surety bond - not acceptable form of bid sec

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surety bond - not acceptable form of bid sec

Post by arlynpvic on Wed Oct 24, 2012 3:54 pm

Some procuring entities don't consider this acceptable form of bid security : "50% Surety Bond callable upon demand issued by a surety / insurance company duly certified by Insurance Commission".

They only accept CASH , Cashier's/manager's check as the form of bid security. When I called their attention why they won't consider Surety bond because under Section 27.2 of Revised IRR, it is clear that it is acceptable, they told me that it is indicated in their BDS. And they insist that they won't accept surety bond as form of bid sec.

Experts in this forum, I need your help. Pls... :-(
Thank you in advance.





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Re: surety bond - not acceptable form of bid sec

Post by elib on Wed Oct 24, 2012 5:49 pm

hi arlynpvic,

if that is the case then the PE can be liable to some sanctions by not following what is prescribe in the irr. educate them that it is not them (the PE) who will decide what form of security the contractor will provide. kindly site to them section 27 of the irr...


for the info, as of to date there is this bid securing declaration as another form of bid security.....

hope this helps...


cheers.....
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Re: surety bond - not acceptable form of bid sec

Post by arlynpvic on Wed Oct 24, 2012 7:00 pm

Thank you Elib for sharing your thoughts.

Actually they said that they are aware of Sec 27.2 of the IRR.
But they insist that they can limit the form of bid security. I wrote to them my complaint but they replied verbally that they will stick what is stated in the BDS. Mad

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Re: surety bond - not acceptable form of bid sec

Post by elib on Wed Oct 24, 2012 7:14 pm

hi arlynpvic,

what they are doing is a direct neglect of the rules which have a corresponding sanctions. again, you can tell/write them if they will not address your query, you will redress it to the office with higher authority.

this is just my opinion....

cheers....
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Re: surety bond - not acceptable form of bid sec

Post by regina avelino on Thu Oct 25, 2012 9:07 am

i DEFINITELY AGREE with sir elib. the option what form to post under the said section rests with the bidder and not with the procuring entity. the law has already set the guidelines and none should be circumvented by merely indicating what the procuring entity prefers in the BDS. you should send a motion for reconsideration

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Re: surety bond - not acceptable form of bid sec

Post by arlynpvic on Thu Oct 25, 2012 9:45 am

Thank you Sir Elib and Maam Regina!
I enjoyed reading your posts in this forum.

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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Mon Oct 29, 2012 4:59 pm

The Instruction to Bidders, on its covering page states that "Section II contains provisions that are to be used unchanged. Section III consists of provisions that supplement, amend, or specify in detail information or requirements included in Section II which are specific to each procurement."

Section II is Instruction to Bidders while Section III is Bid Data Sheet.

Could this not be understood as the authority of the procuring entity to regulate the bid security acceptable to them?

To my understanding, thru Bid Data Sheet, we can amend the requirements stated in the Instruction to Bidders, i.e. we may adapt all forms of bid security or we may just select one at the option of the procuring entity.
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Re: surety bond - not acceptable form of bid sec

Post by mojacko on Mon Oct 29, 2012 6:01 pm

Hi Abecedrian!

You might have point in your observation if the procurement at hand is for the Procurement of Consulting Services because it is specific in the issued PBD 4th Edition that for BDS Clause 15.1 there stated an option to only select one (1) and delete the rest.

Whereas, if you compare it with BDS Clause 18.1 for both the Procurement of Goods & Services and Procurement of Infrastructure Projects, the PE's where not given that option but instead gives the prospective bidder choices to post their Bid Security that is convenient to them.

Curiously, why does some PE's insist on cash as a form of bid security?

Peace!

