PROCUREMENT ON PLANNING, BUDGETING LINKAGE AND CONTRACT IMPLEMENTATION

OF FY 2020 LOCAL GOVERNMENT SUPPORT FUND-CONDITIONAL MATCHING GRANT TO

PROVINCE (LGSF-CMGP) PROJECT IN OCCIDENTAL MINDORO

ABSTRACT

There are many variables that public clients need to consider in their planning and
implementation procedure to enhance efficiency in their procurement for construction
services. This study focusses on the procurement on planning, budgeting linkage and
contract implementation of FY 2020 LGSF-CMGP project in Occidental Mindoro. The specific
objectives are: (i) to examine the principal mandate of the Procuring Entity; and (ii) identify
the relationship of the project to Annual Procurement Plan (APP); and (iii) to determine the
process of payment and deduction to the contractor.

THE STORY

Conditional Matching Grant to Provinces (CMGP) Program is a National Government

initiative that aims to improve the state of core provincial roads by strengthening the capacity and
performance of Provincial Governments in Local Road Management and relevant areas of Public
Financial Management. The Program addresses challenges in road management in the provinces,
leading to poor local road conditions that hamper mobility, connectivity of road networks, and
economic development at the local level. CMGP provides incentives to provinces that
demonstrate good performance in the implementation of the said reforms by providing
funds for the rehabilitation, upgrading, and improvement of core provincial roads. The
Program contributes to the realization of Ambisyon Natin 2040 and the Build, Build, Build
Program of the Administration, by supporting the continuous improvement of core
provincial roads and enhancing national-local roads connectivity and accessibility to social
services and economic opportunities, to support the sustained inclusive socio-economic
progress in the country.

The FY 2020 LGSF-CMGP Project: Upgrading/Improvement of Junction to National

Road (JNR) Phase II was proposed in the year 2019 and been credited to implementing
agency’s account on August 27, 2020. Further, Detailed Engineering Design, Program of
Work, Detailed Unit Price Analysis, permits and other documents relative to the project
implementation has been submitted as required for the released of funds under the said
program. The data shows that the procurement process has been started July 22, 2020 and
awarded on September 16, 2020.
Procurement Planning and Budgeting Linkage

All procurement shall be within the approved budget of the Procuring Entity and
should be meticulously and judiciously planned by the Procuring Entity. Consistent with
government fiscal discipline measures, only those considered crucial to the efficient
discharge of governmental functions shall be included in the Annual Procurement Plan
(APP). For purposes of this IRR, a procurement project shall be considered crucial to the
efficient discharge of governmental functions if it is required for the day-to-day operations
or is in pursuit of the principal mandate of the Procuring Entity concerned. The APP shall
include provisions for foreseeable emergencies based on historical records. In the case of
Infrastructure Projects, the APP shall consider the appropriate timing/phasing of related
project activities, such as, engineering design and acquisition of right-of-way site or location,
to reduce/lower project costs.

No procurement shall be undertaken unless it is in accordance with the approved

APP, including approved changes thereto. The APP must be consistent with the duly
approved yearly budget of the Procuring Entity and shall bear the approval of the HoPE or
second-ranking official designated by the HoPE to act on his behalf.

Progress Payment

5.1 (SWA) or progress billing and corresponding request for progress payment for work
accomplished. The SWA should show the amounts which the contractor considers itself to
be entitled to up to the end of the month, to cover (a) the cumulative value of the works it
executed to date, based on the items in the Bill of Quantities, and (b) adjustments made for
approved variation orders executed.
5.2. The procuring entity’s representative/project engineer shall check the contractor’s
monthly SWA and certify the amount to be paid to the contractor as progress payment.
Except as otherwise stipulated in the Instruction to Bidders, materials and equipment
delivered on the site but not completely put in place shall not be included for payment.
5.3. The procuring entity shall deduct the following from the certified gross amounts to be
paid to the contractor as progress payment:
a) Cumulative value of the work previously certified and paid for.
b) Portion of the advance payment to be recouped for the month.
c) Retention money in accordance with the condition of contract.
d) Amount to cover third party liabilities.
e) Amount to cover uncorrected discovered defects in the works.

