eEPRES,
Lae

NOUse
sans

eal

Republic of the Philippines
House of Representatives
Queson City, Metro Manila

Sixteenth Congress

First Regular Session we DE

House Bill No 110

Introduced by HON. ROMEO M. ACOP

EXPLANATORY NOTE

Republic Act No. 9184, otherwise known as the ‘Government Procurement
Reform Act’, was enacted into law in 2003 to curb, if not completely eradicate graft and
corruption in the government's procurement system, and instead, instil/ the ideals of
good governance. It was envisioned that wastage of scarce public funds will be
minimized and their use maximized for the common good. Likewise, the law upholds the
principles of transparency and accountability as primordial beacons in the
implementation of government procurement contracts. But in the passage of time,
loopholes in the law have been identified that need remedial measures.

Section 4 of the law brings within its scope both domestically and foreign-funded
Projects. However, foreign lending institutions claim exemption from the ambit of the law
citing the same section which partly states that ‘any treaty or international or executive
agreement affecting the subject matter of this Act to which the Philippine government is
a signatory shall be respected’. While there is a point of view which construes the
provision as applicable only to those loans entered into prior to the passage of RA 9184,
the recent declaration of the Department of Justice (DOJ) that the National Broadband
Network (NBN) Project contracted with a Chinese corporation is exempted from the
coverage of RA 9184 is rather disturbing. The project, a highly controversial one, has
been labelled as tainted with official corruption and was later scrapped by the



government. To exempt foreign-funded projects from the Coverage of RA 9184 would
defeat the purpose and spirit behind the enactment of the law. Thus, the need to
remove any ambiguity in the interpretation of the law. This bill provides that in such
cases, the parties shall apply, as first option, the provisions of the Act, and should a
foreign government or international financing institution waives the application of the law
and insists on another option, it shall explain its reasons in writing and commit to review
its position at regular intervals.

RA 9184 further requires public monitoring of the procurement process to
Promote transparency. Under Section 13 of the law, representatives of civil society
organizations with knowledge on the subject matter of the procurement at hand are
allowed to observe the proceedings. However, the absence of observers in the process
does not nullify the proceedings which undermines transparency. This bill requires the
compulsory presence of BAC observers in the procurement process with their absence
resulting to the nullification of the proceedings.

To promote transparency, competitiveness and accountability in all procurements
of the government, the general rule is for the conduct of public bidding _as laid down
in RA 9184. But in order to grant the government flexibility in exceptional circumstances
such as during a state of calamity, the law provides for alternative methods of
Procurement by which public bidding is dispensed with to expedite the process and
serve higher public interests and concerns, among them is the negotiated procurement
mode. There are other circumstances which may be considered “exceptional’ but not
covered by the present law.

This measure seeks to exempt the purchases of military and police equipment,
as well as directly related works and services from the requirement of a public bidding
and having the same covered under the provision of negotiated procurement under
Section 53 of RA 9184. The rationale being the nature of these purchases are
impressed with national security and public order significance. For example, in the
purchase of firearms, it is of paramount importance to the government that it is able to
acquire the most technically superior brands available in the market to enhance the
combat capabilities of its security forces. However, public bidding often results to the
acquisition of lower quality products as their manufacturers are able to offer lower and
Oftentimes winning bids. The government is left to content itself while national security
and public order may have been compromised. Such is an exceptional circumstance.

Unfortunately, many government officials abuse such leeway and engage in
anomalous or irregular transactions. This measure lays down limitations on the
availment of a negotiated contract to reduce, if not end such abuses. Some of the



conditions set in the bill have been incorporated in the law's implementing rules and
regulations but are proposed for legislation to reinforce the same.

Further, the measure proposes that the limitation on reference to brand names
when specifying procurement of goods be qualified by allowing its use but with the
addition of the phrase ‘or equivalent’ and with the observance of other conditions laid
down therein.

Finally, the bill provides that the decisions of the Bids and Awards Committee
(BAC) and the Procuring Entity in all stages of the procurement may be protested to the
Government Procurement Policy Board (GPPB).

These amendments to RA 9184 are aimed at ensuring and promoting greater
accountability, transparency and efficiency in the government's procurement system. In
implementation, it is hoped that every agency of the government will be strengthened,
corruption reduced and bidders are placed in a| more competitive environment in the
conduct of their legitimate business.

For the foregoing reasons, the immediate passage of this bill is eamestly
recommended.

