Mark-ups for OCM and profit added by the contractor to items not subjected to..

View previous topic View next topic Go down

Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Thu Oct 22, 2015 4:45 pm

hi po..just like to ask if the contractor added mark-ups on non-civil work items such as safety and health, traffic management and facilities for the engineer will those be considered? or should it be deducted because as per sec. B.7 of DO 72 non-civil works should not be subjected to mark-ups for OCM?

same with service vehicle and mobilization/demobilization per sec. B.6 of DO 72 which are not subject to mark-ups both for OCM and profit..would they be considered if the contractor added them in their detailed estimates for their bid?


nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by leobcaleja on Mon Oct 26, 2015 9:25 am

Good AM.

I think you are referring to latest DO 22 series of 2015. This refers to the preparation of ABC not the contractor's bid.
avatar
leobcaleja
New Member
New Member

Male Number of posts : 49
Company/Agency : hanjin heavy industries and const. co., ltd.
Occupation/Designation : chief office engineer
Registration date : 2010-09-19

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Mon Oct 26, 2015 9:37 am

gud am..yes i'm referring to the said DO..if it's applicable to the procuring entity as a guideline/standard in preparing for ABC..are the contractors bound to comply with the said DO in preparing their Bids? particularly on items discussed in Sec. B.6 and B.7 which states that these items (e.g. mobilization/demobilization, safety and health, etc.) should not be subjected to mark-ups?

nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by leobcaleja on Tue Oct 27, 2015 9:43 am

Good AM.

The bidders are only bounded by the conditions of bidding. As a bidder, you should consider all factors and conditions that would affect your bid price and surely you would want your bid to be the most responsive bid.

avatar
leobcaleja
New Member
New Member

Male Number of posts : 49
Company/Agency : hanjin heavy industries and const. co., ltd.
Occupation/Designation : chief office engineer
Registration date : 2010-09-19

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Tue Oct 27, 2015 11:32 am

by means of considering all factors and conditions that would affect your bid as a contractor, does it also mean that you would adhere to the Dept. Orders that has something to do with preparation of your bids since this DOs issued by DPWH are published in the DPWH website? like for example if the SPL item mobilization/demobilization per Sec. B.6 of DO 22 series of 2015 is not subject to mark-up for OCM and profits, in preparation of your bid particularly your detailed estimate for the said item, you won't add mark-ups for OCM and profit because it is stated in the said D.O?

nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by leobcaleja on Tue Oct 27, 2015 12:02 pm

Well, as I said previously, the referred DPWH DO is a guideline for preparation of ABC by DPWH. With regards to the items mentioned in the referred DPWH DO that should not be applied with mark-ups, the bidder is not required to adhere to that.
avatar
leobcaleja
New Member
New Member

Male Number of posts : 49
Company/Agency : hanjin heavy industries and const. co., ltd.
Occupation/Designation : chief office engineer
Registration date : 2010-09-19

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by Mikel on Thu Oct 29, 2015 3:49 pm

DPWH DO No. 22, s. 2015 issued on February 18, 2005, reduced the VAT component to 5% (from 12%) in the preparation of the approved budget for the contract (ABC) for infrastructure projects of the DPWH. The COA in our LGU had commented that they will disallow the excess of 7% in the program of work prepared by the Engineering Office of our LGU as it contravenes the DPWH issuance. RA 9337 imposes 12% VAT on sale of services. Questions:
1. Are LGUs obliged to follow the DPWH issuance?
2. In the preparation of program of works for LGU infrastructure projects, is it legal to use the 12% VAT rate as the VAT component in the preparation of the ABC?
Thank you for your reply/ies.

Mikel
Active Poster
Active Poster

Male Number of posts : 72
Company/Agency : Gobyerno ng Pilipinas
Occupation/Designation : Empleyado
Registration date : 2009-03-11

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Thu Oct 29, 2015 4:12 pm

1. Yes LGUs and other agencies are bound to comply with the issuance of DPWH with regards to implementation of Infrastructure projects, since DPWH is the Government's arm in the implementation of Infrastructure projects.
2. Refer to number 1. always follow the latest guidelines/issuance.

nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by Mikel on Thu Oct 29, 2015 4:48 pm

By direct provision of law (Sec. 8 of RA 9337), the government imposes 12% VAT on sale of services, thus, is it not ‘unfair’ for the government to prescribe, through a department order (DPWH DO No. 22), that in the preparation of the ABC of government infrastructure projects only 5% VAT shall be used as the VAT component in the program of work? Please note that under previous DPWH issuances (DO No. 12, s. 2011, No. 29, s. 2011, No. 72, s. 2012) the VAT component was uniformly pegged at 12%, presumably pursuant to the provisions of RA 9337. Please note further that there is no amendment to the law prescribing the 12% VAT imposition.

Mikel
Active Poster
Active Poster

Male Number of posts : 72
Company/Agency : Gobyerno ng Pilipinas
Occupation/Designation : Empleyado
Registration date : 2009-03-11

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Fri Oct 30, 2015 9:12 am

I think the 5% vat component used in the preparation of ABC is different to the 12% vat imposed by the government. The 5% vat component is only used in the preparation of ABC, however the government upon payment to the contractor wittholds 5%final vat and 2% creditable income tax to the contractor and issues forms 2306 and 2307 as reference for the contractor in remitting the remaining 7%component of the 12% vat to the BIR.

nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by Mikel on Sat Oct 31, 2015 7:13 pm

There is only one VAT imposition on the sale of services pursuant to the provisions of RA 9337 and the rate is 12%, although the government is required to withhold 5% of the total 12% to ensure the remittance/ payment to the coffers of the government. The main issue here is that the law imposes 12% VAT but when the government prepares its ABC, it only incorporates 5% and leaving the suppliers to shoulder the remaining 7%, in addition to the income tax they will pay. Please note that under RA 9184, it is required that - "All duties, taxes, and other levies payable by the Contractor under the Contract, or for any other cause, prior to the deadline for submission of bids, shall be included in the rates, prices, and total bid price submitted by the Bidder." (see 15.3 of the ITB of the 4th edition of PBD for Infra.)
Further, clause 27.6 (Detailed Evaluation and Comparisons of Bid) states - 27.6. Bids shall be evaluated on an equal footing to ensure fair competition. For this purpose, all bidders shall be required to include in their bids the cost of all taxes, such as, but not limited to, value added tax (VAT), income tax, local taxes, and other fiscal levies and duties which shall be itemized in the bid form and reflected in the detailed estimates. Such bids, including said taxes, shall be the basis for bid evaluation and comparison.

Mikel
Active Poster
Active Poster

Male Number of posts : 72
Company/Agency : Gobyerno ng Pilipinas
Occupation/Designation : Empleyado
Registration date : 2009-03-11

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by nEwbiE on Mon Nov 02, 2015 2:56 pm

with due respect to you sir, i think i'm not the right person to answer your queries. i just answered the very first question you posted here base on what i know. with regards to your further concern i think you should raise it to authorities of DPWH who issued/authored the said Department Order.

nEwbiE
New Member
New Member

Male Number of posts : 8
Company/Agency : Commission on Audit
Occupation/Designation : State Auditor
Registration date : 2014-06-27

Back to top Go down

Re: Mark-ups for OCM and profit added by the contractor to items not subjected to..

Post by Sponsored content


Sponsored content


Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum