Latest Amendments on the Implementing Rules and Regulations Part A (IRR-A) of Republic Act No. 9184 (The Government Procurement Reform Act)

February 22, 2008 BIR MEMORANDUM TO : All Revenue Officials and Employees Concerned SUBJECT : Latest Amendments on the Implementing Rules and Regulations Part A (IRR-A) of Republic Act No. 9184 (The Government Procurement Reform Act) For the information and guidance of all concerned, please disseminate in all BIR Offices the attached copy of the latest Government Procurement Policy Board (GPPB) Resolutions, to wit: 1. GPPB Resolution No. 19-2007 (Approving and Adopting the Implementing Guidelines for Lease of Privately-Owned Real Estate) 2. GPPB Resolution No. 23-2007 (Approving and Adopting the Revised Guidelines on the Extension of Contracts for General Support Services) 3. GPPB Resolution No. 24-2007 (Approving and Adopting the Guidelines on the Procurement of Security and Janitorial Services) You are enjoined to post a copy of this issuance in your Office Bulletin Board, or in a conspicuous place in your Office, to ensure that it shall be given the most extensive publicity possible. (SGD.) JAMES H. ROLDAN Assistant Commissioner, Legal Service Chairman, Bids and Awards Committee ATTACHMENT June 29, 2007 GPPB RESOLUTION NO. 19-07 APPROVING AND ADOPTING THE IMPLEMENTING GUIDELINES FOR LEASE OF PRIVATELY-OWNED REAL ESTATE WHEREAS, Republic Act No. 9184 (R.A. 9184) and Its Implementing Rules and Regulations Part A (IRR-A) took effect on 26 January 2003 and 8 October 2003, respectively; WHEREAS, the Government Procurement Policy Board (GPPB) under Section 63 of the IRR-A of R.A. 9184 is mandated to formulate and amend public procurement policies, rules and regulations, and amend whenever necessary, the IRR-A of R.A. 9184; EcSCAD WHEREAS, Section 5 (n) of R.A. 9184 defines procurement to include the lease of real estate; WHEREAS, the Inter-Agency Technical Working Group (IATWG), in its 4th regular meeting held on 13 April 2007, recommended for the consideration and approval of the GPPB, the inclusion of lease of office space as one the circumstances when negotiated procurement may be resorted to as provided under Section 53 of the IRR-A of R.A. 9183; WHEREAS, the GPPB, in its 4th regular meeting held on 4 May 2007, duly considered and approved to include, as Section 53 (i) of the IRR-A of R.A. 9184, the lease of privately-owned real estate as one of the instances when an agency can resort to negotiated procurement, subject to guidelines to be approved by the GPPB; WHEREAS, the IATWG, in its 6th regular meeting held on 15 June 2007, discussed and reviewed the draft guidelines for lease of privately-owned real estate, and consequently resolved to recommend the same for the consideration and approval of the GPPB; WHEREAS, the GPPB, in its 6th regular meeting held last 29 June 2007, discussed and deliberated upon the appropriate procedures and guidelines for the implementation of Section 53 (i) of the IRR-A of R.A. 9184; HCTAEc WHEREAS, the Department of Public Works and Highways, during the meeting held last 29 June 2007, recognized the distinct scope and application of the draft guidelines for lease of privately-owned real estate from the standards and guidelines on the determination of the reasonableness of rental rates provided under the Manual on Policies, Standards, Guidelines and Issuances on Building Services and Real Property Management; NOW, THEREFORE, for and in consideration of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law, hereby RESOLVE to confirm, adopt and approve, as WE hereby confirm, adopt and approve, the "Implementing Guidelines for Lease of Privately-Owned Real Estate," attached as Annex "A" and made an integral part hereof. This resolution shall take effect immediately. APPROVED this 29th day of June, 2007 at Pasig City, Philippines. ESacHC (SGD.) ROLANDO G. ANDAYA, JR. Secretary Department of Budget and Management ROMULO L. NERI Director General National Economic and Development Authority NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY DEPARTMENT OF NATIONAL DEFENSE DEPARTMENT OF EDUCATION DEPARTMENT OF HEALTH DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEPARTMENT OF ENERGY DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS DEPARTMENT OF FINANCE DEPARTMENT OF TRADE AND INDUSTRY DEPARTMENT OF SCIENCE AND TECHNOLOGY DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS PRIVATE SECTOR REPRESENTATIVE Attested by: (SGD.) RUBY U. ALVAREZ Board Secretary, GPPB ANNEX A IMPLEMENTING GUIDELINES FOR LEASE OF PRIVATELY-OWNED REAL ESTATE 1. PURPOSE The Guidelines on Lease of Privately-Owned Real Estate (the "Guidelines") set forth the rules and procedures in entering into contracts for lease of privately-owned real estate by government agencies for official use pursuant to Section 53 (i) of the Implementing Rules and Regulations Part A (IRR-A) of Republic Act 9184 (R.A. 9184). It shall assist government agencies in determining reasonableness of rental rates prior to entering into lease contracts. 