'Y, ROMEO i, ACOP MNSA
{epresentative

2" District, Antipolo City



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Republic of the Philippines
House of Representatives
Quezon Eity, Metro Manila
Sixteenth Congress
First Regular Session

House Bill No. 8.1.10

Introduced by HON. ROMEO M. ACOP

AN ACT
AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NO. 9184, OTHERWISE
KNOWN AS THE ‘GOVERNMENT PROCUREMENT REFORM ACT’

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

SECTION 1. Section 4 of Republic Act No. 9184, otherwise known as the
‘Government Procurement Reform Act’, is hereby 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 government-owned and/or controlled
corporations and local government units, subject to the provisions of Commonwealth Act
No. 138. Any treaty or intemational or executive agreement affecting the subject matter
of this Act to which the Philippine govemment is a signatory shall be observed.
PARTIES TO SAID AGREEMENT ARE ENJOINED TO APPLY, AS A FIRST OPTION,
THE PROVISIONS OF THIS ACT, FOR ANY PROCUREMENT THAT MAY ARISE
THEREFROM. SHOULD THE FOREIGN GOVERNMENT OR INTERNATIONAL


FINANCING INSTITUTION WAIVE THE APPLICATION OF THIS ACT AND INSIST
ON USING ANOTHER OPTION, THEY SHALL EXPLAIN IN WRITING THE REASONS
THEREFOR AND COMMIT TO REVIEW THEIR POSITIONS AT REGULAR
INTERVALS.

SECTION 2. Section 13 of Republic Act No. 9184 is hereby amended to read as
follows :

SECTION 13. Observers - To ensure 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 group in a sector or discipline relevant to the procurement at hand, and
the other from 2 non-government organization : Provided, however, that they do not
have any direct or indirect interest in the contract to be bid out : PROVIDED, FURTHER,
THAT THE ABSENCE OF ANY OF THE OBSERVERS, INCLUDING THE
REPRESENTATIVE OF THE COMMISSION ON AUDIT, SHALL NULLIFY THE
PROCEEDINGS. The observers should be [ duly registered with the Securities and
Exchange Commission ] MEMBERS IN GOOD STANDING OF THE SECTOR,
DISCIPLINE OR NON-GOVERNMENT ORGANIZATION THEY REPRESENT AS
DULY CERTIFIED BY THEIR PRESIDENT OR CHAIRPERSON AS THE CASE MAY
BE, and should meet the criteria for observers as set forth in the IRR

SECTION 3. Section 18 of Republic Act No. 9184 is hereby amended to read as
follows :

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 [.], EXCEPT IN THE FOLLOWING
INSTANCES :

A) WHEN REFERENCE TO BRAND NAME IS NECESSARY TO CLARIFY AN
OTHERWISE INCOMPLETE SPECIFICATION; OR,

B) IF IT HAS BEEN DETERMINED THAT A DEGREE OF STANDARDIZATION IS
NECESSARY IN ORDER TO ENSURE CONTINUITY FOR CERTAIN ESSENTIAL
FEATURES.

IN THESE INSTANCES, THE WORDS ‘OR EQUIVALENT’ SHALL BE ADDED AFTER
SUCH REFERENCE. THE SPECIFICATION SHALL PERMIT THE ACCEPTANCE OF
OFFERS FOR GOODS WHICH HAVE SIMILAR CHARACTERISTICS AND WHICH
PROVIDE PERFORMANCE AT LEAST SUBSTANTIALLY EQUIVALENT TO THOSE
SPECIFIED.



SECTION 4. Section 53 of Republic Act No. 9184 is hereby amended to read as
follows :

SECTION 53. Negotiated Procurement - Negotiated Procurement shall be allowed
only in the following instances

a) xxx

b) Incase 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
PROVIDED, THAT THE FOLLOWING CONDITIONS ARE OBSERVED :

4) THE PROCURING ENTITY WILL DRAW UP A LIST OF AT LEAST THREE (3)
SUPPLIERS, CONTRACTORS OR CONSULTANTS AS THE CASE MAY BE,
WHICH WILL BE INVITED TO SUBMIT BIDS; OR,

2) THE NEGOTIATION SHALL BE MADE WITH A PREVIOUS SUPPLIER,
CONTRACTOR OR CONSULTANT OF GOOD STANDING OF THE
PROCURING ENTITY CONCERNED, OR A SUPPLIER, CONTRACTOR OR
CONSULTANT OF GOOD STANDING SITUATED WITHIN THE VICINITY
WHERE THE CALAMITY OR EMERGENCY OCCURRED;

3

THE PROCURING ENTITY SHALL ENSURE THAT THE MOST
ADVANTAGEOUS PRICE FOR THE GOVERNMENT IS OBTAINED; AND,

4) THE PRICES AGREED UPON SHALL BE CONSIDERED AS FIXED PRICES
AND NOT SUBJECT TO PRICE ESCALATION DURING THE CONTRACT
IMPLEMENTATION, EXCEPT UNDER EXTRAORDINARY CIRCUMSTANCES
AND UPON APPROVAL OF THE GOVERNMENT PROCUREMENT POLICY
BOARD (GPPB).

