BIDDING PROCESS

4.1 Preparation of Bid/Tender Documents

4.1.1 To ensure fairest competition, the Bid/Tender Documents shall describe clearly and
precisely the nature of the goods for which bids are to be invited, the technical
standards/requirements which must be met, the place and period of delivery or installation, the
warranty and maintenance requirements, the method and criteria to be employed in the
evaluation and comparison of bids, and other pertinent terms. Annex "D" discusses and
elaborates on the basic content of the Bid/Tender Documents.

4.2 Invitation to Apply for Eligibility and to Bid

4.2.1 Invitation to Apply for Eligibility and to Bid for local competitive bidding, the minimum
content of which is prescribed in annex "e", shall be publicly advertised at least 14 days before
the deadline for submission of eligibility and bid requirements, in two consecutive issues of two
newspapers of general circulation existing for at least 2 years, and posted in the website of the
Department of Budget and Management (DBM) Procurement Service and of the concerned
office/agency/corporation during the same period or for a longer period as determined by the
Head of the office/agency/corporation concerned, and posted at any conspicuous place reserved
for this purpose in the premises of the DBM Procurement Service and of the concerned
office/agency/corporation, as certified by the Chief of Administrative Services or the equivalent
official of the concerned office/agency/corporation. However, for contracts to be bid costing two
million pesos (P2,000,000) and below, advertisement may be posted only in the website of the
DBM Procurement Service and of the concerned office/agency/corporation during the same
period as above or for a longer period as determined by the head of the office/agency/corporation
concerned, and posted at any conspicuous place reserved for this purpose in the premises of the
DBM Procurement Service and of the concerned office/agency/corporation, as certified by the
Chief of Administrative Services or the equivalent official of the concerned
office/agency/corporation.

4.2.2 For international competitive bidding, advertisement shall be done along the same lines
prescribed above. Advertisements of invitations for contracts financed partly or wholly from
ODA funds provided by IFIs shall be in accordance with the procedures established by and
agreed upon with the concerned IFI.

4.2.3 For procurement methods other than the open competitive procedure, public advertisement
of the Invitation to Apply for Eligibility and to Bid may be dispensed with.

4.3 Issuance of Application for Eligibility Forms and Bid/Tender Documents

4.3.1 Prospective bidders shall be given ample time to examine the forms for application for
eligibility and the bid/tender documents and to prepare their respective bids. To provide ample
time, the concerned BAC shall make available upon payment, if applicable, said documents from
the time the Invitation to Apply for Eligibility and to Bid is first advertised.
4.3.2 Supplemental bulletins may be issued upon the government's initiative or upon request of
any interested party who secured the bid/tender documents, otherwise referred to as a prospective
bidder, for purposes of clarifying any provision of the bidding document. Any amendment to the
bid/tender documents should be identified as an amendment. Such bulletins containing
amendments and/or clarifications of certain provisions of bid documents shall be sent by mail, by
hand or electronically, to and duly received/acknowledged by all interested parties within a
reasonable time, including extension of the deadline set for the receipt of bids if needed, to be
determined by the agency concerned depending on the nature, complexity and magnitude of such
notices/amendments to allow said bidders to consider the same in preparing their respective bids.
Requests for clarification(s) on bid documents by interested parties who have secured the bid
documents must be in writing, and submitted to the BAC within 14 calendar days before the
deadline set for the submission of eligibility and bid envelopes. All clarifications shall be made
in writing and furnished to all interested parties within the time stipulated in the Instruction to
Bidders, before the deadline for the submission of bids.

4.4 Determination of Eligibility of Prospective Bidders

4.4.1 The capabilities and resources of prospective bidders shall be initially assessed, subject to
post-qualification, to determine if they meet the requirements for eligibility. The determination
of eligibility of prospective bidders shall be based on the submission of the following documents
as specified hereunder:

A. Legal Documents
1. Current licenses/permits including Department of Trade and Industry (DTI) business name
registration or Securities and Exchange Commission (SEC) registration certificate, mayor's
permit/municipal license, Bureau of Internal Revenue value-added tax registration, and if
applicable, DTI accreditation certificate
2. Prospective bidder's statement that his firm is not "blacklisted" or barred from bidding by
any government office/agency/corporation

