New Company

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New Company

Post by Rick on Fri Nov 27, 2009 1:48 pm

Hello!

Hope you can help me.

With the new RA 9184 IRR, can new companies (less than 3 years) now join competitive biddings assuming it has no problem with the single largest contract?

Thank you so much.
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Re: New Company

Post by RDV @ GP3i on Fri Nov 27, 2009 2:04 pm

Rick wrote:Hello!

Hope you can help me.

With the new RA 9184 IRR, can new companies (less than 3 years) now join competitive biddings assuming it has no problem with the single largest contract?

Thank you so much.

If you are a new company, with less than 3 years experience, it would really depend on the procuring entity on how long will the "relevant period" of experience of any prospective bidder it will be needing for the project.

That relevant period should be stated in the bidding documents. In other words, for some projects, maybe a period of experience longer than 3 years may be needed. For others less complex, a period shorter than 3 years may be sufficient for them, but this relevant period has to be indicated in the bidding documents or in the Invitation to Bid so that prospective bidders are properly guided.

RDV
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Re: New Company

Post by Rick on Fri Nov 27, 2009 2:18 pm

Hello RDV,

But is there any specific guidelines in the new IRR how long should a company exist prior to joining the bidding?

Or is it purely for the BAC to decide?

Thanks!
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Re: New Company

Post by RDV @ GP3i on Fri Nov 27, 2009 2:32 pm

Rick wrote:Hello RDV,

But is there any specific guidelines in the new IRR how long should a company exist prior to joining the bidding?

Or is it purely for the BAC to decide?

Thanks!

There is no specific guideline on how long, because if you have no experience, you can associate with another company which has the experience, thru a Joint Venture. It is left to the procuring entity to prescribe how long the experience should be.
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Re: New Company

Post by amang'65 on Fri Nov 27, 2009 2:54 pm

halo,

i am not sure if rick is referring to section23.5.2.5 whicj applies to infra project. what do you think sir RDV?
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Re: New Company

Post by RDV @ GP3i on Fri Nov 27, 2009 4:03 pm

amang1965 wrote:halo,

i am not sure if rick is referring to section23.5.2.5 whicj applies to infra project. what do you think sir RDV?

Let us carefully digest that provision of Sec. 23.5.2.5 of the revised IRR, on infra, which reads as follows:

"The prospective bidder must have an experience of having completed within a period of ten (10) years from the date of submission of and receipt of bids, at least one (1) contract that is similar to the contract to be bid..."

That provision only provides the maximum period by which a contractor can list as his experience for purpose of complying with a Single Largest Completed Contract (SLCC) of at least 10% of the ABC. In other words, the procuring entity can still require an experience of at least 3 years. A contractor which could be in existence for already 20 years, which is therefore qualified in terms of experience, can list all his completed and ongoing contracts (whether similar or not) during that 20-year period of his operation, but for purposes of complying with his SLCC, the BAC will only look back up to 10 years from the date of the bid submission. If he has no SLCC equivalent to at least 50% of the ABC (adjusted to current prices) within that 10-year period, but has earlier than that, he could not use that anymore for compliance of the SLCC. However, in the previous IRR-A that was still allowed. I think one of the reasons why a period has been set is because of the changes in technology. A contractor's experience 20 years ago may no longer be apt for today even if the value of that is more than 50% of the ABC after adjustment to current prices.
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Re: New Company

Post by Rick on Fri Nov 27, 2009 4:16 pm

Section 23.5 Eligibility Criteria somehow does not stop new companies from joining but the definition of Domestic Entity in Section 5.k states that a company must be in existence for 5 consecutive years... confusing.

What's more, in Section 23.5 a company having 60% Filipino citizen share can join but in the definition of a Domestic Entity it describes that it should be 75% Filipino citizen share.

Hope you can help. Thank you.
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Re: New Company

Post by amang'65 on Fri Nov 27, 2009 4:46 pm

i think sir RDV, rick has a point. where in the RA should "Domestic Entity" apply to? or where in the RA can we find "Domestic Entity" was used aside from the definition of terms, i could hardly find it. so we could relate it to the earlier post of rick regarding the existence of a new company. because basing from the definitaionof terms, a domestice entity should be in existence for at least 5 consecutive years.
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Re: New Company

Post by RDV @ GP3i on Fri Nov 27, 2009 4:57 pm

Rick wrote:Section 23.5 Eligibility Criteria somehow does not stop new companies from joining but the definition of Domestic Entity in Section 5.k states that a company must be in existence for 5 consecutive years... confusing.

