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cancellation of orders by suppliers

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cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 9:49 am

greetings!

i would like to inquire if there is a provision on RA 9184 for partial cancellation of suppliers on ordered goods by a procuring entity.
including the consequences(penalties) in such cases.


thanks!Smile
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Jul 28, 2009 10:08 am

-freya- wrote:greetings!

i would like to inquire if there is a provision on RA 9184 for partial cancellation of suppliers on ordered goods by a procuring entity.
including the consequences(penalties) in such cases.


thanks!Smile
Hi and welcome to the forum, freya!

I just want to ask why would you want to cancel orders? Is it due to excess or because of the supplier's non-conformity? Otherwise, since the supplier is already awarded and the contract have been properly signed by both parties (i presume), the agreement is legal and binding unless both parties mutually agreed to revoke it. Very Happy
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 10:19 am

thank you:)
since the procuring entity no longer needs the last tranche of goods order, it has been proposed that the last tranche be cancelled. i just wanted to know the repercussion of such cancellation by the supplier on the part of the procuring entity.
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Re: cancellation of orders by suppliers

Post by RDV @ GP3i on Tue Jul 28, 2009 10:26 am

-freya- wrote:thank you:)
since the procuring entity no longer needs the last tranche of goods order, it has been proposed that the last tranche be cancelled. i just wanted to know the repercussion of such cancellation by the supplier on the part of the procuring entity.

You can terminate the contract with your supplier. Among the situations that could be used by the procuring entity in terminating its contract with a supplier is termination for convenience.

Kindly read GPPB Resolution 018-2004 regarding the guidelines on termination of contracts. http://www.gppb.gov.ph/issuances/Resolutions/2004/18-2004.pdf
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 10:30 am

the thing is, the initial move is that the cancellation comes from the supplier. since the procuring entity agreed with the cancellation bec it no longer needs the goods. are there any repercussion on the part of the procuring entity in accepting the cancellation from the supplier? what basis should be used under the law on such partial cancellation by the supplier?
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 10:33 am

if on the part of the procuring entity there is a provision on Termination for Convenience...is there such a provision also on the part of the suppliers?
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Re: cancellation of orders by suppliers

Post by RDV @ GP3i on Tue Jul 28, 2009 10:36 am

-freya- wrote:the thing is, the initial move is that the cancellation comes from the supplier. since the procuring entity agreed with the cancellation bec it no longer needs the goods. are there any repercussion on the part of the procuring entity in accepting the cancellation from the supplier? what basis should be used under the law on such partial cancellation by the supplier?

If the contracting parties are agreeable to the termination, then there is less problem, if not no problem at all. That particular GPPB resolution will still apply.
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Jul 28, 2009 1:28 pm

-freya- wrote:if on the part of the procuring entity there is a provision on Termination for Convenience...is there such a provision also on the part of the suppliers?
There could be some similar provisions on the part of the supplier, but what is more important as we try to emphasize is that for some cause the contract is mutually agreed upon by both parties (the procuring entity and the supplier) to be terminated earlier than first agreed, then there will be no violation of any other statutory provisions.

Just be sure that all communications on the pre-termination of contract is properly documented (in writing), and that both expressly agreed on it. Very Happy
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 1:41 pm

what other provision under gppb is there, as counter part of termination for convenience by the procuring entity.id have to see if the supplier has legal basis for the cancellation(termination for convenience by supplier???) i just need to watch my back on documentations as to the basis of the supplier for the termination..... (consequences on COA matters, if any, i guess)... because even if there are agreements made, proper documentations should be processed taking into consideration gppb rules. that is why i need a basis for the supplier's termination.no problem with the procuring entity bec of termination by convenience by the procuring entity under gppb reso.
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Re: cancellation of orders by suppliers

Post by sunriser431 on Tue Jul 28, 2009 1:48 pm

Section IV. General Conditions of Contract

23.Termination for Convenience
23.1.The PROCURING ENTITY may terminate this Contract, in whole or in part, at any time for its convenience. The Head of the PROCURING ENTITY may terminate a contract for the convenience of the Government if he has determined the existence of conditions that make Project Implementation economically, financially or technically impractical and/or unnecessary, such as, but not limited to, fortuitous event(s) or changes in law and national government policies.
23.2. The GOODS that have been delivered and/or performed or are ready for delivery or performance within thirty (30) calendar days after the Supplier’s receipt of Notice to Terminate shall be accepted by the PROCURING ENTITY at the contract terms and prices. For GOODS not yet performed and/or ready for delivery, the PROCURING ENTITY may elect:
(a) To have any portion delivered and/or performed and paid at the contract terms and prices; and/or
(b) To cancel the remainder and pay to the Supplier an agreed amount for partially completed and/or performed goods and for materials and parts previously procured by the Supplier.
23.3. If the Supplier suffers loss in its initial performance of the terminated contract, such as purchase of raw materials for goods specially manufactured for the PROCURING ENTITY which cannot be sold in open market, it shall be allowed to recover partially from this Contract, on a quantum meruit basis. Before recovery may be made, the fact of loss must be established under oath by the Supplier to the satisfaction of the PROCURING ENTITY before recovery may be made.

