Bid Security

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Bid Security

Post by ella on Wed Aug 25, 2010 7:34 pm

Gud day! i just want to ask if there is a provision in the procurement policy that if you submitted a bid security/surety bond that exceeds in the percentage a particular entity required can b a ground for disqualification from joining the bid?
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Re: Bid Security

Post by sunriser431 on Wed Aug 25, 2010 9:51 pm

ella wrote:Gud day! i just want to ask if there is a provision in the procurement policy that if you submitted a bid security/surety bond that exceeds in the percentage a particular entity required can b a ground for disqualification from joining the bid?
excerpt from the revised IRR of RA#9184, which is self explanatory.
Section 27. Bid Security
27.1. All bids shall be accompanied by a bid security, payable to the procuring entity concerned as a guarantee that the successful bidder shall, within ten (10) calendar days or less, as indicated in the Instructions to Bidders, from receipt of the notice of award, enter into contract with the procuring entity and furnish the performance security required in Section 39 of this IRR, except when Section 37.1 of this IRR allows a longer period. Failure to enclose the required bid security in the form and amount prescribed herein shall automatically disqualify the bid concerned.
27.2. The bid security shall be in an amount equal to a percentage of the ABC in accordance with the following schedule:
xxxx


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Re: Bid Security

Post by engrjhez® on Wed Aug 25, 2010 10:26 pm

ella wrote:Gud day! i just want to ask if there is a provision in the procurement policy that if you submitted a bid security/surety bond that exceeds in the percentage a particular entity required can b a ground for disqualification from joining the bid?

Under the Revised IRR, the term used was "...equal to...", which is an exact amount in reference to the ABC. Let us see the difference between the the past and present Sec.27.2

IRR-A wrote:27.2. The Bid Security shall be in an amount at least equal to, and not lower than, a
percentage of the approved budget for the contract to be bid, as advertised by
the concerned procuring entity, in any of the following forms: x x x
Revised IRR wrote: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
And by virtue of Sec.27.1
x x x. Failure to enclose the required bid security in the form and
amount prescribed herein shall automatically disqualify the bid concerned."
it is clear that disqualification is inevitable on this simple mistake.

However, i still do not understand on why this has to be exacting. A higher bid security serves the same purpose with higher coverage. Anyone?

Smile
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Re: Bid Security

Post by sunriser431 on Wed Aug 25, 2010 10:39 pm

engrjhez® wrote:
ella wrote:Gud day! i just want to ask if there is a provision in the procurement policy that if you submitted a bid security/surety bond that exceeds in the percentage a particular entity required can b a ground for disqualification from joining the bid?

Under the Revised IRR, the term used was "...equal to...", which is an exact amount in reference to the ABC. Let us see the difference between the the past and present Sec.27.2

IRR-A wrote:27.2. The Bid Security shall be in an amount at least equal to, and not lower than, a
percentage of the approved budget for the contract to be bid, as advertised by
the concerned procuring entity, in any of the following forms: x x x
Revised IRR wrote: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
And by virtue of Sec.27.1
x x x. Failure to enclose the required bid security in the form and
amount prescribed herein shall automatically disqualify the bid concerned."
it is clear that disqualification is inevitable on this simple mistake.

However, i still do not understand on why this has to be exacting. A higher bid security serves the same purpose with higher coverage. Anyone?

Smile
maybe to discourage bidders from using the same bid security again for future bids.My two cents worth Smile Peace
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Re: Bid Security

Post by engrjhez® on Wed Aug 25, 2010 10:48 pm

sunriser431 wrote:
engrjhez® wrote:
x x x. However, i still do not understand on why this has to be exacting. A higher bid security serves the same purpose with higher coverage. Anyone?
Smile
maybe to discourage bidders from using the same bid security again for future bids.My two cents worth Smile Peace

It has to be more than that. Actually, you cant use the Bid Security more than once without introducing erasures. Anyway, not for our interpretation... but for implementation... Smile
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Re: Bid Security

Post by sunriser431 on Wed Aug 25, 2010 10:58 pm

engrjhez® wrote:
sunriser431 wrote:
engrjhez® wrote:
x x x. However, i still do not understand on why this has to be exacting. A higher bid security serves the same purpose with higher coverage. Anyone?
Smile
maybe to discourage bidders from using the same bid security again for future bids.My two cents worth Smile Peace

It has to be more than that. Actually, you cant use the Bid Security more than once without introducing erasures. Anyway, not for our interpretation... but for implementation... Smile
My previous experience especially cash bid securities, winning bidders dont usually request for refund instead have it as "Deposit" for a year in case of future bids will prosper. bounce anyway my take on this topic.
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Re: Bid Security

