1.1.1 In line with the government's efforts to uphold transparency and accountability, and achieve equity, effectiveness, efficiency and economy in its operations, the herein Implementing Rules and Regulations (IRR) are prescribed to standardize and provide uniformity to the existing rules and regulations governing the procurement of goods using government funds.

1.1.2 In the context of free enterprise, the aims and purposes of the government's procurement process are as follows: a. to purchase goods of acceptable quality at fair and reasonable prices from qualified and capable suppliers/manufacturers/distributors, with on time delivery and satisfactory compliance of all contract terms and conditions; b. to assure fair and equitable treatment of suppliers/ manufacturers/distributors including arrangements for prompt payments; c. to adopt procurement procedures that utilize information technology; and d. to maintain records and collect data for refinement of procurement policies and procedures based on experiences gained.

1.2 Coverage and Applicability

1.2.1 These IRR shall govern and apply to all supply contracts of any agency or subdivision of National Government, including Government-Owned or Controlled Corporations (GOCCs), involving agreements for the acquisition/ procurement of goods/supplies/materials for either project-related or normal/regular operations and maintenance activities/requirements as well as mixed civil works-procurement agreements where the nature of the project requirements is essentially that of procurement of goods/supplies/materials rather than civil works. Procurement of services such as janitorial or security services or repair and maintenance service is covered under these IRR, as well as procurement of materials and supplies provided by the agency concerned for such services. "Supplies", as herein used, include everything, except real estate, which may be needed in the transaction of public businesses, or in the pursuit of any undertaking, project, or activity, whether in the nature of equipment, furniture, stationery, materials for construction, or personal property of any sort, including non-personal or contractual services such as the repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security, and related or analogous services.

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Section 2.0 ORGANIZATION

2.1 Bids and Awards Committee

Each government agency shall create a Bids and Awards Committee (BAC) in its head office and/or in its implementing office which shall be responsible for the determination of eligibility, conduct of bidding, evaluation of bids, post qualification of the lowest calculated bid and recommending award of contracts. The record keeping, planning and management of the procurement process shall be designated to the procurement unit or the administrative unit, as appropriate, of the office/agency/corporation concerned. The prescribed composition of the BAC as well as relevant provisions pertaining thereto and its responsibilities are described in Annex "A".

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Section 3.0 GENERAL PROCEDURES

3.1 Certificate of Availability of Funds

3.1.1 Contracts for the procurement of goods shall not be approved unless a Certificate of Availability of Funds (CAF) has been issued by the proper accounting official of the concerned agency certifying that funds are available and have been duly appropriated for the purpose to cover the expenditures for the current fiscal year.

3. 2 Procurement Planning

3.2.1 Procurement of goods shall be undertaken according to a procurement plan that the agency concerned shall formulate to ensure that the goods/supplies/materials to be procured are available when needed. the basic content of the procurement plan including pertinent guidelines and policies thereon are prescribed in Annex "B".

3.3 Method of Procurement

3.3.1 As a general rule, awards of contracts shall be done after open competitive bidding unless a more appropriate method has been duly approved for adoption. Other than the open competitive bidding methods, Annex "C" outlines the various alternative methods of procurement and the conditions under which such methods may be adopted in the interest of economy and efficiency.

3.4 Who May Be Eligible to Bid

3.4.1 For Procurement Financed by the Government the following manufacturers/suppliers/distributors, whether 100% local - or at most 40% foreign-owned, may participate in the bidding for the supply of goods to be bid out by the Government: a. Duly licensed Individuals/Sole proprietorship; b. Partnerships or corporations; c. Manufacturers/suppliers/distributors forming themselves into a joint venture, i.e., a group of two or more manufacturers/suppliers/distributors that intend to be jointly and severally liable for a particular contract; d. Cooperatives duly registered with the Cooperatives Development Authority (CDA).

3.4.2 For projects financed wholly or partly with funds from International Financing Institutions (IFIs) as well as bilateral and other sources, eligible bidders shall meet the following requirements: a. the manufacturers/suppliers/distributor is an entity from an IFI/member country and eligible in accordance with the procurement rules of the IFI concerned as may be required; and b. the goods must be manufactured in or supplied, as well as bid by, an eligible member country bidder as may required under the procurement rules of the IFI concerned.

3.4.3 Only eligible bidders as hereinafter determined may participate in the bidding and may be awarded contracts if the same bidders are found qualified in accordance with the pertinent provisions of these IRR. An exceptional case is the acquisition called for under the Armed Forces of the Philippines (AFP) Modernization Program wherein only offers from suppliers who are manufacturers themselves shall be entertained pursuant to the pertinent provisions of RA 7898.

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Section 4.0 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.

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Section 5.0 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