B. Technical Documents - prospective bidder's statement of previous similar contracts/sales

completed in at least the last two years, as prescribed by the agency in the Invitation to Apply for
Eligibility and to Bid. "Similar" contracts shall be defined by the concerned
office/agency/corporation in the Invitation to Apply for Eligibility and to Bid. The bidder's
documents shall include, for each contract, kinds of goods/supplies/materials sold, amount of
contract, end user's acceptance, name of contract, date of contract, date of delivery, specification
whether prospective bidder is a manufacturer, supplier or distributor. In the case of capital goods,
the value of the bidder's largest single contract, adjusted to current prices, completed within the
period specified in the Invitation to Apply for Eligibility and to Bid, and similar to the contract to
be bid, must be at least fifty percent (50%) of the approved budget for the contract to be bid.

C. Financial Documents - audited financial statements, stamped "received" by the Bureau of

Internal Revenue, for the last two calendar years. Each of the above requirements shall be under
oath and duly notarized, and shall form part of the duly accomplished application form for
eligibility. For special cases of procurement of goods/supplies/materials where foreign suppliers
may participate, the above requirements may be substituted by the appropriate equivalent
documents issued by the foreign supplier's country. These documents must be duly
acknowledged by the Philippine Consulate therein.

4.4.2 The eligibility of prospective bidders shall be determined using simple "pass/fail" criteria
and shall be determined as either "eligible" or "ineligible". If the prospective bidder is rated
"passed" for all the above requirements, he shall be considered eligible. If the prospective bidder
is rated "failed" in any of the above requirements, he shall be considered ineligible.

4.4.3 If only one bidder is found to be eligible, or that only one bidder responded to the
Invitation to Apply for Eligibility and to Bid, the agency concerned shall recognize a lone
eligible bidder as valid.

4.4.4 Notwithstanding the eligibility of a bidder, the government reserves the right to review the
qualifications of a bidder before the bidding of the contract is made. Should such review uncover
any misrepresentation made in the eligibility statements, or any changes in the situation of the
bidder to materially downgrade the substance of such statements, the agency concerned shall
disqualify the bidder from submitting a bid.

4.5 Pre-bid Conferences

4.5.1 For contracts to be bid costing more than one million pesos (P1,000,000), pre-bid
conferences shall be conducted by the government, to clarify and/or explain any of the
requirements, terms, conditions and specifications stipulated in the bid documents. For contracts
to be bid costing one million pesos (P1,000,000) or less, pre-bid conferences may be conducted
at the discretion of the concerned office/agency/corporation. The conference shall be held not
later than 14 days after the bid documents have been made available to the prospective bidders to
familiarize themselves with the documents but sufficiently in advance of bid opening to allow
consideration of the conference results in preparing bids. The bidders shall bear all costs in the
preparation of their bids and the government shall in no case be responsible or liable for these
costs, regardless of the outcome of the bidding process.

4.5.2 Among others, the pre-bid conference shall discuss the following:
a. technical specifications
b. legal requirements
c. financial requirements
d. production capability requirements
e. delivery schedule
f. after-sales service requirements

4.5.3 Any statement at the pre-bid conference shall not modify the terms of the bid documents
unless such statement is specifically identified in writing as an amendment thereto and sent by
mail, by hand or electronically to all parties who have secured the bid/tender documents. The
minutes of the conference(s) shall be recorded and made available to all participants.