What's more, in Section 23.5 a company having 60% Filipino citizen share can join but in the definition of a Domestic Entity it describes that it should be 75% Filipino citizen share.

Hope you can help. Thank you.

The "Domestic Entity" here has a different application. The experience requirement of at least 5 consecutive years and Filipino ownership of at least 75% (instead of just 60%) will only be applied if "Domestic Preference" will be invoke by such Domestic Entity in accordance with the Flag Law or CA 138.

If Domestic Preference will not be invoke (for clearer understanding you need to read the entire Section 43) because it is not applicable, then the normal requirements will apply - experience and Filipino ownership of at least 60% (for Goods).
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Re: New Company

Post by RDV @ GP3i on Fri Nov 27, 2009 4:59 pm

amang1965 wrote:i think sir RDV, rick has a point. where in the RA should "Domestic Entity" apply to? or where in the RA can we find "Domestic Entity" was used aside from the definition of terms, i could hardly find it. so we could relate it to the earlier post of rick regarding the existence of a new company. because basing from the definitaionof terms, a domestice entity should be in existence for at least 5 consecutive years.

"Domestic Entity" will only apply under the situations provided for under Sec. 43 of the Revised IRR. It is an entirely new provision which is not found in IRR-A. It is only used when Domestic Preference is applied under CA 138.
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Re: New Company

Post by amang'65 on Sat Nov 28, 2009 11:42 am

ayon, i believe that explains it rick, thanks a lot dir.RDV. (sa totoo lang i havent read the irr from cover to cover kaya hindi ko mahanap other appearances ng "Domestic Entity" bukod sa definition of terms, heh.he.)
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Re: New Company

Post by orlan747 on Sun Dec 06, 2009 12:07 pm

Hello Rick, even if your company is only weeks-old you could always join in a competitive bidding provided that you meet the requirements as prescribed by RA9184 and its IRR. We are assured of this by one of the Governing Principles on Government Procurement:
"Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding." Wink
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Re: New Company

Post by engrjhez® on Sun Dec 06, 2009 3:47 pm

orlan747 wrote:Hello Rick, even if your company is only weeks-old you could always join in a competitive bidding provided that you meet the requirements as prescribed by RA9184 and its IRR. We are assured of this by one of the Governing Principles on Government Procurement:
"Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding." Wink

Please take note that a company this 'young' (say two or three weeks) cannot possibly submit at least the following (unless on conditions mentioned by RDV above):

  1. Audited Financial Statement (no transaction yet);
  2. NFCC computation, if CLC is not available; and of course,
  3. List of On-going and completed projects (none to indicate)
Having mentioned the impossibility of producing the above documents, the bidder shall be declared ineligible immediately after applying the PASS/FAIL criteria on eligibility check. Following this scenario, it must be emphasized that the entire criteria of evaluation must cover not only the legal aspect of business, but as to technical and financial capacities which is very hard for a perfect newbie to obtain outright. Very Happy
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Re: New Company

Post by orlan747 on Sun Dec 06, 2009 10:57 pm

engrjhez wrote:
orlan747 wrote:Hello Rick, even if your company is only weeks-old you could always join in a competitive bidding provided that you meet the requirements as prescribed by RA9184 and its IRR. We are assured of this by one of the Governing Principles on Government Procurement:
"Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding." Wink

Please take note that a company this 'young' (say two or three weeks) cannot possibly submit at least the following (unless on conditions mentioned by RDV above):

  1. Audited Financial Statement (no transaction yet);
  2. NFCC computation, if CLC is not available; and of course,
  3. List of On-going and completed projects (none to indicate)
Having mentioned the impossibility of producing the above documents, the bidder shall be declared ineligible immediately after applying the PASS/FAIL criteria on eligibility check. Following this scenario, it must be emphasized that the entire criteria of evaluation must cover not only the legal aspect of business, but as to technical and financial capacities which is very hard for a perfect newbie to obtain outright. Very Happy

Hmmm... I did state that "provided that you meet the requirements as prescribed by RA9184 and its IRR."

For the sake of discussion however, let me expound a little from the point of view of a contractor:

A contractor company is born after it has been issued a PCAB License. And, one of the requirements to get a PCAB License is an Audited Financial Statement (AFS).

If you have the AFS, you can make a computation of your NFCC.

So what if you have no Ongoing projects? You just submit the required form and indicate there that you have no ongoing projects. That would make your NFCC higher, and hopefully would assure the PE that you will have your full attention, all your construction personnel and all your equipments in the implementation of the project once it is awarded to you. Remember, an Ongoing Project IS NOT a requirement, what is required is the "list" not the actual ongoing project itself. The main purpose of the list is for the computation of NFCC only. (I know a lot of "old" contractors that has no Ongoing Projects now.)

