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Abandonment of the Principal

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Abandonment of the Principal

Post by new_heart00 on Sat Jul 14, 2012 6:06 pm


We're having a concern with the Principal/Manufacturer abandoning us just when the PO has been awarded. We've already informed the agency about it but sanctions have to be imposed to us.

According to Section 40.1 " If the bidder with the Lowest Calculated Responsive Bid...is unable...to make good its bid by entering into the contract with the procuring entity...the bid security shall be forfeited and the appropriate sanctions provided in this IRR and existing laws shall be imposed, EXCEPT WHEN SUCH FAILURE, REFUSAL OR INABILITY IS THROUGH NO FAULT OF THE SAID BIDDER. "

We've informed the agency there will be no change in the conditions of the agreement except the manufacturer who abandoned us at the last minute. There interest of the government will be in any way be harmed, and the contract price shall not be changed because of the substitute (which is at least equal if not better in quality).

I've done research on cases such as the following:
(1) "Agan, Jr. versus Philippine International Air Terminals, Co."
(2) "Caltex (Phil.), Inc. versus Delgado Bros., Inc.
(3) " Power Sector Assets and Liabilities Management Corporation vs. Pozzolonic Philippines Incorporated"

Are there any other cases or situations wherein it will support our cause.

Thanks in advance for the help.

new_heart00
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Re: Abandonment of the Principal

Post by RDV @ GP3i on Mon Jul 16, 2012 5:30 pm

new_heart00 wrote:
We're having a concern with the Principal/Manufacturer abandoning us just when the PO has been awarded. We've already informed the agency about it but sanctions have to be imposed to us.

According to Section 40.1 " If the bidder with the Lowest Calculated Responsive Bid...is unable...to make good its bid by entering into the contract with the procuring entity...the bid security shall be forfeited and the appropriate sanctions provided in this IRR and existing laws shall be imposed, EXCEPT WHEN SUCH FAILURE, REFUSAL OR INABILITY IS THROUGH NO FAULT OF THE SAID BIDDER. "

We've informed the agency there will be no change in the conditions of the agreement except the manufacturer who abandoned us at the last minute. There interest of the government will be in any way be harmed, and the contract price shall not be changed because of the substitute (which is at least equal if not better in quality).

I've done research on cases such as the following:
(1) "Agan, Jr. versus Philippine International Air Terminals, Co."
(2) "Caltex (Phil.), Inc. versus Delgado Bros., Inc.
(3) " Power Sector Assets and Liabilities Management Corporation vs. Pozzolonic Philippines Incorporated"

Are there any other cases or situations wherein it will support our cause.

Thanks in advance for the help.

In the cases you mentioned, there were already perfected contracts subsisting between contracting parties, but amendments where introduced later into the contracts after the conduct of public bidding and after they were entered into. According to the Supreme Court they were contrary to public policy on public bidding.

In your case, you are unable to enter into a contract because you are unable to make good in your offer. However, if you are able to convince the procuring entity that your failure to enter into contract after the award has been made is not of your own fault, no sanctions may be imposed on you.

However, I submit that, if the procuring entity should proceed with the contract signing with you with your amended offer, it could still fall squarely as violation of public policy on public bidding, and therefore your contract may be declared null and void should it later on be questioned by the other bidders or any 3rd party.
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Re: Abandonment of the Principal

Post by engrjhez® on Tue Jul 17, 2012 8:26 am

Let us say the Supplier is named "A".

In my understanding of the instant case, "A" cannot deliver item(s) based on their bid proposal because the manufacturer abandoned ties with them. As a result, "A" must seek to produce item(s) equal or superior to their proposal to be able to answer for their obligation if ever they would enter into contract.

If this is right, then the reason why the manufacturer abandoned "A" must be investigated to determine if it is through no fault of "A". And if the investigation favors "A", can they still enter into contract without violating any public policy? Smile
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Re: Abandonment of the Principal

Post by new_heart00 on Tue Jul 17, 2012 6:05 pm

RDV @ GP3i wrote:
new_heart00 wrote:


In the cases you mentioned, there were already perfected contracts subsisting between contracting parties, but amendments where introduced later into the contracts after the conduct of public bidding and after they were entered into. According to the Supreme Court they were contrary to public policy on public bidding.

In your case, you are unable to enter into a contract because you are unable to make good in your offer. However, if you are able to convince the procuring entity that your failure to enter into contract after the award has been made is not of your own fault, no sanctions may be imposed on you.

However, I submit that, if the procuring entity should proceed with the contract signing with you with your amended offer, it could still fall squarely as violation of public policy on public bidding, and therefore your contract may be declared null and void should it later on be questioned by the other bidders or any 3rd party.

engrjhez® wrote:
Let us say the Supplier is named "A".

In my understanding of the instant case, "A" cannot deliver item(s) based on their bid proposal because the manufacturer abandoned ties with them. As a result, "A" must seek to produce item(s) equal or superior to their proposal to be able to answer for their obligation if ever they would enter into contract.

If this is right, then the reason why the manufacturer abandoned "A" must be investigated to determine if it is through no fault of "A". And if the investigation favors "A", can they still enter into contract without violating any public policy? Smile

We have tried to seek a manufacturer that can produce equal (if not superior) items as to try to make good our obligation even if the principal abandoned us. I understand your point of view "RDV @ GP3i" as that the contract may be questioned by other bidders or other 3rd party if it will be awarded to us even if our stand is that the change of manufacturer is not substantial if the contract will be served. Looking from the point of view of the Procuring Entity, we then understand that it will be safer to just deny our appeal for reconsideration (in fact they did deny it) rather than get entangled with legal issues in the future.

Our next step now is in how to convince the procuring entity that since it is not our fault, and that no sanctions should be imposed on us. Are there any cases or situations similar to our plight that will help us plead our case? We have a good record for the past several years with the procuring entity and this was the first time that it happened to us.

engrjhez®, We are actually compiling some documents that will enable us to pursue a case against the principal/manufacturer. It's just that our focus right now is in how to convince the procuring entity that sanctions such as blacklisting and forfeiture of performance bond will not be imposed on us.

Thank you very much in advance for your help!

new_heart00
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