2. SCOPE AND APPLICATION The Guidelines shall apply to the national government, its branches, constitutional offices, departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions, and local government units. It shall not apply to lease of government properties for private use. 3. DEFINITION OF TERMS 3.1. Capitalization Rate. Refers to the interest rate on the cost of value of the property. 3.2. Comparative Price Analysis. Refers to the method of comparing the price quotations obtained pursuant to Item 5.5 of these Guidelines against the prevailing market rate of lease contracts within the vicinity of the selected location as determined pursuant to Item 5.1 of these Guidelines. DaIAcC 3.3. Computation based on Observed Depreciation. Refers to the method of computation in determining reasonableness of rental rate using a depreciation rate determined by the Bids and Awards Committee (BAC) or its Technical Working Group (TWG) after meticulous ocular inspection of the actual condition of the real estate. The formula for this method is provided in Item 6.3 of these Guidelines. 3.4. Computation based on Straight Line Depreciation. Refers to the method of computation in determining reasonableness of rental rate using a depreciation rate based on the Table of Structural Depreciation provided by the Department of Public Works and Highways (DPWH) under Appendix B of these Guidelines. The formula for this method is provided in Item 6.4 of these Guidelines. 3.5. Cost benefit Analysis. Refers to a tool used to aid decision-making by evaluating the benefits to be attained from an action against costs for its implementation. For purposes of these Guidelines, the cost-benefit analysis should consider, among others, the costs for the transfer to, furnishing, and/or maintenance of the real estate, and include a market analysis of prevailing lease rates within the vicinity of the selected location. HATICc 3.6. Depreciation. Refers to the decrease in the value of a real estate due to ordinary wear and tear brought about by its use. 3.7. Estimated Unit of Construction Cost. Refers to the estimated prevailing cost of construction per square meter of the real estate being appraised. The respective Estimated Unit Construction Cost of types of real estate for each region may be obtained from the Bureau of Maintenance of the DPWH. 3.8 Factor Value. Refers to the rating factor where locations and site, conditions, neighborhood data and real estate structural condition, functionality, facilities and other requirements, including free services and facilities offered by the Lessor are considered. The rating factors and its corresponding weights are provided in Appendix A of these Guidelines. 3.9. Lessee. Refers to any government agency temporarily occupying a real estate on the basis of a contract executed with the private individual, partnership, cooperative, association, or corporation having absolute ownership over such real estate. 3.10 Lessor. Refers to any private individual, partnership, cooperative, association, or corporation, having absolute ownership over the real estate to be leased. 3.11. Real Estate. Refers to land and buildings, including office spaces or units. 3.12. Rentable Area. Refers to the total area of the real estate in square meters being occupied or to be occupied by the Lessee less the common area like lobby, stairway, elevator hall, common comfort room, machine room for air conditioner, and other areas of common use by public or upper floor occupants. 3.13. Rental. Refers to the amount paid by the Lessee for the use and/or occupancy of the privately-owned real estate to the Lessor, where payment is usually made on a monthly basis. 3.14. Reproduction Costs. Refers to the estimated total cost of replacing the real estate with the same utility. 