Post by Mike on Thu Sep 16, 2010 11:23 pm

In our place, the procuring entity of the Agency still accept bid security more than the required percentage of the ABC's. I don't know how they interpret the phrase "shall be in an amount equal to a percentage of the ABC".
So I ask for clarification, is it still the right of the procuring entity to consider higher bid security to the required percentage of the ABC to be bid? Is it ground for disqualification for not following the instruction of the revised IRR of RA 9184.?
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Re: Bid Security

Post by sunriser431 on Fri Sep 17, 2010 12:16 am

Mike wrote:In our place, the procuring entity of the Agency still accept bid security more than the required percentage of the ABC's. I don't know how they interpret the phrase "shall be in an amount equal to a percentage of the ABC".
So I ask for clarification, is it still the right of the procuring entity to consider higher bid security to the required percentage of the ABC to be bid? Is it ground for disqualification for not following the instruction of the revised IRR of RA 9184.?
Try this LINK opinion of the GPPB. bounce
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Re: Bid Security

Post by riddler on Fri Sep 17, 2010 11:29 am

engrjhez® wrote:
ella wrote:Gud day! i just want to ask if there is a provision in the procurement policy that if you submitted a bid security/surety bond that exceeds in the percentage a particular entity required can b a ground for disqualification from joining the bid?

Under the Revised IRR, the term used was "...equal to...", which is an exact amount in reference to the ABC. Let us see the difference between the the past and present Sec.27.2

IRR-A wrote:27.2. The Bid Security shall be in an amount at least equal to, and not lower than, a
percentage of the approved budget for the contract to be bid, as advertised by
the concerned procuring entity, in any of the following forms: x x x
Revised IRR wrote: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
And by virtue of Sec.27.1
x x x. Failure to enclose the required bid security in the form and
amount prescribed herein shall automatically disqualify the bid concerned."
it is clear that disqualification is inevitable on this simple mistake.

However, i still do not understand on why this has to be exacting. A higher bid security serves the same purpose with higher coverage. Anyone?

Smile


ha ha ha Very Happy Very Happy what if the bidder opted to post Cash BS in the amount P 1,000.48?
where will the bidder get the amount of 48/100 pesos if we stick to the rules of the IRR that the bidder shall post certain percentage of the BS equal to the amount of ABC? he he he. Methinks that for practical purposes, the percentage of BS should be equal or higher than the requirement of the IRR. Other than that, some electronic calculators used by the bidder are different from the calculators used by the BAC during the Bid Evaluation which resulted to confusion on the computations of BS or PB..

Very Happy [i]
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Re: Bid Security

Post by engrjhez® on Fri Sep 17, 2010 12:19 pm

riddler wrote:
ha ha ha Very Happy Very Happy what if the bidder opted to post Cash BS in the amount P 1,000.48?
where will the bidder get the amount of 48/100 pesos if we stick to the rules of the IRR that the bidder shall post certain percentage of the BS equal to the amount of ABC? he he he. Methinks that for practical purposes, the percentage of BS should be equal or higher than the requirement of the IRR. Other than that, some electronic calculators used by the bidder are different from the calculators used by the BAC during the Bid Evaluation which resulted to confusion on the computations of BS or PB..
Very Happy [i]
Welcome BAC riddler!

What we need to know is the reason behind the amendment. It is true that in the IRR-A, the rule simply requires "minimum" as to percentage. But that has been deliberately been changed to "equal to". For me, there is no problem with a higher bid security, but as to the law, there must be a spirit behind those changes. And where the law speaks in a categorical manner, we are bound to comply rather than to interpret. Smile
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Re: Bid Security

Post by Mike on Fri Sep 17, 2010 1:15 pm

In my litlle understanding for this revised IRR of RA 9184 on bid security that it shall be in amount equal to a percentage of ABC since no bidder will have to bid higher than the ABC and that will be automatically disqualified the bidder, so why the bidder should imposed higher bid security than the required percentage to the ABC. It is in my thought that it should not be abused by the bidder just to make sure that his bid security will not disqualify him. So it is responsibility of the bidder to follow what is the required amount for the percentage of the ABC. We must remermber this is just simple instruction to be followed by the bidder. Under section 27.1 it must be followed or face the consequences.
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Re: Bid Security

Post by RDV @ GP3i on Fri Sep 17, 2010 10:33 pm

engrjhez® wrote:
riddler wrote:
ha ha ha Very Happy Very Happy what if the bidder opted to post Cash BS in the amount P 1,000.48?
where will the bidder get the amount of 48/100 pesos if we stick to the rules of the IRR that the bidder shall post certain percentage of the BS equal to the amount of ABC? he he he. Methinks that for practical purposes, the percentage of BS should be equal or higher than the requirement of the IRR. Other than that, some electronic calculators used by the bidder are different from the calculators used by the BAC during the Bid Evaluation which resulted to confusion on the computations of BS or PB..
Very Happy [i]
Welcome BAC riddler!

