Splitting of Government Projects

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Splitting of Government Projects

Post by cristem on Fri Jul 06, 2012 2:18 pm

Help with this one, pls:

One project was initially allocated with 37M covering dam construction from regular funds. Before the preparation of the program of work and completion of plans, there is another 27 million additional allocation from same fund source due to realignment. Can a separate program of work for the 2 allocations be prepared and bidded separately even if the scope of work is still within the same dam? Coverage of the 37 million would include the main dam; while the 27 million would cover the upstream and downstream protection works like blocks and boulders.

Would this constitute splitting?

Any reference to previously resolved similar issues would be appreciated. Thanks.

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Re: Splitting of Government Projects

Post by regina avelino on Fri Jul 06, 2012 2:49 pm

The proposed separation of the 37M and 27M projects does not constitute splitting of contracts. Section 54.1 of the IRR-A states that "splitting of contracts means the division or breaking up into smaller quantities and amounts, or dividing contract implementation into different phases or sub-contracts, for the purpose of evading or circumventing the requirements of RA 9184 or its IRR-A, especially the necessity of public bidding. Since both projects, the 37M and 27M dam construction and protection works respectively, will be conducted through public bidding, their separation does not appear to be for the purpose of circumventing the requirements of RA 9184 nor its IRR-A. Likewise, regardless of the source of fund would in any other way affect the compliance of the both works with the IRR. I don't think it's not the issue on splitting that you should be concerned of since both will be procured through public bidding but the pricing (just my opinion since 27M and 37M are both huge projects separated).

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Re: Splitting of Government Projects

Post by cristem on Fri Jul 06, 2012 3:33 pm

Thanks for your reply, Ms. Regina. The separation into two programs is based on the fact that the 37 million was the firmed up funding and the 27 million came late due to realignment of fund from another project. It's not so much about the pricing because the amount of allocation is not in the hands of the implementor, but only the determination of the unit prices of individual work items which are definitely compliant with the agency guidelines.

However, I am still wanting of clarification on Sec. 54.1, particularly the one stated in general terms: "... evading or circumventing the requirements of the law and this IRR..."

Any other requirements aside from public bidding? Because definitely, the projects will be procured though public bidding.

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Re: Splitting of Government Projects

Post by RDV @ GP3i on Sat Jul 07, 2012 11:34 am

cristem wrote:Thanks for your reply, Ms. Regina. The separation into two programs is based on the fact that the 37 million was the firmed up funding and the 27 million came late due to realignment of fund from another project. It's not so much about the pricing because the amount of allocation is not in the hands of the implementor, but only t
he determination of the unit prices of individual work items which are definitely compliant with the agency guidelines.

However, I am still wanting of clarification on Sec. 54.1, particularly the one stated in general terms: "... evading or circumventing the requirements of the law and this IRR..."

Any other requirements aside from public bidding? Because definitely, the projects will be procured though public bidding.

Ms. Regina has answered your question on "splitting of contracts", which is prohibited, based on the definition of the term under Section 54.1 of the IRR. The definition is clear that there is "splitting" if the purpose of the action to split contracts is "evading or circumventing the requirements of law and this IRR, especially the necessity of public bidding."

Although, if the amounts of P37M and 27M even if procured separately will still be done through public bidding, we have also to look deeper into that and may still constitute splitting of contracts.

The scenario is this: The procuring entity will procure the main project (main dam) first by public bidding, award the project to the LCRB. During the implementation of the main dam, procurement of the P27M will proceed but this time, the BAC recommends Negotiated Procurement - Adjacent or Contiguous (Sec. 53.4, IRR) with the current contractor of the main dam. In this case, no public bidding will be done as it is allowed under RA 9184 and its IRR.

Could it be considered Splitting of Contract? I would say so, because the ABC is already available (P37M and P27M) before any procurement activity is done for any or both of the projects; hence, why procure separately?

Another reason for splitting the project is to avoid approval by a higher authority. If the project is procured with the combined amount of P64M ABC it would probably need approval by a higher authority than when the projects are procured separately. This happens when a procuring entity sets certain limits, in terms of contract amount, for an approving authority. If a limit, say P50M, is set for the approving authority, and if the project is procured separately then it would fall within the limit of the approving authority, but if combined, it would already be more than this authority which would then require approval by a higher authority.

Those are my thoughts on your query, cristem.
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