4. GUIDING PRINCIPLES 4.1. It is more preferred that government agencies lease publicly-owned real estate from other government agencies. 4.2. However, if no publicly-owned real estate is available or if cost-benefit analysis indicates that lease of privately-owned real estate is more favorable to government, procuring entities shall have the option to enter into lease contracts either through public bidding or negotiated procurement under Section 53 (i) of the IRR-A of the R.A. 9184. In the public bidding of lease contracts, the procedures under the IRR-A of R.A. 9184 shall be followed. 4.3. The location of the real estate to be leased should have been meticulously determined by the procuring entity after taking into consideration, among others, the need for prudence and economy in government service and the suitability of the area in relation to the mandate of the office and its accessibility to its clients. 4.4. The Approved Budget for the Contract (ABC) of lease shall be determined using the mid point of the range obtained from the results of the market analysis on the prevailing lease rates for real estates within the vicinity of the selected location complying with the criteria and technical specifications of the end used unit. 4.5. As a general rule, rental rates are considered reasonable when they represent or approximate the value of what the Lessee gets in terms of accommodation, facility, and convenience from the leased real estate, and the Lessor gets an equitable return of capital or investment in the construction and maintenance of the real estate. 4.6. The reasonableness of the computed rental rates is likewise determined by comparing rental rates of real estates with the same or similar condition or classification and located within the vicinity. It should also consider real estate amenities and/or facilities provided free by the Lessor. 4.7. The procuring entity shall ensure that the objectives and purpose of the lease contract do not constitute an unnecessary, excessive, extravagant, or unconscionable expenditure. 4.8. In no case shall the rental rates, including additional expenses, such as association dues, if shouldered by the procuring entity, exceed the ABC. 5. PROCEDURES AND GUIDELINES 5.1. The end user unit shall conduct a cost-benefit analysis to assess the feasibility of entering into a lease contract for a privately-owned real estate as against purchasing or leasing from a government-owned real estate. 5.2. The recommendation of the end user unit to lease a privately-owned real estate shall be supported by the necessary analytical data establishing the benefits to the procuring entity if it enters into a lease contract. The recommendation shall also indicate the result of the market analysis of the prevailing rate of lease contracts within the vicinity of the selected location. CIDaTc 5.3. The BAC shall evaluate the recommendation of the end user unit, and approve the same if it finds such recommendation to be more advantageous to the government. 5.4. Entering into a lease contract through Negotiated Procurement under Section 53 (i) shall be included in the approved APP of the procuring entity concerned. If the original mode of procurement recommended in the APP was public bidding but cannot be ultimately pursued, or the project to be undertaken has not been previously included, the BAC, through a resolution, shall justify and recommend the change in the mode of procurement, or the updating of the APP, to be approved by the head of the procuring entity. The APP of the procuring entity shall reflect the details of the lease contract including, but not limited to, the ABC and the general description of the requirements for the lease of real estate. 5.5. The BAC shall prepare and finalize the draft contract and the technical specifications for the lease of the real estate taking into consideration the rating factor under Appendix A of these Guidelines. The BAC shall then post the notice for the procurement opportunity in accordance with Section 21.2.4 of the IRR-A of R.A. 9184 for a period of seven (7) calendar days. CTEaDc 5.6. After the required posting period, the BAC shall invite at least three (3) prospective Lessors to submit sealed price quotations. 5.7. On the date specified in the notice, the BAC shall open the price quotations and determine the Lowest Calculated Bid (LCB). The price quotation of the bidder with the LCB shall be evaluated, and its reasonableness computed, in accordance with Item 6 of these Guidelines. 