Analysis (Case Study on Procurement of Infrastructure Projects)

The BAC should award the project not to Contractor A, but to Contractor B, primarily
because a) Contractor A is not eligible in the first place; and b) Contractor B
submitted the lowest bid among all the others who have been found eligible.

Contractor A is not eligible. While the eligibility requirements it has submitted passed
the eligibility check, information that the BAC has gathered during post-qualification
shows that Contractor A misrepresented itself by not reporting on its on-going
project, whose outstanding works would have a negative impact on its NFCC.

IRR-A Section 23.4 says: “Notwithstanding the eligibility of a prospective bidder, the
procuring entity concerned reserves the right to review its qualification at any stage
of the procurement process if it has reasonable grounds to believe that a
misrepresentation has been made by the said prospective bidder, or that there has
been a change in the prospective bidder’s capability to undertake the project from
the time it submitted its eligibility requirements. Should such review uncover any
misrepresentation made in the eligibility requirements, statements or documents, or
any changes in the situation of the prospective bidder which will affect the
capability of the bidder to undertake the project so that it fails the preset eligibility
criteria, the procuring entity shall consider the said prospective bidder as ineligible
and shall disqualify it from submitting a bid or from obtaining an award or contract.”

Further, even if Contractor A posted a credit line enough to compensate for the
difference in its NFCC and the project’s ABC, the BAC, in the first place, should not
have accepted the credit line as this is tantamount to an improvement in the
qualification/bid of Contractor A. In the second place, the eligibility requirement
from a bidder as proof of its capacity to absorb additional obligations in connection
with the contract and to finance its implementation and completion is a choice
among the NFCC or a credit line or a cash deposit, and not a combination of the
three.

Furthermore, Contractor A should even be penalized in accordance with IRR-A

Section 65.3 for submitting eligibility requirements of whatever kind and nature that
contain false information or falsified documents calculated to influence the
outcome of the eligibility screening process or conceal such information in the
eligibility requirements when the information will lead to a declaration of ineligibility
from participating in public bidding.

If proven to be guilty of the above, the bidder may be penalized with imprisonment
of not less than six (6) years and one (1) day, but not more than fifteen (15) years.

The BAC should have disqualified Contractor A despite a) its apparent capability to
undertake the contract as is shown by its other submitted requirements such as lists
of personnel and equipment and its good track record; b) its bid being the lowest;
and c) its closeness to the Congressman, which does not have a bearing on the
bidding process.

Capacitating Civil Society Organizations’ Procurement Trainers, Observers, and Monitors

Training of Trainers
While the foregoing three points may be difficult to ignore, we add the following
arguments. On the first point, it must be clear in the minds of the BAC that the
reason for having an eligibility check prior to the submission of bids is to allow the
BAC to choose from among the many interested bidders and deal only with those
that are eligible, based on some pre-set criteria. Thus, if a bidder is not eligible, the
BAC should not think twice about disqualifying it even if it appears to be capable
based on its technical and/or financial bids. The advantage of having this kind of
step-by-step procedure is that it minimizes discretion of the BAC and thus protects it
from having to face dilemmas of this sort.

On the second point, since Contractor A submitted the lowest bid at P8.5 million
and while this bid was recalculated to be P9.0 million, if the contract is awarded to
it, then the government would have to shell out only P8.5 million (IRR-A Section 37.1).
Since the second lowest bid is P9.1 million, it would understandably be difficult for
the BAC to simply forget about the potential P600,000 savings. However, again, it
has to be emphasized that its bid shall have to be disqualified simply because it is
not eligible to participate.

On the third point, if Contractor A was being endorsed by the Congresswoman

because it is a provincial bidder, and the Congresswoman invokes the preferential
treatment granted to provincial bidders in IRR-A Section 45, still the BAC should not
award the contract to Contractor A, because it is not eligible to participate in the
bidding.

Thus, the BAC has to award the contract to the bidder that submitted the second
lowest bid among all the others who have been found eligible, Contractor B.

While Contractor B has had a slippage of –12% in one of its projects, the eligibility
requirement on track record only requires that the slippage, if any, not be more than
–15%. Further, while the owner of Contractor B is a first cousin of the BAC Chairman,
it is still not in violation of IRR-A Section 47 that prohibits participation of bidders
related to the BAC within the third civil degree. Being a cousin of the BAC Chairman
means that he is a fourth degree relative.

Capacitating Civil Society Organizations’ Procurement Trainers, Observers, and Monitors 2

Training of Trainers