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DOLE Department Order 18-A

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DOLE Department Order 18-A

Post by advocacy on Tue Mar 20, 2012 5:58 pm

I have a question regarding DOLE Department Order No. 18-A, series of 2011.

Under Section 9. Required contracts under these Rules:

" (a) Employment contract between the contractor and its employees. Notwithstanding any oral or written stipulations to the contrary, the contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions:

ii. The place of work and terms and conditions governing the contracting arrangement to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost."

Thus, the DOLE with this Department Order has set a floor price for the Administrative Overhead and Profit Margin for services, such as security guards or janitors, and this is set at 10%.

This seems to go against the provisions of R.A. 9184, which state that there shall be no floor price in a competitive bidding. Still, a bid which goes against the laws and provisions set forth by the DOLE may also be considered non-responsive because a violation against the Department Order is being committed.

Should DOLE Department Order 18-A be followed by bidders when calculating their bid proposals?

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Re: DOLE Department Order 18-A

Post by sunriser431 on Wed Mar 21, 2012 11:57 am

advocacy wrote:I have a question regarding DOLE Department Order No. 18-A, series of 2011.

Under Section 9. Required contracts under these Rules:

" (a) Employment contract between the contractor and its employees. Notwithstanding any oral or written stipulations to the contrary, the contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions:

ii. The place of work and terms and conditions governing the contracting arrangement to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost."

Thus, the DOLE with this Department Order has set a floor price for the Administrative Overhead and Profit Margin for services, such as security guards or janitors, and this is set at 10%.

This seems to go against the provisions of R.A. 9184, which state that there shall be no floor price in a competitive bidding. Still, a bid which goes against the laws and provisions set forth by the DOLE may also be considered non-responsive because a violation against the Department Order is being committed.

Should DOLE Department Order 18-A be followed by bidders when calculating their bid proposals?
In my personal opinion, the DOLE Department Order 18-A is applicable in the private sector industry and there exist the employer-employee relationship. However for government agencies contracting the security and janitors services there is no direct employer-employee relationship exist, so I believe its not applicable. bounce
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Re: DOLE Department Order 18-A

Post by vdrc on Wed Apr 11, 2012 1:57 pm

i have the same question... up for this one!

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Re: DOLE Department Order 18-A

Post by advocacy on Thu Apr 12, 2012 2:57 pm

Has the GPPB made any representations to the DOLE regarding this matter?

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Re: DOLE Department Order 18-A

Post by RDV @ GP3i on Sat Apr 14, 2012 9:24 pm

advocacy wrote:I have a question regarding DOLE Department Order No. 18-A, series of 2011.

Under Section 9. Required contracts under these Rules:

" (a) Employment contract between the contractor and its employees. Notwithstanding any oral or written stipulations to the contrary, the contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions:

ii. The place of work and terms and conditions governing the contracting arrangement to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost."

Thus, the DOLE with this Department Order has set a floor price for the Administrative Overhead and Profit Margin for services, such as security guards or janitors, and this is set at 10%.

This seems to go against the provisions of R.A. 9184, which state that there shall be no floor price in a competitive bidding. Still, a bid which goes against the laws and provisions set forth by the DOLE may also be considered non-responsive because a violation against the Department Order is being committed.

Should DOLE Department Order 18-A be followed by bidders when calculating their bid proposals?

There is no conflict between this DOLE Department Order and RA 9184. As a matter of fact it supplements the latter. It is correct that there is no floor price in RA 9184. It is for this reason that, I am sure, this DO is issued to protect security guards and janitors. Because there is no floor in bid prices in RA 9184, there is always that tendency for providers of janitorial and security services to go so much lower in their bid prices in order to be declared the LCRB. However, the lowering of bid prices will always be to the detriment of janitors and guards as their wages and other benefits will be affected.

So, to protect them, this DO would prohibit service providers from lowering their administrative overhead and profit margin below the minimum set by DOLE. That way, the bid prices of service providers should not be too low and, definitely, it is not in conflict with RA 9184.
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Re: DOLE Department Order 18-A

Post by sunriser431 on Mon Apr 16, 2012 9:47 pm

For proper guidance,latest update issued by DOLE regarding the clarification and applicability of DO 18-A series of 2011. For complete text, follow the LINK bounce
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Re: DOLE Department Order 18-A

Post by meijunji on Fri Jun 08, 2012 2:18 pm

Hi,

We recently read the DOLE Department Order 18-A, and we need to seek your comments on the BAC's observations:

1. From the Order, it requires a "substantial capital" paid up capital stocks of atleast PhP 3M for corporations and atleast PhP 3M of net worth for single proprietorship, in this sense, in the Factors of the NFCC computation, or in the additional technical parameters, the bidders should present such qualification?