5.8. In the case of a proposed lease of a vacant lot or land spaces, the procuring entity shall determine reasonableness of the proposed rate using a comparative price analysis as guided by the zonal valuation of the real estate issued by the city or municipality having jurisdiction over the property. 5.9. If the BAC determines that the LCB is reasonable pursuant to Item 5.8 or 6 of these Guidelines, it shall declare said bid as the Lowest Calculated Responsive Bid (LCRB), and recommend to the head of the procuring entity the award contract thereto. STcHDC 5.10. However, if the BAC determines that the LCB is unreasonable in accordance with Item 5.8 or 6 of these Guidelines, it shall immediately notify the said bidder in writing of its disqualifications and the grounds therefor. The BAC shall then proceed to determine the reasonableness of the second LCB. This procedure shall be repeated for the next LCB until the LCRB is determined for award. 5.11. In case all price quotations are considered unreasonable pursuant to Item 5.8 or 6 of these Guidelines, the BAC shall conduct a comparative price analysis between the LCB and the prevailing market rate previously determined under Item 5.1 of these Guidelines. If the LCB exceeds the prevailing market rate, the next LCB will be subjected to the same comparative price analysis until the LCRB is determined for award. 5.12. If all price quotations exceed the prevailing market rate as determined under Item 5.1 of these Guidelines, the BAC shall declare a failure of negotiated procurement; in which case a public bidding or another negotiated procurement process will be conducted, depending on the recommendation of the BAC. 5.13. Immediately after the determination of the LCRB, the BAC shall recommend to the head of the procuring entity the award of contract to such bidder. EDHCSI 6. DETERMINATION OF REASONABLENESS OF RENTAL RATES 6.1. The reasonableness of rental rates may be determined using either of the two (2) methods provided in Items 6.3 and 6.4 of these Guidelines. The procuring entity must adopt only one method of computation and consistently apply this method to all price quotations submitted for said procurement. However, in lease contracts for land spaces, reasonableness of rental rate shall be determined in accordance with Item 5.8. Sample computations using the above-mentioned formulae are provided in Appendix C of these Guidelines. 6.2. If the price quotation of the prospective Lessor does not exceed the computed monthly rental, the rental rate offered may be regarded as reasonable, and its quotation may then be considered for award. 6.3. Computation based on Observed Depreciation This method uses the following formula and a depreciation rate determined by the BAC of its TWG after meticulous ocular inspection of the actual condition of the real estate: CDAHaE Reproduction Cost = Estimated Unit Construction Cost x (1 - Depreciation Rate) Formula Rate = Reproduction Cost x monthly Capitalization Rate Rental Rate = Formula Rate x Factor Value Monthly Rate = Rentable Area x Rental Rate 6.3.1. The following weights may be used in arriving at the observed depreciation rate: Status Depreciation (%) Good 20 Fair 40 Poor 60 Very Poor 80 6.4. Computation based on Straight Line Depreciation This method uses the following formula and a depreciation rate determined from the Table of Structural Depreciation provided by the DPWH under Appendix B of these Guidelines. Age of Real Estate = Current Year - Year of Construction Depreciation Rate = See Appendix B for the Table of Structural Depreciation Reproduction Cost = Estimated Unit Construction Cost x (1 - Depreciation Rate) Formula Rate = Reproduction Cost x Monthly Capitalization Rate Rental Rate = Formula Rate x Factor Value Monthly Rate = Rentable Area x Rental Rate 7. TERMS AND CONDITIONS OF LEASE CONTRACTS 7.1. Lease contracts may be entered into on a multi-year basis, subject to the application of any set of guidelines that governs multi-year contracts. 