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Mayor's Permit from another location

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Mayor's Permit from another location

Post by orlan747 on Thu Apr 02, 2009 2:49 pm

Please enlighten me whether it is legal for an LGU to require a Mayor's Permit from their own city/municipality from an out-of-town prospective bidder despite of the fact that the said prospective bidder have already mayor's permit from their own locality and that they have no physical presence yet in the LGU that sends out the ITB. If this is legal, could you please point out a law/regulation that supports this practice? If not, could you provide some provision of the law? Thanks.
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Re: Mayor's Permit from another location

Post by engrjhez® on Thu Apr 02, 2009 5:57 pm

If the purpose of your requisition is joining a procurement activity, I'm afraid it is not possible. The IRR states:

23.6. Eligibility Check for the Procurement of Goods and Infrastructure Projects

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 23.11 of this IRR-A:

1. Class “A” Documents -

Legal Documents

a) Department of Trade and Industry (DTI) business name registration or
SEC registration certificate, whichever may be appropriate under
existing laws of the Philippines;

b) Valid and current Mayor’s permit/municipal license;

c) x x x


The validity of mayor's permit does not speak of the location in particular. However, it is encouraged by some LGUs (including ours) to still secure a Municipal Permit after having awarded a contract (if the main branch of business is outside the LGU concerned) for the purposes of local taxation. It is necessary to note however, that as long as the Mayor's Permit for Business is valid and current, there is no way we can invoke ineligibility based on the absence of local municipal license. Very Happy
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Thanks Engrjhez

Post by orlan747 on Thu Apr 02, 2009 9:29 pm

Thanks for the reply. How I wish you could point me to a specific provision of law which I can cite to BACs concerned. Frankly, I have had some heated arguments with the BACs from Talisay City, Negros Occidental and Kabankalan City, Negros Occidental because they specifically required prospective bidders to secure mayor's permit from their cities. They have made it one of their requirements for eligibility. If this is not legal, this could be a dangerous precedent. I had even noticed that the BAC of Cebu City has specifically stated this requirement in their ITB for their project IDs 9HH0015 to 0033. If you may, please look at it in this page: http://www.dpwh.gov.ph/PDF/cw/ad/09/mar/Cebu%20City_DEO_(4-2)_3-26_(HH15-36).pdf

Of course if the project is awarded, then a mayor's permit in that city will be an essential requirement, but not while you are still submitting your eligibility requirements to be able to participate in the Bidding.
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BAC of DPWH Cebu City District Enginering Office

Post by orlan747 on Thu Apr 02, 2009 9:33 pm

Excuse me, I meant the BAC of Cebu City District Engineering Office not that of Cebu City.
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Re: Mayor's Permit from another location

Post by engrjhez® on Thu Apr 02, 2009 9:50 pm

The DPWH has a GPPB approved Customized Procurement Manual. You may download a copy here.

Looking on Volume 3 Section 3.3.2.3.a(3), the Business permit requirement particularly cited "The prospective bidder must have a valid Business Permit from the City or Municipality, x x x".

Since the DPWH is specific in this requirement, you may have no choice but to comply.

Very Happy
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Re: Mayor's Permit from another location

Post by RDV @ GP3i on Fri Apr 03, 2009 11:11 am

orlan747 wrote:Thanks for the reply. How I wish you could point me to a specific provision of law which I can cite to BACs concerned. Frankly, I have had some heated arguments with the BACs from Talisay City, Negros Occidental and Kabankalan City, Negros Occidental because they specifically required prospective bidders to secure mayor's permit from their cities. They have made it one of their requirements for eligibility. If this is not legal, this could be a dangerous precedent. I had even noticed that the BAC of Cebu City has specifically stated this requirement in their ITB for their project IDs 9HH0015 to 0033. If you may, please look at it in this page: http://www.dpwh.gov.ph/PDF/cw/ad/09/mar/Cebu%20City_DEO_(4-2)_3-26_(HH15-36).pdf.

