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Monthly Archives: September 2015

No More Registry System for Procuring Entities under R.A. No. 9184

If you are a supplier, contractor or consultant bidding with the government through any of its branches, agencies or instrumentalities, have you come across a requirement of submitting your eligibility documents in advance, and then being issued a “Certificate of Registration” that you can use in lieu of those documents? If yes, then you need to read this article.

The practice of procuring entities, through their Bids and Awards Committee (BAC), in using the “Certificate of Registration” in lieu of the Class “A” eligibility documents has no more basis in law (since beginning of year 2013).

The Revised Implementing Rules and Regulations (IRR) of R.A. No. 9184 once provided for an option to the procuring entities to devise and adopt a registry, whether manual or electronic, to facilitate eligibility check during bid opening. However, such provision of the IRR no longer exists since its amendment in2012. Hence, such practice is in violation of prevailing procurement rules and regulations, and fees collected therein are considered unnecessary and illegal.

The IRR, before it was amended, contained the following provisions:

8.5.2. Eligibility requirements may be sent electronically to a procuring entity through the PhilGEPS: Provided, however, That the prospective bidder concerned shall submit a certification to the BAC at least seven (7) calendar days before the deadline for the submission and opening of the technical and financial envelopes that the documents submitted are authentic copies of the original, complete, and all statements and information provided therein are true and correct: Provided, further, That the PhilGEPS shall allow manual submission of eligibility requirements. The PhilGEPS shall generate and send an acknowledgement of any eligibility requirement received by it.

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23.4. To facilitate determination of eligibility, the BAC of a procuring entity may maintain a registry system using the PhilGEPS or its own manual or electronic system that allows submission and/or recording/entry of eligibility requirements simultaneously with registration.

23.4.1. The registry system shall contain the foregoing Class “A” documents which should be maintained current and updated by the bidder concerned at least once a year or more frequently when needed.

23.4.2. A bidder who maintains a current and updated file of his Class “A” Documents shall be issued a certification by the BAC to that effect, which certification may be submitted to the procuring entity concerned in lieu of the foregoing Class “A” documents.

23.4.3. If the procuring entity maintains a registry system using the PhilGEPS or its own electronic system, a prospective bidder, whether or not duly registered in either system, shall submit a written letter of intent and/or its application for eligibility and latest Class “A” documents, to the BAC on or before the deadline specified in the Bidding Documents. Any application for eligibility or updates submitted after the deadline for the submission of the letter of intent shall not be considered for the bidding at hand.

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24.4.3. To facilitate determination of eligibility, the BAC of a procuring entity may maintain a registry system using the PhilGEPS or its own manual or electronic system that allows submission and/or recording/entry of eligibility requirements simultaneously with registration.

24.4.3.1. The registry system shall contain the foregoing Class “A” documents which should be maintained current and updated by the bidder concerned at least once a year or more frequently when needed.

24.4.3.2. A bidder who maintains a current and updated file of his Class “A” Documents shall be issued a certification by the BAC to that effect, which certification may be submitted to the procuring entity concerned in lieu of the foregoing Class “A” documents.

24.4.3.3. If the procuring entity maintains a registry system using the PhilGEPS or its own electronic system, a prospective bidder, whether or not duly registered in either system, shall submit a written letter of intent and/or its application for eligibility and latest Class “A” documents, to the BAC on or before the deadline specified in the Bidding Documents which shall in no case be later than the date for the submission and receipt of bids. Any application for eligibility or updates submitted after the deadline for the submission of the letter of intent shall not be considered for the bidding at hand

(underscoring supplied)

However, since the issuance of GPPB Resolution No. 12-2012 dated 01 June 2012, “Approving the Guidelines for the Use of the Government of the Philippines-Official Merchants Registry (GOP-OMR) and the Proposed Amendments to the Implementing Rules and Regulations of Republic Act No. 9184”, such provisions were effectively amended to read as follows:

Section 8.5.2. Eligibility requirements may be sent electronically or manually to the PhilGEPS. When a manufacturer, supplier, distributor, contractor, or consultant registers with PhilGEPS, it shall submit along with the requirements a certification stating that the documents submitted are complete and authentic copies of the original, and all statements and information provided therein are true and correct. Upon confirmation, validation, and verification of the documents submitted, PhilGEPS may issue, in favor of the registered entity, a Certificate of Registration and Membership that contains the certification mentioned in the preceding sentence.

xxx

Section 23.4. To facilitate determination of eligibility, the BAC of a procuring entity may use the contents of the PhilGEPS electronic registry of manufacturers, suppliers, distributors, contractors, and/or consultants.

23.4.1. The PhilGEPS registry system shall contain the foregoing Class “A” documents, which should be maintained current and updated by the bidder concerned at least once a year or more frequently as may be necessary.