What we need to know is the reason behind the amendment. It is true that in the IRR-A, the rule simply requires "minimum" as to percentage. But that has been deliberately been changed to "equal to". For me, there is no problem with a higher bid security, but as to the law, there must be a spirit behind those changes. And where the law speaks in a categorical manner, we are bound to comply rather than to interpret. Smile

I think the spirit behind the change from the "minimum" to "equal to" is because if the former provision where the procuring entity is allowed to increase the percentage of bid security (which was already increased under the revised IRR from a much lower rate in IRR-A), the added cost to the bidder would just be reflected in the cost of his bid, in effect increasing the cost of the project.

Likewise, if the procuring entity sets a much higher rate of bid security, it could also discourage competition as bidders could be turned off by the high rate of bid security.

For procuring entities, the exact amount of bid security and not only the rate should be reflected in the BDS so that bidders are properly guided in the amount of bid security to post.
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Re: Bid Security

Post by sunriser431 on Sun Sep 19, 2010 12:38 pm

excerpts from NPM 076-2004
Dated 5/25/2004
xxxx. In other words, procuring entities have the discretion to specify in its bidding documents the form, amount and validity period of the Bid Security as long as such satisfies the minimum requirements of the law.

Maybe the bottom line is to remove the "discretionary" from the PE. Besides if the PE will set a higher BS, this will discourage bidders from joining, and it will cost additional burden on part of the bidders bounce


Last edited by sunriser431 on Sun Sep 19, 2010 2:12 pm; edited 1 time in total
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Re: Bid Security

Post by Mike on Sun Sep 19, 2010 2:08 pm

if the procuring entity will imposed higher bid security as required in the revised IRR of RA 9184 for bid security, the procuring entity may violate the revised IRR section 27.2.
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Re: Bid Security

Post by sunriser431 on Sun Sep 19, 2010 2:48 pm

Mike wrote:if the procuring entity will imposed higher bid security as required in the revised IRR of RA 9184 for bid security, the procuring entity may violate the revised IRR section 27.2.
agree bounce
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Re: Bid Security

Post by RDV @ GP3i on Sun Sep 19, 2010 3:30 pm

sunriser431 wrote:excerpts from NPM 076-2004
Dated 5/25/2004
xxxx. In other words, procuring entities have the discretion to specify in its bidding documents the form, amount and validity period of the Bid Security as long as such satisfies the minimum requirements of the law.

Maybe the bottom line is to remove the "discretionary" from the PE. Besides if the PE will set a higher BS, this will discourage bidders from joining, and it will cost additional burden on part of the bidders bounce

Sunriser, the GPPB opinion you have quoted is still dated 2004 which is prior to the revised IRR.

In the revised IRR, that "discretionary" power of procuring entities you want removed has in fact already been removed. Procuring entities can no longer specify in the bidding documents the form of bidding documents which are only acceptable to them. Likewise, as to amount, it is already "equal to" and no longer "minimum" percentage prescribed by the IRR.
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Re: Bid Security

Post by sunriser431 on Sun Sep 19, 2010 6:35 pm

RDV @ GP3i wrote:
sunriser431 wrote:excerpts from NPM 076-2004
Dated 5/25/2004
xxxx. In other words, procuring entities have the discretion to specify in its bidding documents the form, amount and validity period of the Bid Security as long as such satisfies the minimum requirements of the law.

Maybe the bottom line is to remove the "discretionary" from the PE. Besides if the PE will set a higher BS, this will discourage bidders from joining, and it will cost additional burden on part of the bidders bounce

Sunriser, the GPPB opinion you have quoted is still dated 2004 which is prior to the revised IRR.

In the revised IRR, that "discretionary" power of procuring entities you want removed has in fact already been removed. Procuring entities can no longer specify in the bidding documents the form of bidding documents which are only acceptable to them. Likewise, as to amount, it is already "equal to" and no longer "minimum" percentage prescribed by the IRR.
I posted the link for the purpose of comparing the "Old" and the "New" law, and I believe those are for implementation only and requires no further clarification. bounce
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Re: Bid Security

Post by RDV @ GP3i on Wed Sep 22, 2010 11:32 am

sunriser431 wrote:
RDV @ GP3i wrote:
sunriser431 wrote:excerpts from NPM 076-2004
Dated 5/25/2004
xxxx. In other words, procuring entities have the discretion to specify in its bidding documents the form, amount and validity period of the Bid Security as long as such satisfies the minimum requirements of the law.