7.2. The procuring entity shall ensure that the lease contract provide the most advantageous terms and conditions to the Government. IaEHSD 8. EFFECTIVITY These Guidelines shall take effect fifteen (15) days after publication in the Official Gazette or in a newspaper of general nationwide circulation. APPENDIX A TABLE OF RATING FACTORS RATING FACTORS WEIGHT (%) RATING I. Location and Site Condition 1. Accessibility 25 2. Topography and drainage 20 3. Sidewalk and waiting shed 15 4. Parking space 15 5. Economic potential 10 6. Land classification, utilization, and assessment 10 7. Other added amenities 5 100 ==== II. Neighborhood Data 1. Prevailing rental rate 20 2. Sanitation and health condition 20 3. Adverse influence 15 4. Property utilization 15 5. Police and fire station 15 6. Cafeterias 10 7. Banking/postal/telecom 5 100 ==== III. Real estate 1. Structural condition 30 2. Functionality a. Module 6 b. Room arrangement 6 c. Circulation 6 d. Light and ventilation 6 e. Space requirements 6 3. Facilities a. Water supply and toilet 6 b. Lighting system 6 c. Elevators 6 d. Fire escapes 6 e. Fire fighting equipment 6 4. Other requirements a. Maintenance 5 b. Attractiveness 5 100 === IV. Free Services and Facilities 1. Janitorial and security 20 2. Air conditioning 20 3. Repair and maintenance 20 4. Water and light consumption 20 5. Secured parking space 20 100 === I. Location and Site Condition x .20 = II. Neighborhood Data x .20 = III. Real estate x .50 = IV. Free Services and Facilities x .10 = FACTOR VALUE APPENDIX B TABLE OF STRUCTURAL DEPRECIATION AGE ESTIMATED LIFE OF REAL ESTATE WOODEN REINFORCED STRUCTURAL FRAME SEMI-CONCRETE CONCRETE REINFORCED (40 years) (60 years) (75 years) (100 years) Percentage (%) of estimated life 1 3 2.5 2 1.5 2 6 4.5 3.8 2.8 3 8.9 6.9 5.6 4.2 4 11.7 9 7.4 5.5 5 14.5 11.1 9.1 6.7 6 17.2 13.1 10.7 8.1 7 19.8 15.1 12.3 9.3 8 22.4 17 13.9 10.5 9 25 18 15.5 11.8 10 27.5 20.7 17.9 13 11 29.9 22.5 18.5 14.2 12 32.2 24.5 20 15.3 13 34.5 26.6 21.4 16.4 14 36.8 27.7 22.8 17.5 15 39 29.3 24.3 18.6 20 49.1 37 30.8 24.8 25 57.7 43.8 36.8 29 30 65 50 42.4 33.6 35 70 55.6 47.5 38 40 75 60.6 52.2 42.1 45 65 56.5 46 50 68.9 60.5 49.6 55 72.3 64.1 53.1 60 75 67.3 56.3 65 70.3 59.3 70 73 62 75 75 64.5 80 67 85 69.3 90 71.4 95 73.3 100 75 APPENDIX C SAMPLE COMPUTATION A 5-storey office building made of reinforced concrete structure with mechanical equipment, i.e., elevator, air conditioning system, etc. Date of Construction 1987 Estimated Unit Construction Cost P25,000/sq.m Depreciation 20% Good condition Capitalization Rate 20% (Variable based on bank rate) Factor Value 90% (Based on rating) COMPUTATION BASED ON OBSERVED DEPRECIATION Reproduction Cost = Estimated Unit Construction Cost x (1 - Depreciation Rate) = P25,000/sq.m. (1- 0.20) = P20,000/sq.m. Formula Rate = Reproduction Cost x Monthly Capitalization Rate = 20,000 (0.20/12) = 20,000 (0.0167) = P334/sq.m./mo. Rental Rate = Formula Rate x Factor Value P334 (0.90) 300.60/sq.m./mo. say 300/sq.m. Rentable Area = 200.00 sq.m. Monthly Rental = Rentable Area x Rental Rate = 200/sq.m. x P300/sq.m./mo. = P60,000.00/mo. COMPUTATION BASED ON STRAIGHT LINE DEPRECIATION Age of Real estate = 20 years Year of Construction = 2007-1987 = 20 years Depreciation Rate = See Appendix B for the Table of Structural Depreciation Reproduction Cost = Estimated Unit Construction Cost x (1 - Depreciation Rate) = P25,000/sq.m. (1 - 0.248) = P18,800/sq.m. Formula Rate = Reproduction Cost x Monthly Capitalization Rate = P18,800 (0.20/12) = 18,800 (0.0167) = P313.96/sq.m./mo. Rental Rate = Formula Rate x Factor Value = P313.96 (0.90) = P282.56/sq.m./mo. say P285.00/sq.m. Rentable Area = 200.00 sq.m. Monthly Rental = Rentable Area x Rental Rate = 200 sq.m. x P285.00/sq.m. = P57,000.00/mo. HcSDIE September 28, 2007 GPPB RESOLUTION NO. 23-07 APPROVING AND ADOPTING THE REVISED GUIDELINES ON THE EXTENSION OF CONTRACTS FOR GENERAL SUPPORT SERVICES WHEREAS, Section 63 of Republic Act No. 9184 (R.A. 9184) and Section 63.1 of the Implementing Rules and Regulations Part A (IRR-A) provide that the Government Procurement Policy Board (GPPB) shall have the power to formulate and amend public procurement policies, rules and regulations, and amend, whenever necessary the IRR-A; ITSacC WHEREAS, pursuant to such power, the GPPB issued the Guidelines on Extension of Contracts for General Services last 28 April 2005; WHEREAS, the foregoing guidelines authorize the extension of contracts for general services beyond the allowable period of two (2) months, subject to GPPB approval; WHEREAS, the GPPB amended said Guidelines to extend the allowable period for contract extension from two (2) months to six (6) months last 20 January 2006; WHEREAS, the Inter-Agency Technical Working Group, during its 8th and 9th regular meetings held last 17 August and 14 September 