Approved Budget for the Contract

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Approved Budget for the Contract

Post by spicegrinder on Thu Jul 19, 2012 2:33 pm

Solicit Clarification/Comments?

ABC for the Project/Procurement is the amount indicated in the PPMP and in the consolidated APP. It is assumed that validation has been made on the prevailing market price for the goods/services/equipment etc. to arrive at the correct ABC. SCENARIO. The procurement method adopted is public bidding the ABC reflected in the documents is the same amount as the offer of the sole bidder, upon verification of the price in the market it was found out that the price of said item offered is more than 15% of the prevailing price of similar item in the market, though a notice of award was previously issued and received by supplier before the discovery of overpricing. QUESTION.1 In this situation can the Agency cancel the item in the Contract on the sole basis of overpricing?
QUESTION 2. Can the management endorse the issue to the BAC for recommendation of appropriate action? QUESTION 3. In the event of cancellation, can the sole responsive bidder/ party to the contract take legal action, and what probable complaint/course of action can be taken?
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Re: Approved Budget for the Contract

Post by regina avelino on Thu Jul 19, 2012 3:49 pm

Just my opinion:

Answer No. 1: Yes. if there is a valid ground and the Procuring entity has made a study leading to the confirmation of overpricing and the award of the contract will not redound to the benefit of the the procuring entity by way of overpriced contract.
Answer No. 2: No need to endorse the matter to the BAC. The Head of the procuring entity will just cancel the notice of award by issuing a letter to the supplier for canceling such.
Answer No. 3: I think the supplier will take legal action on the basis of the received notice of award. I believe this supplier will base its complaint on the "reservation clause" clause of the IRR which the procuring entity may reject bids prior to award of the contracts. What happened is that there were already an acceptance of the bid (NOA) which will be the ground for legal action.

Again, just my opinion.

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Re: Approved Budget for the Contract

Post by riddler on Thu Jul 19, 2012 4:42 pm

spicegrinder wrote:Solicit Clarification/Comments?

ABC for the Project/Procurement is the amount indicated in the PPMP and in the consolidated APP. It is assumed that validation has been made on the prevailing market price for the goods/services/equipment etc. to arrive at the correct ABC. SCENARIO. The procurement method adopted is public bidding the ABC reflected in the documents is the same amount as the offer of the sole bidder, upon verification of the price in the market it was found out that the price of said item offered is more than 15% of the prevailing price of similar item in the market, though a notice of award was previously issued and received by supplier before the discovery of overpricing. QUESTION.1 In this situation can the Agency cancel the item in the Contract on the sole basis of overpricing?
QUESTION 2. Can the management endorse the issue to the BAC for recommendation of appropriate action? QUESTION 3. In the event of cancellation, can the sole responsive bidder/ party to the contract take legal action, and what probable complaint/course of action can be taken?

I believed overpricing is difficult to prove on this matter especially if the method of procurement is through Public Bidding. The End-User/PMO is allowed to include Overhead Costs in the preparation of their respective PPMP taking into consideration the expenses (payment for the Bid Bond. purchase of Bidding Docs, travelling, delivery exp., other admin expenses, etc. etc.) of the prospective Bidder, other than that, most gov't agencies are sooo sloow in processing the voucher for payment of the suppliers affecting the business cash flow of the latter. Very Happy Remember the alleged overprice Noodles Scam of the DepEd? Di ba na acquit yung BAC dun? Very Happy Public Bidding din yun. Very Happy

The prevailing price in the market would always be lower than the govt ABC, kasi cash to cash ang pabili dun, eh sa govt daming deductions kaya nagdadagdag tayo ng Overhead Cost sa Estimate natin depende sa market analysis ng End User. Very Happy Very Happy
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Re: Approved Budget for the Contract

Post by alpha1 on Sat Jul 21, 2012 11:47 am

Good day!

I agree with you riddler! I think many would that it is necessary to make some marked-up on the market price because of additional expenses on the part of the bidder.
Even in the preparation of POW in infrastructure projects there is this so called OCM (overhead contingency and miscellaneous) which usually forms part of the contractor's profit.

Just my personal view.
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Re: Approved Budget for the Contract

Post by sunriser431 on Sun Jul 22, 2012 7:03 pm

spicegrinder wrote: QUESTION.1 In this situation can the Agency cancel the item in the Contract on the sole basis of overpricing?
The purpose of conducting a competitive bidding is to give equal opportunity to qualified and eligible bidders participating in the bidding process. The financial bid offered is one factor to be considered provided it had not gone over the ABC. It is common among government agency to conduct phone canvassing or any other means to verify the price offered. Remember, prospective bidders have to recover the cost of overhead expenses in the preparation of their bids. bounce

spicegrinder wrote:QUESTION 2. Can the management endorse the issue to the BAC for recommendation of appropriate action?
The function of the BAC would have ended the moment the HOPE had signed the resolution approving the recommendation..

spicegrinder wrote:QUESTION 3. In the event of cancellation, can the sole responsive bidder/ party to the contract take legal action, and what probable complaint/course of action can be taken?
The Head of the Procuring Entity can exercise his right to reject any and all bids, declare a failure of bidding, or not award the contract as specified in section 41 of the IRR of RA 9184.
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