Rules and Regulations for the Electronic Procurement System of the Department of National Defense (R.A. No. 8792)

September 28, 2000

DND DEPARTMENT CIRCULAR NO. 09-00

RULES AND REGULATIONS FOR THE ELECTRONIC PROCUREMENT SYSTEM OF THE DEPARTMENT OF NATIONAL DEFENSE

INTRODUCTION

Pursuant to Section 27 (d) of Republic Act No. 8792, otherwise known as the "Electronic Commerce Act," the following Implementing Rules and Regulations are hereby adopted to govern the use of information and communications technology in the procurement activities of the Department of National Defense. CIDTcH

RULE 1

Preliminary Provisions

SECTION 1.1. Policy. — It is the policy of the Department of National Defense to utilize information and communications technology in the conduct of procurement activities to streamline procurement processes, reduce procurement costs, maximize transparency and minimize opportunities for graft and corruption. For this purpose, all bureaus and offices under the Department shall, within three (3) months from the issuance of this Department Circular, adopt their respective electronic procurement systems in accordance with the rules and regulations promulgated hereunder.

SECTION 1.2. Coverage. — These Implementing Rules and Regulations shall cover the procurement through public bidding of goods, supplies and materials for all agencies and offices under the Department of National Defense: Provided, That bidding procedures not covered by the provisions of these Implementing Rules and Regulations shall be covered by the applicable provisions of Republic Act No. 8792, Executive Order No. 302 (series of 1996) and its amendments, and their implementing rules and regulations: Provided, further, That during the first two years from the adoption of these Implementing Rules and Regulations, the electronic procurement systems shall be used only for simple procurements.

SECTION 1.3. Definition of Terms. — For purposes of these Implementing Rules and Regulations, the terms and phrases hereunder shall be understood as follows:

(a) Agency — refers to the Department of National Defense or to any of the bureaus and offices under it, namely, the Armed Forces of the Philippines, Government Arsenal, National Defense College of the Philippines, Office of Civil Defense, and Philippine Veterans Affairs Office.

(b) Closing Date — refers to the precise date and time, indicated in the Instructions to Bidders, when the acceptance of bids will stop and after which the electronic procurement system will automatically bar all incoming bids.

(c) Day — shall be understood as a calendar day consisting of twenty-four (24) hours. TAEcSC

(d) Electronic Procurement System or System — refers to the system using electronic communications and digital information processing technologies in the conduct of procurement.

(e) Head of Agency — refers to the Secretary of National Defense or, whenever applicable, the Chief of Staff, Armed Forces of the Philippines; Director, Government Arsenal; President, National Defense College of the Philippines; Administrator, Office of Civil Defense; or the Administrator, Philippine Veterans Affairs Office, or their respective authorized representatives. For purposes of procurements for the Office of the Secretary of National Defense, the Director, Administrative Services shall be the authorized representative of the Head of Agency.

(f) Notice — Notification or the sending of notices shall be understood to be done electronically.

(g) Simple Procurement — entails the procurement of commonly used goods, supplies and materials with simple or standard technical requirements that do not require complex technical evaluation. In view of the standardized requirements, pre-bid conferences shall not be conducted for this kind of procurement.

(h) Web Site — refers to the Web sites of the Agencies. A Web site is a collection of Web files on a particular subject (e.g., Armed Forces of the Philippines) that includes a beginning file called a home page that could be accessed through its URL address (e.g., http://www.armedforces.mil.ph). IEHScT

RULE 2

General Provisions

SECTION 2.1. Confidentiality, Integrity and Security Features. — The electronic procurement system to be adopted by each Agency shall incorporate the following features, which shall be periodically upgraded to keep abreast with the latest technology:

(a) Confidentiality — The system shall ensure the privacy of parties transacting with it. For this purpose, no message or document sent through the system shall be divulged to third parties unless such message or document was sent after the sender was informed that it will be made publicly available. The system shall protect the intellectual property rights over documents, including technical designs, submitted in response to invitations to apply for eligibility and to bid.

(b) Integrity — The system shall ensure that nobody, including members of the Bids and Awards Committee (BAC), will be able to alter the contents of bids submitted through the system or read the same ahead of the stipulated time for the decryption or opening of bids.