2007, respectively, recognized the need to further revise said Guidelines, deliberated on and approved the revisions to the Guidelines, and accordingly recommends them to the GPPB for its approval; NOW, THEREFORE, premises considered, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law, hereby RESOLVE, to approve and adopt the "Revised Guidelines on the Extension of Contracts for General Support Services" attached hereto as Annex A. This resolution shall take effect immediately. APPROVED this 28th of September 2007 at Pasig City, Philippines. (SGD.) ROLANDO G. ANDAYA, JR. Secretary Department of Budget and Management AUGUSTO B. SANTOS OIC-Director General National Economic and Development Authority NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY DEPARTMENT OF NATIONAL DEFENSE DEPARTMENT OF EDUCATION DEPARTMENT OF HEALTH DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEPARTMENT OF ENERGY DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS DEPARTMENT OF FINANCE DEPARTMENT OF TRADE AND INDUSTRY DEPARTMENT OF SCIENCE AND TECHNOLOGY DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS PRIVATE SECTOR REPRESENTATIVE Attested by: (SGD.) RUBY U. ALVAREZ Board Secretary, GPPB Executive Director, GPPB-TSO ANNEX A REVISED GUIDELINES ON THE EXTENSION OF CONTRACTS FOR GENERAL SUPPORT SERVICES 1.0 POLICY STATEMENT As a general policy, extensions of contracts for general support services are discouraged. 2.0 PURPOSE These guidelines are formulated to identify the conditions for the allowance of contract extension and to prescribe the rules and procedures governing the same, for the purpose of averting hiatus in support services essential, indispensable, or necessary in the operations of a procuring entity. DCESaI 3.0 SCOPE AND APPLICATION These guidelines shall govern the extension of ongoing contracts of general support services which are essential, indispensable, or necessary to support the operations of any of the procuring entities or for the enhancement of the welfare of its personnel to include, but shall not be limited to, non-personal or contractual services such as maintenance of equipment and furniture, janitorial and security services. However, these guidelines shall not apply to contracts with water, electricity, telecommunications, and internet service providers, which shall be governed by the Guidelines on Procurement of Water, Electricity, Telecommunications and Internet Service Providers provided issued by the Government Procurement Policy Board under Resolution No. 19-2006, dated 6 December 2006. 4.0 GENERAL CONDITIONS FOR EXTENSION Procuring entities may extend the duration or effectivity of an ongoing contract about to expire, under the following conditions: 4.1 No contract extension shall exceed one (1) year. 4.2 The original contract subject of the extension was awarded in accordance with the provisions of Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A). 4.3 The procuring entity concerned has substantially undertaken the procurement activities required prior to award of the new contract under R.A. 9184 and its IRR-A. 4.4 The aforesaid contract extension is undertaken due to circumstances beyond its control and the procuring entity concerned cannot award a new contract within a month after the expiration of the term of the original contract. 4.5 The contemplated extension is merely an emergency measure to maintain status quo in the operations of the Procuring Entity and to avoid interruption of service. SECHIA 4.6 The current service provider has not violated any of the provisions of the original contract. 4.7 The terms and conditions of the original contract shall not be changed or modified, except when changes or modifications will redound to the advantage of the government at no additional cost to the Procuring Entity. 5.0 PROCEDURAL REQUIREMENTS 5.1 All contract extensions shall be subject to the prior approval of the Head of the Procuring Entity or his/her duly authorized representative upon recommendation of the Bids and Awards Committee. 5.2. In addition to the foregoing, if the proposed contract extension exceeds six (6) months, the Head of the Procuring Entity or his/her duly authorized representative shall immediately report to the Government Procurement Policy Board in writing of its intent to extend beyond six months. 6.0 REPEALING CLAUSE These Guidelines repeal GPPB Resolution 08-2005 and the amendments thereto per GPPB Resolution 03-2006, dated 28 April 2005 and 11 March 2006, respectively. 