Approving Amendments to Sections 23.1 (a) (vi), 23.5.1.4 and 23.5.2.6 of the Revised IRR of R.A. No. 9184

July 30, 2013

GPPB RESOLUTION NO. 20-13

APPROVING AMENDMENTS TO SECTIONS 23.1 (a) (vi), 23.5.1.4 AND 23.5.2.6 OF THE REVISED IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 9184; CLAUSES 5.5 AND 12.1 (a) (v) OF THE INSTRUCTIONS TO BIDDERS OF THE PHILIPPINE BIDDING DOCUMENTS FOR GOODS; AND CLAUSES 5.5 AND 12.1 (a) (vi) OF THE INSTRUCTIONS TO BIDDERS OF THE PHILIPPINE BIDDING DOCUMENTS FOR INFRASTRUCTURE PROJECTS

WHEREAS, Section 63.1 (b) of Republic Act (RA) No. 9184 and its revised Implementing Rules and Regulations (IRR) authorize the Government Procurement Policy Board (GPPB) to formulate public procurement policies, rules and regulations, and amend, whenever necessary, the IRR;

WHEREAS, as part of the eligibility documents for submission, Section 23.1 (a) (vi) of the IRR of RA 9184 and Clauses 12.1 (a) (v) and 12.1 (a) (vi) of the Instructions to Bidders (ITB) of the Philippine Bidding Documents (PBDs) for Goods and Infrastructure Projects, respectively, require the submission of the prospective bidder's computation of its Net Financial Contracting Capacity (NFCC) or a commitment from a Universal or Commercial Bank to extend a credit line in favor of the prospective bidder if awarded the contract to be bid (CLC);

WHEREAS, Sections 23.5.1.4 and 23.5.2.6 of the IRR of RA 9184 and Clause 5.5 of the ITB of the PBDs for Goods and Infrastructure Projects provide for the NFCC formula, thus:

NFCC = [(Current assets minus current liabilities) (K)] minus the value of all outstanding or uncompleted portions of the projects under ongoing contracts, including awarded contracts yet to be started coinciding with the contract to be bid.

Where: K = 10 for a contract duration of one year or less, 15 for a contract duration of more than one year up to two years, and 20 for a contract duration of more than two years. TSHEIc

WHEREAS, the GPPB adheres to the policy that the government should only be entering into contracts with potential bidders who are actually contributing to the coffers of the government through the payment of correct taxes;

WHEREAS, during the 2nd GPPB Regular Meeting held on 15 March 2013, the Board agreed to adopt, as a matter of policy, that the Income Tax Return, together with the Audited Financial Statement (AFS) submitted, should be used in determining the financial eligibility of bidders. During the meeting, the Board likewise created the NFCC Committee that will study alternative formula in lieu of the NFCC and the CLC;

WHEREAS, the Bureau of Internal Revenue (BIR) presented its proposed NFCC formula during the NFCC Committee meeting held on 5 June 2013, which utilized the prospective bidder's average net income after taxes for three (3) years as the basis for the computation of the NFCC;

WHEREAS, in the meeting held on 9 July 2013, the Inter Agency Technical Working Group (IATWG) discussed the BIR's proposed NFCC formula, reviewed the CLC requirement, and thereafter recommended the amendment of the provisions of the IRR of RA 9184 and the Philippine Bidding Documents in relation to NFCC/CLC;

WHEREAS, during the 5th Regular GPPB Meeting held on 30 July 2013, the Board discussed the recommendations of the IATWG, and, after thorough discussion and careful deliberation, resolved to retain the current NFCC formula, subject to the following modifications:

1. CLC shall no longer be accepted as an alternative to the prospective bidder's computation of NFCC;

2. The values of the bidder's current assets and current liabilities shall be based on the data submitted to the BIR, through its Electronic Filing and Payment System (EFPS);

3. The Factor K multipliers 10, 15 and 20 shall be retained, subject to future review by the Board of its efficiency and accuracy in relation to NFCC. HIcTDE

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 following:

1. AMEND Sections 23.1 (a) (vi), 23.5.1.4 and 23.5.2.6 of the IRR of RA 9184, as shown in Annex "A" hereof;

2. AMEND Clauses 5.5 and 12.1 (a) (v) of the Instructions to Bidders of the Philippine Bidding Documents for Goods, and Clauses 5.5 and 12.1 (a) (vi) of the Instructions to Bidders of the Philippine Bidding Documents for Infrastructure Projects, as shown in Annex "B" hereof; and,

3. REVIEW the efficiency and accuracy of Factor K multipliers 10, 15 and 20 in relation to NFCC at some future time.

This resolution shall take effect immediately.