(c) Security — The system shall be protected from unauthorized access or interference through the incorporation of security features such as, but not limited to, firewalls. Periodic tests shall be conducted to ensure that the system cannot be breached. TAcSaC

SECTION 2.2. Reckoning the Time of Sending/Receipt of Documents. — The sending of an electronic document to or from the Bids and Awards Committee shall be reckoned from the time such document enters an information system outside the control of the sender or of the person who sent such document on behalf of the sender. On the other hand, the receipt of an electronic document sent to or from the Bids and Awards Committee shall be reckoned from the time such document enters the addressee's information system.

SECTION 2.3. Submission of Hard Copies. — Pending the issuance of rules on electronic notaries by the Supreme Court, prospective bidders shall be required to submit hard copies of all documents required by the BAC. Prospective bidders shall ensure that hard copies of such documents are received on or before the deadline set by the BAC, which in no case shall be later than the time for the post-qualification of the lowest calculated bid. Where an inconsistency exists between the electronic and hard copies, and such inconsistency materially affects the eligibility of the bidder or the substance of a bid, the bidder shall be disqualified.

SECTION 2.4. Bids and Awards Committee. — The Head of the concerned Agency shall create a Bids and Awards Committee (BAC) in accordance with the provisions of existing rules and regulations: Provided, That the BAC shall have at least one member who is knowledgeable with the administration of the electronic procurement system. In the event that an Agency does not have the personnel to administer its own electronic procurement system, the Communications, Electronics and Information Systems Service of the Armed Forces of the Philippines shall be requested to assign a competent officer/personnel to such Agency's BAC: Provided, however, That all Agencies shall ensure that within three (3) months from the issuance of these Implementing Rules and Regulations they will have administrators for their respective electronic procurement systems.

SECTION 2.5. Functions of the BAC. — The BAC shall be responsible for all aspects of the bidding, including the publication of the invitation to apply for eligibility and to bid, issuance of clarifications and supplemental notices, examination and evaluation of bids, resolution of requests for reconsideration, post-qualification of the lowest calculated bid, and recommendation for the award of the contract. EaISTD

RULE 3

Publication of Invitations to Apply for Eligibility and to Bid

SECTION 3.1. Posting of Invitation to Apply for Eligibility and to Bid in Web Sites. — The posting in the Agency web site of the Invitation to Apply for Eligibility and to Bid shall be considered "publication" for purposes of the newspaper publication requirement under existing rules and regulations: Provided, That procurement contracts amounting to at least Two Million Pesos (P2,000,000.00) shall comply with the newspaper publication requirement.

SECTION 3.2. Posting of Announcements and Notices in Web Sites. — Without prejudice to the provisions of Rule 5, all announcements and notices related to or affecting all contracts to be bid shall be posted in the Agency web site.

RULE 4

Enrollment of Prospective Bidders

SECTION 4.1. Electronic Enrollment. — All parties interested to be included in an Agency's registry of suppliers and contractors shall enroll by filling in an electronic form found in or linked to such Agency's web site. Applicants for enrollment shall be notified of the status of their applications. In case of denied applications, the notice shall state the reason(s) for the denial.

The concerned Agency reserves the right to deny enrollment to or exclude from the registry any party who is found to have misrepresented any of the information provided in the enrollment form or who is barred by any government agency from participating in any of its procurement activities.

SECTION 4.2. Required Information for Enrollment. — (a) Applicants for enrollment shall be required to provide information on their company/business entity profile including, but not limited to, the following:

(i) Business Name Registration with the Department of Trade and Industry (DTI); TcIAHS

(ii) Certificate of Incorporation/Registration with the Securities and Exchange Commission (SEC), or Certificate of Registration with the Cooperative Development Authority (CDA) in case of cooperatives, or equivalent registration for other entities;

(iii) Certified list of partners/stockholders indicating their respective interests or shares in the company or business entity, or list of members in case of cooperatives; in case a partner or stockholder is another business entity, the ownership structure of such entity should likewise be indicated;

 

(iv) Certified list of corporations or other business entities where the applicant owns a controlling interest or in which the owner of the applicant also holds a controlling interest; for the purpose of this provision, "controlling interest" refers to the ownership of or control over at least fifty-one percent (51%) of the shares of a corporation or of the ownership interests over a business entity;

(v) City permit/municipal license;

(vi) Tax Information Number (TIN);

(vii) Certificate of Value-Added Tax (VAT) Registration for VAT registered entities;

(viii) DTI Accreditation Certificate, if applicable; EACTSH

(ix) A statement that applicant is not blacklisted or otherwise barred from bidding by any government agency; and

(x) Audited financial statements stamped "received" by the Bureau of Internal Revenue (BIR) for the last two (2) calendar years.