23.4.2. A bidder who maintains a current and updated file of his Class “A” Documents may submit to the procuring entity, in lieu of the said documents, the Certificate of Registration and Membership issued by PhilGEPS pursuant to Section 8.5.2.

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Section 24.4.3. To facilitate determination of eligibility, the BAC of a procuring entity may use the contents of the PhilGEPS electronic registry of manufacturers, suppliers, distributors, contractors, and/or consultants.

24.4.3.1. The PhilGEPS registry system shall contain the foregoing Class “A” documents, which should be maintainedcurrent and updated by the bidder concerned at least once a year or more frequently as may be necessary.

24.4.3.2. A bidder who maintains a current and updated file of his Class “A” Documents may submit to the procuring entity, in lieu of the said documents, the Certificate of Registration and Membership issued by PhilGEPS pursuant to Section 8.5.2.

(underscoring supplied)

It can be inferred from the above that procuring entities are no longer empowered to issue a “Certificate of Registration” in lieu of Class “A” documents.Also, the “Letter of Intent” or LOI was also deemed as unnecessary requirement and inconsistent with the operationalization of the PhilGEPS electronic registry. For this reason, the GPPB issued GPPB Resolution No. 27-2012 dated 23 November 2012, the fallo of which:

NOW, THEREFORE, for and in view of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law and other executive issuances, hereby RESOLVE to confirm, adopt, and approve, as WE hereby confirm, adopt, and approve the following:

DELETE Section 23.4.3 of the revised IRR of RA 9184, and the similar provision under Section 24.4.3.3 of the same IRR, requiring the submission of a written LOI and/or application of eligibility together with the latest Class “A” Documents in case the procuring entity maintains a registry system using the PhilGEPS or its own electronic system.

(underscoring supplied)

The current practice of the BAC requiring or allowing the payment of “Registration Fee” specific to a particular procurement also appears to be excessive and unnecessary, but may also be also illegal.

The next logical question is: What is the effect of the current practice of the BAC to the procurement itself?

The prospective bidders should have been declared DISQUALIFIED if they submitted only the certification in lieu of class “A” documents. The IRR of R.A. No. 9184 is clear that bids shall contain the eligibility requirements as enumerated in Sec. 23.1 thereof:

25.2. The first envelope shall contain the following technical information/documents, at the least:

a) For the procurement of goods:

i) Eligibility requirements under Section 23.1 of this IRR;

xxx

b) For the procurement of infrastructure projects:

i) Eligibility requirements under Section 23.1 of this IRR

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If such eligibility documents are not present in the bid opening, the BAC shall rate the bids as “Failed”:

Section 30. Preliminary Examination of Bids

30.1. The BAC shall open the first bid envelopes of prospective bidders in public to determine each bidder’s compliance with the documents required to be submitted for eligibility and for the technical requirements, as prescribed in this IRR. For this purpose, the BAC shall check the submitted documents of each bidder against a checklist of required documents to ascertain if they are all present, using a non-discretionary “pass/fail” criterion, as stated in the Instructions to Bidders. If a bidder submits the required document, it shall be rated “passed” for that particular requirement. In this regard, bids that fail to include any requirement or are incomplete or patently insufficient shall be considered as “failed”. Otherwise, the BAC shall rate the said first bid envelope as “passed”.(emphasis supplied)

The COR issued by the BAC, having no more legal basis to stand on, cannot be a substitute to the exclusive and absolute enumeration of Sec. 23.1, to wit:

23.1. For purposes of determining the eligibility of bidders using the criteria stated in Section 23.5 of this IRR, only the following documents shall be required by the BAC, using the forms prescribed in the Bidding Documents:

a) Class “A” Documents

Legal Documents

i) Registration certificate from SEC, Department of Trade and Industry (DTI) for sole proprietorship, or CDA for cooperatives, or any proof of such registration as stated in the Bidding Documents.

ii) Mayor’s permit issued by the city or municipality where the principal place of business of the prospective bidder is located.

iii) Tax clearance per Executive Order 398, Series of 2005, as finally reviewed and approved by the BIR.

Technical Documents

iv) Statement of the prospective bidder of all its ongoing government and private contracts, including contracts awarded but not yet started, if any, whether similar or not similar in nature and complexity to the contract to be bid; and

Statement identifying the bidder’s single largest completed contract similar to the contract to be bid, except under conditions provided for in Section 23.5.1.3 of this IRR, within the relevant period as provided in the Bidding Documents in the case of goods.

All of the above statements shall include all information required in the PBDs prescribed by the GPPB.

v) In the case of procurement of infrastructure projects, a valid Philippine Contractors Accreditation Board (PCAB) license and registration for the type and cost of the contract to be bid.