4.6 Submission, Receipt and Opening of Eligibility and Bid Envelopes

4.6.1 Prospective bidders shall submit their application for eligibility and bid documents
simultaneously on the specified deadline for the submission of the eligibility and bid envelopes.
The eligibility envelope shall be sealed and contain the documents required in section 4.4.1. The
bid envelope(s) shall be sealed and contain the documents required in section 4.8.1 and Annex F.
In case of single-stage bidding: Prospective bidders shall submit simultaneously two envelopes,
one containing eligibility requirements and the other containing bidding documents. In case of
single-stage bidding variation: Prospective bidders shall submit simultaneously three envelopes,
one containing eligibility requirements and two containing bidding documents. Contents of each
of the bid envelopes are specified in Annex F. In case of two-stage bidding: Prospective bidders
shall submit their eligibility envelopes first, during the first stage of the bidding. Eligible bidders
who are interested to bid shall submit their bidding documents in two sealed envelopes during
the second stage of the bidding. The eligibility envelopes of prospective bidders shall be opened
first to determine eligibility of prospective bidders. In case any of the requirements specified in
section 4.4.1 is missing from the eligibility envelope, the BAC shall declare said prospective
bidder as "ineligible" to bid. Bid envelope(s) shall immediately be returned unopened to
ineligible bidders in case of simultaneous submission of eligibility and bid envelopes. In case of
single-stage bidding variation and two-stage bidding, the first bid envelopes of eligible bidders
shall be opened to determine the bidders' compliance with requirements. In case any of the
requirements is missing, the BAC shall rate the bid as "failed" and immediately return to the
bidder concerned his second bid envelope unopened. The second envelopes of the remaining
eligible bidders shall be opened immediately for those whose first bid envelopes were rated
"passed". In case any of the requirements in the second envelope is missing or if the submitted
price exceeds the approved budget for the contract, the BAC shall rate the bid concerned as
"failed". Only bids whose envelopes are all rated as "passed" shall be evaluated and calculated to
come up with the lowest calculated bid.

4.6.2 Bidders may be required to submit bids either through the single-stage bidding procedure,
its variation or two-stage bidding procedures depending on the requirements of the procurement
process as duly approved for use. These bidding procedures and the conditions under which the
same may be adopted are indicated in Annex "F".

4.6.3 Each bid shall be accompanied by a bid security that is payable to the concerned agency as
a guarantee that the successful bidder shall, within fifteen (15) calendar days after receipt of the
Notice of Award, enter into contract with the Government and furnish the required performance
security for the faithful performance of all works called for. Failure to enclose the required bid
security as to form and amount prescribed herein shall automatically disqualify the bid
concerned.

4.6.4 The amount of the bid security shall be fixed at an amount equal to two-and-one-half
percent (2-1/2%) of the approved budget for the contract to be bid. The security may be in the
form of cash, cashier's check, manager's check, bank draft or guarantee against any reputable
bank, letter of credit issued by a commercial bank, a surety bond callable on demand issued by a
surety or insurance company accredited by the Office of the Insurance Commissioner, or any
combination thereof.
4.6.5 Bids and bid securities shall be valid for such reasonable period determined by the head of
the agency concerned. This period shall be so indicated in the Instructions to Bidders. In no case
shall this period exceed one hundred twenty (120) days from the date of opening of bids.4.6.6
Withdrawal of bids after the applicable deadline shall be subject to appropriate sanctions as
prescribed herein. Bid modifications received after the applicable deadline as well as bids
submitted after the deadline for the submission of bids shall not be considered and shall be
returned unopened. Subject to this restriction, a prospective bidder may withdraw his bid,
including the bid security, or modify it. Where a bidder wishes to modify his bid, he shall not be
allowed to retrieve his original bid, but shall only be allowed to send another bid equally sealed,
properly identified and linked to his original bid and marked as "modification".4.6.7 No bid
securities submitted in the form of sureties of all complying bidders shall be returned after the
opening of bids. Bid securities submitted in form other than sureties, such as cash, cashier's
check, manager's check, letter of credit and bank draft/guarantee, may be returned upon request
of the bidder, provided that he is not among the three lowest evaluated complying bidders and
such withdrawal shall be construed as a waiver by the bidder for the award of contract. Bid
securities in the form of sureties shall be returned only after the successful bidder has signed the
contract and furnished the performance security but not later than the expiration of the bid
security validity period indicated in the Instructions to Bidders.4.6.8 If only one (1) bid is
received in response to an invitation for bids, an award may be made to the single bidder
provided that his bid price is not higher than the approved budget for the contract to be bid, his
bid passes post qualification, and there is no evidence of collusion with non-participating
suppliers and/or other parties and that other prospective bidders were given equal opportunity to
respond.

4.7 Determination of the Lowest Calculated Responsive Bid

4.7.1 The "lowest calculated responsive bid" is defined as the bid (a) with the lowest calculated
price as determined in section 4.8.3, and (b) which complies with or is responsive to all the
requirements hereof. The bid satisfying (a) shall be referred to as the lowest calculated bid.