Retention Money

Progress payments are subject to retention of ten percent (10%) referred to as the
"retention money." Such retention shall be based on the total amount due to the contractor
prior to any deduction and shall be retained from every progress payment until fifty percent
(50%) of the value of works, as determined by the procuring entity, are completed. If, after
fifty percent (50%) completion, the work is satisfactorily done and on schedule, no
additional retention shall be made; otherwise, the ten percent (10%) retention shall be
imposed.

The total "retention money" shall be due for release upon final acceptance of the
works. The contractor may, however, request the substitution of the retention money for
each progress billing with irrevocable standby letters of credit of from a commercial bank,
bank guarantees or surety bonds callable on demand, of amounts equivalent to the
retention money substituted for and acceptable to Government, provided that the project is
on schedule and is satisfactorily undertaken. Otherwise, the ten percent (10%) retention
shall be made. Said irrevocable standby letters of credit, bank guarantees and/or surety
bonds, to be posted in favor of the Government shall be valid for a duration to be
determined by the concerned implementing office/agency or procuring entity and will
answer for the purpose for which the ten percent (10%) retention is intended, i.e., to cover
uncorrected discovered defects and third party liabilities.

CASE STUDY

The project cost is P24, 961,300. What would be the timeline for the procurement process
as recommended in the RA 9184?

 The same timeline is followed for infrastructure project except for the deadline of
submission and receipt of Bids. P50,000.000.00 and below project should only take
50 calendar days to submit their bids. It should take 26-141 days for the
procurement process from the Procurement Conference up to Notice to Proceed.

The project was advertised without the Notice of Authority to Debit Account Issued
(NADAI).

 The Notice of Authority to Debit Account Issued (NADAI) was received at August 21,
2020. The SARO – OSEC-20-0014890 was released to the Province of Occidental
Mindoro. The Sub-Allotment Release Order for the project as released later than
November 23, 2020. The project cannot be awarded and thus it will exceed the given
timeline of 141 calendar days

PROCUREMENT SCHEDULE

Name of Project: Upgrading/Improvement of JNR Iriron-Malpalon (Phase II)

Location : Calintaan, Occidental Mindoro

MINIMUM MAXIMUM
RECOMMENDE RECOMMENDED ACTUAL
STAGE ACTIVITIES ACTUAL DATE
D TIMELINE TIMELINE TIMELINE
(RA 9184) (RA 9184)
PRE-PROCUREMENT
1 July 22, 2020 Day 0 Day 0 Day 0
CONFERENCE
 POSTING OF INVITATION TO
2 July 24, 2020 Day 1-7 Day 1-7 Day 2
BID

3 ISSUANCE OF BID DOCS July 24, 2020      

4 PRE-BID CONFERENCE August 03, 2020 Day 8 Day 8-45 Day 12

SUPPLEMENTAL/BID
5 N/A      
BULLETIN

6 SUBMISSION OFBIDS August 17, 2020 Day 20 Day 57 Day 26

7 OPENING OF BIDS August 17, 2020      

8 BID EVALUATION August 24, 2020 Day 21 Day 58-64 Day 33

9 POST QUALIFICATION September 01, 2020 Day 22-23 Day 65-109 Day 41

APPROVAL OF RES./ISSUANCE
10 September 08, 2020 Day 24 Day 110-124 Day 48
OF NOTICE OF AWARD
CONTRACT PREPARATION
11 September 16, 2020 Day 25 Day 125-134 Day 56
AND SIGNING
ISSUANCE TO NOTICE TO
12 September 18, 2020 Day 26 Day 135-141 Day 58
PROCEED

13 EFFECTIVITY September 21, 2020      

14 EXPIRY DATE January 12, 2021