(b) In procurements where foreign suppliers are allowed to participate, any of the above requirements may be substituted by the equivalent documents issued by the foreign supplier's country. These documents must be duly acknowledged by the appropriate Philippine consular officials.

SECTION 4.3. Enrollee's E-mail Address. — A party applying for enrollment in an Agency's registry of suppliers and contractors shall be required to provide an e-mail address to which all communications from the Agency and/or its BAC shall be sent. The e-mail address provided shall be considered as such party's information system for purposes of Section 2.2.

SECTION 4.4. Access to Bid Documents. — Parties enrolled in an Agency's registry of suppliers and contractors shall be given access to bid documents for procurement contracts being bid by such Agency: Provided, That once the registry of suppliers and contractors of the different Agencies have become centralized in accordance with Section 4.6, a registered party shall be given access to bid documents related to procurement contracts being bid by all the Agencies. HTcDEa

SECTION 4.5. Inclusion/Non-inclusion in the Registry. — Inclusion in an Agency's registry of suppliers and contractors does not guarantee that a party is eligible to participate in a particular bidding. On the other hand, non-inclusion in the registry does not preclude a party from applying for eligibility, although such party shall also be required to fill up an electronic enrollment form.

SECTION 4.6. Centralized Registry for DND. — Upon the establishment of electronic procurement systems in all the Agencies, the DND Electronic Procurement Committee created hereunder shall be responsible for the creation of a single registry for all suppliers and contractors of the Department of National Defense and its bureaus and offices.

RULE 5

Pre-Bid Modification of Bid Documents and Inquiries

SECTION 5.1. Modification of Bid Documents. — Any modification of the bid documents shall be sent as supplemental notices to all eligible bidders: Provided, however, That no modification shall be allowed within seven (7) days prior to the closing date. ECTSDa

SECTION 5.2. Inquiries. — Before the closing date but not later than seven (7) days before such date, a prospective bidder may request the BAC for clarification of the bid documents. A clarification that modifies any of the bid documents shall be sent to all eligible bidders in accordance with the procedure in the preceding Section.

RULE 6

Submission and Receipt of Eligibility Requirements and Bids

SECTION 6.1. Submission and Receipt of Eligibility Requirements. — The application for eligibility and submission of eligibility requirements shall be done electronically within the time specified in the Invitation to Apply for Eligibility and to Bid. Applicants shall scan the required documents and send the same as attachments to their applications for eligibility. Upon receipt of an application for eligibility together with its attachments, the electronic procurement system shall automatically generate and send a message to the applicant acknowledging such receipt.

SECTION 6.2. Applications from Related Interests. — In addition to eligibility requirements provided under existing rules and regulations, related interests shall not be allowed to participate in the same bidding to prevent collusion and manipulation of the bidding process. For purposes of this provision, "related interests" shall be construed as referring to two or more applicants for eligibility the controlling interest over which is owned or controlled by a single person, corporation or business entity. Applicants who submit false information to circumvent this prohibition shall be perpetually blacklisted in all the Agencies, without prejudice to the filing of the appropriate criminal action under existing laws.

SECTION 6.3. Determination of Eligibility. — Applications for eligibility shall be processed electronically. The electronic procurement system shall check, for purposes of determining eligibility, whether a prospective bidder has submitted all of the documents required by law and indicated in the bid documents. DaTICc

SECTION 6.4. Notification of Eligibility/Ineligibility. — (a) Prospective bidders who submit all the required documents for eligibility shall be notified by the electronic procurement system of their eligibility. The notification shall contain a password, automatically generated by the electronic procurement system, which would allow eligible bidders to submit their bids.

(b) Ineligible bidders shall likewise be notified of their ineligibility. The notice shall indicate the reason(s) for such ineligibility.

SECTION 6.5. Submission of Bid Proposals. — (a) The submission of bids through the electronic procurement system shall follow the Single Stage Bidding Variation that entails the submission of technical and financial proposals in two (2) separately encrypted or electronically locked "envelopes" (i.e., electronic documents).

(b) Eligible bidders may submit their bids at any time before the closing date. The electronic procurement system shall bar incoming bids after such date as specified in the Instructions to Bidders. IcHTAa

(c) The submission of a bid using the password referred to in Section 6.4(a) shall be conclusive evidence that the person using the password is authorized by the bidder to submit its bid through the electronic procurement system.

