NPM No 071 2015

2015-10-12

Requesting Entity: Bureau of Local Government Finance (BLGF) Department of Finance (DOF)

Issues Concern: Tie-Breaking Method; Bid Securing Declaration; Notice of Award; PADPAO
Format

Details

1. In case a tie occurred between two bidders during the opening of bids, whether BLGF
could recommend the bidder that provided freebies/add-ons to be the winning bidder.

In determining the applicability and appropriateness of a tie-breaking method, it necessitates a

prior determination of the existence of a tie among bids which calls for its resolution. Pointedly,
tie-breaking methods are applied only in situations where all bids are considered to have passed
the post-qualification stage and are now considered as Lowest Calculated and Responsive Bids
(LCRBs).

A tie occurring during the opening of the bids does not find support to the situation contemplated
in the preceding paragraph where a tie-breaking method will be employed. Instead of declaring a
tie after bid opening, the PE should continue the process of Bid Evaluation and Post-
Qualification and only upon declaration that two or more of the bidders are determined as
LCRBs will a tie be considered to have occurred among the bids.

2. Whether BLGF could set aside the draw lots or similar tie-breaking method considering
that there was an agreement during the Pre-bid Conference that freebies/add-ons could be
considered.

[F]reebies/add-ons, which are items offered by a bidder on top of the minimum requirements set
by the PE in its technical specifications, are not considered in evaluating the bids and
determining compliance with the conditions and requirements specified in the Bidding
Documents mainly because these run counter to the rules on the use of non-discretionary criteria
in Bid Evaluation and Post-Qualification.

[C]onsidering that the appreciation of freebies/add-ons will require discretion among the
members of the BAC, they cannot be used as measures in any tie-breaking method, which, on the
contrary, requires non-discretionary and nondiscriminatory measures that are based on sheer luck
or chance.

The tie-breaking method to be determined by the PE shall be non-discretionary and non-

discriminatory such that the same is based on sheer luck or chance.
3. Whether the use of the old format of Bid Securing Declaration, which was required in
the Bidding Documents, could be a ground for disqualification of a bidder for non-
compliance with the new format.

Under Section 27.1 of the IRR of RA 9184, failure to enclose the required bid security in the
form and amount prescribed therein shall automatically disqualify the bid concerned. In
relation to this, GPPB Resolution No. 15-2014, dated 20 June 2014, amended the form of BSD,
which was originally adopted as another form of bid security under GPPB Resolution No. 03-
2012, dated 27 January 2012.

Consequently, in the event a bidder opts to submit a BSD, the submission must comply with the
form and substance of a BSD pursuant to GPPB Resolution No. 15-2014. Failure to use the
required BSD form shall be a ground for the disqualification of the bidder.

4. Whether the Notice of Award, which was inadvertently signed and sent thru fax to a
bidder could be retracted and revoked considering that the bids were still under review.

[A] duly communicated and received NOA brings about the perfection of contract through the
meeting of the minds of the offeror - the bidder, and the offeree - the Procuring Entity. However,
even if the NOA was duly issued, communicated to and received by the winning bidder, a
contract would have been perfected, conditioned upon specific requirements provided for under
the law and the rules for it to be legally binding and enforceable.

Under Article 1330 of the New Civil Code of the Philippines, a contract where consent is given
through mistake is voidable. But in order that mistake may invalidate consent, it should refer to
the substance of the thing which is the object of the contract, or to those conditions which have
principally moved one or both parties to enter into the contract. Mistake as to the identity or
qualifications of one of the parties will vitiate consent only when such identity or qualifications
have been the principal cause of the contract.

Applying Article 1330 of the New Civil Code of the Philippines in procurement contracts, a
mistake in the issuance of NOA renders the contract voidable. However, the question of whether
the inadvertence in the signing of the NOA and sending it to the bidder may constitute mistake as
contemplated by the New Civil Code of the Philippines, such that it vitiates the consent and
invalidates the contract, is a matter that is well within the sound determination of the PE.

5. Whether BLGF could apply the PADPAO format only but use the minimum rates based
on the New Wage Order, dated 4 April 2015, in computing the respective rates of each
item.
PADPAO rates are issued and prescribed by the PADPAO, an organization of private security
agencies, in order to ensure that its member security agencies pay uniform rates for the service of
its security guards, while the rates indicated in Wage Orders are issued by the Regional Tripartite
Wages and Productivity Board (RTWPB) and forms part of labor rules and standards.

A PE has the discretion to prescribe the use of PADPAO rate, or just the PADPAO format, but
the rates to be indicated by the bidders cannot go below the minimum labor standards.
Considering that Wage Orders issued by the RTWPB form part of labor laws and standards,
security agencies participating in government procurement are mandated to submit bid prices in
accordance with the rates prescribed in these wage orders. Otherwise, it shall cause the
disqualification of the concerned bidder.

Thus, PEs can use PADPAO rates/format as reference in identifying the required items in
security services but it shall ensure that items on standard salaries and benefits for the guards and
the mandated taxes are included in the minimum cost distribution formula in compliance with
existing labor laws and standards.