[ RESOLUTION NO. 31-2017, January 04, 2018 ]

APPROVING THE ISSUANCE OF A CIRCULAR CLARIFYING THE GOVERNMENT EMPLOYEES ™ COOPERATIVES PARTICIPATION IN GOVERNMENT PROCUREMENT



Adopted: 31 July 2017
Date Filed: 04 January 2018

WHEREAS, the Government Procurement Policy Board - Technical Support Office   (GPPB-TSO)   received   copy   of  letters   of  Cooperative   Development Authority  (CDA)  to  the  following  government   agencies  and  cooperatives   in response  to  the  query  about  the  participation  of  employees ™  cooperatives  in bidding activities of the government, thus:
1.    Bureau of Fisheries and Aquatic Resources Central Office;
2.    Bureau of Fisheries and Aquatic Resources - Region 4A;
3.    Provincial Environment and Natural Resources Office (Palawan);
4.    Agusan Sur Savers Multipurpose Cooperative; and
5.    University of Southeastern Philippines Multipurpose Cooperative;
WHEREAS,  the  CDA  Central  Office  adopted  the  opinion  issued  by  its Calamba  Extension  Office  on  23  August  2016,  stating  the  following,  among others:
1.     Cooperative enjoys the privilege to participate in all procurement activities of any government agency or instrumentality;
2.     Cooperatives     should     be    exempted     from     pre-qualification     bidding requirements  because Article 62, par. 10 of Republic Act (RA) No. 9520[1]   is clear and unambiguous in granting such exemption;
3.    By  using  the  phrase  œnotwithstanding  the  provisions  of  Republic  Act  No.
9184 ,  RA  9520  expressly  amends  any  provision  of  said  law  insofar  as cooperatives are concerned;
4.     A  distinction  should  be  made  between  the  employees  of  government  as bidders, and the cooperative, as the latter is a separate juridical personality. Therefore, a bid offered by the cooperative, regardless of the composition of its membership, should not be considered as a bid offered by employees of government; and
5.    The opinion of GPPB has the same weight as the opinion of CDA Calamba
Extension Office. More so as the said opinion is not considered as a policy.
WHEREAS, the CDA Central Office also opined that it is not necessary that in  order  to  avoid  the  existence  of  conflict  of  interest,  employees  cooperative should be disqualified automatically as the provision on the disclosure of interest under RA 9184 is the safeguard against conflict of interest, and explained that:
1.     Automatically   disqualifying   employees   cooperative   as   bidders   will   be inconsistent with the declared policy of RA 9520 on bringing about a strong cooperative  movement  that is free from  any conditions  that might  infringe upon the autonomy or organizational integrity of cooperatives; and

2.     Even  if  strictly  applying  RA  9184,  the  disqualification   is  limited  to  the relationship between the bidder and the head of the procuring entity by consanguinity  or affinity up to the third civil degree,  and not a question  of direct  access  to information  that may  substantially  affect  the result  of the bidding or procurement process.
WHEREAS, during the 5th Inter-Agency Technical Working Group (IATWG) Meeting on 14 July 2017, the GPPB-TSO presented the matter as well as the discussion  on the relevant provisions  of RA 9184, its 2016 Revised IRR, other related issuances and GPPBTSO Non-Policy Matter (NPM) Opinions pertinent to the issues raised by the CDA;

WHEREAS, after due deliberation, the IATWG agreed to the proposal of the GPPB-TSO to recommend to the GPPB the issuance of a Circular containing the following:
1.     Since RA 9184 had already abolished pre-qualification, there is nothing from which cooperatives will be exempted, i.e., there is no exemption upon which cooperatives can rely on; and

2.     Government  employees ™  cooperatives  may be allowed  to participate  in the procurement  of any government  agency provided they meet all the requirements  prescribed under the rules, unless there is a determination  by the BAC of the existence of a conflict of interest.
WHEREAS, during its 4th Regular Meeting on 31 July 2017, the GPPB, after careful review and due deliberation, adopted the recommendation  of the IATWG and GPPB-TSO;

NOW, THEREFORE, for and in consideration of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the  powers  vested  on  US  by  law,  hereby  RESOLVE  to  confirm,  adopt,  and approve, as WE hereby confirm, adopt, and approve the issuance of a Circular, copy  of  which  is  attached,  informing  the  Procuring  Entities  of  the  following, among other information and reminders, thus:
1.     Since RA 9184 had already abolished pre-qualification, there is nothing from which cooperatives will be exempted, i.e., there is no exemption upon which cooperatives can rely on; and

2.     Government  employees ™  cooperatives  may be allowed  to participate  in the procurement  of any government  agency provided they meet all the requirements  prescribed under the rules, unless there is a determination  by the BAC of the existence of a conflict of interest.
This Resolution shall take effect immediately.

APPROVED this 31st day of July 2017 at the Pasig City, Philippines.

Signed by the Representatives  of the Following Agencies:

DEPARTMENT  OF BUDGET AND MANAGEMENT DEPARTMENT  OF EDUCATION DEPARTMENT OF ENERGY
DEPARTMENT  OF INFORMATION  AND COMMUNICATIONS
TECHNOLOGY DEPARTMENT  OF NATIONAL DEFENSE
DEPARTMENT  OF PUBLIC WORKS AND HIGHWAYS
DEPARTMENT  OF SCIENCE AND TECHNOLOGY DEPARTMENT  OF TRADE AND
INDUSTRY PRIVATE SECTOR REPRESENTATIVE


Annex "A"

CIRCULAR NO. 08-2017

GOVERNMENT EMPLOYEES ™ COOPERATIVES PARTICIPATION IN GOVERNMENT
PROCUREMENT

1.0 Purpose

This Circular is being issued to clarify the government  employees ™ cooperatives participation in government procurement.