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Re: surety bond - not acceptable form of bid sec

Post by elib on Mon Oct 29, 2012 6:09 pm

hi Abecedarian,

(1)i am of the opinion that all the requirements set out in the irr are general and minimum and should not be changed and/or ammended by the pe for a bidding to have the same ground level for all competitors (the principle of competetiveness applies here).
To my understanding, thru Bid Data Sheet, we can amend the requirements stated in the Instruction to Bidders, i.e. we may adapt all forms of bid security or we may just select one at the option of the procuring entity.
(2)yes, i agree with you that the bds is somewhat a leeway to ammend...,but when i say amend, i do not mean to deduct/select but to add essential information or requirements that will aide the pe in his procurement venture. however, this additional requirements are to be verified on the post qualification stage.... so that we can comply with (1).
Could this not be understood as the authority of the procuring entity to regulate the bid security acceptable to them?
(3)it should not be interpreted like that, for this instance, the pe should not change or select just one or two in the list for his own convinience, as again it will defeat competetion. why bother to change this requirement, if all of them are in favor to the pe.

just my opinion....

cheerss.......
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Re: surety bond - not acceptable form of bid sec

Post by elib on Mon Oct 29, 2012 6:35 pm

hi mojacko,
Curiously, why does some PE's insist on cash as a form of bid security?


just a hunch, maybe they prefer the more liquid one.........


cheersss......
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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Tue Oct 30, 2012 8:43 am

Hello mojacko,

[quote="mojacko"]Hi Abecedrian!

You might have point in your observation if the procurement at hand is for the Procurement of Consulting Services because it is specific in the issued PBD 4th Edition that for BDS Clause 15.1 there stated an option to only select one (1) and delete the rest.


If it were to be the case, which of the instructions in the Instruction to Bidders could be amended by PE thru BDS? Are we only limited to "select one, delete the other?"
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Re: surety bond - not acceptable form of bid sec

Post by mojacko on Tue Oct 30, 2012 11:32 am

If it were to be the case, which of the instructions in the Instruction to Bidders could be amended by PE thru BDS? Are we only limited to "select one, delete the other?"

In my own understanding, yes. As you can see " select one, delete the others" might mean that the two could not be together at the same time that is why we are given the instruction (not an option) to select from the two.

Part of the succeeding paragraph of BDS Clause 15.1 (CS) provides an option for the PE if the Funding Source is Foreign "or state the acceptable form/s of bid security and the amount thereof." (underscoring mine)

cheers!


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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Tue Oct 30, 2012 11:57 am

...and considering that in the BDS, the PE has no option to select which of the bid security the PE should accept, it means that the PE has no alternative but to accept any of the bid security enumerated therein.

That would mean that the authority of the PE to amend instruction to bidders is only limited where the PE is allowed to select, and where the PE is not allowed to select, the PE is bound to follow the instruction.
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Re: surety bond - not acceptable form of bid sec

Post by engrjhez® on Tue Oct 30, 2012 12:11 pm

Abecedarian wrote:Hello mojacko,

[quote="mojacko"]Hi Abecedrian!

You might have point in your observation if the procurement at hand is for the Procurement of Consulting Services because it is specific in the issued PBD 4th Edition that for BDS Clause 15.1 there stated an option to only select one (1) and delete the rest.


If it were to be the case, which of the instructions in the Instruction to Bidders could be amended by PE thru BDS? Are we only limited to "select one, delete the other?"

Strictly speaking, you re not allowed to amend. What the PBDs thru BDS and SCC provide you is to set alternatives. However, you cannot set another rule that directly contravenes or violates the principles and provisions of RA 9184 an its IRR. Take for example the bid security. The revised IRR had sufficient wordings for us to understand:

27.2. The bid security shall be in an amount equal to a percentage of the ABC in
accordance with the following schedule:

x x x

The introduction of the word "equal" mandates procuring entities to fix their bid security amounts, not the form. Before, procuring entities have the discretion of setting (higher values of) the bid security amount. But now, it is clear that it is fixed. Also the practice of other agencies before was to limit only the form bid security to specific forms like cash.


