Splitting of Contracts

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Splitting of Contracts

Post by iamcris on Thu Jul 24, 2014 12:36 am

Can i solicit your opinion on this matter:

In our Procurement Section, it is a policy to prepare only one Purchase Order per Supplier per month. If there is another concluded award for the same company/supplier we prepare the P.O. the following month. They claim that it is a form of splitting of contracts if if prepare 2 POs in one month for a single supplier even if the procurement is different in nature, let's say the first one is drugs and medicines and the second one is medical supplies. even if both are procured though public bidding. or more if one is through public bidding and the other one is through alternative mode.

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."

Given that, i think there is no splitting of contracts if the two contracts are different in nature and specially if both are done through public bidding.

How about you guys, what advice can you give me? Are we doing it wrong?


Thank you.

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Re: Splitting of Contracts

Post by engrjhez® on Wed Jul 30, 2014 10:13 pm

iamcris wrote:Can i solicit your opinion on this matter:

In our Procurement Section, it is a policy to prepare only one Purchase Order per Supplier per month. If there is another concluded award for the same company/supplier we prepare the P.O. the following month. They claim that it is a form of splitting of contracts if if prepare 2 POs in one month for a single supplier even if the procurement is different in nature, let's say the first one is drugs and medicines and the second one is medical supplies. even if both are procured though public bidding. or more if one is through  public bidding and the other one is through alternative mode.

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."

Given that, i think there is no splitting of contracts if the two contracts are different in nature and specially if both are done through public bidding.

How about you guys, what advice can you give me? Are we doing it wrong?


Thank you.

You are correct.

Splitting of Government Contracts means the division or breaking up of GOP contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of R.A. No. 9184 and its IRR...(Sec.54.1)

Even if you follow your office policy, it does not guarantee that you wont violate the "splitting" clause. The proscription is not dependent on the awarded supplier or contractor, but by the willful and deliberate attempt to skip a mandatory requirement prescribed by law. One reason for this is that acts executed against the provisions of mandatory or prohibitory laws shall be void. (Art. 5, Civil Code)

Actually, "splitting of contracts" is a misnomer. There is no contract yet to speak of during the pre-procurement stage where it is expected to be committed. The right term should be "splitting of programs" or "splitting of projects". Nonetheless, I hope I answered your query. Smile
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Re: Splitting of Contracts

Post by iamcris on Wed Jul 30, 2014 11:27 pm

Thank you very much sir,

Can I also ask your idea on this:

COMMISSION ON AUDIT CIRCULAR NO. 76-41 July 30, 1976
SUBJECT : Prohibition against splitting of requisitions, purchase orders, vouchers and others.

What is "Splitting"?

Splitting, in its literal sense, means dividing or breaking up into separate parts or portions, or an act resulting in a fissure, rupture, breach. Within the sphere of government procurement, splitting is associated with requisitions, purchase orders, deliveries and payments.

Forms of Splitting:

1) Splitting of Requisitions consists in the non-consolidation of requisitions for one or more items needed at or about the same time by the requisitioner.

2) Splitting of Purchase Orders consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by different requisitioners; and

3) Splitting of Payments consists in making two or more payments for one or more items involving one purchase order.

The above-enumerated forms of splitting are usually resorted to in the following cases:

1) Splitting of requisitions and purchase orders to avoid inspection of deliveries;

2) Splitting of requisitions and purchase orders to avoid action, review or approval by higher authorities; and

3) Splitting of requisitions to avoid public bidding.



I am not clear on the item # [color=#ff3300]2 Splitting of Purchase Orders consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by different requisitioners;

I think this is what our accounting dept was referring to. That there should be no issuance of Two Purchase Orders for the same Supplier within a month. But there was no statement on the period covering the issuance.

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Re: Splitting of Contracts

Post by engrjhez® on Thu Jul 31, 2014 11:04 am

iamcris wrote:Thank you very much sir,

Can I also ask your idea on this:

COMMISSION ON AUDIT CIRCULAR NO. 76-41     July 30, 1976
SUBJECT : Prohibition against splitting of requisitions, purchase orders, vouchers and others.

What is "Splitting"?

Splitting, in its literal sense, means dividing or breaking up into separate parts or portions, or an act resulting in a fissure, rupture, breach.  Within the sphere of government procurement, splitting is associated with requisitions, purchase orders, deliveries and payments.

Forms of Splitting:

1) Splitting of Requisitions consists in the non-consolidation of requisitions for one or more items needed at or about the same time by the requisitioner.

2) Splitting of Purchase Orders consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by different requisitioners; and

3) Splitting of Payments consists in making two or more payments for one or more items involving one purchase order.

The above-enumerated forms of splitting are usually resorted to in the following cases:

1) Splitting of requisitions and purchase orders to avoid inspection of deliveries;

2) Splitting of requisitions and purchase orders to avoid action, review or approval by higher authorities; and

3) Splitting of requisitions to avoid public bidding.



I am not clear on the item # [color=#ff3300]2 Splitting of Purchase Orders consists in the issuance of two or more purchase orders based on two or more requisitions for the same or at about the same time by different requisitioners;

I think this is what our accounting dept was referring to. That there should be no issuance of Two Purchase Orders for the same Supplier within a month. But there was no statement on the period covering the issuance.

I believe the above COA Circular is still valid not yet expressly repealed. However, here's my my 2-cent on the matter:

The above COA Circular is an old circular, long before the enactment of the Local Government Code of 1991, Government Procurement Reform Act (2003) and New Government Accounting System (NGAS). My opinion is that the Circular must give way to intention of new laws and rules. That "requisition" is no longer the practice as APP is prepared proactively.

Hence, it is my personal considered view that COA Circular No. 76-41 should be amended or repealed accordingly.
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Re: Splitting of Contracts

Post by iamcris on Sun Apr 19, 2015 2:30 am

I completely agree with you sir but until now COA still insists that their circular should be followed. and because they're the one who conducts the audit and issues an AOM, all i can do is obey. Evil or Very Mad

Thank you for your reply sir. i'ts been a while since i last visited the forum.

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