SECTION 6.6. Acknowledgment of Receipt of Bid Proposals. — Upon receipt of a bid proposal, the electronic procurement system shall automatically generate and send a message to the bidder acknowledging such receipt.

RULE 7

Opening, Examination and Evaluation of Bids

SECTION 7.1. Opening and Examination of the First Envelope. — Immediately after the closing date or at such date indicated in the bid documents, the first envelopes shall be opened simultaneously by the BAC. The BAC shall conduct an examination to determine whether or not a bidder has submitted all the required information and/or documents for the first envelope. In case one or more of the required information and/or documents are missing, the bidder shall be disqualified. The BAC shall inform such bidder of the disqualification and the reason(s) therefor. A disqualified bidder has seven (7) days from receipt of such notice to request for reconsideration with the BAC whose decision shall be final. DEcITS

SECTION 7.2. Opening and Evaluation of the Second Envelope. — The second envelope of a bidder shall only be decrypted or opened if the first envelope of such bidder has passed the examination in the preceding Section. Upon receipt of notification that their first envelopes passed the examination, bidders shall, within a period to be specified in the notification, send an electronic message to the BAC containing information on their electronic keys that would enable the BAC to decrypt or open their second envelopes.

SECTION 7.3. Determination of the Lowest Calculated Bid. — The electronic procurement system shall have a feature for the automatic comparison of financial proposals to come up with the lowest calculated bid: Provided, That in case of procurements for capital equipment, the calculation shall take into consideration the detailed recurring and maintenance costs indicated in the second envelope: Provided, further, That in procurements requiring bidders to bid by lot, incomplete bids shall not be accepted.

SECTION 7.4. Publication of Evaluation Results. — The results of the evaluation of the second envelope shall be published in the Agency web site: Provided, however, That the lowest bid as calculated by the electronic procurement system shall still be subject to post-qualification.

RULE 8

Post-Qualification of Lowest Calculated Bid

SECTION 8.1. Post-qualification. — Within seven (7) days after the lowest calculated bid has been determined, the BAC shall verify, validate and ascertain whether the bidder with the lowest calculated bid complies with and is responsive to all the requirements for eligibility and of the bidding, using the non-discretionary "pass/fail" criteria stated in the bid documents. These criteria shall consider, but shall not be limited to, the following measures:

(a) Validity of registration certificates, permits, licenses and other legal documents submitted by the bidder;

(b) Compliance of the goods with the required specifications; determination of compliance may include inspections and tests of goods, and of maintenance and after-sales capabilities in applicable cases; and

(c) Financial capability of the bidder to ensure that such bidder can sustain the operating cash flow requirements of the transaction, among others. SCADIT

SECTION 8.2. Requests for Reconsideration. — In case a bidder with the lowest calculated bid is post-disqualified, such bidder may request the BAC for reconsideration within seven (7) days after receipt of the notice of post-disqualification. Using the same non-discretionary "pass/fail" criteria mentioned in the preceding Section in the evaluation of the request, the BAC shall decide on such request within seven (7) days after receipt thereof. In the event the request for reconsideration is denied, the BAC shall forthwith conduct the post-qualification of the bidder with the second lowest calculated bid. In case the bidder with the second lowest calculated bid is also post-disqualified, the same process shall be repeated until the lowest calculated responsive bid is determined.

 

RULE 9

Award

SECTION 9.1. BAC Recommendation for Award. — The lowest calculated bid that passes post-qualification shall become the lowest calculated responsive bid, which shall be recommended by the BAC to the Head of the concerned Agency for the award of the procurement contract.

SECTION 9.2. Approval of BAC Recommendation. — The Head of the concerned Agency shall approve the BAC recommendation for award within seven (7) days after the receipt of such recommendation. aCSTDc

SECTION 9.3. Notice of Award. — The BAC shall notify the bidder with the lowest calculated responsive bid of the award immediately upon receipt of the Head of Agency's approval of the BAC recommendation for award. The notification shall include an electronic copy of the contract and/or purchase order.

SECTION 9.4. Execution of Contract. — The successful bidder shall execute the contract with the concerned Agency within seven (7) days after receipt of the notice of award.

SECTION 9.5. Notice to Other Bidders. — In addition to the announcement required in Section 11.1, all bidders who participated in the bidding shall be notified of the outcome of such bidding.

