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11, 2012

NR # 2828B

House leader seeks floor limit or cap on bid prices for government projects
A House leader is seeking a cap or floor limit on the bid prices of winning bidders for government projects to prevent delays in their completion. Rep. Erico Aumentado (2nd District, Bohol) raised the proposal, noting that contractors jockeying for government projects tend to understate the price of the project in their bid proposal to corner juicy projects. Some even venture to propose bid prices costing less than 50 percent of the Approved Budget for the Contract or ABC just to ensure that they will get the project according to him. Aumentado said while this may sound beneficial to the government as it would translate to substantial savings on the part of the implementing government agency, it is not actually the case. “The result is not at all advantageous to the government since the project suffers in terms of poor quality, the terms of reference in the project not being followed and worse, projects are not completed for lack of finances,” said Aumentado, Chairman of the House Committee on Ethics and Privileges. Under the present set-up, he noted Republic Act 9184 otherwise known as the Government Procurement Reform Act, only provides for a maximum ceiling of bid prices for bidders to observe, while there is no cap or minimum limit of bid prices that shall be awarded. “Thus, unscrupulous contractors venture to propose a considerably lowered price in their bids compared to the actual approved ABC,” said Aumentado. He cited as an example two projects in his district which are in danger of not being completed despite the huge approved budget for them. These are: the Sagbayan-Danao Road Project with an appropriation of P200 million, an ABC of P189 million, and the winning bid of P139 million; and the Loay-Interior Road Trinidad Section Re-blocking with an appropriation of P65 million, an ABC of P65 million, and the winning bid of P39 million. “It was known that the contractors are complaining they suffered financial setbacks affecting construction work. And yet, this representation learned the contractors have almost consumed their budget according to their bid,” Aumentado said. He said this is the dilemma that the passage of his proposal seeks to address through

the amendment of the Government Procurement Law to introduce a cap or floor limit on bid prices of winning bidders for government projects. In House Bill 6337, Aumentado proposed the amendment of Section 31 of RA 9184 so that the ABC shall be the upper limit or ceiling for the bid prices, provided that the floor bid for the winning bidder shall not be lower by 25 percent of the approved ABC. It also provides bid prices that exceed the upper limit or ceiling, or below the floor limit shall be disqualified outright from further participating in the bidding. (30) rbb