5.1. National Government/Government-Owned or -Controlled Corporations

5.1.1Applicable Laws, Rules and Regulations

IB 5, IRR, PD 1594, as amended, 12 July 1995 - Classification and Registration of Contractors

The Inter-agency committee composed of representatives from the Department of Public Works and Highways, the Department of Transportation and Communications, the Office of the President of the Philippines in the absence of a Department of Energy and the Construction Industry Authority of the Philippines (CIAP) which classified and registered, or predisqualified contractors based on their submitted confidential application for registration and classification (ARC-C) and classification functions, resources and manpower will be transferred to CIAP through PCAB. The Inter-agency committee shall still exist for three months from the date of approval of the proposed amendments by the Office of the President to effect the smooth transfer of the system.

5.2.1Applicable Laws, Rules and Regulations

IB 5, DILG MC 94-185 dated October 20, 1994 - Classification and Registration of Contractors

1. A body or a committee under the supervision of DILG and PEAP will conduct the classification and registration or predisqualification of contractor who have submitted ARC-C statements.
(a) Certificates or Registration and Classification of contractors approved by the above body or committee shall be deemed valid until the same shall have expired, revoked and/or upgraded/downgraded.

2. The body or committee shall be chaired by and based at the office of PEAP with DILG to provide secretariat services. This body shall formulate uniform guidelines, criteria and procedures for the classification of contractors to be adopted by all LGU concerned.

3. The classification shall be made by matching the contractors with the types of categories of projects (e.g., highways, irrigation, flood control, water supply, buildings, power, etc.) considering their magnitude, degree of complexity, cost and construction time, on the one hand, and the experience or track record, financial resources, equipment, capability, organization and technical personnel of the contractor, on the other. These shall provide, among other things, that, for similar types of project (e.g., buildings), the local government unit shall adopt a common classification system.

4. A contractor may not be qualified to bid for contracts in a class higher than for which he has been classified. Bidding for projects larger than the small (or lowest) category shall be open to all contractors above that category, provided that a contractor may not bid for project with a cost exceeding the ceiling of his class. Bidding for projects within the small category shall be limited only to small contractors.

5. A body under the supervision of DILG and PEAP shall examine and evaluate the contractor's confidential Application for Registration and Classification (ARC-C), together with all attached supporting papers to determine whether all requirements (legal, financial, equipment, technical, experience and organization) have been duly complied with.

6. The following documents shall, among others, comprise ARC-C:
 

(a) Certified xerox copy of Contractor's License for the current year.
(b) Certified xerox copy of Privilege Tax Receipt (PTR) for the current year.
(c) Description of the organization including its objectives and the names, nationalities and construction experiences of key officials/engineers.
(d) Detailed financial statements (balance sheets and profit and loss statements) for at least the current year, or for a longer period depending on the size or complexity of the project at the discretion of the Head of local government unit, as reflected in his Income Tax Return duly filed with and received by the BIR. In the case of joint ventures, the financial statements of each individual member entity shall be shown.
(e) List of equipment owned
(f) Experience record
(g) In the case of foreign contractors allowed to bid and submit proposals under these rules and regulations, a certification from their respective embassies/consulates that they are bonafide contractors.
(h) Articles of partnership or incorporation.
 
7. For large and complicated projects, emphasis shall be on the technical expertise and experience of the prospective bidders. And for small projects, emphasis shall be on the financial capability of the contractor for the last three years, shall be scrutinized and actual verification shall be made when there is doubt in authenticity of any item in his prequalification statements.

8. The body under DILG and PEAP supervision shall examine carefully the organization and the equipment capability of the prospective bidder.

9. The body under DILG and PEAP supervision shall check the Financial Contracting Capacity (FCC) of the prospective bidder. The FCC shall be his present net worth as shown in his balance sheet and reflected in his latest Income Tax Return (duly filed with and received by the BIR) times twelve (12).

10. The body under DILG and PEAP supervision shall check whether the applicant, or any member of the joint venture is suspended, the same shall be a ground for predisqualification. When the applicant is a new contracting firm, the names of the incorporators shall be checked against the list of suspended contractors. If the controlling stockholder(s) are found as such, the applicant firm shall be predisqualified.

11. After undertaking the above processes, the body shall, as the case may be, either classify and register the contractor for the current year, the validity of which shall be consistent with the prescribed guidelines on classification and registration formulated in accordance with these rules and regulations, or predisqualify the contractor, giving the reason therefor.

Subject: Alleged irregularity in the bidding for the repair and rehabilitation of the Catanduanes Athletic Sports Complex, Virac, Catanduanes.

Issues Validity of the contract entered into by and between Hi-Tone Construction and the Provincial Government of Catanduanes.

Decision: With respect to the first issue , this Commission hereby reiterates that PD 1594 is the law which should prevail over Memorandum Order No. 175.

This Commission believes and so holds that the contract is of doubtful validity for compliance of No.4, IB 2.1 and IB 1.4 of the IRR of PD 1594 as amended. Records show that there were three bidders, namely: Jaz Design and Construction, Wilper Engineering Construction, and Hi-Tone Construction who took part in subject bidding. Jaz Design and Construction should have been disqualified from participating in the bidding since it is classified as a small contractor. Wilper Engineering Construction was not registered or classified by the Committee. Hi-Tone Construction, the alleged lowest bidder, should have been disqualified since this firm was indefinitely suspended by LTO for very poor performance in the construction of the LTO Building in Legaspi City and its bid documents were not accompanied by a bid bond thereby rendering it a non-complying bidder