4.7.2 The BAC shall determine the lowest calculated responsive bid in the following manner:

A. The first step is to determine whether each eligible bid complies with the submission
requirements as specified hereunder in section 4.8.1 and in annex F. The BAC shall rate a bid
"passed" only if it complies with all the requirements and the submitted price does not exceed the
approved budget for the contract.
B. The second step is to establish the calculated prices of all bids rated "passed" in the first step.
Calculated prices are to be determined in accordance with section 4.8.3 hereunder. The BAC
shall then rank the calculated prices from lowest to highest.
C. The third step is the post qualification of the bidder with the lowest calculated price based on
the results of the above evaluation. This shall be done in accordance with the provisions hereof.
In case the said bidder fails to post qualify, the provisions of section 4.10 shall apply.

4.8 Examination and Evaluation of Bids

4.8.1 Prior to bid evaluation and comparison, bids received shall be examined using "pass/fail"
criteria, to determine submission of the following: the bid prices in the bill of quantities, the
recurring and the maintenance costs (if applicable), bid securities as to form, amount, and
validity period, authority of signatory, production/delivery schedule, person power requirements,
after-sales service/parts, technical specifications, credit line commitments or cash deposit
certificate, and other non-discretionary criteria as stated in the Instructions to Bidders. The above
requirements shall be submitted in the following manner: one sealed bid envelope for single
stage bidding; two sealed bid envelopes for single stage bidding variation; and at least two sealed
envelopes for two stage bidding. Only bids that are determined to contain all the bid
requirements in the sealed envelope/s shall be rated "passed" and shall be considered for
evaluation and comparison.

4.8.2 The purpose of bid evaluation is to determine the lowest calculated bid. This bid, which
may not be the lowest submitted price, shall be subject to post qualification. Post qualification
shall determine the responsiveness of the lowest calculated bid to eligibility and bid
requirements. The contract shall be awarded to the bidder with the lowest calculated responsive
bid. The general guidelines to be followed in bid evaluation and comparison are outlined in
annex "G". The bid evaluation shall be based on a detailed analysis of the following:
A. Completeness of the bid: unless the instructions to bidders specifically allow partial bids, bids
not offering all of the required items shall be considered non-responsive and, thus, automatically
disqualified
B. The bid security must conform to the requirements of the Instructions to Bidders, as to type,
amount, form and wording, and validity period
C. The recurring costs if any and maintenance costs
D. The bid price subject to a price equalization analysis calculating arithmetical errors and other
minor deviations
E. Identification of minor/major deviations and terms and conditions as described in the
Instructions to Bidders Bids that contain major deviations from the requirements in the
instruction to bidders shall be considered invalid. Major deviations are those that would not
fulfill the purpose for which the bid was requested, or would prevent a fair comparison with bids
that comply with the bid documents. Examples are:
(1) stipulating price adjustment when fixed price bids were called for;
(2) failing to respond to the specifications by offering a different design or work item;
(3) subcontracting beyond allowable limits;
(4) refusing to bear contractual responsibilities specified in the bid documents, such as
performance guarantees;
(5) taking exception to critical provisions or setting conditions to his bid, such as applicable
laws, taxes and duties, and dispute resolution procedures.
F. Corrections for errors, discounts, and other modifications: corrections for arithmetical or
computational errors, as well as for discrepancies between total bid prices and extended unit bid
prices, between stated total prices and actual summations, between prices in figures and in
words, and other errors/discrepancies, shall use the methodology described in the Instructions to
Bidders. Discounts and other modifications in the bid amounts shall be reflected in the
evaluation of bids.

4.8.3 The concerned agency may employ any of the specific evaluation procedures described in
Annex "H" in determining the bid's calculated price that it deems most appropriate for the
requirements of a particular contract. The use of any such procedure shall be approved by the
head of the concerned office/agency/corporation and indicated in the Instructions to Bidders.

4.8.4 Evaluation of bids shall be completed not later than thirty (30) calendar days from the date
of the opening of bids. The BACs of all agencies shall prepare and keep on file detailed reports
on the evaluation and comparison of bids setting forth the specific reasons on which
recommendations are based for the contract award.