25.Procedures for Termination of Contracts
25.1.The following provisions shall govern the procedures for termination of this Contract:
(a)Upon receipt of a written report of acts or causes which may constitute ground(s) for termination as aforementioned, or upon its own initiative, the Implementing Unit shall, within a period of seven (7) calendar days, verify the existence of such ground(s) and cause the execution of a Verified Report, with all relevant evidence attached;
(b)Upon recommendation by the Implementing Unit, the Head of the PROCURING ENTITY shall terminate this Contract only by a written notice to the Supplier conveying the termination of this Contract. The notice shall state:
(b.1)That this Contract is being terminated for any of the ground(s) afore-mentioned, and a statement of the acts that constitute the ground(s) constituting the same;
(b.2)The extent of termination, whether in whole or in part;
(b.3)An instruction to the Supplier to show cause as to why this Contract should not be terminated; and
(b.4)Special instructions of the PROCURING ENTITY, if any.
(c)The Notice to Terminate shall be accompanied by a copy of the Verified Report;
(d)Within a period of seven (7) calendar days from receipt of the Notice of Termination, the Supplier shall submit to the Head of the PROCURING ENTITY a verified position paper stating why this Contract should not be terminated. If the Supplier fails to show cause after the lapse of the seven (7) day period, either by inaction or by default, the Head of the PROCURING ENTITY shall issue an order terminating this Contract;
(e)The PROCURING ENTITY may, at anytime before receipt of the Supplier’s verified position paper to withdraw the Notice to Terminate if it is determined that certain items or works subject of the notice had been completed, delivered, or performed before the Supplier’s receipt of the notice;
(f)Within a non-extendible period of ten (10) calendar days from receipt of the verified position paper, the Head of the PROCURING ENTITY shall decide whether or not to terminate this Contract. It shall serve a written notice to the Supplier of its decision and, unless otherwise provided, this Contract is deemed terminated from receipt of the Supplier of the notice of decision. The termination shall only be based on the ground(s) stated in the Notice to Terminate; and
(g)The Head of the PROCURING ENTITY may create a Contract Termination Review Committee (CTRC) to assist him in the discharge of this function. All decisions recommended by the CTRC shall be subject to the approval of the Head of the PROCURING ENTITY.
You can use the mentioned procedure as reference point. Hope this would be of help. Smile
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 2:13 pm

thanks sunriser 431! but do u have similar provision for suppliers?
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Jul 28, 2009 3:58 pm

-freya- wrote:what other provision under gppb is there, as counter part of termination for convenience by the procuring entity.id have to see if the supplier has legal basis for the cancellation(termination for convenience by supplier???) i just need to watch my back on documentations as to the basis of the supplier for the termination..... (consequences on COA matters, if any, i guess)... because even if there are agreements made, proper documentations should be processed taking into consideration gppb rules. that is why i need a basis for the supplier's termination.no problem with the procuring entity bec of termination by convenience by the procuring entity under gppb reso.
In the absence of (knowledge) on termination as initiated by the supplier, and having said that the procuring entity is also willing to pre-terminate the contract, the latter may be invoked for both party's purpose. By doing so, the Procuring Entity may safely use Termination for Convenience, with or without the suppliers' consent. Very Happy
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Jul 28, 2009 5:10 pm

Please refer to the link provided by RDV quoted below:

"x x x
8. Procuring Entity’s Options in Termination for Convenience in Contracts for Goods. The goods that have been performed or are ready for delivery within thirty (30) calendar days after the Supplier’s receipt of Notice to Terminate shall be accepted by the Procuring Entity at the contract terms and prices. For goods not yet performed or ready for delivery, the Procuring Entity may elect:

a) to have any portion delivered or performed and paid at the contract terms and prices; and/or

b) to cancel the remainder and pay to the Supplier an agreed amount for partially completed or performed goods and for materials and parts previously procured by the Supplier.

If the Supplier suffers loss in its initial performance of the terminated contract, such as purchase of raw materials for goods specially manufactured for the Procuring Entity which cannot be sold in open market, it shall be allowed to recover partially from the contract, on a quantum meruit basis. Before recovery may be made, the fact of loss must be established under oath by the Supplier to the satisfaction of the Procuring Entity before recovery may be made.
x x x "
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 8:41 pm

thank you!!!! Very Happy
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Re: cancellation of orders by suppliers

Post by sunriser431 on Tue Jul 28, 2009 11:42 pm

-freya- wrote:thanks sunriser 431?