As to the completed similar project, here's an excerpt from the now famous Section 23.5.2.5 of the IRR of RA9184:

"contractors under Small A and Small B categories without similar experience on the contract to be bid may be allowed to bid if the cost of such contract is not more than fifty percent (50%) of the Allowable Range of Contract Cost (ARCC) of their registration based on the guidelines as prescribed by the PCAB."

If you're a Small B contractor, you may participate in a bidding for projects with ABC not more than 7.5M. If you are a Small A, be contented with a 250Thou or less projects, until after you have upgraded yourself to Small B.

So you see, I still stick to this statement:
orlan747 wrote:Hello Rick, even if your company is only weeks-old you could always join in a competitive bidding provided that you meet the requirements as prescribed by RA9184 and its IRR. We are assured of this by one of the Governing Principles on Government Procurement:
"Competitiveness by extending equal opportunity to enable private contracting parties who are eligible and qualified to participate in public bidding." Wink

Thanks po. Smile
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Re: New Company

Post by engrjhez® on Mon Dec 07, 2009 8:18 pm

orlan747 wrote:
A contractor company is born after it has been issued a PCAB License. And, one of the requirements to get a PCAB License is an Audited Financial Statement (AFS).

Hmm. I seemed to overlooked that under infrastructure projects (although my argument shall be valid for goods). I admire your keen reasoning. You have done your homework well. Let me explore this case before I make further arguments. Meanwhile I yield to the fact that this round goes to the PROs (coz we are the CONs, haha).

Trabaho mode muna. Very Happy
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Re: New Company

Post by amang'65 on Tue Dec 08, 2009 11:50 am

that is precisely the point here, about the provisions of the RA. it is generic, very broad and most of all it is fair enough. it becomes unfair, unjust, discriminating when it is varied, changed, or inserted of some specific conditions by the so called discretion of the BAC. which of course is still justified by some that it is a discretion without violating the law, but what happens, we recieve complaints and some even result to the arbitration of the courts and because of this so called discretion, what and who suffers?
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Re: New Company

Post by RDV @ GP3i on Wed Dec 09, 2009 12:50 pm

amang1965 wrote:that is precisely the point here, about the provisions of the RA. it is generic, very broad and most of all it is fair enough. it becomes unfair, unjust, discriminating when it is varied, changed, or inserted of some specific conditions by the so called discretion of the BAC. which of course is still justified by some that it is a discretion without violating the law, but what happens, we recieve complaints and some even result to the arbitration of the courts and because of this so called discretion, what and who suffers?

Question (for everybody):

How can a bidder comply with the Single Largest Completed Contract (SLCC) requirement for goods and infra if it does not have any experience yet?


Last edited by RDV on Wed Dec 09, 2009 2:02 pm; edited 2 times in total
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Re: New Company

Post by Niwram on Wed Dec 09, 2009 1:29 pm

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Re: New Company

Post by RDV @ GP3i on Wed Dec 09, 2009 2:03 pm


Actually, I just posted the question to give emphasis to the point that "experience" is a requirement. A newly-established company cannot participate or should be disqualified. That is just to stress my point, but at any rate, thank you mmp for providing the link since it reinforces still my point.
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Re: New Company

Post by amang'65 on Wed Dec 09, 2009 3:37 pm

RDV wrote:
amang1965 wrote:that is precisely the point here, about the provisions of the RA. it is generic, very broad and most of all it is fair enough. it becomes unfair, unjust, discriminating when it is varied, changed, or inserted of some specific conditions by the so called discretion of the BAC. which of course is still justified by some that it is a discretion without violating the law, but what happens, we recieve complaints and some even result to the arbitration of the courts and because of this so called discretion, what and who suffers?

Question (for everybody):

How can a bidder comply with the Single Largest Completed Contract (SLCC) requirement for goods and infra if it does not have any experience yet?


what about it sir? please expound, mahirap magquote pag kulang ang details.
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Re: New Company

Post by RDV @ GP3i on Wed Dec 09, 2009 4:03 pm

amang1965 wrote:
RDV wrote:
amang1965 wrote:that is precisely the point here, about the provisions of the RA. it is generic, very broad and most of all it is fair enough. it becomes unfair, unjust, discriminating when it is varied, changed, or inserted of some specific conditions by the so called discretion of the BAC. which of course is still justified by some that it is a discretion without violating the law, but what happens, we recieve complaints and some even result to the arbitration of the courts and because of this so called discretion, what and who suffers?

