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Republic of the Philippines
HOUSE OF REPRESENTATIVES
QUEZON CITY

SEVENTEENTH CONGRESS
First Regular Session

5404
House Bill No. 5404

Introduced By: Erico Aristotle C. Aumentado.

EXPLANATORY NOTE

The explicit provisions of the 1987 Philippine Constitution, especially in Article XIV,
recognizing that science and technology are essential for national development and progress and
mandating that the State shall give priority to education, science, and technology, sustained
efforts to promote the advancement of science, engineering and technology research arid
education is hereby declared as a national priority concern in view of their indispensability in
achieving national development and growth and international competitiveness of the Philippines
in the fields of science, engineering and technology

In the Philippines, the contribution to the economy of the use of technology in the production
system is about 40% while in developed economies it is about 70% showing that the Philippines
is lagging behind in the application of technology in the production systems and that there is
therefore much room for improving the economy through Research & Development (R&D).

The conduct of R&D in the country is hampered among other things by the bureaucratic
procedures in financial management that are regulatory rather that facilitative thus stifling
initiatives and creativity research and development activities. A dramatic example is the situation
where these funds could not spend to acquire needed equipment because of constraining
procurement procedures

A Jong-sought solution to this situation are administrative reforms and a system of incentives that
will encourage and stimulate researchers to undertake more relevant and quality R&D programs
and activities vital to national development, One researcher from the University of the
Philippines Los Banos states that “the primary problem that slowed down the implementation of
the project was the bureaucratic system of disbursing funds including issuance of appointments
to projects staff...researchers have to spend considerable time (administrative activities) which
could otherwise be channeled to the research.” Another researcher complained that “the funds
have already been transferred to our agency but could not be used to purchase the needed
equipment because of the many and difficult procurement requirements”



Finally, the proposed bill seeks to address and institutionalize reforms in the procurement and
fund disbursements systems in science, engineering and technology research and development,
and education programs in line with the Governments program of good governance where there
is a need to streamline procedures for science, engineering and technology contracts for the
expeditious implementation of research and development projects and the speedy response to the
fast changing demands of science and technology while promoting transparency, impartiality and
accountability in government transactions in the country

A similar bill has been filed during the Fifteen Congress by Representative Angelo B. Palmones,
Agham PartyList

In view of the foregoing, approval of this measure is earnestly sought



SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL No,_5404

Introduced by: Erico Aristotle C. Aumentado

AN ACT MANDATING TO INSTITUTIONALIZE REFORMS IN THE
PROCUREMENT AND FUND DISBURSEMENT SYSTEMS, IN SCIENCE,
ENGINEERING, AND TECHNOLOGY RI ARCH AND DEVELOPMENT
AND EXTENSION (RDE) OPERATIONS AND FOR OTHER PURPOSES

Article 1
TITLE, DECLARATION OF POLICY AND OBJECTIVES

SECTION I, Title - This act shall be known as the “Procurement Reforms Act of Science,
Engineering and Technology for R & D of 2017.”

Section 2. Declaration of Policy and Objectives ~ The Philippines firmly believes that science
and technology enhance the economy’s potential and competitiveness and are essential to
national development. It is the declared policy of the state as enshrined in the 1987 Constitution
that “the State shall give priority to research and development, invention, innovation and their
utilization.” Furthermore, the same Constitution declares that it shall “support indigenous,
appropriate and self-reliant scientific and technological capabilities, and their application to the
country’s productive system and national life.”

For this purpose an institutionalize reforms in the procurement fand disbursement supportive and
facilitative to research and development system of the Philippines shall be pursued to attain the
maximum return of the country’s investments, Further, improve procurement systems of fund
disbursements, research development supplies and equipment procurement, and personnel
management shall be established for a more effective and efficient systems suited to the needs of
the scientific communities

Section 3. Objective — This Act shall provide reforms in the procurement and fund disbursement
systems operational guidelines relevant and supportive to the peculiar requirements and concerns
of the research, development and extension sector.

Section 4. Definition of Perms — For the purpose of this Act the following terms will have these
corresponding definitions

Accreditation ~ refers to the process by which the Department of Science and Technology
(DOST) recognize an organization as an agency undertaking research and development and
related activities including extension services.