4.8.5 The Government reserves the right to reject any or all bids or to declare the bidding a
failure if there is evidence of collusion among bidders thus resulting in the absence of
competition. However, all bids shall not be rejected and new bids invited on the same
specifications for the purpose of obtaining low prices, except in cases where the lowest
submitted bid exceeds the approved budget for the contract under bidding. In such a case, a
revised less expensive requirement may be substituted to seek a more affordable result.

4.8.6 No information relating to the detailed evaluation of bids, post qualification of the lowest
calculated bid and recommendations concerning awards shall be disclosed to persons outside the
BAC concerned before the announcement of the contract award to the successful bidder. After
the award of contract, all unsuccessful bidders shall be informed individually in writing.

4.9 Failure of Bidding

4.9.1 The Government shall declare the bidding a failure and the concerned
office/agency/corporation shall conduct a rebidding with re-advertisement as per section 4.2.1 of
the project when no bids are received, or without re-advertisement when all bids fail to comply
with all the eligibility and bid requirements or fail post qualification. In case of the latter, a direct
notification shall be extended to all bidders either by mail, by hand, or electronically.

4.9.2 Should there occur another bidding failure after the conduct of the project's rebidding, the
agency concerned may enter into a negotiated procurement.

4.10 Post qualification of the Lowest Calculated Bid

4.10.1 To determine the lowest calculated responsive bid, the BAC shall, within thirty (30) days
from the determination of the lowest calculated bid, conduct a post qualification of the bidder
with the lowest calculated bid. The post qualification shall verify, validate and ascertain whether
the bidder with the lowest calculated bid complies with and is responsive to all the requirements
for eligibility and of the bidding, using the non-discretionary "pass/fail" criteria stated in the
Invitation to Apply for Eligibility and to Bid and in the Instructions to Bidders. These criteria
shall consider, but shall not be limited to, the following measures:
A. Legality of documents To validate the licenses and agreements submitted by the bidder.
B. Evaluation of technical capacity To determine compliance of the goods/product with the
required specifications. This may include inspection and tests of the goods/product, maintenance
and after-sales capabilities in applicable cases.
C. Evaluation of financial capability To analyze and verify, whenever applicable, the required
bank commitment to provide a credit line to the bidder in the amount specified and over the
period stipulated in the Instructions to Bidders, to ensure that the bidder can sustain the operating
cash flow of the transaction. If the bidder passes in all criteria, he shall be considered post
qualified and the concerned office/agency/corporation shall award the contract to him. If, on the
other hand, the bidder fails in any of the criteria, he shall be considered post disqualified and the
concerned agency shall undertake the same post qualification process on the bidder with the
second lowest calculated bid.

5. CONTRACT AWARD AND IMPLEMENTATION

5.1 Award of Contract

5.1.1 Award of contract shall be made using the submitted, not the calculated, price for the
contract under bidding.

5.1.2 The decision whether or not to award the contract shall be made within thirty (30) calendar
days after the completion of bid evaluation. If the decision is to award the contract, the Notice of
Award should be approved by the Head of Agency or his duly authorized representative and
issued within seven (7) calendar days from the date the decision to award is made.

5.1.3 For foreign-assisted projects, the duly approved decision to award shall be transmitted to
the concerned IFI, for concurrence as may be required, within seven (7) calendar days from the
date of approval of the decision. Likewise, the Notice to Award shall be issued by the concerned
agency within seven (7) calendar days from the date of concurrence of the concerned IFI.