APPROVED this 30th day of July 2013 at Pasig City, Philippines.

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Attested by:

(SGD.) DENNIS S. SANTIAGOBoard Secretary, Government Procurement Policy Board

ANNEX A

Revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184

Original	Amended
Section 23.1 (a) (vi)	Section 23.1 (a) (vi)
Section 23.1 For purposes of determining the	Section 23.1 For purposes of determining the
eligibility of bidders using the criteria stated	eligibility of bidders using the criteria stated
in Section 23.5 of this IRR, only the	in Section 23.5 of this IRR, only the
following documents shall be required by the	following documents shall be required by the
BAC, using the forms prescribed in the	BAC, using the forms prescribed in the
Bidding Documents:	Bidding Documents:
a)	Class "A" Documents	a)	Class "A" Documents
. . .			. . .
Financial Documents		Financial Documents
. . .			. . .
	(vi)	The prospective bidder's		(vi)	The prospective bidder's
		computation for its Net Financial			computation for its Net Financial
		Contracting Capacity (NFCC) or a			Contracting Capacity (NFCC).
		commitment from a Universal or
		Commercial Bank to extend a credit
		line in favor of the prospective bidder
		if awarded the contract to be bid (CLC).
Section 23.5.1.4		Section 23.5.1.4
Section 23.5.1.4. If the prospective bidder	Section 23.5.1.4. The computation of a
submits a computation of its NFCC, the	prospective bidder's NFCC must be at least
NFCC must be at least equal to the ABC to	equal to the ABC to be bid, calculated as
be bid, calculated as follows:	follows:
NFCC = [(Current assets minus current	NFCC = [(Current assets minus current
liabilities) (K)] minus the value of all	liabilities) (K)] minus the value of all
outstanding or uncompleted portions of the	outstanding or uncompleted portions of the
projects under ongoing contracts, including	projects under ongoing contracts, including
awarded contracts yet to be started coinciding	awarded contracts yet to be started coinciding
with the contract to be bid.	with the contract to be bid.
Where: K = 10 for a contract duration of one	Where: K = 10 for a contract duration of one
year or less, 15 for a contract duration of	year or less, 15 for a contract duration of
more than one year up to two years,	more than one year up to two years,
and 20 for a contract duration of more than	and 20 for a contract duration of more than
two years.		two years.
If the prospective bidder submits a CLC, the	The values of the bidder's current assets
CLC must be at least equal to ten percent	and current liabilities shall be based on the
(10%) of the ABC to be bid. If the CLC is	data submitted to the BIR, through its
issued by a foreign Universal or Commercial	Electronic Filing and Payment System
Bank, it shall be confirmed or authenticated	(EFPS).
by a Universal or Commercial Bank. For
biddings conducted by LGUs, the prospective
bidder may also submit CLC from other
banks certified by the BSP as authorized to
issue such financial instrument.
Section 23.5.2.6		Section 23.5.2.6
Section 23.5.2.6. If the prospective bidder	Section 23.5.2.6. The computation of a
submits a computation of its NFCC, the	prospective bidder's NFCC must be at least
NFCC must be at least equal to the ABC to	equal to the ABC to be bid, calculated as
be bid, calculated as follows:	follows:
NFCC = [(Current assets minus current	NFCC = [(Current assets minus current
liabilities) (K)] minus the value of all	liabilities) (K)] minus the value of all
outstanding or uncompleted portions of the	outstanding or uncompleted portions of the
projects under ongoing contracts, including	projects under ongoing contracts, including
awarded contracts yet to be started coinciding	awarded contracts yet to be started coinciding
with the contract to be bid.	with the contract to be bid.
Where: K = 10 for a contract duration of one	Where: K = 10 for a contract duration of one
year or less, 15 for a contract duration of	year or less, 15 for a contract duration of
more than one year up to two years,	more than one year up to two years,
and 20 for a contract duration of more than	and 20 for a contract duration of more than
two years.		two years.
If the prospective bidder submits a CLC, the	The values of the bidder's current assets
CLC must be at least equal to ten percent	and current liabilities shall be based on the
(10%) of the ABC to be bid. If the CLC is	data submitted to the BIR, through its
issued by a foreign Universal or Commercial	Electronic Filing and Payment System
Bank, it shall be confirmed or authenticated	(EFPS).
by a Universal or Commercial Bank. For
biddings conducted by LGUs, the prospective
bidder may also submit CLC from other
banks certified by the BSP as authorized
to issue such financial instrument.

