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Monday, June 7, 2010

Procurement reform -- Philippines

Public bidding and executive agreements
Government procurement is notoriously prone to corruption. In order to curb this, various statutes requiring public bidding have, from as early as the 1900s, been enacted, amended and supplemented. The latest incarnation of such legislation (after more than 100 years) is Republic Act 9184 or the Government Procurement Reform Act (GPRA).

The state policy is essentially the same: public bidding is required for all government contracts. It is meant to ensure that the government and, more important, the public, get value for their money and obtain goods and services at the most advantageous terms. It is designed to afford greater transparency, competition and accountability in the process of selection and award of contracts.

The general rule requiring the conduct of public bidding is subject only to very limited and well-defined exceptions under GPRA (Article XVI) and other laws. More often than not, resort to these exceptions results in controversy or dispute.

Possibly the most contentious exception to public bidding, of late, has been the exemption given under Section 4 of the GPRA to “treaties or international or executive agreements.” This provision, in effect, allows procurement and infrastructure projects undertaken pursuant to such agreements, if their terms so provide, to be excluded from the coverage of the GPRA and be exempted from the requirement of public bidding.

The Department of Justice (DOJ), taking its cue from Supreme Ccourt rulings, seems liberal in its construction of what constitute “executive agreements.” In its Opinion 46, s. 2007, reiterated in DOJ Opinion 33, s. 2009, it found its way clear to allowing the designation of a contractor without public bidding by echoing the justification that “executive agreements involving infrastructure projects to be funded by a foreign- lending institution do not fall within the scope of RA 9184.”

But what is an “executive agreement?”

A treaty is an international agreement that requires legislative ratification after executive concurrence. Upon ratification by the Senate, it acquires the status of law and may as such amend or repeal prior laws.

An executive agreement, on the other hand, while entered into by the Executive branch of government, does not require ratification by the Senate. It has the force and effect of law but must comply or remain consistent with stated policies in law. It cannot alter or work to amend or repeal prior laws.

The GPRA is categorical in its policy: all procurement shall be done through competitive bidding, subject only to defined exceptions. The exceptions do not include purchases from foreign suppliers handpicked or controlled by foreign governments. Since the executive agreement, as written, cannot alter the stated policy of or exclusions under the law, it cannot exempt the supply contract from the requirement of public tender.

The author of this report, Atty. Manuel L. Manaligod Jr. is a senior partner at CVCLAW-Villaraza Cruz Marcelo & Angangco (web site:

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