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Splitting or not?

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Splitting or not?

Post by brucewayne on Sat Apr 18, 2009 2:09 am

Last year, our Health Office requested for the procurement of medical supplies and medicines worth more than 250k. The BAC secretariat posted the medicines in the category of drugs and medicines while the the medical supplies were posted in the medical supplies category. COA said we have violated RA 9184 for splitting it. As BAC Chair I opined that this can not be considered as splitting of contracts because in the Philgeps posting is categorized. But COA countered our position saying that since the requesting office was the same then that is splitting of contracts. Was our action a circumvention of the law on procurement? Di pa naman kami nakulong hanggang ngayon and mind you it was not disallowed.
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Re: Splitting or not?

Post by engrjhez® on Sat Apr 18, 2009 11:58 pm


Almost all agencies at some point of their existence, whether intended or not, had violated the law thru "splitting". Splitting of contracts occur when procurement is divided into "artificial" phases so as to evade or circumvent the bidding process. Confusion arises when the category of procurement is divided by the GEPS itself. If the items involved is non-duplicating and is independent to the other "phases" then, it may not be splitting at all. Additional evidence may be necessary if this has to be proven well beyond reasonable doubt.

As to your question, the answer is always inside of us. If you do not have similar past and/or future procurements of the same (under alternative methods), I can say, probably, you are NOT violating any.
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Re: Splitting or not?

Post by Mikel on Mon Apr 20, 2009 10:37 am

Splitting of contract, per se, is not a violation of the law. what is punishable under the law is when the 'splitting' or breaking up of the contract into smaller quantities and amount is done for the main purpose of evading the requirement of conducting a public bidding.

In my opinion, to be considered a violation of the law and be deemed illegal, the following elements must concur:

1. there is splitting of the contract; and,
2. that the splitting of the contract is for the purpose of evading the conduct of a competitive bidding.

P.S.
I think the term - Splitting of Contract, is a misnomer. it is the procurement project that is being divided and not the contract itself.

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Re: Splitting or not?

Post by RDV @ GP3i on Mon Apr 20, 2009 11:34 am

brucewayne wrote:Last year, our Health Office requested for the procurement of medical supplies and medicines worth more than 250k. The BAC secretariat posted the medicines in the category of drugs and medicines while the the medical supplies were posted in the medical supplies category. COA said we have violated RA 9184 for splitting it. As BAC Chair I opined that this can not be considered as splitting of contracts because in the Philgeps posting is categorized. But COA countered our position saying that since the requesting office was the same then that is splitting of contracts. Was our action a circumvention of the law on procurement? Di pa naman kami nakulong hanggang ngayon and mind you it was not disallowed.

As correctly pointed out by mikel, the act alone of "splitting" does not per se constitute splitting of contract. The more important consideration is the "intention" of the procuring entity, which is to avoid the requirement of the law, particularly on public bidding. (Please see the definition under Sec. 54.1 of IRR-A)

You mentioned that the Health Office requested the procurement of medical supplies and medicines worth more than P250k, which could no longer be done by way of Shopping. It appears as one project only. The suppliers of medical supplies are also suppliers of medicines, generally. It may also appear as one project in the APP. If the only reason for splitting the project into two is to follow the categorization in the PhilGEPS, maybe COA find it a shallow reasoning because you need not categorize the way PhilGEPS did but consider the main purpose of the procurement. Just as in the case of mixed procurements (a project includes procurement of goods and civil works, for example), the nature of procurement shall be determined based on the primary reason of procurement.

If later on the two (2) projects, as it now appears, were later on awarded to only one supplier, how are you going to deal with that situation? That could strengthen the "case" against the BAC/procuring entity.
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Re: Splitting or not?

Post by shobe on Tue Apr 21, 2009 4:14 pm

Last year, our Health Office requested for the procurement of medical supplies and medicines worth more than 250k. The BAC secretariat posted the medicines in the category of drugs and medicines while the the medical supplies were posted in the medical supplies category. COA said we have violated RA 9184 for splitting it. As BAC Chair I opined that this can not be considered as splitting of contracts because in the Philgeps posting is categorized. But COA countered our position saying that since the requesting office was the same then that is splitting of contracts. Was our action a circumvention of the law on procurement? Di pa naman kami nakulong hanggang ngayon and mind you it was not disallowed.

Dear Brucewayne:

Commission on Audit Circular No. 76-41, dated July 30, 1976 as regards the splitting of requisitions, purchase orders, vouchers and the like is quite clear and unambiguous. It explains the three (3) forms of splitting, to wit:

1) Splitting of Requisitions consists in the non-consolidation of requisitions for one or more items needed at or about the same time by the requisitioner.

2) Splitting of Purchase Orders consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by different requisitioners; and

3) Splitting of Payment consist in making two or more payments for one or more items involving one purchase order.'


The above-enumerated forms of splitting are usually resorted to in the following cases:

1) Splitting of requisitions and purchase orders to avoid inspection of deliveries;

2) Splitting of requisitions and purchase orders to avoid action, reviews or approval by higher authorities; and

3) Splitting of requisitions to avoid public bidding.

Sir, if you can justify the alleged splitting of your agency’s requirements vis-ŕ-vis the abovequoted requisites re splitting of contracts, then you probably did not violate the procurement law and the COA circular.
Cool
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Re: Splitting or not?

Post by brucewayne on Wed Apr 22, 2009 1:27 pm

Dear all posters,

It seems that you have all points and your opinions are comparable to supreme court rulings with matching quotations from existing laws and relevant issuances. Kudos to you all! Very Happy Very Happy Very Happy
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Re: Splitting or not?

Post by engrjhez® on Wed Nov 24, 2010 6:04 pm

Consider this case naman. Two requisitions say amounting 2.5M and 3.5M for the purchase of medical supplies. The first, to be used for Rural Health Units and the other for a District Hospital. Most of the supplies were identical. The supplies for the hospital was approved following the approval of supplemental budget while the first one for RHUs was already in the APP from the beginning of budget year. In the intent as not to disturb the original APP but to issue a supplemental APP the two requisitions remained as two. Incidentally, the schedules of their respective bidding coincided.

However, after the conduct of procurement process, the two procurements yielded two suppliers. Supplier "A" won for contract on RHU and Supplier "B" for the hospital. They both appear not to have competed with each other. After award of their individual contracts, it was learned (on pre-audit) that since their unit prices vary, Supplier "B" may have offered the lowest price should they competed with Supplier "A" (but it did not happen). Now, splitting of (procurement) contract may be ruled out but the results of the procurement may indicate overpricing.

Let us hear again what other can say about this. Smile
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