ANNEX B

Philippine Bidding Documents for Goods and Infrastructure Projects

Instructions to Bidders

Original	Amended
Clause 5.5	Clause 5.5
5.5 The Bidder must submit a computation of	5.5 The Bidder must submit a computation
its Net Financial Contracting Capacity	of its Net Financial Contracting Capacity
(NFCC) or a commitment from a Universal	(NFCC), which must be at least equal to the
or Commercial Bank to extend a credit line in	ABC to be bid, calculated as follows:
its favor if awarded the contract for this
Project (CLC).	NFCC = [(Current assets minus current
	liabilities) (K)] minus the value of all
The NFCC, computed using the following	outstanding or uncompleted portions of the
formula, must be at least equal to the ABC to	projects under ongoing contracts, including
be bid:	awarded contracts yet to be started coinciding
	with the contract to be bid.
NFCC = [(Current assets minus current
liabilities) (K)] minus the value of all	Where: K = 10 for a contract duration of one
outstanding or uncompleted portions of the	year or less, 15 for a contract duration of
projects under ongoing contracts, including	more than one year up to two years,
awarded contracts yet to be started coinciding	and 20 for a contract duration of more than
with the contract for this Project.	two years.
Where: K = 10 for a contract duration of one	The values of the bidder's current assets
year or less, 15 for a contract duration of	and current liabilities shall be based on the
more than one year up to two years, and 20	data submitted to the BIR, through its
for a contract duration of more than two	Electronic Filing and Payment System
years.	(EFPS).
The CLC must be at least equal to ten percent
(10%) of the ABC for this Project. If issued
by a foreign bank, it shall be confirmed or
authenticated by a Universal or Commercial
Bank. In the case of local government units
(LGUs), the Bidder may also submit CLC
from other banks certified by the Bangko
Sentral ng Pilipinas (BSP) as authorized to
issue such financial instrument.

Philippine Bidding Documents for Goods

Instructions to Bidders

Clause 12.1 (a) (v)	Clause 12.1 (a) (v)
12. Documents Comprising the Bid:	12. Documents Comprising the Bid:
Eligibility and Technical Components	Eligibility and Technical Components
12.1. Unless otherwise indicated in the BDS,	12.1. Unless otherwise indicated in the BDS,
the first envelope shall contain the following	the first envelope shall contain the following
eligibility and technical documents:	eligibility and technical documents:
(a)	Eligibility Documents —	(a)	Eligibility Documents —
	Class "A" Documents:		Class "A" Documents:
. . .			. . .
	(v)	NFCC computation or CLC in		(v)	NFCC computation in accordance
		accordance with ITB Clause 5.5;			with ITB Clause 5.5;

Philippine Bidding Documents for Infrastructure Projects

Instructions to Bidders

Clause 12.1 (a) (vi)	Clause 12.1 (a) (vi)
12. Documents Comprising the Bid:	12. Documents Comprising the Bid:
Eligibility and Technical Components	Eligibility and Technical Components
12.1. Unless otherwise indicated in the BDS,	12.1. Unless otherwise indicated in the BDS,
the first envelope shall contain the following	the first envelope shall contain the following
eligibility and technical documents:	eligibility and technical documents:
(a)	Eligibility Documents —	(a)	Eligibility Documents —
	Class "A" Documents:		Class "A" Documents:
. . .			. . .
	(vi)	NFCC computation or CLC in	(vi)	NFCC computation in accordance
		accordance with ITB Clause 5.5;		with ITB Clause 5.5;