Question (for everybody):

How can a bidder comply with the Single Largest Completed Contract (SLCC) requirement for goods and infra if it does not have any experience yet?


what about it sir? please expound, mahirap magquote pag kulang ang details.

I am sorry, amang, that it happens that the quote I made was on your post. No intention there, but maybe I just want to add also to your questions. However, my question is only to poke our minds. Some kasi are insisting that even those without experience or those which are just a week-old can be allowed to participate. That position begs the question, how could they comply with the eligibility requirement for technical capacity or experience?

One of the requirements for eligibility is technical capacity. A bidder (for goods and infra) must have at least a single largest completed contract (SLCC) that is similar to the contract to be bid which must be at least 50% of the ABC (for goods this could be lowered subject to certain conditions prescribed by the IRR).

Of course, my earlier post in this topic is that an option is available for a bidder which is to form a joint venture with those which could comply with that technical requirement.

RDV
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Re: New Company

Post by sunriser431 on Wed Dec 09, 2009 4:47 pm

I'll be on watch mode, this topic getting interesting. bounce
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Re: New Company

Post by orlan747 on Sun Dec 13, 2009 4:03 pm

RDV wrote:
amang1965 wrote:
RDV wrote:
amang1965 wrote:that is precisely the point here, about the provisions of the RA. it is generic, very broad and most of all it is fair enough. it becomes unfair, unjust, discriminating when it is varied, changed, or inserted of some specific conditions by the so called discretion of the BAC. which of course is still justified by some that it is a discretion without violating the law, but what happens, we recieve complaints and some even result to the arbitration of the courts and because of this so called discretion, what and who suffers?

Question (for everybody):

How can a bidder comply with the Single Largest Completed Contract (SLCC) requirement for goods and infra if it does not have any experience yet?


what about it sir? please expound, mahirap magquote pag kulang ang details.

I am sorry, amang, that it happens that the quote I made was on your post. No intention there, but maybe I just want to add also to your questions. However, my question is only to poke our minds. Some kasi are insisting that even those without experience or those which are just a week-old can be allowed to participate. That position begs the question, how could they comply with the eligibility requirement for technical capacity or experience?

One of the requirements for eligibility is technical capacity. A bidder (for goods and infra) must have at least a single largest completed contract (SLCC) that is similar to the contract to be bid which must be at least 50% of the ABC (for goods this could be lowered subject to certain conditions prescribed by the IRR).

Of course, my earlier post in this topic is that an option is available for a bidder which is to form a joint venture with those which could comply with that technical requirement.

RDV

Here's once again an excerpt from Section 23.5.2.5.
"The prospective bidder must have an experience of having completed, within a period of ten (10) years from the date of submission and receipt of bids, at least one (1) contract that is similar to the contract to be bid, and whose value, adjusted to current prices using the NSO consumer price indices, must be at least fifty percent (50%) of the ABC to be bid: Provided, however, That contractors under Small A and Small B categories without similar experience on the contract to be bid may be allowed to bid if the cost of such contract is not more than fifty percent (50%) of the Allowable Range of Contract Cost (ARCC) of their registration based on the guidelines as prescribed by the PCAB."

There are now extensive discussions regarding this section in this post and in other forum threads, and it is very clear that "That contractors under Small A and Small B categories without similar experience on the contract to be bid may be allowed to bid if the cost of such contract is not more than fifty percent (50%) of the Allowable Range of Contract Cost (ARCC) of their registration based on the guidelines as prescribed by the PCAB". When the ABC is less than 7.5M, then a new company (without similar experience) under the size range of Small B may be able to participate. When the ABC is less than 250K then even the Small A companies may be allowed to join the bidding. This is a privilege granted to small companies, old or new.

The more important use of a Single Largest Completed Contract is in the updating of the contractor's PCAB license. It determines whether you may be upgraded or stay with your current category.

So you see, I am one of those who insisted and is still insisting that a new company may be allowed to participate in the procurement process of an infra project, provided that it is eligible as per Section 23.5.2.

I agree with you sir RDV, one option for a new company is to go into a joint venture with another just to get an experience. This is easier said than done,however, unless you have a close relative or friend that owns a company that will allow you to hitchhike just for you to get an experience. Invoking Section 23.5.2.5 is still the best option.

Section 23.5.2.5 is an ally of week-old companies, though they are growing older as we exchange posts here. Very Happy
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