Prescribing Guidelines for Issuance of MYOA for Multi-Year Projects Covering the Procurement of Regular and Recurring Services

May 19, 2017

DBM NATIONAL BUDGET CIRCULAR NO. 570-17

 

1.0 PURPOSE

To provide guidelines relative to the application of Section 26 of the General Provisions (GP) of Republic Act (R.A.) No. 10924, FY 2017 General Appropriations Act (GAA) specifically where regular and recurring multi-year projects may require issuance of MYOA. These include janitorial and security services, telecommunication requirements, provision for water, rental of office space and equipment, and lease-purchase agreements.

MYOAs may be issued to cover such regular/recurring services to:

• Promote prudent government spending in terms of reasonable costs in the provision of quality services in a timely manner.

• Enable agencies to tap Multi-Year Contracts (MYCs) with the following options during the contract period, without prejudice to annual performance evaluation:

o Flexibility of adopting rates advantageous to the government; and

o Adoption of locked-in contract for specific cases, e.g., IT contracts of proprietary conditions, etc.

2.0 COVERAGE

This Circular covers all departments, bureaus, offices, agencies and operating units of the national government, including commissions/offices under the CFAG and SUCs, undertaking MYCs approved by the DBM, for the following specific support services:

1. Janitorial and security services;

2. Supply of mineral/purified/distilled water;

3. Telecommunications requirements;

4. Rental of office space and equipment;

5. Lease-purchase agreements; and

6. Others as may be identified in later issuances.

3.0 DEFINITION OF TERMS

The following terms, as defined in previous circulars, 1 shall be taken and understood in the sense indicated hereunder and as used in this NBC:

3.1 Multi-Year Obligational Authority (MYOA) — a document issued by DBM, either for locally funded projects (LFPs) or foreign-assisted projects (FAPs) implemented by agencies, in order to authorize the latter to enter into MYPs for the full project cost. A MYOA, which contains an annual breakdown of the full project cost, obligates the agencies to include in their budget proposal for the ensuing years, the amount programmed for the said year(s) (MYOA Format attached as Annex A).

3.2 Multi-Year Project (MYP) — program or project which will take more than one year to complete and requires multi-year appropriations.

3.3 Regular and Recurring Services (General Support Services) — services that are essential, indispensable, or necessary to support the operations of the procuring entity or for the enhancement of the welfare of its personnel, such services to include among others, janitorial and security services, telecommunications requirements, provision for water, rental of office space and equipment, and lease-purchase agreements.

3.4 Lease-Purchase Agreements — Lease contract under which a portion of the lease payment or rent is applied to the purchase price of the leased asset or property. When the full price is paid up, the title to the item is transferred from the seller or owner (the lessor) to the buyer or tenant (the lessee). This also refers to agreements for the acquisition of office space or building using agencies' annual rental appropriations for the purpose, subject to the following requirements for Lease Purchase Agreements as listed under Section 27 of the General Provisions of the FY 2017 GAA:

• The annual lease payment shall not exceed the annual rental appropriations at the time of the signing of the lease-purchase agreement; and

• Any available Maintenance and Other Operating Expenses (MOOE) allotments for Repair and Maintenance, Transportation and Delivery, Supplies and Materials, Utility Expenses, Printing and Binding, and Storage Expenses may be used by the agency to accelerate the lease-purchase payments whenever such would lower the amortization cost or total contract of the office space or building.

4.0 GUIDELINES

4.1 The DBM shall issue MYOAs covering recurring services only under the following instances:

4.1.1 Savings will be generated in a contract that would exceed one year;

4.1.2 Delivery of timely services would be hampered if annual bidding will be conducted; and

4.1.3 Locked-in contracts which would make it more advantageous for the government agency to undergo the same.

4.2 A government agency requesting for the issuance of MYOAs to cover MYCs for regular/recurring services to facilitate timely procurement of such services shall submit the following:

4.2.1 A fully accomplished Request Form for MYOA (attached as Annex B); and

4.2.2 Certification of the agency head that procurement activity pertaining to the project to be covered by the MYOA has not been started as of date of request.

4.3 Notwithstanding the issuance of a MYOA, MYCs entered into based on such MYOAs, shall be guided by the following:

4.3.1 The liability of the agency for a given year shall only be limited to the available appropriations for the purpose for a specific year;

4.3.2 Obligations to be incurred by the agency in any given calendar year shall in no case exceed the allotment released for the purpose; and

4.3.3 Annual review should be conducted by the agency concerned as part of the process/MYC to enable to negotiate for a lower price for the service in the event that the actual cost for the good or service covered by the contract become lower as per prevailing market analysis; and

4.3.4 Procurement covering MYCs shall be subject to guidelines issued by the GPPB and/or the DBM.

5.0 MYOA AMENDMENT

MYOAs issued for recurring MYPs under this Circular may be amended, if the MYC is adjusted as a result of the annual review conducted by the agency consistent with the provisions of item 4.3.3 of this Circular.

6.0 ESTABLISHMENT OF A REGISTRY

The DBM shall set up a registry or database for all MYOAs issued in order to monitor the required annual budgetary requirements of the MYPs.

7.0 ISSUES FOR RESOLUTION

Interpretation of the provisions in this Circular, including cases not covered herein, shall be referred to the DBM for final resolution.

8.0 REPEALING CLAUSE

All provisions in existing guidelines that are inconsistent with this Circular are hereby revised, modified and/or repealed accordingly.

9.0 EFFECTIVITY

This Circular shall take effect immediately upon publication.

(SGD.) BENJAMIN E. DIOKNOSecretary

ANNEX A

Multi-Year Obligational Authority

ANNEX B

Request for Multi-Year Obligational Authority

1. Specifically DBM CL No. 2015-7 (Updated Guidelines for issuance of Multi-Year Obligational Authority [MYOA]), dated June 3, 2015.

Published in The Philippine Star on May 21, 2017.