Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

105

Introduced HON. JOSEPH EMILIO A. ABAYA

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 goverment, 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 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
intemational or executive agreements entered into by the government prior to
its enactment shall be exempt from its coverage.

In view of the foregoing, immediate passage of this bill is earnestly

sought.
EPH anne



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

105

Introduced By: HON. JOSEPH EMILIO A. ABAYA

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 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} 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.