Accredited research, development and extension institutes (RDIs) - are research agencies of
government and private sector, whether undertaking research, development and extension wholly
or in part, full-time of part time such as the academic institutions that have been recognized by
DOST and are authorized to use the Manual of Procedures for procurement ond fund
disbursements systems

Extension Services ~ cover the totality of activities by which research, development and
react A CADIS) transfer fo another party the knowledge and/or skills developed through
research, the application of which will result in improving the competence of the party to whom
the knowledge or skills have been transferred or to the improvement of production or reduction
of cost of production,

Grants-in-Aid ~ are funds provided by funding institutions to research, development and
oxiersions institutes (RDIs) for the conduct of research, development and extension activities, It
shall also include donations of equipment and RDE facilities, scientist exchange and technizal
assistance,

Incomes - are monies received by RDIs for services rendered such as but not limited to technical
Services, laboratory tests and analyses, licensing fees, training fees, the sale of developed
technologies, fabricated equipment and publications and for other similar services

Research and development- refers to creative work undertaken on a systematic basis in order to
iMerease the stock of knowledge, including knowledge of man, culture and society, and to use
this stock of knowledge to devise new applications,

Research, development and extension institutes (RDI)- refers to public or private
trae zation, association, partnership, joint venture, higher education institution ox corporation
that performs RDE activities and is duly registered andlor licensed to do business in the
Philippines, or otherwise with legal personality in the Philippines, In the case of private RDIs,
they shall be owed solely by the citizens of the Philippines. In the case private RDIs, they
shall be owed solely by the citizens of the Philippines or corporations or associations at least
covered centum of the capital of which is owned by such citizens. This does not include RDIs
covered by international bilateral or mulilateral agreements: Agencies undertaking only
tee ig Services without conducting research and development activities are nov covered under
this definition,

Research equipment- refers to but not limited to tools, machines (including fabricated ones),
laboratory tables and chairs, computers, cameras, calculating machines, and others that are
needed in the conduct of research, development and extension setivines

Research supplies and materials — includes but not limited to chemical, reagents, plants,
animals, minerals, office supplies that are necessary in the conduct of research, development and
extension activities by RDIs.


ARTICLE II
PROCUREMENT REFORMS FUND DISBURSEMENTS PROCEDURES

Section $. Coverage of this Act- This Act shall apply to government research and development
on science, engineering and technology research and development as well as non-government
RDIs that receive government funds for the conduct of research, development and extension
activities, Research and development planning councils of government shall likewise be covered
by this Act but not agencies that undertake only extension services without conducting research
and development

Section 6, - Procurement Management Reforms Procedure ~ The Department of Science and
Technology (DOST) in consultation with the Department of Budget and Management (DBM)
and the Commission on Audit (COA), and other concemed agencies of government shall
formulate the rules, regulations and operational procedures on accounting and budgeting systems
for the research, development and extension institutes (RDIs), Within 90 days from the approval
of this Act the DOST shall issue a Manual of Procedures for use by accredited RDIs of the
country, This manual shall be revised or updated to meet changing needs and requirements of the
scientific communities,

The DOST in consultation with concerned agencies shall develop a criteria for accreditation of
RDIs which shall be authorized to use the Manual of Procedures for procurement and
disbursement management reforms issued under SECTION 6 as part of the implementing rules
and regulations of this Act.

Section 7. Uniformity of Accounting Procedures for the Scientific Communities - All science,
engineering, and technology research and development and extension operations systems
shall have a uniform procurement by adopting the Manual of Procedures for procurement
reforms, fund disbursements procedures in science, engineering, and technology research
and development and extension operations systems issued under SECTION 6 as part of
the implementing rules and regulations of this Act

Section 8, Disbursement of funds — Grants-in-aids funds released to the all science,
engineering, and technology research and development and extension shall be deposited
in a government depository bank as Trust Accounts. The provisions of EO 338 (Directing
the deposit of cash balances to the national Treasury) on the prohibition in the
establishment of trust funds are hereby revoked for the purposes of this Act.

Funds regardless of sources intended for the conduct of research, development can be
realigned to meet the requirement of the projects


Unexpected fund balances at the termination/conclusion of research, development
extension to all science, engineering, and technology research and development
infrastructure projects shall not revert back to the National Treasury for three years and
can be utilized to fund projects related to the original project with proper recording and
eporting. The head of the institute is hereby given the authority to realign the unexpected
balances but must inform the DBM for funds provided under the government annual
appropriations (GAA) or the funding institution if funds are grants-in-aid, If after three
years there are still balances from a specific project such balances shall revert back to the
National Treasury

