PHL scales terrain of Swiss challenge and procurement

Part Two

THE lowest offer in bidding may appear to be the surest way an agreement is sealed. That, however, is not usually the case, especially in public biddings.

According to Government Procurement Policy Board (GPPB) Executive Director V Dennis S. Santiago, the lowest-bid policy is not usually the route taken by the government for public biddings.

Santiago told the BusinessMirror that the government may award the project to the company that complies with the technical requirements even if it has the highest bid.

He cited as example a project with a P10-million approved budget. Three bidders submit their respective proposals: the first bid amounting to P4 million, the second at P6 million and the third at P9 million, Santiago explained.

Even if the first received bid is the lowest at P4 million, the proponent can be automatically disqualified if the bidder did not comply with the technical requirements of the project.

In terms of the third bidder with P9 million, if the company was found to have complied with the technical requirement, and is legally compliant and financially-capable, then the government awards the project to them, Santiago said.

“That’s the highest bidder, as a matter of fact. The President is right when he said we don’t want to award to the lowest bid because it really doesn’t go to the lowest bid,” he further explained. “What the President is saying is that we should award to the bidder with the quality offer. So, no matter how low your offer [is] but you cannot comply with the technical requirements, your bid will not be accepted.”

Santiago was referring to the statement issued by President Duterte in January, when he said he wants to do away with the bidding process for public-works projects and instead opt for the Swiss challenge scheme. Duterte said he believes doing so could eliminate the chances of corruption and lessen chances of delay in major government projects.


THE Government Procurement Reform Act or Republic Act (RA) 9184 was enacted in 2003 with the goal of having a streamlined procurement process in the country. Its implementing rules and regulations (IRR) was issued in October of the same year.

According to the GPPB Technical Support Office (TSO), the law was created to consolidate numerous issuances and executive orders (EOs) before 2003 that caused confusion in government agencies and the private sector involved in public procurement.

“RA 9184 was crafted to consolidate all these, to have the good laws and rules together, consolidate them to a singular legal framework; one law for government procurement in the Philippines,” Santiago, also a lawyer, told the BusinessMirror in an interview. “So just imagine prior to RA 9184, because of so many issuances on procurement, sometimes bidders, even government agencies, will use a rule that is not the right rule. This will then result to occasions of failures of biddings, a lot of unawarded projects because they failed to comply with the rules.”


DESPITE the effectivity of RA 9184 on applying uniformity in public biddings, its IRR have gone through two major revisions.

Duterte is seen to likely push for the amendment of the law itself in line with removing the lowest-bid rule.

“If there’s any change that we want to put in, we can basically put it in the IRR. Now, the GPPB is duty-bound under the law to review the law. It is our mandate,” Santiago said.

He, however, clarified the reviews conducted by the GPPB and the technical support office before did not entail the amendment of the law but the amendment of the IRR.

Earlier, Budget Secretary Benjamin E. Diokno also pointed out that if the government wants changes to be made to the procurement process in the country, a revision of its IRR will be easier than opting for an amendment of the law, which goes through Congress.

“We can change the IRR because it’s very hard to push for legislation,” Diokno has said. “We’re not sure what would come out of Congress.”


SANTIAGO cited another example in solicited proposals for infrastructure.

In this case, the government usually invites the private sector to hand in their bids for certain projects the government has already planned or lined up, he explained. An unsolicited proposal, on the other hand, takes effect when the government suddenly receives an offer from a private entity wanting to go into a public-private partnership (PPP) for the development of a project of their choosing.

“For solicited proposals, the government will invite bidders to bid,” Santiago said. “For unsolicited, you are not doing anything, you are just doing your own work then suddenly someone makes an offer.”

Around five infrastructure projects in the country were noted to have undertaken the Swiss challenge scheme. These projects include the Cebu-Mactan bridge by Metro Pacific Tollways Development Corp. (MPTDC), the Metro Rail Transit Line 7 by San Miguel Corp. and the Caliraya-Botocan-Kalayaan power plant by the Impsa Corp. of Argentina. Other projects are the North Luzon Expressway-South Luzon Expressway connector road by MPTDC and the Ninoy Aquino International Airport Terminal 3 by the Philippine International Air Terminals Co. Inc.

“That’s why if you want changes in the law—it’s even the position of our chairperson Secretary Diokno—that we do not have to change the law; we can change the IRR,” Santiago said. “That’s all and it’s adaptable.”

According to the GPPB-TSO official, “the good thing about solicited proposals is that it coincides with the timeline of the government while unsolicited proposal need more time as the government needs to study it thoroughly since it’s not incorporated in its initial roster of planned projects.”

“But as long as it will benefit the public, any of the two proposals prove to be beneficial.”


ACCORDING to Santiago, “there are really good unsolicited proposals and there’s no reason for the government not to take it because it will benefit the public.”

However, he added, the country is better off with RA 9184 since it streamlined the procurement process and allowed no room for confusion in the system.

“The law provides for a single guiding framework, making it easier for both government agencies and the private sector in terms of project biddings.”

Since both parties are applying the same rules, chances for corruption can be minimized, if not eliminated, this makes procurement more predictable, stable and transparent, he added.

“We are far better off with the procurement law than without it,” Santiago said. “Just the mere confusion that the old context provided, it will be hard to correct the procurement system if you look at random and various rules.”

The procurement law also did away with the use of a substantial-nonsubstantial method of awarding bidders. This was replaced by a “pass or fail” criterion for a more efficient and systematized processing.

To be concluded



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