Because it is not clear in IRR-A, and it could be subject to abuse, the LGU Procurement Manual (Vol 2, p. 29) released by the GPPB has included the following: Submission of the bidder’s mayor’s permit from its principal place of business is enough compliance with this eligibility requirement. ]http://www.gppb.gov.ph/downloadables/forms/LGU-Volume%202.pdf

Likewise, in the draft IRR, the particular eligibility requirement is made much clearer with the following rewording of the provision: "Valid and current Mayor’s permit issued by the city or municipality where the principal place of business of the prospective bidder is located;"

Requiring a mayor's permit "from their own city/municipality from an out-of-town prospective bidder despite of the fact that the said prospective bidder have already mayor's permit from their own locality" is contrary to the Principle of Competitiveness of the GPRA, since it will be limiting competition among bidders within the locality only. (The out-of-town bidders could not apply because they don't have a local address, or may be denied issuance of a mayor's permit in the locality just to prevent them from competiting with local suppliers.)

orlan747 wrote:Of course if the project is awarded, then a mayor's permit in that city will be an essential requirement, but not while you are still submitting your eligibility requirements to be able to participate in the Bidding.
AGREE!
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Re: Mayor's Permit from another location

Post by shobe on Fri Apr 03, 2009 12:56 pm

Please enlighten me whether it is legal for an LGU to require a Mayor's Permit from their own city/municipality from an out-of-town prospective bidder despite of the fact that the said prospective bidder have already mayor's permit from their own locality and that they have no physical presence yet in the LGU that sends out the ITB. If this is legal, could you please point out a law/regulation that supports this practice? If not, could you provide some provision of the law? Thanks.

Points to ponder:study

a) As pointed out by Sir RDV and Engrjhez, what the IRR-A merely require is a valid and current permit or license. It does not clearly provide that the permit or license should be from the province, city or municipality where the project is located;
b) However, it should be noted that what the IRR-A provides are but minimum requirements thus, procuring entities can argue that they can ask for additional requirements, a permit or license where the project is located may be one of them;
c) On the other hand, prospective bidders not situated within the locality who are willing to bid can argue that they should not be required such document considering that only those physically situated within such locality can be issued such permit.

From my point of view, considering that the rationale behind requiring the legal documents is for any procuring entity to determine and be assured that the prospective bidder has a legal capacity, then requiring that prospective bidders get a permit or license from the locality where the project is located is but superfluous: the permit or license issued from the place of business of the bidder should suffice. To add, it will definitely limit competition among only those situated within the area, as pointed out by Sir RDV, thus rendering the public bidding a mere sham. The draft IRR better include the clarified provision on this issue so that this requirement will not be abused.
Suspect
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Re: Mayor's Permit from another location

Post by engrjhez® on Fri Apr 03, 2009 5:25 pm

The DPWH may have the rationale to specify the particularity of business permits. It is said to be more advantageous for the government if the contractor is based, or have an extension office within the city/municipality:

(1) hauling of materials to site;
(2) hauling of manpower and equipment;
(3) easier to coordinate if within locality; and,
(4) contractor is always ready address acountability in case of unexpected accidents or construction related damages.

If outside bidders can match the bid proposal of locally-based contractors - then there is no reason why the latter cannot match it even better. Thus, this puts the pressure on local contractors to even mark-down their bids in anticipation of competitive pricings.The DPWH requirement is also an invitation for outside bidders to setup their business (as in a branch) in the location where project is to be bid and implemented (because they cannot secure a Mayor's Business Permit without a specifically owned or leased property to put up their office with.

But that's just my observation. I'm in for no further restriction other than that stipulated by the IRR.
Very Happy
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Re: Mayor's Permit from another location

Post by RDV @ GP3i on Fri Apr 03, 2009 5:46 pm

engrjhez wrote:[justify][color=green]The DPWH may have the rationale to specify the particularity of business permits. It is said to be more advantageous for the government if the contractor is based, or have an extension office within the city/municipality:

(1) hauling of materials to site;
(2) hauling of manpower and equipment;
(3) easier to coordinate if within locality; and,
(4) contractor is always ready address acountability in case of unexpected accidents or construction related damages.

