's national government would have to implement policies that call for non-
discriminatory treatment to foreign suppliers. Parties to the GPA include Canada, Israel,
Japan, Norway, Switzerland, the United States, and the 28 states of the European


Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Rumania, Slovakia, Slovenia,
Spain, Sweden, and the United Kingdom). Within the ASEAN, Singapore is already a
Party to the GPA, while Indonesia, Malaysia and Vietnam joined as Observers to the
GPA in 2012.

The procurement chapter of Singapore's Free Trade Agreement with the
European Union (EU-Singapore FTA) demonstrates the kind of uniform treatment that
allows domestic and foreign suppliers to compete fairly. Under the EU ingapore FTA,
Singapore and its procuring entities are committed to treating goods, services, and
suppliers from the EU no less favorably than it would its own domestic goods, services
and suppliers. Singapore is likewise committed to not discriminating among local
suppliers on the basis of their foreign affiliation or ownership. This should mean that a
local supplier that is partly owned by nationals of EU member countries would not be
treated less favorably than a 100% Singapore owned company. The EU has the same
commitments.

Philippine law still discriminates against foreign suppliers, and we have not taken
steps toward joining the TPP or the WTO GPA as a Party or as an Observer. But the
repercussions of being excluded from these significant trading blocs should be urgently
considered in the context of positioning the Philippines more competitively in the global
procurement market. Therefore, this bill seeks to provide a more level playing field, and
extend equal opportunities to eligible and qualified domestic and foreign bidders to
participate in government procurement contracts.

RUFUS B. RODRIGUEZ
i; =


SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

3986

House Bill No.

AN ACT
AMENDING REPUBLIC ACT NO. 9184, OTHERWISE KNOWN AS THE
GOVERNMENT PROCUREMENT REFORM ACT, AND FOR OTHER PURPOSES

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

Section 1. Section 4 of Republic Act No. 9184 is hereby amended to read as follows:
"Sec. 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
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 a signatory shall be
observed."

Sec. 2. Section 76 of Republic Act No. 9184 is hereby amended to read as follows:
"Sec, 76. Repealing Clause. - This law repeals
COMMONWEALTH ACT NO. 138, ENTITLED "AN ACT TO
GIVE NATIVE PRODUCTS AND DOMESTIC ENTITIES
THE PREFERENCE IN THE PURCHASE OF ARTICLES
FOR THE GOVERNMENT", 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 in 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 "Providing
Additional Guidelines in the processing and Approval of
Contracts of the National Government"; and the relevant
provisions of Republic Act No. 7898 dated February 23,
1995, entitled "An Act Providing for the Modernization of th
Armed Forces of the Philippines and for Other Purpose:
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 is hereby
repealed, modified or amended accordingly."

Sec. 3. Separability Clause. - If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provisions not affected thereby shall
remain in force and effect.

Sec. 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or two (2) newspapers of general circulation.

Approved,