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Procurement Contract Without Availability of Funds

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Procurement Contract Without Availability of Funds

Post by rune-x on Wed Jan 04, 2012 4:22 pm

Can a contract be entered into by a government agency without sufficient funds? Can the contract be such that the funds to be paid to the contractor will be from the fees the government agency shall collect from end-users?

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Re: Procurement Contract Without Availability of Funds

Post by Jovinal on Wed Jan 04, 2012 4:55 pm

No, there should be an approved budget to cover the contract, that is what we call Approved Budget for the Contract which is required in every procurement.
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Re: Procurement Contract Without Availability of Funds

Post by lena2011 on Fri Jan 20, 2012 4:30 pm

But is it okay to proceed with the posting of invitation to bid, without a certification of availability of funds on hand of the BAC, provided that ABC is determined and source of fund is known?

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Re: Procurement Contract Without Availability of Funds

Post by riddler on Fri Jan 20, 2012 7:13 pm

lene2011 wrote:But is it okay to proceed with the posting of invitation to bid, without a certification of availability of funds on hand of the BAC
Very Happy lene, i think your query is already answered by jovinal. the bottom line is, no ABC no procurement. if you proceed with the Invitation to Bid without the proper source of appropriate fund, chances are Bidder/s may purchase bidding documents only to be suspended/posponed if the funds is short or not readily available Very Happy

lene2011 wrote:provided that ABC is determined and source of fund is known?

Very Happy The source of fund must legally met the requirement of your agency before it has to be purposely use as ABC. Very Happy e.g. Board Resolution,etc. etc.Very Happy Very Happy

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Re: Procurement Contract Without Availability of Funds

Post by lena2011 on Tue Jan 24, 2012 6:03 pm

the source of fund is a loan applied to a bank, to which there is already notice that the loan is already approved with a corresponding amount indicated. The funds however, is still to be transferrred to our agency. This is our basis in posting, including the project type and amount , to which one more basis is the MOA with the bank. Of course, from the amount we have computed the ABC.

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Re: Procurement Contract Without Availability of Funds

Post by alpha1 on Wed Jan 25, 2012 10:35 am

It seems that there was confusion on your part lene2011, on your first posting you said that there is no certification for the availability of funds but on your second posting you mentioned that there was already a notice of loan approval from the bank. In my own understanding, there is already a fund available for that purpose. The actual release is just but a ministerial one considering that there is also a MOA between the bank and your municipality.
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Re: Procurement Contract Without Availability of Funds

Post by lena2011 on Wed Jan 25, 2012 10:55 am

thanks. i was referring to the certification of fund availability which is issued by the treasurer. the amount is still to be transferred to the agency.

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Re: Procurement Contract Without Availability of Funds

Post by RDV @ GP3i on Sun Jan 29, 2012 10:48 pm

lene2011 wrote:the source of fund is a loan applied to a bank, to which there is already notice that the loan is already approved with a corresponding amount indicated. The funds however, is still to be transferrred to our agency. This is our basis in posting, including the project type and amount , to which one more basis is the MOA with the bank. Of course, from the amount we have computed the ABC.

The loan or the expected loan has to be appropriated first by the sanggunian concerned. If the loan is used directly, without the necessary appropriation, there could be violation not only of the procurement law but also of the Local Government Code.
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Re: Procurement Contract Without Availability of Funds

Post by alpha1 on Mon Jan 30, 2012 10:23 am

RDV @ GP3i wrote:
lene2011 wrote:the source of fund is a loan applied to a bank, to which there is already notice that the loan is already approved with a corresponding amount indicated. The funds however, is still to be transferrred to our agency. This is our basis in posting, including the project type and amount , to which one more basis is the MOA with the bank. Of course, from the amount we have computed the ABC.

The loan or the expected loan has to be appropriated first by the sanggunian concerned. If the loan is used directly, without the necessary appropriation, there could be violation not only of the procurement law but also of the Local Government Code.

Thanks RDV.