Financial Documents

vi) The prospective bidder’s audited financial statements, showing, among others, the prospective bidder’s total and current assets and liabilities, stamped “received” by the BIR or its duly accredited and authorized institutions, for the preceding calendar year which should not be earlier than two (2) years from the date of bid submission.

vii) The prospective bidder’s computation for its Net Financial Contracting Capacity (NFCC).

b) Class “B” Document

Valid joint venture agreement (JVA), in case the joint venture is already in existence. In the absence of a JVA, duly notarized statements from all the potential joint venture partners stating that they will enter into and abide by the provisions of the JVA in the instance that the bid is successful shall be included in the bid. Failure to enter into a joint venture in the event of a contract award shall be ground for the forfeiture of the bid security. Each partner of the joint venture shall submit the legal eligibility documents. The submission of technical and financial eligibility documents by any of the joint venture partners constitutes compliance.

According to Article 5 of the Civil Code of the Philippines, an act executed against the provisions of mandatory or prohibitory laws is VOID. Failure to comply with the mandatory requirement of submitting the eligibility requirements may fall under this case. It may also be a proper subject of DISALLOWANCE by the Commission on Audit.

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Posted by on September 14, 2015 in BAC^k Issues, Government Procurement

 

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Reaction Paper: “Regulations and Cyberspace”

(Reaction from the A/V presentation at MMS 201, Arellano University School of Law, Taft Ave. cor. Menlo St. Pasay City, Philippines, played on 03 September 2015)

In the video was Prof. Lawrence Lessig of the Stanford Law School discussing about regulations and how it applies in cyberspace.

It is quite amazing how simple internet is, and at the same time so complicated. As one John Gilmore puts it: “the net interprets censorship as damage and routes around it”. This brought the idea that the internet is “unregulable”. The idea is that the internet caters cyberspace, a futuristic concept which cannot be controlled by any government or sovereignty. But this also brings us to the irony that: if the cyberspace cannot be regulated, then why so many people worry about its regulation?

Prof. Lessig illustrated how things may be regulated by the following modalities:

  • Law
  • Norms of Society
  • Market
  • Architecture

Concept of Regulation

The discussion made by Prof. Lessig is so simple and easy to understand. In the motorist’s language a law may regulate motor vehicle speeds such as speed limit of 80 kilometers per hour. Meanwhile, the norms are those not dictated by state but might prompt us to “pull over” whenever other vehicles are doing the same or when there is a problem. On the other hand, the market regulates the use of motor vehicles by dictating the selling price of vehicles as well as the price of gasoline and diesel. The architecture, as a modality, simply set limits to performance parameters of motor vehicles such as maximum speed of 180 kilometers per hour, the dimensions the vehicle, and other conditions. Of the four, it is the law that greatly affects the other three in the aspect of regulation.

Laws are set of conducts that may be used to bend and affect norms, control the market price by imposing taxes and regulatory fees, and may dictate how the architecture of things should be. The set of conduct or rules are ex ante, meaning before the fact, and violation of which are punished ex post, or “after the fact” of commission or omission.

Applying these in the case of “no smoking” regulation for example: the law imposes the rule that only those 18 years and above may be allowed to purchase and smoke cigarettes. The law now indirectly affects the norms by a propaganda that “smoking kills”. People smoke depending on the market price, which is affected by the way the government imposes duties and taxes on such products. As to the architecture, a law may provide for certain nicotine content limits. That way, smokers are less likely to be addicted or may eventually reject smoking.

Law dictating to architecture is the most effective way of regulating things

Interactions with the other two (norms and market) are a lot of easier to understand. Prof. Lessig’s approach focusing the on architecture is laudable. It is in this topic the author came to understand better of the internet and the cyberspace.

In controlling architecture, one may impose building codes and zoning ordinances that would provide for accessible buildings, wider roads and sidewalks, and other similar stuffs. One can think of an “accessibility law” like for instance our very own Batas Pambansa (B.P.) Blg. 344 as amended. Said law provides for a mandatory design and architecture of accessibility for Persons with Disabilities (PWD). That means the design of roads, sidewalks, all the way to the parking area, to establishments and within, including amenities such as comfort rooms, must be in such a manner not to restrict PWDs freedom of access. This is an example of a law telling how architecture should be.

In a nutshell, architecture is a regulator on the ability of persons or things to participate in simultaneous interactions. If the law can dictate how architecture would be, the former can also practically and effectively regulate anything within the latter’s bounds.

Understanding how cyberspace (as the internet’s architecture) is regulated

If the cyberspace represents the architecture of the internet, it seems like the cyberspace, and ultimately the internet, may be regulated after all. But to regulate cyberspace is to understand first the architecture where it was built.