RULE 10

The DND Electronic Procurement Committee (EPC)

SECTION 10.1. Functions of the DND EPC. — An Electronic Procurement Committee is hereby created to assist the Secretary of National Defense in overseeing the conduct of electronic procurement in the Department. It shall have the following functions:

(a) Advise the Secretary on the implementation of electronic procurement by the various Agencies in the Department;

(b) Periodically update the Secretary on the status of implementation of electronic procurement in the Department and, for this purpose, require the Agencies to submit periodic reports to the Committee; HEaCcD

(c) Recommend to the Secretary, upon prior consultation with the Agencies, the goods and supplies to be procured through the electronic procurement systems of the Agencies;

(d) Supervise the conduct of training for officials and personnel involved with procurement; the successful completion of such training shall be a prerequisite for membership in the BAC;

(e) Initiate or review proposals to amend these Implementing Rules and Regulations or to upgrade the existing electronic procurement systems; and

(f) Perform such other functions as may be directed by the Secretary.

SECTION 10.2. Composition of the DND EPC. — The DND Electronic Procurement Committee shall be composed of the following:

(a)	Undersecretary for Operations	Chair
(b)	Assistant Secretary for Installations	Vice-Chair
	and Logistics
(c)	Assistant Secretary for Legal Affairs	Vice-Chair
(d)	Director, Administrative Services	Member
	Office of the Secretary of National Defense
(e)	Deputies Chief of Staff for Logistics	Members
	(J4) and for Communications, Electronics
	and Information Systems (J11), AFP
(f)	Representatives of Agencies, except AFP,	Members
	who are at least the second ranking
	officials of their respective Agencies

SECTION 10.3. Secretariat Support. — The Office of the Assistant Secretary for Installations and Logistics shall provide secretariat support for the Committee. SIHCDA

RULE 11

Miscellaneous Provisions

SECTION 11.1. Posting of Procurement Update. — An update of all procurement contracts, regardless of whether procurement is done manually or electronically, shall be posted in the Agency web site. The update shall include, but not be limited to, the status of a particular procurement contract from the time it is advertised up to the time it is implemented, indicating the dates corresponding thereto.

SECTION 11.2. Administrative Sanctions. — (a) Without prejudice to criminal prosecution under the applicable provisions of Republic Act No. 8792, otherwise known as the "Electronic Commerce Act," Republic Act No. 3019, otherwise known as the "Anti-Graft and Corrupt Practices Act," and other penal laws, Agency officials and employees who commit any of the following acts shall be deemed to have committed grave misconduct and shall be penalized in accordance with the applicable Civil Service rules and regulations:

(i) Opening or decryption, by whatever means, of documents submitted through the electronic procurement system ahead of the appointed time for the opening or decryption of such documents; IcADSE

(ii) Causing the unauthorized disclosure of any information or document submitted through the electronic procurement system; or

(iii) Hacking into or cracking the electronic procurement system, or aiding another person to hack into or crack the same.

(b) When any of the foregoing acts is done in collusion with a private party who is a participant in the bidding process, the latter shall be imposed the corresponding administrative penalties under existing rules and regulations.

SECTION 11.3. Agency Implementing Procedures. — The Heads of Agencies shall, within thirty (30) days from the issuance of this Department Circular, issue implementing procedures on electronic procurement for their respective Agencies: Provided, however, That failure to issue such implementing procedures shall not affect the executory nature of the provisions of this Circular. aSTAcH

RULE 12

Final Provisions

SECTION 12.1. Separability Clause. — If any provision of this Department Circular is declared invalid, the other provisions not affected thereby shall remain valid and subsisting.

SECTION 12.2. Non-modification of Delegated Authority. — Nothing in this Department Circular shall be deemed as a modification of the authority of Heads and officials of the different Agencies to approve contracts for local procurement as delegated under Department Order No. 47 (series of 1996), as amended.

SECTION 12.3. Amendments. — Amendments to these Implementing Rules and Regulations affecting the public shall not be effective without due public consultation/hearing and publication.

SECTION 12.4. Effectivity. — These Implementing Rules and Regulations shall become effective fifteen (15) days after their publication in two (2) newspapers of general circulation. cSTDIC

September 28, 2000.

(SGD.) ORLANDO S. MERCADOSecretary

Published in Today on September 30, 2000.