IRR of EO 40 requires a valid joint venture agreement; COMELEC BAC ignored requirement.

The main issue on the eligibility of Mega Pacific Consortium can be settled by the applicability of the Implementing Rules and Regulations of Executive Order No. 40.

The Government Procurement Reform Act (GPRA, RA 9184) was approved as a law on January 10, 2003. It was published in newspapers of general circulation the following day and took effect fifteen (15) days after its publication. Thus, GPRA took effect on January 26, 2003.

Prior to the effectivity of the GPRA, Executive Order No. 40 which was signed by Pres. Gloria Macapagal-Arroyo on October 8, 2001 consolidated the procurement rules and procedures for all national government agencies (NGAs), government-owned or –controlled corporations (GOCCs) and government financial institutions (GFIs) and required the use of Government Electronic Procurement System (GEPS). The implementing rules and regulations of EO 40 was signed on February 8, 2002.

With the passage of RA 9184, certain procurement laws, including EO 40 were expressly repealed. However, the law did not specify which implementing rules will have to be followed in the meantime that the IRR of the GPRA has not yet taken effect. This is a legislative oversight that might just prove costly if the Supreme Court will rule later on that the penal liabilities of the persons involved cannot be determined in the absence of a valid IRR of the law governing the procurement.

The Implementing Rules and Regulations of the GPRA consist of two parts – Part I (IRR-A) covers all domestically-funded procurement activities and Part II (IRR-B) covers all foreign-funded procurement activities. IRR-A eventually took effect last October 8, 2003.

The “Invitation to Apply for Eligibility and to Bid” was issued by the BAC of COMELEC on January 28, 2003 or just two days after the effectivity of RA 9184.

Which implementing rules and regulations should the BAC follow?

This was the dilemma of most government offices at that time. They are to comply with the GPRA in their procurement activities but its IRR is not yet in place.

An interesting legal question also arises: Did the express repeal of EO 40 render its implementing rules ineffective?

Procurement is an ongoing activity of government. Its conduct cannot be hampered. Otherwise, major government services will suffer. This indispensable need for procurement in the day to day operations of government renders it unthinkable that Congress, in passing the GPRA into law, intended to halt government operations because of its oversight to provide which implementing rules and regulations will have to govern in the interim that the IRR of GPRA is still being crafted and until said IRR finally takes effect.

Eighteen government offices actually sought the opinion of the Government Procurement Policy Board (GPPB) on the matter. As early as February 5, 2003 or nine (9) days prior to the release of COMELEC-BAC of the eligibility criteria, terms of reference and other pertinent documents to interested bidders, the GPPB already made a pronouncement that “the procedures embodied in E.O. 40 and its IRR shall still apply until the IRR of the GPRA shall have been finally approved.” (TSG NPM 002-2003)

Having established the applicability of the IRR of EO40, let us now consider the most important provisions that apply to the Mega Pacific Case.

Eligibility check is defined under said IRR as a “simplified form of pre-qualification based on non-discretionary pass/fail criteria.” Note the use of the word ‘non-discretionary.’ It means that the BAC has no discretion in the pre-qualification process. The BAC simply has to follow the “non-discretionary pass/fail criteria.”

Under Rule 16.7, the IRR provides, “The determination of eligibility shall be based on the submission of the following documents to the BAC, utilizing the forms prepared by the BAC and using the criteria stated in Section 16.2:
1. BAC certification of the official registration of the prospective bidder, referred to in Section 16.1.1 of these IRR.
2. Technical Documents:
a) Valid joint venture agreement, in case of a joint venture.”

This provision was, in fact, carried over to the IRR-A of RA 9184.

In ruling that there is no irregularity in the BAC decision finding Mega Pacific Consortium eligible for bidding, the Ombudsman relied on the dissenting opinion of Justice Tinga which reads,

“Nowhere in the RFP is it required that the members of the joint venture execute a single written agreement to prove the existence of a joint venture. Indeed, the intention to be jointly and severally liable may be evidenced not only by a single joint venture agreement but by supplementary documents executed by the parties signifying such intention.”

While it may not have been included in the Request for Proposal issued by the BAC, yet the bidding rules and regulations applicable at the time the COMELEC-BAC conducted the bidding specifically provided that part of the technical documents to be submitted for eligibility is a “valid joint venture agreement, in case of a joint venture.”

A valid joint venture agreement cannot but be a single document executed between and among the members of such joint venture.

We have established that the COMELEC-BAC did not follow the “non-discretionary ‘pass/fail’ criteria in evaluating the eligibility of the bidders. We have also shown that it totally disregarded the requirement for the submission of a valid joint venture agreement by any joint venture desiring to participate in the bid.

Why then, does this Government trumpet its efforts on reforming the bidding process if right at its inception, it will just be disregarded?

Why hail procurement reforms when the Ombudsman, who is supposed to be at the forefront of stamping out corruption and irregularities in government seems to be condoning the acts of COMELEC-BAC in disregarding these laws?