But for clarification, isn't it that before an LGU can secure any loan there is an appropriate sanggunian resolution authorizing the LCE to enter into any contract or loan agreement and indicating therein the purpose for which the loan shall be disburse?. We are also in the process of securing a loan, but our sanggunian will only allow such if the purpose of the loan is already indicated therein; e.g. "Procurement of 250 HP Marine Engine"
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Re: Procurement Contract Without Availability of Funds

Post by lena2011 on Mon Jan 30, 2012 11:08 am

noted RDV. thanks alpha1. yes, there is indeed a purpose and amount indicated in securing the loan, and is indicated in the sanggunian resolution authorizing for the mayor to enter into MOA.

thanks for the clarification.

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Re: Procurement Contract Without Availability of Funds

Post by RDV @ GP3i on Mon Jan 30, 2012 12:26 pm

alpha1 wrote:
RDV @ GP3i wrote:
lene2011 wrote:the source of fund is a loan applied to a bank, to which there is already notice that the loan is already approved with a corresponding amount indicated. The funds however, is still to be transferrred to our agency. This is our basis in posting, including the project type and amount , to which one more basis is the MOA with the bank. Of course, from the amount we have computed the ABC.

The loan or the expected loan has to be appropriated first by the sanggunian concerned. If the loan is used directly, without the necessary appropriation, there could be violation not only of the procurement law but also of the Local Government Code.

Thanks RDV.

But for clarification, isn't it that before an LGU can secure any loan there is an appropriate sanggunian resolution authorizing the LCE to enter into any contract or loan agreement and indicating therein the purpose for which the loan shall be disburse?. We are also in the process of securing a loan, but our sanggunian will only allow such if the purpose of the loan is already indicated therein; e.g. "Procurement of 250 HP Marine Engine"

Before the sanggunian authorization to enter into contract, there has to be a sanggunian authorization first to enter into a loan agreement. Aside from that sanggunian authorization, the LGU should pass a budget for the amount of the loan which is usually done thru a supplemental budget, if the same is not yet part of its annual budget. The sanggunian authorization to enter into contract, on the other hand, could already be included as one of the provisions of the Supplemental Budget. The amount and purpose of the loan necessarily are indicated in the supplemental budget. The amount of the loan in the supplemental budget will then become the Approved Budget for the Contract (ABC) which could be the basis for the conduct of public bidding.

If the LGU will not pass a supplemental budget for the amount of the loan, what could then be the basis of the ABC? The loan itself? The loan alone cannot be the basis of the ABC for without the ABC no bidding could be conducted. If you go by the definition of ABC in RA 9184 and its IRR, the ABC (for LGUs) is the budget approved by the sanggunian.
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Re: Procurement Contract Without Availability of Funds

Post by Jovinal on Mon Jan 30, 2012 1:27 pm

I agree with you SIR.
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Re: Procurement Contract Without Availability of Funds

Post by engrjhez® on Mon Jan 30, 2012 6:32 pm

I agree with RDV. The authorization to enter into loan agreement must be separated from Appropriation Ordinance which is required under RA 9184.
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Re: Procurement Contract Without Availability of Funds

Post by alpha1 on Tue Jan 31, 2012 9:31 am

Thanks to all!

I will try to discuss this with our sanggunian and local finance committee if in case this will transpire so that everything will be in order.
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Re: Procurement Contract Without Availability of Funds

Post by amor2012 on Fri Mar 16, 2012 11:29 am

riddler wrote:
lene2011 wrote:But is it okay to proceed with the posting of invitation to bid, without a certification of availability of funds on hand of the BAC
Very Happy lene, i think your query is already answered by jovinal. the bottom line is, no ABC no procurement. if you proceed with the Invitation to Bid without the proper source of appropriate fund, chances are Bidder/s may purchase bidding documents only to be suspended/posponed if the funds is short or not readily available Very Happy

lene2011 wrote:provided that ABC is determined and source of fund is known?

Very Happy The source of fund must legally met the requirement of your agency before it has to be purposely use as ABC. Very Happy e.g. Board Resolution,etc. etc.Very Happy Very Happy


in the case of printing for a souvenir program where the source of fund will come from the advertisement fees, can we proceed with the previous years printing cost as the basis for the ABC? the ad fees will be deposited to a trust fund for such purposes...

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