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DEPARTMENT CIRCULAR NUMBER 03 IMPLEMENTING GUIDELINES FOR DEFENSE ACQUSITION AND PROCUREMENT Article 1.

0 GENERAL POLICIES, GUIDELINES AND OBJECTIVES: 1.1 Establishment of an efficient Defense Acquisition System: The Department shall pursue efforts for the development of an efficient Defense Acquisition System. It is envisioned that this system will be implemented through the Defense Acquisition Office. In the meantime, the interim guidelines, policies, and procedures prescribed herein shall apply. 1.2 For the AFP to be able to focus on its mission, the acquisition of major defense equipment will be elevated at the DND level not later than the end of CY 2005. To effect this change, however, the Department shall pursue efforts to rationalize the release of the budget to the DND. 1.3 The Undersecretary for Armed Forces Operations is the primary staff of the SND in overseeing the Armed Forces of the Philippines, including the AFP Modernization Program (DO 160 dtd Sep 2003) and the Self Reliant Defense Posture Program. In this regard, all decisions associated with the AFP, including matters related to capability build-up from the identification of capabilities to be developed, to the procurements of these capabilities, up to commissioning, and even disposal- shall pass through the USAFO for appropriate action and recommendation, before SND·s action. 1.4 Establishment of a Defense Acquisition Office: To provide the strategic context in which the acquisition process takes place, the Department shall pursue all efforts to develop this organizational capability not later than the end of CY 2005. The DAO shall orchestrate the acquisition activities of major defense equipment and shall serve as the central channel of communications for all acquisition related issues. In the meantime, the Defense Acquisition Office established pursuant to DO 71 (s- 2000), while continuing to perform its mandated tasks, shall developed to evolve into the Defense Acquisition Office. The USAFO shall issue the necessary guidelines and instructions to implement this policy. 1.5 Responsibility for Requirements Definition: In general, the head of the bureau where the budget has been released shall be responsible for the definition and approval of the requirements. As such, the Chief of Staff, AFP shall be responsible for the definition of the requirements for the AFP, erstwhile known as the Circular of Requirements. Additionally, the head of the bureau where the budget belongs is rightfully vested the authority to approve the Annual Procurement Plans of the Bureau. In the case, however, of the AFP Modernization Program and SRDP Program, authority for the approval of the AFP is vested in the SND or to the President, as may be necessary. In this regard, accomplishment of the prescribed Project Procurement Management Plans, the Annual Procurement Plans pursuant to RA 9184 and its IRR-A, and the Five Year Rolling Plan pursuant to JR 28, shall emanate from the AFP. 1.6 Responsibility for Procurement: As provided for by law, the function of the BAC shall be from the conduct of Pre Procurement Conference up to the Issuance of the Notice of Award. It shall have its own BAC Secretariat.

once fully established and operational. rules. Article 2. that.1 In issuing these policies. subject to delegated levels of approving authority pursuant to existing laws. once fully established and operational. The contract as signed shall be submitted to the SNS for approval.0 APPLICABILITY OF LAWS: These policies. 1. guidelines. this function will be absorbed by the Defense Acquisition Office.1. specifically those falling under the AFP Modernization Program (AFPMP) approved by Congress through Joint Resolution No.7 Responsibility for Contracting: After award decisions have been made. 3. guidelines. guidelines. the responsibility for procurement will be absorbed by the Defense Acquisition Office. in coordination with the endusers. however. The head of the bureau where the budget has been released shall be authorized signatory as a contracting party for the Government.2 To prescribe the interim procedures that will govern defense acquisition and procurements in accordance with existing laws. As applicable. Article 4. perfection. contracting activities. entitled ´An Act Providing for the Modernization of the Armed Forces of the Philippines and For Other Purposesµ otherwise known as the ´AFP Modernization Actµ . It is envisioned that. 1. the procedures herein prescribed shall also apply to acquisitions and procurements under the Self Reliant Defense Posture Program (SRDP). once fully established and operational. and procedures prescribed herein shall govern all defense acquisitions and procurements by the DND/AFP.0 SCOPE: The policies.1 Section 4 of Republic Act 7898. and consummation of contracts shall emanate from the procurement office of the agency where the budget has been released. It is envisioned that. this function will be absorbed by the Defense Acquisition Office.8 Responsibility for Contract Implementation: After the issuance of the Notice to Proceed.1. It is envisioned.28. and regulation. 3.1.1 To pave the way for the developments of a responsive and sustainable Defense Acquisition System by providing the foundation from which the system can evolve.Procurements pursued through modes other than public bidding require certain skills and expertise best addressed by composing Negotiating Teams on a case to case basis. the Contract is ready for implementation. which involve generation. Contract implementation properly belongs to the agency where the budget is released.0 PURPOSES: 3. the 3. Department seeks to attain the following objectives: and procedures.3 To delineate functions and responsibilities of the different staff/offices involved in the acquisition process. Article 3. and procedures are issued pursuant to: 4.

