GENERAL PROCEDURES IN CONTRACT PREPARATION AND EXECUTION

A. PREPARATION OF CONTRACT/PURCHASE ORDER/JOB ORDER

1. Resolution for Award

The Committee on Bids and Awards (CBA) shall prepare the resolution for award based on the winning bid, in cases where a bidding has been conducted. The resolution shall invariably contain the reasons for the award.

The resolution for award shall then be forwarded to the Agency Head for his approval before the expiration of the validity of the bid.

The acceptance of the award by the contractor/the supplier signals the perfection of the contract.

Applicable Laws, Rules and Regulations

Section 435, GAAM, Volume I - Consideration for Award

In all government agencies, contracts are generally awarded to the bidder offering the most advantageous terms. The following factors, among others, shall be considered in making the award:

1. Conformity with the specifications in the invitation to bid;
2. Price quoted, considering the Flag Law, Commonwealth Act (CA) 138, as amended, and other laws and policies pertinent to procurement;
3. Delivery/completion period - when time is of the essence, the bidder who offers to deliver within the period stipulated in the invitation to bid shall be awarded the contract, provided that the price is not unreasonably higher than the lowest price offered;
4. Reliability of bidders as supplier or contractor.

Awards in the procurement of supplies shall be given to the lowest complying and responsible bid which meets all the terms and conditions of the contract or undertaking.

Section 35, COA Circular 92-386 - Procedures for Award

The decision of the CBA on a particular bid or question of award shall be concurred in by at least a majority of members present and constituting a quorum.

The members who voted in favor shall sign the decision of the Committee. The members who voted against may explain their objection in writing and the same shall form an integral part of the supporting papers to the claim.

Illustrative Decisions

COA Decision No. 299 dated December 14, 1982 - Acceptance of award

Acceptance of purchase order by a supplier without promptly stating that it refused to be bound thereby, presupposes the immediate existence of a contract between the parties concerned. The fact that the supplier made deliveries of the other items upon receipt of the purchase order constitutes an implied ratification of the contract and precluded the rejection of the binding effects thereof.

COA Decision No. 903 dated May 15, 1989 - Award to be made in favor of lowest complying bidder

Bids for the waterproofing of the Manila Film Center were submitted by three contractors as follows:

1. De Razza Industries P= 737,252.00
2. Polywerke Incorporated 837,909.60
3. Republic Chemical Industries 1,618,504.66

The Approved Agency Estimate (AAE) for the project is P=1,465,504.56. The Cultural Center of the Philippines (CCP) awarded the contract to Republic Chemical Industries after the latter agreed to lower its bid to conform with the AAE. Said award was assailed on the ground that it was not awarded to the lowest bidder. The CCP argued that the bids of De Razza Industries and Polywerke Incorporated were rejected based on the agency's finding that "their bids were manipulated with the end in view, that one of them should win" considering that "Polywerke's Vice President and General Manager, Mr. Raoul T. Mauri is also the Consultant of De Razza Industries, a sole proprietorship owned by his brother/relative, Mr. Efren T. Mauri."

It appeared further that both De Razza and Republic Chemical Industries used the same Elastomeric type of waterproofing and utilized the same method thru the application of fluid with fiberglass reinforcement.

COA held that there was no valid award of the subject contract in favor of the Republic Chemical Industries. That the latter has consented to reduce its price to conform to the Approved Agency Estimate did not cure the deficiency for the fact remained that it was not the lowest bidder and that its bid could not be considered the most advantageous to the agency.

COA Decision No. 2169 dated January 31, 1992 - No legal basis for advance payment where project cannot be prosecuted due to premature award of contract

The Auditor, DPWH Regional Office No. XI, Davao City disallowed in audit the amount of P=410,054.85 representing the 15 percent advance payment of the contract cost for the construction of Maniki Bridge (Completion and Approaches, Phase II), Kapalong, Davao del Norte. The DPWH Director of said Regional Office requested the lifting of the disallowance.

The Commission ruled that there was a premature award of the project as there was no prior compliance with Item II of MPWH Ministry (now Department) Order No. 65, Series of 1983, which requires, among others, that, subject to the exception therein provided, a project shall not be allowed to be advertised for bids unless the necessary right-of-way has been acquired. Since the project cannot be prosecuted, the grant of the 15 percent advance payment would have no legal basis and, therefore, Rule III, CI (4) of the Implementing Rules and Regulations of PD 1594 finds no application on this case.

Case No. OMB-0-90-0771 - Express stipulations in the contract is Binding on the parties

The PPA did not violate any provisions in the contract in granting a hold-over authority to another contractor in the conduct of port operations as the adoption of an open competition policy by PPA was stipulated in the contract entered into by and between the PPA and complainant.

Case No. OMB-1-94-0947 - Failure of public bidding as basis for negotiation

No probable cause exists to indict respondents. The negotiated contract for the construction of the ABC Building worth P550,000.00 and the production of street signs costing P29,955.90 was entered into because the public bidding failed.