That particular advantage could not be ascertained before-hand. It may be determined, during the evaluation or post-qualification, but not before bids are even submitted. The BAC/TWG can see that only when it opens the bidder's Technical Proposal, particularly the Construction Schedule and S-Curve. Looking also at the bidders Financial Proposal, the BAC/TWG could also examine the Bill of Quantities and Detailed Estimates as to the costing, specifically how it costs those mentioned in items (1) and (2).

Also during post-qualification, the procuring entity can determine if the contractor would be able to perform its obligations if awarded the contract. But to say beforehand that local contractors are in better position is not well-placed. It should be determined thru the competitive bidding process. Once awarded the contract, the contractor will definitely establish an extension office in the area, but they should not be required to do it first in order to qualify in joining the bidding process.

engrjhez wrote:If outside bidders can match the bid proposal of locally-based contractors - then there is no reason why the latter cannot match it even better. Thus, this puts the pressure on local contractors to even mark-down their bids in anticipation of competitive pricings.The DPWH requirement is also an invitation for outside bidders to setup their business (as in a branch) in the location where project is to be bid and implemented (because they cannot secure a Mayor's Business Permit without a specifically owned or leased property to put up their office with.

If that is the case, then the local contractors have nothing to fear since award is based on the lowest calculated and responsive bid anyway. The pressure is part of the competitive process. If there is no such pressure, then the the local contractors will bid higher up to the maximum of the ABC, thereby depriving the procuring entity from getting the most advantageous price for the government.
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Re: Mayor's Permit from another location

Post by ten2089 on Fri Aug 24, 2012 8:54 am

Related to this, if a bidder submits a Mayor's Permit from a city other than the bidder's principal place of business, is the bidder automatically disqualified or can the bidder correct this during post-qualification by presenting the Mayor's permit from the principal place of business? Thanks.

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Re: Mayor's Permit from another location

Post by engrjhez® on Fri Aug 24, 2012 10:17 am

ten2089 wrote:Related to this, if a bidder submits a Mayor's Permit from a city other than the bidder's principal place of business, is the bidder automatically disqualified or can the bidder correct this during post-qualification by presenting the Mayor's permit from the principal place of business? Thanks.

If we are still under the regime of IRR-A, the Mayor's permit would be valid. But effective September 03, 2009, the required Mayor's Permit must be from the principal place of business:

Section 23. Eligibility Requirements for the Procurement of Goods and
Infrastructure Projects

23.1 x x x

a) x x x

i. x x x

ii. Mayor’s permit issued by the city or municipality where the principal
place of business of the prospective bidder is located.


x x x (Emphasis supplied)
You cannot submit anymore another Mayor's Permit during Post Qual as the documents were already limited to the following.

34.2. Within three (3) calendar days from receipt by the bidder of the notice from the BAC
that the bidder has the Lowest Calculated Bid or Highest Rated Bid, the bidder shall
submit the following documentary requirements to the BAC:

a) Tax clearance;

b) Latest income and business tax returns;

c) Certificate of PhilGEPS Registration; and

d) Other appropriate licenses and permits required by law and stated in the
Bidding Documents.


Failure to submit the above requirements on time or a finding against the veracity of
such shall be ground for the forfeiture of the bid security and disqualify the bidder
for award. (Underscoring supplied)
Although the underlined may appear as a possibility of submitting a Mayor's Permit, it cannot be construed to mean the same as those listed under Sec.23 as an eligibility requirement. Further, the requisite is that such permits/licenses must be stated in the bidding documents before it can be validly required.

Hope it clarified things. Smile
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Re: Mayor's Permit from another location

Post by ten2089 on Fri Aug 24, 2012 10:21 am

Yes, this is very helpful, thanks!

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