6. solicitation and selection of sources. JR 28). 4.1 Pre. 6. for SND approval. the CSAFP submits to DND through the USAFO. and those technical and management functions directly related to the process of fulfilling agency needs by contract.4 In cases of deviations from the list of AFP Modernization Projects as approved under JR 28 dated 19 Dec 1997.1 Based on the annual General Appropriations Act. 5. including construction. lease. 6. Acquisition begins at the point when agency needs are established and includes the description of the requirements to satisfy agency needs. Standardization and Regulation of the Procurement Activities of the Government and For Other Purposesµ otherwise known as the ´Government Procurement Reform Actµ and its IRR-A. SND approves the Annual Procurement Plan for AFP Modernization Program projects pursuant to Sec 14 of RA 7898 and the projects under the SRDP Program pursuant to the provisions of the GAA. contract performance.3 Republic Act 9184 entitled ´An Act Providing for the Modernization. the USAFO. or services. entitled ´Authorizing the Secretary of National Defense to Enter Into Defense Contracts to Implementation Projects Under the Self. whether the supplies or services are already in existence or must be created. processes the CSAFP recommendation and prepares enabling documents for approval. . erstwhile known as the Reprioritized Project List. 28. the approval of the President is required under Sec 15 of RA 7898. together with the individual Project Procurement Management Plans pursuant to the requirement of RA 9184 and its IRR-A. reference will be made to the approved AFP Medium Term Development Plan (also known as the ´Future Years Defense Programµ as required under Section 4.1. and the SRDP Program as approved by the President. supplies. including construction for the Government. by and for the use of the Government through procurements/purchase.2 Procurement: ´Procurementµ shall mean the act of purchasing goods. annually called from the AFP Modernization Program Project List as approved through Joint Resolution No. In preparing the AFP. developed. contract financing.1. contract administration.2 For the AFP Modernization Program and the SRDP Program.2 PD 415 dated 19 March 1974. the proposed priority projects (AFP or RPL) for implementation.4.1.1.3 USAFO. or joint venture. through the DMO. or services. Article 5.Procurement Process 6. supplies.1 Acquisition: ´Acquisitionµ shall mean the acquiring of goods.Reliant Defense Programs and For Other Purposesµ as amended by PD 1081 dated 01 February 1977. Article 6. by contract with appropriated funds. and evaluated. award of contracts.0 DEFINITIONS OF TERMS: 5. demonstrated.0 DEFENSE ACQUISITION PROCEDURE: 6. through the Defense Modernization Office (DMO) initiates the generation of the Annual Procurement Plan.

6. 6. for validation. as the case may be. for the official approval. A negotiating team (NT) shall be formed for projects to be pursued other than Public Bidding.2.2 Procurement Process 6. if USAFO concurs.2.1 Upon receipt of the approval of the AFP by SND or the President. RA 9184).2. 6. 6. DoJ. as appropriate. as applicable) in accordance to the procedures specified under RA 9184 and other existing laws. 6. the procurement office of the agency where the budget is released shall translate the approved user requirements into the bid or solicitation documents. NEDA.2. 6.2 Upon the receipt of the directive to implement the APP.1. who will review the recommendation and. All requests for change in the mode of procurement will be submitted to the SND through the USAFO. or in cases requiring DoJ and NEDA approvals (EO 109 A). the USAFO. the SND shall submit the request to the OP/DoJ/NEDA. 6.2.5 This phase ends with the approval of the list of priority projects. As a general policy.5 If the mode of procurement requires the approval of other bodies/agencies. all the approved projects will be procured through public bidding.2. Upon approval. unless specific modes of procurement are recommended by the CSAFP and approved by the Secretary. the SND approves the recommended mode of procurement and USAFO directs the implementation of the approved mode of procurement.2. through DMO shall prepare the directive to implement the AFP. rules. and regulations. or OP.3 Specifically for projects under the AFP Modernization Program. 6. the procurement office of the agency where the budget is released shall be forward the bid or solicitation documents to the duly constituted BAC or Negotiating Team. prepares the documents to seek the required approval (SND. as the case may be.7 The concurred BAC or NT shall ascertain the readiness of the agency .6 For projects to be implemented either through Public Bidding or other alternative modes of procurement. or the Annual Procurement Plan (erstwhile known as Reprioritized Project List). the USAFO directs the procurement office of the agency where the budget is released to create the appropriate negotiating teams to implement the approve mode of procurement.4 Unless Presidential approval is required (Sec 4.