7.0 EFFECTIVITY These guidelines or any amendments hereto shall take effect fifteen (15) days after publication in the Official Gazette or in a newspaper of general nationwide circulation. Published in The Manila Times on October 26, 2007. September 28, 2007 GPPB RESOLUTION NO. 24-07 APPROVING AND ADOPTING THE GUIDELINES ON THE PROCUREMENT OF SECURITY AND JANITORIAL SERVICES WHEREAS, Section 63 of Republic Act No. 9184 (R.A. 9184) and Section 63.1 of the Implementing Rules and Regulations Part A (IRR-A) provide that the Government Procurement Policy Board (GPPB) shall have the power to formulate and amend public procurement policies, rules and regulations, and amend, whenever necessary the IRR-A; IaHDcT WHEREAS, it is recognized that the procurement of security and janitorial services has significant budgetary impact across the bureaucracy; WHEREAS, considering the numerous queries received relating to security and janitorial services, there is a need to provide guidelines in the procurement of these services; WHEREAS, the Inter-Agency Technical Working Group (IATWG), during its 8th regular meeting held last 17 August 2007, recommended the issuance of guidelines to govern the procurement of security and janitorial services; WHEREAS, the IATWG, in its 8th and 9th regular meetings held last 17 August 2007 and 14 September 2007, respectively, deliberated and agreed on the proposed guidelines for the procurement of security and janitorial services, and accordingly recommends these to the GPPB for its approval; NOW, THEREFORE, for and in consideration of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law, hereby RESOLVE to approve and adopt, as WE hereby approve and adopt the " Guidelines on the Procurement of Security and Janitorial Services , attached hereto as Annex "A" and made an integral part hereof. This resolution shall take effect immediately. APPROVED this 28th day of September, 2007 at Pasig City, Philippines. (SGD.) ROLANDO G. ANDAYA, JR. Secretary Department of Budget and Management AUGUSTO B. SANTOS OIC-Director General National Economic and Development Authority NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY DEPARTMENT OF NATIONAL DEFENSE DEPARTMENT OF EDUCATION DEPARTMENT OF HEALTH DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DEPARTMENT OF ENERGY DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS DEPARTMENT OF FINANCE DEPARTMENT OF TRADE AND INDUSTRY DEPARTMENT OF SCIENCE AND TECHNOLOGY DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS PRIVATE SECTOR REPRESENTATIVE Attested by: (SGD.) RUBY U. ALVAREZ Board Secretary, GPPB Executive Director, GPPB-TSO ANNEX A GUIDELINES ON THE PROCUREMENT OF SECURITY AND JANITORIAL SERVICES 1.0 POLICY STATEMENT Under Section 5 (h) of Republic Act No. 9184 (R.A. 9184), as reiterated in Section 5 (k) of its Implementing Rules and Regulations Part A (IRR-A), procurement of general support services, including non-personal or contractual services, such as security and janitorial services, falls under the definition of goods. Thus, in the procurement of security or janitorial services, the winning bid is determined by the lowest calculated and responsive bid. It is recognized, however, that the proper and efficient procurement of security and janitorial services should be based not solely on cost, but should also take into consideration a range of other factors, such as, but not limited to, length of contract, standards of internal governance, adequacy of resources, levels of training, and adherence to labor and other social legislation. 2.0 SCOPE AND APPLICATION These guidelines shall govern the procurement of security and janitorial services by government agencies. These guidelines shall not apply to the procurement of other general support services, such as, repair and maintenance of equipment and furniture, trucking, hauling, and other services. 3.0 PURPOSE These guidelines are formulated to meet the following objectives: 3.1 To prescribe an objective set of parameters in the evaluation of technical proposals for security and janitorial services; 3.2 To provide conditions on the use of multi-year contracts for security and janitorial services. 