5.1.4 If the BAC finds that the bidder with the lowest calculated price passes the
abovementioned post qualification criteria, his bid shall be considered as the "lowest calculated
responsive bid", and the office/agency/corporation shall award the contract to him, at his
submitted bid price, subject to the other provisions of this section. If , however, the BAC finds
that the bidder with the lowest calculated bid fails the abovementioned post qualification criteria,
the office/agency/corporation shall immediately notify him in writing of his post disqualification
and the grounds for it. The post disqualified bidder shall have seven (7) days from receipt of the
said notification to request from the BAC, if he so wishes, a reconsideration of this decision. The
BAC shall evaluate the request for reconsideration, if any, using the same non-discretionary
"pass/fail" post qualification criteria. After the office/agency/corporation has notified the first
bidder of his post disqualification, the BAC shall initiate and, within seven (7) days, complete
the same post qualification process on the bidder with the second lowest calculated price. If the
request for reconsideration of the bidder with the lowest calculated price is denied and if the
second bidder with the next lowest calculated price passes the post qualification criteria, the bid
of the second bidder shall be considered as the lowest calculated responsive bid. The
office/agency/corporation shall accordingly award the contract to the second bidder at his
submitted bid, pursuant to the pertinent provisions of this section. If the second bidder, however,
fails the post qualification criteria, the procedure shall be repeated for the bidder(s) with the next
lowest calculated bid(s), until the lowest calculated responsive bid is obtained for award.

5.1.5 Contract award shall be made within the bid validity period. Should it become necessary to
extend the validity of bids, the agency concerned shall request in writing all those who submitted
bids for such extension before the bid expiration date. Bidders, however, shall have the right to
refuse to grant such an extension without forfeiting their bid security.

5.1.6 The successful bidder shall execute the contract with the concerned agency within fifteen
(15) calendar days after receipt of the notice of award. All unsuccessful bidders shall also be
notified of the award through official notices/communications. Notice of award shall
immediately be posted in a conspicuous place within the premises of the concerned
office/agency/corporation and in the website of the office/agency/corporation and/or the
procurement service. A copy thereof may be requested in writing.

5.2 Performance Security

5.2.1 To guarantee the faithful performance of the contract awardee, he shall post a performance
security, whose form and amount are prescribed in Annex "I" , in favor of the Government
within the time specified by the concerned agency after contract signing. Subject to the
conditions of the contract, the performance security may be released after the issuance of the
"Certificate of Acceptance" of the goods provided that there are no claims filed against the
awardee or the surety company.

5.2.2 The supplier/manufacturer/distributor shall post an additional performance security

proportionate to cover any cumulative increase of more than ten percent (10%) over the original
value of the contract, including validity extension of performance security to cover approved
contract time extensions if any, as a result of cost adjustments and/or Amendments to Order.
Similarly, the agency concerned may allow a proportional reduction in the original amount of
performance security in case of a reduction in contract value.

5.3 Warranties

5.3.1 To assure that manufacturing defects will be corrected by the contract awardee for a fixed
time after delivery, a warranty shall be required of the successful bidder, the obligations for
which shall be covered by either retention moneys in the amount equal to ten percent (10%) of
every progress payment, or a special bank guarantee equivalent to ten percent (10%) of the total
contract price. Such amounts shall only be released after the warranty period provided that the
goods supplied are free from defects and all the conditions imposed under the contract are fully
met.

5.3.2 For supply contracts which include installation and commissioning services in addition to
the supply of goods/equipment, the period and the required obligation of the warranty shall cover
the same.

5.4 Refusal to Enter into Contract

5.4.1 Should the lowest calculated responsive bidder refuse, fail or be unable to enter into
contract with the Government and/or to post the required performance security within the time
provided therefore, he shall be meted with the appropriate sanctions provided under Annex "M"
of these IRR and the office/agency/corporation concerned may consider for award the second
lowest calculated responsive bidder at his submitted bid provided it does not exceed the
approved budget of the contract to be awarded. In case of another refusal or failure, appropriate
sanctions shall likewise be imposed and the agency concerned may consider the next ranked
bidder and so on until an award is made.

5.5 Approval of Contracts

5.5.1 Supply contracts should be approved or disapproved by the Head of Agency concerned or
his duly authorized representative in accordance with existing laws, rules and regulations within
fifteen (15) calendar days from the date the successful bidder has executed the contract with the
concerned agency and submitted all documentary requirements to perfect the contract.

5.6 Issuance of Notice to Proceed

5.6.1 The concerned agency shall issue the Notice to Proceed (NTP) to the successful bidder not
later than fifteen (15) calendar days from the date of contract approval. All notices called for by
the terms of the contract shall be effective only at the time of receipt thereof by the supplier.