2. In the particulars in the Financial Proposal, should they put atleast 10% admin overhead to become the lowest calculated and responsive bid?

Hope you can advise us soon, since we are about to publish an invitation to bid for our security and janitorial services. Thank you.

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Re: DOLE Department Order 18-A

Post by regina avelino on Fri Jun 08, 2012 2:44 pm

Good afternoon po sir, please rephrase your question for no. 1. It's kind of confusing.

with regard po sa no. 2, the order requires that the bidder should not go below 10%. they may charge 11%, 12% or more of the total contract cost. But if the bidder would like to make sure that they will bid the lowest price, definitely they would charge the least which is 10%. But the administrative charge is not the only determinant of getting the lowest bid. One way is to use the minimum daily wage in your reimbursable cost and all other reimbursable cost will follow such as night differential, COLA, 13th month pay, SIL and the SSS, PHILHEALTH, ECC, PAG-IBIG contribution, since all of this will be computed based on the minimum wage. Lastly, if the contract, requires provision of janitorial supplies and materials to be provided during the contract, you can charge this at a minimum to get a lower bid.

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Re: DOLE Department Order 18-A

Post by meijunji on Fri Jun 08, 2012 4:36 pm

regina avelino wrote:Good afternoon po sir, please rephrase your question for no. 1. It's kind of confusing.

with regard po sa no. 2, the order requires that the bidder should not go below 10%. they may charge 11%, 12% or more of the total contract cost. But if the bidder would like to make sure that they will bid the lowest price, definitely they would charge the least which is 10%. But the administrative charge is not the only determinant of getting the lowest bid. One way is to use the minimum daily wage in your reimbursable cost and all other reimbursable cost will follow such as night differential, COLA, 13th month pay, SIL and the SSS, PHILHEALTH, ECC, PAG-IBIG contribution, since all of this will be computed based on the minimum wage. Lastly, if the contract, requires provision of janitorial supplies and materials to be provided during the contract, you can charge this at a minimum to get a lower bid.

Thank you ma'am.

As for number 1, because in the definition of terms of the DOLE Order, section 3 (l):

"Substantial capital" refers to paid-up capital stocks/shares of at least Three Million Pesos (P 3,000,000.00) in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of atleast Three Million Pesos (P 3,000,000.)

In this case po, should this be added as a part of the financial capacity qualifications for additional technical parameters of contractors when we examine its Financial Statement or in the computation of its NFCC?

Should these be the minimum requirement set forth for the financial capacity in addition to the NFCC?

Paano po kung pumasa sila sa NFCC pero the net working capital is below the PhP 3Million requirements?

thank you po..

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Re: DOLE Department Order 18-A

Post by regina avelino on Fri Jun 08, 2012 5:52 pm

Definitely, the NFCC and the working capital requirement must both be met by the bidder. Failure of one requirement would mean disqualification of the bidder. Non-discretionary po dapat yun.

With regard to "substantial capital", it is not part of the computation of the NFCC. Please refer to section 23.5.2.6 of the revised IRR of RA 9184 on how to compute the NFCC. The "substantial capital requirement is separate from the NFCC requirement and both must be checked during the evaluation by the procuring entity.

Hope to get your query right.


Last edited by regina avelino on Mon Jun 11, 2012 11:33 am; edited 1 time in total

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So there will always be a floor price?

Post by advocacy on Fri Jun 08, 2012 5:53 pm

sunriser431 wrote:For proper guidance,latest update issued by DOLE regarding the clarification and applicability of DO 18-A series of 2011. For complete text, follow the LINK bounce

So according to DOLE Department Circular No. 01, series of 2012, agencies for security or janitorial projects must always bid on 10% of they agency fee in government procurement activities? Thus, ideally, most bidding activities for said projects will end in a tie?

Should not R.A. 9184, which is an IRR, supersede any mere Department Order?

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Re: DOLE Department Order 18-A

Post by sunriser431 on Sun Jun 10, 2012 8:42 am

advocacy wrote:
sunriser431 wrote:For proper guidance,latest update issued by DOLE regarding the clarification and applicability of DO 18-A series of 2011. For complete text, follow the LINK bounce

So according to DOLE Department Circular No. 01, series of 2012, agencies for security or janitorial projects must always bid on 10% of they agency fee in government procurement activities? Thus, ideally, most bidding activities for said projects will end in a tie?
Should not R.A. 9184, which is an IRR, supersede any mere Department Order?
The GPPB has issued circular 06-2005 on the Use of Non-Discretionary/Non-Discriminatory Selection criteria as Tie-Breaking Method. For full text of the circular, follow the LINK bounce
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Re: DOLE Department Order 18-A

Post by meijunji on Fri Jun 22, 2012 1:03 pm

Hello po ma'am/sir,

We have some queries with GPPB regarding the requirement of DOLE 18-A, we need the opinion of the GPPB, for it to be binding on our bidding.