4.0 ADDITIONAL SET OF TECHNICAL PARAMETERS 4.1 Procuring entities are highly encouraged to evaluate the technical proposal of bidders using the additional set of parameters prescribed in Appendix A of these guidelines. However, considering that procuring entities have different needs and requirements, the minimum standard for each parameter shall be determined by the procuring entity. Additional technical parameters and minimum standard for each parameter must be expressly stated under Section VII. Technical Specifications of the Philippine Bidding Documents for the Procurement of Goods (PBDs). 4.2 To determine compliance with these parameters, procuring entity may require additional documents or materials as part of the bidder's technical proposal. These additional documents or materials must be expressly stated in Item 14.1. (j) of the Bid Data Sheet consistent with Item 11, Section 25.3 (A) of the IRR-A of R.A. 9184. 4.3 The procuring entity shall check compliance with the technical parameters using a non-discretionary "pass/fail" criteria. 5.0 MULTI-YEAR CONTRACTS Procuring entities may enter into multi-year contracts, but not to exceed three (3) years, in the procurement of security and janitorial services, subject to the following conditions: 5.1 The Invitation to Apply for Eligibility and to Bid must expressly state the following: 5.1.1 Duration of the contract to be bid, which should not exceed three (3) years; 5.1.2 The Approved Budget for the Contract (ABC) for the first year only. 5.2 All bid prices for a duration of three (3) years shall be fixed and shall not be adjusted during contract implementation, except for the following: 5.2.1 Increase in minimum daily wage pursuant to law or new wage order issued after date of bidding; 5.2.2 Increase in taxes; and 5.2.3 If during the term of the contract the procuring entity sees the need for an increase or decrease in the number of security guards or janitorial attendants, the resulting cost of said increase or decrease, provided that the ABC for the relevant year is not exceeded. The procuring entity shall ensure that the foregoing allowable price adjustments are specified under Section 8.1 of the Special Conditions of Contract of the PBDs. 5.3 The Financial Proposal shall contain a breakdown of all costs, including cost of supplies and equipment, necessary for the execution of the contract 5.4 Procuring entities shall expressly provide, under Section VII. Technical Specifications , which shall form part of the contract under Section 13.1 of the General Conditions of the Contract of the PBDs, that the service provider/contractor shall maintain a satisfactory level of performance throughout the term of the contract based on a prescribed set of performance criteria. The performance criteria to be applied shall include, among others, the following: (i) quality of service delivered; (ii) time management; (iii) management and suitability of personnel; (iv) contract administration and management; and (v) provision of regular progress reports. 5.5 Before end of each year, procuring entities shall conduct an assessment or evaluation of the performance of the service provider/contractor based on the set of performance criteria prescribed under Section VII. Technical Specifications. 5.6 Based on its assessment, the procuring entity may pre-terminate the contract for failure by the service provider/contractor to perform its obligations thereon following the procedure prescribed under the Guidelines on Termination of Contracts issued by the Government Procurement Policy Board under Resolution No. 018-2004 dated 22 December 2004. 6.0 EFFECTIVITY These Guidelines shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation and upon filing with the University of the Philippines Law Center of three (3) certified copies of these guidelines: APPENDIX A ADDITIONAL SET OF TECHNICAL PARAMETERS A. Security Services 1. Stability (a) Years of Experience (b) Liquidity of the Contractor (c) Organizational Set-up 2. Resources (a) No. of Licensed Firearms (b) No. and Kind of Communication Devices (c) No. and Kind of Motor Powered Vehicles (d) No. of Licensed Guards 3. Security Plan 4. Other Factors (a) Recruitment and Selection Criteria (b) Completeness of Uniforms and Other Paraphernalia B. Janitorial Services 1. Stability (a) Years of Experience (b) Liquidity of the Contractor (c) Organizational set-up 2. Resources (a) No. and Kind of Equipment and Supplies (b) No. of Janitors and Supervisors 3. Housekeeping Plan 4. Other Factors (a) Recruitment and Selection Criteria (b) Completeness of Uniforms and Other Paraphernalia Published in The Manila Times on October 26, 2007.