In fact, the GPPB recently issued GPPB Resolution No. 03-2012 "RESOLUTION APPROVING AND ADOPTING BID SECURING DECLARATION AS AN ADDITIONAL FORM OF BID SECURITY". The GPPB considered:

x x x

WHEREAS, the existing forms have substantial monetary value that is considered cause for the increase of bid prices and transactional costs both on the part of the bidder and the procuring entity;

WHEREAS, allowing a form of bid security that has no or insignificant monetary value, such as a Bid Securing Declaration will increase bidders’ participation; decrease the transactional costs; and, reduce bid prices;

WHEREAS, the use of Bid Securing Declaration is recognized by multilateral development partners and is used by other countries as a form and modality of bid security;


x x x
The direction is actually providing for alternatives and not by setting restrictions. Smile

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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Tue Oct 30, 2012 12:27 pm

If we require in the BDS one form only as Bid Security, let us say Bid Securing Declaration, does it collide with RA 9184?
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Re: surety bond - not acceptable form of bid sec

Post by engrjhez® on Tue Oct 30, 2012 1:03 pm

Abecedarian wrote:If we require in the BDS one form only as Bid Security, let us say Bid Securing Declaration, does it collide with RA 9184?

YES. The Guidelines of GPPB Resolution 03-2012 in Clause 2 Par. 2 also provides:

The bidder shall have the option to use a Bid Securing Declaration or any other bid security in the form and amount enumerated under Section 27.2 of the IRR.


Smile
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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Tue Oct 30, 2012 3:18 pm

So, it means that it is the option of the supplier to choose which form of bid security he should submit, not the PE.
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Re: surety bond - not acceptable form of bid sec

Post by mojacko on Tue Oct 30, 2012 3:48 pm

I think the answer of engrjhez is self explanatory!

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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Wed Oct 31, 2012 9:09 am

Just seeking confirmation from a PhilGEPS trainor.
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Re: surety bond - not acceptable form of bid sec

Post by engrjhez® on Wed Oct 31, 2012 12:46 pm

Abecedarian wrote:So, it means that it is the option of the supplier to choose which form of bid security he should submit, not the PE.

Yes. If you will restrict the option to only one, then the bidder cannot exercise option to choose. Smile
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Re: surety bond - not acceptable form of bid sec

Post by Abecedarian on Wed Oct 31, 2012 4:31 pm

I see. Thanks Very Happy
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Re: surety bond - not acceptable form of bid sec

Post by jcolas on Thu Nov 01, 2012 12:35 pm

As what Engrjhez has posted, the option to select which kind of Bid Security he will submit is in the hands of the bidder. No effort should be made to curtail that option. In fact, under Section Section 27.2, the PE has the obligation to provide the bidders with varied option; whether to submit its bid security in cash, Bank Draft, Surety Bond or a combination of the foregoing.
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Surety bond - not acceptable form of bid sec

Post by alexkindipan@yahoo.com on Fri Nov 02, 2012 9:45 pm

I too encountered a particular BAC who insisted that it has the authority to prescribe what form of bid security it can accept to the extent that it adopted its Internal Rules of Procedure (IRP) where, among others, it limit the form of bid security to cash, manager's check, cashier's check and bank guarantee only. The BAC's attention was called many times but it insisted that it's legal because it is provided for in the IRP. Is that BAC liable for any violations? If so, which court or authority should a complaint be made formally?

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Re: surety bond - not acceptable form of bid sec

Post by engrjhez® on Mon Nov 05, 2012 2:18 pm

alexkindipan@yahoo.com wrote:I too encountered a particular BAC who insisted that it has the authority to prescribe what form of bid security it can accept to the extent that it adopted its Internal Rules of Procedure (IRP) where, among others, it limit the form of bid security to cash, manager's check, cashier's check and bank guarantee only. The BAC's attention was called many times but it insisted that it's legal because it is provided for in the IRP. Is that BAC liable for any violations? If so, which court or authority should a complaint be made formally?

You may report such 'abuse of discretion' directly to the Ombudsman. Smile
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Re: surety bond - not acceptable form of bid sec

Post by KENTOY on Fri Jan 03, 2014 2:09 pm

THE PROCUREMENT LAW (RA 9184) LAW ITSELF PRESCRIBED AND ENUMERATED WITH A PURPOSE THE ACCEPTABLE BID SECURITY FOR THE BIDDER TO CHOOSE AT HIS OPTION... NOW ANY LOCAL OR AGENCY BAC WHO WILL CURTAIL AS IT OPTIONS MUST BE VERY CAREFUL FOR THEY MIGHT BE COUNTERING THE VERY PROVISION OF THE LAW AND IS DEFEATING THE VERY PURPOSE OF THE LAW..
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