2.0 Coverage

All Departments, Bureaus, Offices and Agencies of the National Government, including State Universities and Colleges, Government-Owned  and/or Controlled Corporations, Government Financial Institutions, and Local Government Units.

3.0 Cooperatives Participation in Government Procurement
3.1 Republic Act (RA) No. 9184 is governed by the principle of competitiveness, which  means  extending  equal  opportunity  to  enable  private  contracting parties who are eligible and qualified to participate in public bidding.

3.2 Under Sections 23.4.1.1(d), 23.4.2.1(d) and 24.3.1(d) of the 2016 Revised Implementing Rules and Regulations (IRR) of RA 9184, cooperatives duly organized   under   the   laws   of   the   Philippines   may   participate   in   the procurement of goods, infrastructure projects and consulting services, respectively.

3.3 GPPB   Circular   02-2010,   entitled   œGuidelines   on   Comparison   of   Bids Submitted by Cooperatives , clarifies the procedure for comparison of bids submitted by cooperatives in line with the principle that all bids shall be evaluated on equal footing to ensure fair and competitive bid comparison.
3.4 Thus,  Government   employees ™   cooperatives   may  participate   in  the  procurement opportunities of the government provided that they meet all the requirements prescribed under the 2016 Revised IRR of RA 9184, and they are evaluated  on equal footing with other bidders, subject to existing laws, rules and regulations;
4.0 Cooperatives ™ Exemption from Pre-Qualification
4.1 Pursuant  to Article  62, par. 10 of RA 9520  or the œPhilippine  Cooperative Code of 2008 ,  cooperatives  transacting  business  with the Government  of the Philippines  or any of its political subdivisions  or any of its agencies  or instrumentalities,  including  government-owned  and controlled  corporations, shall be exempt from pre-qualification  bidding requirements  notwithstanding the provisions of RA 9184.

4.2 However,  RA  9184  already  abolished  the  pre-qualification  process,  which was required under Presidential Decree No. 1594 for infrastructure  projects and  Executive  Order  No.  302  for  goods,  and  was  replaced  by  simple eligibility checking.

4.3 The legislative intent of RA 9184 is to subject bidders, such as cooperatives, to simple eligibility  check, which utilizes an objective  and non-discretionary pass or fail criterion in the examination of eligibility documents submitted by the bidder.

4.4 Since  the  exemption   granted  to  cooperatives   was  only  limited  to prequalification, there is no exemption from which cooperatives can rely on.
5.0 Limitation on Participation in Government Procurement
5.1 Under  Section  47  of  RA  9184  and  its  IRR,  bidders  are  automatically disqualified  from  participating  in the  procurement  activities  of a Procuring Entity when such bidder is related by consanguinity or affinity within the third civil degree  to the Head  of the Procuring  Entity  (HOPE),  members  of the BAC,  the Technical  Working  Group  (TWG),  and  the BAC  Secretariat,  the head of the Project Management Office (PMO), or the end-user unit, and the project consultants, if any. If the bidder is a cooperative, the provision applies to all its officers, directors, and controlling shareholders or members.

5.2 Section 47.2 of the 2016 Revised IRR of RA 9184 and the relevant provision of the Philippine Bidding Documents (PBDs) mandate that bidders found to have  conflicting   interests  with  each  other  shall  also  be  disqualified   to participate in the procurement. A general conflict of interests arises when a bidder has a relationship, directly or through third parties, that puts them in a position  to  have  access  to  information  about  or  influence  on  the  bid  of another  bidder or influence  the decisions  of the Procuring  Entity regarding this bidding process.

5.3 Under Sec. 3(i) of RA 6713 or the œCode of Conduct and Ethical Standards for Public  Officials  and Employees ,  a conflict  of interest  occurs  when the official or employee is a member of the Board of Directors and the interest of such corporation or business, or the official or employees ™ rights or duties therein, are opposed to or affected by the faithful performance of official duty. In the event that a conflict of interest arises, the official or employee involved shall resign from his position and/or divest himself of his shareholdings or interest  within  the  prescribed  period,  reckoned  from  the  date  when  the conflict  of interest  had  arisen.  In any  case,  it shall  be  incumbent  for  any public official or employee to avoid conflict of interest at all times.
5.4 Government employees ™ cooperatives participating in the procurement within their   own   agencies   poses   undue   advantage   in   terms   of   access   to information, which are generally not available to other bidders, and it sows suspicion  of partiality  or familiarity  among market operators  participating  in the procurement process. The determination of the existence of a conflict of interest  is essentially  and  primarily  lodged  with  the BAC  of the Procuring Entity
5.5 Accordingly,    government    employees ™    cooperatives    participation    in government procurement, especially within their own respective agencies, is restricted  by  reason  of  presence  of  conflict  of  interest,  which  shall  be determined by the BAC of the Procuring Entity taking into consideration  the surrounding circumstances  and applying the relevant provisions of the 2016 Revised IRR of RA 9184, the PBDs, RA 6713 and other applicable rules.
6.0 This Circular  shall take effect fifteen  (15) days following  the publication  in Official Gazette or a newspaper of general nationwide circulation.

7.0 For guidance and compliance.

(SGD) BENJAMIN E. DIOKNO
Chairperson


[1] Cooperatives registered under this Code, notwithstanding the provisions of any law to the contrary, be also accorded the following privileges:

xxx

(10) Cooperatives transacting business with the Government of the Philippines or any of its political subdivisions or any of its agencies or instrumentalities, including government-owned and controlled corporations shall be exempt from prequalification bidding requirements notwithstanding the provisions of Republic Act No. 9184, otherwise known as, the Government Procurement Act.