5.7 Amendment of Order

5.7.1 Subject to conditions set forth in Annex ":J", amendments to order may be issued at any
time by the concerned agency. If any such Order increases or decreases the cost of, or the time
required for executing any part of, the work under the original contract, an equitable adjustment,
in contract price and/or delivery schedule shall be mutually agreed upon between the parties
concerned and the contract accordingly modified in writing.

5.8 Suspension of Work

5.8.1 The Government may suspend the work wholly or partly by written order for a certain
period of time as it deems necessary due to force majeure or any fortuitous events as defined in
the contract. The supplier shall take all reasonable steps to minimize the costs allocable to the
work covered by such order during work stoppage.

5.8.2 Before the suspension order expires, the agency concerned shall either lift such order or
terminate the work covered by the same. If the suspension order is lifted, or if the period of the
order expires, the supplier shall have the right to resume work. Appropriate adjustments shall be
made in the delivery schedule or contract price, or both, and the contract shall be modified
accordingly.

5.9 Contract Termination

5.9.1 The Government may terminate the contract for reasons of default and/or convenience
Annex "K" discusses the conditions and/or situations where such authority could be exercised.

5.9.2 Notwithstanding contract termination and subject to any directives from the concerned
agency, the supplier shall take timely, reasonable and necessary actions to protect and preserve
property(s) in his possession upon which the Government has an interest.

5.10 Liquidated Damages

5.10.1 When the supplier fails to satisfactorily deliver goods under the contract within the
specified delivery schedule, inclusive of duly granted time extensions, if any, the supplier shall
be liable for damages for the delay and shall pay the Government for liquidated damages, not by
way of penalty, an amount equal to one-tenth(1/10) of one percent (1%) of the cost of the
delayed goods scheduled for delivery for every day of delay until such goods are finally
delivered and accepted by the Government.

5.10.2 The Government need not prove that it has incurred actual damages to be entitled
to liquidated damages. Such amount shall be deducted from any money due or which may
become due to the supplier, or collect the same from any securities or warrantees posted
by the supplier whichever is convenient to the Government. In no case shall the total sum
of liquidated damages exceed fifteen percent (15%) of the total contract price, in which
event the concerned agency shall automatically terminate the contract and impose
appropriate sanctions over and above the liquidated damages to be paid.

5.11 Administrative Sanctions

5.11.1 For offenses/violations committed under the pertinent provisions of these IRR,
appropriate administrative sanctions shall be imposed on erring suppliers as prescribed
under Annex "M".

6. PROCUREMENT BY ELECTRONC MEANS

6.1. Within two (2) years from the issuance of these IRR, government
offices/agencies/corporations shall have adopted electronic communications and digital
information processing technology systems in the conduct of procurement procedures.
Electronic procurement systems of government offices/agencies/corporations shall ensure
the integrity, security and confidentiality of documents submitted through such systems.
Due to the peculiar requirements of electronic procurement, government
offices/agencies/corporations with electronic procurement systems may adopt procedures
and safeguards to address such peculiar requirements, provided such are in accordance
with and guided by the principles of transparency, accountability, equity, effectiveness,
efficiency and economy and submitted for review by the procurement policy board; and
provided further, that, the determination of eligibility, post qualification, and the lowest
calculated responsive bid are undertaken in accordance with the provisions of these
implementing rules and regulations.

6.2 In the interim, government offices/agencies/corporations with reliable means and

facilities may implement electronic procurement gradually, starting with basic commodities
that the agency uses. Pending the issuance by the Supreme Court of rules and regulations
on electronic notaries, the BAC shall require hard copies of documents submitted by
prospective bidders. Where electronic and hard copies are inconsistent, and such
inconsistencies materially affect the substance of the bid, the bidder shall be automatically
disqualified. in addition, the office/agency/corporation concerned shall keep hard copies of
all documents received and notices sent, to protect from possible loopholes in
implementation of electronic procurement. The implementing procedures for electronic
procurement are found in Annex L.

7. EFFECTIVITY

7.1 These Implementing Rules and Regulations (IRR) as well as their amendments shall
take effect fifteen (15) days after the date of publication of the same in the official gazette
or in a newspaper of general circulation. The IRR and their amendments shall have
prospective application.