The cyberspace works on a Transmission Control Protocol/Internet Protocol (TCP/IP) which contains set of rules on how to transfer packets of data. As previously discussed in the author’s second reaction paper titled: “Implications of Structuring Communication Technology”, the process can be likened to a “water cycle”. Water on earth evaporates as vapor, goes up to the clouds, condenses into rain which precipitates back to earth. In the same manner, an email in one endpoint is first broken down into packets, then transferred into the “cloud”, then re-assembled back into a readable email in the other endpoint.

Relative Anonymity vs. Relative Identity

With such kind of architecture, it would be difficult to answer questions like: who sends or receives emails? What are its contents? Where it came from and where is its destination? The strength of the system is also its weakness. This manner on how people would treat data in the internet will affect the norms and other market aspects. In the matter of law enforcement, we could hardly locate one internet user because the TCP/IP is based only on a logical location and not a geographical location. To resolve the issue, at least three (3) different technologies were introduced: the cookies, packet sniffing, and IP mapping.

To the author’s mind, these innovations intended to reveal certain details about endpoints in internet transactions also provides the same threat that people are worrying about. We understand that cookies are bits of information left in our PCs (and even in some mobile devices) to help a server (internet site) recall the transactions and, to a certain degree, identify the person making such transaction. But this feature may also be the means on how to collect information from us to be delivered back to an identity thief. Packet sniffing on the other hand makes one vulnerable in exposing his/her online transactions to the one obtaining the packets of data. This could be the government but this could also be anyone else just sneaking around.  The idea of IP mapping is a good idea because there is at least an instant approximation of the person’s geographical location. However, if we talk of civil liberties, on the right to be left alone, this may not be totally acceptable to some freedom fundamentalists.

With the start of these improvements, the relative anonymity now becomes relative identity, as we can now better understand who are we dealing with, what are the contents and consequences of the transactions we are making, and the proximate location where these transactions are taking place. The idea of “stateless architecture” is slowly being set aside. These changes brought about more commercial activity and the same time more control over the cyberspace. Because of this, the four modalities must also be understood as interrelated and interdependent, such that the increase in one or more results in the decrease of dominion over the rest, and vice versa.

The interplay of modalities: the law, the norms, the market, and the architecture

First users of the cyberspace focused on interactions, i.e. more on communications and mails. The norm is that there should be no advertisements. But this changed with the advent of Internet Service Provider (ISP) giants like the America Online (AOL). Commercial activity becomes prevalent. The norms slowly began accepting the fact that advertisements are necessary part of the cyberspace – which promises cost-effective means of advertisement and publication.

The increase in market activity had been acceptable for some time until the dawn of spam advertisement and spam mails. The architecture must be adjusted and expanded either to accommodate the increase in market modality or simply to suppress it. The law and the norm remained silent at some time during this battle between the architecture and the market. But later on, laws were passed in a way to control the over-activity of architecture and market and to give way for a better norm in the use of cyberspace. This makes law as an important controlling factor in the interplay of the four modalities.

The architecture, being the next powerful modality, should be the one the law is so concerned about. The author agrees, with certain reservations, with Prof. Lessig that the “code”, as being used in the architecture modality, has the following characteristics: (1) code is law; (2) code is plastic; (3) no law can beget bad code, and (4) good law can prevent bad code. The code (sometimes used as “source code”) sets the rules on how to use the cyberspace. It is the “law” in the internet. Since the code is plastic, it is not inflexible. One can alter the code to give way to one function and restrict the other functions. By introducing such alterations, the cyberspace may allow a more plastic interplay among other modalities. The law as modality is never a source of bad code. But a good law can effectively prevent or even eliminate a bad code. We mentioned good law, but how about a “bad law”? The author recalls a famous quote from Justice Oliver Wendell Holmes, Jr.:

“Great cases like hard cases make bad law. For great cases are called great, not by reason of their importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment.” (Northern Securities Co. v. United States, 193 U.S. 197, 400-401)

This means that bad laws may be legislated from time to time whenever great or hard case appears, distorting some of our well settled principles of stare decisis.

Epilogue

The law plays a very, if not the most, important part in almost all aspects life. This goes without saying that the cyberspace is necessarily included. The fate of the information technology can always be dictated by law. It may be true that the cyberspace is out of reach by states and sovereignty, but it cannot be beyond the reach of law. And because we have seen how law can affect the modalities of regulation as it may also be affected by one another, it is imperative that our lawmakers legislate properly to maintain the balance of interests. If we can avoid the pronouncement of Justice Oliver Wendell Holmes, Jr. above, let us all help in making sure only good laws are passed.

Finally, we all cannot be legislators. But remember the interplay. The norms may not be the law, but if we all join hands in speaking of norms most favorable to the society, it can come across the eyes and ears of a legislator, who may be able to support a law for the common good. Salus populi est suprema lex. For the welfare of the people is the supreme law.

 
 

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