Maybe the bottom line is to remove the "discretionary" from the PE. Besides if the PE will set a higher BS, this will discourage bidders from joining, and it will cost additional burden on part of the bidders bounce

Sunriser, the GPPB opinion you have quoted is still dated 2004 which is prior to the revised IRR.

In the revised IRR, that "discretionary" power of procuring entities you want removed has in fact already been removed. Procuring entities can no longer specify in the bidding documents the form of bidding documents which are only acceptable to them. Likewise, as to amount, it is already "equal to" and no longer "minimum" percentage prescribed by the IRR.
I posted the link for the purpose of comparing the "Old" and the "New" law, and I believe those are for implementation only and requires no further clarification. bounce

Okey, if that was the purpose, but I would caution all those reading non-policy matter opinions of the GPPB, particularly those issued prior to the effectivity of the revised IRR that those opinions may no longer be applicable or are no longer true for the moment because of the revisions in the IRR.
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Re: Bid Security

Post by engrjhez® on Thu Sep 30, 2010 5:28 pm

After a clarification with the GPPB-TSO, and in agreement with the explanation of RDV, the term "equal" is actually intended for Procuring Entities and not on the bidders. This would mean in the end, that when a bidder posts a higher bid security, that is already a substantial compliance.

This will hope to amend my first answer (that disqualification is inevitable) and that this will stick to the spirit and purpose of bid security. Smile


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Re: Bid Security

Post by sunriser431 on Thu Sep 30, 2010 7:30 pm

Hopefully "ella" and the rest will now be clarified. bounce
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Re: Bid Security

Post by cesar on Fri Mar 11, 2011 3:10 pm

points to ponder:
1. the "shall" and "equal" as stated requires a lot of queries and interpretations. it may also consider the purpose of BS and is it advantageous to the procuring entity.
2. is it stated in ra 9184 to reject or disqualify a bidder who submitted beyond the stated the percentage?

happy brainstorming! Very Happy

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Re: Bid Security

Post by engrjhez® on Fri Mar 11, 2011 7:55 pm

cesar wrote:points to ponder:
1. the "shall" and "equal" as stated requires a lot of queries and interpretations. it may also consider the purpose of BS and is it advantageous to the procuring entity.
2. is it stated in ra 9184 to reject or disqualify a bidder who submitted beyond the stated the percentage?

happy brainstorming! Very Happy

1. It was already clarified in the foregoing that the intent of "shall" and "equal" is for the PE and not for the bidder. In the IRR-A, the amount required is worded "at least". Because of this, it became too liberal for PEs because the PE can require a higher amount than the minimum (1%, 2.5%, etc.) which can be 10%, 25%, or even more. To resolve this, the revised IRR doubled the required amount but have it fixed so as not to be abused. Smile

2. Definitely NOT stated. It goes by the same principle as specifications. And may I throw back the question: Should a bidder used a superior specifications than required, will you disqualify that bidder?

Happy Evening to all! Smile
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Re: Bid Security

Post by RDV @ GP3i on Sun Mar 13, 2011 9:10 am

engrjhez® wrote:
cesar wrote:points to ponder:
1. the "shall" and "equal" as stated requires a lot of queries and interpretations. it may also consider the purpose of BS and is it advantageous to the procuring entity.
2. is it stated in ra 9184 to reject or disqualify a bidder who submitted beyond the stated the percentage?

happy brainstorming! Very Happy

1. It was already clarified in the foregoing that the intent of "shall" and "equal" is for the PE and not for the bidder. In the IRR-A, the amount required is worded "at least". Because of this, it became too liberal for PEs because the PE can require a higher amount than the minimum (1%, 2.5%, etc.) which can be 10%, 25%, or even more. To resolve this, the revised IRR doubled the required amount but have it fixed so as not to be abused. Smile

2. Definitely NOT stated. It goes by the same principle as specifications. And may I throw back the question: Should a bidder used a superior specifications than required, will you disqualify that bidder?

Happy Evening to all! Smile

In addition, if you will notice, the procuring entity is required to indicate in the Bid Data Sheet (BDS) of the bidding documents the exact amount of the Bid Security (equal to the percentage of the ABC depending on the form of such BS) to be submitted by a prospective bidder.
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