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 facilities, PROVIDED, THAT THE
CONDITIONS SET IN THE PRECEDING PARAGRAPH SHALL BE OBSERVED.

d) xxxx
e) 0K



F) FOR THE PROCUREMENT OF MATERIALS AND SERVICES FOR MILITARY
AND POLICE PURPOSES, OR PURCHASES AND WORKS WHICH INVOLVE
NATIONAL SECURITY AND DEFENCE, AND PUBLIC ORDER, SPECIFICALLY :

(I) CONTRACTS FOR THE SUPPLY OF MILITARY AND POLICE EQUIPMENT
INCLUDING ANY PARTS, COMPONENTS OR SUB-ASSEMBLIES THEREOF,
AND SPECIAL TOOLS AND MACHINES WHICH ARE NECESSARY FOR THE
PRODUCTION AND MAINTENANCE OF SUCH EQUIPMENT.

‘MILITARY AND POLICE EQUIPMENT’ ARE THOSE SPECIFICALLY
DESIGNED OR ADAPTED, DEVELOPED AND PRODUCED FOR MILITARY
AND POLICE PURPOSES AND INTENDED FOR USE AS ARMS, MUNITIONS.
OR COMBAT OR WAR MATERIALS. IT SHALL ALSO COVER
INVESTIGATIVE AND SURVEILLANCE EQUIPMENT SUCH AS AUDIO-
VISUAL TRANSMITTERS, RECEIVERS, CAMERAS, GLOBAL POSITIONING
SYSTEM (GPS) DEVICES, POLYGRAPHS, AND OTHER SIMILAR,
ACCESSORIAL OR ALLIED DEVICES AND EQUIPMENT DESIGNED AND
PRODUCED FOR SUCH PURPOSES : PROVIDED, THAT IT SHALL ALSO
INCLUDE PRODUCTS WHICH, ALTHOUGH INITIALLY DESIGNED FOR
CIVILIAN USE, ARE LATER ADAPTED TO MILITARY AND POLICE
PURPOSES TO BE USED AS ARMS, MUNITIONS OR COMBAT OR WAR
MATERIALS, SUCH AS BUT NOT LIMITED TO SPECIAL SUITS, HELMETS,
AND VEHICLES, SEA CRAFTS AND AIRCRAFTS WITH DISTINGUISHABLE
MILITARY TECHNICAL FEATURES THAT ENABLE THEM TO CARRY OUT
MISSIONS THAT ARE CLEARLY MILITARY AND POLICE WORK IN
NATURE.

(ll) CONTRACTS FOR WORKS AND SERVICES DIRECTLY RELATED TO
MILITARY AND POLICE EQUIPMENT SUCH AS, BUT NOT LIMITED TO,
REPAIR OF EQUIPMENT FOR ANY AND ALL ELEMENTS OF THE LIFE
CYCLE OF SUCH EQUIPMENT | INCLUDING FIREARMS, ARMORED
PERSONNEL CARRIERS, TANKS, AIRCRAFTS AND SHIPS, AND
CONSTRUCTION OF TEST FACILITIES.

‘DIRECTLY RELATED’ SHALL MEAN A CLOSE CONNECTION BETWEEN
THE WORKS AND SERVICES IN QUESTION AND THE EQUIPMENT, SUCH
THAT WITHOUT WHICH, THE WORKS AND SERVICES MAY NOT BE PUT
TO A MEANINGFUL USE TO THE MILITARY OR POLICE EQUIPMENT THEY
ARE RELATED TO: PROVIDED, THAT IT SHALL ALSO INCLUDE WORKS
AND SERVICES NOT DIRECTLY RELATED TO MILITARY AND POLICE
EQUIPMENT BUT ARE FOR SPECIFICALLY MILITARY AND POLICE
PURPOSES, SUCH AS BUT NOT LIMITED TO CONSTRUCTION OF
RUNWAYS, BARRACKS, AIR RAID-AND FALL-OUT SHELTERS AND
DEPOTS.



SECTION 5. Section 55 of Republic Act No, 9184 is hereby amended to read as
follows :

SECTION 55. Protests on Decisions of the [ BAC ] PROCURING ENTITY - Decisions
of the [ BAC ] PROCURING ENTITY in all stages of procurement may be protested to
the [ head of the procuring entity ] GOVERNMENT PROCUREMENT AND POLICY
BOARD (GPPB) and shall be in writing. Decisions of the [ BAC ] PROCURING ENTITY
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 6. Section 56 of Republic Act No, 9184 is hereby amended to read as
follows :

SECTION 56. Resolution of Protests - The protest shall be resolved strictly on the
basis of records of the [ BAC ] PROCURING ENTITY. [ Up to a certain amount to be
specified in the IRR, the decisions of the Head of the Procuring Entity shall be final. ]
THE GPPB SHALL FORM AN INDEPENDENT PANEL COMPOSED OF
PROCUREMENT EXPERTS WHICH SHALL RESOLVE THE PROTEST.

SECTION 7. Separability Clause. - \f any provision of this Act is declared invalid or
unconstitutional, the provisions not affected thereby shall continue to be in full force and

effect.

SECTION 8. Repealing Clause. - All laws, decrees, orders, rules and regulations or
parts thereof which are inconsistent with the provisions of this Act are hereby repealed
or modified accordingly.

SECTION 9. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in at least two (2) national newspapers of general

circulation.

Approved.