Paano po kami magpadala sa GPPB? thru fax; thru snail mail; thru email? Paano po? Ilang days po kaya ang reply nila? Yung procuring entity po ba ang ang dapat mag-inquire or yung mga bidder? Thank you po.

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Re: DOLE Department Order 18-A

Post by advocacy on Tue Aug 14, 2012 5:00 pm

Can the BAC decide on discretionary means to break a tie?

For example, in bids for security services, wherein all bidders will be tied due to 10% floor price stated in Department Order 18-A, can the BAC instruct all bidders to state add-ons included in their bid, and then the BAC will decide which of the bidders will give the most advantageous bid for the Procuring Entity?

Alternatively, can the BAC grade the security plan submitted by the agencies, and the one with the highest grade be awarded the contract?

Admittedly, both of these practices are highly subjective. Nonetheless, at least two Procuring Entities have included such instructions for breaking a tie in their Instructions to Bidders.

May we kindly request clarification and guidance from the BAC regarding this highly contestable issue?

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Re: DOLE Department Order 18-A

Post by regina avelino on Wed Aug 15, 2012 10:47 am

Based on CIRCULAR NO. 06-2005 dated August 05, 2005, these add-ons should have been identified by the Procuring entity at the onset of the bidding process, and thereafter include in the bidding documents as instruction or a matter of information to prospective bidders, a ready and clear measure to be used in the event two or more of the bidders have been post-qualified as LCRB or HRRB.

If these were not defined in the bidding documents, then you cannot make decision who to choose based on the add-ons or negotiated specification after there was a tie as these would mean discretionary conduct on the part of the part procuring entity. Put the criteria (specifications) in the bidding documents before the bidding and based your decision on these criteria in case of a tie. Kung tie pa rin, draw lots na as per circular.

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Re: DOLE Department Order 18-A

Post by Abecedarian on Wed Aug 22, 2012 3:34 pm

Good afternoon. Anybody knew on the bid price distribution for janitorial services?
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Re: DOLE Department Order 18-A

Post by regina avelino on Wed Aug 22, 2012 5:30 pm

I believe you are referring to the standard computation. please refer to Annex A of the department order 18-A series of 2011. if the contract requires provision of supplies and materials and other inclusions such as VAT, uniform etc. just include these items to come up with the price distribution.

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Re: DOLE Department Order 18-A

Post by Abecedarian on Thu Aug 23, 2012 9:15 am

Thank you very much. Smile
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Re: DOLE Department Order 18-A

Post by Abecedarian on Tue Aug 28, 2012 8:53 am

Regarding VAT. Is it 12% of the administrative cost or 12% of the contract cost? Anybody please...

Thanks, study
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Re: DOLE Department Order 18-A

Post by regina avelino on Tue Aug 28, 2012 9:13 am

The minimum 10% administrative cost is based on the total Reimbursable Costs which is Payable Directly to Servicemen and Payable to the government Employer Share.

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Re: DOLE Department Order 18-A

Post by Abecedarian on Tue Aug 28, 2012 11:27 am

I mean the 12% VAT, not the administrative cost.
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Re: DOLE Department Order 18-A

Post by regina avelino on Tue Aug 28, 2012 11:43 am

Oh, I see. sorry po. You add 12% VAT based on your determined administrative cost. Example:

Total Reimbursable Cost------------P10,000.00
Administrative Cost-------------------1,000.00 (10% of Total Reimbursable Cost)
VAT-----------------------------------120.00 (12% of Administrative Cost)
Contract/Billing rate per------------P11,120.00
month per employee

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Re: DOLE Department Order 18-A

Post by Abecedarian on Tue Aug 28, 2012 12:26 pm

So, the VAT is 12% of the administrative cost, not 12% of the contract cost. Thank you, Regina. Very Happy
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Re: DOLE Department Order 18-A

Post by tazmanian on Mon Sep 24, 2012 3:55 pm

Hi Peeps.. how can we apply this for relievers? Do we have a standard computation for this or do we treat this as additional headcount? Thanks

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Re: DOLE Department Order 18-A

Post by regina avelino on Tue Sep 25, 2012 9:13 am

there is no unique or different computation for relievers. computation will be the same and treat it as an additional headcount. the only variable is the number of hours worked by the relievers compared to the other employees. God Bless.

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