Section 9. Use of Income and Revolving Fund ~ All income of science, engineering, and
technology research and development infrastructure projects funded by public funds and
fees from technical services such as but not limited to laboratory tests and analyses,
licensing fees, training fees sale of developed technologies, fabricated equipment and
facilities, testing and calibration facilities, printing and sale of publications, and income
from contract research shall be constituted as a revolving fund for use of the research and
development infrastructure undertaking research, development and extension activities,
deposited in an authorized government depository bank subject to accounting and
auditing rules and regulations; Provided, That said income shall be used to defray costs
and expenses for research and development, science and technology capability building,
and technology transfer activities; Provided, Further, That no amount of said income
shall be used for payment of salaries and other allowances. In case the income after
payment of all costs and expenses for research, development and extension activities and
management, shall exceed ten percent 10% of the annual budget of the RDI, a minimum
of (70%) of the excess income shall be remitted to the Bureau of Treasury; Provided,
That this shall apply only if the government funding agency has solely funded the
research, development or extension activity; Provided, finally, That this paragraph shall
not apply to State Universities and Colleges and Government Owned and Controlled
Corporations, which enjoy fiscal autonomy under their respective charters or other
applicable laws.

Section 10. Honoraria and per diems ~ A uniform set of honoraria and per diems shall be
adopted for science, engineering, and technology research and development and
extensions infrastructure projects, The DOST in consultation with other government
institutions shall prescribe the set of honoraria and such shall become part of the
implementing rules and regulations of this Act.


ARTICLE IV

PROCUREMENT OF SCIENCE, ENGINEERING, AND TECHNOLOGY AND
(RDE) RESEARCH, EQUIPMENT AND SPECIALIZED SUPPLIES AND
MATERIALS

Section 11. Procurement of equipment, supplies and materials for research development
and extension activities ~ The Government Procurement Policy Board ( GPPB) created
under RA No. 9184 (Government Procurement Reform Act) in consultation with DOST,
DBM, and COA shall promulgate procurement rules and regulations designed to facilitate
the conduct of research, development and extension activities. Such rules and regulations
shall form part of the Implementing Rules and Regulations of this Act.

Section! 2. Exemption from Customs Duties and other Taxes ~ All items of equipment,
supplies and materials. including vehicles for research, development and extension and
related activities imported by RDIs shall be exempt from payment of custom duties or
other taxes; Provided that for non-government RDIs only research equipment, supplies
and materials including vehicles identified and enumerated in the approved research
project shall be covered under this Section

Likewise, specialized equipment for science and technology education shall be exempted
from payment of customs duties.

Section 13. Customs Procedures on Importation of RDE Equipment and Other Supplies
and materials — The DOST and the Department of Finance (DOF) shall establish the
rules and regulations on the exemptions of taxes on the importation of RDE equipment
and supplies and materials including vehicles as well as educational equipment. Such
rules and regulations shall form part of the implementing rules and regulations of this
Act.

‘There shall be established a special lane (express lane) at the Bureau of Customs in all
ports of entry for imported RDE equipment, supplies and materials and the express lane
mechanism shall commence from the release of imported equipment, supplies and
materials from the ship/vessel. The DOST Secretary or head of the RDI whether public or
private shall issue a certification that importation of equipmenv/instruments, supplies and
materials including vehicles is necessary in the conduct of RDE activities, Accountability
on the propriety of importation is vested in the head of the RDI

Section 14. Lease, sale or donation of research equipment by RDIs - may lease, sell or
donate research equipment and facilities that they no longer need or use but are still
operable and in good working condition. All RDIs who have such equipment and
facilities shall furnish the DOST a list of the equipment and facilities including their
pertinent descriptions and specifications. The DOST shall establish a list of availabie
research equipment and facilities and shall provide information to other institutions
through publication or any other suitable means.


The lease, sale or donation of research equipment and facilities shall be exempt from
existing laws, rules and regulations covering such lease, sale or donation

All incomes from the lease or sale of research equipment and facilities shall be used
under SECTION 9 of this Act

Section 15. /mplementing Rules and Regulations - The DOST in consultation with
concerned agencies of government shall formulate the implementing rules and
regulations within 90 days approval of this Act

Section 16. Separability Clause — If any section or provision of this Act shall be declared
invalid or unconstitutional, such shall not invalidate any other section or provision of this
Act.

Section 17, Repeating Clause — All laws, decrees, executive orders, rules and regulations
or parts thereof which are in conflict with the provisions of this Act are hereby repealed
or modified accordingly.

Section 18. Efectivity - This Act shall take effect thirty (30) days following its full
Publication in the Official Gazette or two (2) major newspaper of general circulation

Approved,