No problem.Hopefully we'll hear more from you in the future. Smile
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Re: cancellation of orders by suppliers

Post by -freya- on Tue Jul 28, 2009 11:46 pm

worry not...im pretty sure u'll hear a lot from soon. by the way are there seminars conducted on procurement matters? im really hoping to join one.

thanks again:)
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Re: cancellation of orders by suppliers

Post by sunriser431 on Wed Jul 29, 2009 9:29 am

-freya- wrote:worry not...im pretty sure u'll hear a lot from soon. by the way are there seminars conducted on procurement matters? im really hoping to join one.

thanks again:)

You can visit DBM or COA website for seminars/trainings update click this link http://www.coa.gov.ph/Seminar/PDS_Seminar.htm
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Re: cancellation of orders by suppliers

Post by RDV @ GP3i on Fri Jul 31, 2009 11:01 am

sunriser431 wrote:
-freya- wrote:worry not...im pretty sure u'll hear a lot from soon. by the way are there seminars conducted on procurement matters? im really hoping to join one.

thanks again:)

You can visit DBM or COA website for seminars/trainings update click this link http://www.coa.gov.ph/Seminar/PDS_Seminar.htm

For procurement trainings, it is better if you attend the GPPB-TSO authorized trainings. As of now, unless requested by a procuring entity, there is no training yet as we are yet to roll-out the newly approved revised IRR, but expect that normal trainings will start next month.
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Re: cancellation of orders by suppliers

Post by misty on Mon Mar 28, 2011 5:29 pm

good pm.
just a follow up. may i know the options of the PE regarding the fund of the cancelled portion of the contract? can this be used to procure other items? thank you.
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Re: cancellation of orders by suppliers

Post by engrjhez® on Mon Mar 28, 2011 7:12 pm

misty wrote:good pm.
just a follow up. may i know the options of the PE regarding the fund of the cancelled portion of the contract? can this be used to procure other items? thank you.

My answer will be based on an LGU Scenario: Yes you may use it to procure for other items, PROVIDED THAT:

1) The necessary supplemental appropriation is approved by the Sanggunian (supplemental fund); and
2) The new procurement is under the (Supplemental) Annual Procurement Plan as approved by the Local Chief executive.

Smile
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Re: cancellation of orders by suppliers

Post by sunriser431 on Mon Mar 28, 2011 8:25 pm

Excerpts from RA#7160. For comment of Forum members. bounce
Section 336. Use of Appropriated Funds and Savings. -
Funds shall be available exclusively for the specific purpose for which they have been appropriated. No ordinance shall be passed authorizing any transfer of appropriations from one item to another. However, the local chief executive or the presiding officer of the sanggunian concerned may, by ordinance, be authorized to augment any item in the approved annual budget for their respective offices from savings in other items within the same expense class of their respective appropriations.

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Re: cancellation of orders by suppliers

Post by misty on Tue Mar 29, 2011 9:13 am

thank you for your inputs.

the fund i am referring to is the portion of contract which was cancelled. if this is so, the fund for this was previously appropriated. why the need for the sanggunian?

ty ulit.
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Mar 29, 2011 10:13 am

misty wrote:thank you for your inputs.

the fund i am referring to is the portion of contract which was cancelled. if this is so, the fund for this was previously appropriated. why the need for the sanggunian?

ty ulit.

Based on your earlier query:
misty wrote:good pm.
just a follow up. may i know the options of the PE regarding the fund of the cancelled portion of the contract? can this be used to procure other items? thank you.
You will be using the funds for other purposes. As sunriser cited Sec.336 of LGC that "Funds shall be available exclusively for the specific purpose for which they have been appropriated. x x x" and that only savings realized may be appropriated to augment the annual budget. It is the Sanggunian that will approve any budget thru appropriation ordinance. Hence, the Sanggunian needs to be consulted. Smile
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Re: cancellation of orders by suppliers

Post by neestrevencion on Tue Mar 29, 2011 10:31 am

good day!
on the topic 'cancellation of orders by suppliers', we have the following scenario:
the award was accepted by the winning bidder, evidenced by their submission of the performance bond. however, before the delivery schedule, the supplier was able to get from its source that the item is no longer available and was changed/superseded by another item of different model.
will it be allowed?
please advise.
thank you!
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Re: cancellation of orders by suppliers

Post by engrjhez® on Tue Mar 29, 2011 10:52 am

neestrevencion wrote:good day!
on the topic 'cancellation of orders by suppliers', we have the following scenario:
the award was accepted by the winning bidder, evidenced by their submission of the performance bond. however, before the delivery schedule, the supplier was able to get from its source that the item is no longer available and was changed/superseded by another item of different model.
will it be allowed?
please advise.
thank you!

If the items, particularly computers and IT parts, were already obsolete 'at no fault' of the bidder, then an equivalent or more superior item may be acceptable for the procuring entity if it serves the same purpose. You may need to include such amendment (of item specs) prior to contract signing. Smile
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